PREMIUM STANDARD FARMS INC /NEW, S-1, 1997-04-30

PREMIUM STANDARD FARMS INC /NEW
S-1, 1997-04-30
MEAT PACKING PLANTS

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<PAGE> 1

Registration No. 333-
As filed with the Securities and Exchange Commission on April , 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------

<TABLE>
<C> <C> <C>
PSF HOLDINGS, L.L.C. PREMIUM STANDARD FARMS, INC. PRINCETON DEVELOPMENT CORP.
(EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS (EXACT NAME OF REGISTRANT AS
SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER) SPECIFIED IN ITS CHARTER)
DELAWARE DELAWARE DELAWARE
(STATE OR OTHER JURISDICTION (STATE OR OTHER JURISDICTION (STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION) OF INCORPORATION OR ORGANIZATION) OF INCORPORATION OR ORGANIZATION)
6719 2011 6513
PRIMARY STANDARD INDUSTRIAL PRIMARY STANDARD INDUSTRIAL PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER) CLASSIFICATION CODE NUMBER)
43-1756956 43-1755411 43-1625636
(I.R.S. EMPLOYER (I.R.S. EMPLOYER (I.R.S. EMPLOYER
IDENTIFICATION NUMBER) IDENTIFICATION NUMBER) IDENTIFICATION NUMBER)
</TABLE>

423 WEST 8TH STREET, SUITE 200
KANSAS CITY, MISSOURI 64105
(816) 472-7675
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)

WILLIAM R. PATTERSON
PSF HOLDINGS, L.L.C.
423 WEST 8TH STREET, SUITE 200
KANSAS CITY, MISSOURI 64105
(816) 472-7675
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-------------------------

COPIES TO:

JAMES A. HEETER
DIANE M. BONO
SONNENSCHEIN NATH & ROSENTHAL
4520 MAIN STREET, SUITE 1100
KANSAS CITY, MISSOURI 64111
(816) 932-4400

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please 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 to be a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
registration statement of the earlier effective registration statement for the
same offering. [ ]

If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
-------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY AGGREGATE OFFERING PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LLC Units............................... 10,000,000 units(1) $14.00(2) $140,000,000(2) $42,425
- ------------------------------------------------------------------------------------------------------------------------------
Warrants to acquire LLC Units........... 2,048,192 warrants $45.00(3) $92,168,640(3) $27,930
- ------------------------------------------------------------------------------------------------------------------------------
LLC Units underlying Warrants........... 2,048,192 units(1) (4) (4) (4)
- ------------------------------------------------------------------------------------------------------------------------------
11% Senior Secured Notes due 2003....... $248,640,672(5) 100% of Principal $248,640,672 $75,346
Amount
- ------------------------------------------------------------------------------------------------------------------------------
Guarantees of 11% Senior Secured Notes
due 2003.............................. (6) (6) (6) (6)
- ------------------------------------------------------------------------------------------------------------------------------
Total............................... $145,701
==============================================================================================================================
</TABLE>

(1) Consists of Class A and Class B units of membership interest (the "LLC
Units") issued by PSF Holdings, L.L.C. ("Holdings"). In the event of a LLC
Unit split, dividend or similar dilutive transaction involving LLC Units,
the number of LLC Units registered shall be automatically increased to cover
additional interests in accordance with Rule 416(a) under the Securities Act
of 1933.

(2) Estimated solely for the purpose of calculating the registration fee based
on the book value of $14.00 per LLC Unit as of March 31, 1997.

(3) Calculated pursuant to Rule 457(g) under the Securities Act of 1933.

(4) No separate registration fee required pursuant to Rule 457(g) under the
Securities Act of 1933.
(5) Includes (i.e. $123,890,699) aggregate principal amount of 11% Senior
Secured Notes due 2003 (Partial Pay-in-Kind) ("Notes") of Premium Standard
Farms, Inc. offered pursuant to this Registration Statement and up to
$124,749,973 aggregate principal amount of Notes that may be issued in lieu
of cash payments of interest on the Notes offered pursuant to this
Registration Statement.

(6) Issued by Holdings, Princeton Development Corp., a wholly-owned subsidiary
of PSF, and any subsequent subsidiary guarantor of the Notes. No separate
registration fee required pursuant to Rule 457(n) under the Securities Act
of 1933.
-------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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.
================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED APRIL 30, 1997

PROSPECTUS

PSF HOLDINGS, L.L.C.

LLC UNITS
WARRANTS TO PURCHASE LLC UNITS
GUARANTEES OF 11% SENIOR SECURED NOTES (PARTIAL PAY-IN-KIND)

PREMIUM STANDARD FARMS, INC.
11% SENIOR SECURED NOTES (PARTIAL PAY-IN-KIND)

PRINCETON DEVELOPMENT CORP.
GUARANTEES OF 11% SENIOR SECURED NOTES (PARTIAL PAY-IN-KIND)

All of the (i) 10,000,000 aggregate units of membership interest,
consisting of Class A and Class B units of membership interest (the "LLC Units"
or the "Units"), in PSF Holdings L.L.C. ("Holdings"), (ii) 2,048,192 warrants to
acquire LLC Units of Holdings ("Warrants") and (iii) $123,890,699 aggregate
principal amount of 11% Senior Secured Notes due 2003 (Partial Pay-in-Kind) (the
"Notes") issued by Premium Standard Farms, Inc. ("PSF"), a wholly-owned
subsidiary of Holdings, and guaranteed by Holdings and Princeton Development
Corp., a wholly-owned subsidiary of PSF (the "Guarantees"), offered hereby are
being sold by certain securityholders of Holdings or PSF named herein (the
"Selling Securityholders"). The LLC Units, Warrants, Notes and Guarantees are
sometimes referred to herein collectively as the "Securities." The 2,048,192 LLC
Units underlying the Warrants and being registered hereunder for resale upon
issuance may be issued directly by Holdings to the holders of Warrants upon
exercise of the Warrants by the holders thereof. The additional $124,749,973 in
principal amount of Notes being registered hereunder may be issued directly by
PSF to the holders of the Notes as payment of certain accrued interest when due,
in lieu of cash, pursuant to the terms of the Notes. Such LLC Units and Notes,
if issued, may be subsequently resold by the Selling Securityholders in
accordance with the procedures described in this Prospectus. See "Selling
Securityholders" and "Plan of Distribution."

Interest on the Notes accrues at the rate of 11% per annum, computed on the
basis of a 360-day year comprised of twelve 30-day months. Interest is payable
semiannually on March 15 and September 15 of each year, commencing March 15,
1997, to the holders of record of the Notes at the close of business on the
February 15 and August 15 immediately preceding such interest payment date. The
Notes are secured by a lien on certain collateral of the Company, including all
of the capital stock of subsidiaries owned by the Company and substantially all
the real and personal property owned or leased by the Company. However, such
lien and the right of payment pursuant to the Notes are junior to the liens and
right of payment under the Company's Senior Indebtedness (as defined). See
"Description of the Notes."

None of the proceeds from the sale of the Securities will be received by
the Company. The Company will bear all expenses of the Offering, except that the
Selling Securityholders will pay any applicable brokerage fees and expenses and
transfer taxes. None of the Securities are listed on a national securities
exchange or on the Nasdaq Stock Market. See "Risk Factors -- Absence of Public
Market."

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES OFFERED
HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Any or all of the Selling Securityholders' Securities may be sold in
accordance with the procedures described in this Prospectus, from time to time,
in privately negotiated transactions, in the over-the-counter market, or
otherwise, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at such other prices as may be negotiated among
the parties. A Selling Securityholder may engage one or more brokers or dealers
to act as principal or agent in making sales. Such brokers or dealers may
receive discounts, commissions or other compensation from such Selling
Securityholder and any such brokers or dealers may be deemed "underwriters"
under the Securities Act of 1933, as amended (the "Securities Act"), of the
Securities sold. See "Plan of Distribution."
------------------------

The date of this Prospectus is , 1997
<PAGE> 3

The Selling Securityholders may sell all or a portion of the Securities
offered hereby in accordance with the procedures set forth in this Prospectus
from time to time while the Registration Statement of which this Prospectus is a
part remains effective. The Company has been advised by the Selling
Securityholders that the Securities may be sold on terms to be determined at the
times of such sales through customary brokerage channels, negotiated
transactions or a combination of these methods, at fixed prices that may be
changed, at market prices then prevailing or at negotiated prices then
obtainable. There is no assurance that the Selling Securityholders will sell any
or all of the Securities offered pursuant to this Prospectus. Each of the
Selling Securityholders reserves the right to accept and, together with its
agents from time to time, to reject in whole or in part any proposed purchase of
the Securities to be made directly or through agents. The Company will receive
no portion of the proceeds from the sale of Securities offered hereby. The
aggregate proceeds to the Selling Securityholders from the sale of the
Securities offered by the Selling Securityholders hereby will be the purchase
price of such Securities less any discounts or commissions.

The Registration Statement of which this Prospectus forms a part has been
filed pursuant to Rule 415 under the Securities Act of 1933, as amended, to
afford the holders of the Securities the opportunity to sell such Securities in
a public transaction rather than pursuant to an exemption from the registration
and prospectus delivery requirements of the Securities Act. In order to avail
itself of that opportunity, a holder must notify the Company in writing of its
intention to sell Securities and request that the Company file a supplement to
this Prospectus or an amendment to the Registration Statement, if required,
identifying such holder as a Selling Securityholder and disclosing such other
information concerning the Selling Securityholder and the Securities to be sold
as may then be required by the Securities Act and the rules of the Commission.
No offer or sale pursuant to this Prospectus may be made by any holder until
such a request has been made and until any such supplement has been filed or any
such amendment has become effective.

ADDITIONAL INFORMATION

The Company has filed a Registration Statement with the Securities and
Exchange Commission (the "Commission") on Form S-1 under the Securities Act of
1933, as amended, with respect to the Securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by rules of the Commission. For further information with
respect to the Company and the Securities offered hereby, reference is made to
such Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
document referred to are not necessarily complete. With respect to each such
contract or other document filed as a part of or otherwise incorporated in the
Registration Statement, reference is made to the exhibit for a more complete
description of the matters involved, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement,
including the schedules and exhibits thereto, can be inspected, without charge,
and copied at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices maintained by the Commission at Suite 1400, Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such materials can also
be obtained from the Public Reference Section of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Web site (located at http://www.sec.gov) which
includes reports, proxy statements and other information, including the
Company's Registration Statement, filed electronically by registrants with the
Commission.

When the Registration Statement of which this Prospectus forms a part was
declared effective by the Commission, the Company became subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and in accordance therewith became obligated to file reports and other
information with the Commission. Reports and other information may be inspected
at the Commission's public reference facilities listed above.
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, when used in this
Prospectus, all references to the "Company" or "Premium Standard Farms" refer
collectively to PSF Holdings, L.L.C. ("Holdings"), its subsidiary, Premium
Standard Farms, Inc. ("PSF") and PSF's subsidiary, Princeton Development Corp.
("Princeton"). Unless otherwise indicated, as it relates to the Company's
operations, references herein to fiscal years or years and quarters are to the
Company's fiscal year which, beginning with 1996, ends on the last Saturday in
December and, prior to 1996, was December 31. The end of any such fiscal year of
the Company, unless otherwise stated, shall be referred to herein as December
31.

THE COMPANY

Premium Standard Farms is a vertically integrated provider of pork and pork
products to the wholesale and retail food markets in the United States and
abroad. The Company believes that it is the largest vertically integrated pork
producer in the Midwest and that it is one of the largest owners of sows in the
United States. The Company utilizes modern, efficient building designs,
sophisticated genetic methods, and strict control of animal health and diet to
produce premium pork and pork products. As of March 31, 1997, the Company had
approximately 87,000 sows in production operations located on over 37,000 acres
in northwest Missouri and approximately 19,000 sows located on approximately
14,000 acres located in the Texas Panhandle area, with an aggregate capacity to
produce approximately 1.9 million hogs annually. The Company's operations
include hog production facilities, a pork processing facility capable of
processing 7,000 hogs per day (on a single shift), feed mills, genetic
improvement facilities, office and training facilities and additional production
infrastructure. The Company's Milan, Missouri pork processing facility is among
the most modern facilities of its kind, and is capable of processing all of the
approximately 1.5 million hogs expected to be produced annually from the
Company's Missouri operations. The Milan plant has the capacity to process
approximately 2.6 million hogs on two shifts.

The Company's products include fresh pork. The Company currently markets
these products to a variety of wholesale and retail customers in the U.S. and
abroad. The Company's fresh pork, which includes loins, tenderloins, hams,
butts, picnics, bellies and other products are sold to supermarket chains, meat
distributors, further processors, food service companies, and institutional food
customers and the export market. The Company's operations also include the sale
of live hogs, and the sale of processed pork products in the variety meat
industry, the feed processing industry and the pet food industry.

The Company's business strategy is to produce and market high quality pork
and pork products in a cost-efficient manner by combining state-of-the-art hog
production with strategically located modern pork processing facilities. The
Company's highly automated processing operations have been designed to enable
Premium Standard Farms to capitalize on the value of its hog supply by achieving
benefits of vertical integration that generally are not available to its
non-integrated competitors. For example, the integrated management of
strategically located production and processing operations enables the Company
to streamline logistics, transportation and production schedules to enhance
asset utilization and reduce the Company's cost structure. Vertical integration
also enables Premium Standard Farms to capture the incremental carcass value of
its hogs rather than passing this value on to other processors.

Founded in 1988, Premium Standard Farms expanded from 3,300 sows with the
capacity to produce 73,600 hogs annually in 1990 to approximately 106,000 sows
with the capacity to produce approximately 1.9 million hogs annually in 1996.
During this period, the Company developed its entire Missouri operation,
including its hog production facilities and the Milan, Missouri pork processing
facility. In 1994, Premium Standard Farms began the development of a second pork
production operation located in the Texas Panhandle (the "Texas Facilities").
The first phase in this expansion was the acquisition, in June 1994, of a 16,800
sow hog production operation from National Hog Farms of Texas Inc. ("Perico"),
and the High Plains Ranch, a 33,000 acre parcel of land near the Perico
operations. The planned second phase of that expansion was to create a fully
integrated production and processing operation in Texas through the construction
of additional hog production facilities on the High Plains Ranch, a
state-of-the-art processing plant (based on the Milan, Missouri facility), and
the acquisition of an adjacent 7,000 acre ranch. The Company commenced the
3
<PAGE> 5

construction of additional hog production facilities on the High Plains Ranch
and related infrastructure between June 1994 and May 1995. In May 1995, the
Company indefinitely suspended expansion of the Texas Facilities.

During 1995, the Company did not meet its operating plans as hog prices
continued at historically low levels, feed costs increased, the deficiency of
earnings to fixed charges increased, and the Company suspended construction of
the Texas Facilities incurring substantial losses. As a result, the Company was
unable to service certain of its debt obligations. As of June 30, 1996, the
Company had $455 million of long-term debt outstanding. On July 2, 1996, the
Company filed a pre-negotiated, consensual reorganization under Chapter 11 of
the United States Bankruptcy Code (the "Reorganization") which was successfully
completed on September 17, 1996 (the "Effective Date") and which enabled the
Company to significantly improve its financial structure by restructuring its
debt and converting a significant portion of its outstanding debt to equity. As
of December 28, 1996, the Company had $153 million of long-term debt
outstanding. The Company has initiated organizational and operational changes
during and following the Reorganization which it believes, together with
decreased debt service obligations and increased hog and pork prices, has
resulted in the Company's improved performance since the Effective Date.

The Company resumed work on the Texas Facilities in early 1997 through the
planned investment of approximately $5 million in hog production facilities.
Following the completion of such construction, the Company's Missouri and Texas
operations will have approximately 110,000 sows in production operations. The
Company intends to periodically evaluate the desirability of further expansion
of its Texas operations based on the Company's production and processing needs,
operating performance, capital requirements and growth strategy.

PSF Holdings, L.L.C. is a limited liability company organized under the
laws of the state of Delaware in 1996. Premium Standard Farms, Inc. was
incorporated in Delaware in 1996 and Princeton Development Corp. was
incorporated in Delaware in 1992. The principal executive offices of the Company
are located at 423 West 8th Street, Suite 200, Kansas City, Missouri 64105 and
its telephone number is (816) 472-7675.

THE OFFERINGS

LLC Units offered by the
Selling Securityholders....... 10,000,000 LLC Units

LLC Units outstanding on the
date of this Prospectus(1).... 10,000,000 LLC Units

Warrants offered by the
Selling Securityholders....... 2,048,192 Warrants to acquire LLC Units

Notes offered by the Selling
Securityholders(2)............ $248,640,672 aggregate principal amount

Use of Proceeds............... The Company will not receive any proceeds from
the sale of Securities by the Selling
Securityholders.

Absence of Public Market...... There is currently no public market for the LLC
Units or the Warrants and the Company does not
presently intend to list any of the Securities
on a stock exchange or quotation service.
Bankers Trust Company currently makes a market
in the Notes. However, Bankers Trust Company is
not obligated to do so and any market-making
activities with respect to the Notes may be
discontinued at any time without notice.
Accordingly, no assurance can be given as to
the liquidity of the trading market for any of
the Securities or that an active public market
for the Notes will develop. See "Risk Factors
-- Absence of Public Market."
- -------------------------
(1) Does not include (i) 2,048,192 LLC Units issuable upon the exercise of
outstanding Warrants or (ii) 620,000 LLC Units issuable upon the exercise of
outstanding options.

(2) Includes (i) $117,500,000 aggregate principal amount of Notes issued on the
Effective Date, (ii) $6,390,699 aggregate principal amount of Secondary
Notes (as defined) issued March 15, 1997 in payment of interest then due on
the Notes, and (iii) $124,729,973 aggregate principal amount of Secondary
Notes that may be issued after the date of this Prospectus in lieu of cash
payments of interest on the Notes.
4
<PAGE> 6

THE NOTES

Maturity Date................. September 17, 2003

Interest Payment Dates........ Interest on the Notes accrues from the date of
issuance at 11% and is payable semi-annually on
each March 15 and September 15, commencing
March 15, 1997. Until the Term Loan Payout Date
or the maturity of any Note, at the option of
PSF, interest is payable by the issuance of
additional Notes (valued at 100% of the face
amount thereof) in lieu of cash interest. After
any such date, interest on the Notes is payable
solely in cash.

Optional Redemption........... The Notes are redeemable at the option of PSF,
in whole or in part, during the twelve-month
periods beginning on each September 1 for the
years 1996 through 2001, at the redemption
prices set forth herein plus accrued interest
to the date of redemption.

Change in Control............. In the event of a Change in Control (as
defined), each holder of Notes will have the
right, subject to the terms and conditions of
the Indenture (as defined) for the Notes, to
have all or any portion of such holder's Notes
(equal to $1,000 or an integral multiple
thereof) repurchased by PSF at a purchase price
equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to
the date of purchase.

Offers to Purchase............ In the event of certain asset sales, to the
extent that the proceeds thereof are not used
to purchase certain lines of business or to
repay the Term Loan (as defined) or the Second
Priority Note Agreement (as defined), PSF will
be required to offer to purchase the Notes at
100% of their principal amount plus accrued and
unpaid interest, if any, to the date of
purchase with the net proceeds of such asset
sales.

Security...................... The Notes are guaranteed by Holdings and
Princeton and are collaterally secured by a
lien on substantially all of the assets of the
Company.

Ranking....................... The liens securing the Notes and the right of
payment pursuant to the Notes are junior to the
liens and right of payment under the Credit
Agreement (as defined) and all indebtedness
under the Second Priority Note Agreement.

Restrictive Covenants......... The Indenture imposes certain limitations on
the ability of the Company to, among other
things, (i) incur additional indebtedness, (ii)
pay dividends or make certain restricted
payments or make certain investments, (iii)
consummate certain asset sales, (iv) enter into
certain transactions with affiliates, (v) incur
certain liens, (vi) impose restrictions on the
ability of a Subsidiary to issue capital stock,
and (vii) impose restrictions on the Company
from engaging in certain businesses. The
restrictive covenants are subject to certain
exceptions and qualifications. See "Description
of the Notes -- Certain Covenants."

THE WARRANTS

Warrants...................... The Warrants will entitle the holders thereof
to purchase from Holdings an aggregate of
2,048,192 LLC Units of Holdings (the
5
<PAGE> 7

"Warrant LLC Units"), which collectively
represents 17% of the LLC Units on a fully
diluted basis as of the date of this
Prospectus.

Exercise...................... Each Warrant will entitle the holder thereof to
purchase one LLC Unit of Holdings at an
exercise price of $45.00 per LLC Unit. The
Warrants are exercisable (i) in the case of a
holder which is not a MS Member (as defined),
at any time during the ten year period
commencing on the original issue date and
terminating on the first business day after the
tenth anniversary of the original issue date
(the "Termination Date") and (ii) in the case
of a holder which is a MS Member, at any time
during the period that commences on January 1,
2000 and that terminates on the Termination
Date, subject to earlier exercise in certain
circumstances, and in each case subject to
earlier cancellation under certain
circumstances. The number of LLC Units of
Holdings for which, and the price per LLC Unit
at which, a Warrant is exercisable are subject
to adjustment upon the occurrence of certain
events as provided in the Warrant Agreement (as
defined).

Expiration of Warrants........ The Warrants shall expire at the close of
business on the Termination Date.

THE LLC UNITS

LLC Units..................... The LLC Units are divided into two classes,
Class A Units and Class B Units. Class A Units
and Class B Units are identical and entitle the
holders thereof to the same rights and
privileges, except that Class B Members of
Holdings shall have no right, power or
authority to participate in the management of
Holdings in any manner, including without
limitation, voting rights.

Conversion of LLC Units....... Each Class B Unit transferred to a party other
than a MS Member is convertible, at the
election of such party, into one Class A Unit
immediately following such transfer, and each
Class A Unit transferred to a MS Member shall
convert automatically, immediately following
such transfer, into one Class B Unit, subject
in either case to certain adjustments under
certain circumstances in the number and kind of
LLC Units.

Repurchase of Units........... In the event of termination of employment of a
holder of LLC Units who is an employee of the
Company, as a result of death or disability,
Holdings is obligated to purchase such holder's
LLC Units at fair value generally within 90
days after such termination. In the event of
termination of employment of such a holder
other than as a result of death or disability,
Holdings has the right for a period of six
months following the last date on which such
employee was a member of the board of directors
or manager or an employee of the Company to
repurchase the LLC Units held by such employee
for fair value, or if such LLC Units have not
vested, at such price specified in the
agreement or plan pursuant to which such
unvested LLC Units were acquired.

Restrictions on Transfer...... A holder of LLC Units who is a Member (as
defined) of Holdings is subject to certain
restrictions on transfer of such holder's LLC
Units. Prior written notice of such transfer
must be given to
6
<PAGE> 8

Holdings and certain other conditions must be
met before such transfer is made. A transferee
of LLC Units shall not be admitted as a Member
of Holdings unless certain conditions, as set
forth in the LLC Agreement, are met, and unless
admitted as a Member (holding Class A Units),
shall have no voting rights. Transfers which
would cause Holdings to become a Foreign
Business (as defined) are not permitted.

For additional information concerning the Securities, see "Description of
Units," "Description of Warrants," and "Description of the Notes."
7
<PAGE> 9

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
PREDECESSOR(1) THE COMPANY(1)
--------------------------------------------------------------- ---------------------------------
PERIOD FROM PERIOD FROM PRO FORMA
YEAR ENDED DECEMBER 31, JANUARY 1, 1996 SEPTEMBER 17, 1996 YEAR ENDED
----------------------------------------- TO SEPTEMBER 16, TO DECEMBER 31, DECEMBER 31,
1992 1993(2) 1994 1995 1996 1996 1996(3)
---- ------- ---- ---- ---------------- ------------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $ 9,007 $ 86,786 $132,816 $ 194,491 $194,925 $ 91,233 $286,158
Gross profit (loss).... (182) 2,768 (7,461) 1,654 22,522 25,918 63,757
Operating income
(loss)............... (4,770) (3,520) (17,446) (43,137)(4) 15,606 21,788 53,148
Interest expense....... (1,487) (13,200) (36,051) (61,676) (32,252) (4,628) (18,113)
Net income (loss)...... (5,815) (15,812) (53,080) (113,695) 43,401(5) 10,456 21,424
BALANCE SHEET DATA (AT
END OF PERIOD):
Net property, plant,
equipment and
breeding stock....... 52,899 159,407 408,884 402,326 -- 185,611 --
Total assets........... 78,754 276,854 654,232 514,046 -- 305,499 --
Long-term debt, less
current portion...... 33,256 222,019 537,712 479,996 -- 149,419 --
Members' or common
partners' equity,
excluding redeemable
portion.............. 2,433 (6,945) (22,926) (55,740) -- 135,529 --
</TABLE>

- -------------------------
(1) As a result of emerging from Chapter 11 bankruptcy proceedings as described
elsewhere herein, the Company adopted "fresh-start" reporting in which its
assets, liabilities and equity were adjusted to reflect their estimated fair
values, resulting in a new reporting entity as of September 17, 1996.
Accordingly, the Predecessor's consolidated results of operations and
financial condition for periods prior to September 17, 1996 are not
necessarily comparable to those presented subsequent to that date.

(2) In May 1993, the Company acquired certain pork processing facilities of
Mariah Packing, Inc. in a transaction accounted for as a purchase. Net sales
of the Company's Mariah operations for the period from the acquisition date
to December 31, 1993 were approximately $57 million.

(3) The unaudited pro forma statement of operations data for the year ended
December 31, 1996 is presented as if the Reorganization (described elsewhere
herein) had occurred as of January 1, 1996. The pro forma financial
information does not purport to represent the actual consolidated results of
operations that would have been reported if the Reorganization had occurred
as of January 1, 1996, or to represent consolidated results of operations to
be expected in any future periods.

(4) In 1995, the Company incurred losses from the suspension of an expansion
project and disposal of certain other business assets totaling $33,346. See
Note 10 to consolidated financial statements.

(5) Reorganization items reported in the period ended September 16, 1996 consist
of net revaluation adjustments of $180,357 and professional fees and
expenses of $8,534. In addition, in 1996 an extraordinary gain for debt
forgiveness of $250,467 was recognized as a result of the Reorganization.
See Note 1 to consolidated financial statements.
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<PAGE> 10

RISK FACTORS

The Securities offered hereby involve a high degree of risk. In addition to
the other information in this Prospectus, prospective investors should carefully
consider the following factors in evaluating an investment in the Securities
offered hereby:

THE REORGANIZATION; HISTORY OF NET LOSSES

PSF Finance L.P. ("Finance"), the predecessor to Holdings, was organized as
a Delaware limited partnership. Premium Standard Farms, Inc. ("Farms"), the
predecessor to PSF, was incorporated as a Missouri corporation and was
consolidated as a unilaterally controlled special-purpose entity of Finance.
Finance and Farms are sometimes collectively referred to herein as
"Predecessor," and Holdings and PSF are sometimes collectively referred to
herein as "Successor." The Successor commenced operations on September 17, 1996
by merging Finance into Holdings, which then transferred the net assets it
received from Finance to PSF. Farms transferred all of its net assets to PSF in
satisfaction of debt. The Predecessor was then dissolved and all Predecessor
operations were continued by the Successor.

The Company's formation was the culmination of a process of financial and
organizational reorganization that began on March 15, 1996, when the Predecessor
did not make a required interest payment of approximately $7 million due on its
senior secured notes. The subsequent Reorganization resulted in a new bank
credit agreement and the Notes. See "Description of Certain Indebtedness" and
"Description of the Notes." The Notes and 9,700,000 LLC Units were issued in
exchange for all of the Predecessor senior notes and the preferred limited
partner units. The remaining 300,000 LLC Units were exchanged for Finance's
common general and limited partner units. Additionally, the holders of Finance's
common general and limited partner units received Warrants entitling the holders
to purchase 2,048,192 LLC Units of Holdings for $45 per LLC Unit. Warrants for
1,621,044 LLC Units become exercisable on January 1, 2000 and the balance became
exercisable on September 17, 1996. All unexercised Warrants expire on September
17, 2006. No separate value was allocated to the Warrants in the Reorganization
Plan (as defined).

The Company filed a formal plan of reorganization (the "Reorganization
Plan") under Chapter 11 with the United States Bankruptcy Court on July 2, 1996.
On September 16, 1996, the Reorganization Plan became effective and the Company
emerged from Chapter 11 effective with the beginning of business on September
17, 1996. Also, on that date, the Company adopted fresh start reporting in
accordance with generally accepted accounting principles, resulting in
adjustment of the Company's equity and the carrying value of assets. Therefore,
the Company's post-reorganization balance sheets and statements of operations
are not prepared on a consistent basis of accounting with its pre-reorganization
balance sheets and statements of operations. Accordingly, the Company has had
limited history of operations post-bankruptcy on which its performance may be
evaluated and the Company does not believe that pre-bankruptcy performance
yields a meaningful comparison. See "Business -- Reorganization" and Notes to
Consolidated Financial Statements.

As described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations," the Company's financial performance has
improved since the Effective Date of the Reorganization. However, prior to the
Effective Date, the Company experienced net losses from operations for the nine-
month period ended September 17, 1996, and during each of the four fiscal years
ended December 31, 1995. The aggregate net operating losses, excluding
restructuring items, during such periods were approximately $207 million, and
were due in significant part to a combination of low hog prices, high feed
ingredient prices, the interest expense associated with then outstanding debt,
"start-up" losses on newly constructed units, and depreciation on assets which
had not yet reached their full productive and earning capacity. There can be no
assurance as to the Company's ability to generate net income in future periods.
If the Company is unable to generate net income in the future, it may not be
able to make required payments on its debt obligations, including the Notes. See
"-- Sensitivity to Pork and Hog Prices" and "-- Sensitivity to Commodity
Prices."

SENSITIVITY TO PORK AND HOG PRICES

The Company's revenues are primarily dependent on the price of hogs, pork
and pork products. The prices of these products can be volatile as a result of a
number of factors, the most important of which are the

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<PAGE> 11

supply of and demand for pork as well as other meat products, particularly beef
and poultry. For example, during the third and fourth quarter of 1994, selling
prices for hogs fell substantially to reach levels not experienced on a nominal
basis during the last 20 years, and, on a real basis since the 1930's. In
contrast, hog prices during the third and fourth quarters of 1996 were near
historically high levels on a nominal basis. Many of the Company's costs are
relatively fixed during the short-term, and during periods of low hog prices,
the Company's average selling price for hogs may be below its cost of
production. There can be no assurance that hog prices will maintain current
levels, and any significant decrease for a sustained period of time could have a
material adverse effect on the Company's business, financial condition and
results of operation. While the Company's revenues are now primarily derived
from the sale of pork and pork products, it has continued to sell significant
numbers of hogs to other processors. In addition, to the extent that the
Company's Texas and other production capabilities expand without a corresponding
increase in processing capabilities, the Company will sell hogs to other
processors to the extent that hog production exceeds the Missouri plant's
capacity to process additional animals. As a result, the Company's business,
financial condition and results of operation could be materially impacted by
significant changes in the selling price for hogs. Historically, prices for pork
and pork products have tended to be more stable than hog prices. No assurances
can be given, however, that prices of pork and pork products will not decline
either in the short-term to reflect lower hog prices or in the long-term to
reflect a greater supply or for other reasons. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- General" and
"Business -- Industry Overview."

SENSITIVITY TO COMMODITY PRICES

The Company's results of operations and financial condition are affected by
the cost and supply of feed components and by the selling prices for hogs and
pork and pork products, all of which are determined by constantly changing
market forces of supply and demand over which the Company has no control. Severe
price swings in feed components, which may not be reflected in the prices of the
Company's finished products, could have material adverse effects on the
Company's business, financial condition and results of operations. Unless and
until changes in the cost of raw materials can be passed on to consumers through
changes in the prices of the Company's finished products, increases in such
costs will adversely affect the Company's profitability and cash flow. Many of
the Company's non-feed costs are relatively fixed during the short-term, and
during periods of low pork and pork product prices, the revenue received for the
Company's products may be below its cost of production and processing. There can
be no assurance that pork and pork product prices will maintain current levels,
and any significant decrease for a sustained period of time could have a
material adverse effect on the Company's business, financial condition and
results of operation.

The Company's feed component costs are primarily dependent on crop
conditions, which can be volatile as a result of a number of factors, the most
important of which include weather, current and projected grain stocks and
prices, grain export prices and supports and the governmental agricultural
policies. The Company typically purchases in the cash markets or through futures
contracts all or a portion of its largest feed components, corn and soybean
meal, in advance at fixed prices in order to hedge the Company's short term
exposure to future price fluctuations. The Company utilizes forward contracts,
as well as futures and options contracts, to establish adequate supplies of
future grain purchasing requirements and to reduce the risk of market
fluctuations. These contracts may result in off-balance sheet market risk which
is dependent on fluctuations in the grain, hog and pork commodity markets.
Market risk resulting from a position in a particular contract may be offset by
other on- or off-balance sheet transactions. The Company continually monitors
its overall market position. These purchasing and hedging activities may or may
not lower the Company's average cost for these commodities. In periods of
declining commodity prices, these advance purchases could result in the Company
paying a higher price for feed components than its competitors. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

HERD PRODUCTIVITY AND FEED EFFICIENCY

The Company's sow herd productivity and feed efficiency are primary
measures by which PSF evaluates its operating performance. Sow productivity, as
measured by the number of pigs which reach 45-50 pounds per

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<PAGE> 12

sow per year, is a measure of the performance of PSF's breeding, gestation,
farrowing and nursery operations. Changes in sow productivity can have a
material effect on profitability and margins because a substantial portion of
the costs of operating a sow unit are either fixed or related to the number of
sows. Sow productivity is influenced by a number of factors, including the
growth of production, sow base and number of employees, the health condition of
PSF's hogs, and their genetics and environment. The feed conversion ratio is
measured by the number of pounds of feed consumed to produce a pound of live
weight in hogs in the Company's finishing units and is a measure of the
performance of PSF's hog-finishing operations. Changes in feed efficiency affect
per head feed consumption and hence the aggregate cost of feed, a primary cost
component in PSF's hog-production operations. Feed efficiency is affected by a
number of factors, including the rapid growth of production and number of new
employees, the health condition of PSF's animals, and the nutrient value of
available feed ingredients. Accordingly, there can be no assurance that the
Company will be able to maintain existing herd productivity and feed efficiency
levels in the future, or that any decline in such levels will not have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Production Operations."

IMPACT OF DISEASE

The ability to maintain health and control disease is a large factor in the
productivity and profitability of a hog operation. Disease may reduce the number
of pigs weaned per sow and hamper the growth of pigs to finished size. Diseases
can be spread from other infected pigs, in feed, in trucks, by rodents or birds,
by people visiting the farms or through the air. The Company has experienced
outbreaks of certain diseases in the past and the potential remains for the
inception and spread of disease. The Company has experienced outbreaks of TGE
and PRRS, a respiratory disease commonly affecting swine herds, in previous
fiscal years. Although the Company believes that its production system, the
geographic separation of its units and biosecurity measures reduce the effect of
disease outbreaks, there can be no assurance that the Company will not
experience outbreaks of diseases in the future, or that any such outbreaks will
not have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Production Operations."

INTERNATIONAL SALES

The Company intends to further penetrate the pork and pork product markets
in the United States and to significantly expand its sales in international
markets, including in particular Japan, other Asian countries, Mexico and
Europe. The markets for the Company's products in countries outside of the
United States vary in several material respects from the Company's markets in
the United States, including differences in pork consumption levels and
marketing and distribution practices. International activities also pose certain
other risks not faced by companies that limit themselves to United States
activities, such as fluctuations in the value of foreign currencies relative to
the U.S. dollar, the imposition of or changes in government controls, tariffs,
duties or taxes and changes in economic and political conditions. There can be
no assurance that the Company will be successful in identifying favorable
international expansion opportunities or that it will be able to further
penetrate and compete effectively in international markets. See "Business --
International Sales."

TEXAS FACILITIES

The construction of new facilities or renovation of existing or acquired
facilities requires substantial expenditures of Company resources. There can be
no assurance that the Company will complete all of the originally proposed Texas
Facilities or will be able to meet its construction schedules or budgets in the
future, including those for the Texas Facilities. In addition, there can be no
assurance that necessary permits can be obtained, or obtained on a timely basis.
See "Business -- The Texas Facilities" and "Business -- Other Operations --
Construction Operations." Community relations are also important to any
expansion. Special interest groups such as animal rights activists, family
farming and environmental activists may have an influence in communities where
the Company has or may plan to locate facilities. No assurance can be given that
these special interest groups would not impede any proposed expansion. See
"Business -- Legal Proceedings."

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<PAGE> 13

DEPENDENCE ON KEY PERSONNEL

The operations and future success of the Company are dependent upon the
efforts of its senior management team, including Horst W. Schroeder, the
Chairman of the Board, Dennis W. Harms, the Vice Chairman and Chief Executive
Officer, Robert W. Manly, the President and Chief Operating Officer, and William
R. Patterson, the Executive Vice-President, Chief Financial Officer and
Treasurer. The Company has entered into a consulting agreement with Mr.
Schroeder and into employment contracts with each of Messrs. Harms, Manly and
Patterson. No assurance can be given that the Company would be able to find
qualified replacements for any of these individuals if their services were no
longer available. The loss of the services of one or more members of this senior
management team could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company's future success and
plans for growth also depend on its ability to attract, train and retain skilled
personnel in all areas of its business. There is strong competition for skilled
personnel in the pork production and processing businesses. See "Management."

PRIORITY OF THE NOTES AND ASSET ENCUMBRANCES

The Notes are guaranteed by Holdings and the Subsidiary Guarantors (as
defined below) and are collaterally secured by a lien on substantially all of
the assets of the Company. However, such lien and the right of payment pursuant
to the Notes are junior to the liens and right of payment under the Company's
senior bank credit facility with Chase Manhattan Bank, N.A., issuing bank,
collateral agent and administrative agent, and the lenders named therein (the
"Credit Agreement") and all indebtedness under the Company's Second Priority
Note Purchase Agreement with Morgan Stanley Group Inc. (the "Second Priority
Note Agreement") (collectively, the "Senior Indebtedness"). Therefore, in the
event of the liquidation, dissolution, reorganization, or any similar proceeding
regarding the Company, the assets of the Company will be available to pay
obligations on the Notes only after all Senior Indebtedness has been paid in
full, and there may not be sufficient assets to pay all amounts due on the
Notes. In addition, a default under the obligations of the Company under the
Second Priority Note Agreement and the Second Priority Notes, or any other debt
of the Company, shall constitute an event of default under the Indenture. See
"Description of the Notes -- Events of Default." As of March 31, 1997, the
Company had $30 million of Senior Indebtedness outstanding.

The obligations of the Company under the Credit Agreement are secured by a
first priority security interest in substantially all of the Company's assets
and the obligations of the Company under the Second Priority Note Agreement are
secured by a second priority security interest in substantially all of the
Company's assets. If the Company becomes insolvent or is liquidated, or if
payment of the Senior Indebtedness is accelerated, the lenders of the Senior
Indebtedness would be entitled to exercise the remedies available to a secured
lender under applicable law and pursuant to the applicable agreements.
Accordingly, such lenders will have a prior claim on the Company's assets in
which they have a security interest. See "Description of Certain Indebtedness"
and "Description of the Notes."

LEVERAGE/RESTRICTIVE COVENANTS

The Company has significant debt service obligations. As of March 31, 1997,
the Company had outstanding long-term indebtedness of approximately $156
million. The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including the following: (i) the
Company's ability to obtain additional financing for working capital or other
purposes in the future may be limited; (ii) a substantial portion of the
Company's cash flow from operations will be dedicated to the payment of
principal and interest on its indebtedness, thereby reducing funds available for
operations and capital expenditures; and (iii) the Company may be more
vulnerable to economic downturns or other adverse developments with respect to
its business than certain less leveraged competitors and, thus, may be limited
in its ability to withstand competitive pressures. In addition, borrowings under
the Credit Agreement bear interest at fluctuating rates. Increases in interest
rates on such borrowings would increase the Company's interest payment
obligations and could adversely affect the amounts that would be available for
payment of interest and principal on other indebtedness of the Company. The
Company's ability to make scheduled payments of the principal of or interest on,
or to refinance, its indebtedness will depend on its future operating

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<PAGE> 14

performance and cash flow, which are subject to prevailing economic conditions,
prevailing interest rate levels, and financial, competitive, business and other
factors, many of which are beyond its control.

The Credit Agreement and the Indenture pursuant to which the Notes were
issued contain numerous financial and operating covenants including, among
others, restrictions on the ability of the Company to incur additional
indebtedness, to create liens or other encumbrances, to make certain payments,
distributions and investments, and to sell or otherwise dispose of assets and
merge or consolidate with another entity. The Credit Agreement also requires the
Company to meet certain financial ratios and tests, including a minimum net
worth test and a four consecutive quarter minimum EBITDA test. A failure to
comply with the obligations contained in the Credit Agreement or the Indenture
could result in an event of default under either the Credit Agreement or the
Indenture which could permit acceleration of the related debt and acceleration
of debt under other instruments that may contain cross-acceleration or
cross-default provisions. Other indebtedness of the Company that may be incurred
in the future could contain financial or other covenants more restrictive than
those applicable to the Notes. See "Description of Certain Indebtedness" and
"Description of the Notes -- Certain Covenants".

COMPETITION

The Company operates in a highly competitive environment and faces
significant competition in all of its markets. Certain of the Company's
competitors possess significantly greater financial, technical and other
resources than the Company. Some of these larger competitors may be able to use
their substantial financial resources to decrease pork and pork products pricing
in the markets in which the Company operates. If vertically integrated hog and
pork processing companies gain market share, and the market price of these
products is decreasingly influenced by the relatively higher-cost products of
smaller farms, the Company could experience increased price competition for its
pork and pork products. When hog prices are lower than the Company's hog
production costs, the Company's non-integrated pork processing competitors may
have a cost advantage over the Company, because they can purchase lower cost
hogs on the spot market, while the Company would have to continue to use hogs
produced by its own hog production operations.

ENVIRONMENTAL MATTERS

The Company is subject to various federal, state and local environmental
and health and safety laws and regulations, particularly relating to its waste
treatment lagoons and facilities and new construction projects. The nature of
the Company's operations exposes it to the risk of claims with respect to
environmental matters and there can be no assurance that material costs or
liabilities will not be incurred in connection with such claims. The Company
believes that the cost of achieving and maintaining compliance with such laws
and regulations will not have a material adverse effect on the Company's
business, including the Texas Facilities, or its financial position. However,
future events, such as changes in existing laws and regulations or enforcement
policies could result in additional compliance costs which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Environmental Matters."

PSF was served with a letter dated April 1, 1997 which serves as notice of
intent of Citizens Legal Environmental Action Network, Inc., a Missouri
not-for-profit corporation ("CLEAN"), to bring an action against the United
States Environmental Protection Agency ("EPA") and PSF, pursuant to Title 33
U.S.C. sec.1365, the citizen suit provision of the Clean Water Act and Title 42
U.S.C. sec.7604, the citizen suit provision of the Clean Air Act, for alleged
violations of NPDES permits and of the Clean Air Act. This notice is required to
be given 60 days prior to commencing an action under the Clean Water Act and the
Clean Air Act and, no action has been commenced to date. The Company believes
the allegations are without merit and intends to vigorously defend any such suit
that is brought. However, there can be no guarantee that the Company would
prevail in any such suit. See "Business -- Litigation."

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<PAGE> 15

CORPORATE FARMING LAWS

Several states, including Missouri, but excluding Texas, have enacted
"corporate farming laws," which restrict the ability of corporations to engage
in farming activities. These laws are intended to protect family-owned farms
from the competitive threat posed by large agri-businesses. Missouri's corporate
farming law, subject to certain exceptions, bars corporations (but not, on its
terms, limited liability companies or partnerships) from owning agricultural
land and engaging in farming activities. The Company's operations have been
structured to comply with the Missouri corporate farming law and its existing
exemptions. The Company believes that the restructuring transactions effected in
connection with the Reorganization enable PSF to qualify for an exception to the
Missouri corporate farming restrictions for corporations that acquire
agricultural land in connection with the collection of debts or the enforcement
of a lien or claim on such land. Under this exemption for agricultural land
acquired in payment of a debt, management believes that PSF may own its
currently held agricultural land and conduct its hog operations thereon
(including farming activities) for a ten year period. The Company continues to
utilize improved technology and other techniques in an attempt to reduce the
amount of land needed for spreading effluent produced by its operations. It is
presently not determinable whether the Company will need more or less
agricultural land in Missouri in the foreseeable future. Furthermore, Missouri
enacted a statute in 1993 that specifically exempts from the corporate farming
law hog farming operations in the three counties in Missouri where the Company
conducts its farming operations. This exemption, however, is subject to certain
county population limitations which may be exceeded in one or more of the three
counties in which PSF operates when the next federal decennial census occurs in
the year 2000, which might cause such exemption to thereafter be unavailable
unless the statute is amended. It is not conclusive that the Company would not
be able to purchase land under this exemption after the year 2000, even if
population limitations are exceeded, however, there can be no guarantee that in
such event, the Company would be permitted to purchase additional land pursuant
to the exemption. While the Company believes that it is in compliance with the
Missouri corporate farming laws, there can be no assurance that the Company's
compliance with such corporate farming law will not be challenged.

Missouri also restricts the ability of "Aliens" or a "Foreign Business"
(i.e., a business entity in which a "controlling interest" is owned by Aliens)
to own agricultural land in Missouri. To the Company's knowledge, Aliens and
Foreign Businesses do not own a controlling interest in Holdings or PSF. The LLC
Agreement of Holdings contains provisions restricting the ownership of LLC
interests by foreign entities. An Alien (as defined) or a Foreign Business (as
defined) may not acquire or own in the aggregate more than 5% of the outstanding
LLC Units of Holdings without the prior written approval of Holdings, and if any
Person acquires or owns LLC Units in violation of the foregoing provision, such
Person must dispose of such number of LLC Units as will reduce its ownership of
LLC Units to 5% or less of the outstanding LLC Units or such lesser percentage
as is required for Holdings not to be a Foreign Business. If such LLC Units are
not disposed of within the time period set forth in the LLC Agreement, Holdings
will not pay any distribution with respect to such LLC Units held by such Person
and such Person will not be entitled to vote on any matter or otherwise
participate in the management of Holdings. In addition, Holdings may redeem such
LLC Units at their Fair Value (as defined). Any failure by the Company to comply
with corporate farming, foreign ownership, or other laws could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Corporate Farming Laws and Ownership Structure."

LABOR RELATIONS

None of the Company's employees was represented by a labor union as of
February 28, 1997. However, on February 26, 1997, the Western Missouri & Kansas
Laborers' District Council of the Laborers' International Union of North
America, AFL-CIO, filed a petition with the National Labor Relations Board,
seeking an election among the production and maintenance employees at the Milan
facility, and on April 10, 1997, that election was conducted, with the Company's
employees voting not to form a union. Under the law, the National Labor
Relations Board will not conduct an election among the same unit of employees
until at least April 10, 1998, one year after the date of the election. The
Company is aware of no other union organizing efforts at its other facilities,
but there can be no assurance that efforts will not be made to unionize the
Company's work force in the future or that some or all of the Company's work
force will not be unionized

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<PAGE> 16

in the future. The Company's Missouri and Texas operations are each material to
the Company's business, and any significant increase in labor costs,
deterioration of employee relations, slowdowns or work stoppages at any of its
locations, whether due to union activities or otherwise, could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Employees."

CONTROL BY EXISTING SECURITYHOLDERS

One fund group, Putnam Funds, holds approximately 49.8% of the voting LLC
Units of Holdings as of the date of this Prospectus. As a result, Putnam Funds
will be able to significantly influence matters affecting the Company, including
matters submitted to a vote of the members of Holdings. Further, Putnam Funds
together with any one other current holder of voting LLC Units effectively
control Holdings. See "Description of the Units -- Rights of Members," "Selling
Securityholders" and "Principal Unitholders."

ABSENCE OF PUBLIC MARKET

The Company does not intend to list any of the Securities on any national
securities exchange or to seek approval for quotation through any automated
quotation system. Accordingly, there can be no assurance as to the liquidity of
any markets that may develop for the Securities, the ability of holders to sell
their Securities, or at what price holders would be able to sell their
Securities. If a trading market does not develop or is not maintained, holders
of the Securities may experience difficulty in reselling the Securities or may
be unable to sell them at all. Prices for the Securities will be determined by
the marketplace and may be influenced by many factors, including the depth and
liquidity of any market which develops, investor perception of the Company and
general economic and market conditions. In addition, factors such as quarterly
variations in the Company's financial results, announcements by the Company or
others and developments affecting the Company could cause the market price of
the Securities to fluctuate significantly. Securities markets have, on occasion,
experienced extreme price and volume fluctuations which have often been
unrelated to the operating performance of the affected companies.

Bankers Trust Company currently makes a market in the Notes. However,
Bankers Trust Company is not obligated to do so and any market-making activities
with respect to the Notes may be discontinued at any time without notice. In
addition, such market-making activity will be subject to the limits imposed by
the Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Accordingly, no assurance can be given that an active public or
other market will develop for the Notes or as to the liquidity of or the trading
market for the Notes. If a market for the Notes develops, any such market may
cease to continue at any time.

EFFECT OF CERTAIN OPERATING AGREEMENT PROVISIONS

Holders of LLC Units are subject to certain restrictions on transfer
pursuant to the Limited Liability Company Agreement (the "Operating Agreement"
or "LLC Agreement") of Holdings. A holder of LLC Units that is a Member of
Holdings may not transfer any LLC Units or all or any part of the economic or
other rights that comprise its membership interest in Holdings unless ten days'
prior written notice (or more in certain circumstances) is given to Holdings. In
addition, such transfer is subject to certain other requirements, and in some
instances transfers are not permitted. Further, a purchaser of LLC Units may not
be admitted as a Member of Holdings unless certain specific conditions are met.
A holder of Warrants for LLC Units, upon exercise of such Warrants, must also
meet certain conditions to be admitted as a Member of Holdings. Accordingly,
there can be no assurance that a purchase of LLC Units will entitle the
purchaser to voting rights as a Member of Holdings. See "Description of Units --
Restrictions on Transfer" and "Description of Units -- Admission as Members."

RESTRICTIONS ON THE PAYMENT OF DIVIDENDS

15
<PAGE> 17

financial condition, capital requirements, results of operations and other
factors deemed relevant by the Company's Management Committee, including any
contractual or statutory restrictions on the Company's ability to pay dividends.
See "Dividend Policy."

FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE

Certain statements contained under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and under "Business," as well as
other statements contained in this Prospectus regarding matters that are not
historical facts are forward-looking statements. When used in this Prospectus,
the words "believes," "anticipates," "may," "expects," "estimates" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to risks, uncertainties and assumptions, including those identified
above. Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. In addition to the other risk factors
set forth above, such factors include economic conditions generally and in the
Company's principal markets, competitive practices in the pork production and
processing industries, the impact of consolidation and cost containment in the
pork production and processing industries, the impact of current and future
laws, governmental regulations and fiscal policies affecting the Company's
industry and operations, the availability of additional capital to fund future
commitments and expansion and the cost and terms of such financing, feed
ingredient costs, disease, the occurrence of electrical outages, and the
occurrence of natural disasters and other occurrences beyond the control of the
Company. Given these uncertainties, prospective investors are cautioned not to
place undue reliance on such forward-looking statements. The Company undertakes
no obligation to update any such factors or to publicly announce the result of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of
Securities by the Selling Securityholders.

DIVIDEND POLICY

The Company does not anticipate paying cash dividends in the foreseeable
future. The Company's current policy is to retain earnings to provide funds for
the operation and expansion of its business and for the repayment of
indebtedness. Any determination in the future to pay dividends will depend upon
the Company's financial condition, capital requirements, results of operations
and other factors deemed relevant by the Company's Management Committee,
including any contractual or statutory restrictions on the Company's ability to
pay dividends.

16
<PAGE> 18

SELECTED CONSOLIDATED FINANCIAL DATA

Set forth below are selected historical consolidated financial information
of the Company and its predecessor. The historical consolidated Statement of
Operations and Balance Sheet Data of the Company for the period from September
17, 1996 (reorganization date) to December 31, 1996 have been derived from the
Company's audited consolidated financial statements for that period. The
historical Statement of Operations and Balance Sheet Data of the predecessor for
each of the four years in the period ended December 31, 1995 and for the period
from January 1, 1996 through September 16, 1996 have been derived from its
audited consolidated financial statements for those periods. The pro forma
consolidated Statement of Operations Data for the year ended December 31, 1996
has been derived from the Unaudited Pro Forma Condensed Consolidated Statement
of Operations for that period and, in the opinion of the Company, include all
adjustments necessary for a fair and consistent presentation of said
information. The information presented below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated financial statements and notes thereto and
other financial information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
PREDECESSOR (1) THE COMPANY (1)
----------------------------------------- -------------------------------
PERIOD FROM
PERIOD FROM SEPTEMBER 17, PRO FORMA
YEAR ENDED DECEMBER 31, JANUARY 1, 1996 1996 YEAR ENDED
----------------------------------------- TO SEPTEMBER 16, TO DECEMBER 31, DECEMBER 31,
1992 1993(2) 1994 1995 1996 1996 1996(3)
---- ------- ---- ---- ---------------- --------------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................ $ 9,007 $ 86,786 $132,816 $ 194,491 $ 194,925 $ 91,233 $286,158
Cost of goods sold............... 9,189 84,018 140,277 192,837 172,403 65,315 222,401
------- -------- -------- --------- -------- ------- --------
Gross profit (loss).............. (182) 2,768 (7,461) 1,654 22,522 25,918 63,757
General and administrative
expenses........................ 4,588 6,288 9,985 11,445 6,916 4,130 10,609
Other losses..................... -- -- -- 33,346(4) -- -- --
------- -------- -------- --------- -------- ------- --------
Operating income (loss).......... (4,770) (3,520) (17,446) (43,137) 15,606 21,788 53,148
Interest expense................. (1,487) (13,200) (36,051) (61,676) (32,252) (4,628) (18,113)
Interest income.................. 612 1,458 1,842 3,296 411 261 673
------- -------- -------- --------- -------- ------- --------
Income (loss) before
reorganization items, income
taxes and extraordinary items... (5,645) (15,262) (51,655) (101,517) (16,235) 17,421 35,708
Reorganization items............. -- -- -- -- (188,891)(5) -- --
------- -------- -------- --------- -------- ------- --------
Income (loss) before income taxes
and extraordinary items......... (5,645) (15,262) (51,655) (101,517) (205,126) 17,421 35,708
Income tax expense............... 170 550 1,425 2,525 1,940 6,965 14,284
------- -------- -------- --------- -------- ------- --------
Income (loss) before
extraordinary items............. (5,815) (15,812) (53,080) (104,042) (207,066) 10,456 21,424
Extraordinary gain (loss) on debt
retirement/ forgiveness......... -- -- -- (9,653) 250,467(5) -- --
------- -------- -------- --------- -------- ------- --------
Net income (loss)................ $(5,815) $(15,812) $(53,080) $(113,695) $ 43,401 $ 10,456 $ 21,424
======= ======== ======== ========= ======== ======= ========
Per common unit(6):
Net income (loss) before
extraordinary items........... $ (1.09) $ (3.65) $ (9.06) $ (10.77) $ (20.34) $ 1.05 $ 2.14
Net income (loss)............... (1.09) (3.65) (9.06) (11.71) 3.73 1.05 2.14
Weighted average common units
outstanding..................... 5,714,286 5,714,286 6,507,734 10,229,878 10,405,037 10,000,000 10,000,000
Ratio (deficiency) of earnings to
fixed charges(7)................ $(6,468) $(22,115) $(63,408) $(108,886) $ (20,779) 4.70 2.94
BALANCE SHEET DATA (AT END OF
PERIOD):
Net property, plant, equipment
and breeding stock.............. $52,899 $159,407 $408,884 $ 402,326 -- $185,611 --
Total assets..................... 78,754 276,854 654,232 514,046 -- 305,499 --
Long-term debt, less current
portion......................... 33,256 222,019 537,712 479,996 -- 149,419 --
Redeemable capital............... 34,501 43,210 117,388 54,671 -- -- --
Members' or common partners'
equity, excluding redeemable
portion......................... 2,433 (6,945) (22,926) (55,740) -- 135,529 --
</TABLE>

(4) In 1995, the Company incurred losses from the suspension of an expansion
project and disposal of certain other business assets. See Note 10 to
consolidated financial statements.

(6) Net income or loss per common unit is determined by the net income or loss
attributable to common equity divided by the weighted average number of
common units outstanding during each period. The effect of options and
warrants to acquire common units are not included in the weighted average
units outstanding since the effect is antidilutive or less than 3% dilutive
during each period presented.

(7) For purposes of calculating the ratio or deficiency of earnings to fixed
charges, earnings consist of net income or loss plus fixed charges charged
against earnings. Fixed charges consist of interest expense (including
amortization of financing costs), the estimated portion of rental expense
attributable to interest costs, and, for Predecessor periods, accretion of
redeemable preferred limited partnership interests.

17
<PAGE> 19

UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PREDECESSOR COMPANY
--------------- -------------
PERIOD FROM PERIOD FROM
JANUARY 1, 1996 SEPTEMBER 17, PRO FORMA
THROUGH 1996 THROUGH YEAR ENDED
SEPTEMBER 16, DECEMBER 31, PRO FORMA DECEMBER 31,
1996 1996 ADJUSTMENTS 1996
--------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales......................... $ 194,925,320 $91,233,170 $ -- $286,158,490
Cost of goods sold................ 172,402,789 65,314,947 (15,316,356)(1) 222,401,380
------------- ----------- ------------- ------------
Gross profit...................... 22,522,531 25,918,223 15,316,356 63,757,110
General and administrative
expenses........................ 6,916,255 4,130,038 (437,016)(2) 10,609,277
------------- ----------- ------------- ------------
Income from operations............ 15,606,276 21,788,185 15,753,372 53,147,833
Other income (expense):
Interest income................. 411,770 260,922 -- 672,692
Interest expense................ (32,252,421) (4,627,824) 18,767,718(3) (18,112,527)
------------- ----------- ------------- ------------
(31,840,651) (4,366,902) 18,767,718 (17,439,835)
------------- ----------- ------------- ------------
Income (loss) before
reorganization items, income
taxes and extraordinary item.... (16,234,375) 17,421,283 34,521,090 35,707,998
Reorganization items:
Revaluation adjustments of net
assets....................... 180,357,538 -- (180,357,538)(4) --
Professional fees and
expenses..................... 8,533,888 -- (8,533,888)(4) --
------------- ----------- ------------- ------------
Income (loss) before income taxes
and extraordinary item.......... (205,125,801) 17,421,283 223,412,516 35,707,998
Income tax expense................ 1,940,000 6,965,000 5,379,000(5) 14,284,000
------------- ----------- ------------- ------------
Income (loss) before extraordinary
items........................... (207,065,801) 10,456,283 218,033,516 21,423,998
Extraordinary gain on debt
forgiveness..................... 250,467,111 -- (250,467,111)(4) --
------------- ----------- ------------- ------------
Net income........................ $ 43,401,310 $10,456,283 $ (32,433,595) $ 21,423,998
============= =========== ============= ============
</TABLE>

18
<PAGE> 20

NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS

The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 1996 is presented as if the 1996 Reorganization
(described in Note 1 to the consolidated financial statements) had occurred as
of January 1, 1996. The pro forma financial statement is based upon the
historical consolidated financial statements of the Predecessor for the period
from January 1, 1996 through September 16, 1996 and of the Company for the
period from September 17, 1996 to December 31, 1996. The unaudited pro forma
condensed consolidated statement of operations should be read in conjunction
with the consolidated financial statements of the Predecessor and the Company,
and the respective notes thereto, included elsewhere in this Prospectus. The pro
forma financial information does not purport to represent the actual
consolidated results of operations that would have been reported if the
reorganization had occurred as of January 1, 1996, or to represent consolidated
results of operations to be expected in any future periods.

A description of pro forma adjustments is as follows:

(1) Adjustment to depreciation expense to reflect the reduction in
cost basis of property, plant, equipment and breeding stock due to the
revaluation of such assets in the 1996 Reorganization, in accordance with
fresh-start reporting.

(2) Adjustment to amortization of goodwill and deferred organization
costs which were eliminated under fresh-start reporting.

(3) Adjustment to reduce interest expense based on the revised debt
structure of the reorganized company.

(4) Adjustment to eliminate the reorganization items and extraordinary
gain recognized during the pre-reorganization period of Predecessor.

(5) Adjustment to recognize the applicable income tax expense based on
pro forma pre-tax income.

19
<PAGE> 21

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the financial
statements, including the notes thereto, and the other financial information
appearing elsewhere in this Prospectus.

INTRODUCTION

The Company underwent a legal and financial restructuring in connection
with a Chapter 11 bankruptcy filing in July 1996. PSF Finance L.P. ("Finance")
was merged into Holdings which transferred the net assets it received from
Finance to PSF. Premium Standard Farms, Inc. ("Farms") transferred all of its
net assets to PSF in satisfaction of debt. Farms and Finance are collectively
referred to as the "Predecessor" and Holdings and PSF are collectively referred
to as the "Successor." The long term debt and equity of the Successor was also
combined and substantially reorganized.

The Successor's business operations are substantially the same as the
Predecessor's.

GENERAL

During the past three years, the Company experienced rapid growth followed
by a leveling off of construction of hog production units. In September 1994,
the Company, upon completion of a live hog processing facility in Milan,
Missouri became a fully vertically integrated processor of pork and pork
products. The Company also converted its Mariah Operation (disposed of at the
end of 1995) into a dedicated further processing facility. Since the start-up of
the Company's Milan processing plant and the conversion of the Mariah facility
in the fourth quarter of 1994, the company has been selling fresh pork produced
solely from its own hogs at the Milan facility. During 1995, the company put in
place several value added processes, including ham boning, loin boning for
export customers, casings processing and other byproduct saving processes. These
processes increased revenues per head by over $2 per head from the beginning of
1995 until the end of 1995. During 1996, with the successful servicing of a
major distributor in Japan, the plant continued to increase value-added volumes,
prices and margins, adding over $3 per head on average for 1996. Operating days,
hours and speeds increased during 1996, with annual slaughter increasing over
27% from 1995 to 1996.

For the fiscal years 1995 and 1996, approximately 80% of the hogs produced
by the Company were being processed at Milan and approximately 20% were being
sold live to third parties. As the number of hogs produced by the company
increases, the proportion of the company's hogs processed at the Milan facility
is likely to begin to decrease until a second shift is added. No assurances can
be given however, that the necessary staffing can be obtained, or that the
necessary changes to the physical plant can be made in a cost effective manner
to achieve two shift operation.

The Company's historical financial and operating performance has also been
affected by the rapid expansion of its hog production operations, including the
acquisition of the hog production operations in Perico, Texas in June 1994.
Since 1990, PSF has grown from a production base of 3,300 sows to a production
base of 106,821 sows as of December 28, 1996.

Until recently, due to the lead time between adding production capacity in
the form of sows and producing fully grown hogs, the Company's revenues have
lagged behind the growth in its sow base. Until 1996, the cost of operating the
Company's new units prior to producing animals had a substantial impact on the
Company's profitability. In 1996, the Company reached "steady state", a term
which means startup has ended and market hogs are being produced at or near
capacity from existing units.

Since 1994, the Company's sow herd productivity and feed efficiency, the
primary measures by which the Company evaluates operating performance, have
fluctuated within a relatively narrow range. Sow productivity is measured by the
number of pigs which reach 45-50 lbs. per sow per year and is a measure of the
performance of the Company's breeding, gestation, farrowing, and nursery
operations. Changes in sow productivity can have a material effect on
profitability and margins because a substantial portion of the costs of
operating a sow unit are either fixed or related to the number of sows. Sow
productivity is influenced by a number of factors including the rapid growth of
production, sow base and number of employees, the health

20
<PAGE> 22

status of the company's hogs, and their genetics and environment. The feed
conversion ratio is pounds of feed consumed to produce a pound of live weight in
the Company's finishing units and is a measure of the performance of the
company's hog finishing operations. Changes in feed efficiency effect per head
feed consumption and hence the cost of feed, the primary cost component in the
Company's animals.

Additionally, the Company's profitability is to a large degree influenced
by the selling price of its products and the prices it pays for its feed
ingredients. Historically, the Company's revenues have been, and in the future
will continue to be, driven by the prices paid by its customers for fresh and
processed pork products. The selling prices for the Company's products and the
price of its feed ingredients are determined by constantly changing market
forces of supply and demand over which the Company has little or no control.

As a result of the changing nature of the Company's business, the Company's
rapid growth and the market forces to which the Company is subject, revenues,
costs and margins have changed significantly over time and are not necessarily
indicative of future performance.

Although processed pork prices have been less volatile than those for live
hogs, prices for fresh pork, prior to any price premiums, have tracked closely
with live hog prices. Hog prices were extremely low in late 1994, recovered
somewhat during 1995, and were very high in 1996. The Company endeavors to
receive price premiums for its fresh pork by providing higher quality products
than are generally available from other processors and through exports, but
there can be no assurances that the Company can be successful in this goal.

As of December 28, 1996, the price for a live hog on the Iowa/Southern
Minnesota market prior to any price premiums was $54.70 per hundredweight, well
above seasonal averages of January 1980 through December 1994 of $47 per
hundredweight. This compares with $44 per hundredweight on December 31, 1995 and
$28 per hundredweight in December 1994.

RECENT DEVELOPMENTS

The Company commenced operations on September 17, 1996 by merging Finance
into Holdings, which then transferred the net assets it received from Finance to
PSF. Farms transferred all of its net assets to PSF in satisfaction of debt. The
Predecessor was then dissolved and all Predecessor operations were continued by
the Company.

Additionally, the holders of Finance's common general and limited partner
units received Warrants entitling the holders to purchase 2,048,192 LLC Units
for $45 per LLC Unit. Warrants for 1,621,044 LLC Units become exercisable on
January 1, 2000 and the balance became exercisable on September 17, 1996. All
unexercised Warrants expire on September 17, 2006. No separate value was
allocated to the Warrants in the Reorganization Plan.

The Company filed the Reorganization Plan under Chapter 11 with the United
States Bankruptcy Court on July 2, 1996. On September 16, 1996, the
Reorganization Plan became effective and the Company emerged from Chapter 11
effective with the beginning of business on September 17, 1996.

USE OF CONSOLIDATED FINANCIAL STATEMENTS

The Reorganization became effective on September 17, 1996. From an
accounting and legal standpoint this event resulted in the presentation of
financial information for a new legal entity (the post-Reorganization Company).
In accordance with AICPA Statement of Position 90-7 "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code" (SOP 90-7), the Company
adopted "fresh-start reporting."

21
<PAGE> 23

Accordingly, all assets and liabilities were restated to reflect their
Reorganization value at the date of the Reorganization. Accordingly, the
Company's Consolidated Balance Sheets at and after September 17, 1996 and its
Consolidated Financial Statements for periods after September 17, 1996 may not
be comparable to the Consolidated Financial Statements for prior periods
included elsewhere in this Prospectus.

The following discussion and certain of the financial information contained
elsewhere in this Prospectus are based on the consolidated operations of the
Predecessor in Fiscal 1994, Fiscal 1995, and Fiscal 1996 prior to the
restructuring on September 16, 1996. After September 16, 1996, the consolidated
statements of the Successor entities are presented.

RESULTS OF OPERATIONS

For purposes of the following presentation, the discussion of operations
during Fiscal 1996 is based on the combined actual operations of the Predecessor
(from January 1 through September 16, 1996) and Successor (from September 17
through December 31, 1996) during such fiscal year and does not include pro
forma figures.

FISCAL 1996 COMPARED WITH FISCAL 1995

During the year ended December 28, 1996, the Company increased the number
of sows it had in production to 106,821 from 104,683 at December 31, 1995. The
Company's market hog production increased to 1,808,306 in 1996 from 1,415,416 in
1995. Hogs processed in the Milan processing facility increased to 1,449,573 in
1996 from 1,134,868 in 1995.

REVENUES. The Company's net sales increased to $286.2 million for 1996 from
$194.5 million in 1995. Net sales attributable to pork processing increased to
$236.2 million (82.5% of net sales) for 1996 from $158.1 million (81.3% of net
sales) for 1995. Net sales attributable to live hog sales increased to $50.0
million (17.5% of net sales) for 1996 from $36.4 million (18.7.% of net sales)
in 1995. The increase in net sales from live hog sales was attributable to
increased overall hog production in 1996, which offset the reducing effect of
increased slaughter levels at Milan, and to higher average market prices in 1996
compared to 1995. In 1996, 358,733 hogs were sold in outside markets (19.8% of
hogs produced) compared to 275,810 sold in 1995. (19.5% of hogs produced). The
number 2 cutout in 1996 averaged $72.41 per dressed hundredweight and in 1995
averaged $59.90 per dressed hundredweight. Live hog prices averaged $53.64 per
live hundredweight in 1996 and averaged $42.62 per live hundredweight in 1995.

Mariah sales were $48.0 million in 1995. Because the Mariah operation was
sold at the end of 1995, there were no Mariah sales in 1996.

The capacity utilization at the Milan facility increased from approximately
80% at the end of 1995 to approximately 90% at the end of 1996.

OPERATING COSTS. The Company's total operating costs, excluding
depreciation and amortization, increased to $221.3 million for 1996 from $168.7
million for 1995. Operating costs attributable to pork processing decreased to
$32.0 million (14.4% of operating costs) in 1996 from $40.5 million (24.0% of
operating costs) for fiscal year 1995. The decrease in operating costs
attributable to pork processing resulted from the disposal of the Mariah
facility. Operating cost attributable to Mariah was $11.5 million in 1995. Milan
operating costs increased to $32.0 million in 1996 from $26.6 million in 1995
due to the Milan processing facility's increased slaughter from 1,134,868 in
1995 to 1,449,573 in 1996, and to increasing costs associated with further
value-added processes. See "-- Introduction -- General."

Operating costs attributable to hog production increased to $189.3 million
(85.6% of operating costs) for 1996 from $128.2 million (76% of operating cost)
for 1995. The increase in operating costs reflects the Company's growth and
other factors described below. The Company's hog production operating costs,
excluding depreciation are primarily composed of feed, other operating, selling,
general and administrative expenses. Total feed costs increased to $149.5
million in 1996 from $98.8 million in 1995. This increase was due partly to
increased production in 1996, but mainly to record high feed grain prices in
1996. The average

22
<PAGE> 24

price for corn in 1996 was $4.15 per bushel in Missouri and $4.27 per bushel in
Texas, compared to $2.61 per bushel in Missouri and $3.23 per bushel in Texas in
1995.

Other farm operating costs, excluding feed, increased to $39.9 million in
1996 from $29.4 million in 1995. This increase primarily reflects growth in the
Company's operations. The Company's feed and other operating cost are affected
to a substantial degree by the productivity of its sows, measured by the number
of pigs placed per sow per year, defined by the number of animals per sow that
reach 45-50 lbs. live weight per year. The Company's pigs placed per sow per
year decreased to 19.28 for 1996 from 19.70 in 1995, primarily because of issues
related to high summer heat and some outbreaks of the PRRS virus.

NET INCOME (LOSS). For 1996, income before reorganization, income taxes and
extraordinary items, was $1.2 million, compared to a loss of $101.5 million in
1995. This change was primarily due to higher market prices in 1996, but also
due to decreased interest, depreciation and amortization resulting from
restructuring. Net interest expense decreased to $36.2 million in 1996 from
$58.4 million in 1995. Depreciation and amortization decreased to $27.4 million
in 1996 from $35.6 million in 1995. Extraordinary and non-recurring losses in
1995 included a loss on the suspension of the Texas Facilities project of $28.1
million, a loss on the disposal of a business unit of $5.2 million, and a loss
on extraordinary debt retirement of $9.7 million.

The restructuring in 1996 resulted in an asset write down of $180.4
million, restructuring fees and expenses of $8.5 million and an extraordinary
gain on debt retirement of $250.4 million. After the effects of the
restructuring items, and after the income tax expense of $8.9 million, net
income in 1996 was $53.9 million.

FISCAL 1995 COMPARED WITH FISCAL 1994

During the year ended December 31, 1995, the Company increased the number
of sows in production to 104,700 from 102,600 at December 31, 1994. The
Company's hog production increased to 1,415,400 in 1995 from 752,536 in 1994.
Hogs processed in the Milan processing facility increased to 1,134,868 in 1995
from 202,367 in 1994.

REVENUES. The Company's net sales increased to $194.5 million for 1995 from
$132.8 million in 1994. Net sales attributable to pork processing increased to
$158.1 million (81.30% of net sales) for 1995 from $85.7 million (64.5% of net
sales) for 1994. Net sales attributable to market hog sales decreased to $36.4
million (18.70% of net sales) for 1995 from $47.1 million (35.5% of net sales)
in 1994. The decrease in net sales from market hog sales was attributable to the
increase in hogs slaughtered in Milan to 1,134,868 in 1995 (80.2% of hog
production) from 202,367 in 1994, (26.9% of hog production), leaving 280,532
hogs (19.8% of hogs produced) for sale on the outside market in 1995 and 550,169
(73.1% of hogs produced) in 1994. Mariah, a processing division sold in 1996,
contributed $48.0 million to sales in 1995, and $74.0 million in 1994, a decline
caused by discontinuation of its slaughter operations in September 1994. The
Milan processing facility contributed $108.7 million to net sales for 1995 and
$9.6 million for 1994. The Milan facility began operations in late September
1994.

When comparing 1995 to 1994, overall revenues were also impacted by market
prices. Live hog prices averaged $42.62 per live hundredweight in 1995 and
averaged $40.34 per live hundredweight in 1994. The number 2 cutout in 1995
averaged $59.90 per dressed hundredweight and in 1994 averaged $57.28 per
dressed hundredweight.

OPERATING COSTS. The Company's total operating costs, excluding
depreciation and amortization, increased to $168.7 million for 1995 from $128.7
million for 1994. Operating costs attributable to pork processing decreased to
$40.5 million in 1995 (24.0% of operating costs) from $71.6 million (55.6% of
operating costs) for 1994. The decrease in operating costs attributable to pork
processing resulted from the fact that the Mariah facility stopped purchasing
live hogs from third parties in September 1994, but instead received fresh pork
from the Milan facility in 1995. The cost of live hogs purchased in 1994 was
$48.0 million. The decline in operating costs due to third party hog purchases
was offset by an increase in operating expenses at the Milan facility. Operating
expenses for the full year of 1995 were $26.6 million versus $3.9 million for
the startup period September 1994 through December 1994.

23
<PAGE> 25

Operating costs attributable to hog production increased to $128.2 million
(76.0% of operating costs) for 1995 from $57.2 million (44.41% of operating
cost) for 1994. The increase in operating costs reflects the Company's growth
and other factors described below. Operating costs, excluding depreciation, are
primarily composed of feed, and other operating, selling, general and
administrative expenses. Included in the Company's operating costs are the costs
associated with growing animals placed into inventory but not yet sold. These
costs are capitalized into inventory and netted against operating costs to
determine operating expenses for the period. Total farm inventory increased to
$66.5 million at December 31, 1995, from $43.7 million at December 31, 1994 as
the Company's inventory grew with the increased sow base. Total feed costs
increased to $98.8 million in fiscal year 1995 from $41.5 million in fiscal year
1994. The increase was mainly due to increased production in 1995.

Other farm operating costs, excluding feed, increased to $29.4 million in
1995 from $15.7 million in 1994. This increase primarily reflects growth in the
Company's operations and full year compared to part year operations in Texas.

The Company's feed and other operating cost are affected to a substantial
degree by the productivity of its sows, measured by the number of pigs placed
per sow per year, defined by the number of animals per sow that reach 45-50 lbs.
live weight per year. The Company's pigs placed per sow per year changed to
19.70 for 1995 from 20.60 in 1994. Selling, general and administrative costs
increased to $11.4 million for 1995, compared to $10.0 million for 1994,
primarily due to increased management and sales expenses associated with the
growth of the Company, and a one time accrual for severance arrangements in
connection with management resignations.

NET LOSSES. Net losses for 1995 were $113.7 million, compared to a net loss
of $53.1 million in 1994. The increase is mainly a result of increases in
depreciation and amortization, interest, and extraordinary losses and
non-recurring items. Gross Profit (net sales less cost of goods sold) in 1995
was $1.7 million, compared to a loss of $7.5 million in 1994, reflecting
improvement in market prices, and higher volumes associated with growth.
Depreciation and amortization in 1995 was $35.6 million and in 1994 it was $21.5
million. The increase is due to growth in the Company's fixed asset base, and
incurring full year depreciation for assets acquired mid-year in 1994. Interest
expense increased to $58.4 million in 1995 from $34.2 million in 1994 because of
the Company's increased borrowings. Extraordinary and non-recurring losses in
1995 included a loss on the suspension of the Texas Facilities project of $28.1
million, a loss on the disposal of a business unit of $5.2 million, and a loss
on extraordinary debt retirement of $9.7 million.

SEASONALITY

Prices of certain of the Company's pork products change in part based on
seasonal consumption and production patterns. For example, demand for fresh hams
increases during the periods leading up to the Christmas and Easter holiday
seasons. In general, demand for the Company's products tends to be the greatest
during the first and fourth quarters due to consumers' tendency to eat greater
amounts of meat during colder periods of the year. The price effect of this
increased demand is offset by the increased supply of pork products during the
fourth quarter. Live hogs are generally in greater supply during the fourth
quarter than during any other part of the year. The larger supply of hogs in the
fourth quarter typically results in lower live hog prices, which typically are
not fully offset by higher meat prices, even though demand is strong in the
fourth quarter. See "Business -- Business and Industry Overview -- Pork and Hog
Supply." In general, the Company does not expect a material seasonal impact on
revenues.

Costs of hog production are, to some extent, affected by seasonal factors.
During the warm summer months, feed consumption falls and efficiency worsens,
resulting in higher feed conversion ratios. During the winter, utility costs,
primarily for propane, rise due to increased heating needs.

LIQUIDITY AND CAPITAL RESOURCES

On September 17, 1996, the Successor emerged with a new bank credit
agreement, new debt and a new equity structure.

24
<PAGE> 26

The Credit Agreement incorporates a term loan of $30.0 million and
revolving loans not to exceed $60.0 million. Unused available borrowings were
$57.0 million for the period September 17 through December 28, 1996.

As a result of the Reorganization, improvements in live hog and pork
prices, and slower rate of growth, the Successor's cash flows are meeting its
debt service obligations. See the following table. (in millions).

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Net cash provided (used) by operating activities.... $ (33.8) $ (26.6) $ 27.4
Net cash (used) in investing activities............. $(282.1) $ (55.2) $ (2.4)
Net cash provided (used) by financing activities.... $ 382.2 $ (61.0) $(13.4)
Net increase (decrease) in cash and cash
equivalents....................................... $ 66.3 $(142.8) $ 11.6
</TABLE>

The Company has projected non-expansion capital expenditures of $7 million
in 1997 plus an additional $5 million to expand production facilities on the
Texas properties. Continued future expansion will be evaluated based on market
conditions and economic forecasts. Management believes that cash flow from
operations and available borrowing capacity will provide sufficient cash for
operations and anticipated expansion for the foreseeable future.

IMPACT OF INFLATION

The impact of inflation on the Company's operations is primarily a function
of pork and hog and feed commodity prices. These prices are subject to many
forces, including those of the marketplace and inflation. The Company does not
believe inflation played a major role in either the cost of production or the
selling price of its products during Fiscal 1994, Fiscal 1995, or Fiscal 1996.

HEDGING ACTIVITIES

In order to minimize the risk of market fluctuations in the price of corn
and soybean meal, hog and meat prices, the Company from time to time enters into
forward fixed price contracts, forward price adjustable contracts, and purchases
and sells options and futures contracts on a recognized futures exchange. These
contracts, options and futures are intended to fulfill or hedge the Company's
feed ingredient requirements or to lock in revenues at or above planned levels.
The Company has strict policies against and does not engage in speculative
commodity price hedging transactions. At December 28, 1996, the Company had
forward fixed price contracts with an aggregate exercise price of $10.8 million
and additional futures contracts used for hedging the Company's feed ingredient
costs and meat revenues with an aggregate exercise price of $3.6 million. These
contracts, options and futures are used to establish price ranges for the
Company's forward feed ingredient requirements and meat revenues, but also may
limit the Company's ability to benefit from price decreases (feed costs) or
increases (meat revenues). Historically, the impact of hedging gains and losses
has been insignificant compared with the total cost of hogs, feed, pork bellies,
propane and natural gas.

REGULATION AND ENVIRONMENTAL MATTERS

The Company is subject to various federal, state and local laws and
regulations, particularly in the health and environmental areas administered by
the Occupational Safety and Health Administration, the United States Department
of Agriculture ("USDA"), the Food and Drug Administration ("FDA"), the
Environmental Protection Agency and corresponding state agencies such as the
Missouri Department of Natural Resources ("MDNR") and the Texas Natural
Resources Conservation Commission. The Company anticipates increased regulation
by the USDA concerning food safety as well as by the FDA regarding the use of
medication in feed.

Current environmental regulations impose standards and limitations on the
Company's waste treatment lagoons, water treatment facilities and new
construction projects. Animal waste from the Company's hog production facilities
is anaerobically digested (using lagoons in Missouri and solid separators and
aeration tanks in Texas) and the resulting fluids are then applied to
surrounding farm land.

25
<PAGE> 27

In 1995, there were five alleged spills of hog waste into public waters in
the Missouri operations, allegedly in violation of the Missouri Clean Water Law
and regulations promulgated thereunder. Pursuant to the Settlement Agreement and
Consent Order dated January 29, 1996, between MDNR and the Company's predecessor
(the "Settlement Agreement"), which addressed all of the five alleged spills,
the Company's predecessor paid the specified penalties and compensatory damages,
and agreed to certain remedial actions, subject to review and approval by MDNR.
In connection with the Reorganization, the Company assumed all obligations under
the Settlement Agreement.

The Company believes that the cost of achieving and maintaining compliance
with these health and environmental laws and regulations will not have a
material adverse effect on the Company's business, including the Texas
Facilities, or financial position. However, future events, such as changes in
existing laws and regulations or enforcement policies, could give rise to
additional compliance costs which could have a material adverse effect on the
Company's financial condition. See "-- Litigation."

PSF received a letter dated April 1, 1997 which serves as notice of intent
of Citizens Legal Environmental Action Network, Inc., a Missouri not-for-profit
corporation ("CLEAN"), to bring an action against the United States
Environmental Protection Agency ("EPA") and PSF, pursuant to Title 33 U.S.C.
sec.1365, the citizen suit provision of the Clean Water Act, and Title 42 U.S.C.
sec.7604, the citizen suit provision of the Clean Air Act, for alleged
violations of NPDES permits and of the Clean Air Act. This notice is required to
be given 60 days prior to commencing an action under the Clean Water Act, and
the Clean Air Act and, no action has been commenced to date. The Company
believes the allegations are without merit and intends to vigorously defend any
such suit that is brought. However, there can be no assurance that the Company
would prevail in any such suit.

26
<PAGE> 28

BUSINESS

OVERVIEW

The Company's products include fresh pork. The Company currently markets
these products to a variety of wholesale and retail customers in the U.S. and
abroad. The Company's fresh pork, which includes loins, tenderloins, hams,
butts, picnics, bellies and other products are sold to supermarket chains, meat
distributors, further processors, food service companies, institutional food
customers and the export market. The Company's operations also include the sale
of live hogs, and the sale of processed pork products in the variety meat
industry, the feed processing industry and the pet food industry.

INDUSTRY OVERVIEW

Pork and Hog Prices

Prior to the start-up of the Company's Milan pork processing plant in
September 1994, the Company's revenues and profitability were primarily related
to the production and sale of hogs and therefore driven by the market price of
live hogs. Currently, the Company's revenues and profitability are primarily
driven by the sale of pork and pork products. However, to assure an adequate
supply of animals at desired weights for the processing facility, it is the
Company's present intention to produce 10% to 15% more hogs than are needed for
processing. Additionally, as production is expanded, the Company will be unable
to process the additional hogs unless and until the Company expands the capacity
of its processing operations. All these additional hogs will be sold to other
processors.

The marketing of pork and pork products, although based on customer
relationships and/or supply contracts, can be characterized by prices which
change from day to day based on seasonal consumption patterns and overall supply
and demand for pork and other meats. The market price of live hogs is related to
the price of pork and pork products as well as other factors, particularly the
short-term supply of hogs available to processors relative to the processors'
short-term demand for those hogs required to meet consumer demand. Because
historically consumer demand for and consumption of pork has been relatively
stable, while production capacity and supply of hogs tends to vary based on
production decisions of individual farmers, there have been periods of time in
which hog supply has been either in excess of or in deficit to processors'
demand for animals. As a result, prices for hogs have fluctuated either up or
down, often relatively independent of short-term changes in pork prices.
Generally speaking, in periods of excess supply of hogs, the profitability of
hog producers is reduced while that of processors is increased due to the
reduction in input costs. Conversely, in periods of insufficient supply of hogs,
the profitability of hog producers generally increases while that of processors
decreases. See "Risk Factors -- Sensitivity to Pork and Hog Prices."

Over time, hog production capacity adjusts to reflect producers' expected
profitability. In periods of high hog prices, producers tend to expand their
production capacity by adding additional sows to their herds, often by keeping
back marketable females, which further constrains short-term supply. In periods
of low hog prices,

27
<PAGE> 29

producers with high production costs tend to liquidate or reduce their herds by
selling their animals, including sows, which further increases short-term
supply. Because (i) the hog production industry is highly fragmented and each
producer tends to react individually relative to immediate market conditions by
either adding or reducing capacity and (ii) the lead times for changes in
capacity to be reflected in animal production (due to growing time) are
relatively long, supply tends to accumulate and results in larger and more
severe supply and price disequilibriums. Nevertheless, on average over time hog
production has tended to track consumer demand.

Pork Demand

Consumer demand for various protein sources including pork, beef, chicken,
fish and other meats is driven by consumer preferences and the relative prices
and quality of the available products. Over the last 15 to 20 years, chicken
producers have enhanced the quality and consistency of their product and as
consumers have increasingly chosen healthier foods, chicken consumption has
steadily increased. This increase has been reflected in a corresponding decline
in beef consumption.

Historically, U.S. consumption of pork has been relatively constant.
Nevertheless, management believes that as hog production becomes more
sophisticated and the overall quality, leanness and consistency of pork
increases, consumer demand for pork will be enhanced. Worldwide, pork is
consumed more than any other meat protein source. Particularly in high growth
areas of the world such as Asia and Latin America, pork is a highly favored
meat. Management believes that if per capita income increases in these and other
developing countries, the amount of per capita meat consumed will also increase.

Pork Supply -- Processors

Despite the level of concentration in the U.S. pork processing industry,
with the top ten processors representing a substantial majority of total
federally inspected industry capacity, the industry is highly competitive.
Although customers in the retail, institutional, further processing and export
markets have different product specifications and service requirements,
processors generally compete on the basis of the price and quality of their
product. Overall pork processing operations can be characterized primarily by:
(i) high fixed costs primarily related to the capital required to build a plant
and by labor, energy and other operating costs; and (ii) large daily
requirements for hogs to process. In order to operate profitably, processors
attempt to acquire animals to process at the lowest possible costs and to
minimize processing costs by maximizing plant operating rates.

The processing industry is geographically concentrated around the hog
producing regions of the U.S., particularly the Midwest and portions of the
Southeast. Due to the high degree of fragmentation of the hog production
industry, processing operations are extremely large relative to the producers
which supply them with animals. As a result, non-integrated processors, on a
daily basis, must acquire each day's supply of animals through large procurement
operations which include an extensive network of buyers and buying stations.
Since many modern plants process in excess of 10,000 animals per day and the
typical producer produces, on average three to five animals per day, processors
typically process animals from a large number of suppliers, many of whom use
varying genetics, feeding programs and animal husbandry methods. Management
believes that this dichotomy between the animal requirements of processors and
the fragmentation and variation of animal production makes it relatively
difficult for non-integrated pork processors to produce consistent, high quality
products.

Pork Supply -- Hog Producers

The hog production industry is highly fragmented and can be characterized
by large variations in cost of production and quality of animal produced.
Although the number and size of large, sophisticated producers such as the
Company has increased, a substantial majority of U.S. producers had one-time
inventory on hand of fewer than 1,000 hogs in 1995.

In many hog operations, the hogs are kept outdoors in open lots or in less
sophisticated buildings, bred in an unscientific manner in which they may be
subject to higher disease and death risk, and grown on low-cost

28
<PAGE> 30

feed. As a result, these operations generally are characterized by fewer pigs
per sow per year, higher feed-to-gain conversion ratios, higher costs of
production, lower quality and less consistent pigs brought to market. In
addition, the effects of temperature and climate on breeding and farrowing
encourages outdoor hog producers to breed animals in the spring and fall. This
results in seasonal production, which may result in lower prices when these
producers bring their animals to market.

Due to a rigorous work environment, the financial risk of hog farming, and
the migration of young people to non-agricultural industries, many producers are
not attracting young people to replenish their work forces. In a bad year,
generally caused by high feed costs, low hog prices or the impact of disease or
natural disasters, these farmers, who have lower and more volatile margins, may
decide or be forced to sell all their hogs and exit the business. Due to the
large capital investment, the lead time to produce market pigs from sows and the
increased productivity of modern producers, the Company believes that many of
these farmers will not re-enter the business when conditions improve.

According to the U.S. Department of Agriculture, the number of U.S. hog
producers has declined from approximately one million in 1968 to approximately
183,000 at the end of 1995. Management believes that as the pork industry moves
to more sophisticated production techniques, the pressures on marginal producers
will intensify. In the last five to ten years a number of operations have
emerged which are based on large-scale scientific and management-intensive
production of hogs. These operations have grown rapidly. Nevertheless, the 10
largest hog producers in the United States still only accounted for
approximately 17% of the total pounds of pork produced in 1995, with the largest
single producer accounting for less than 5%.

On a worldwide basis, traditional pig-raising countries such as Denmark,
Britain, Germany and the Netherlands have established a large share of pork
production. Producers in these nations have overcome the high costs of feed in
their countries by cooperating, with government assistance, to develop good
genetic stock and also by using modern management techniques. The U.S. pork
industry has been increasingly effective in producing both heavier and leaner
hogs and, thereby, reducing the efficiency gap between the U.S. and traditional
pork producing countries. Management believes that as other countries with
greater natural competitive advantages develop efficient pig production,
particularly the U.S., Argentina, Australia and Brazil, such countries' share of
the market should increase relative to the European producers' market share.

BUSINESS STRATEGY

The Company's business strategy is to produce and market high quality pork
and pork products at low cost by combining state-of-the-art hog production with
modern and efficient pork processing, located together in geographic regions
that provide strategic access to key inputs and attractive markets for pork and
pork products. The Company's large scale hog production operations utilize
modern, efficient building designs, sophisticated genetic methods, strict
control of animal health and diet, modern animal husbandry practices, aggressive
feed cost management and well-trained employees. As a result, management
believes that premium Standard Farms generates a high volume of lean hogs of
more consistent size and quality and at a lower cost than that of the Company's
typical competitor. Management also believes that, based on cut-outs of over 2.5
million hogs, Premium Standard Farms' hogs have more lean meat per pound of live
animal, better meat quality and higher realizable product value compared to hogs
raised by the typical hog producer.

MARKETING AND CUSTOMERS

The Company primarily markets its products as fresh pork. PSF's fresh pork
is sold to: (i) certain retailers and retail distributors in the form of chilled
and boxed bone-in or boneless tenderloins, loins, hams, picnics, butts and
bone-in ribs; (ii) further processors, in the form of containers of chilled
bone-in or boneless hams and picnics, boneless Boston butts, trimmings and other
products which are used by these customers to make processed pork products;
(iii) institutional food customers in the form of large containers of chilled
bone-in or boneless loins; and (iv) export customers, particularly to Japan, to
whom the Company ships, in chilled form, boneless tenderloins, loins, hams,
shoulders and bellies for the Japanese retail market and, in frozen form, the
same cuts as well as offal items.

29
<PAGE> 31

The Company's marketing strategy is to capitalize on the quality of the
pork produced by the Company's controlled supply of high-quality, consistent
hogs and its modern processing plant, by selling its fresh and processed pork at
prices which reflect a premium to those received by competitors selling lower
quality products. Due to its management of genetics, feed and animal handling,
the Company believes that its products generally have better and more consistent
color, flavor, nutrition and consumer appeal than products made from typical
market animals. The Company's Milan pork processing facility has been designed
to enhance the realization of this quality by converting standard pork cuts to
value-added products through boning, trimming and other further processing.
Furthermore, the Company may realize additional incremental value by targeting
specialty, export and ethnic markets with undervalued cuts.

In order to take advantage of what management believes to be a
differentiated product, the Company markets its products with the Premium
Standard Certified(TM) label to retail and other customers. Currently all of the
Company's fresh pork including that sold to third parties for further processing
receives the Premium Standard Certified label. The Company intends to broaden
its labeling to include products packaged and sold by further processors who
process the Company's fresh pork.

INTERNATIONAL SALES

In 1997, PSF renewed a three year contract with Marubeni America
Corporation ("Marubeni"), to be the exclusive trading partner for the Japanese
market. PSF and Marubeni are contractually bound to increase export volumes to
Japan over the three-year period. Management believes that the Japanese market
generally has provided a premium value for the fresh and frozen further
processed pork items because of PSF's vertical integration. PSF also exports
offal items to Japan because of the generally higher value placed on certain of
these items than can be taken advantage of in the domestic market.

PSF is actively pursuing export opportunities in the Korean market. In July
1997 most of the tariffs and artificial trade barriers for fresh and frozen pork
products are scheduled to be greatly reduced and in some cases eliminated. A
principal area of focus of the Company will be to replace domestic sheet ribbed
belly sales with export single ribbed belly sales. The main risk will be a
flooding of the market by low cost competitors. PSF believes it will be able to
use its vertical integration and production flexibility to develop this market
niche.

PSF is certified to export fresh pork to the European Economic Community.
While the Company believes this market has relatively low risk, the potential
volume of the Company's sales in this market fluctuates with relative pricing in
the United States. If European prices increase or domestic prices decrease, the
Company expects the opportunity in the European Economic Community to increase
(and vice versa).

PSF also exports fresh or further processing raw materials to Canada and
Mexico.

PSF has attempted to establish relationships with domestic trading partners
to avoid market risks such as foreign currency valuation, government controls,
tariffs, duties, and unpredictable economic and political conditions. However,
certain of these and other risks are inherent in conducting international
business, and there can be no assurance that such factors will not have a
material adverse effect on the Company's business, financial condition and
results of operations in the future. See "Risk Factors -- International Sales."

PRODUCTION OPERATIONS

General

Efficient commercial hog production is a scientific and
management-intensive process that requires modern genetics, insemination
methods, feeding, animal husbandry and management methods. In Premium Standard
Farms' operations, the production of a pig takes place in five steps: breeding,
gestation, farrowing, nursery and finishing. These activities are conducted in
the Company's specially designed units for each

30
<PAGE> 32

function, all of which are centrally monitored through a computerized control
system. The lifecycle of a typical Premium Standard Farms hog is shown in the
following graphic:

<TABLE>
<C> <C> <S>
BREEDING
BREEDING - Artificial Insemination utilizes high-quality
boars, reduces genetic lag, improves biosecurity
and creates a safer work environment.
.
GESTATION
GESTATION - Pregnant sows generally gestate for 114 days
before birthing a litter.
- Nutrition, temperature, genetics and stress
levels affect the number of pigs born per litter.
.
FARROWING
FARROWING - Sow generally gives birth to 8-11 piglets per
litter.
- Sow is ready for rebreeding five days after
piglets are weaned.
- Sow produces 2.4 litters/year on average.
- Sows generally are productive for up to three
years.
.
PIGLET
PIGLET - Fed by mother until weaned at 18-21 days of age.
- Farrowing buildings are individually ventilated
and heated to provide flexibility and optimize
growing conditions.
- Sows are made comfortable to minimize movement
which could injure offspring.
- Piglets are sorted according to size and sex so
that they are better able to compete for nursing
access.
.
FEEDER PIG
FEEDER PIG - After weaning, piglets are placed in nursery for
35-42 days.
- Require highest levels of nutrition,
environmental control, and biosecurity.
.
</TABLE>

31
<PAGE> 33
FINISHING PIG
FINISHING PIG - A group of feeder pigs is placed in finishing
building at 45-50 lbs. and grown to 260 lbs.
- Efficiency affected by genetics, health,
environment, and feed formulation.
- Buildings are temperature-controlled to maintain
comfort and are fully disinfected between the
shipment of finished pigs and the arrival of new
feeder pigs.
.
PROCESSOR

Breeding. The first step in the production process is the impregnation of a
sow. Maximizing the efficiency and productivity of this step and minimizing the
time between each sow's pregnancies requires the careful monitoring of each
sow's heat (fertility) cycle, maintaining proper health and nutrition for the
sows, the use of high quality genetic material and the maintenance of
environmental conditions which maximize the likelihood of a successful
pregnancy. Also, the knowledge and the diligence of the breeding manager in
detecting heat in the individual sows, properly inseminating the sows and
determining whether the sows have become pregnant is crucial to the maximization
of productivity.

Traditionally, hog producers inseminate sows through natural mating with
live boars. In contrast, the Company, in its entire production operations, uses
artificial insemination ("AI") to enhance the health, safety, productivity and
profitability of its breeding operations. The Company's AI system is comprised
of centralized genetic improvement facilities with high quality boars and well
organized semen collection, processing and distribution systems for daily
deliveries of fresh semen to each breeding farm. The Company believes that its
AI system has a number of advantages relative to natural insemination. First, AI
substantially reduces the number of boars required to service a sow herd. This
allows the Company to improve the value of its hogs by using a smaller, more
select boar herd. Second, the use of AI, with its smaller boar herd, allows the
Company to rapidly change its male genetics to incorporate improved boars as
they are developed by the Company's genetic suppliers. Third, as the Company
develops data relating to meat quality and value from its processing operations,
it will be able to use the flexibility of its AI system to target its production
towards genetic stock which maximizes its overall profitability. Fourth, AI, by
making natural mating obsolete, eliminates a time consuming and difficult to
manage aspect of hog production. Fifth, AI reduces the incidence of sexually
transmitted and other diseases. The Company believes that because of the capital
costs, expense, economies of scale and rapid delivery required to provide fresh
semen, AI generally can be effectively implemented only by large sophisticated
producers with geographically concentrated production. See "--Other Operations
- -- Genetic Improvement Facilities."

Gestation. The gestation period of a pregnant sow averages 114 days before
birthing a litter or "farrowing." During this period, the sows must receive
adequate nutrition and careful attention to health and disease control in order
to maximize the size and health of their litters. In Premium Standard Farms'
gestation buildings, pregnant females are carefully monitored and individually
fed according to body weight. Ultrasound testing is utilized to monitor
pregnancies. The number of pigs born per litter is influenced by the sows'
nutrition and the temperature and the stress level of the environment. Premium
Standard Farms' feeding program and facilities are designed to maintain a
low-stress and temperature-controlled environment in order to enhance sow
productivity.

Farrowing. The third step in the production process is the farrowing of the
sows, in which a pregnant sow gives birth to a litter of piglets and these
piglets are nursed until weaning at 18 to 21 days of age. Successful farrowing
will result in the maximum number of live healthy piglets born to each sow in
the herd. The number of stillborn piglets is minimized by maintaining the sow's
health during gestation and providing supervision during birthing. In the
Company's farrowing units, the number of piglets which are eventually weaned
from each litter is maximized by making each sow comfortable so that it
minimizes movement which could injure

32
<PAGE> 34

its offspring, and by ensuring that all piglets are able to nurse and are kept
warm and protected from disease. Rooms in Premium Standard Farms farrowing
buildings are individually ventilated and heated to provide the flexibility to
manage each room to match the temperature requirements of the animals in that
room. Managers also ensure that all piglets are adequately nourished by
redistributing piglets to average out the litter size for each sow and sorting
piglets according to size so that they are better able to compete for nursing
access.

Nursery. Pigs that have been weaned are grown in nursery buildings until
they reach an average of approximately 45 to 50 pounds prior to being moved to
one of the finishing units. This step requires high levels of nutrition,
environmental control and minimization of disease and health risks. In Premium
Standard Farms' nursery buildings, weaned piglets are fed in environmentally
controlled rooms with pens for up to 23 animals. Pigs are kept with others of
the same size and gender to ensure each pig has an optimal chance to quickly
grow to feeder size and to increase the consistency of the size and weight of
each lot of animals at the end of the growing process.

Finishing. In the finishing process, feeder pigs are grown from 45 to 50
pounds to their typical finished weight of 260 pounds. In this phase each pig
consumes a large amount of grain. Efficiency in finishing operations is affected
by the health and environment of the pigs and the formulation of the feed. These
factors, as well as the genetics of the pig, can have a substantial impact on
the feed-to-gain conversion ratio (the pounds of feed required to add a pound of
weight) and the average daily gain (the average weight gained per day). The
finishing buildings are temperature-controlled to keep the pigs comfortable and
are completely washed and disinfected between the shipment of finished pigs and
the arrival of new feeder pigs.

Genetic Improvement Facilities

PSF uses AI technology to further improve and control key production
parameters, reduce the time necessary to incorporate new genetics, improve
product uniformity, increase protection from disease transmission and enable the
Company to implement more rapid product changes. The Company believes that its
Missouri genetic improvement facilities are sufficient to meet the semen
requirements of its 87,000 sow herd in Missouri, and the Company expects to
construct similar facilities to meet the Texas herd's semen requirements.
Management believes that the advantages provided by the use of a genetic
improvement facility and AI methods will result in a higher consistency and
quality pork and processed pork products. See "--Breeding" above.

Breeding Stock

Currently, most of the breeding stock used by the Company to stock new sow
units and to replace culled sows is purchased from the world's largest pig
genetics firm. The Company has also developed an internal "multiplier" herd,
which uses a portion of the Company's female production as a Company owned and
controlled source of sows at a substantially lower cost. This internal
multiplier herd is continually improved through the purchase of enhanced
genetics. In addition, both to enhance the quality of its genetics and to
diversify its sources of genetic supply, PSF has an agreement for the exclusive
use and distribution to third parties in the United States of all genetic lines
of a leading European pig genetics firm. In addition to the use of high-quality
stock, careful computer-based monitoring of the breeding performance of a sow
and its litter can improve productivity of a herd by making it possible to
improve breeding patterns and cull sub-optimal parents from the herd.

Biosecurity

The ability to maintain health and control disease is a crucial factor in
the productivity and profitability of a hog operation. Disease may reduce the
number of pigs weaned per sow, increase mortality rates and hamper the growth of
pigs to finished size. Diseases can be spread in a variety of ways including
from other infected pigs, feed, trucks, rodents or birds, people visiting the
farm, or through the air. The Company attempts to reduce the risk of disease
transmission through a number of methods, including geographic separation of,
and restricted access to, production facilities, cleanliness procedures, high
health genetic stock and monitoring and response. All units are restricted
access, "shower in/shower out" facilities. If it is necessary for a manager or

33
<PAGE> 35

worker to enter a unit other than their designated unit, a mandatory 24-hour
layover period is required. Feed and trucks are inspected and monitored.
Procedures within the facilities are designed to stop the spread and lessen the
viability of infection agents during all phases of the production process. The
impact of disease is also controlled through the selection of healthy,
disease-resistant sows and through herd-breeding procedures which help pass
along antibodies to young pigs. When disease is found, prompt treatment is
implemented to lessen its impact on the affected animals and to prevent its
spread to other facilities. The Company believes that its biosecurity practices
and large number of dispersed units reduce the likelihood and economic impact of
the outbreak and spread of disease. See "Risk Factors -- Impact of Diseases."

Animal Waste Treatment

Pig production results in a large amount of manure. Many traditional
farmers raise hogs either in outdoor lots or in production buildings in which
manure drops through the floor into pits where it is allowed to collect for up
to six months. Both traditional methods result in unpleasant and sometimes
dangerous working conditions. In addition, neighbors and municipalities are
often concerned with odor problems and the impact on water supplies of large
quantities of waste in small areas.

The Company's operations have been designed to handle hog manure in a
manner which attempts to preserve the health, cleanliness and well-being of the
Company's animals, provide an acceptable working environment for the Company's
employees, reduce odor around the production facilities and to provide high-
quality natural fertilizer which is applied to surrounding farmlands. Many of
the Company's buildings incorporate a flushing system which removes animal waste
periodically throughout the day. In the Company's Missouri operations, this
waste is collected in lagoons which are located at each site. In these lagoons
water is added and the waste is broken down by naturally occurring bacteria. The
effluent, which is 95% water, is drawn through a system of pipes to irrigators,
which distribute it on farmland owned by the Company. In the Company's Texas
operations, the location of large numbers of units in closer proximity on the
same property allow Premium Standard Farms to treat its waste without the use of
lagoons. Instead, waste is pumped to centralized waste treatment centers where
solids are mechanically separated for use as high-quality fertilizer on the
Company's land and the separated liquid effluent is then treated in aeration
tanks. The aerated effluent is used to irrigate the Company's surrounding land.

The effluent provided by the Company's waste treatment systems is a
high-quality irrigant which enhances the economic value of the Company's
acreage. The crops growing on this acreage absorb the specific nutrients
contained in the effluent. The Company maintains a staff of land management
specialists comprised of farming and animal waste experts and consultants who
constantly monitor and model waste production, farming activity and nutrient
levels to ensure that waste is promptly and properly applied and that nutrient
uptake by the crops is sufficient to utilize all amounts applied. The Company
believes this emphasis on waste management provides a benefit to its local
communities by providing opportunities for cropping arrangements on Company land
and reducing odor and environmental impact. The Company has operating permits
for all of its currently operating waste-handling facilities.

PROCESSING OPERATIONS

The Company's highly automated processing operations have been designed to
enhance its ability to capitalize on the value of its hog supply by achieving
the significant benefits of vertical integration that are not available to other
non-integrated hog producing or pork processing competitors. First, the Company,
by processing its own hogs, can capture all of the incremental carcass value of
its hogs through processing rather than passing this value on to other
processors. Second, the proximity and integrated management of production and
processing operations allow the Company to streamline logistics, transportation
and production schedules to enhance asset utilization and reduce the Company's
cost structure. Third, control over the key factors (genetics, nutrition and
environment) that affect the leanness and meat quality of each hog allows the
Company to improve the realizable value of its hogs. Fourth, control of both
production and processing generally allows the Company to provide a higher level
of quality and safety assurance to its customers.

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<PAGE> 36

Most processing plants are large facilities with high capital investments
and fixed costs. To operate efficiently, they require a large supply of hogs
which they must purchase on the open market. Most of these operations are
designed to produce a commodity product rather than high quality pork. As a
result, the processing industry is highly competitive and has not been
consistently profitable. However, the Company believes that by controlling its
own high quality, consistent hog supply, it should be among the more efficient
processors in the industry and capable of producing a consistent high-quality
product whose value will be recognized in the market.

The design of the Company's Milan, Missouri processing facility reflects
four key objectives of the Company. First, modern equipment and proven
technology has been used to build what management believes to be one of the
highest quality facilities in the industry. Second, the facility design
emphasizes worker safety to ensure compliance with all regulations and to reduce
worker injury and turnover. Third, the facility is designed to produce a product
that is appealing to further processors and consumers and will be brandable. It
employs identification and tracking technology to insure quality control for the
final pork product. Fourth, the facility is designed to reduce waste products
and emissions and dispose of waste in accordance with applicable environmental
standards.

OTHER OPERATIONS

Feed Mills

The Company has two modern pelletizing feed mills in operation (one 600,000
tons/year mill in Lucerne, Missouri and another 180,000 tons/year mill in
Princeton, Missouri). These two mills are expected to be able to meet all the
feed requirements of the Company's Missouri operations. The Perico operations
include a modern 180,000 tons/year mill that was completed in May 1993.

The Company derives a number of advantages from milling its own feed. The
Company's Missouri and Texas operations are located in areas with access to
substantial corn and other feed grain production which is in excess of local
demand. As a result, the Company can typically access feed grains on a
cost-effective basis without incurring undue shipping expense. In addition, the
Company can manufacture and deliver feed to its facilities at a savings relative
to a commercial feed mill. As a large consumer of grain and feed additives,
management believes that the Company possesses buying power that gives it an
advantage over smaller feed manufacturers. Furthermore, unlike third-party feed
mills which operate on a cost plus basis and must provide feeds for many types
of customers and animals, the Company has substantial incentives and the
capability to procure grain cost-effectively, to develop "least cost"
formulations based on available feed components and to create customized diets
which are designed to optimize animal performance. While corn is the primary
component in pig feed, a large number of other grains, proteins, fats and
supplements may be added, and the content and mix of feed ingredients can be
managed to improve nutrition, feed-to-gain ratios and meat quality.

Transportation Facilities

Trucking is important in a number of aspects of pig production,
particularly the delivery of feed to pig growing units, the shipment of feeder
pigs to finishing units, and the shipment of finished pigs to processing plants.
The Company maintains a fleet of heavy trucks for hauling feed and pigs. This
fleet provides scheduling flexibility and reduces costs. All trucks are cleaned
and sanitized at the Company's truck wash between carrying loads of pigs to
reduce the likelihood of disease spreading to or between units.

THE TEXAS FACILITIES

In 1994, the Company's predecessor began the development of a hog operation
located in the Texas Panhandle. The Company selected this region for several
reasons. First, the availability of large, flat tracts of land allows for
efficient layout of units and reduced construction and operating costs. The size
of these properties allows for large, three-site production buildings which can
benefit from common infrastructure such as waste handling and utilities while
preserving the separation needed for biosecurity. Second, this area has access
to substantial amounts of water from the Ogallala Aquifer. Third, because of the
historical presence of large cattle feed lot operations, the area has well
developed and economical access to locally produced grain as

35
<PAGE> 37

well as by rail and truck from the major grain producing areas of the Midwest.
Fourth, this region's semi-arid climate is desirable for swine production
because it provides a comfortable environment for hogs which encourages feed
efficiency and rapid growth and because it reduces airborne transmission of
disease. Fifth, the region provides relative isolation from other hog
operations, further reducing the risk of disease. Finally, management believes
the economic and social climate in this region is favorable for large scale
agribusiness operations, particularly livestock.

The first phase of the Texas Facilities was the acquisition, in June 1994,
of the 16,800 sow Perico hog production operations and the 33,000 acre High
Plains Ranch located nearby. The planned second phase of that expansion was to
create a fully integrated production and processing operation in Texas through
the construction of additional hog production facilities on the High Plains
Ranch, a state-of-the-art processing plant (based on the Milan, Missouri
facility), and the acquisition of an adjacent 7,000 acre ranch. The Company made
a substantial investment in the construction of additional hog production
facilities on the High Plains Ranch and related infrastructure between June 1994
and May 1995.

However, beginning in the third quarter of 1994, the Company did not meet
its operating plans as hog prices declined significantly and feed, labor and
other costs remained relatively fixed or increased, and in May 1995 the Company
suspended expenditures on the Texas Facilities. See "Risk Factors--The
Reorganization; History of Net Losses." The Company initiated organizational and
operational changes during and following the Reorganization which it believes,
together with decreased debt service obligations and increased hog and pork
prices, has resulted in the Company's improved performance since the Effective
Date.

The Company resumed work on the Texas Facilities in early 1997 through the
investment of approximately $5 million in hog production facilities. Following
the completion of such construction, the Company's Texas operations will have
approximately 22,000 sows in production operations in Texas with the capacity to
produce over 400,000 hogs per year. Hogs produced at the Company's Texas
operations generally are shipped to the Company's Milan facility for processing
to the extent that facility has available capacity. Texas hogs produced in
excess of this capacity will be sold as market hogs to other processors. The
Company intends to periodically evaluate the desirability of further expansion
of its Texas operations in the future based on the Company's production and
processing needs, operating performance, capital requirements and growth
strategy. Current plans call for the project to be completed over a period of
several years, beginning in 1997. See "Risk Factors -- Texas Facilities."

PROPERTIES

The Company conducts its hog processing operations in Missouri and its hog
production operations in Missouri and Texas. All of the hog production and
processing facilities have been constructed since 1989. In

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<PAGE> 38

the opinion of management, the Company's various properties used in operations
are generally in good condition and adequate for the purposes for which they are
utilized. See "-- The Texas Facilities."

<TABLE>
<CAPTION>
LOCATION AND FUNCTION SIZE OR OUTPUT NUMBER
--------------------- -------------- ------
<S> <C> <C>
Missouri:
Sow Units..................................... 1,100 head units 74
Nursery Units................................. 16,640 head units 2
15,600 head units 1
20,800 head units 1
Finishing Units............................... 8,800 head units 69
4,400 head units 2
7,700 head units 1
Processing Facility (Milan)................... 7,000 head/day 1
Genetic Improvement........................... 780 head units 1
Maintenance Support Facilities................ 93,000 square feet
Truck Maintenance (Milan)..................... 22,000 square feet
Truck Maintenance (Princeton)................. 42,000 square feet
Feed Mill (Princeton)......................... 180,000 tons/year
Feed Mill (Lucerne)........................... 600,000 tons/year
Training Facility............................. 28,500 square feet
Headquarters Office........................... 12,400 square feet
Missouri Production Office (Princeton)........ 36,120 square feet
Developed Land................................ 37,000 acres
Texas:
Sow Units..................................... 1,375 head units 12
2,000 head unit 1
Nursery Units................................. 14,000 head units 3
1,500 head unit 1
Finishing Units............................... 20,400 head units 5
13,600 head unit 1
4,500 head unit 1
Feed Mill..................................... 180,000 tons/year
Office........................................ 5,000 square feet
Developed Land................................ 14,000 acres
Partially Developed Land...................... 40,000 acres
</TABLE>

CORPORATE FARMING LAWS AND OWNERSHIP STRUCTURE

Furthermore, Missouri enacted a statute in 1993 that specifically exempts
from the corporate farming law hog farming operations in the three counties in
Missouri where the Company conducts its farming operations. This exemption,
however, is subject to certain county population limitations which may be
exceeded in one or

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<PAGE> 39

more of the three counties in which PSF operates when the next federal decennial
census occurs in the year 2000, which might cause such exemption to thereafter
be unavailable unless the statute is amended. It is not conclusive that the
Company would not be able to purchase land under this exemption after the year
2000, even if population limitations are exceeded, however, there can be no
guarantee that in such event, the Company would be permitted to purchase
additional land pursuant to the exemption. See "Risk Factors -- Corporate
Farming Laws."

Missouri also restricts the ability of Aliens or a Foreign Business (i.e.,
a business entity in which a "controlling interest" is owned by Aliens) to own
agricultural land in Missouri. To the Company's knowledge, Aliens and Foreign
Businesses do not own a controlling interest in Holdings or PSF. The LLC
Agreement of Holdings contains provisions restricting the ownership of LLC
interests by foreign entities. An Alien or a Foreign Business may not acquire or
own in the aggregate more than 5% of the outstanding LLC Units of Holdings
without the prior written approval of Holdings, and if any Person acquires or
owns LLC Units in violation of the foregoing provision, such Person must dispose
of such number of LLC Units as will reduce its ownership of LLC Units to 5% or
less of the outstanding LLC Units or such lesser percentage as is required for
Holdings not to be a Foreign Business. If such LLC Units are not disposed of
within the time period set forth in the LLC Agreement, Holdings will not pay any
distribution with respect to such LLC Units held by such Person and such Person
will not be entitled to vote on any matter or otherwise participate in the
management of Holdings. In addition, Holdings may redeem such LLC Units at their
Fair Value (as defined). See "Risk Factors -- Effect of Certain Operating
Agreement Provisions."

EMPLOYEES

At March 31, 1997, the Company had approximately 2,060 employees, of whom
210 were in administration, 700 were in processing and 1,150 were in production.
None of the Company's employees are subject to collective bargaining
arrangements, although there can be no assurance that in the future, the
Company's employees will not enter into any such agreements. See "Risk Factors
- -- Labor Relations." The Company generally considers its employee relations to
be good.

The Company also uses services of consultants as necessary to provide
management expertise and to augment its executive staff. HWS & Associates, Inc.
is the primary consulting firm engaged by the Company. HWS & Associates, Inc.
has agreed to make available the personal services of Horst W. Schroeder,
Chairman of the Board of Directors of PSF, a Manager of Holdings and Chairman of
the Board of Directors and President of Princeton, under a consulting agreement
dated as of March 16, 1997, pursuant to which Mr. Schroeder (i) serves as
Chairman of the Board of PSF, Chairman of the Compensation Committee of PSF and,
upon its formation, shall serve as Chairman of the Executive Committee of the
PSF Board, (ii) assists in developing, implementing and controlling PSF's
business objectives and strategies to further profitable growth, including but
not limited to, optimization of employment of assets and the formation of
strategic alliances, (iii) assists in developing and implementing operational
and marketing strategies which will support PSF's business growth plan, (iv)
supervises the development and implementation of PSF's annual business plans and
annual budgets, (v) assists PSF management and shareholders in developing and
establishing the appropriate senior management structure for PSF, and (vi)
assists in developing a compensation strategy and policy for senior management
that is competitive, equitable and supportive to the goals and strategies of
PSF. In addition, the Company utilizes the services of Dr. Roy Schultz, a
veterinarian specializing in the swine industry.

REGULATION AND ENVIRONMENTAL MATTERS

The Company is subject to various federal, state and local laws and
regulations, particularly in the health and environmental areas administered by
the Occupational Safety and Health Administration, the USDA, the FDA, the EPA
and corresponding state agencies such as the MDNR and the Texas Natural
Resources Conservation Commission. The Company anticipates increased regulation
by the USDA concerning food safety as well as by the FDA regarding the use of
medication in feed.

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<PAGE> 40

In 1995, there were five alleged spills of hog waste into public waters in
the Missouri operations, allegedly in violation of the Missouri Clean Water Law
and regulations promulgated thereunder. Pursuant to the Settlement Agreement,
which addressed all of the five alleged spills, the Company's predecessor paid
the specified penalties and compensatory damages, and agreed to certain remedial
actions, subject to review and approval by MDNR. In connection with the
Reorganization, the Company assumed all obligations under the Settlement
Agreement.

The Company believes that the cost of achieving and maintaining compliance
with these health and environmental laws and regulations will not have a
material adverse effect on the Company's business including the Texas
Facilities, or financial position. However, future events, such as changes in
existing laws and regulations or enforcement policies, could give rise to
additional compliance costs which could have a material adverse effect on the
Company's financial condition. See "-- Litigation."

LITIGATION

On July 29, 1994, the Company filed an action against Lincoln Township in
Putnam County, Missouri seeking an injunction and declaratory judgement from the
Circuit Court that Lincoln Township's newly imposed zoning ordinances were
illegal and unconstitutional. During the construction of the Company's White
Tail Farm facility, Lincoln Township purportedly enacted zoning regulations
which regulated the farm lagoons and hog barns at White Tail Farm. On May 31,
1996, the Circuit Court granted the Company summary judgment and declared the
Lincoln Township Zoning Regulations void. Lincoln Township appealed and the
Missouri Attorney General intervened in the appeal on the side of Lincoln
Township. On February 25, 1997, the Missouri Supreme Court heard oral argument
on Lincoln Township's appeal. The Company is awaiting the decision of the
Missouri Supreme Court.

PSF received a letter dated April 1, 1997 which serves as notice of intent
of CLEAN, to bring an action EPA and PSF, pursuant to Title 33 U.S.C. sec.1365,
the citizen suit provision of the Clean Water Act and Title 42 U.S.C. sec.7604,
the citizen suit provision of the Clean Air Act, for alleged violations of NPDES
permits and of the Clean Air Act. This notice is required to be given 60 days
prior to commencing an action under the Clean Water Act and the Clean Air Act
and, no action has been commenced to date. The Company believes the allegations
are without merit and intends to vigorously defend any such suit that is
brought. However, there can be no assurance that the Company would prevail in
any such suit.

In addition, the Company is involved from time to time in routine
litigation incidental to its business. Although no assurance can be given as to
the outcome or expense associated with any of these routine proceedings, the
Company believes that none of such proceedings currently pending should,
individually or in the aggregate, have a material adverse effect on the
financial condition of the Company.

INTELLECTUAL PROPERTY

The Company holds several trademark and other intellectual property rights.
For example, the Company has registered the name "Premium Standard Farms" and
"PSF" with the United States Trademark Office. In addition to trademark
protection, the Company attempts to protect its unregistered marks and other
proprietary information under trade secret laws, employee and third-party
non-disclosure agreements and other laws and methods of protection.

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<PAGE> 41

MANAGEMENT

The following table sets forth certain information concerning the managers
and executive officers of Holdings and the directors and executive officers of
PSF:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Horst W. Schroeder..................... 55 Chairman of the Board of Directors of PSF; Manager of
Holdings
Dennis W. Harms........................ 45 Vice Chairman and Chief Executive Officer of PSF;
President of Holdings
Robert W. Manly........................ 44 President and Chief Operating Officer of PSF
William R. Patterson................... 55 Executive Vice President, Chief Financial Officer and
Treasurer of PSF; Vice President of Holdings
Michael Townsley....................... 37 Senior Vice President of Sales and Marketing of PSF
Charles Arnot.......................... 35 Vice President-Corporate Communications and
Government Relations of PSF
Hal Brown.............................. 39 Vice President
Robert W. Rippentrop................... 40 Vice President and Controller and Assistant Secretary
of PSF; Vice President, Treasurer, Assistant
Secretary and Controller of Holdings
Dennis D. Rippe........................ 43 Vice President-Finance & Administration (Missouri
Operations) of PSF
Calvin Held............................ 41 Vice President-Operations (Foods) of PSF
Justin Hanlon.......................... 31 Vice President-Sales of PSF
David Mitchell......................... 46 Vice President-Operations (Texas) of PSF
Mark Warren............................ 40 Vice President-Operations (Missouri) of PSF
Arthur Newman.......................... 54 Director of PSF; Manager of Holdings
Dean Mefford........................... 56 Director of PSF; Manager of Holdings
Ronald E. Justice...................... 52 Director of PSF; Manager of Holdings
Maurice L. McGill...................... 60 Director of PSF; Manager of Holdings
Peter K. Shea.......................... 46 Director of PSF; Manager of Holdings
</TABLE>

As a holding company organized as a limited liability company, Holdings has
no directors or operating activities. Management of Holdings is vested in a
Board of Managers except as delegated by the Board of Managers to officers or
agents in accordance with the LLC Agreement. The current Managers of the Board
of Managers are Horst W. Schroeder, Arthur Newman, Dean Mefford, Ronald E.
Justice, Maurice L. McGill and Peter K. Shea. The current executive officers of
Holdings are Dennis W. Harms, President; William R. Patterson, Vice President;
and Robert W. Rippentrop, Vice President, Treasurer, Assistant Secretary and
Controller. The directors of Princeton Development Corp. are Messrs. Schroeder,
Harms and Patterson and its executive officers are Horst W. Schroeder,
President; Dennis W. Harms, Vice President; and William R. Patterson, Vice
President and Treasurer.

Except for Messrs. Schroeder, Manly, Townsley, Brown, Rippentrop, Newman,
Justice, McGill and Shea, each of the persons listed in the foregoing table
served as an executive officer or director of the Company's predecessor at the
time of the Reorganization. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Recent Developments."

Horst W. Schroeder has been Chairman of the Board of PSF since September
1996 and a consultant to the Company or its predecessors since June 1995 and has
served as a Manager on the Board of Managers of Holdings since April 1997. See
"-- Employment and Consulting Agreements." Mr. Schroeder has been a director and
President of Princeton since September 1996. Mr. Schroeder has served as
President of HWS & Associates, Inc., a consulting firm owned by Mr. Schroeder,
since 1990.

Dennis W. Harms has been the President of Holdings and the Vice Chairman
and Chief Executive Officer of PSF since October 1996. From 1988 to October
1996, Mr. Harms was the President, Chief

40
<PAGE> 42

Executive Officer, and Co-Chairman of the Board of PSF's predecessor and the
President of Premium Holdings Corp., and served as a director and the Vice
President of Collings Farm, Inc., the general partner of Holdings' predecessor.
Mr. Harms has been a director of Princeton since December 1992 and Vice
President of Princeton since September 1996.

Robert W. Manly has been President and Chief Operating Officer of PSF since
October 1996. From July 1995 to October 1996, Mr. Manly served as Executive Vice
President of Smithfield Foods, Inc. and from June 1994 to June 1995, served as
President and Chief Operating Officer of Smithfield Packing Company, Inc. Mr.
Manly served as Executive Vice President of Smithfield Foods, Inc. from 1986 to
1994.

William R. Patterson has been Vice President of Holdings and Executive Vice
President, Chief Financial Officer and Treasurer of PSF since October 1996. Mr.
Patterson has been a director and Treasurer of Princeton since September 1996
and Vice President and Treasurer of Princeton since April 1997. From January to
October 1996, Mr. Patterson was a principal of Patterson Consulting LLC and
served as the Acting Chief Financial Officer of Farms, the predecessor company
to PSF, pursuant to a consulting agreement between Farms and Patterson
Consulting LLC. Prior to joining Farms in 1996, Mr. Patterson was a partner in
Arthur Andersen LLP from 1976 through 1995.

Michael Townsley has been Senior Vice President of Sales and Marketing of
PSF since March 1997. From June 1994 to March 1997, Mr. Townsley served as Vice
President of Fresh Pork Sales for Smithfield Packing. Prior to June 1994, Mr.
Townsley spent eleven years in various sales and marketing positions with IBP.

Charles Arnot has been Vice President of Communications and Public Affairs
of PSF since October 1996. From August 1993 to October 1996, Mr. Arnot was the
Director of Communications and Public Affairs of Farms. Mr. Arnot served as the
Director of Account Services at Bates & Associates, Communications Specialists,
a public relations consulting firm, from January 1992 to August 1993.

Hal Brown has served as Vice President of PSF since April 1997 and from
November 1995 to April 1997 served as Director of Integrated Systems of PSF.
From October, 1994 to November, 1995, Mr. Brown was the Director of Sow/Nursery
Production for PSF's Missouri Farm operations. Mr. Brown joined PSF as Manager
of Production Information in September of 1993. Prior to joining PSF, Mr. Brown
was the Administrative Assistant to the General Manager of Cargill's pork
production business since August 1986.

Robert W. Rippentrop has been Vice President and Controller and Assistant
Secretary of PSF since February 1997 and has served as Vice President,
Treasurer, Assistant Secretary, and Controller of Holdings since April 1997.
From September 1994 to February 1997 Mr. Rippentrop was General
Manager-Administration and Production Services -- Texas with PSF (or its
predecessor). Prior to joining PSF, Mr. Rippentrop was employed by Foster Farms
as the Chicken Division Processing Controller.

Dennis Rippe has been Vice President-Finance and Administration-Operations
(Missouri) of PSF since February 1997. From May 1995 to February 1997, Mr. Rippe
was Vice President and Controller of PSF (or its predecessor), and was Vice
President, Controller, Secretary and Treasurer of Holdings from October 1996 to
April 1997. Mr. Rippe served as Director of Accounting Services of PSF from
February to May 1995 and as Construction Division Controller of PSF from April
1994 to February 1995. From May 1988 to April 1994, Mr. Rippe served as
Executive Vice President and Chief Financial Officer of Lueder Construction
Company, a commercial general contractor.

Calvin Held has been Vice President-Processing of PSF (or its predecessor)
since January 1996. From August 1992 to January 1996, Mr. Held served as the
Controller of PSF's predecessor, Farms. Mr. Held served as Controller and
Operations Manager and in various other positions, for Jimmy Dean Foods, a
division of Sara Lee, from October 1978 to August 1992.

Justin Hanlon has been Vice President-Sales/Marketing of PSF since October
1996. From January 1994 to October 1996, Mr. Hanlon was Vice
President-Sales/Marketing of PSF's predecessor, Farms, in Milan, Missouri. From
April 1991 to January 1994, Mr. Hanlon was Vice President-Foodservice Sales for
Mariah Foods.

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<PAGE> 43

David Mitchell has been Vice President of Operations/Texas of PSF or its
predecessor since June 1994. During the period from 1991 to 1994 he was a
private investor. From 1985 to 1993, Mr. Mitchell was President of Altair Energy
Corp. Mr. Mitchell has been a member of the Board of Directors of North American
Gas Corp. since 1991.

Mark Warren has been Vice President of Operations/Missouri of PSF or its
predecessor since November 1994. From 1992 to 1994, Mr. Warren was Vice
President-Feed Operations of PSF. During 1991, Mr. Warren was employed by Foster
Farms and managed its milling operations. Between 1989 and 1991, Mr. Warren was
employed by Central Soya Company, Inc. as Operations Manager.

Arthur Newman has been a director of PSF since September 1996 and a Manager
on the Board of Managers of Holdings since April 1997. Mr. Newman has been a
Senior Managing Director of The Blackstone Group L.P., a private investment
bank, for more than five years. Mr. Newman has been a director of Lone Star
Industries since April 1994.

Dean Mefford has been a director of PSF since September 1996 and a Manager
on the Board of Managers of Holdings since April 1997. Mr. Mefford has served as
President and Chief Executive Officer of Viskase Corporation, a manufacturer of
flexible packaging and meat casings, since 1994, and as President and Chief
Operating Officer of Harvard Capital International Corporation, a vending
machine company, during 1994. Mr. Mefford served as principal of Mefford
Consulting from 1993 to 1994, and as Corporate Vice President, President and
Chief Operating Officer of Ralston Purina International from 1988 through 1992.

Ronald E. Justice has been a director of PSF since September 1996 and a
Manager on the Board of Managers of Holdings since April 1997. Mr. Justice has
served as the Senior Vice President of Operations of Scotts Co. since July 1995.
From August 1992 to July 1995, Mr. Justice was the Corporate Vice President of
Operations at Continental Baking. Prior to August 1992, Mr. Justice was a Vice
President at Frito Lay.

Maurice L. McGill has been a director of PSF since September 1996 and a
Manager on the Board of Managers of Holdings since April 1997. Mr. McGill has
served as the President of Wirmac Corp. since 1986 and as a general partner of
McGill Partners for the last five years. Mr. McGill has also served as a
director of Bluebonnet Savings Bank since 1990.

Peter K. Shea has been a director of PSF since September 1996 and a Manager
on the Board of Managers of Holdings since April 1997. Mr. Shea has been the
Chairman of the Board, President and Chief Executive Officer of SMG, Inc. since
March, 1994. From August 1991 to March 1994, Mr. Shea served as the Chairman of
the Board, President and Chief Executive Officer of John Morrell & Co.

COMPENSATION OF DIRECTORS

PSF has agreed to pay each person who is not an affiliate of PSF (the
"Independent Directors"), other than Horst Schroeder whose compensation is
described below, an annual fee in the amount of $20,000, payable semi-annually,
for serving on the Board of Directors. At the option of the Independent
Director, one-half of such annual fee may be paid by issuance of common stock
(or options on common stock) of PSF, valued at the value established for shares
of PSF common stock at the time of such Independent Director's election to PSF's
Board of Directors. In addition, each such Independent Director (other than Mr.
Schroeder) receives meeting fees of $1000 per day for each day (or portion
thereof) spent attending meetings of PSF's Board of Directors or committees
thereof and $500 per committee meeting. The chairman of each committee (other
than Mr. Schroeder) receives an additional $2500 per year. All such Independent
Directors are reimbursed for all ordinary and reasonable business expenses in
connection with their activities as a member of PSF's Board. Any director of PSF
who is also an executive officer thereof does not receive any additional
compensation for services as a director, although all directors are reimbursed
for expenses incurred to attend meetings. See "--Employment and Consulting
Agreements." In addition, the PSF Board of Directors has adopted a director
equity plan that provides for the granting of certain LLC Units to non-employee
directors under certain terms and conditions. See "--Director Equity Plan."

No member of the Board of Managers of Holdings currently receives any
compensation for service as a Manager. Any compensation paid to members of the
Board of Managers must be first approved by the Board

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<PAGE> 44

of Managers. Princeton has no directors who are not also executive officers of
Princeton and such directors receive no compensation from Princeton for their
services as directors of Princeton.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors of PSF has established two committees: a
Compensation Committee and an Audit Committee. Each such committee has two or
more members, who serve at the pleasure of the Board of Directors.

The Compensation Committee is responsible for reviewing and making
recommendations to the Board of Directors with respect to compensation of
executive officers, other compensation matters and awards under the Company's
management option plan. Currently, Messrs. Schroeder, Mefford and Newman serve
on the Compensation Committee.

The Audit Committee is responsible for reviewing PSF's financial
statements, audit reports, internal financial controls and the services
performed by PSF's independent public accountants, and for making
recommendations with respect to those matters to the Board of Directors.
Currently, Messrs. McGill, Justice and Shea serve on the Audit Committee.

The Board of Directors of Princeton and the Board of Managers of Holdings
have not established any committees thereof as of the date of this Prospectus.

TERMS OF DIRECTORS AND OFFICERS

Directors of PSF are nominated and placed for election at the annual
meeting of stockholders to hold office for a one-year term and until their
successors are duly elected and qualified.

Officers of PSF are appointed by the Board of Directors and serve at the
pleasure of the Board, except that Dennis Harms, Vice Chairman and Chief
Executive Officer of PSF, Robert Manly, President and Chief Operating Officer of
PSF, William Patterson, Executive Vice President, Chief Financial Officer and
Treasurer of PSF, David Mitchell, Vice President of Operations/Texas of PSF, and
Mark Warren, Vice President of Operations/Missouri of PSF, are parties to
employment agreements with PSF. See "Management -- Employment and Consulting
Agreements."

Managers of Holdings are nominated and placed for election at the annual
meeting of members to hold office for a one-year term and until their successors
are duly elected and qualified.

Officers of Holdings are appointed by, and serve at the pleasure of, the
Board of Managers of Holdings.

Directors of Princeton are nominated and placed for election at the annual
meeting of stockholders to hold office for a one-year term and until their
successors are duly elected and qualified.

Officers of Princeton are appointed by the Board of Directors of Princeton
and serve at the pleasure of the Board.

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<PAGE> 45

EXECUTIVE COMPENSATION

The following summary compensation table (the "Compensation Table")
summarizes compensation information with respect to the Vice Chairman and Chief
Executive Officer ("CEO") of PSF and the four other most highly compensated
executive officers of PSF for the year ended December 31, 1996 (collectively,
with the CEO, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND FISCAL BONUS OTHER ANNUAL OPTIONS COMPENSATION
PRINCIPAL POSITION(S) YEAR SALARY($) ($) COMPENSATION(1) (#) ($)
--------------------- ------ --------- ----- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dennis W. Harms............ 1996 $225,000 $100,000 $ -- 160,000(2) $8,620(3)
(Vice-Chairman and Chief
Executive Officer)
Robert W. Manly............ 1996 41,538(4) 100,000 -- 110,000(2) 272(5)
(President and Chief
Operating Officer)
William R. Patterson....... 1996 46,154(6) 50,000 256,000(7) 110,000(2) 141(8)
(Executive Vice President
-- Finance and
Administration and Chief
Financial Officer)
Mark Warren................ 1996 120,000 92,000 -- 15,000(2) 3,388(9)
(Vice President of
Operations/Missouri of
PSF)
David Mitchell............. 1996 103,221 70,000 -- 10,000(2) 3,522(10)
(Vice President of
Operations/Texas of PSF)
</TABLE>

- -------------------------
(1) Unless otherwise indicated, the value of perquisites otherwise reportable
as Other Annual Compensation did not exceed the lesser of $50,000 or 10% of
such Named Executive Officer's aggregate salary and bonus.

(2) Options to acquire LLC Units granted pursuant to Holdings' Management
Option Plan on December 23, 1996.

(3) All other compensation for Mr. Harms for the year indicated is comprised of
$3,000 in health insurance premiums and $870 in group term life premiums
paid by PSF and a contribution of $4,750 to his account under PSF's 401(k)
Plan.

(4) Based on an annual salary for Mr. Manly of $225,000.

(5) All other compensation for Mr. Manly for the year indicated is comprised of
$250 in health insurance premiums and $22 in group life insurance premiums
paid by PSF.

(6) Based on an annual salary for Mr. Patterson of $200,000.

(7) Other annual compensation for Mr. Patterson for the year indicated is
comprised of consulting fees paid to Patterson Consulting LLC of which Mr.
Patterson was the sole principal for services provided by Mr. Patterson
pursuant to a consulting contract between PSF's predecessor and Patterson
Consulting LLC. See "Certain Transactions."

44
<PAGE> 46

(8) All other compensation for Mr. Patterson for the year indicated is comprised
of $141 in group term life insurance premiums paid by PSF.

(9) All other compensation for Mr. Warren for the year indicated is comprised of
$3,000 in health insurance premiums and $388 in group term life insurance
premiums paid by PSF.

(10) All other compensation for Mr. Mitchell for the year indicated is comprised
of $3,000 in health insurance premiums and $522 in group term life
insurance premiums paid by PSF.

Employees of PSF do not receive additional compensation for serving as
executive officers of Holdings or Princeton.

The following table sets forth certain information with respect to Unit
options granted to each of the Named Executive Officers during 1996:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL RATES OF
LLC UNITS OPTIONS EXERCISE OR UNIT PRICE APPRECIATION FOR
UNDERLYING GRANTED TO BASE OPTION TERM ($)(3)
OPTIONS EMPLOYEES PRICE(1) EXPIRATION ------------------------------
GRANTED IN 1996 ($/SHARE) DATE 5% 10%
---------- ---------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Dennis W. Harms............ 160,000(4) 34.8% $12.00 (2) $1,206,400 $3,059,200
Robert W. Manly............ 110,000(5) 23.9% 12.00 (2) 829,400 2,103,200
William R. Patterson....... 110,000(6) 23.9% 12.00 (2) 829,400 2,103,200
Mark Warren................ 15,000(7) 3.3% 12.00 (2) 113,100 286,800
David Mitchell............. 10,000(8) 2.2% 12.00 (2) 75,400 191,200
</TABLE>

- -------------------------
(1) Based on the fair market value of the LLC Units determined as of the date of
grant of the options.

(2) The options expire within a certain period after the termination of
employment, depending on the type of termination of employment, as set forth
in the Management Option Plan. (See "-- Management Option Plan").

(3) The amounts shown as potential realizable values are based on assumed
annualized rates of appreciation in the price of the LLC Units of five
percent and ten percent, as set forth in the rules of the Securities and
Exchange Commission, over an assumed 10 year term of the options. Actual
gains, if any, on LLC Unit option exercises are dependent upon the future
performance of the LLC Units. There can be no assurance that the potential
realizable values reflected in this table will be achieved.

(4) Options granted on December 23, 1996. Options to acquire 64,000 LLC Units
were immediately exercisable on the grant date. Options to acquire 19,200
LLC Units vest annually each September 17 thereafter through September 17,
2001.

(5) Options granted on December 23, 1996. Options to acquire 44,000 LLC Units
vest on September 17, 1997. Options to acquire 16,500 LLC Units vest
annually thereafter each September 17 thereafter through September 17, 2001.

(6) Options granted on December 23, 1996. Options to acquire 22,000 LLC Units
were immediately exercisable on the grant date. Options to acquire 17,600
LLC Units vest annually each September 17 thereafter through September 17,
2001.

(7) Options granted on December 23, 1996. Options to acquire 3,000 LLC Units
vested were immediately exercisable on the grant date. Options to acquire
2,400 LLC Units vest annually each September 17 thereafter through September
17, 2001.

(8) Options granted on December 23, 1996. Options to acquire 2,000 LLC Units
vested effective were immediately exercisable on the grant date. Options to
acquire 1,600 LLC Units vest annually each September 17 thereafter through
September 17, 2001.

45
<PAGE> 47

The following table sets forth certain information with respect to LLC Unit
options granted to each of the Named Executive Officers that were outstanding at
December 31, 1996:

AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
------------------------------------------------------------
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS(1)
UNITS ACQUIRED VALUE ---------------------------- ----------------------------
NAME UPON EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis Harms........... -- -- 64,000 96,000 -- --
Robert Manly........... -- -- -- 110,000 -- --
William Patterson...... -- -- 22,000 88,000 -- --
Mark Warren............ -- -- 3,000 12,000 -- --
David Mitchell......... -- -- 2,000 8,000 -- --
</TABLE>

- -------------------------
(1) The dollars values (if any) in this column are calculated by determining the
excess (for those options for which such excess exists) of the fair market
value of the securities underlying the options over the aggregate exercise
price of the options at December 28, 1996.

401(K) PLAN

The 401(k) Plan is a qualified defined contribution plan. Employees who
have completed at least one year of service to PSF may elect to have contributed
to their 401(k) Plan account up to 15% of their salaries. PSF makes matching
contributions of 50% of an employee's contribution, up to a maximum contribution
by PSF of 3% of such employee's compensation. However, if an employee is a
highly paid employee, his or her contribution and PSF's matching contribution
may be limited by law, and PSF will either restrict the amount such employee may
contribute in the future or return such employee's contributions over the limit.
Employees are always 100% vested in their own contributions. Contributions by
PSF to an employee's account are 100% vested after three years of employment,
with full vesting at age 55, death or disability. Employees may direct the
investment of their and PSF's contributions among a group of investment options
selected by PSF.

MANAGEMENT OPTION PLAN

The Amended and Restated PSF Holdings, L.L.C. 1996 Management Option Plan
was adopted by Holdings as of September 17, 1996 and amended as of March 14,
1997 (the "Plan"). The Plan was established to advance the interests of the
Company by enabling the Company to grant options ("Options") to acquire LLC
Units to selected employees of Holdings or its affiliates and certain others.

Pursuant to the LLC Agreement, subject to further action by the Board of
Managers of Holdings, the Compensation Committee of PSF's Board of Directors,
has been appointed as the committee (the "Committee") which administers the
Plan, determining eligibility for, and the terms and conditions of, any Option
and granting Options, among other things. A total of 686,315 Units may be issued
under the Plan. No fractional Units will be delivered under the Plan. No Option
may be granted under the Plan after September 17, 2006, but Options previously
granted may extend beyond that date. Issuance of Units pursuant to the Plan is
subject to certain conditions as set forth in the Plan.

Subject to certain exceptions, the exercise price of each Option will be
equal to the fair market value of the Units subject to the Option, except that
an incentive stock option ("ISO") granted to an employee described in Section
422(b)(6) of the Internal Revenue Code of 1986, as from time to time amended and
in effect (the "Code"), will have an exercise price of 110% of such fair market
value. Both ISOs and Options that are not ISOs may be granted under the Plan,
but no Option granted under the Plan will be an ISO unless

46
<PAGE> 48

the Committee expressly provides for ISO treatment. Holdings may at any time,
with the consent of the Option holder, extinguish rights under the Option in
exchange for payment in cash or other property.

Except as otherwise provided by the Committee, Options may not be
transferred other than by will or by the laws of descent and distribution and,
generally during the lifetime of the employee, or other person or entity granted
an Option under the Plan (a "Participant") may be exercised only by such
Participant. The Committee shall determine the time or times at which an Option
will vest or become exercisable. However, unless the Committee otherwise
expressly provides, Options granted to any person subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") shall not vest
or become exercisable for six months after the date of the Option.

Unless the Committee expressly provides otherwise, all Options held by a
Participant immediately prior to death, to the extent then exercisable, may be
exercised by the Participant's executor or administrator or the Participant's
heirs or descendants at any time within the lesser of the one year period after
the Participant's death or the latest date on which such Option could otherwise
have been exercised, and shall thereupon terminate. If the employment of an
employee Participant is terminated for any reason other than death, or if there
is a termination (other than by reason of death) of the consulting, service or
similar relationship in respect of which a non-employee Participant was granted
an Option award under the Plan (each such termination referred to as a "Status
Change"), all Options held by the Participant that were not exercisable
immediately prior to the Status Change shall terminate at the time of the Status
Change, and any Options that were exercisable immediately prior to the Status
Change will continue to be exercisable for the shorter of three months after the
Status Change or the latest date on which such Option could otherwise have been
exercised, and shall thereupon terminate, unless the Status Change results from
a discharge for cause in which case the Option shall immediately terminate upon
the Status Change.

In the event of the consummation of a Covered Transaction (as defined in
the Plan), any issued and outstanding Options shall immediately vest and be
exercisable; provided, however, that in anticipation of the consummation of such
a Covered Transaction, the Committee may immediately accelerate the vesting and
exercisability of any issued and outstanding Options, or provide for a
substitute or replacement Option from the entity acquiring a majority of
Holdings' Units, upon the consummation of the Covered Transaction.

In the event of a division of Holdings' Units, the payment of a
distribution to Members in Units, the combination of Units, or the
recapitalization or other change in Holdings' Units or capital structure, the
Committee will make appropriate adjustments to the maximum number of Units that
may be delivered under the Plan, the number of Units subject to Options then
outstanding, the exercise price and any other provisions of then outstanding
Options affected. In the event of a transaction that represents merely a change
in the identity, form or place of organization of Holdings, the Committee shall
provide for substitute or replacement Options in the successor entity. The
Committee may also make certain other adjustments if the Committee determines
that adjustments are appropriate to avoid distortion in the operation of the
Plan and to preserve the value of the Options made thereunder.

Subject to certain exceptions as set forth in the Plan, the Committee may
amend the Plan or any outstanding Option as permitted by law, or may terminate
the Plan as to any further grant of Options.

DIRECTOR EQUITY PLAN

The Premium Standard Farms, Inc. Director Equity Plan (the "Director Equity
Plan") for Non-Employee Directors was adopted by the PSF Board of Directors on
April 24, 1997, for those directors of PSF who are neither officers nor
employees of PSF. The Director Equity Plan was established to enable PSF to
attract, retain and motivate the best-qualified directors and to enhance a
long-term mutuality of interest between the directors and the Members of
Holdings.

Subject to the provisions of the Director Equity Plan, the PSF Board of
Directors has full authority to interpret and administer the Director Equity
Plan, to establish, amend and rescind rules to carry out such plan, to construe
awards, and to make all other determinations and to take all other actions that
it deems necessary or desirable for administering such plan, subject to certain
terms and conditions set forth in the Director

47
<PAGE> 49

Equity Plan. The PSF Board of Directors may delegate any or all of its powers
and functions under the Director Equity Plan (other than the power to amend such
plan) to a committee of the PSF Board of Directors. A total of 50,000 LLC Units
may be issued under the Director Equity Plan, subject to adjustment by the PSF
Board of Directors under certain circumstances. No fractional Units shall be
issued in connection with any such adjustment.

Each participant shall be granted 1,667 unrestricted LLC Units on the
effective date of the Director Equity Plan. In addition, each participant who
elects to forego a portion of his Annual Retainer (as defined in the Director
Equity Plan) for a period of years, as set forth in such plan, shall
automatically be granted an award of 2,500 restricted LLC Units immediately
following the 1997 annual meeting of PSF provided he agrees to be bound by the
terms of the LLC Agreement. Except as otherwise provided in the Director Equity
Plan, restricted LLC Units received pursuant to the Director Equity Plan may not
be sold, assigned, pledged or otherwise transferred until such LLC units have
become vested pursuant to the Director Equity Plan.

Under the terms and conditions as set forth in the Director Equity Plan,
the restricted LLC Units vest and become unrestricted over a three-year period
beginning in 1998. Notwithstanding these vesting provisions, all restricted LLC
Units shall vest and become unrestricted upon the earliest of (i) the
participant's death or disability or (ii) a Change of Control (as defined in the
Director Equity Plan). Except as set forth in the Director Equity Plan, if a
participant's service as a director terminates at any time before his restricted
LLC Units vest and become unrestricted, then the unvested portion of such LLC
Units shall be forfeited.

Subject to the provisions of the Director Equity Plan, an award shall
entitle the grantee thereof to all of the voting, dividend, liquidation and
other rights of a holder of LLC Units with respect to the LLC Units subject to
such award.

Awards granted under the Director Equity Plan are subject to certain
restrictions on transferability as set forth in such plan.

The Director Equity Plan shall terminate immediately following the 2000
annual meeting of PSF, unless sooner terminated pursuant to its terms. The PSF
Board of Directors may amend or terminate the Director Equity Plan without the
approval of the Members of Holdings; provided that no termination, amendment or
modification of the Director Equity Plan may, without the consent of a
participant, impair the rights and obligations of such participant arising under
any then-outstanding award.

If at any time the PSF Board of Directors determines that the listing,
registration or qualification of the LLC Units covered by the Director Equity
Plan upon any national securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale of LLC Units under
the Director Equity Plan, no LLC Units will be delivered unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained.

EMPLOYMENT AND CONSULTING AGREEMENTS

Each of the Named Executive Officers has entered into an employment
agreement (each, an "Employment Agreement") with PSF. The Employment Agreements
between PSF and Messrs. Harms, Patterson and Manly are dated January 1, 1997,
February 27, 1997 (amending and restating an Employment Agreement dated October
1, 1996) and October 16, 1996, respectively. The Employment Agreements between
PSF and Messrs. Warren and Mitchell are dated November 1, 1994. The Employment
Agreement for each of Messrs. Warren and Mitchell has a term of five years and
for each of Messrs. Harms, Manly and Patterson has an initial term which ends
December 31, 1999, however, each such Employment Agreement automatically extends
for one year periods unless written notice of either party's decision not to
extend the term of such Employment Agreement has been given to the other party
at least six months, in the case of Messrs. Harms, Manly and Patterson, and
three months in the case of Messrs. Warren and Mitchell, prior to the expiration
of the then effective term. Pursuant to the Employment Agreements, Messrs.
Harms, Manly, Patterson, Warren and Mitchell receive annual base salaries of
$300,000, $225,000, $200,000, $130,000 and $100,000, respectively, subject to
annual reviews by the Compensation Committee of PSF and as necessary to reflect
changes

48
<PAGE> 50

in the cost of living. In addition, under their respective Employment
Agreements, and pursuant to action by the Compensation Committee, each of
Messrs. Harms, Manly and Patterson is eligible to receive a performance bonus as
determined by PSF's Board, provided that for Messrs. Harms, Manly and Patterson
such performance bonus shall be less than 150% of 60%, 50% and 50%,
respectively, of his Base Salary. Mr. Manly's Employment Agreement provides for
a one-time signing bonus of $100,000.

Each of the Employment Agreements for Messrs. Harms, Manly, Patterson,
Warren and Mitchell provides that upon a termination of such executive's
employment by PSF without "cause" or by such executive for "good reason" (each
as defined in the executive's Employment Agreement), PSF will continue to pay
such executive's base salary for the Severance Period. The Severance Period for
Messrs. Harms, Manly and Patterson is one year, and for Messrs. Warren and
Mitchell is the lesser of one year and the remainder of the term. Such
executives will not be required to mitigate the payments made during the
Severance Period, and with respect to Messrs. Harms, Manly and Patterson, the
amount PSF is required to pay will not be reduced to the extent of amounts such
executive receives from a subsequent employer, but with respect to Messrs.
Warren and Mitchell the amount PSF is required to pay will be so reduced. If any
of Messrs. Harms', Manly's or Patterson's employment is terminated due to such
executive's death or permanent disability, PSF will, in the event of death, pay
a lump sum benefit of twelve months base salary and, in the event of permanent
disability, continue to pay such executive's base salary for a period of twelve
months. The Employment Agreements for Messrs. Warren and Mitchell provide for a
lump sum payment of three months base salary in the event of death and the
continuation of base salary for a period of six months in the event of permanent
disability. In addition, the Employment Agreement for each of Messrs. Harms,
Manly and Patterson provides that if PSF terminates such executive without cause
or within six months following a Change in Control (as defined in such
executive's Employment Agreement), PSF will pay to such executive an amount
equal to the greater of (i) executive's annual base salary as of the date of the
Change of Control, or (ii) if the Change of Control occurs during the initial
employment term, the remaining portion of such executive's base salary for the
initial employment term as of the date of the executive's termination.

Each of the Named Executive Officers (except Mr. Warren) is subject to a
covenant not to compete with the Company pursuant to his Employment Agreement.

Horst W. Schroeder, the Chairman of the Board of PSF, a Manager of Holdings
and the Chairman of the Board of Directors and President of Princeton, and HWS &
Associates, Inc., a South Carolina corporation ("HWS"), of which Mr. Schroeder
is the president and owner, has been a party to consulting agreements with the
Company or its predecessors since June 1995. The most current consulting
agreement is dated March 16, 1997 (the "Consulting Agreement") by and among Mr.
Schroeder, HWS and PSF. HWS has agreed to cause Mr. Schroeder to serve as a
consultant to PSF under the Consulting Agreement pursuant to which Mr. Schroeder
(i) serves as Chairman of the Board of PSF, Chairman of the Compensation
Committee of PSF and, upon its formation, shall serve as Chairman of the
Executive Committee of the PSF Board, (ii) assists in developing, implementing
and controlling PSF's business objectives and strategies to further profitable
growth, including but not limited to, optimization of employment of assets and
the formation of strategic alliances, (iii) assists in developing and
implementing operational and marketing strategies which will support PSF's
business growth plan, (iv) supervises the development and implementation of
PSF's annual business plans and annual budgets, (v) assists PSF management and
shareholders in developing and establishing the appropriate senior management
structure for PSF, and (vi) assists in developing a compensation strategy and
policy for senior management that is competitive, equitable and supportive to
the goals and strategies of PSF. The Consulting Agreement terminates on December
31, 1999 unless extended or renewed by mutual agreement in writing of the
parties or earlier terminated pursuant to the terms of the Consulting Agreement.
HWS is paid a retainer (the "Retainer") by PSF for Mr. Schroeder's services
pursuant to the Consulting Agreement, on a quarterly basis, which Retainer in
the aggregate shall be equal to the daily rate, currently set at $4,000 per day,
multiplied by the number of days Mr. Schroeder provides such consulting services
during the then current Retainer Period (as defined herein). Such daily rate
shall be increased annually starting January 1, 1998 at a rate equal to the
higher of the annual rate of increase in the Consumer Price Index for the United
States for the preceding year, or 5%, and in either case such daily rate shall
then be rounded up to the nearest $25.00 increment. The Consulting Agreement
provides for a minimum

49
<PAGE> 51

of 20 days and a maximum of 35 days of such services during the remainder of
1997 and a minimum of 30 days and a maximum of 50 days during each of 1998 and
1999 (the remainder of 1997 and each of 1998 and 1999, each a separate "Retainer
Period"). Mr. Schroeder will be eligible to receive an executive performance
bonus in accordance with PSF's general management bonus policy, but in no event
shall such bonus amount be equal to or greater than 60% of the total annual
Retainer, plus any amounts paid for additional services of Mr. Schroeder in any
given year. Such performance bonus shall be paid by PSF to HWS. In addition, HWS
will be reimbursed by PSF for business expenses incurred in connection with the
performance of duties under the Consulting Agreement. The Consulting Agreement
provides for the grant, pursuant to Holdings' Management Option Plan and the PSF
Holdings, L.L.C. Membership Interest Unit Option Agreement between PSF and HWS
(the "Option Agreement"), by PSF to HWS of an option to purchase 160,000 LLC
Units. The Option Agreement provides that the exercise price of such option is
$12.00 per LLC Unit, that options to acquire 64,000 LLC Units vested on March
16, 1997, and that options to acquire 19,200 LLC Units vest annually each March
16 thereafter through March 16, 2002. Under certain circumstances, as set forth
in the Option Agreement, the unvested options shall immediately vest and become
exercisable. The Consulting Agreement further provides that in the event PSF
wishes to extend the Consulting Agreement beyond December 31, 1999, for an
additional two years, and HWS is either unwilling or unable to do so, the
unvested portion of the option shall be forfeited. However, in the event that
HWS wishes to so extend the Consulting Agreement and PSF is either unwilling or
unable to do so, the unvested portion of the option shall accelerate and become
immediately vested. PSF may terminate the Consulting Agreement upon the death or
disability (as defined in the Consulting Agreement) of Mr. Schroeder or for
"cause" (as defined in the Consulting Agreement). In the event of a termination
due to the death or disability of Mr. Schroeder, HWS will be entitled to receive
the unpaid balance of the Retainer for the Retainer Period. In addition, HWS may
terminate the Consulting Agreement for "cause" (as defined in the Consulting
Agreement), and in such event, HWS shall be entitled to receive payment in an
amount equal to the balance of the Retainer for the remainder of the term of the
Consulting Agreement plus an additional payment equal to $2000 multiplied by the
number of days remaining in the balance of the Retainer for the remaining term
of the Consulting Agreement. Further, upon such termination by HWS, the unvested
portion of the option granted pursuant to the Option Agreement shall accelerate
and become immediately vested. Each of HWS and Mr. Schroeder are subject to a
covenant not to compete with PSF or its affiliates pursuant to the Consulting
Agreement. PSF will hold harmless HWS and Mr. Schroeder for all acts or
decisions made by it or him in good faith related to its or his performance of
services under the Consulting Agreement and will pay reasonable legal fees and
expenses incurred by HWS and Mr. Schroeder in connection with entering into and
performing the services under the Consulting Agreement.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Schroeder, Mefford and Newman have served on the Compensation
Committee of PSF since September 1996. Mr. Schroeder, the Chairman of the
Compensation Committee, also serves as the Chairman of the Board of Directors
and the President of Princeton and as a Manager on the Board of Managers of
Holdings. Mr. Schroeder has been a party to consulting agreements with the
Company or its predecessors since June 1995. The most current consulting
agreement pursuant to which Mr. Schroeder provides certain services to PSF is
dated March 16, 1997. See "-- Employment and Consulting Agreements." Mr. Newman
is a Senior Managing Director of The Blackstone Group L.P. which acted as an
adviser to the Bondholders' Committee in connection with the Reorganization and
received fees for such services. See "Certain Transactions."

The Compensation Committee establishes goals and objectives for senior
management. Bonus compensation is based on the Compensation Committee's
evaluation of individual goal achievement. Base compensation in the past has
been based on evaluation of management performance and a general knowledge of
industry compensation. The Company has secured the services of a consulting
group to perform a senior management job evaluation and compensation study. The
results, which are not presently available, will be used by the Compensation
Committee in establishing future compensation policies.

50
<PAGE> 52

CERTAIN TRANSACTIONS

In August 1991, Dennis Harms and Theodore J. Gordon, Jr. (who together
owned 100% of PSF's predecessor, Premium Standard Farms, Inc. ("Farms")),
jointly borrowed $1 million from Holdings' predecessor, PSF Finance L.P.
("Finance"), to finance the purchase of the capital stock of Farms (the "Farms
Stock Loan"). The Farms Stock Loan was secured by the capital stock of Farms.
Finance held an option to acquire all of the capital stock of Farms from Messrs.
Harms and Gordon in the event of certain changes in Missouri corporate farming
law. As of September 16, 1996, each of Messrs. Harms and Gordon owed Farms
$627,133 in principal and accrued interest. The stock of Farms was exchanged for
the balance of the note on the Effective Date.

In 1992, Finance provided construction funding to Farms in return for a
secured demand note dated September 15, 1992, as amended and restated on October
7, 1993 (the "Farms/Finance Note"). The Farms/ Finance Note was secured by
substantially all the assets of Farms, subordinated to the senior debt of
Finance. The net amount of the claims of Finance against Farms under the
Farms/Finance Note prior to the Reorganization was approximately $172 million
(the "Farms/Finance Note Claim"). On the Effective Date, pursuant to the
Reorganization, the Farms/Finance Note Claim was transferred and reassigned to
Holdings, which, in turn, transferred and assigned such note to PSF. On the
Effective Date, PSF received by process of law and in satisfaction of the
indebtedness represented by the Farms/Finance Note, and by enforcement of the
liens on Farms' assets to secure the payment of such indebtedness, all of the
assets of Farms subject to the liabilities of Farms as provided under the
Reorganization Plan.

Certain other intercompany loans were satisfied pursuant to the
Reorganization by payments of amounts agreed upon as part of the Reorganization
Plan.

Prior to the Reorganization, Farms and Finance had an agreement whereby
Farms provided certain services to Finance with respect to the breeding and
commercial production of hogs. The agreement provided that Finance would
reimburse Farms for substantially all costs incurred in performing the services,
as well as certain additional specified amounts. In fulfilling such services,
Farms utilized certain assets owned by Finance, including breeding stock, feed
mills, an office building and various machinery, equipment and vehicles. Farms
was charged for the use of such assets an amount equivalent to Finance's
depreciation on the assets. This agreement was cancelled as part of the
Reorganization.

Horst W. Schroeder, the Chairman of the Board of PSF, a Manager on the
Board of Managers of Holdings, and Chairman of the Board of Directors and
President of Princeton, provides certain services to PSF as a result of the
Consulting Agreement among Mr. Schroeder, HWS (of which Mr. Schroeder is
president and owner) and PSF. HWS is paid by PSF for Mr. Schroeder's services
pursuant to the Consulting Agreement, on a quarterly basis, at a daily rate
currently set at $4,000.00. During 1996, PSF (together with its predecessor)
paid HWS pursuant to the then current consulting agreement consulting fees of
$278,821 and expenses of $20,061 for a total of $298,882. Under the current
Consulting Agreement, Mr. Schroeder is eligible to receive an executive
performance bonus in accordance with PSF's general management bonus policy. HWS
has been granted an option to purchase 160,000 LLC Units at an exercise price of
$12.00. Options to purchase 64,000 LLC Units vested March 16, 1997. Options to
purchase 19,200 LLC Units vest annually each March 16 thereafter through March
16, 2002, with acceleration and immediate vesting under certain circumstances.
Mr. Schroeder does not receive any additional compensation from PSF for his
services as Chairman of the Board. See "Management -- Employment and Consulting
Agreements."

William R. Patterson, the Vice President of Holdings, Executive Vice
President, Chief Financial Officer and Treasurer of PSF, and Vice President and
Treasurer and a director of Princeton, was a principal of Patterson Consulting
LLC and served as the Acting Chief Financial Officer of Farms, pursuant to a
consulting agreement between Farms and Patterson Consulting LLC, from January to
October 1996. During 1996, Farms paid Patterson Consulting LLC approximately
$256,000 in consulting fees pursuant to said consulting agreement. See
"Management."

Arthur B. Newman, a director of PSF and a Manager on the Board of Managers
of Holdings, is a Senior Managing Director of The Blackstone Group L.P.
("Blackstone"). Blackstone acted as an adviser to the

51
<PAGE> 53

Bondholders' Committee in connection with the Reorganization and received fees
for such services of $328,959 in 1996 as an administrative expense claim under
the Reorganization Plan.

Pursuant to the Reorganization, Holdings entered into registration rights
agreements with the holders of the LLC Units and the Warrants and PSF entered
into a registration rights agreement with the holders of the Notes. The
Securities are being registered hereunder pursuant to such registration rights
agreements. Holders of the Securities have certain other rights pursuant to the
registration rights agreements, including, among other things, certain Demand
Registration rights and Piggy-Back Registration rights. See "Description of the
Units -- Registration Rights of Unit Holders," "Description of the Warrants --
Registration Rights of Warrant Holders" and "Description of the Notes --
Registration Rights of Note Holders."

The Company's policy is that all material transactions between the Company
and its executive officers, directors, Managers and principal stockholders
occurring outside the ordinary course of the Company's business be on terms no
less favorable than could be obtained from unaffiliated third parties or are
subject to the approval of the Company's disinterested directors.

52
<PAGE> 54

SELLING SECURITYHOLDERS

The following table sets forth the name of each Selling Securityholder, the
aggregate number of Securities beneficially owned by each Selling Securityholder
as of the date hereof and the aggregate number of Securities that each Selling
Securityholder may offer and sell pursuant to this Prospectus. Because the
Selling Securityholders may sell all or a portion of the Securities at any time
and from time to time after the date hereof, no estimate can be made of the
number of Securities that each Selling Securityholder may retain upon completion
of the offering pursuant to this Prospectus. Information concerning the Selling
Securityholders may change from time to time and, to the extent required, will
be set forth in an accompanying Prospectus supplement or, if appropriate, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part. To the Company's knowledge, none of the Selling Securityholders has
any material relationship with the Company except as set forth in the footnotes
to the following table or as described elsewhere in this Prospectus. The
following table has been prepared based upon information furnished to the
Company by or on behalf of the Selling Securityholders.

<TABLE>
<CAPTION>
SECURITIES BENEFICIALLY
OWNED PRIOR TO OFFERING(1)
-------------------------- SECURITIES BEING
NAME OF BENEFICIAL OWNER NUMBER(2) PERCENT(3) OFFERED
------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
LLC UNITS (CLASS A UNITS):
- ----------------------------------------------------------
PUTNAM FUNDS:
AAF-Balanced Portfolio.................................. 12,885 * 12,885
AAF-Conservative Portfolio.............................. 4,186 * 4,186
AAF-Growth Portfolio.................................... 3,305 * 3,305
Ameritech Pension Trust................................. 31,938 * 31,938
Balanced Retirement Fund................................ 11,013 * 11,013
Capital Management Trust-PCM Div. Income Fund........... 52,810 * 52,810
Capital Manager Trust-PCM High Yield Fund............... 157,853 2.1% 157,853
Convertible Opportunities and Income Trust.............. 22,025 * 22,025
Div. Income Portfolio/Smith Barney/Travelers Series
Fund................................................. 2,203 * 2,203
Diversified Income Trust................................ 979,968 12.8% 979,968
Equity Income Fund...................................... 1,101 * 1,101
Global Government Income Trust.......................... 11,327 * 11,327
High Income Convertible and Bond Fund................... 33,430 * 33,430
High Yield Advantage Fund............................... 707,186 9.2% 707,186
High Yield Managed Trust................................ 35,429 * 35,429
High Yield Trust........................................ 1,185,708 15.5% 1,185,708
Income Fund............................................. 44,051 * 44,051
Managed High Yield Trust................................ 57,579 * 57,579
Master Income Trust..................................... 100,386 1.3% 100,386
Master Intermediate Income Trust........................ 71,533 * 71,533
Premier Income Trust.................................... 250,248 3.3% 250,248
Southern Farm Bureau Annuity Insurance Company.......... 18,722 * 18,722
The George Fund of Boston............................... 22,025 * 22,025
GEM CAPITAL MANAGEMENT:
Delta Airlines Retirement Trust(4)...................... 97,610 1.3% 97,610
Los Angeles Fire and Police Prevention Plan(4).......... 351,942 4.6% 351,942
Mt. Sinai School of Medicine(4)......................... 56,194 * 56,194
Xerox Profit Sharing(4)................................. 166,973 2.2% 166,973
PRUDENTIAL FUNDS:
General Motors Retirement Program for Salaried Employees
High Yield Account................................... 55,064 * 55,064
The High Yield Income Fund, Inc. ....................... 27,924 * 27,924
</TABLE>

53
<PAGE> 55
<TABLE>
<CAPTION>
SECURITIES BENEFICIALLY
OWNED PRIOR TO OFFERING(1)
-------------------------- SECURITIES BEING
NAME OF BENEFICIAL OWNER NUMBER(2) PERCENT(3) OFFERED
------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
Prudential High Yield Fund, Inc. ....................... 951,717 12.4% 951,717
Prudential Series Fund, Inc. High Yield Bond
Portfolio............................................ 22,025 * 22,025
The U.S. High Yield Fund SICAV.......................... 77,873 1.0% 77,873
BEAR STEARNS SECURITIES CORP.:
Pan International Ltd. ................................. 12,114 * 12,114
Pan Fixed Income Fund................................... 40,945 * 40,945
MISCELLANEOUS FUNDS:
Continental Assurance Co. Pension Investment Fund....... 742,247 9.7% 742,247
OAKTREE CAPITAL MANAGEMENT, LLC:
Columbia/HCA Master Retirement Trust (5)................ 46,710 * 46,710
OCM Opportunities Fund, L.P. (5)........................ 1,212,087 14.6% 1,212,087
OTHER:
Premium Holdings Corp. ................................. 78,763 1.0% 78,763
Dennis Harms............................................ 247,732(6) 3.2% 104,969
LLC UNITS (CLASS B UNITS):
- ----------------------------------------------------------
Morgan Stanley Group Inc. .............................. 2,112,664 90.5% 2,112,664
PSF Finance Holdings Inc. .............................. 219,000 9.4% 219,000
Collings Farms, Inc. ................................... 3,000 * 3,000
WARRANTS:
- ----------------------------------------------------------
Irene B. Adams.......................................... 500 * 500
Randolph F. Alexander D.D.S., M.S. ..................... 561 * 561
Rick Anderson........................................... 1,021 * 1,021
Michael A. Anthony & Vivian Anthony Trustees for M.A. &
V.A. Anthony Living Trust............................ 765 * 765
Robert C. Anthony & Maha Anthony Trustees of R.C. & M.A.
Anthony Living Trust................................. 885 * 885
Robert Aufiero.......................................... 312 * 312
Leslie Gordon Augustus.................................. 932 * 932
William D. Baird........................................ 3,571 * 3,571
David Barkin as Custodian for Benjamin Barkin-Wilkins... 262 * 262
David Barkin............................................ 4,483 * 4,483
Elaine Barkin, Trustee.................................. 170 * 170
David Bauer............................................. 1,559 * 1,559
Robert P. Baynard, Robert P. Baynard, Jr. .............. 2,602 * 2,602
R.B. Beale Equip. Rental Profit Sharing Plan............ 510 * 510
Rupert H. & Birdie G. Best Co-Trustees.................. 2,041 * 2,041
Aimee Simon Bloom....................................... 1 * 1
Robert T. Bodamer Family Trust.......................... 2,041 * 2,041
Jane Folsom Boggs....................................... 510 * 510
Rudolph Bragg TTEE...................................... 2,041 * 2,041
Sally J. Brandenburg.................................... 468 * 468
Kent Bry................................................ 334 * 334
Kenneth J. Candelaria................................... 510 * 510
Richard Candelaria...................................... 510 * 510
Thomas M. Candelaria.................................... 5,513 * 5,513
William G. Clark........................................ 375 * 375
William N. Cory & Faye Cory TTEE for Cory Family
Trust................................................ 15,646 * 15,646
Kevin Cunningham........................................ 1,377 * 1,377
</TABLE>

54
<PAGE> 56
<TABLE>
<CAPTION>
SECURITIES BENEFICIALLY
OWNED PRIOR TO OFFERING(1)
-------------------------- SECURITIES BEING
NAME OF BENEFICIAL OWNER NUMBER(2) PERCENT(3) OFFERED
------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
Mark L. Deutsch......................................... 1,674 * 1,674
Ronald E. Deutsch....................................... 8,156 * 8,156
Boyd Finch.............................................. 939 * 939
William M. Fitzmaurice.................................. 50 * 50
Peter E. Gadkowski...................................... 1 * 1
Elizabeth Gordon Gage................................... 932 * 932
Ned Gerstman............................................ 390 * 390
Ned & Virginia Gerstman................................. 1,091 * 1,091
Elizabeth S. Gordon, Trustee for J. MacMillan, C.
MacMillan & S. MacMillan............................. 2,795 * 2,795
Elizabeth S. Gordon, Trustee for K.M. Augustus, A.G.
Augustus & E.E. Augustus............................. 2,795 * 2,795
Elizabeth S. Gordon, Trustee for M.C. Gordon, C.E.
Gordon & S.E. Gordon................................. 2,795 * 2,795
Elizabeth S. Gordon, Trustee for Everett L. Gage, IV.... 932 * 932
Michael Colin Gordon.................................... 932 * 932
Theodore E. Gordon...................................... 1,020 * 1,020
Theodore E. Gordon, Jr.................................. 56,743 2.8% 56,743
Richard Augustus, Trustee of the Gordon Family Trust.... 18,938 * 18,938
Bud Hale................................................ 1,237 * 1,237
Dennis Harms & Kathy Harms as Tenants by the Entirety... 104,969 5.1% 104,969
Gene Harris............................................. 13 * 13
Craig C. Hoagland....................................... 485 * 485
David Hoagland.......................................... 204 * 204
Laurance R. Hoagland, Jr................................ 255 * 255
Laurance R. Hoagland, III............................... 1,247 * 1,247
Don Houts, MD Inc. Profit Sharing Plan.................. 775 * 775
Don & Jean Houts, Trustees of the Houts Family Trust.... 436 * 436
Billy C. and/or Betty L. Hunter, JTWROS................. 614 * 614
IPP93, L.P. ............................................ 40,848 2.0% 40,848
Edward H. Jewett, IV.................................... 16,812 * 16,812
Ellen W. Joffe, Marion W. Oppenheimer JTWROS............ 1,020 * 1,020
Robert W. Johnson....................................... 1 * 1
Douglas & Co. (FBO Robert Johnson)...................... 1,559 * 1,559
K. Gregory & Louise Kepley.............................. 510 * 510
Aaron F. Kramer......................................... 2,340 * 2,340
Bofirnat Co. FBO Aaron F. Kramer SEP.................... 801 * 801
Nacy M. Law & Theodore B. Law........................... 51 * 51
Robert I. Law........................................... 1,118 * 1,118
J.P. Lipson............................................. 5,268 * 5,268
Douglas B. Luce......................................... 26,540 1.3% 26,540
J. David Luce........................................... 10 * 10
John T. Lucci........................................... 3,378 * 3,378
Mary Cordon MacMillan................................... 932 * 932
Christine G. Malouf, Trustee of the C.G. Malouf Living
Trust................................................ 680 * 680
Bruce E. Martin......................................... 510 * 510
R.T. McCleave D.D.S., Inc. Profit Sharing Plan Trust.... 780 * 780
Ronald T. McCleave & Erika McCleave, Co-Trustees........ 1,531 * 1,531
Pressley McCoy.......................................... 102 * 102
R. David Mitchell....................................... 510 * 510
</TABLE>

55
<PAGE> 57
<TABLE>
<CAPTION>
SECURITIES BENEFICIALLY
OWNED PRIOR TO OFFERING(1)
-------------------------- SECURITIES BEING
NAME OF BENEFICIAL OWNER NUMBER(2) PERCENT(3) OFFERED
------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
Michael G. Mitchell & William L. Pfau, TC............... 510 * 510
Edward B. Mohns, M.D.................................... 3,214 * 3,214
HOMCO & CO c/o Danielson Trust Co. Trust (FBO Mohns).... 2,296 * 2,296
Morgan Stanley Leveraged Equity Fund II, L.P. .......... 90,519 4.4% 90,519
Morgan Stanley Capital Partners III, L.P. .............. 1,595 * 1,595
Morgan Stanley Capital Investors, L.P. ................. 67 * 67
MSCP III 892 Investors, L.P. ........................... 209 * 209
Robert A. Morrow........................................ 3,061 * 3,061
Scott J., MD & Sandra J. Mubarak, CoTrustees for
Pediatric, Ortho & Scoliosis Medical Group Inc. ..... 681 * 681
Julie A. Simon Munro.................................... 1 * 1
Mary Louise Navarrete................................... 510 * 510
Thomas H. Neill and/or Vicki L. Neill, JTWROS........... 1,607 * 1,607
Stephen G. Nelson & Nancy L. Nelson..................... 21,938 1.1% 21,938
Stephen G. Nelson or Nancy L. Nelson Custodian for
Stephanie A. Nelson.................................. 510 * 510
Stephen G. Nelson or Nancy L. Nelson Custodian for
Tifanie H. Nelson.................................... 510 * 510
Edward R. Newsom........................................ 510 * 510
Gerald Odegaard......................................... 510 * 510
Mark A. Pinto........................................... 1,674 * 1,674
Carol Leigh Porges...................................... 1 * 1
Premium Holdings L.P. .................................. 12,992 * 12,992
James Rice, M.D. ....................................... 3,826 * 3,826
Michael C. Robert....................................... 2,041 * 2,041
Connie S. Schmidt & Terry B. Schmidt.................... 256 * 256
David L. Shank, TTEE of the George F. Shank Exempt
Trust................................................ 387 * 387
Stephan F. Shank........................................ 738 * 738
Stephen L. Shank, TTEE of the George F. Shank Exempt
Trust................................................ 1,600 * 1,600
James M. Shepard........................................ 3,571 * 3,571
J. Peter Simon.......................................... 1 * 1
Janet M. Simon.......................................... 1,243 * 1,243
Johanna K. Simon........................................ 1 * 1
William E. Simon, Jr.................................... 468 * 468
William E. Simon........................................ 1 * 1
Charles M.K. Simonds.................................... 779 * 779
Donald G. Skadburg...................................... 600 * 600
Gary A. Stougaard & Sheryl B. Stougaard, JTWROS......... 255 * 255
Mary Beth Streep........................................ 780 * 780
Antonino B. Triscari.................................... 5,204 * 5,204
David P. Wallace........................................ 390 * 390
Marsha Webster.......................................... 917 * 917
Randy Whitcomb.......................................... 390 * 390
Katherine A. Wierman.................................... 408 * 408
Mona M. Williams........................................ 127 * 127
Premium Holdings Corp. (Reserved for Anderson and
Skadburg)............................................ 763 * 763
PSF Finance Holdings Inc. .............................. 1,495,180 73.0% 1,495,180
Collings Farm Inc. ..................................... 20,482 1.0% 20,482
</TABLE>

56
<PAGE> 58
<TABLE>
<CAPTION>
SECURITIES BENEFICIALLY
OWNED PRIOR TO OFFERING(1)
-------------------------- SECURITIES BEING
NAME OF BENEFICIAL OWNER NUMBER(2) PERCENT(3) OFFERED
------------------------ --------- ---------- ----------------
<S> <C> <C> <C>
NOTES:
- ----------------------------------------------------------
Morgan Stanley Group Inc. .............................. 11,262,791 9.1% 11,262,791
Bost & Co. ............................................. 191,806 * 191,806
Cede & Co. ............................................. 111,313,659 89.9% 111,313,659
Cun & Co. .............................................. 358,363 * 358,363
Gimlet & Co. ........................................... 386,838 * 386,838
List & Co. ............................................. 116,073 * 116,073
Pitt & Co. ............................................. 261,169 * 261,169
</TABLE>

- -------------------------
* Less than 1%.

(1) Unless otherwise indicated, each person has sole investment and voting power
with respect to the Securities listed in the table, subject to community
property laws, where applicable. For purposes of this table, a person or
group of persons is deemed to have "beneficial ownership" of any Securities
such person has the right to acquire within 60 days. For purposes of
computing the percentage of outstanding Securities held by each person or
group of persons named above, any security which such person or group of
persons has the right to acquire within 60 days is deemed to be outstanding
for the purpose of computing the percentage ownership for such person or
persons, but is not deemed to be outstanding for the purpose of computing
the percentage ownership of any other person.

(2) Figures for Notes are the face amount of the Notes in dollars.

(3) Based upon (i) 7,665,336 Class A LLC Units and 2,334,664 Class B LLC Units
outstanding plus Units issuable upon exercise of options, warrants and
convertible securities which are included in the number of LLC Units
beneficially owned by such person, (ii) 2,048,192 Warrants outstanding and
(iii) $123,890,699 aggregate principal amount of Notes outstanding.

(4) GEM Capital Management, Inc. has sole voting power and investment power over
such LLC Units as the investment adviser for certain accounts, but disclaims
beneficial ownership of such LLC Units.

(5) Oaktree Capital Management, LLC acts as the general partner of OCM
Opportunities Fund, L.P. and investment manager of the Columbia/HCA Master
Retirement Trust separate account and in such role has voting and
dispositive powers over such LLC Units. Oaktree Capital Management, LLC
disclaims beneficial ownership of such LLC Units.

(6) Consists of 104,969 LLC Units and 64,000 LLC Units which may be acquired
through the exercise of Warrants and options, respectively. Also includes
78,000 LLC Units held by Premium Holdings Corp. and 763 LLC Units which may
be acquired through the exercise of Warrants held by Premium Holdings Corp.,
of which Mr. Harms is a director, over which he may have shared voting and
dispositive power, but as to which beneficial ownership is disclaimed. Such
Warrants are held by Dennis Harms and his wife as Tenants in the Entirety.

(7) Consist of the specified number of LLC Units which may be acquired through
the exercise of options.

57
<PAGE> 59

PRINCIPAL LLC UNITHOLDERS

The following table sets forth certain information regarding beneficial
ownership of LLC Units as of December 31, 1996, by (i) each person who is known
by the Company to own beneficially more than 5% of the outstanding LLC Units,
(ii) each director of the Company, (iii) each of the Named Executive Officers
and (iv) all directors and executive officers of the Company as a group.

<TABLE>
<CAPTION>
UNITS BENEFICIALLY OWNED(2)
NAME AND ADDRESS OF ----------------------------
BENEFICIAL OWNER(1) NUMBER PERCENT(3)
------------------- ------ ----------
<S> <C> <C>
Putnam Funds................................................ 3,816,911 49.8%
One Post Office Square, 10th Floor
Boston, MA 02109
GEM Capital Management...................................... 672,719 8.8
70 East 55th Street, 12th Floor
New York, NY 10022
Prudential Funds............................................ 1,134,603 14.8
Gateway II, 7th Floor
Newark, NJ 07101
Continental Assurance Co. Pension Investment Fund........... 742,247 9.7
667 Madison Avenue, 7th Floor
New York, NY 10021-8087
Oaktree Capital Management, LLC............................. 1,167,797(4) 15.2
550 South Hope Street, 22nd Floor
Los Angeles, CA 90071
Dennis W. Harms............................................. 247,732(5) 3.2
William R. Patterson........................................ 22,000(6) *
Mark Warren................................................. 3,000(7) *
David Mitchell.............................................. 2,000(8) *
Horst W. Schroeder.......................................... 64,000(9) *
All directors and executive officers as a group (17
persons)(10).............................................. 343,532 4.3
</TABLE>

- -------------------------
* Less than 1%.
(1) Unless otherwise indicated, the business address of the persons named in
the above table is care of PSF Holdings, L.L.C., 423 West 8th Street, Suite
200, Kansas City, Missouri 64105.
(2) Unless otherwise indicated, each person has sole investment and voting
power with respect to the Units listed in the table, subject to community
property laws, where applicable. For purposes of this table, a person or
group of persons is deemed to have "beneficial ownership" of any Units
which such person has the right to acquire within 60 days. For purposes of
computing the percentage of outstanding Units held by each person or group
of persons named above, any security which such person or group of persons
has the right to acquire within 60 days is deemed to be outstanding for the
purpose of computing the percentage ownership for such person or persons,
but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) Based upon 7,665,336 voting LLC Units outstanding plus 591,648 voting LLC
Units issuable upon exercise of options and warrants (currently exercisable
or exercisable within 60 days) and upon conversion of convertible
securities which are included in the number of Units beneficially owned by
such person.
(4) Consists of 1,121,087 LLC Units held by OCM Opportunities Fund, L.P. of
which Oaktree Capital Management, LLC is the general partner, and 46,710
LLC Units held by Columbia/HCA Master Retirement Trust for which Oaktree
Capital Management, LLC acts as investment manager, and which over all of
such LLC Units, Oaktree Capital Management, LLC has voting and dispositive
powers. Oaktree Capital Management, LLC disclaims beneficial ownership of
such LLC Units.
(5) Consists of 104,969 LLC Units and 64,000 LLC Units which may be acquired
through the exercise of Warrants and options, respectively. Also includes
78,000 LLC Units held by Premium Holdings Corp. and 763 LLC Units which may
be acquired through the exercise of Warrants held by Premium Holdings Corp.
of which Mr. Harms is a director, over which he may have shared voting or
dispositive power, but as to which beneficial ownership is disclaimed. The
Warrants for 104,969 LLC Units are held by Mr. Harms and his wife as
Tenants by the Entirety.
(6) Consists of 22,000 LLC Units which may be acquired through the exercise of
options.
(7) Consists of 3,000 LLC Units which may be acquired through the exercise of
options.
(8) Consists of 2,000 LLC Units which may be acquired through the exercise of
options.
(9) Consists of 64,000 LLC Units which may be acquired through the exercise of
options by HWS & Associates, Inc. of which Mr. Schroeder is the president
and owner.
(10) Where more than one person or entity is the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of the same LLC Units listed in the
table, such Units are counted only once in determining the totals listed in
the table.

58
<PAGE> 60

DESCRIPTION OF CERTAIN INDEBTEDNESS

THE CREDIT AGREEMENT

PSF, as borrower, and Holdings, as guarantor, entered into the Credit
Agreement with Chase Manhattan Bank, N.A., as issuing bank, collateral agent and
administrative agent, and the lenders named therein to enable the Company to
exit Chapter 11. The Credit Agreement provides for a revolving credit facility
in the amount of $60 million and a term loan facility in the amount of $30
million. Letters of credit may be issued under the revolving credit facility up
to a sublimit of $5 million. The repayment of any indebtedness under the Credit
Agreement is secured by a first priority perfected lien on substantially all of
the assets of the Company and guaranteed by Holdings and Princeton Development
Corp.

Borrowings under the Credit Agreement bear interest, payable monthly in
arrears, at a base interest rate equal to either (a) the applicable base rate of
Chase Manhattan Bank, N.A., plus 2 1/2%, or (b) an adjusted LIBOR plus 3 1/2%,
at the option of PSF; provided, however, that the applicable margin over such
base interest rate and adjusted LIBOR will decrease to 1 1/2% and 2 1/2%,
respectively, at such time following the six month anniversary of the first
borrowing under the Credit Agreement as PSF shall have repaid $2,500,000 in
principal amount of the term loan thereunder. PSF is obligated to pay a
commitment fee of 1/2% per annum on the average daily undrawn amount of the
revolving credit facility, and a letter of credit fee of 3% per annum on the
undrawn amount of each letter of credit issued and outstanding under the Credit
Agreement.

Commencing September 30, 1997, PSF is required to make quarterly payments
of principal of the term loan in the amount of $1,500,000 plus accrued interest;
provided that all unpaid principal and accrued and unpaid interest thereon is
due on September 30, 2001.

Subject to PSF's obligation to indemnify each lender under the Credit
Agreement for certain losses and expenses, any borrowing under the Credit
Agreement may be prepaid in whole or in part upon notice without premium or
penalty. Mandatory prepayments will be required to be made under the Credit
Agreement from the proceeds of any Asset Sale (as defined therein); the proceeds
of sales or issuances of any equity securities by the Company (subject to
certain exceptions); the proceeds from the incurrence of indebtedness by the
Company (other than in connection with the Second Priority Notes and certain
other permitted indebtedness); in the amount of 75% of PSF's excess cash flow as
defined in the Credit Agreement beginning in the year ending December 31, 1997;
and, as may be required pursuant to applicable mortgages delivered pursuant to
the Credit Agreement, the proceeds of any Casualty Insurance or Condemnation
Proceeds (in each case as defined in such applicable mortgage).

At December 28, 1996, the outstanding principal amount of the term loan was
$30 million, and interest accrued thereon as of such date was approximately
$795,000; the outstanding principal amount under the revolving credit facility
as of such date was $0, and interest accrued thereon as of such date was $0.

SECOND PRIORITY NOTES

PSF and Holdings, as Guarantor, entered into the Second Priority Note
Agreement with Morgan Stanley Group Inc. as of the Effective Date. Pursuant to
the Second Priority Note Agreement, Morgan Stanley Group Inc. has committed to
purchase $10 million in Second Priority Notes of PSF under certain terms and
conditions. The Second Priority Notes will be purchased, subject to the
conditions contained therein, only if the sum of the unused amount available
under the Credit Agreement and total cash and certain short-term investments of
PSF is less than $5 million. The obligation of Morgan Stanley Group Inc. under
the Second Priority Note Agreement will terminate two years after the Effective
Date. The maturity of the Second Priority Notes is September 17, 2002, subject
to earlier redemption. The Second Priority Notes will bear interest at the rate
of 11% per annum, calculated on the basis of a 360-day year, payable in cash,
quarterly in arrears on each March 15, June 15, September 15 and December 15.

The Second Priority Notes upon issuance will be guaranteed by Holdings and
Princeton and secured by a second priority lien on substantially all of the
assets of the Company, junior to the lien of the lenders under the Credit
Agreement, but senior to the lien of the Notes.

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The Second Priority Note Agreement imposes certain limitations on the
ability of the Company to among other things, (i) merge or consolidate with any
other person, (ii) incur liens securing indebtedness that is pari passu or ranks
higher than the right of payment to the Second Priority Notes, (iii) make
certain restricted payments. PSF has agreed to indemnify and hold harmless
Morgan Stanley Group Inc. against losses arising out of or in connection with
the Second Priority Note Agreement, any other Note Document (as defined in the
Second Priority Note Agreement) or any other services rendered in connection
with the Second Priority Note Agreement, subject to certain exceptions.

Events of Default under the Second Priority Note Agreement include, among
other things, payment defaults, covenant defaults, cross-defaults to certain
other indebtedness, judgment defaults and certain events of bankruptcy and
insolvency, except that acceleration of the Second Priority Notes will be
triggered only by acceleration under the Credit Agreement or the Indenture, or
breach of specified covenants.

At March 31, 1997, no Second Priority Notes were outstanding.

DESCRIPTION OF THE UNITS

GENERAL

The following summary is a summary of the material provisions of the Units
and the Second Amended and Restated Limited Liability Company Agreement of
Holdings dated April 16, 1997 (the "LLC Agreement"). This summary does not
purport to be complete and is subject to the detailed provisions of, and is
qualified in its entirety by reference to, the LLC Agreement, including the
definitions of certain terms contained therein. A copy of the LLC Agreement has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The definition of certain terms used in the following summary are set
forth below under "-- Certain Definitions." Reference is made to the LLC
Agreement for the full definition of all such terms, as well as any other
capitalized terms used herein for which no definition is provided.

The Units were issued on the Effective Date to the original Members and
those Persons admitted as Members on the Effective Date. Holdings may issue
additional Units for cash, property or services on such terms as the Board of
Managers deems appropriate, provided that the consent of the Required Members is
obtained in advance, and upon such issuance, the Percentage Interests (as
defined below) of the Members shall be redetermined as set forth hereinafter.
The percentage interests of each Member in the profits and capital of Holdings
(each a "Percentage Interest") shall be determined by dividing the number of
Units held by such Member by the number of Units then held by all Members and
multiplying the result by 100, and shall be adjusted each time Units are issued
or repurchased by Holdings. Unless and until the Board of Managers provide that
the Units shall be certificated, the Units shall be uncertificated, and the
Units and Percentage Interests of each Member shall be evidenced by an exhibit,
as amended from time to time, to the LLC Agreement.

CLASSES

The Units are divided into two classes, Class A Units and Class B Units.
Except as otherwise provided in this "Description of the Units," the Class A
Units and Class B Units are identical and entitle the holders thereof to the
same rights and privileges.

DISTRIBUTIONS

Subject to the terms and conditions set forth in the LLC Agreement, the
Board of Managers has the sole authority to determine the timing and aggregate
amount of any Distributions from Holdings to Members. Such Distributions shall
be made first, to the Members as a Tax Distribution on or before April 1 of each
fiscal year of Holdings in an amount equal to the Members' Estimated Tax
Liability (as defined below) and second, to all Members pro rata in accordance
with their respective Percentage Interests. "Members' Estimated Tax Liability"
means the product of (i) the Taxable Income from Operations of Holdings times
(ii) the Tax Distribution Rate for the immediately preceding fiscal year, all as
reasonably determined by the Board of Managers. Any Tax Distribution for a
fiscal year shall be distributed among the Members pro rata in

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accordance with their respective Percentage Interests. Notwithstanding the
foregoing, Holdings will not make a Distribution to any Member on account of its
interest in Holdings if such Distribution would violate the Delaware Limited
Liability Company Act or other applicable law. The Board of Managers is
authorized to withhold from Distributions, or with respect to allocations, to
the Members and to pay over to the appropriate federal, state, local or foreign
government any amounts required to be so withheld, and shall allocate any such
amounts to the Members in respect of whose Distribution or allocation the tax
was withheld and shall treat such amounts as actually distributed to such
Members.

Holdings will establish and maintain a separate account (each a "Capital
Account") for each Member which will reflect the amount of cash and the fair
market value of any other property contributed by such Member as a Capital
Contribution, any adjustment required pursuant to the LLC Agreement and such
Member's share of the Net Profit of Holdings and which shall be charged with the
amount of cash and the fair market value of any other property distributed to
such Member and such Member's share of the Net Losses of Holdings. Subject to
certain exceptions, the Net Profit and Net Loss of Holdings shall be allocated
among the Members for tax purposes pro rata in accordance with their respective
Percentage Interests.

CONVERSION OF UNITS

Each Class B Unit transferred (by sale, assignment, pledge, encumbrance,
disposition or other transfer) to a party other than a MS Member is convertible,
at the election of such party, into one Class A Unit immediately following such
transfer, and each Class A Unit transferred to a MS Member shall convert
automatically, immediately following such transfer, without further action on
the part of any party, into one Class B Unit; provided that in either case, in
the event of any change in the Units of Holdings by reason of merger,
consolidation, recapitalization, split, division or subdivision, combination,
conversion, exchange of Units or other change in the capital or organization
structure of Holdings, the number and kind of Units shall be appropriately
adjusted so that the holders of such Units shall receive upon conversion,
purchase or transfer of the Units, the number of Units or other securities or
property that such holder would have received in respect of the Units had such
Units been converted, purchased or transferred immediately prior to such event.

RIGHT TO REPURCHASE UNITS

Holdings has the right or obligation to repurchase the Interest of any
Employee Member upon termination of the Employee Member as an employee of
Holdings or an Affiliate of Holdings as set forth below. If an Employee Member
is terminated as a result of death or Disability, Holdings is obligated to
purchase such Employee Member's Interest at Fair Value within 90 days after such
termination, subject to extension as provided in the LLC Agreement. If an
Employee Member is terminated other than as a result of death or Disability,
Holdings has the right for a period of six months following the last date on
which such Employee Member was a member of the board of directors or managers or
an employee of Holdings or an Affiliate of Holdings to repurchase the entire
Interest of such Employee Member for Fair Value or, if such Employee's Interest
had not vested or was otherwise subject to restrictions, at such price as may be
specified in the agreement or plan pursuant to which such unvested or restricted
interest was acquired, upon written notice to the Employee on or before the
expiration of such six-month period. Such notice shall set forth a closing date
for such repurchase of not later than 30 days after the date of such notice,
subject to extension as provided in the LLC Agreement.

MANAGEMENT BY BOARD OF MANAGERS

The management of the business and affairs of Holdings shall be vested in a
Board of Managers. The Board of Managers shall have complete authority and
discretion to make any and all decisions concerning the business and affairs of
Holdings and to exercise any and all powers of Holdings, except as limited by
the Delaware Limited Liability Company Act, the Certificate, or as specifically
reserved to the Members pursuant to the LLC Agreement. Each Manager shall have
one vote in all matters coming before the Board of Managers. Notwithstanding the
foregoing, the Board of Managers may delegate the day to day management and the
power to execute documents to certain officers as set forth in the LLC
Agreement. Each of the Managers appointed pursuant to the LLC Agreement shall
serve until the next annual meeting of the

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Members or until such Managers' successors are duly elected and qualified. Upon
the resignation, death or incapacity of any Manager, the remaining Managers
shall constitute the Board of Managers. Subject to the foregoing, if at any time
any Manager then serving dies, becomes incapacitated or resigns, and such
vacancy results in there being less than three Managers, the remaining Managers
by vote or resolution, shall appoint a successor Manager or Managers so that
there will be at least three Managers. Absent express authority by the Board of
Managers, no individual Manager will have the power or the authority to act on
behalf of, or to bind, Holdings.

RIGHTS OF MEMBERS

The Members have the right to vote on all matters which are submitted to
the Members for approval by the Board of Managers or required by the LLC
Agreement. Matters required to be submitted to the Members for approval include
(i) an increase in the number of LLC Units which may be issued under the
Management Option Plan, (ii) amendment of the LLC Agreement, (iii) dissolution
of Holdings, (iv) election of the Board of Managers, (v) the merger or
consolidation of Holdings with any other person, (vi) change of status of
Holdings from one in which management is vested in the Board of Managers to one
in which management is vested in the Members, (vii) the sale, lease, exchange or
other disposition, other than by mortgage, deed of trust, or pledge, of all, or
substantially all, of the assets and property of Holdings, (viii) the
authorization of any transaction, agreement or action that otherwise contravenes
the LLC Agreement and (ix) an amendment of the Certificate which the Board of
Managers reasonably believes may have an adverse effect on the Members. The
foregoing actions require approval by the affirmative vote of the Required
Members subject to certain provisions regarding amendment of the LLC Agreement.
Notwithstanding the foregoing, no Class B Member shall have any right, power or
authority to participate in the management of Holdings in any manner, including
without limitation, the right, power or authority (i) to initiate or participate
in any vote or resolution of the Members adopted pursuant to the LLC Agreement,
(ii) to initiate or participate in the granting of any consent or approval
required to be granted by the Members pursuant to the LLC Agreement (except as
otherwise provided in the LLC Agreement), (iii) to initiate or participate in
any action permitted to be taken in the discretion or at the direction of the
Members as a group, or on the part of the Members by or through any
determination, designation, appointment or other action of the Members, as a
group, as provided in the LLC Agreement, or (iv) to execute any documents that
are binding on Holdings or otherwise to take any action to bind Holdings in any
respect.

No Member shall have the right or power to (i) withdraw or reduce its
Capital Contribution except as a result of the dissolution of Holdings or as
otherwise provided by law or the LLC Agreement, (ii) make voluntary Capital
Contributions or to contribute any property to Holdings other than cash, (iii)
bring an action for partition against Holdings or any Holdings assets, (iv)
cause the termination and dissolution of Holdings, except as set forth in the
LLC Agreement, or (v) require that property other than cash be distributed upon
the distribution of its Capital Contribution. Each Member waives its rights (i)
to maintain an action for partition of any of Holdings's property and (ii)
except where the Board of Managers has failed to liquidate Holdings as required
by the LLC Agreement and except as specifically provided under the Delaware
Limited Liability Company Act, to initiate legal action to seek dissolution or
to seek the appointment of a receiver or trustee to liquidate Holdings. Except
as set forth under "-- Distributions," no Member shall have priority over any
other Member either as to the return of its Capital Contribution or as to Net
Profit, Net Loss, or Distributions, except that Holdings shall pay the expenses
incurred by the Tax Matters Member for which Holdings has agreed to indemnify
and reimburse the Tax Matters Member pursuant to the LLC Agreement before any
Distributions are made to Members. Other than upon the termination and
dissolution of Holdings, there is no agreed upon time when the Capital
Contribution of any Member will be returned. No Member shall have the right to
demand a return of all or any part of such Member's Capital Contributions. Any
return of the Capital Contributions of a Member shall be made solely from the
assets of Holdings and only in accordance with the terms of the LLC Agreement.
Interest may be paid to each Member with respect to such Member's Capital
Contributions on terms and at a rate to be determined from time to time by the
Board of Managers.

The Board of Managers, with the approval of the Required Members, may elect
at any time to convert Holdings into a corporation (by merger or such other form
of transaction as may be available under applicable law). In such conversion,
the Interests of the Members (determined as set forth in the LLC Agreement),

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option holders and warrant holders of Holdings shall be the basis for the
allocation of shares, options or warrants in the corporation. In connection with
such a conversion, MS Members shall, at their election, be allocated non-voting
shares, options, or warrants, as applicable, convertible upon transfer at the
election of the transferee to voting shares of the class received by other
Members; provided that the MS Members shall not be allocated voting shares,
options, or warrants, as applicable, if in so doing, compliance with the
Investment Company Act of 1940 would become materially more burdensome to such
MS Members. Such non-voting shares, options or warrants, as applicable, shall
otherwise be identical and shall entitle the MS Members to the same rights and
privileges as those shares, options or warrants allocated to the non-MS Members
in any such conversion.

No Member shall resign from Holdings except that, subject to the
restrictions set forth in the LLC Agreement, a Member may transfer its Interest
to an Assignee and an Assignee may become a Member in place of the assigning
Member.

RESTRICTIONS ON TRANSFER

A Member may not sell, assign, pledge, encumber, dispose of or otherwise
transfer (each a "Transfer"), any Units or all or any part of the economic or
other rights that comprise its Interest unless ten days' prior written notice
(or such shorter time as agreed to by Holdings) is given to Holdings; provided
that the ten day period may be increased to thirty days in the event Holdings,
in its sole discretion, advises the Member seeking to Transfer Units that such
Transfer may cause a termination of Holdings for tax purposes; and provided
further that no prior written notice need be given in connection with Transfers
by Collings Farm, Inc. or PSF Finance Holdings, Inc. to their respective
stockholders in connection with the dissolution of such corporations.

In addition, no Transfer of a Member's Interest may be made unless and
until Holdings shall have received, if requested (i) an opinion of counsel,
satisfactory in form and substance to Holdings and its counsel to the effect
that such Transfer would not violate the Securities Act of 1933, as amended, or
any state securities or blue sky laws applicable to Holdings or the Interest to
be transferred, and (ii) the agreement in writing of the Assignee to comply with
all of the terms and provisions of the LLC Agreement. Pursuant to the LLC
Agreement, a Member will not transfer its Interest in Holdings except as
permitted by the LLC Agreement and in no event will an Interest be transferred
to a minor or an incompetent except in trust or pursuant to the Uniform Gifts to
Minors Act. Any Transfer in contravention of the provisions regarding Transfer
in the LLC Agreement will be void and of no effect, and will not bind nor be
recognized by Holdings.

A transferee of an Interest shall not be admitted as a Member of Holdings,
but shall remain an Assignee with respect to the Interest transferred unless
admitted as a Member as set forth below. Unless a transferee is admitted as a
Member, the Transfer of all of a Member's interest in the profits, losses and
capital of Holdings shall not cause such Member to cease to be a Member of
Holdings. In the event of a Transfer in compliance with the LLC Agreement, the
Assignee will be entitled to receive Distributions, allocations of Net Profit,
Net Loss and items of income, deduction, gain, loss, or credit attributable to
the Economic Interest assigned to the Assignee, and a copy of the financial
statements and tax information required to be provided to Members, but an
Assignee will have no other rights of a Member, including without limitation the
right to vote as a Member on matters set forth in the LLC Agreement or the
Delaware Limited Liability Company Act, which rights shall continue to be held
by the assigning Member, unless and until such Assignee is admitted as a Member
pursuant to the LLC Agreement.

Holdings and the Board of Managers will be entitled to treat the transferor
as the absolute owner of the Economic Interest transferred to the Assignee in
all respects, and will not incur liability for Distributions, allocations of Net
Profits or Net Loss, or transmittal of reports and notices required to be given
to Members that are made in good faith to the transferor until the effective
date, as set forth in the LLC Agreement, of the Transfer.

No Person may acquire or own any Units if such Person's ownership of Units
would cause Holdings to become a Foreign Business. Without limiting the
foregoing, no Person who is an Alien or a Foreign Business shall acquire or own
in the aggregate more than 5% of the outstanding Units of Holdings without the
prior written approval of Holdings. If any Person acquires or owns Units in
violation of the above provisions, such

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Person shall dispose of such number of Units as will reduce its ownership of
Units to 5% or less of the outstanding Units or such lesser percentage as is
required for Holdings not to be a Foreign Business, within thirty days (or such
earlier date as Holdings determines) of the date that Holdings notifies such
Person that it is in violation of the above provisions. If such Units are not
disposed of within such period, Holdings shall not be required or permitted to
pay any distribution with respect to such Units and such Person will not be
entitled to vote on any matter, or otherwise participate in the management of
Holdings, with respect to any Units owned by it. In addition, Holdings shall be
entitled to redeem such Units at their Fair Value, payable in cash, property or
rights.

No Member may Transfer all or any part of its Interest to Morgan Stanley
Group, Inc., or any successor thereto, or an Affiliate thereof (other than
Premium Holdings Corp.) (i) if Holdings, within ten days following the receipt
of the required prior written notice of Transfer, notifies the Member in writing
that the acquisition of Units would cause Holdings to become a Foreign Business
or (ii) if the number of Class A Units held by any Member (other than Members
advised by Putnam Investment Management, Inc., Putnam Advisory Company, Inc.,
and Putnam Fiduciary Trust Company) and its Affiliates on the date of the LLC
Agreement would equal or exceed 25% of the Class A Units issued and outstanding
following such Transfer. In the case of a proposed Transfer that would cause a
violation of clause (ii) above, Holdings will within ten days following receipt
of the required prior written notice notify in writing the Member who provides
such required notice.

Except as may otherwise be required by law or by the LLC Agreement, and
subject to the above provisions regarding restrictions on Transfer, Holdings
will be entitled to treat the record holders of the Interests as the Members
under the LLC Agreement.

ADMISSION AS MEMBERS

An Assignee shall not be admitted as a Member unless all of the following
conditions are satisfied: (i) a duly executed and acknowledged written
instrument of Transfer is filed with Holdings, specifying the Interests being
transferred and setting forth the intention of the Member effecting the Transfer
that the Assignee succeed to a portion or all of such Member's Interest as a
Member; (ii) if requested by Holdings, the Assignee delivers to Holdings an
opinion of counsel, in form and substance reasonably satisfactory to Holdings,
to the effect that such admission would not violate the Securities Act of 1933,
as amended, or any state securities or blue sky laws applicable to Holdings or
the admission of the Assignee as a Member; (iii) the Member effecting the
Transfer and Assignee execute and acknowledge any other instruments that
Holdings reasonably deems necessary or desirable for admission of the Assignee,
including the written acceptance and adoption by the Assignee of the provisions
of this Agreement and execution, acknowledgment and delivery to Holdings of a
special power of attorney as provided in the LLC Agreement; (iv) the Member
effecting the Transfer or the Assignee pays to Holdings a transfer fee
sufficient to cover all reasonable expenses connected with admission; and (v)
the provisions of the LLC Agreement regarding Transfer of Interests have been
complied with. If a Member transfers all of its interests in the profits, losses
and capital of Holdings and the Assignee of such interest is admitted as a
Member pursuant to the LLC Agreement, immediately following such admission, the
transferor Member shall cease to be a Member of Holdings.

A holder of Warrants or options for Units of Holdings, upon exercise of
such warrants or options in accordance with the terms thereof and issuance of
Units, shall be admitted to Holdings as a Member upon written acceptance and
adoption by such holder of the provisions of the LLC Agreement and execution,
acknowledgment and delivery of a special power of attorney as provided in the
LLC Agreement. Except for transferees of Interests who become Members as set
forth in this section and Members to whom Interests are issued pursuant to the
LLC Agreement, no additional Members shall be admitted to Holdings without the
consent of the Board of Managers and the Required Members.

INDEMNIFICATION

Holdings will indemnify the Managers, Members and their respective
officers, directors, trustees, partners, investment advisers, members
shareholders, employees and agents, and the employees, officers, and

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agents of Holdings (collectively, "Indemnified Persons") from certain
liabilities, losses and damages (collectively, "Losses") incurred by any such
Indemnified Person if such Indemnified Person's action or inaction giving rise
to such Losses was in good faith, was not intentionally harmful or opposed to
the best interests of Holdings, and did not constitute fraud or willful
misconduct. Such indemnification shall be recoverable only from the assets of
Holdings and not from the assets of the Members.

LIMITED LIABILITY OF MEMBERS

No Member shall be bound by or personally liable for the expenses,
liabilities or obligations of Holdings. Except as otherwise provided by the
Delaware Limited Liability Company Act, the debts, obligations and liabilities
of Holdings shall be solely the debts, obligations and liabilities of Holdings,
and no Indemnified Person shall be obligated personally for any such debt,
obligation or liability solely by reason of being an Indemnified Person. All
persons dealing with Holdings shall look solely to the assets of Holdings for
the payment of such debts, obligations or liabilities.

DISSOLUTION OF HOLDINGS

Holdings will be dissolved upon the happening of any of the following
events: (i) December 31, 2046 unless such date is extended pursuant to the LLC
Agreement; (ii) the written determination of the Members; (iii) the death,
retirement, resignation, insanity, expulsion, bankruptcy or dissolution of the
Class A Members, unless there are at least two remaining Members and the
business of Holdings is continued by the consent of remaining Members owning a
majority of the Units owned by the Remaining Members within 90 days following
the occurrence of any such event; or (iv) the entry of a decree of judicial
dissolution under the Delaware Limited Liability Company Act. Upon dissolution
of Holdings (unless Holdings is continued pursuant to clause (iii) above),
Holdings's remaining assets or the proceeds from the liquidation thereof will be
distributed as set forth above under "-- Distributions;" provided, however, that
Distributions to Members shall be made after their Capital Accounts have been
adjusted to reflect all Net Profits and Net Losses of Holdings through the date
of distribution. A statement of accounting of the assets and liabilities of
Holdings will be furnished to each Member within thirty days after the
distribution of all of the assets of Holdings. Upon dissolution, each Member
shall look solely to the assets of Holdings for the return of its capital, and
if Holdings's property remaining after payment or discharge of the debts and
liabilities of Holdings, including debts and liabilities owed to Members, is
insufficient to return the aggregate Capital Contributions of each Member, such
Members shall have no recourse against Holdings, the Board of Managers, the
Members or any other Member.

AMENDMENTS TO LLC AGREEMENT

The LLC Agreement may be modified or amended only with the prior written
consent of the Required Members; provided, however, that the LLC Agreement may
not be amended without the approval of any Member being affected thereby if the
amendment (i) does not treat all Members equally based on their pro rata
interests, (ii) would reduce the allocation to any Member of any Net Profit, Net
Loss, or distribution of cash or property from that which is provided or
contemplated in the LLC Agreement, (iii) would alter the provisions of the LLC
Agreement relating to certain rights of Class B Members without the consent of
Morgan Stanley Group Inc., or any successor thereto, or (iv) would alter the
above provisions. Any modification or amendment of the LLC Agreement shall be
binding on all Members.

CERTAIN DEFINITIONS

Alien means an alien as defined under Missouri Revised Statutes
sec.sec.442.560-442.591 and any regulations thereunder.

Assignee means a Person that has acquired the right from a Member to (i)
share in Net Profit and Net Loss of Holdings, (ii) receive Distributions and
(iii) receive the allocation of income, gain, loss deductions or credits (and
items thereof) of Holdings to which the transferor Member was entitled in
accordance with the

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provisions of the LLC Agreement, but has not been admitted as a Member of
Holdings in accordance with the provisions of the LLC Agreement.

Board of Managers means the Board of Managers as provided in the LLC
Agreement.

Capital Contribution means with respect to any Member, the amount of money
plus the fair market value of any other property contributed to Holdings (net of
any liabilities assumed by Holdings and any liabilities to which contributed
property is subject) with respect to the Interest held by such Member pursuant
to the terms of the LLC Agreement.

Distribution means cash or property distributed to a Member or a Member's
Assignee in respect of the Member's Interest in Holdings.

Economic Interest means all rights of an Assignee with respect to an
Interest.

Fair Value as applied to all or any portion of the Interest of any Member
shall mean the fair market value of the Interest in question as determined by
the Board of Managers in good faith.

Foreign Business means a foreign business as defined under Missouri Revised
Statutes sec.sec.442.560-442.591 and any regulations thereunder.

Interest means the entire interest of a Member in the capital and profits
of Holdings, including the right of such Member to any and all benefits to which
a Member may be entitled as provided in the LLC Agreement, together with the
obligations of such Member to comply with all the terms and provisions of the
LLC Agreement.

Management Option Plan means the Amended and Restated PSF Holdings, L.L.C.
1996 management option plan effective as of September 17, 1996, as amended on
March 14, 1997, and from time to time thereafter.

Managers means the Persons designated or elected from time to time to the
Board of Managers of Holdings, acting in their capacity as Managers.

Members means the Persons listed as members on Exhibit B to the LLC
Agreement and any other Person that both acquires an Interest in Holdings and is
admitted to Holdings as a Member.

REGISTRATION RIGHTS OF UNIT HOLDERS

The LLC Units are being registered pursuant to an agreement for the benefit
of the holders of Registerable Securities for the registration of the LLC Units
(the "Units Registration Rights Agreement"). Subject to certain conditions and
limitations, Holdings has agreed to use its best efforts to keep a shelf
registration with respect to the LLC Units continuously effective under the
Securities Act for four years from the effective date of this Registration
Statement or such shorter period ending when all the LLC Units have been sold
hereunder. The Units Registration Rights Agreement also provides rights to the
holders under certain conditions after such four year period to request up to
two Demand Registrations, as defined in the Units Registration Rights Agreement.
In addition, if PSF or Holdings proposes to register its securities for its own
account, holders of LLC Units will have the opportunity to include their LLC
Units in such proposed registration, subject to certain exceptions. The Units
Registration Rights Agreement is being filed as an exhibit to this Registration
Statement of which this Prospectus is a part, and this summary of the Units
Registration Rights Agreement is qualified in its entirety by the more detailed
provisions set forth therein.

If the Members of Holdings determine in accordance with the terms of the
LLC Agreement in their good faith reasonable judgment, that to file or maintain
the effectiveness of any shelf registration or a Demand Registration or to
permit such registration statement to become effective would be significantly
disadvantageous to Holdings's financial condition, business or prospects (a
"Disadvantageous Condition") in connection with certain actions or anticipated
actions of Holdings or any subsidiary, Holdings may, until such Disadvantageous
Condition no longer exists (but not for more than 180 days in the aggregate nor
more than 90 consecutive days during any 12-month period) withdraw such
registration statement and terminate its effectiveness, suspend the use of the
prospectus contained therein or elect not to file the registration statement.

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In any such event, Holdings will deliver notice to any holder of Registrable
Securities covered or to be covered under such withdrawn, suspended or not to be
filed registration statement, which indicates that the registration statement is
no longer effective or will not be filed, and upon the cessation of such
Disadvantageous Condition, Holdings shall so notify such holders, and shall file
at such time as it in good faith deems appropriate, an amended, supplemented or
new registration statement covering such Registrable Securities.

While there remain outstanding any Registrable Securities, Holdings will
(i) at any time it is not subject to the requirements of Section 13 or Section
15(d) of the Exchange Act (A) make available to any holder upon request such
information as necessary to permit sales pursuant to Rule 144A under the
Securities Act and (B) make publicly available such information concerning
Holdings required under the Exchange Act to permit sales pursuant to Rule 144
under the Securities Act; and (ii) during such times Holdings is subject to the
requirements of Section 13 or Section 15(d) of the Exchange Act, timely file the
periodic and other reports required to permit sales of such Registrable
Securities pursuant to Rule 144 under the Securities Act. Holdings will take
such further action as any holder of Registrable Securities may reasonably
request, to the extent required to enable such holder to sell its Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144A and Rule 144 under the Securities Act,
as such Rules may be amended from time to time, or any similar rule or
regulation hereafter promulgated by the Commission.

In connection with any registration statement filed by Holdings pursuant to
the Units Registration Rights Agreement in which a holder has registered for
sale Registrable Securities, each such holder shall severally indemnify
Holdings, PSF, with respect to any offering of PSF securities, and each of the
other Persons set forth in the Units Registration Rights Agreement for losses
arising out of or based upon material inaccuracies in any registration statement
under which securities were registered pursuant to the Units Registration Rights
Agreement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, which were made in
reliance upon written information furnished to Holdings or such subsidiary for
use therein, provided, however, that the liability of such indemnifying holder
shall be limited to the amount of net proceeds received by such indemnifying
holder in such offering.

INDEMNIFICATION BY HOLDINGS

As permitted by the Delaware Limited Liability Company Act, the LLC
Agreement of Holdings provides that Holdings shall indemnify the Managers,
Members, including the Tax Matters Member, and each such Person's officers,
directors, trustees, partners, investment advisors, members, shareholders,
employees and agents, and the employees, officers and agents of Holdings (all
indemnified persons being referred to as "Indemnified Persons"), from any
liability, loss, or damage incurred by the Indemnified Person by reason of any
act performed or omitted to be performed by the Indemnified Person in connection
with the business of Holdings and from liabilities or obligations of Holdings
imposed on such Indemnified Person by virtue of such Indemnified Person's
position with Holdings, including reasonable attorneys' fees and costs and any
amounts expended in the settlement of any such claims of liability, loss or
damage; provided, however, that, if the liability, loss, damage, or claim arises
out of any action or inaction of an Indemnified Person, such indemnification
shall be available only if (a) either (i) the Indemnified Person, at the time of
such action or inaction, determined, in good faith, that its, his or her course
of conduct was in, or not opposed to, the best interests of Holdings and was
authorized under the LLC Agreement, or (ii) in the case of inaction by the
Indemnified Person, the Indemnified Person did not intend its, his or her
inaction to be harmful or opposed to the best interests of Holdings, and (b) the
action or inaction was not undertaken (or omitted) in bad faith nor did it
constitute fraud or willful misconduct by the Indemnified Person, and provided,
further, that such indemnification shall be recoverable only from the assets of
Holdings and not from any assets of the Members. The LLC Agreement also provides
that Holdings may pay or reimburse attorneys' fees of an Indemnified Person as
incurred, if such Indemnified Person executes an undertaking to repay such
amount if there is a final determination that such Indemnified Person is not
entitled to be indemnified by Holdings. In addition, the LLC Agreement provides
that Holdings may pay for insurance covering liability of the Indemnified
Persons for negligence in operation of Holdings' affairs.

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The LLC Agreement further provides that Holdings shall indemnify and
reimburse the Tax Matters Member of Holdings for all expenses (including legal
and accounting fees) incurred as Tax Matters Member pursuant to the LLC
Agreement in connection with any administrative or judicial proceeding with
respect to the tax liability of the Members of Holdings as long as the Tax
Matters Member has determined in good faith that its course of conduct was in,
or not opposed to, the best interest of Holdings.

DESCRIPTION OF THE WARRANTS

Warrants to purchase up to an aggregate of 2,048,192 Units of Member
Interests were issued on September 17, 1996 (the "Original Issue Date") under a
Warrant Agreement (the "Warrant Agreement") between Holdings and Fleet National
Bank (the "Warrant Agent"). The following summary of certain provisions of the
Warrant Agreement does not purport to be complete and is subject to, and is
qualified in all respects by reference to, all of the provisions of the Warrants
and the Warrant Agreement, including the definitions therein of certain terms.
Wherever particular sections or defined terms of the Warrant Agreement are
referred to, such sections or defined terms are incorporated by reference. A
copy of the Warrant Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.

Each Warrant will entitle the registered holder thereof, subject to and
upon compliance with the provisions thereof and of the Warrant Agreement, at
such holder's option, to purchase from Holdings one (or such other number as may
result from adjustments as provided in the Warrant Agreement) Unit at a price of
$45.00 per Unit (or such other amount as may result from adjustments as provided
in the Warrant Agreement) (the "Exercise Price") (i) in the case of a registered
holder which is not a MS Member, at any time during the ten year period that
commences on the Original Issue Date and that terminates at 5:00 p.m., New York
City time, on the first Business Day after the tenth anniversary of the Original
Issue Date (the "Termination Date") and (ii) in the case of any registered
holder which is a MS Member, at any time during the period that commences on
January 1, 2000 and that terminates on the Termination Date, in each case
subject to earlier cancellation of the Warrants upon the consummation of a Sale
Transaction. Notwithstanding the foregoing, until the Termination Date, the MS
Members shall have the right to exercise the Warrants in accordance with the
provisions of the Warrant Agreement, and immediately prior to the consummation
of, any (i) Sale Transaction, (ii) Non-Sale Transaction (as defined below) or
(iii) event which would cause an adjustment to the number of Units purchasable
upon the exercise of the Warrants of the Exercise Price under the provisions of
the Warrant Agreement, unless, in the case of the immediately preceding clause
(ii) or (iii), by exercising such Warrants, compliance with the Investment
Company Act of 1940 would become materially more burdensome to such MS Member or
any of its Affiliates. Any Warrant not exercised before the close of business on
the Termination Date shall become void, and all rights of the holder under the
Warrant Certificate evidencing such Warrant and under the Warrant Agreement
shall cease. In the event of a Sale Transaction, any Warrants which are not
exercised prior to, or in connection with, the consummation of such Sale
Transaction shall be cancelled upon the consummation of such transaction, and
the holders of such cancelled Warrants shall not be entitled to receive any
property with respect to their cancelled Warrants.

The Warrants may be exercised by the registered holder by surrendering the
certificate or certificates therefor, together with the subscription form set
forth therein completed and executed as indicated, at the corporate trust office
of the Warrant Agent or, if such exercise shall be in connection with an
underwritten Public Offering, at the location designated by Holdings,
accompanied by payment (in the form of a certified or official bank or bank
cashier's check) of an amount equal to the product of the number of Units
(subject to adjustment) designated in such subscription form multiplied by the
Exercise Price (subject to adjustment).

Notwithstanding the immediately preceding paragraph, cashless exercise
shall be permitted by all registered holders in the event that a cash tender
offer is made for all Units and the Warrant holder commits to tender; and in the
case of such a cash tender offer, each tendering Warrant holder shall be
entitled to receive, upon the consummation of the cash tender offer, an amount
equal to the excess, if any, of the cash consideration per Unit over the then
applicable Exercise Price per Unit, in each case, multiplied by the number of
Units which the holder would be entitled to receive with respect to its tendered
Warrants.

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Holdings will use its best efforts, at its expense and on a continual
basis, to assure that all Units that may be issued upon exercise of Warrants may
be so issued and delivered without violation of any Federal or state securities
law or regulation, or any other applicable law or regulation; provided that with
respect to any such exercise involving a sale or transfer of Warrants or any
such securities issuable upon such exercise, Holdings shall have no obligation
to register such Warrants or securities except as provided in the Warrants
Registration Rights Agreement (as defined below).

Holdings shall cause to be mailed to each registered holder notice of (i)
any taking of a record of holders of Units for the purpose of determining the
holders thereof entitled to receive any distribution or any right or interest;
(ii) any capital reorganization of Holdings, reclassification of the Units,
Non-Sale Transaction, Sale Transaction or exchange offer for Units; or (iii) the
voluntary or involuntary dissolution, liquidation or winding up of Holdings, not
less than (a) 20 days prior to the date or expected date of the action set forth
in (i) above, and (b) not less than 30 days prior to the date or expected date
of any action set forth in (ii) and (iii). Failure to give such notice within
the time provided or any defect therein shall not affect the legality or
validity of any such action.

Subject to the terms of the Warrant Agreement, the Warrant Certificates may
be surrendered for exchange, and the transfer of Warrant Certificates will be
registrable, at the office of Holdings or the Warrant Agent maintained for such
purpose which initially will be (i) in Princeton, New Jersey with respect to
Holdings and (ii) with respect to the Warrant Agent, at its corporate trust
office in Hartford, Connecticut. Any Warrant Certificate surrendered to Holdings
for exercise, exchange or registration of transfer will be delivered to the
Warrant Agent. The Warrant Certificates will be issued in registered form only
as definitive Warrant Certificates. No service charge will be made for any
registration of transfer or exchange of Warrant Certificates. Upon the issuance,
pursuant to the terms of the Warrant Agreement, of any new Warrant Certificate
to the registered holder of any lost, stolen, destroyed or mutilated Warrant
Certificate, Holdings may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including reasonable fees and expenses of the Warrant Agent) in
connection therewith.

Holders of Warrants will not be entitled, by virtue of being such holders,
to receive notice of any meetings of Members or otherwise have any rights as a
Member of Holdings.

The number of Units purchasable upon exercise of the Warrants and the
Exercise Price per Unit are subject to adjustment from time to time upon the
occurrence of certain events, including (a) a distribution of Units on Units;
(b) subdivisions, combinations or certain reclassifications of the Units; (c)
certain consolidations or mergers or a transfer of substantially all of the
assets of Holdings; (d) the issuance, sale, distribution, fixing of a record
date, or other grant of rights, warrants or options for the purchase of
Additional Units or any securities convertible into or exchangeable for
Additional Units (any such rights, warrants or options herein referred to as
"Options" and any such convertible or exchangeable securities being herein
referred to as "Convertible Securities") or any Convertible Securities (other
than upon exercise of any Options) where the price per Unit upon exercise,
conversion or exchange shall be less than the Fair Value per Unit on either (1)
the record date in the case of a distribution to registered holders of any class
of securities, or (2) the actual date, in the case of an issuance, sale,
distribution or grant to Persons other than registered holders of any class of
securities; (e) the issuance or sale of Additional Units without consideration
or for less than the Fair Value per Unit; (f) the taking of a record by Holdings
of the holders of its Units for the purpose of entitling them to receive a
dividend or other distribution of cash, evidences of its indebtedness, other
securities or other property (other than Options or Convertible Securities), or
options, warrants or other rights to purchase any of the foregoing; (g) a change
(other than by reason of provisions in the Warrant Agreement designed to protect
against dilution upon an event which results in an equivalent related
adjustment) in any Option exercise price, additional consideration payable upon
conversion or exchange of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exchangeable for Units; (h) in
the event that at any time after any adjustment to the number of Units
purchasable upon exercise of each Warrant shall have been made pursuant to the
provisions of the Warrant Agreement, any Options or Convertible Securities shall
have expired unexercised; (i) in the event that at any time, as a result of an
adjustment made pursuant to the provisions of the Warrant Agreement, the Warrant
holders shall become

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entitled to receive any securities of Holdings other than Units; and (j) in the
event that Holdings takes any action with respect to the Units which is the
substantive equivalent of a transaction that would require an adjustment
pursuant to the provisions of the Warrant Agreement, but which is not, by its
literal terms, covered in the Warrant Agreement. Notwithstanding the above, no
adjustment to the Exercise Price (including the related adjustment to the number
of Units purchasable upon exercise of each Warrant) shall be required unless
such adjustment, together with other adjustments carried forward as provided in
the Warrant Agreement, would result in an increase or decrease of at least 1% of
the Exercise Price.

Other than in the case of a Sale Transaction, in the event of any
consolidation or merger of Holdings with or into another entity (other than a
merger in which Holdings is the continuing entity and which does not result in
any reclassification or change of the then outstanding Units) or of a transfer
of all or substantially all of the assets of Holdings (any such consolidation,
merger, transfer or sale which does not constitute a Sale Transaction being
referred to as a "Non-Sale Transaction"), in each case, as a condition of such
Non-Sale Transaction, Holdings or such successor or transferee entity, as the
case may be, shall provide the holder of each Warrant then outstanding with the
right to receive on exercise of such Warrant the kind and amount of equity
interests, other securities and property receivable upon such consolidation or
merger by a holder of Units immediately prior to such Non-Sale Transaction.
Holdings will not effect any such Non-Sale Transaction unless prior to the
consummation of such transaction, each entity (other than Holdings) which may be
required to deliver any securities, cash or other property upon the exercise of
the Warrants as provided in the Warrant Agreement assumes in writing the
obligations of Holdings under the Warrant Agreement and under each of the
Warrants.

Fractional Units shall not be issued upon exercise of Warrants, but in lieu
thereof, Holdings will pay a cash adjustment.

The Warrant Agreement permits the amendment or modification thereof and the
provisions thereof waived with the prior written consent of Holdings and the
holders of Warrants exercisable for at least 66 2/3% of the aggregate number of
Units then purchasable upon exercise of all Warrants then outstanding.

CERTAIN DEFINITIONS

Set forth below are certain defined terms used in the Warrant Agreement.
Reference is made to the Warrant Agreement for the definition of all other terms
used in the Warrant Agreement.

"Additional Units" means any Units issued or sold by Holdings after the
date of the Warrant Agreement, other than (i) Units issued upon exercise of the
Warrants and (ii) Units issued in connection with any employee or director
incentive plan.

"Affiliate" means, with respect to any specified Person, any Person that
directly or through one or more intermediaries controls or is controlled by or
is under common control with the specified Person. As used in this definition,
the term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.

"Fair Value" means fair market value, as determined by an Investment
Banker; provided, however, that in the case of determinations with respect to
fractional Units "Fair Value" shall be determined by the Members acting in good
faith.

"Interest" means the entire interest of a Member in the capital and profits
of Holdings, including the right of such Member to any and all benefits to which
a Member may be entitled as provided in the LLC Agreement, together with the
obligations of such Member to comply with all the terms and provisions of the
LLC Agreement.

"Investment Banker" means an independent investment banking firm not
regularly retained by Holdings of recognized national standing which is (i)
selected by Holdings and (ii) reasonably acceptable to the Majority Holders.

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"LLC Agreement" means the amended and restated limited liability company
agreement of Holdings dated as of September 17, 1996, as from time to time in
effect.

"Majority Holders" means the holders of Warrants exercisable for in excess
of 50% of the aggregate number of Units then purchasable upon exercise of all
Warrants then outstanding.

"Member" means any Person that both acquires an Interest in Holdings and is
admitted to Holdings as a Member.

"MS Member" means Morgan Stanley Group, Inc. or any Affiliate of Morgan
Stanley Group, Inc. (other than Premium Holdings Corp.).

"Public Offering" means any offering of Units to the public pursuant to an
effective registration statement under the Securities Act.

"Sale Transaction" means a transaction or series of related transactions
which, whether by consolidation, merger, business combination, reorganization or
sale of all or substantially all of the assets of Holdings (or of a successor to
Holdings pursuant to a Non-Sale Transaction), effects a sale of Holdings (or of
such successor to Holdings) to a third party; provided that a consolidation,
merger, business combination, reorganization or sale of all or substantially all
assets shall be deemed to effect a sale of Holdings (or such successor to
Holdings) if 25% or less of the aggregate consideration received by holders of
Units with respect to their Units (or, in the case of any such successor to
Holdings, of holders of equity interests in Holdings with respect to such
interests) in connection with such transaction or transactions consists of
equity securities of the surviving entity in the case of a consolidation,
merger, business combination or reorganization, or of the transferee in the case
of a sale of all or substantially all assets.

"Warrant Certificates" means the certificates evidencing the Warrants and
shall include any Warrant Certificate issued upon partial exercise of the
Warrants represented by a Warrant Certificate.

REGISTRATION RIGHTS OF WARRANT HOLDERS

The Warrants are being registered pursuant to an agreement for the benefit
of the holders of the Registrable Warrants, dated the original issue date of the
Warrants (the "Warrants Registration Rights Agreement"). Subject to certain
conditions and limitations, Holdings has agreed to use its best efforts to keep
a shelf registration with respect to the Warrants continuously effective under
the Securities Act for four years from the effective date of this Registration
Statement or such shorter period ending when all the Warrants have been sold
hereunder. The Warrants Registration Rights Agreement also provides rights to
the holders under certain conditions after such four year period to request a
Demand Registration, as defined in the Warrants Registration Rights Agreement.
In addition, if PSF or Holdings proposes to register its securities for its own
account, holders of Warrants will have the opportunity to include their Warrants
in such proposed registration, subject to certain exceptions. The Warrants
Registration Rights Agreement is being filed as an exhibit to this Registration
Statement, of which this Prospectus is a part, and this summary of the Warrants
Registration Rights Agreement is qualified in its entirety by the more detailed
provisions set forth therein.

If the Board of Directors of Holdings determines in its good faith
reasonable judgment, that to file or maintain the effectiveness of any shelf
registration or a Demand Registration or to permit such registration statement
to become effective would be significantly disadvantageous to Holdings's
financial condition, business or prospects (a "Disadvantageous Condition") in
connection with certain actions or anticipated actions of Holdings or any
subsidiary, Holdings may, until such Disadvantageous Condition no longer exists
(but not for more than 180 days in the aggregate nor more than 90 consecutive
days during any 12-month period) withdraw such registration statement and
terminate its effectiveness, suspend the use of the prospectus contained therein
or elect not to file the registration statement. In any such event, Holdings
will deliver notice to any holder of Registrable Warrants covered or to be
covered under such withdrawn, suspended or not to be filed registration
statement, which indicates that the registration statement is no longer
effective or will not be filed, and upon the cessation of such Disadvantageous
Condition, Holdings shall so notify such holders, and shall file at such time as
it in good faith deems appropriate, an amended, supplemented or new registration
statement covering such Registrable Warrants.

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While there remain outstanding any Registrable Warrants, Holdings will (i)
at any time it is not subject to the requirements of Section 13 or Section 15(d)
of the Exchange Act (A) make available to any holder upon request such
information as necessary to permit sales pursuant to Rule 144A under the
Securities Act and (B) make publicly available such information concerning
Holdings required under the Exchange Act to permit sales pursuant to Rule 144
under the Securities Act; and (ii) during such times Holdings is subject to the
requirements of Section 13 or Section 15(d) of the Exchange Act, timely file the
periodic and other reports required to permit sales of such Registrable Warrants
pursuant to Rule 144 under the Securities Act. Holdings will take such further
action as any holder of Registrable Warrants may reasonably request, to the
extent required to enable such holder to sell its Registrable Warrants without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144A and Rule 144 under the Securities Act, as such Rules may
be amended from time to time, or any similar rule or regulation hereafter
promulgated by the Commission.

In connection with any registration statement filed by Holdings pursuant to
the Warrants Registration Rights Agreement in which a holder has registered for
sale Registrable Warrants, each such holder shall severally indemnify Holdings,
PSF, with respect to any offering of PSF securities, and each of the other
Persons set forth in the Warrants Registration Rights Agreement for losses
arising out of or based upon material inaccuracies in the Offering Documents
which were made in reliance upon written information furnished to Holdings for
use therein, provided, however, that the liability of such indemnifying holder
shall be limited to the amount of net proceeds received by such indemnifying
holder in such offering.

TRANSFER AGENT AND REGISTRAR

Pursuant to the Warrant Agreement, Fleet National Bank acts as the Warrant
Agent for the registration and transfer of Warrants as provided in the Warrant
Agreement.

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DESCRIPTION OF THE NOTES

GENERAL

The Notes were issued pursuant to the Reorganization Plan on the Effective
Date as fully registered Notes, without coupons, under an Indenture dated as of
the Effective Date (the "Indenture") by and between PSF, its parent, Holdings
and Fleet National Bank, as trustee (together with any successor, the
"Trustee").

The following is a summary of the material provisions of the Notes and the
Indenture. This summary does not purport to be complete and is subject to the
detailed provisions of, and is qualified in its entirety by reference to, the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), the Notes
and the Indenture, including the definitions of certain terms contained therein
and including those terms made part of the Indenture by reference to the Trust
Indenture Act. A copy of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The definitions of
certain terms used in the following summary are set forth below under
"-- Certain Definitions." Reference is made to the Indenture for the full
definition of all such terms, as well as any other capitalized terms used
herein for which no definition is provided.

MATURITY AND INTEREST

The Notes are senior secured obligations of PSF and will mature on
September 17, 2003. The aggregate principal amount of Notes which may be
authenticated and delivered under the Indenture is limited to $117,500,000 plus
the aggregate principal amount of Secondary Notes (as described below) issued
under the Indenture, except for Notes authenticated and delivered upon
registration or transfer of, or in exchange for, or in lieu of, other Notes.

Interest on the Notes accrues at the rate of 11% per annum, computed on the
basis of a 360-day year comprised of twelve 30-day months. Interest is payable
semi-annually on March 15 and September 15 of each year, commencing March 15,
1997, to the holders of record of Notes at the close of business on February 15
and August 15 next preceding each such interest payment date.

PSF may, at its option if an effective registration statement under the
Securities Act covers such issuance or such issuance is exempt from registration
under the Securities Act, pay interest on the Notes through the issuance of
additional Notes (the "Secondary Notes") in an aggregate principal amount equal
to the amount of interest (rounded up to the next whole dollar) that would be
payable if such interest were paid in cash; provided that interest payable on
any date on or after the Term Loan Payout Date or on or after the Maturity of
any Note shall be payable solely in cash. The terms of the Secondary Notes shall
be identical to the terms of the Notes. All references to "Notes" herein shall,
unless the context otherwise requires, also refer to any Secondary Notes. On
March 15, 1997, PSF issued $6,390,699 aggregate principal amount of Secondary
Notes in payment of interest then due on the Notes.

Principal of, premium, if any, and interest on the Notes is payable at the
office or agency of PSF maintained for such purpose in The City of New York or,
at the option of PSF, payment of interest may be made by check mailed to the
holders of the Notes at their respective addresses as set forth in the register
of holders of Notes. Until otherwise designated by PSF, PSF's office or agency
in The City of New York will be the office of the Trustee, Security Registrar or
Paying Agent maintained for such purpose. The Notes are issuable only in fully
registered form without coupons, and in denominations of $1.00 and integral
multiples thereof.

The Notes are transferrable at the corporate trust office of the Trustee or
an office or agency of PSF designated by PSF. No service charge is made for any
registration of transfer or exchange of the Notes; provided, however, that PSF
may require payment of (i) a service charge with respect to any transfer or
exchange as a result of which the number of Notes not in a denomination of
$1,000 or any integral multiple thereof would be increased, and (ii) a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.

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SECURITY

The Notes are collaterally secured by a lien on substantially all of the
assets of the Company, including all of the capital stock of the Company's
subsidiaries and substantially all the real and personal property owned or
leased by the Company, whether owned on the date of the Security Agreement or
thereafter acquired through appropriate Security Documents in favor of the
Trustee as Collateral Agent. Such lien is junior to the indebtedness and liens
under the Credit Agreement and to the indebtedness and liens under the Second
Priority Note Agreement and the Second Priority Notes.

Provided that no Event of Default then exists, PSF is entitled to obtain a
release of Collateral from the lien securing the Notes in accordance with the
provisions of the Security Documents, the Trust Indenture Act and the Indenture.

The proceeds of any sale of the Collateral in whole pursuant to the
Indenture and the related Security Documents following an Event of Default may
not be sufficient to satisfy payments due on the Notes. In addition, the ability
of the holders of the Notes to realize upon the Collateral may be limited in the
event of a bankruptcy or pursuant to other applicable laws, including securities
laws.

The right of the Trustee to repossess and dispose of the Collateral upon
the occurrence of an Event of Default is likely to be significantly impaired by
applicable bankruptcy law if a bankruptcy proceeding were to be commenced by or
against PSF or PSF's Subsidiaries prior to the Trustee having repossessed and
disposed of the Collateral. Under the United States Bankruptcy Code (the
"Bankruptcy Code"), a secured creditor such as the Trustee is prohibited from
repossessing its security from a debtor in a bankruptcy case, or from disposing
of security repossessed from such debtor, without bankruptcy court approval.
Moreover, the Bankruptcy Code permits the debtor to continue to retain and to
use Collateral owned as of the date of the bankruptcy filing (and the proceeds,
products, rents or profits of such Collateral) to the extent provided by the
Security Documents and applicable nonbankruptcy law event though the debtor is
in default under the applicable debt instruments, provided that the secured
creditor is given "adequate protection." The meaning of the term "adequate
protection" may vary according to circumstances, but it is intended in general
to protect the value of the secured creditor's interest in the Collateral and
may include, if approved by the court, cash payments or the granting of
additional security for any diminution in the value of the Collateral as a
result of the stay of repossession or disposition or any use of Collateral by
the debtor during the pendency of the bankruptcy case. In view of the lack of a
precise definition of the term "adequate protection" and the broad discretionary
power of a bankruptcy court, it is impossible to predict how long payments under
the Notes could be delayed following commencement of a bankruptcy case, whether
or when the Trustee could repossess or dispose of the Collateral or whether or
to what extent holders of the Notes would be compensated for any delay in
payment or loss of value of the Collateral through the requirement of "adequate
protection."

REDEMPTION

Mandatory Redemption. The Notes are not subject to any mandatory sinking
fund redemption prior to maturity.

Optional Redemption. The Notes are redeemable at the option of PSF, in
whole or in part, at the redemption prices (expressed as percentages of the
principal amount of the Notes) set forth below plus accrued interest to the date
of redemption, if redeemed during the twelve-month period beginning on September
1 of the years indicated below:

<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
1996........................................................ 111%
1997........................................................ 108%
1998........................................................ 105%
1999........................................................ 103%
2000........................................................ 101%
2001........................................................ 100%
</TABLE>

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Selection and Notice. If less than all of the Notes are to be redeemed at
any time, selection of the Notes to be redeemed will be made by the Trustee by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of Notes of a denomination larger than
$1,000 and which need not, unless PSF otherwise directs, provide for the
selection of amounts which are less than $1,000. Notice 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 such holder's
registered address. If any Note if to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed, and the Trustee shall authenticate and deliver to
the holder of the original Note a new Note or Notes of like tenor, of any
authorized denomination as requested by such holder, in aggregate principal
amount equal to the unredeemed portion of the principal of the original Note
promptly after the original Note has been cancelled. On and after the redemption
date, interest will cease to accrue on Notes or portions thereof called for
redemption.

CHANGE OF CONTROL

In the event of a Change of Control, each holder of Notes will have the
right, subject to the terms and conditions of the Indenture to have all or any
portion of such holder's Notes (equal to $1000 or an integral multiple thereof)
repurchased by PSF at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of purchase in
accordance with the terms set forth below.

On or before the 30th day following the date of consummation of a
transaction resulting in a Change of Control, PSF shall mail to each holder of
Notes at such holder's registered address a written offer (the "Offer") with
respect to an Offer to Purchase all Notes outstanding on the date of purchase,
stating: (i) the Section of the Indenture pursuant to which the Offer to
Purchase is being made, (ii) the expiration date ("Expiration Date") of the
Offer to Purchase which shall be, subject to any contrary requirements of
applicable law, not less than 30 days or more than 65 days after the date of
such Offer and a settlement date (the "Purchase Date") for the purchase of Notes
within five business days after the Expiration Date, (iii) the aggregate
principal amount of the outstanding Notes offered to be purchased by PSF
(including, if less than 100%, the manner by which such has been determined
pursuant to the provisions of the Indenture) (the "Purchase Amount"), (iv) the
purchase price (expressed as a percentage of principal amount) to be paid by PSF
for each Note accepted for payment (the "Purchase Price"), (v) that the holder
may tender all or any portion of the Notes registered in the name of such holder
and that Notes tendered must be tendered in an integral multiple of $1,000
principal amount, (vi) the place or places where Notes are to be surrendered for
tender, (vii) that interest on any Note not tendered or tendered but not
purchased by PSF will continue to accrue, (viii) that on the Purchase Date the
Purchase Price will become due and payable upon each Note accepted for payment
and that interest thereon shall cease to accrue on and after the Purchase Date,
(ix) that each holder electing to tender a Note will be required to surrender
such Note at the place or places specified in the Offer prior to the close of
business on the Expiration Date, such Note being, if PSF or the Trustee so
requires, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to PSF and the Trustee duly executed by, the holder thereof
or his attorney duly authorized in writing, (x) that holders will be entitled to
withdraw all or any portion of Notes tendered if PSF (or its Paying Agent)
receives, not later than the close of business two business days prior to the
Expiration Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the holder, the principal amount and certificate number of the
Note the holder tendered, and a statement that such holder is withdrawing all or
a portion of such tender, (xi) that if Notes in an aggregate principal amount
less than or equal to the Purchase Amount are duly tendered and not withdrawn,
PSF shall purchase all such Notes, (xii) that in the case of any holder whose
Notes is purchased only in part, PSF shall execute, and the Trustee shall
authenticate and deliver to the holder of such Note without service charge, a
new Note or Notes, of any authorized denomination as requested by such holder,
in an aggregate principal amount equal to and in exchange for the unpurchased
portion of the Note so tendered, and (xiii) such other information as may be
required by the Indenture and applicable laws and regulations.

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Prior to the Purchase Date, PSF will (i) accept for payment Notes or
portions thereof tendered pursuant to the Offer, (ii) deposit with the Paying
Agent the aggregate Purchase Price of all Notes or portions thereof so accepted
and (iii) deliver or cause to be delivered to the Trustee all Notes so accepted
together with an Officers' Certificate stating the Notes or portions thereof
accepted for payment by PSF. The Paying Agent shall promptly mail or deliver to
each holder of Notes or portions thereof accepted for payment an amount equal to
the Purchase Price for such Notes, and the Trustee shall promptly authenticate
and mail or deliver to each holder of Notes accepted for payment in part a new
Note or Notes equal in principal amount to any unpurchased portion of the Notes
as requested by the holder, and any Note not accepted for payment in whole or in
part shall be promptly returned to the holder of such Note.

Any Offer to Purchase shall be governed by and effected in accordance with
applicable securities laws and regulations and the Offer for such Offer to
Purchase.

A Change of Control shall be deemed to have occurred if (a) any person or
group (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934
as in effect on the date of the Indenture) other than one or more Permitted
Holders shall own directly or indirectly, beneficially or of record, shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding membership interests of the Guarantor; (b) a majority
of the seats (other than vacant seats) on the Board of Directors of PSF shall at
any time be occupied by persons who were neither (i) nominated by the Board of
Directors of PSF nor (ii) appointed by directors so nominated; (c) any change in
control (or similar event, however denominated) with respect to PSF or the
Guarantor shall occur under and as defined in any indenture or agreement in
respect of the Debt to which PSF or the Guarantor is a party; or (d) PSF ceases
for any reason to be a Wholly Owned Subsidiary of the Guarantor (other than as a
result of the merger of PSF into the Guarantor).

CERTAIN COVENANTS

Limitation on Consolidated Debt. The Indenture provides that neither the
Guarantor nor PSF will, nor will they cause or permit any of their respective
Subsidiaries to Incur any Debt except:

(i) Debt of PSF and the Guarantor under (A) the Credit Agreement, (B)
the Second Priority Note Agreement and the Second Priority Notes and (C)
the Notes and the Indenture;

(ii) Debt of PSF arising from reimbursement and other obligations in
respect of performance bonds, bankers' acceptances and surety or appeal
bonds provided in the ordinary course of business in an aggregate amount
not to exceed $2,500,000 at any time outstanding;

(iii) Debt of PSF (other than Debt permitted by clause (vi) below) to
finance the purchase or lease of equipment, buildings and real estate in an
aggregate principal amount not to exceed $15,000,000 at any time
outstanding;

(iv) Debt of PSF incurred in the ordinary course of business arising
from Hedge Agreements;

(v) Debt arising from intercompany loans between the Guarantor and
PSF;

(vi) New Finishing Facility Debt in an aggregate principal amount not
to exceed $15,000,000 at any time outstanding; provided, however, that PSF
shall be permitted to incur New Finishing Facility Debt only to the extent
that (a) the New Finishing Facility Debt Service with respect thereto (and
with respect to all other New Finishing Facility Debt incurred in the same
quarter) for the period of four consecutive fiscal quarters following the
incurrence thereof would not exceed one-third of the Excess EBITDA for the
period of four consecutive fiscal quarters most recently ended and (b) the
lender or, in the case of any Capital Lease Obligation, the lessor with
respect to any New Finishing Facility shall have entered into an agreement,
whereby it shall (A) waive any statutory or common law lien it may have on
the part of the Collateral located at such New Finishing Facility and (B)
grant the Trustee access thereto, whether before or after the occurrence of
an Event of Default;

(vii) Debt assumed in connection with any mergers or consolidations of
another Person with PSF or a Subsidiary or in connection with any
acquisitions by PSF or a Subsidiary of all or part of the assets of

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another Person to the extent that the cumulative aggregate consideration
(including all such assumed Debt) paid by PSF or a Subsidiary in connection
therewith does not exceed $10,000,000, provided, that additional such Debt
beyond such $10,000,000 may be incurred only if the aggregate principal
amount of such additional Debt shall not exceed 50% of the fair market
value of the assets of the other Person being acquired in such merger,
consolidation or acquisition;

(viii) Intercompany loans (A) made by PSF to any Subsidiary that is a
Wholly Owned Subsidiary, or (B) made by any Subsidiary to PSF or any other
Subsidiary that is a Wholly Owned Subsidiary;

(ix) in addition to the Debt permitted by clauses (i) through (viii)
above, PSF may become and remain liable with respect to unsecured Debt, if
at the date of and after giving effect to the incurrence of such Debt on a
pro forma basis, the Interest Coverage Ratio is equal to or greater than
2.25 to 1.0; and

(x) Debt issued in exchange for or the net proceeds of which are used
to exchange, refinance or refund outstanding Debt of PSF; in each case that
is otherwise permitted as set forth in clauses (i) through (ix) above, so
long as (A) the principal amount of any Debt issued pursuant to this clause
(x) does not exceed the principal amount of, premium, if any, and accrued
interest on, and fees and expenses with respect to, the respective Debt
exchanged, refinanced or refunded, plus any transaction costs, fees and
expenses incurred in connection with or related to such exchange,
refinancing or refunding, (B) the Debt issued pursuant to this clause (x)
does not mature prior to the stated maturity of, and does not have an
Average Life shorter than the remaining Average Life of, the respective
Debt exchanged, refinanced or refunded, and (C) where the Debt exchanged,
refinanced or refunded is subordinated to the obligations of PSF or such
Subsidiary under the Indenture, the respective Debt issued pursuant to this
clause (x) is, to the same extent, also subordinated to such obligations.

Limitation on Restricted Payments. The Indenture provides that neither the
Guarantor nor PSF will, nor will they cause or permit any of their respective
Subsidiaries to, directly or indirectly (i) declare or pay any dividend or make
any distribution, of any kind or character (whether in cash, property or
securities), in respect of the Capital Stock of the Guarantor, PSF or any
Subsidiary, excluding any dividends or distributions payable solely in shares of
such Capital Stock (other than Redeemable Stock) or in options, warrants or
other rights to acquire such Capital Stock (other than Redeemable Stock); (ii)
purchase, redeem or otherwise acquire or retire for value any such Capital Stock
of the Guarantor, PSF or any Subsidiary; (iii) make any Investment in, or
payment on a guarantee of any obligation of, any Person other than the
Guarantor, PSF or a Subsidiary; and (iv) redeem, defease (including, but not
limited to, legal or covenant defeasance), repurchase, retire or otherwise
acquire or retire for value prior to any scheduled maturity, repayment or
sinking fund payment, Debt (other than the Notes) which is subordinate in right
of payment to the Notes; (the transactions described in the foregoing clauses
(i) through (iv) being referred to herein as "Restricted Payments"), if at the
time of and after giving effect to any proposed Restricted Payment (A) an Event
of Default, or an event that with the lapse of time or the giving of notice, or
both, would constitute an Event of Default, shall have occurred and be
continuing; or (B) the aggregate of all Restricted Payments from the date of the
Indenture exceeds the sum of (I) 50% of cumulative Consolidated Net Income of
the Guarantor, PSF and their Subsidiaries (or, in the case Consolidated Net
Income of the Guarantor, PSF and their Subsidiaries shall be negative, less 100%
of such deficit) from the date of the Indenture through the last day of the last
full fiscal quarter immediately preceding such Restricted Payment; plus (II) the
net proceeds received by PSF or the Guarantor from the issuance or sale of Debt
that is convertible into Capital Stock after the date of the Indenture, to the
extent that such Debt has been actually converted into Capital Stock (other than
Redeemable Stock) through the last day of the last full fiscal quarter
immediately preceding such Restricted Payment.

Notwithstanding the foregoing, the following Restricted Payments will be
permitted on the respective terms and conditions specified hereinafter: (i) any
Restricted Payment declared or made between the Guarantor and PSF; (ii) the
purchase, redemption, acquisition, cancellation or other retirement for value of
shares of Capital Stock of the Guarantor (including options on such shares or
related Capital Stock appreciation rights or similar securities) held by
officers or employees, or former officers or employees (or their estates or
beneficiaries thereunder), or by any Benefit Plan, upon death, disability,
retirement or termination of employment or pursuant to the terms of such Benefit
Plan or any other related agreement,

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provided that the aggregate cash consideration paid for such purchase,
redemption, acquisition, cancellation or other retirement after the Closing Date
shall not exceed $1,000,000 in any one year; (iii) the purchase of shares of
Capital Stock of the Guarantor for the purpose of contributing such Capital
Stock to any Benefit Plan or permitting any Benefit Plan to make payments to the
participants therein in cash rather than in such shares of Capital Stock; (iv) a
Wholly Owned Subsidiary of PSF may declare and pay dividends or make
distributions to PSF or any other Wholly Owned Subsidiary of PSF and transfer
any of its properties or assets to PSF or any other Wholly Owned Subsidiary of
PSF; (v) Permitted Investments; and (vi) dividends or other distribution in
respect of PSF's Capital Stock up to 50% of cumulative Consolidated Net Income
of the Guarantor, PSF and their Subsidiaries from the date of this Indenture
through the last day of the last full final quarter immediately preceding such
Restricted Payment; provided that, in the case of any Restricted Payment made
pursuant to clause (ii) or (iii) above, no Default or Event of Default shall
have occurred and be continuing, or shall occur as a consequence thereof.

Limitations Concerning Disposal of Assets. The Indenture provides that
neither the Guarantor nor PSF will, nor will they cause or permit any Subsidiary
to, make any Asset Disposition unless (i) 75% of the consideration received from
any such Asset Disposition is received in cash, net of all legal, title and
recording tax expenses, commissions and other reasonable fees and expenses
incurred, and any taxes actually payable as a consequence of such disposition
(the "Proceeds") and such consideration is at least equal to the fair market
value (as determined in good faith by the Board of Directors or the President or
the Chief Financial Officer or acting Chief Financial Officer of PSF or the
Guarantor) of the assets being sold; and (ii) the Proceeds are being applied to
purchase, or such Person enters into a definitive agreement to purchase, within
180 days after receipt of such Proceeds, assets or businesses used or engaged in
the line of business referred to under "--Limitation on Related Business"; and
to the extent Proceeds are not so applied, either to repay within 180 days after
the date of such receipt with respect to the Term Loan or Second Priority Note
Agreement in the amount of such Proceeds or to make an Offer to Purchase in
accordance with the remainder of this "--Limitations Concerning Disposal of
Assets" Notes at 100% of their principal amount plus accrued interest, or both.

If all or a portion of the Proceeds of any Asset Disposition are to be
applied to make such an Offer to Purchase, PSF shall, within 180 days after
receipt of such Proceeds, deliver to the Trustee an Officers' Certificate
stating its intention to offer to purchase Notes, and within 15 days thereafter,
the Trustee shall select the Notes which are to be the subject of such offer.
Within 15 days thereafter, PSF shall mail or cause the Trustee to mail an Offer
to Purchase to each Holder whose Notes have been selected to be the subject of
such an Offer to Purchase. The Offer to Purchase shall offer to purchase Notes,
the aggregate principal amount of which (including any Secondary Notes issued
with respect thereto between the date of the Offer to Purchase and the Purchase
Date), together with accrued interest thereon to the Purchase Date, shall equal
the amount of Proceeds required to be so applied, and shall further state: (i)
the Section of the Indenture pursuant to which the Offer to Purchase is being
made, (ii) the expiration date ("Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not less
than 30 days or more than 65 days after the date of such Offer and a settlement
date (the "Purchase Date") for the purchase of Notes within five business days
after the Expiration Date, (iii) the aggregate principal amount of the
outstanding Notes offered to be purchased by PSF (including, if less than 100%,
the manner by which such has been determined pursuant to the provisions of the
Indenture) (the "Purchase Amount"), (iv) the purchase price (expressed as a
percentage of principal amount) to be paid by PSF for each Note accepted for
payment (the "Purchase Price"), (v) that the holder may tender all or any
portion of the Notes registered in the name of such holder and that Notes
tendered must be tendered in an integral multiple of $1,000 principal amount,
(vi) the place or places where Notes are to be surrendered for tender, (vii)
that interest on any Note not tendered or tendered but not purchased by PSF will
continue to accrue, (viii) that on the Purchase Date the Purchase Price will
become due and payable upon each Note accepted for payment and that interest
thereon shall cease to accrue on and after the Purchase Date, (ix) that each
holder electing to tender a Note will be required to surrender such Note at the
place or places specified in the Offer prior to the close of business on the
Expiration Date, such Note being, if PSF or the Trustee so requires, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to PSF and the Trustee duly executed by, the holder thereof or his
attorney duly authorized in writing, (x) that holders will be entitled to
withdraw all or

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any portion of Notes tendered if PSF (or its Paying Agent) receives, not later
than the close of business two business days prior to the Expiration Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
holder, the principal amount and certificate number of the Note the holder
tendered, and a statement that such holder is withdrawing all or a portion of
such tender, (xi) that if Notes in an aggregate principal amount less than or
equal to the Purchase Amount are duly tendered and not withdrawn, PSF shall
purchase all such Notes, (xii) that in the case of any holder whose Notes is
purchased only in part, PSF shall execute, and the Trustee shall authenticate
and deliver to the holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such holder, in an
aggregate principal amount equal to and in exchange for the unpurchased portion
of the Note so tendered, and (xiii) such other information as may be required by
the Indenture and applicable laws and regulations.

A Holder receiving such an Offer to Purchase may elect to have the Notes to
which the Offer to Purchase relates purchased by furnishing to the Trustee on or
before 35 days preceding the Purchase Date, written notice of its election to
have all such Notes so purchased. In the event that less than all of the Holders
receiving an Offer to Purchase elect to have the Notes subject thereto
purchased, PSF or the Trustee (in the name of PSF and at its expense) shall, no
later than 25 days preceding the Purchase Date, mail an additional Offer to
Purchase to the Holders of the Notes, if any, who have provided written notice
of election to have Notes purchased and all of whose Notes would not otherwise
have been purchased.

Prior to the Purchase Date, PSF shall (i) accept for purchase Notes or
portions thereof tendered pursuant to the Offer to Purchase, (ii) deposit with
the Trustee money sufficient to pay the Purchase Price of all Notes or portions
thereof so accepted, and (iii) deliver to the Trustee all the Notes so accepted
together with an Officers' Certificate stating Notes or portions thereof
accepted for payment by PSF. The Trustee shall promptly mail or deliver to
Holders of Notes so accepted payment in an amount equal to the Purchase Price,
and the Trustee shall promptly authenticate and mail or deliver to such Holders
a new Note or Notes equal in principal amount to any unpurchased portion of the
Note surrendered as requested by the Holder. Any Note not accepted for payment
shall be promptly mailed or delivered by PSF to the Holder thereof.

Limitation on Issuance of Capital Stock of Subsidiaries. The Indenture
provides that PSF and the Guarantor shall not permit, directly or indirectly,
any Subsidiary that owns (or has a Subsidiary that owns) any Collateral or that
guarantees (or has a Subsidiary that guarantees) any obligation under the
Indenture to issue or sell any shares of its Capital Stock, except to PSF or a
Wholly Owned Subsidiary of PSF.

Dividends and Distributions; Liens Affecting Subsidiaries. The Indenture
provides that PSF and the Guarantor will not, and will not permit any Subsidiary
of PSF to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Subsidiary of PSF to (i) pay dividends or make any other distributions permitted
by applicable law on any Capital Stock of such Subsidiary owned by PSF, the
Guarantor or any other Subsidiary, (ii) pay any Debt owed to PSF, the Guarantor
or any Subsidiary, (iii) make loans or advances to PSF, the Guarantor or any
Subsidiary or (iv) transfer any of its property or assets to PSF, the Guarantor
or any Subsidiary, except for such encumbrances or restrictions existing (a) in
the Indenture or any agreement in effect on the Effective Date or in any
amendments, restatements, refinancings or other modifications of the Indenture
or any such other agreement, provided that the encumbrance or restrictions
contained therein are comparable to, or no less restrictive than, those
originally set forth therein, (b) under or by reason of applicable law, rule or
regulation (including applicable currency control laws and applicable state
corporate statutes restricting the payment of dividends in certain
circumstances), (c) with respect to any Person or the property or assets of such
Person acquired by PSF or any Subsidiary at the time of such acquisition, which
encumbrances or restrictions are not applicable to any Person or the property or
assets of any Person other than such Person, or (d) in the case of clause (iv)
above, that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance or
contract or similar property or asset.

Limitations on Liens. The Indenture provides that the Guarantor and PSF
shall not, and shall not permit any of their Subsidiaries to, Incur any Lien on
property or assets now owned or hereinafter acquired, except for (i) Liens
Incurred to secure the Credit Agreement, the Second Priority Note Agreement and
the Notes and the Indenture, (ii) Liens on equipment to secure Debt permitted
pursuant to clause (iii) under "-- Limitation

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on Consolidated Debt", (iii) Liens securing Debt permitted pursuant to clause
(x) under "-- Limitation on Consolidated Debt" to the extent issued in exchange
for, or the net proceeds of which are used to exchange, refinance or refund,
directly or indirectly, Debt referred to under "-- Limitation on Consolidated
Debt" in subclauses (i)(A) and (B) or clauses (iii), (vi) or (vii), (iv) Liens
for taxes not yet delinquent or which are being contested in good faith by
appropriate proceedings, provided, that adequate reserves with respect thereto
are maintained on the books of PSF or its Subsidiaries, as the case may be, in
conformity with generally accepted accounting principles, (v) landlords',
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business and with respect to amounts
which are not yet delinquent or are being contested in good faith by appropriate
proceedings, (vi) pledges or deposits made in the ordinary course of business in
connection with (a) leases, performance bonds and similar obligations, (b)
workers' compensation, unemployment insurance and other social security
legislation, (c) Liens imposed under the Packers and Stockyards Act of 1921, as
amended from time to time, and (d) to secure the performance of surety bonds and
appeal bonds required (1) in the ordinary course of business or in connection
with the enforcement of rights or claims of PSF or a Subsidiary or (2) in
connection with judgments that do not exceed $250,000 in the aggregate, (vii)
Liens, easements, rights-of-way, zoning restrictions, Mineral Rights and other
similar restrictions, charges or encumbrances which do not interfere with the
ordinary conduct of the business of PSF and which do not materially detract from
the value of the property to which they attach or materially impair the use
thereof by PSF, the Guarantor or any Subsidiary, (viii) any attachment or
judgment Lien, unless the judgment it secured shall not, within 30 calendar days
after the entry thereof, have been discharged or execution thereof stayed
pending appeal, or shall not have been discharged within 30 calendar days after
the expiration of any such stay, (ix) Liens securing Debt permitted by clause
(vii) under "-- Limitation on Consolidated Debt," provided that such Liens
attach solely to the assets of the acquired entity and do not extend to or cover
any other assets of PSF or any of its Subsidiaries, (x) Liens in favor of the
Trustee for its own benefit and for the benefit of the Holders, (xi) any
interest or title of a lessor pursuant to a lease constituting a Capital Lease
Obligation, (xii) any renewal of or substitution for any Lien permitted by any
of the preceding clauses, provided that the Debt secured is not increased nor
the Lien extended to any additional assets (other than proceeds and accessions),
(xiii) Liens upon New Finishing Facilities to secure New Finishing Facility Debt
permitted under the Indenture, (xiv) Liens on any Hedge Agreements resulting
solely from the purchase of such Hedge Agreements on margin, and (xv) Liens
(including Liens consisting of Mineral Rights) in existence on the Effective
Date, and identified in the appropriate Schedule to the Indenture.

Notwithstanding the foregoing, PSF shall not grant, or permit to exist, any
lien on or security interest in any Collateral in contravention of the
provisions for "Protection of Security" under the Security Agreement.

Limitation on Transactions with Affiliates. The Indenture provides that PSF
and the Guarantor shall not, and shall not permit any Subsidiary to, directly or
indirectly, enter into any transaction not in the ordinary course of its
business (excluding transactions between PSF and Subsidiaries or between or
among Subsidiaries, and transactions permitted under "-- Limitation on
Restricted Payments"), with any Affiliate other than Permitted Holders, unless a
majority of its Board of Directors or its Members, as the case may be, shall
determine in its good faith judgment and evidenced by a Board Resolution that
the terms of such transaction are in the best interests of PSF, the Guarantor or
such Subsidiary and such transaction is on terms no less favorable to PSF, the
Guarantor or such Subsidiary than those that could be obtained in a comparable
arm's-length transaction with an entity that is not an Affiliate.
Notwithstanding the foregoing, so long as no Event of Default shall have
occurred and be continuing, this provision will not apply to (i) any transaction
or series of transactions (A) which the Board of Directors of PSF or the Members
of the Guarantor, as the case may be, shall determine, in good faith, is in the
best interest of PSF and (B) as to which PSF shall have delivered to the Trustee
a written opinion of an independent nationally recognized investment banking
firm stating that this transaction is fair to PSF or the Guarantor, as the case
may be, from a financial point of view, (ii) any Restricted Payment not
prohibited under "-- Limitation on Restricted Payments," (iii) payments pursuant
to any tax sharing agreement or arrangement among the Guarantor, PSF and any
Subsidiaries, and (iv) any transactions between the Guarantor, PSF or any of its
Subsidiaries and MS Group or any of its Affiliates involving the provision of
financial, investment banking, management consulting or underwriting services by
MS Group or any of its Affiliates, provided that the fees payable to MS Group or
any of its Affiliates do not

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exceed the usual and customary fees of MS Group or any such Affiliate charged to
persons that are not Affiliates of MS Group or any of its Affiliates (through
direct equity ownership, warrants, contract rights or otherwise).

Limitation on Related Business. The Indenture provides that PSF and the
Guarantor will not, and will not permit any Subsidiary to, engage in any
business other than the business in which they are engaged on the date of the
Indenture and business activities reasonably complementary or incidental
thereto.

Provision of Financial Information. The Indenture provides that PSF shall
file with the Trustee (i) within 45 days after the close of each quarterly
accounting period in each fiscal year of PSF, the consolidated balance sheets of
the Guarantor, PSF and their Subsidiaries as at the end of such quarterly
accounting period and the related consolidated statements of income and cash
flow for such quarterly accounting period, together with a management's
discussion and analysis relating thereto, all of which shall be certified by an
Officer of PSF and the Guarantor as fairly presenting the consolidated financial
condition and results of operations of PSF and the Guarantor in accordance with
generally accepted accounting principles consistently applied, subject to normal
year-end audit adjustments, (ii) within 90 days after the end of each fiscal
year of PSF, the consolidated balance sheets of the Guarantor, PSF and their
Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and cash flow for such fiscal year, certified by
independent certified public accountants of recognized national standing,
together with (a) a management's discussion and analysis relating thereto and
(b) a statement of such accounting firm that it audit of such financial
statements was conducted in accordance with generally accepted auditing
standards, and (iii) together with the delivery of financial statements under
clause (i) or (ii) above, a certificate of an Officer of PSF certifying that, as
of the date of such certificate and as to his or her knowledge, PSF is in
compliance with all conditions and covenants under the Indenture and, since the
date of the last such certificate delivered by PSF, no Event of Default has
occurred or, if such Event of Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken with
respect thereto.

In addition, PSF shall, upon receipt of notice from any Holder that it
proposes to sell any Notes pursuant to the exemption provided by Rule 144A (or
any successor thereto) under the Securities Act of 1933, provide at its expense
the information required by such Rule, including without limitation a brief
statement of the nature of PSF's business and its products and services and the
financial information required by such Rule.

Additional Covenants. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency in The City of New York; (iii) holding in
trust money for security payments; (iv) maintenance of existence, rights and
franchises; (v) maintenance of properties; (vi) payment of taxes and other
claims; (vii) maintenance of insurance; (viii) Permitted Investments; (ix)
compliance with Environmental and Safety Laws; (x) providing statement by
Officers as to Default; (xi) waiver of certain covenants; (xii) provision of
further assurances to the Trustee; and (xiii) compliance with Security
Documents.

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

The Guarantor. The Indenture provides that the Guarantor shall not
consolidate with or merge into any other Person or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all its properties
and assets as an entirety, unless either (i) the Guarantor shall be the
continuing Person or (ii) the Person (if other than the Guarantor) formed by
such consolidation or into which the Guarantor is merged or the Person which
acquires by conveyance, transfer, lease or disposition the properties and assets
of the Guarantor (the "Surviving Entity") shall be a corporation duly organized
and validly existing under the laws of the United States of America or any state
thereof and shall expressly assume the Guarantee and the obligations of the
Guarantor with respect to any covenant of the Indenture and the Security
Documents, and (a) immediately after giving effect to such transaction, and
treating any Debt Incurred by the Guarantor as a result of such transaction as
having been Incurred at the time of such transaction, the Guarantor or the
Surviving Entity would not be liable with respect to any Debt which is not
permitted as set forth under "-- Certain Covenants -- Limitation on Consolidated
Debt" and the Consolidated Net Worth of the Guarantor, PSF or the

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Surviving Entity and their Subsidiaries would be no less than the Consolidated
Net Worth of the Guarantor, PSF and their Subsidiaries immediately prior to such
transactions, (b) no Event of Default as set forth in "-- Events of Default"
shall have occurred or be continuing at the time of such transaction, and (c)
the Guarantor shall have delivered to the Trustee an Officers' Certificate
stating that the consolidation, merger, conveyance, transfer, lease or other
disposition and supplemental indenture, if a supplemental indenture is required
in connection with such transaction, complies with the provisions of the
Indenture relating to such transactions and all conditions precedent provided
for in the Indenture relating to such transaction shall have been complied with.

PSF. The Indenture provides that PSF shall not consolidate with or merge
into any other Person or permit any other Person to consolidate with or merge
into PSF or transfer, convey, sell, lease or otherwise dispose of all or
substantially all of its properties or assets as an entirety, unless (i) PSF is
the surviving Person, or (ii) in the case of such transaction where PSF is not
the surviving Person, the surviving Person shall be a corporation organized and
validly existing under the laws of the United States of America, any state
thereof or the District of Columbia and shall expressly assume the payment of
principal (and premium, if any) and interest due on all the Notes and the
obligations of PSF under the Indenture, and (a) immediately after giving effect
to such transaction, and treating any Debt Incurred by PSF as a result of such
transaction as having been Incurred at the time of such transaction, PSF or the
surviving Person (if other than PSF) would not be liable with respect to any
Debt which is not permitted as set forth in "-- Certain Covenants -- Limitation
on Consolidated Debt" and the Consolidated Net Worth of the Guarantor, PSF or
the surviving Person (if other than PSF) and their Subsidiaries would be no less
than the Consolidated Net Worth of the Guarantor, PSF and their Subsidiaries
immediately prior to such transaction, (b) no Event of Default as set forth in
"-- Events of Default" shall have occurred or be continuing at the time of such
transaction, and (c) PSF shall have delivered to the Trustee an Officers'
Certificate stating that the consolidation, merger, conveyance, transfer, lease
or other disposition and supplemental indenture, if a supplemental indenture is
required in connection with such transaction, complies with the provisions of
the Indenture relating to such transactions and all conditions precedent
provided for in the Indenture relating to such transaction shall have been
complied with.

In the event of any transaction described in and complying with the
conditions listed in the immediately preceding two paragraphs, the successor
Person shall succeed to, and be substituted for, and may exercise every right
and power of, PSF or the Guarantor, as the case may be, under the Indenture and
PSF or the Guarantor, as the case may be, would be discharged from its
obligations under the Indenture and the Notes.

EVENTS OF DEFAULT

The Indenture provides that each of the following constitutes an Event of
Default:

(i) default in the payment of any interest upon any Note when it
becomes due and payable, and continuance of such default for a period of 30
days;

(ii) default in the payment of the principal of (or premium, if any,
on) any Note at its Maturity;

(iii) default in the payment of principal (or premium, if any) or
interest pursuant to an Offer to Purchase as set forth in "-- Certain
Covenants -- Limitations Concerning Disposal of Assets" and "-- Change of
Control;"

(iv) default in the performance, or breach, of the terms regarding
consolidation, merger, sale, assignment, conveyance, transfer, lease or
other disposition of all or substantially all of the assets of the
Guarantor or PSF set forth in the Indenture (See "-- Consolidation, Merger,
Conveyance, Transfer or Lease);

(v) default under the Second Priority Obligations or any other Debt or
other evidence of Debt of PSF or the Guarantor or any Subsidiary in a
principal amount of $10,000,000 or more, or under any mortgage, indenture
or security agreement with respect thereto, which default shall constitute
a failure to pay principal of such Debt when due at final maturity thereof
or shall have resulted in such Debt

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becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable;

(vi) default in the performance, or breach, of any covenant,
representation or warranty of PSF or the Guarantor in the Indenture (other
than the defaults specified in clauses (i) through (v) above and clauses
(vii) through (xi) below), and continuance of such default or breach for a
period of 30 days after written notice thereof has been given to PSF by the
Trustee or to PSF and the Trustee by the Holders of at least 25% in
principal amount of the then outstanding Notes, specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Indenture;

(vii) one or more final judgments for the payment of money shall be
entered against PSF or the Guarantor or any Subsidiary in an aggregate
amount in excess of $10,000,000 by a court or courts of competent
jurisdiction, which judgments remain undischarged, unstayed or unbonded for
a period (during which execution shall not be effectively stayed) of 60
days;

(viii) the entry by a court having jurisdiction in the premises of (a)
a decree or order for relief in respect of PSF or the Guarantor or any
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other similar
law or (b) a decree or order adjudging PSF or the Guarantor or any
Subsidiary a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of PSF or the Guarantor or any Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 90
consecutive days;

(ix) the commencement by PSF or the Guarantor or any Subsidiary of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect of
PSF or the Guarantor or any Subsidiary in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition, answer or consent seeking reorganization or relief under any
applicable federal or state law, or the consent by it to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of PSF or the Guarantor or any Subsidiary or of any substantial
part of its property, or the making by it of an assignment for the benefit
of creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of action by PSF or the
Guarantor or any Subsidiary in furtherance of any such action;

(x) any Security Document shall, at any time, cease to be in full
force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by PSF or the Guarantor or the
Collateral Agent shall not have or shall cease to have a valid, perfected
and subsisting Lien on the Collateral (other than Collateral released as
provided in the Security Documents and the Intercreditor Agreement); or any
Lien shall have a priority equal to or greater than the Liens on the
Collateral, except as permitted by the Indenture (See "-- Certain Covenants
-- Limitations on Liens");

(xi) the Indenture or the Notes for any reason other than satisfaction
in full of the obligations thereunder shall cease to be, or shall be
asserted by PSF or the Guarantor not to be, in full force and effect and
enforceable in accordance with its terms or is declared null and void.

If an Event of Default (other than as specified in clauses (viii) or (ix)
above) occurs and is continuing, the Trustee or the holders of at least 50% in
principal amount of the then outstanding Notes may declare the principal amount
of all the Notes to be due and payable immediately by notice in writing to PSF,
and to the Trustee if given by such holders, and upon any such declaration the
principal amount and any accrued interest shall become immediately due and
payable. If an Event of Default specified in clauses (viii) or (ix) above
occurs, the principal amount of and any accrued interest on the Notes then
outstanding shall become immediately due and payable without any declaration or
other action on the part of the Trustee or any holder.

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After a declaration of acceleration and before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in principal amount of the then outstanding Notes may, by written
notice to PSF and the Trustee, rescind or annul such declaration if (a) PSF has
paid or deposited with the Trustee a sum sufficient to pay all amounts due the
Trustee under the Indenture and reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, all overdue interest on all
Notes, the principal of (and premium, if any, on) any Notes which have become
due otherwise than by such declaration of acceleration (including any Notes
required to have been purchased on the Purchase Date pursuant to an Offer to
Purchase made by PSF) and, interest thereon at the rate provided by the Notes,
and interest upon overdue interest at the rate provided by the Notes; and (b)
all Events of Default have been cured or waived, other than non-payment of
principal of the Notes due solely by such acceleration.

In the case of an Event of Default specified in clauses (i), (ii) or (iii)
above, PSF will, upon demand of the Trustee or the holders of not less than 25%
in principal amount of Notes then outstanding, pay to the Trustee, for the
benefit of the holders of such Notes, the whole amount then due and payable on
such Notes for principal (and premium, if any) and interest and, to the extent
legally enforceable, interest on overdue principal (and premium, if any) and on
any overdue interest, and such further amount sufficient to cover costs and
expenses of collection. If PSF fails to pay such amounts upon demand, the
Trustee or the holders of not less than 25% in principal amount of the Notes
then outstanding may institute a suit for the collection of the amounts so due
and unpaid.

If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights.

No holder of any Note shall have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or trustee, or
for any other remedy thereunder, unless such holder has previously given written
notice to the Trustee of a continuing Event of Default, the holders of not less
than 25% in principal amount of the Notes then outstanding have made written
request, and have offered reasonable indemnity, to the Trustee to institute such
proceeding as Trustee, the Trustee has failed to institute such proceeding for
60 days after its receipt of such notice, request and offer of indemnity, and
the Trustee has not within such 60-day period received directions inconsistent
with such written request by holders of a majority in principal amount of the
outstanding Notes. Such limitations do not apply, however, to a suit instituted
by a holder against PSF and/or the Guarantor for the enforcement of the payment
of the principal of, premium, if any, or accrued interest on, such Note on or
after the respective due dates expressed in such Note.

If an Event of Default has occurred and is continuing, the Trustee is
required to exercise such rights and powers vested in it under the Indenture and
use the same degree of care and skill in its exercise thereof as a prudent man
would exercise or use under the same circumstances in the conduct of his own
affairs. Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default shall occur and be continuing, the
Trustee is not under any obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders unless
such holders shall have offered to such Trustee reasonable security or
indemnity. Subject to certain provisions concerning the rights of the Trustee,
the holders of a majority in principal amount of the outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.

DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE

PSF may, at its option and at any time, elect to have the obligations of
PSF discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that PSF shall be deemed to have paid and discharged the entire
Debt represented by the outstanding Notes and to have satisfied all other
obligations under the Notes and the Indenture except for (i) the rights of
Holders of the outstanding Notes to receive, solely from the trust fund
described below, payments in respect of the principal of, premium, if any, and

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interest on such Notes when such payments are due, (ii) PSF'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, (iii) the
rights, powers, trusts, duties and immunities of the Trustee under the
Indenture, and (iv) the defeasance and covenant defeasance provisions of the
Indenture. In addition, PSF may, at its option and at any time, elect to have
the obligations of PSF released with respect to certain covenants that are
described in the Indenture ("covenant defeasance") and any omission to comply
with such obligations shall not constitute a default or an Event of Default with
respect to the Notes. In the event that a covenant defeasance occurs, certain
events (not including non-payment, bankruptcy and insolvency events) described
under "-- Events of Default" will no longer constitute Events of Default with
respect to the Notes.

In order to exercise defeasance or covenant defeasance, (i) PSF shall
irrevocably deposit with the Trustee, as trust funds in trust, for the benefit
of the Holders of the Notes, money or U.S. Government Obligations (as defined in
the Indenture), 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 and discharge the principal of, premium, if any, and
interest on the outstanding Notes to redemption or maturity, (ii) PSF shall have
delivered to the Trustee an opinion of counsel to the effect that the Holders of
the outstanding Notes will not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance or covenant defeasance, as the case
may be, 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 defeasance
or covenant defeasance, as the case may be, had not occurred (in the case of
defeasance, such opinion must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable Federal income tax laws),
(iii) no Event of Default or event which with notice or lapse of time or both
would become an Event of Default shall have occurred and be continuing on the
date of such deposit or insofar as clauses (viii) and (ix) under the first
paragraph under "-- Events of Default" are concerned, at any time during the
period ending on the 121st day after the date of deposit, (iv) such defeasance
or covenant defeasance shall not result in a breach or violation of, or
constitute a default under, the Indenture or any other agreement or instrument
to which PSF is a party or by which it is bound, (v) PSF shall have delivered to
the Trustee an Officers' Certificate and an opinion of counsel, each stating
that all conditions precedent under the Indenture to either defeasance or
covenant defeasance, as the case may be, have been complied with, (vi) such
defeasance or covenant defeasance shall not cause the Trustee to have a
conflicting interest within the meaning of the Trust Indenture Act with respect
to any securities of PSF, (vii) PSF shall have delivered to the Trustee an
Officers' Certificate to the effect that the Notes, if then listed on any
securities exchange, will not be delisted as a result of such deposit, (viii)
such defeasance or covenant defeasance shall not result in the trust arising
from such deposit constituting an investment company as defined in the
Investment Company Act of 1940, as amended, or such trust shall be qualified
under such act or exempt from regulation thereunder.

SATISFACTION AND DISCHARGE

The Indenture will cease to be of further effect (except as to any
surviving obligations of PSF under the provisions of the Indenture relating to
temporary Notes, registration of transfer or exchange of the Notes, mutilated,
destroyed, lost and stolen Notes, compensation and reimbursement of the Trustee,
maintenance of an office or agency and money for security payments held in
trust) as to all outstanding Notes when (i) either (a) all the Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has been deposited in
trust and repaid to PSF or discharged from such trust) have been delivered to
the Trustee for cancellation or (b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable, will become due and
payable at their Stated Maturity within one year, or are to be called for
redemption within one year, and PSF has irrevocably deposited or caused to be
deposited with the Trustee an amount sufficient to pay and discharge the entire
Debt on the Notes not theretofore delivered to the Trustee for cancellation, for
the principal of, premium, if any, and interest to the date of deposit or to the
Stated Maturity or Redemption Date, as the case may be, (ii) PSF has paid or
caused to be paid all other sums payable under the Indenture by PSF, and (iii)
PSF has delivered to the Trustee an Officers' Certificate and an opinion of
counsel each stating that all

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conditions precedent under the Indenture relating to the satisfaction and
discharge of the Indenture have been complied with.

TRANSFER AND EXCHANGE

The registered holder of a Note will be treated as the owner of it for all
purposes. A holder may transfer or exchange Notes in accordance with the
Indenture. The Trustee may require a holder, among other things, to furnish
appropriate endorsements and transfer documents and PSF may require a holder to
pay any taxes and fees required by law or permitted by the Indenture. PSF shall
not be required to issue, register the transfer of or exchange any Note (i)
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of Notes selected for redemption and
ending at the close of business on the day the notice of redemption is sent to
holders, or (ii) selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part may be transferred or
exchanged, and (iii) tendered pursuant to an Offer to Purchase and not
withdrawn.

AMENDMENT, SUPPLEMENT AND WAIVER

PSF may, when authorized by resolutions of its Board of Directors, and the
Trustee may, without the consent of the Holders, amend, waive or supplement the
Indenture, the Security Documents, or the Notes to (i) evidence the succession
of another person to PSF or the Guarantor and the assumption by such person of
the covenants of PSF or the Guarantor, as the case may be, (ii) add to the
covenants of PSF or the Guarantor for the benefit of the Holders, or surrender
any right or power of PSF or the Guarantor, (iii) secure the Notes pursuant to
such further assurances required under the Indenture or otherwise, (iv) cure any
ambiguity, defect or inconsistency, (v) make any change which is not
inconsistent with the Indenture and which does not adversely affect the rights
of the Holders, or (vi) maintain the qualification of the Indenture under the
Trust Indenture Act.

Other amendments and modifications of the Indenture, the Notes or the
Security Documents may be made by PSF and the Trustee with the consent of the
Holders of not less than a majority of the aggregate principal amount of the
outstanding Notes, provided that no such modification or amendment may, without
the consent of the Holder of each outstanding Note affected thereby: (i) reduce
the percentage in principal amount of the Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) change the Maturity of the principal of,
or any installment of interest on, any Note, (iii) reduce the principal of or
the rate of interest on or any premium payable upon the redemption of any Note,
(iv) change the place of payment where, or the coin or currency in which, any
Note or any premium or interest thereon is payable, (v) impair the right to
institute suit for any payment after the Maturity, the Redemption Date or the
Purchase Date, as the case may be, (vi) modify any provisions in the Indenture
relating to supplemental indentures with the consent of holders, waiver of past
defaults or certain covenants, except to increase the percentage of outstanding
Notes required for such actions or to provide that certain other provisions of
the Indenture cannot be modified or waived without the consent of the Holder of
each Note affected thereby, or (vii) following the making of an Offer with
respect to an Offer to Purchase, modify the provisions of the Indenture with
respect to an Offer to Purchase in a manner adverse to such Holder.

THE TRUSTEE

Fleet National Bank, serves as Trustee under the Indenture and acts as
Collateral Agent and Junior Collateral Agent, as applicable, under the Security
Documents. Any replacement trustee must be qualified to act as such under the
Trust Indenture Act, have a combined capital and surplus of at least
$50,000,000, and have its Corporate Trust Office in the continental United
States.

In the event the Trustee becomes a creditor of PSF, the Indenture contains
certain limitations on the rights of the Trustee 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 or resign, subject to the provisions of the Trust Indenture Act
and the Indenture.

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The Holders of a majority in aggregate principal amount of the then
outstanding Notes will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, subject to certain exceptions. The
Indenture provides that, in case an Event of Default has occurred and has not
been cured, 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. 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 reasonable security or indemnity against any
cost, liability or expense.

GUARANTEE OF NOTES

The Notes and PSF's obligations under the Indenture are irrevocably and
unconditionally guaranteed by Holdings and the Subsidiary Guarantors (currently
Princeton). The guarantees of Holdings and the Subsidiary Guarantors are in
addition to (and not in substitution for) any other security for the Notes and
may not be revoked by Holdings or the Subsidiary Guarantors until all guaranteed
obligations have been indefeasibly paid and performed in full. See "Description
of Guarantees of 11% Senior Secured Notes."

CERTAIN DEFINITIONS

Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for the definition of all other terms used in the
Indenture.

Asset Disposition means, with respect to any Person, any sale, lease,
transfer, condemnation, loss in an insured event or other disposition (including
by way of merger, consolidation or sale and leaseback transaction, but excluding
any sales of assets or property that (i) are substantially concurrently replaced
with the proceeds of such sale and (ii) are no longer used or useful in the
business of such Person) in one transaction or a series of related transactions
by such Person or any of its subsidiaries to any Person other than the
Guarantor, PSF or any of its Wholly Owned Subsidiaries of (a) any of the Capital
Stock of any subsidiary of such Person, (b) all or substantially all of the Real
Property, Leaseholds or Personal Property of such Person or any of its
subsidiaries or (c) any other Real Property, Leaseholds or Personal Property of
such Person or any of its subsidiaries, except, in the case of clause (c), for
(i) sales of inventory, livestock, processed pork inventories, breeding stock,
grain, feedstock or Hedge Agreements in the ordinary course of business and (ii)
any sale, lease, transfer or other disposition in one transaction or a series of
related transactions of Real Property, Leaseholds or Personal Property with a
value not in excess of $250,000.

Capital Stock of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.

Collateral means all of the property and possessions, and the proceeds
thereof, pledged and mortgaged under the Security Documents and all the "Trust
Premises" as defined in each Mortgage.

Consolidated Net Worth of any Person as of any date of determination means
the stockholders' equity of such Person and its Subsidiaries at such date
determined in accordance with generally accepted accounting principles on a
Consolidated basis.

Credit Agreement means the Credit Agreement, dated as of September 17,
1996, among PSF, the lending banks identified therein and The Chase Manhattan
Bank, a New York banking corporation, as administrative agent for such lending
banks, providing initially for a revolving credit loan of up to $60,000,000 (the
"Credit Loan") and a term loan of $30,000,000 (the "Term Loan"), secured by a
first priority lien on substantially all of the assets of PSF pursuant to the
Security Document of even date therewith, as at any time amended, extended or
otherwise modified, restated or refinanced.

Guarantor means PSF Holdings, L.L.C., a Delaware limited liability company,
and its successors and assigns.

Hedge Agreement of any Person means any contract for, or option, put,
Currency Agreement or similar arrangement relating to, the purchase by such
Person of (a) grain, soy meal and other feed ingredients or

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related hedging activities conducted in accordance with prudent business
practice and (b) hogs and related hedging activities conducted in accordance
with prudent business practice, in each case that are created to protect such
Person against price fluctuations and not for speculative purposes.

Holder means a Person in whose name a Note is registered in the Security
Register.

Incur means, with respect to any Debt or other obligation of any Person, to
create, issue, incur (by conversion, exchange or otherwise), assume, guarantee
or otherwise become liable in respect of such Debt or other obligation or the
recording, as required pursuant to generally accepted accounting principles or
otherwise, of any such Debt or other obligation on the balance sheet of such
Person (and "Incurrence," "Incurred," "Incurrable," and "Incurring" shall have
meanings correlative to the foregoing); provided, however, that a change in
generally accepted accounting principles that results in an obligation of such
Person that exists at such time becoming Debt shall not be deemed an Incurrence
of such Debt.

Interest Coverage Ratio means, with respect to PSF as of any date, the
ratio of (i) the aggregate amount of the Consolidated EBITDA of the Guarantor,
PSF and their Subsidiaries for the period since the Effective Date but in no
event more than four fiscal quarters for which financial information in respect
thereof is available immediately prior to such date to (ii) the aggregate amount
of the Consolidated Interest Expense of the Guarantor, PSF and their
Subsidiaries during such period since the Effective Date but in no event more
than four fiscal quarters.

Lien means, with respect to any property or assets, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).

Maturity, when used with respect to any Note, means the date on which the
principal of such Note become due and payable as provided therein or under the
Indenture, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.

Member means a Person admitted as an owner of a membership interest in a
limited liability company.

Mineral Rights mean rights and interests held by third parties in the oil,
gas and other minerals estate (including mineral and royalty interests).

MS Group means Morgan Stanley Group Inc., a Delaware corporation.

New Finishing Facility means a hog finishing facility acquired or
constructed by PSF after the Effective Date.

New Finishing Facility Debt means Debt of PSF (including Debt of others
guaranteed by PSF) incurred after the Effective Date to finance the construction
or acquisition of New Finishing Facilities, so long as the instruments governing
such Debt do not contain (a) any financial covenants or (b) any other covenants
or defaults that are more onerous to PSF than those contained in the Indenture
(except for any such covenants that relate solely to the New Finishing Facility
financed thereby).

Offer to Purchase means a written offer (the "Offer") sent by PSF by first
class mail, postage prepaid, to each Holder at its address appearing in the
Security Register on the date of the Offer, offering to purchase up to the
principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture).

Person means any individual, corporation, partnership, joint venture,
trust, limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.

Redeemable Stock of any Person means any equity security of any Person (not
including any warrants/stock issued under the Management Option Plan) that by
its terms or otherwise is required to be

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redeemed prior to the Stated Maturity of the Notes or is redeemable at the
option of the holder thereof at any time prior to the Stated Maturity of the
Notes.

Redemption Date, when used with respect to any Note to be redeemed, means
the date fixed for such redemption by or pursuant to the Indenture.

Second Priority Obligations means the obligations of PSF and the Guarantor
under the Morgan Stanley Note Agreement and the Second Priority Notes.

Security Documents means the Security Agreement, the Pledge Agreement, the
Assignment of Contracts, the Mortgages, and each of the ancillary agreements
required by any of the foregoing and any agreements and other instruments and
documents executed and delivered pursuant to the provisions of the Indenture
relating to "Further Assurances."

Stated Maturity when used with respect to any Note or any installment of
interest thereof means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.

Subsidiary of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof but shall not include any Inactive Subsidiary.

Subsidiary Guarantors means each Subsidiary which executes a Subsidiary
Guarantee Agreement.

Wholly Owned Subsidiary of any Person means a Subsidiary of such Person all
of the outstanding Voting Stock of which (other than director's qualifying
shares) shall at the time be owned by such Person or by one or more Wholly Owned
Subsidiaries of such Person.

REGISTRATION RIGHTS OF NOTE HOLDERS

The Notes are being registered pursuant to an agreement for the benefit of
the holders of Registrable Notes, dated the original issue date of the Notes
(the "Notes Registration Rights Agreement"). Subject to certain conditions and
limitations, PSF has agreed to use its best efforts to keep a shelf registration
with respect to the Notes continuously effective under the Securities Act for
four years from the effective date of this Registration Statement or such
shorter period ending when all the Notes have been sold hereunder. The Notes
Registration Rights Agreement also provides rights to the holders under certain
conditions after such four year period to request up to two Demand
Registrations, as defined in the Notes Registration Rights Agreement. In
addition, if PSF or Holdings proposes to register its securities for its own
account, holders of Notes will have the opportunity to include their Notes in
such proposed registration, subject to certain exceptions. The Notes
Registration Rights Agreement is being filed as an exhibit to this Registration
Statement of which this Prospectus is a part and this summary of the Notes
Registration Rights Agreement is qualified in its entirety by the more detailed
provisions set forth therein.

If the Board of Directors of PSF determines in its good faith reasonable
judgment, that to file or maintain the effectiveness of any shelf registration
or a Demand Registration or to permit such registration statement to become
effective would be significantly disadvantageous to PSF's financial condition,
business or prospects (a "Disadvantageous Condition") in connection with certain
actions or anticipated actions of PSF or any subsidiary, PSF may, until such
Disadvantageous Condition no longer exists (but not for more than 180 days in
the aggregate nor more than 90 consecutive days during any 12-month period)
withdraw such registration statement and terminate its effectiveness, suspend
the use of the prospectus contained therein or elect not to file the
registration statement. In any such event, PSF will deliver notice to any holder
of Registrable Notes covered or to be covered under such withdrawn, suspended or
not to be filed registration statement, which indicates that the registration
statement is no longer effective or will not be filed, and upon the cessation of
such Disadvantageous Condition, PSF shall so notify such holders, and shall file
at such time as it in good

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faith deems appropriate, an amended, supplemented or new registration statement
covering such Registrable Notes.

While there remain outstanding any Registrable Notes, PSF will (i) at any
time it is not subject to the requirements of Section 13 or Section 15(d) of the
Exchange Act (A) make available to any holder upon request such information as
necessary to permit sales pursuant to Rule 144A under the Securities Act and (B)
make publicly available such information concerning PSF required under the
Exchange Act to permit sales pursuant to Rule 144 under the Securities Act; and
(ii) during such times PSF is subject to the requirements of Section 13 or
Section 15(d) of the Exchange Act, timely file the periodic and other reports
required to permit sales of such Registrable Notes pursuant to Rule 144 under
the Securities Act. PSF will take such further action as any holder of
Registrable Notes may reasonably request, to the extent required to enable such
holder to sell its Registrable Notes without registration under the Securities
Act within the limitation of the exemptions provided by Rule 144A and Rule 144
under the Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter promulgated by the Commission.

INDEMNIFICATION BY PSF

As permitted by the Delaware General Corporation Law ("DGCL"), the Charter
and By-Laws of PSF provide that directors of PSF shall not be personally liable
to PSF or its stockholders for monetary damages for breach of fiduciary duty as
a director except to the extent that exculpation from liability is not permitted
under the DGCL as in effect at the time such liability is determined. In
addition, the Charter provides that PSF shall, to the maximum extent permitted
from time to time under the DGCL, as amended from time to time, indemnify and
upon request advance expenses to any person who is or was a party or is
threatened to be made a party to any threatened, pending or completed action,
suit, proceeding or claim, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was or has agreed to
be a director or officer of PSF or while a director or officer is or was serving
at the request of PSF as a director, officer, partner, trustee, employee or
agent of any corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, against expenses
(including attorney's fees and expenses), judgments, fines, penalties and
amounts paid in settlement incurred (and not otherwise recovered) in connection
with the investigation, preparation to defend or defense of such action, suit,
proceeding or claim.

TRANSFER AGENT AND REGISTRAR

Pursuant to the Indenture, the Trustee is appointed as the "Security
Registrar" for the purpose of registering Notes and transfers of Notes as
provided in the Indenture.

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DESCRIPTION OF GUARANTEES OF 11% SENIOR SECURED NOTES

The Guarantor and the Subsidiary Guarantors (collectively referred to
herein as the "Grantors") jointly and severally have irrevocably and
unconditionally guaranteed the payment of the Notes and the payment and
performance of all of PSF's other obligations under the Indenture and the Notes
(the foregoing collectively referred to as the "Obligations"). The guarantees of
the Grantors are in addition to (and not in substitution for) any other security
for the Obligations and may not be revoked by the Grantors until all Obligations
have been indefeasibly paid and performed in full. The rights, remedies and
benefits of the Trustee and the holders of Notes expressly specified in the
Indenture are cumulative and not exclusive of any other rights, remedies and
benefits which either may have in connection with the guarantees at law, in
equity, by statute or otherwise.

The liability of a Grantor under its guarantee is joint and several for the
full amount of the Obligations and is independent of, and not in consideration
of or contingent upon, the liability of PSF or any other Grantor. The obligation
of a Grantor under its guarantee is continuing, absolute and unconditional
without regard to (i) the legality, validity or enforceability of the
Obligations, (ii) any defense of set-off, counterclaim and recoupment or
termination, or (iii) any other circumstance whatsoever. The Grantors waive (i)
any and all rights of subrogation (until all Obligations have been paid in
full), (ii) the right to require any holder or the Trustee to proceed against
PSF, any other guarantor or any security held for payment of the Obligations,
and (iii) notice of protest for non-payment, notice of default, notice of
extension or renewal of the Obligations, and in the event of notice to or demand
on a Grantor, the right to any other or further notice or demand in the same,
similar or other circumstances. In addition, the Obligations of the Grantors
shall not be subject to any reduction, limitation, impairment or termination for
any reason, including any claim of waiver, release, surrender, alteration or
compromise and, shall not be affected by (i) the failure of any holder or the
Trustee to assert any claim or demand to enforce any right or remedy against PSF
or any other person under the Indenture, the Notes or any other agreement or
otherwise, (ii) any extension or renewal of any thereof, (iii) any rescission,
waiver, amendment or modification of the Indenture, the Notes or any other
agreement, (iv) the release of any security held by any holder or the Trustee
for the Obligations or any of them, (v) the failure of any holder or the Trustee
to exercise any right or remedy against any other guarantor of the Obligations,
or (vi) (except as provided in the Indenture) any change in the ownership of any
Grantor. The maturity of the Obligations guaranteed by the Grantors may be
accelerated as provided in the Indenture, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect of the Obligations
guaranteed by the Grantors, and in the event of any such acceleration, such
Obligations shall forthwith become due and payable by the Grantors. The
Grantors' guarantees shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of principal of and
interest on any Obligation is rescinded or must otherwise be restored by any
holder or the Trustee upon the bankruptcy or reorganization of PSF or otherwise.
In addition, the Grantors, jointly and severally, will pay the costs and
expenses incurred by the Trustee or any holder in enforcing any rights under the
respective provisions of the Indenture and the Subsidiary Guaranty Agreement
relating to the guarantees.

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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

This section is a summary of material tax considerations that may be
relevant to prospective holders of LLC Units ("LLC Unitholders") and prospective
holders of Notes ("Note Holders"). This section is based upon current provisions
of the Internal Revenue Code of 1986, as amended ("Code"), existing and proposed
regulations thereunder and current administrative rulings and court decisions,
all of which are subject to change. Subsequent changes in such authorities may
cause the tax consequences to vary substantially from the consequences described
below.

No attempt has been made in the following discussion to comment on all
federal income tax matters affecting Holdings or the LLC Unitholders and Note
Holders. Moreover, the discussion focuses on LLC Unitholders and Note Holders
who are individual citizens or residents of the United States and has only
limited application to corporations, estates, trusts, non-resident aliens or
other LLC Unitholders and Note Holders subject to specialized tax treatment
(such as tax-exempt institutions, individual retirement accounts, REITs or
mutual funds). Accordingly, each prospective LLC Unitholder and Note Holder
should consult, and should depend on, his own tax advisor in analyzing the
federal, state, local and foreign tax consequences to him of the ownership or
disposition of LLC Units or Notes.

TAX TREATMENT OF HOLDINGS

Based on the representations and subject to the qualifications set forth in
the detailed discussion that follows, for federal income tax purposes (i)
Holdings will be treated as a partnership, and (ii) owners of LLC Units will be
treated as partners of a partnership.

Although no attempt has been made in the following discussion to comment on
all federal income tax matters affecting Holdings or prospective LLC
Unitholders, based on current law the following is a general description of the
principal federal income tax consequences that should arise from the ownership
and disposition of LLC Units and, insofar as it relates to matters of law and
legal conclusions, addresses the material tax consequences to LLC Unitholders
who are individual citizens or residents of the United States.

No ruling has been or will be requested from the Internal Revenue Service
(the "IRS") with respect to (i) classification of Holdings as a partnership for
federal income tax purposes, (ii) whether Holdings' income constitutes
"qualifying income" under sec. 7704 of the Code, or (iii) any other matter
affecting Holdings or prospective LLC Unitholders. Furthermore, no assurance can
be given that the treatment of Holdings or an investment therein will not be
significantly modified by future legislative or administrative changes or court
decisions. Any such modification may or may not be retroactively applied.

No discussion is set forth herein with respect to the following specific
federal income tax issues: (i) the treatment of an LLC Unitholder whose LLC
Units are loaned to a short seller to cover a short sale of Units (ii) whether
an LLC Unitholder acquiring LLC Units in separate transactions must maintain a
single aggregate adjusted tax basis in his LLC Units and (iii) whether Holdings'
monthly convention for allocating taxable income and losses is permitted by
existing Treasury Regulations.

PARTNERSHIP STATUS

A partnership is not a taxable entity and incurs no federal income tax
liability. Instead, each partner is required to take into account his allocable
share of items of income, gain, loss and deduction of the partnership in
computing his federal income tax liability, regardless of whether cash
distributions are made. Distributions by a partnership to a partner are
generally not taxable unless the amount of any cash distributed is in excess of
the partner's adjusted basis in his partnership interest.

No ruling has been or will be sought from the IRS as to the status of
Holdings as a partnership for federal income tax purposes. Based upon the Code
and the regulations thereunder, as amended by TD 8697, issued December 17, 1996
(the "check the box" regulations), Holdings will be classified as a partnership
for federal income tax purposes, provided that Holdings will be operated in
accordance with all applicable limited liability company statutes and its
Certificate of Formation and the LLC Agreement, and provided that, for each
taxable year, more than 90% of the gross income of Holdings will be derived from
interest (from other than a

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financial business) and dividends, and other items of income which constitute
"qualifying income" within the meaning of Section 7704(d) of the Code.

Section 7704 of the Code provides that publicly-traded partnerships will,
as a general rule, be taxed as corporations. However, an exception (the
"Qualifying Income Exception") exists with respect to publicly-traded
partnerships of which 90% or more of the gross income for every taxable year
consists of "qualifying income." "Qualifying income" includes, inter alia,
interest (from other financial business) and dividends. Based upon
representations of the management of Holdings, at least 90% of Holdings' gross
income for every taxable year will consist of dividends from PSF and will
constitute qualifying income.

If Holdings fails to meet the Qualifying Income Exception (other than a
failure which is determined by the IRS to be inadvertent and which is cured
within a reasonable time after discovery), Holdings will be treated as if it had
transferred all of its assets (subject to liabilities) to a newly formed
corporation (as of the first day of the year in which it fails to meet the
Qualifying Income Exception) in return for stock in that corporation, and then
distributed that stock to the LLC Unitholders in liquidation of their interests
in Holdings. This contribution and liquidation should be tax-free to LLC
Unitholders and Holdings, so long as Holdings, at that time, does not have
liabilities in excess of the basis of its assets. Thereafter, Holdings would be
treated as a corporation for federal income tax purposes.

If Holdings were to be treated as a corporation in any taxable year, as a
result of a failure to meet the Qualifying Income Exception, its items of
income, gain, loss and deduction would be reflected only on its tax return
rather than being passed through to the LLC Unitholders, and its net income
would be taxed to Holdings at corporate rates. In addition, any distribution
made to an LLC Unitholder would be treated as either taxable dividend income (to
the extent of Holdings' current or accumulated earnings and profits) or (in the
absence of earnings and profits) a nontaxable return of capital (to the extent
of the LLC Unitholder's tax basis in his LLC Units) or taxable capital gain
(after the Unitholder's tax basis in his Units is reduced to zero). Accordingly,
treatment of Holdings as a corporation would result in a material reduction in
an LLC Unitholder's cash flow and after-tax return and thus would likely result
in a substantial reduction of the value of the LLC Units.

The discussion below is based on the assumption that Holdings will be
classified as a partnership for federal income tax purposes.

PARTNER STATUS

LLC Unitholders who have been admitted as Members of Holdings will be
treated as partners of a partnership for federal income tax purposes. Moreover,
assignees of partnership interests who have not been admitted to a partnership
as partners, but who have the capacity to exercise substantial dominion and
control over the assigned partnership interests, will be treated as partners for
federal income tax purposes. Assignees who have executed and delivered the
documents required for transfer and admission as a Member (the "Transfer
Documents") and are awaiting admission as Members and LLC Unitholders whose LLC
Units are held in street name or by a nominee and who have the right to direct
the nominee in the exercise of all substantive rights attendant to the ownership
of their LLC Units will be treated as partners of a partnership for federal
income tax purposes. This status does not extend to assignees of LLC Units who
are entitled to execute and deliver Transfer Documents and thereby become
entitled to direct the exercise of attendant rights, but who fail to execute and
deliver Transfer Documents. Income, gain, deductions or losses would not appear
to be reportable by an LLC Unitholder who is not a partner for federal income
tax purposes, and any cash distributions received by such an LLC Unitholder
would therefore be fully taxable as ordinary income. These persons should
consult their own tax advisors with respect to their status as partners in a
partnership for federal income tax purposes. A purchaser or other transferee of
LLC Units who does not execute and deliver Transfer Documents may not receive
certain federal income tax information or reports furnished to record holders of
LLC Units unless the Units are held in a nominee or street name account and the
nominee or broker has executed and delivered Transfer Documents with respect to
such LLC Units.

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TAX CONSEQUENCE OF LLC UNIT OWNERSHIP

Flow-through of Taxable Income

No federal income tax will be paid by Holdings. Instead, each LLC
Unitholder will be required to report on his income tax return his allocable
share of the income, gains, losses and deductions of Holdings without regard to
whether corresponding cash distributions are received by such LLC Unitholder.
Consequently, an LLC Unitholder may be allocated income from Holdings even if he
has not received a cash distribution. Each LLC Unitholder will be required to
include in income his allocable share of Holdings' income, gain, loss and
deduction for the taxable year of Holdings ending with or within the taxable
year of the LLC Unitholder.

Treatment of Partnership Distributions

Distributions by Holdings to an LLC Unitholder generally will not be
taxable to the LLC Unitholder for federal income tax purposes to the extent of
his basis in his LLC Units immediately before the distribution. Cash
distributions in excess of an LLC Unitholder's basis generally will be
considered to be gain from the sale or exchange of the LLC Units, taxable in
accordance with the rules described under "-- Disposition of LLC Units" below.

Basis of LLC Units

An LLC Unitholder's initial tax basis for his LLC Units will be the amount
he paid for the LLC Units. That basis will be increased by his share of
Holdings' income and will be decreased (but not below zero) by distributions
from Holdings.

ALLOCATION OF HOLDINGS' INCOME, GAIN, LOSS AND DEDUCTION

In general, if Holdings' has a net profit, items of income, gain, loss and
deduction will be allocated among the LLC Unitholders in accordance with their
respective percentage interests in Holdings.

TAX TREATMENT OF OPERATIONS

Accounting Method and Taxable Year

Holdings will use a fiscal year ending on the last Saturday in December as
its taxable year and will adopt the accrual method of accounting for federal
income tax purposes. Each LLC Unitholder will be required to include in income
his allocable share of Holdings' income, gain, loss and deduction for the fiscal
year of Holdings' ending within or with the taxable year of the LLC Unitholder.
In addition, an LLC Unitholder who has a taxable year ending on a date other
than Holdings' fiscal year-end date and who disposes of all of his LLC Units
following the close of Holdings' taxable year but before the close of his
taxable year must include his allocable share of Holdings' income, gain, loss
and deduction in income for his taxable year with the result that he will be
required to report in income for his taxable year his distributive share of more
than one year of Holdings' income, gain, loss and deduction. See "-- Disposition
of LLC Units -- Allocations Between Transferors and Transferees."

Initial Tax Basis, Depreciation and Amortization

The tax basis of the assets of Holdings will be used for purposes of
computing gain or loss on the disposition of such assets. Holdings' assets,
consisting solely of PSF stock, will initially have an aggregate tax basis equal
to approximately $240 million.

Costs incurred in organizing Holdings may be amortized over any period
selected by Holdings not shorter than 60 months. The costs incurred in promoting
the issuance of LLC Units must be capitalized and cannot be deducted currently,
ratably or upon termination of Holdings. There are uncertainties regarding the
classification of costs as organization expenses, which may be amortized, and as
syndication expenses, which may not be amortized. For example, under recently
proposed regulations, the Underwriter's spread would be treated as a syndication
cost.

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Section 754 Election

Holdings will make the election permitted by Section 754 of the Code. That
election is irrevocable without the consent of the IRS. The election will
generally permit Holdings to adjust an LLC Unit purchaser's basis in Holdings'
assets ("inside basis") pursuant to Section 743(b) of the Code to reflect his
purchase price. The Section 743(b) adjustment belongs to the purchaser and not
to other LLC Unitholders. (For purposes of this discussion, an LLC Unitholder's
inside basis in Holdings' assets will be considered to have two components: (1)
his share of the Holdings' basis in such assets ("Common Basis") and (2) his
Section 743(b) adjustment to that basis.)

A Section 754 election is advantageous if the transferee's basis in his LLC
Units is higher than such Units' share of the aggregate basis to Holdings of
Holding's assets immediately prior to the transfer. In such a case, as a result
of the election, the transferee would have a higher basis in his share of
Holdings assets for purposes of calculating his share of any gain or loss on a
sale of Holding's assets. Conversely, a Section 754 election is disadvantageous
if the transferee's basis in such LLC Units is lower than such Units' share of
the aggregate basis of Holding's assets immediately prior to the transfer. Thus,
the fair market value of the LLC Units may be affected either favorably or
adversely by the election.

DISPOSITION OF LLC UNITS

Recognition of Gain or Loss

Gain or loss will be recognized on a sale of LLC Units equal to the
difference between the amount realized and the LLC Unitholder's tax basis for
the LLC Units sold. An LLC Unitholder's amount realized will be measured by the
sum of the cash or the fair market value of other property received.

The IRS has ruled that a partner who acquires interests in a partnership in
separate transactions must combine those interests and maintain a single
adjusted tax basis. Upon a sale or other disposition of less than all of such
interests, a portion of that tax basis must be allocated to the interests sold
using an "equitable apportionment" method. The ruling is unclear as to how the
holding period of these interests is determined once they are combined. If this
ruling is applicable to the holders of LLC Units, an LLC Unitholder will be
unable to select high or low basis Units to sell. It is not clear whether the
ruling applies to Holdings, because, similar to corporate stock, interests in
the Partnership are evidenced by separate certificates. Currently proposed
legislation, if enacted, may require use of an average cost basis in determining
gain or loss on a disposition. An LLC Unitholder considering the purchase of
additional LLC Units or a sale of LLC Units purchased in separate transactions
should consult his tax advisor as to the possible consequences of such ruling or
proposed legislation.

Allocations Between Transferors and Transferees

In general, Holdings' taxable income and losses will be determined
annually, will be prorated on a monthly basis and subsequently apportioned among
the LLC Unitholders in proportion to the number of LLC Units owned by each of
them as of the close of business on the last day of the preceding month.
However, gain or loss realized on a sale or other disposition of Holdings'
assets other than in the ordinary course of business will be allocated among the
LLC Unitholders of record as of the first business day of the month in which
that gain or loss is recognized. As a result, LLC Unitholders transferring LLC
Units in the open market may be allocated income, gain, loss and deduction
accrued after the date of transfer.

The use of this method may not be permitted under existing Treasury
Regulations. If this method is not allowed under the Treasury Regulations (or
only applies to transfers of less than all of the LLC Unitholder's interest),
taxable income or losses of Holdings might be reallocated among the LLC
Unitholders. Holdings is authorized to revise its method of allocation between
transferors and transferees (as well as among partners whose interests otherwise
vary during a taxable period) to conform to a method permitted under future
Treasury Regulations.

An LLC Unitholder who owns LLC Units at any time during a quarter and who
disposes of such LLC Units prior to the record date set for a cash distribution
with respect to such quarter will be allocated items of

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Holdings' income, gain, loss and deductions attributable to such quarter but
will not be entitled to receive that cash distribution.

Constructive Termination

Holdings will be considered to have been terminated if there is a sale or
exchange of 50% or more of the total interests in Holdings' capital and profits
within a 12-month period. A termination results in the closing of Holdings'
taxable year for all LLC Unitholders and Holdings' assets are regarded as having
been distributed to LLC Unitholders and reconveyed to Holdings, which is then
treated as a new partnership. Such termination could also result in penalties or
loss of basis adjustments under Section 754 of the Code if the Partnership were
unable to determine that the termination had occurred.

In the case of an LLC Unitholder reporting on a taxable year other than a
fiscal year ending December 31, the closing of the tax year of Holdings may
result in more than 12 months' taxable income or loss of Holdings being
includable in his taxable income for the year of termination. In addition, each
LLC Unitholder will realize taxable gain to the extent that any money deemed to
have been distributed to him as a result of the termination exceeds the adjusted
basis of his LLC Units. New tax elections required to be made by the
Partnership, including a new election under Section 754 of the Code, must be
made subsequent to a constructive termination.

Foreign Investors

Ownership of LLC Units by nonresident aliens, foreign corporations, other
foreign persons and regulated investment companies raises issues unique to such
persons and, as described below, may have substantially adverse tax
consequences.

Non-resident aliens and foreign corporations, trusts or estates which hold
LLC Units may be considered to be engaged in business in the United States on
account of ownership of LLC Units. As a consequence they will be required to
file federal tax returns in respect of their share of Holdings income, gain,
loss or deduction and pay federal income tax at regular rates on any net income
or gain. Under rules applicable to publicly-traded partnerships, Holdings will
withhold (currently at the rate of 39.6%) on actual cash distributions made
quarterly to foreign LLC Unitholders. Each foreign LLC Unitholder must obtain a
taxpayer identification number from the IRS and submit that number to the
Transfer Agent of Holdings on a Form W-8 in order to obtain credit for the taxes
withheld. A change in applicable law may require Holdings to change these
procedures.

A foreign LLC Unitholder will not be taxed upon the disposition of an LLC
Unit if that foreign LLC Unitholder has held less than 5% in value of the units
during the five-year period ending on the date of the disposition and if the LLC
Units are regularly traded on an established securities market at the time of
the disposition.

ADMINISTRATIVE MATTERS

Partnership Information Returns and Audit Procedures

Holdings intends to furnish to each LLC Unitholder, within 90 days after
the close of each calendar year, certain tax information, including a Schedule
K-1, which sets forth each LLC Unitholder's allocable share of Holdings' income,
gain, loss and deduction for the preceding taxable year. In preparing this
information, Holdings will use various accounting and reporting conventions,
some of which have been mentioned in the previous discussion, to determine the
LLC Unitholder's allocable share of income, gain, loss and deduction. There is
no assurance that any of those conventions will yield a result which conforms to
the requirements of the Code, regulations or administrative interpretations of
the IRS.

The federal income tax information returns filed by Holdings may be audited
by the IRS. Adjustments resulting from any such audit may require each LLC
Unitholder to adjust a prior year's tax liability, and possibly may result in an
audit of the LLC Unitholder's own return. Any audit of an LLC Unitholder's
return could result in adjustments of non-partnership as well as partnership
items.

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Partnerships generally are treated as separate entities for purposes of
federal tax audits, judicial review of administrative adjustments by the IRS and
tax settlement proceedings. The tax treatment of partnership items of income,
gain, loss and deduction are determined in a partnership proceeding rather than
in separate proceedings with the partners. The Code provides for one partner to
be designated as the "Tax Matters Partner" (referred to as the "Tax Matters
Member" in Holdings' LLC Agreement) for these purposes. Pursuant to the LLC
Agreement, the Members shall designate a Member as the Tax Matters Member of
Holdings.

The Tax Matters Member will make certain elections on behalf of Holdings
and LLC Unitholders and can extend the statute of limitations for assessment of
tax deficiencies against LLC Unitholders with respect of partnership items. The
Tax Matters Member may bind an LLC Unitholder with less than a 1% profits
interest in Holdings to a settlement with the IRS unless that LLC Unitholder
elects, by filing a statement with the IRS, not to give such authority to the
Tax Matters Member. The Tax Matters Member may seek judicial review (by which
all the LLC Unitholders are bound) of a final partnership administrative
adjustment and, if the Tax Matters Member fails to seek judicial review, such
review may be sought by any LLC Unitholder having at least a 1% interest in the
profits of Holdings and by the LLC Unitholders having in the aggregate at least
a 5% profits interest. However, only one action for judicial review will go
forward, and each LLC Unitholder with an interest in the outcome may
participate.

An LLC Unitholder must file a statement with the IRS identifying the
treatment of any item on his federal income tax return that is not consistent
with the treatment of the item on Holdings' return. Intentional or negligent
disregard of the consistency requirement may subject an LLC Unitholder to
substantial penalties.

Under current law, adjustments relating to partnership items for a previous
taxable year are taken into account by those persons who were partners in the
previous taxable year. Therefore, LLC Unitholders could bear significant
economic burdens associated with tax adjustments relating to periods predating
their acquisition of LLC Units.

Nominee Reporting

Persons who hold an interest in Holdings as a nominee for another person
are required to furnish to Holdings (a) the name, address and taxpayer
identification number of the beneficial owner and the nominee; (b) whether the
beneficial owner is (i) a person that is not a United States person, (ii) a
foreign government, an international organization or any wholly-owned agency or
instrumentality of either of the foregoing, or (iii) a tax-exempt entity; (c)
the amount and description of LLC Units held, acquired or transferred for the
beneficial owner; and (d) certain information including the dates of
acquisitions and transfers, means of acquisitions and transfers, and acquisition
cost for purchases, as well as the amount of net proceeds from sales. Brokers
and financial institutions are required to furnish additional information,
including whether they are United States persons and certain information on LLC
Units they acquire, hold or transfer for their own account. A penalty of $50 per
failure (up to a maximum of $100,000 per calendar year) is imposed by the Code
for failure to report such information to Holdings. The nominee is required to
supply the beneficial owner of the LLC Units with the information furnished to
Holdings.

STATE, LOCAL AND OTHER TAX CONSIDERATIONS

In addition to federal income taxes, LLC Unitholders may be subject to
other taxes, such as state and local income taxes, unincorporated business
taxes, and estate, inheritance or intangible taxes that may be imposed by
various jurisdictions. Certain states have not yet adopted or approved the
federal "check-the-box" classification regulations referred to under
"Partnership Status" set forth above. Such states may not follow the federal
classification regulations, which result in Holdings being classified as a
partnership for federal income tax purposes, and may instead attempt to classify
Holdings as an association taxable as a corporation for state income tax
purposes.

It is the responsibility of each LLC Unitholder to investigate the legal
and tax consequences, under the laws of pertinent states and localities of his
investment in the Partnership. Accordingly, each prospective LLC Unitholder
should consult, and must depend upon, his own tax counsel or other advisor with
regard to those

97
<PAGE> 99

matters. Further, it is the responsibility of each LLC Unitholder to file all
state and local, as well as federal, tax returns that may be required of such
LLC Unitholder.

TAX TREATMENT OF THE NOTES

Original Issue Discount

The Notes will be issued with original issue discount for federal income
tax purposes. The amount of original issue discount ("OID") on a Note is the
excess of its "stated redemption price at maturity" (the sum of all payments to
be made on the Note, whether denominated as interest or principal) over its
"issue price." The "issue price" of each Note will be the initial offering price
at which a substantial amount of the Notes are sold (not including sales to bond
houses, brokers or similar persons or organizations acting in the capacity of
underwriters or wholesalers). Each Note Holder (whether a cash or accrual method
taxpayer) will be required to include in income such OID as it accrues, in
advance of the receipt of some or all of the related cash payments.

The amount of OID includable in income by a Note Holder is the sum of the
"daily portions" of OID with respect to the Note for each day during the taxable
year or portion of the taxable year on which such Note Holder held such Note
("accrued OID"). The daily portion is determined by allocating to each day in
any "accrual period" a pro rata portion of the OID allocable to that accrual
period. The accrual periods for a Note will be periods that are selected by the
Note Holder that are no longer than one year, provided that each scheduled
payment occurs either on the final day or on the first day of an accrual period.
The amount of OID allocable to any accrual period other than the initial short
accrual period (if any) and the final accrual period is an amount equal to the
product of the Note's "adjusted issue price" at the beginning of such accrual
period and its yield to maturity (determined on the basis of compounding at the
close of each accrual period and properly adjusted for the length of the accrual
period). The amount of OID allocable to the final accrual period is the
difference between the amount payable at maturity and the adjusted issues price
of the Note at the beginning of the final accrual period. The amount of OID
allocable to any initial short accrual period may be computed under any
reasonable method. The adjusted issue price of the Note at the start of any
accrual period is equal to its issue price increased by the accrued OID for each
prior accrual period and reduced by any prior payments, or payments on the first
day of the current accrual period (in either case, other than any payments of
"additional interest" described below) with respect to such Note. PSF is
required to report the amount of OID accrued on Notes held of record by persons
other than corporations and other exempt Note Holders, which may be based on
accrual periods other than those chosen by the Note Holder.

Treatment of Secondary Notes. The issuance of Secondary Notes in lieu of
cash interest is not treated as a payment of interest. Instead, the underlying
Note and any Secondary Notes that may be issued thereon are treated as a single
debt instrument under the OID rules. Moreover, because the terms of the
Secondary Notes and underlying Note are identical so that the two are fungible
in all respects, the issuance of an Secondary Note should be treated simply as a
division of the underlying Note, so that the Note Holder's tax basis and
adjusted issue price in the underlying Note should be allocated between the
underlying Note and the Secondary Notes in proportion to their relative
principal amounts.

In determining the stated redemption price at maturity and the rate at
which OID accrues on a Note, it is presumed that the Company will pay all
interest in cash, unless the Company would minimize the yield-to-maturity of the
Note by making interest payments in the form of Secondary Notes. If the Company
elects to make an interest payment in the form of Secondary Notes when it is
presumed to pay interest in cash, the Company will be treated as if it had
reissued the Note, the Note Holder's adjusted issue price will be increased by
the amount of the cash interest that is paid in the form of the Secondary Note,
and the yield-to-maturity of the Notes will remain unchanged.

Tax Basis

The tax basis of a Note in the hands of the Note Holder will be increased
by the amount of OID, if any, on the Note that is included in the Note Holder's
income pursuant to these rules, and will be decreased by the amount of any
payments (other than payments of "Additional Interest" described in the
following paragraph)

98
<PAGE> 100

made with respect to the Note and by the amount of tax basis allocated to any
Secondary Notes as described above.

OTHER TAX CONSIDERATIONS

Market Discount

If a Note is acquired at a "market discount," some or all of any gain
realized upon a disposition (including a sale or a taxable exchange) or payment
at maturity of such Note may be treated as ordinary income. "Market discount"
with respect to a security is, subject to a de minimis exception, the excess of
(1) the issue price of the security plus all previously accrued original issue
discount and less all prior payments (other than payments of Additional Interest
referred to in the preceding paragraph) (the "revised issue price"), over (2)
such Note Holder's tax basis in the security immediately after its acquisition.
The amount of market discount treated as having accrued will be determined
either on a straight-line basis, or, if the Note Holder so elects, on a constant
interest method. Upon any subsequent disposition (including a gift or payment at
maturity) of such Note (other than in connection with certain nonrecognition
transactions), the lesser of any gain on such disposition (or appreciation, in
the case of a gift) or the portion of the market discount that accrued while the
Note was held by such Note Holder will be treated as ordinary interest income at
the time of the disposition. In lieu of including accrued market discount income
at the time of disposition, a Note Holder may elect to include market discount
in income currently. Unless a Note Holder so elects, such Note Holder may be
required to defer a portion of any interest expense that may otherwise be
deductible on any indebtedness incurred or maintained to purchase or carry such
Note until the Note Holder disposes of the Note.

Acquisition Premium

If a Note Holder's purchase price for the Note exceeds the "revised issue
price" at the time of acquisition, the excess (referred to as "acquisition
premium") is offset ratably against the amount of OID otherwise includable in
such Note Holder's taxable income.

Disposition of Notes

A Note Holder generally will recognize gain or loss upon the sale,
redemption, retirement or other disposition of a Note equal to the difference
between the amount realized on the disposition and the Note Holder's adjusted
tax basis in the Note. Subject to the market discount rules discussed above,
gain or loss recognized will be long-term capital gain or loss, provided the
Note was a capital asset in the hands of the Note Holder, and had been held (or
treated as held) for longer than one year.

Interest Election

A Note Holder, subject to certain limitations, may elect to include all
interest that accrues on a Note in gross income under the constant
yield-to-maturity method. For this purpose, interest includes stated and
unstated interest, acquisition discount, de minimis OID and OID, de minimis
market discount and market discount, as adjusted by any acquisition premium.
Such election, if made in respect of a market discount obligation, will
constitute an election to include market discount in income currently on all
market discount obligations acquired by such Note Holder on or after the first
taxable year to which the election applies. See "Market Discount" above.

BACKUP WITHHOLDING

A Note Holder may be subject to backup withholding at the rate of 31% with
respect to interest paid on a Note unless such Note Holder (a) is a corporation
or other exempt recipient and, when required, demonstrates this fact or (b)
provides, when required, a correct taxpayer identification number, certifies
that backup withholding is not in effect and otherwise complies with applicable
requirements of the backup withholding rules. Furthermore, a Note Holder that
does not provide the Company with the Note Holder's

99
<PAGE> 101

correct taxpayer identification number may be subject to penalties imposed by
the IRS. Amounts withheld as backup withholding generally will be creditable
against the Note Holder's federal income tax liability.

SECURITIES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no established market for the LLC
Units or the Warrants of Holdings and there can be no assurance that an active
trading market will subsequently develop. No prediction can be made as to the
effect, if any, that future sales of LLC Units or future sales of Warrants to
acquire LLC Units, and options to acquire LLC Units, or the availability of LLC
Units for sale, will have on the market price of the LLC Units prevailing from
time to time. Nevertheless, sales of substantial amounts of LLC Units could
adversely affect the market price of the LLC Units.

The Securities issued to holders of "Allowed Claims" and "Allowed Equity
Interests" under the Reorganization Plan were issued pursuant to the exemption
from the registration requirements of the Securities Act provided under Section
1145 of the Bankruptcy Code. As a result, holders of such Securities may resell
their Securities without restriction so long as the requirements of Section 1145
with respect to any such resales have been met. Holdings, PSF, Princeton and the
Selling Securityholders believe that the registration of the Securities under
the Registration Statement should not affect the ability of any holder to resell
its Securities without registration for resale made in compliance with
exemptions available under current law, including the exemption available under
Section 1145 of the Bankruptcy Code. Selling Securityholders should seek the
advice of their own counsel with respect to the legal requirements for such
sales.

Holdings has 10,000,000 LLC Units outstanding, all of which are being
registered under the Registration Statement of which this Prospectus forms a
part. Accordingly, all such LLC Units will be freely transferable without
restriction (except as may otherwise be set forth in the LLC Agreement) or
registration under the Securities Act, except for any such securities purchased
by an existing "affiliate" of Holdings, as that term is defined in Rule 144
under the Securities Act, as amended ("Rule 144").

In general, under Rule 144 as currently in effect, a person (or persons
whose securities are aggregated) who has beneficially owned restricted
securities for at least one year (including the holding period of the prior
owner except an affiliate of Holdings) would be entitled to sell within any
three-month period a number of LLC Units that does not exceed the greater of:
(i) one percent of the number of LLC Units then outstanding (approximately
100,000 LLC Units); or (ii) the average weekly trading volume of the LLC Units
during the four calendar weeks preceding the filing of a Form 144 with respect
to such sale. Sales under Rule 144 are also subject to certain manner of sale
provisions and notice requirements and to the availability of current public
information about Holdings. Under Rule 144(k), a person who is not deemed to
have been an affiliate of Holdings at any time during the 90 days preceding a
sale, and who has beneficially owned the LLC Units proposed to be sold for at
least two years (including the holding period of any prior owner except an
affiliate of Holdings), is entitled to sell such LLC Units without complying
with the manner of sale, public information, volume limitation or notice
provision of Rule 144. The foregoing summary of Rule 144 is not intended to be a
complete description thereof.

PLAN OF DISTRIBUTION

100
<PAGE> 102

Selling Securityholders from the sale of the Securities offered by the Selling
Securityholders hereby will be the purchase price of such Securities less any
discounts or commissions.

The Selling Securityholders, acting as principals for their own account,
may sell Securities from time to time directly to purchasers or through agents,
dealers or underwriters to be designated by the Selling Securityholders from
time to time who may receive compensation in the form of underwriting discounts,
commissions or concessions from the Selling Securityholders and the purchasers
of the Securities for whom they may act as agent. The Selling Securityholders
and any agents, broker-dealers or underwriters that participate with the Selling
Securityholders in the distribution of the Securities may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
discounts, commissions or concessions received by such broker-dealers, agents or
underwriters and any profit on the resale of the Securities purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act.

A Selling Securityholder may elect to engage a broker or dealer to effect
sales of the Securities in one or more of the following transactions: (a) block
trades in which the broker or dealer so engaged will attempt to sell the
Securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction, (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus, and (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers and dealers engaged
by a Selling Securityholder may arrange for other brokers or dealers to
participate. Broker-dealers may agree with the Selling Securityholders to sell a
specified number of such Securities at a stipulated price, and, to the extent
such broker-dealer is unable to do so acting as agent for a Selling
Securityholder, to purchase as principal any unsold Securities at the price
required to fulfill the broker-dealer commitment to such Selling Securityholder.
Broker-dealers who acquire Securities as principal may thereafter resell such
Securities from time to time in transactions (which may involve crosses and
block transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may pay to or receive from the purchasers of
such Securities commissions as described above.

The Registration Statement of which this Prospectus forms a part has been
filed pursuant to Rule 415 under the Securities Act to afford the holders of the
Securities the opportunity to sell such Securities in a public transaction
rather than pursuant to an exemption from the registration and prospectus
delivery requirements of the Securities Act. In order to avail itself of that
opportunity, a holder must notify the Company in writing of its intention to
sell Securities and request that the Company file a supplement to this
Prospectus or an amendment to the Registration Statement, if required,
identifying such holder as a Selling Securityholder and disclosing such other
information concerning the Selling Securityholder and the Securities to be sold
as may then be required by the Securities Act and the rules of the Commission.
No offer or sale pursuant to this Prospectus may be made by any holder until
such a request has been made and until any such supplement has been filed or any
such amendment has become effective.

Selling Securityholders may also offer the Securities covered by this
Prospectus under other registration statements or pursuant to exemptions from
the registration requirements of the Securities Act, including sales which meet
the requirements of Rule 144 under the Securities Act or pursuant to an
exemption contained in the Federal Bankruptcy Code. Selling Securityholders
should seek advice from their own counsel with respect to the legal requirements
for such sales.

To comply with the securities laws of certain states, if applicable, the
Securities will be sold in such states only through registered or licensed
brokers or dealers. In addition, in certain states the Securities may not be
offered or sold unless they have been registered or qualified for sale in such
state or an exemption from the registration or qualification requirement is
available and is complied with.

Each of the Selling Securityholders has certain registration rights with
respect to the Securities owned by such Selling Securityholder. See "Description
of Units -- Registration Rights," "Description of Warrants -- Registration
Rights" and "Description of Notes -- Registration Rights." The Company has filed
the

101
<PAGE> 103

Registration Statement of which this Prospectus is a part pursuant to such
registration rights. The Company currently intends to maintain the effectiveness
of such Registration Statement for a period of four years or until such earlier
time as all the Securities have been sold pursuant hereto or are no longer
outstanding. The Company will bear all expenses relating to this registration,
other than applicable brokerage or underwriting fees and expenses and transfer
taxes.

LEGAL MATTERS

The validity of the Securities offered hereby will be passed upon for the
Company by Sonnenschein Nath & Rosenthal, Kansas City, Missouri.

EXPERTS

The consolidated financial statements included in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

ADDITIONAL INFORMATION

102
<PAGE> 104

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements of PSF Holdings, L.L.C.
and Predecessor
Report of Independent Auditors............................ F-2
Consolidated Balance Sheets as of December 31, 1995 and
December 28, 1996...................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1994 and 1995, period from January 1, 1996
through September 16, 1996, and period from September
17, 1996 through December 28, 1996..................... F-4
Consolidated Statements of Changes in Partners' Capital
for the years ended December 31, 1994 and 1995 and
period from January 1, 1996 through September 16, 1996
and Members' Equity for the period from September 17,
1996 through December 28, 1996......................... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1994 and 1995, period from January 1, 1996
through September 16, 1996, and period from September
17, 1996 through December 28, 1996..................... F-6
Notes to Consolidated Financial Statements................ F-7
</TABLE>

F-1
<PAGE> 105

REPORT OF INDEPENDENT AUDITORS

The Members
PSF Holdings, L.L.C.

We have audited the accompanying consolidated balance sheets of PSF
Holdings, L.L.C. ("Successor") as of December 28, 1996 and PSF Finance L.P.
("Predecessor") as of December 31, 1995, and the related consolidated statements
of operations, changes in members' equity and cash flows of the Successor for
the period from September 17, 1996 through December 28, 1996 and consolidated
statements of operations, changes in partners' capital, and cash flows of the
Predecessor for the period from January 1, 1996 through September 16, 1996 and
for the years ended December 31, 1995 and 1994 (see Note 1 -- 1996
Reorganization). 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 audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Successor
at December 28, 1996 and the Predecessor at December 31, 1995, and the
consolidated results of operations and cash flows of the Successor for the
period from September 17, 1996 through December 28, 1996 and of the Predecessor
for the period January 1, 1996 through September 16, 1996 and the years ended
December 31, 1995 and 1994, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Des Moines, Iowa
February 14, 1997

F-2
<PAGE> 106

PSF HOLDINGS, L.L.C. AND PREDECESSOR

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS (Notes 1 and 4)
Current assets:
Cash and cash equivalents................................. $ 6,491,350 $ 18,116,777
Accounts receivable, less allowances of $207,000 in 1995
and $252,000 in 1996.................................... 8,408,526 11,347,398
Inventories (Note 3)...................................... 69,178,799 68,802,041
Prepaid expenses and other................................ 1,235,315 3,470,571
------------ ------------
Total current assets.................................... 85,313,990 101,736,787
Property, plant, equipment and breeding stock, at cost:
Land and improvements..................................... 54,724,920 30,874,410
Buildings................................................. 200,397,010 80,308,572
Machinery and equipment................................... 158,876,057 55,078,055
Breeding stock............................................ 20,135,108 6,016,385
Construction in progress.................................. 21,076,523 16,391,666
------------ ------------
455,209,618 188,669,088
Less accumulated depreciation............................. 52,883,258 3,057,837
------------ ------------
402,326,360 185,611,251
Deferred income taxes (Note 5).............................. -- 17,485,000
Deferred financing costs, less accumulated amortization of
$7,125,567 in 1995........................................ 18,704,299 --
Goodwill, less accumulated amortization of $820,227 in
1995...................................................... 6,951,097 --
Other assets................................................ 749,780 665,693
------------ ------------
Total assets............................................ $514,045,526 $305,498,731
============ ============
LIABILITIES, MEMBERS' EQUITY AND PREDECESSOR CAPITAL (Note
1)
Current liabilities:
Accounts payable.......................................... $ 12,198,055 $ 7,923,040
Accrued interest.......................................... 6,619,981 154,592
Other accrued expenses.................................... 9,298,399 8,965,875
Distributions payable..................................... 979,588 --
Current portion of long-term debt (Note 4)................ 327,651 3,506,595
------------ ------------
Total current liabilities............................... 29,423,674 20,550,102
Long-term debt, less current portion (Note 4)............... 479,996,185 149,419,346
Deferred income taxes (Note 5).............................. 4,270,000 --
Other liabilities........................................... 1,425,016 --
------------ ------------
Total liabilities....................................... 515,114,875 169,969,448
Commitments (Note 6)
Members' equity (Notes 7 and 8):
Member capital, 10,000,000 units issued and outstanding
(7,665,336 -- Class A; 2,334,664 -- Class B)............ 125,073,000
Retained earnings......................................... 10,456,283
------------
Total members' equity................................... 135,529,283
Predecessor capital (Notes 7 and 9):
Redeemable preferred limited partners, net of subscription
note receivable of $268,700............................. 34,029,534
Redeemable common limited partner......................... 20,641,374
Nonredeemable common general partner...................... (149,580)
Nonredeemable common limited partner...................... (55,590,677)
------------ ------------
Total liabilities, members' equity and Predecessor
capital................................................ $514,045,526 $305,498,731
============ ============
</TABLE>

See accompanying notes.

F-3
<PAGE> 107

PSF HOLDINGS, L.L.C. AND PREDECESSOR

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
---------------------------------------------- -------------
PERIOD FROM PERIOD FROM
JANUARY 1, SEPTEMBER 17,
YEAR ENDED DECEMBER 31, 1996 THROUGH 1996 THROUGH
----------------------------- SEPTEMBER 16, DECEMBER 28,
1994 1995 1996 1996
---- ---- ------------- -------------
<S> <C> <C> <C> <C>
Net sales........................... $132,816,192 $ 194,491,305 $ 194,925,320 $91,233,170
Cost of goods sold.................. 140,277,344 192,837,000 172,402,789 65,314,947
------------ ------------- ------------- -----------
Gross profit (loss)................. (7,461,152) 1,654,305 22,522,531 25,918,223
General and administrative expenses
(Notes 6 and 7)................... 9,984,978 11,445,278 6,916,255 4,130,038
Loss on suspension of Texas
expansion project (Note 11)....... -- 28,145,887 -- --
Loss on business disposal (Note
11)............................... -- 5,200,000 -- --
------------ ------------- ------------- -----------
Income (loss) from operations....... (17,446,130) (43,136,860) 15,606,276 21,788,185
Other income (expense):
Interest income................... 1,842,448 3,295,773 411,770 260,922
Interest expense.................. (36,051,491) (61,675,743) (32,252,421) (4,627,824)
------------ ------------- ------------- -----------
(34,209,043) (58,379,970) (31,840,651) (4,366,902)
------------ ------------- ------------- -----------
Income (loss) before reorganization
items, income taxes and
extraordinary items............... (51,655,173) (101,516,830) (16,234,375) 17,421,283
Reorganization items (Note 1):
Revaluation adjustments of net
assets......................... -- -- (180,357,538) --
Professional fees and expenses.... -- -- (8,533,888) --
------------ ------------- ------------- -----------
Income (loss) before income taxes
and extraordinary items........... (51,655,173) (101,516,830) (205,125,801) 17,421,283
Income tax expense (Note 5)......... 1,425,000 2,525,000 1,940,000 6,965,000
------------ ------------- ------------- -----------
Income (loss) before extraordinary
items............................. (53,080,173) (104,041,830) (207,065,801) 10,456,283
Extraordinary gain (loss) on debt
retirement/forgiveness (Notes 1
and 11)........................... -- (9,653,056) 250,467,111 --
------------ ------------- ------------- -----------
Net income (loss)................... (53,080,173) (113,694,886) 43,401,310 10,456,283
Less accretion of preferred limited
partnership interests............. 5,853,089 6,117,009 4,544,469 --
------------ ------------- ------------- -----------
Net income (loss) attributable to
common members or partners........ $(58,933,262) $(119,811,895) $ 38,856,841 $10,456,283
============ ============= ============= ===========
Per common unit (Note 2):
Net income (loss) before
extraordinary items............ $(9.06) $(10.77) $(20.34) $1.05
Net income (loss)................. $(9.06) $(11.71) $3.73 $1.05
</TABLE>

See accompanying notes.

F-4
<PAGE> 108

PSF HOLDINGS, L.L.C. AND PREDECESSOR

CONSOLIDATED STATEMENTS OF CHANGES IN
PARTNERS' CAPITAL AND MEMBERS' EQUITY

<TABLE>
<CAPTION>
REDEEMABLE NONREDEEMABLE
-------------------------- ---------------------------
PREFERRED COMMON COMMON COMMON
LIMITED LIMITED GENERAL LIMITED
PARTNERS PARTNER PARTNER PARTNER
--------- ------- ------- -------
<S> <C> <C> <C> <C>
PREDECESSOR
Balance at January 1, 1994............... $27,356,099 $16,122,351 $ 293,134 $ (7,238,621)
Capital contributions.................... -- 107,888,200 1,350,000 5,761,800
Expenses of obtaining capital............ -- (344,044) (3,730) (25,289)
Net loss for 1994........................ -- (32,426,113) (530,802) (20,123,258)
Distributions............................ (3,348,669) -- -- --
Accretion of redeemable preferred limited
partnership interests (Note 8)......... 5,853,089 (3,444,311) (58,531) (2,350,247)
----------- ----------- ----------- ------------
Balance at December 31, 1994............. 29,860,519 87,796,083 1,050,071 (23,975,615)
Capital contributions.................... -- 19,873,850 -- 126,150
Expenses of obtaining capital............ -- (151,248) (1,532) (4,747)
Net loss for 1995........................ -- (82,447,972) (1,136,949) (30,109,965)
Distributions............................ (1,679,294) -- -- --
Accretion of redeemable preferred limited
partnership interests (Note 8)......... 6,117,009 (4,429,339) (61,170) (1,626,500)
----------- ----------- ----------- ------------
Balance at December 31, 1995............. 34,298,234 20,641,374 (149,580) (55,590,677)
Net income for period ended
September 16, 1996..................... -- 31,626,534 434,014 11,340,762
Distributions............................ (709,026) -- -- --
Accretion of redeemable preferred limited
partnership interests (Note 8)......... 4,544,469 (3,311,555) (45,445) (1,187,469)
----------- ----------- ----------- ------------
Balance at September 16, 1996............ $38,133,677 $48,956,353 $ 238,989 $(45,437,384)
=========== =========== =========== ============
</TABLE>

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

<TABLE>
<CAPTION>
MEMBERS' RETAINED
CAPITAL EARNINGS TOTAL
-------- -------- -----
<S> <C> <C> <C>
SUCCESSOR
Initial capitalization at September 17, 1996 based
on fair value determined as a result of 1996
Reorganization (Note 1)........................... $125,073,000 $ -- $125,073,000
Net income for period from September 17, 1996
through December 28, 1996......................... -- 10,456,283 10,456,283
------------ ----------- ------------
Balance at December 28, 1996........................ $125,073,000 $10,456,283 $135,529,283
============ =========== ============
</TABLE>

See accompanying notes.

F-5
<PAGE> 109

PSF HOLDINGS, L.L.C. AND PREDECESSOR

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------------------------------------------- -------------
PERIOD FROM PERIOD FROM
JANUARY 1, SEPTEMBER 17,
YEAR ENDED DECEMBER 31, 1996 THROUGH 1996 THROUGH
------------------------------ SEPTEMBER 16, DECEMBER 28,
1994 1995 1996 1996
---- ---- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)............................ $ (53,080,173) $(113,694,886) $ 43,401,310 $ 10,456,283
Adjustments to reconcile net income (loss) to
net cash provided (used) in operating
activities:
Extraordinary (gain) loss on debt
retirement/forgiveness................... -- 9,653,056 (250,467,111) --
Noncash losses on asset writedowns......... -- 28,100,000 180,357,538 --
Depreciation and amortization.............. 21,577,363 35,604,218 24,467,231 2,969,037
Amortization of deferred financing costs... 1,857,062 4,497,352 2,045,643 --
Interest on senior notes paid in-kind or
accreted to principal.................... 17,578,904 21,059,009 11,473,871 3,662,084
Deferred income taxes...................... 1,340,000 2,285,000 1,940,000 4,415,000
Changes in operating assets and
liabilities:
Increase in accounts receivable............ (3,186,281) (2,503,880) (106,034) (3,225,566)
Decrease (increase) in inventories......... (20,412,975) (23,794,802) (9,753,194) 1,473,088
Decrease (increase) in other assets........ (2,712,140) 2,280,857 (516,072) (1,822,488)
Increase (decrease) in operating accounts
payable and accrued expenses............. 2,873,926 9,588,964 13,301,177 (6,728,735)
Increase in other liabilities.............. 329,809 318,801 83,358 --
------------- ------------- ------------ ------------
Net cash provided (used) by operating
activities................................. (33,834,505) (26,606,311) 16,227,717 11,198,703
INVESTING ACTIVITIES
Purchases of short-term investments.......... (161,574) (2,404) -- --
Proceeds from short-term investments......... 2,923,600 -- 28,378 --
Purchases of property, plant, equipment and
breeding stock............................. (210,747,662) (55,222,728) (830,590) (1,647,120)
Payments for businesses acquired............. (74,151,467) -- -- --
------------- ------------- ------------ ------------
Net cash used in investing activities........ (282,137,103) (55,225,132) (802,212) (1,647,120)
FINANCING ACTIVITIES
Payments for deferred financing costs........ $ (25,721,196) $ -- $ -- $ --
Proceeds from long-term debt................. 325,435,960 36,502,295 20,804,319 336,598
Payments on long-term debt................... (28,717,423) (115,657,674) (33,567,952) (215,600)
Net proceeds from cash contributions from
partners................................... 114,626,937 19,842,473 -- --
Distributions paid to preferred limited
partners................................... (3,388,232) (1,679,294) (709,026) --
------------- ------------- ------------ ------------
Net cash provided (used) by financing
activities................................. 382,236,046 (60,992,200) (13,472,659) 120,998
------------- ------------- ------------ ------------
Net increase (decrease) in cash and cash
equivalents................................ 66,264,438 (142,823,643) 1,952,846 9,672,581
Cash and cash equivalents at beginning of
period..................................... 83,050,555 149,314,993 6,491,350 8,444,196
------------- ------------- ------------ ------------
Cash and cash equivalents at end of period... $ 149,314,993 $ 6,491,350 $ 8,444,196 $ 18,116,777
============= ============= ============ ============
SUPPLEMENTAL DISCLOSURES
Reorganization expenses paid and included as
cash used by operating activities.......... $ -- $ -- $ 6,778,855 $ 1,300,774
Interest paid, net of amounts capitalized.... 16,270,876 34,030,623 8,885,929 1,009,697
Income taxes paid............................ 130,000 10,000 312,100 4,500,000
Noncash investing and financing activity --
accounts payable for property and equipment
additions.................................. 4,993,865 4,742,379 -- --
Noncash financing activities:
Accretion or payment-in-kind of senior note
principal................................ 17,578,904 21,059,009 11,473,871 3,662,084
Accretion of preferred limited partnership
interests................................ 5,853,089 6,117,009 4,544,469 --
</TABLE>

See accompanying notes.

F-6
<PAGE> 110

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1995 AND
PERIOD FROM JANUARY 1, 1996 THROUGH SEPTEMBER 16, 1996
(PREDECESSOR) AND PERIOD FROM SEPTEMBER 17, 1996
THROUGH DECEMBER 28, 1996 (SUCCESSOR)

1. ORGANIZATION AND 1996 REORGANIZATION

ORGANIZATION OF SUCCESSOR

PSF Holdings, L.L.C. (Holdings) is organized as a Delaware limited
liability corporation. Holdings has a wholly-owned subsidiary, Premium Standard
Farms, Inc. (PSF, Inc.), which is incorporated as a Delaware corporation. All
operations are conducted by PSF, Inc. PSF, Inc. engages principally in the
business of hog production and pork processing, and sells to domestic and
international markets. Holdings and PSF, Inc. are collectively referred to as
"Successor" or "the Company". The Successor commenced operations on September
17, 1996 by succeeding to the business of the Predecessor pursuant to the 1996
Reorganization described below.

ORGANIZATION OF PREDECESSOR

PSF Finance L.P. (Finance) was organized as a Delaware limited partnership.
Premium Standard Farms, Inc. (Farms) was incorporated as a Missouri corporation
and was consolidated as a unilaterally controlled special-purpose entity of
Finance. Finance and Farms are collectively referred to as "Predecessor" or "the
Company".

1996 REORGANIZATION

The Successor was formed on September 17, 1996 by merging Finance into
Holdings, which transferred the net assets it received from Finance to PSF, Inc.
Farms transferred all of its net assets to PSF, Inc. in satisfaction of debt.
The Predecessor was then dissolved. All Predecessor operations were continued by
the Successor.

The Company's formation was the culmination of a process of financial and
organizational reorganization (the "1996 Reorganization") that began on March
15, 1996, when the Predecessor did not make a required interest payment of
approximately $7 million which was due on its senior secured notes. The
resulting reorganization resulted in a new bank credit agreement and 11% senior
secured notes (Note 4). The 11% senior secured notes and 9,700,000 membership
units of Holdings were issued in exchange for all of the Predecessor senior
notes and the preferred limited partner units. The remaining 300,000 membership
units of Holdings were exchanged for Finance's common general and limited
partner units.

Additionally, the holders of Finance's common general and limited partner
units received warrants entitling the holders to purchase 2,048,192 membership
units of Holdings for $45 per unit. Warrants for 1,621,044 units become
exercisable on January 1, 2000 and the balance became exercisable on September
17, 1996. All unexercised units expire on September 17, 2006. No separate value
was allocated to the warrants in the 1996 Reorganization plan.

The Company filed a formal plan of reorganization under Chapter 11 with the
United States Bankruptcy Court on July 2, 1996. The essence of the plan is as
described above. On September 16, 1996, the plan became effective and the
Company emerged from Chapter 11 effective with the beginning of business on
September 17, 1996.

In accordance with AICPA Statement of Position 90-7 (SOP 90-7), the Company
was required to adopt "fresh-start" reporting and reflect the effects of such
adoption in the financial statements as of September 16, 1996. In adopting
fresh-start reporting, the Company, with the assistance of its financial
advisors including independent appraisers, was required to determine its
reorganization value, which represents the fair value of the entity and
approximates the amount a willing buyer would pay for the net assets of the
Company

F-7
<PAGE> 111

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND 1996 REORGANIZATION (CONTINUED)

immediately after its emergence from Chapter 11 status. The reorganization value
of the Company was determined by consideration of several factors, including:
the discounted residual value of the Company; market share, position and
competition of each operating company; projected sales, profitability growth and
working capital requirements; and general economic considerations. Various
valuation methods were relied upon, including: discounted cash flow,
price/earnings ratios, comparable merger and acquisition activities and other
applicable ratios and industry indices.

The total enterprise reorganization value, before long-term debt, was
determined to be $273.5 million and was allocated as follows (in millions):

<TABLE>
<S> <C>
Senior bank term loan....................................... $ 30.0
Senior secured notes........................................ 117.5
Other long-term debt........................................ .9
Initial value of members' equity............................ 125.1
------
$273.5
======
</TABLE>

The adjustments to reflect the consummation of the reorganization plan
(including the gain on extinguishment of debt relating to pre-petition
liabilities) and the adjustment to record assets and liabilities at their fair
values have been reflected in the accompanying consolidated statement of
operations for the period ended September 16, 1996. As described above, all of
the Predecessor's senior notes and redeemable preferred limited partner units
(with an aggregate carrying value, net of deferred financing costs, of
approximately $489.3 million) were exchanged for consideration valued at
approximately $238.8 million, including new senior notes and membership units of
Holdings. The resulting debt discharge of $250.5 million is reflected as an
extraordinary gain (no income tax effect) on the consolidated statement of
operations. Interest on the Predecessor senior notes for the period from the
Chapter 11 filing date of July 2, 1996 to September 16, 1996, which was not
recorded in accordance with SOP 90-7, totaled approximately $10.9 million. All
trade and other creditors received a 100% recovery of pre-petition claims and
liabilities due.

In addition to the extraordinary gain on debt forgiveness, other
reorganization items reflected on the consolidated statement of operations were
professional fees and other expenses of approximately $8.5 million and a net
revaluation adjustment of approximately $180.4 million. The net adjustment to
revalue the Company's assets and liabilities in accordance with fresh-start
reporting consisted of the following (in millions):

<TABLE>
<S> <C>
Inventories................................................. $ (8.6)
Property, plant, equipment and breeding stock............... (194.1)
Deferred income tax asset established....................... 21.9
Goodwill.................................................... (6.6)
Deferred income tax liability............................... 6.2
Other assets and liabilities, net........................... 0.8
-------
$(180.4)
=======
</TABLE>

The pre-reorganization accumulated deficit which was eliminated in
accordance with fresh-start reporting was approximately $145.4 million.

F-8
<PAGE> 112

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

As a result of the 1996 Reorganization described above, the Company adopted
"fresh start" reporting in which its assets and liabilities were adjusted to
reflect their estimated fair values and the existing accumulated deficit was
eliminated, resulting in a new reporting entity as of September 17, 1996.
Accordingly, the Predecessor's consolidated financial statements prior to
September 17, 1996 are not necessarily comparable to consolidated financial
statements presented subsequent to that date. A line has been placed on the
consolidated financial statements to distinguish between pre-reorganization and
post-reorganization activity. Certain prior year amounts have been reclassified
to conform with the current year presentation.

FISCAL YEAR-END

Effective in 1996, the Company's fiscal year-end is the Saturday in
December nearest to the end of December. Prior to 1996, the fiscal year-end was
December 31.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Holdings (as
Successor) or Finance and Farms (as Predecessor) and their wholly-owned
subsidiaries. Significant intercompany accounts and transactions have been
eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of the statement of cash flows, all highly liquid investments
with a maturity of three months or less when purchased are considered to be cash
equivalents.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or net
realizable value.

PROPERTY, PLANT, EQUIPMENT AND BREEDING STOCK

Depreciation of property, plant, equipment and breeding stock is computed
using the straight-line method over the estimated useful lives of the assets as
follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Land improvements........................................... 20 - 31
Buildings................................................... 20 - 31
Machinery and equipment..................................... 3 - 10
Breeding stock.............................................. 3
</TABLE>

Interest of approximately $5,900,000 and $1,252,000 was capitalized in 1994
and 1995, respectively, in connection with the construction of property and
equipment. Capitalized interest is recorded as a cost of the asset to which it
relates and is depreciated over the estimated useful life of the asset.

F-9
<PAGE> 113

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED FINANCING COSTS AND GOODWILL

Deferred financing costs of the Predecessor were amortized over the term of
the related loans. Goodwill of the Predecessor was amortized on the
straight-line method over fifteen years.

ADVERTISING COSTS

The cost of advertising, which has not been material, is expensed as
incurred.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company adopted in 1995 the provisions of Statement of Financial
Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of.

FUTURES TRANSACTIONS

The Company hedges, through the use of futures and options contracts,
certain anticipated grain purchases and hog and pork sales, to minimize the risk
of market fluctuations. Futures gains or losses that qualify as hedges are
deferred until the cost of the related inventory is recognized in the results of
operations. The deferred gain at December 28, 1996 was not material.

INCOME TAXES

All pre-tax income of the Successor relates to PSF, Inc., as there are no
operations at the Holdings level. The Company uses the liability method of
accounting for income taxes. Under this method, deferred income tax assets and
liabilities are determined based on the difference between financial reporting
and income tax bases of assets and liabilities using the enacted marginal tax
rates. Deferred income tax expenses or credits are based on changes in the asset
or liability from period to period. The Company's primary temporary differences
are outlined in Note 5.

Income tax expense and deferred income taxes reflected by the Predecessor
relate to taxes provided on Farms. Temporary differences existed for Finance
between financial statement and income tax reporting, primarily due to
depreciation; however, no income taxes generally were reflected relating to
Finance as taxable income or loss was included in the income tax returns of the
partners. Accordingly, no deferred income taxes were provided with respect to
temporary differences for Finance.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used by the Company in
estimating its fair value of financial instruments:

Cash equivalents, accounts receivable and accounts payable: Carrying
amounts reported in the Company's consolidated balance sheets based on
historical cost approximate estimated fair value for these instruments, due
to their short-term nature.

Long-term debt and redeemable preferred capital: Carrying amounts in
the balance sheet approximate the fair value of long-term debt at December
28, 1996, due to the close proximity to the issuance date of the
instruments pursuant to the 1996 Reorganization, an independent appraisal
at the time of the reorganization and recent arms-length trades. Due to the
expected reorganization, it was not practical to reasonably estimate the
fair value of the Company's long-term debt and redeemable preferred capital
at December 31, 1995.

F-10
<PAGE> 114

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

NET INCOME (LOSS) PER COMMON UNIT

Net income (loss) per common unit amounts are computed based on the net
income or loss attributable to common equity divided by the weighted average
number of common units outstanding (6,507,734, 10,229,878 and 10,405,037 for the
years ended December 31, 1994 and 1995 and period ended September 16, 1996,
respectively, for Predecessor and 10,000,000 for the period ended December 28,
1996 for Successor). The effect of options and warrants to purchase common units
were antidilutive or less than 3% dilutive during each period presented.

EMERGING ACCOUNTING ISSUES

Management is not aware of any accounting standards which have been issued
and which will require the Company to change current accounting policies or
adopt new policies, the effect of which would be material to the consolidated
financial statements.

3. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Hogs................................................. $62,689,671 $63,004,881
Processed pork and pork products..................... 1,911,524 2,562,297
Grain, feed additives and other...................... 4,577,604 3,234,863
----------- -----------
$69,178,799 $68,802,041
=========== ===========
</TABLE>

4. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Senior bank term loan, due in quarterly $1.5 million
installments beginning in September 1997 with balance due
at maturity in September 2001, interest at the Company's
option of either a defined base rate plus 2.5% or a
defined LIBOR plus 3.5% (9.3125% at December 28, 1996)
payable monthly........................................... $ -- $ 30,000,000
Senior secured notes, due in September 2003, interest
(partial pay-in-kind) at 11% payable semiannually......... -- 121,162,084
Former senior bank loans, interest at base rate plus 1.5%... 63,567,952 --
Former senior secured notes, interest payable semiannually at
12%-12.25%............................................... 416,339,343 --
Other installment contracts and term notes payable.......... 416,541 1,763,857
------------ ------------
480,323,836 152,925,941
Less current portion........................................ 327,651 3,506,595
------------ ------------
Long-term debt, less current portion........................ $479,996,185 $149,419,346
============ ============
</TABLE>

F-11
<PAGE> 115

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. LONG-TERM DEBT (CONTINUED)

As more fully described in Note 1, the Company completed a financial
reorganization and emerged from Chapter 11 on September 17, 1996. The
reorganization included refinancing of the former senior bank loans with a new
bank credit facility and the exchange of all of the former senior secured notes
for a substantial equity ownership interest in the reorganized Company and new
11% senior secured notes.

The new bank credit agreement incorporates a term loan of $30,000,000 and
revolving loans not to exceed $60,000,000. The credit agreement provides for up
to $5,000,000 in letters of credit, for which the Company pays a fee of 3% of
the average daily letter of credit exposure. At December 28, 1996, the Company
had $3,000,000 of outstanding letters of credit. Additionally, the Company pays
a .5% commitment fee based on the average daily unused amount of lender
commitments. No revolving loans were drawn for the period September 17 through
December 28, 1996. The credit agreement provides for a 1% reduction in the
interest rate at any time after March 16, 1997 upon reduction of the term loan
by $3,000,000.

The bank credit agreement is secured by virtually all of the Company's
assets. The amount available under the revolving loan facility is determined by
a borrowing base formula determined from the sum of eligible accounts receivable
and a formula value for inventory, but is limited to $60,000,000. The borrowing
base at December 28, 1996 was approximately $92,044,000 and, accordingly, unused
available borrowings were $57,000,000 (net of outstanding letters of credit).
Interest on revolving loans is at the same interest rate options described above
on the term loan. The agreement contains various restrictive covenants which,
among other things, substantially limit additional borrowings, prohibit payment
of dividends, and restrict capital additions and sale of assets. The Company was
in compliance with all covenants at December 28, 1996.

The 11% senior secured notes were issued to certain members at an initial
amount of $117,500,000. The notes require certain prepayment premiums for
payment prior to September 1 of each year as follows: 1997 -- 111%, 1998 --
108%, 1999 -- 105%, 2000 -- 103% and 2001 -- 101%. The notes are secured by a
secondary interest, subordinated to the bank credit agreement, in virtually all
of the Company's assets. Prior to complete repayment of the bank term loan,
interest on the notes is payable only through issuance of additional notes in
principal amount equal to the interest due ($3,662,084 accrued to be paid
in-kind for the period ending December 28, 1996). After repayment of the term
loan, interest is payable in cash. The note indenture contains covenants which
either mirror or are less restrictive than those of the bank credit agreement.

The Company also has a $ 10 million note purchase agreement with a member
that allows borrowing only if the bank line of credit is fully borrowed and the
Company's cash balance falls below $5 million. The notes, if issued, would bear
interest at 11% per annum, payable quarterly in arrears, and would be secured by
a subordinated security interest in the Company's real property. The commitment
expires on September 17, 1998. It is management's belief that no amounts will be
borrowed under the agreement.

Future maturities of long-term debt are as follows:

<TABLE>
<S> <C>
1997........................................................ $ 3,506,595
1998........................................................ 6,175,007
1999........................................................ 6,183,015
2000........................................................ 6,747,588
2001........................................................ 9,067,219
Thereafter.................................................. 121,246,517
------------
$152,925,941
============
</TABLE>

F-12
<PAGE> 116

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

The components of income tax expense are as follows:

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
--------------------------------------- -------------
PERIOD FROM PERIOD FROM
JANUARY 1, SEPTEMBER 17,
1996 THROUGH 1996 THROUGH
SEPTEMBER 16, DECEMBER 28,
1994 1995 1996 1996
---- ---- ------------- -------------
<S> <C> <C> <C> <C>
Current:
Federal..................... $ 85,000 $ 240,000 $ -- $2,200,000
State....................... -- -- -- 350,000
---------- ---------- ---------- ----------
85,000 240,000 -- 2,550,000
Deferred:
Federal..................... 1,168,000 1,942,000 1,650,000 3,765,000
State....................... 172,000 343,000 290,000 650,000
---------- ---------- ---------- ----------
1,340,000 2,285,000 1,940,000 4,415,000
---------- ---------- ---------- ----------
$1,425,000 $2,525,000 $1,940,000 $6,965,000
========== ========== ========== ==========
</TABLE>

A reconciliation of income tax expense with the amount computed by applying
the statutory Federal income tax rate to the Company's pretax income is shown
below. Predecessor amounts are based on the pretax income of Farms ($3,509,575,
$6,050,408 and $4,864,941 in 1994, 1995 and 1996, respectively).

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
--------------------------------------- -------------
PERIOD FROM PERIOD FROM
JANUARY 1, SEPTEMBER 17,
1996 THROUGH 1996 THROUGH
SEPTEMBER 16, DECEMBER 28,
1994 1995 1996 1996
---- ---- ------------- -------------
<S> <C> <C> <C> <C>
Amount based on Federal
statutory rate.............. $1,193,000 $2,057,000 $1,654,000 $5,923,000
State income taxes, net of
Federal benefit............. 114,000 226,000 191,000 660,000
Effect of nondeductible
expenses.................... -- 106,000 -- --
Other......................... 118,000 136,000 95,000 382,000
---------- ---------- ---------- ----------
$1,425,000 $2,525,000 $1,940,000 $6,965,000
========== ========== ========== ==========
</TABLE>

F-13
<PAGE> 117

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)
Components of the net deferred tax balances are as follows:

<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 28,
1995 1996
------------ ------------
<S> <C> <C>
Deferred tax assets:
Fixed asset basis difference.................... $ -- $17,526,000
Net operating loss carryforwards................ 6,569,000 --
Accrued liabilities............................. 476,000 --
AMT credit carryforward......................... 345,000 --
Other........................................... 11,000 --
Deferred tax liabilities:
Tax depreciation in excess of financial
statement amounts............................ (11,671,000) --
Other........................................... (41,000)
------------ -----------
Net deferred tax asset (liability)................ $ (4,270,000) $17,485,000
============ ===========
</TABLE>

6. COMMITMENTS

The Company has employment agreements with key senior management employees.

The Company enters into forward grain purchase contracts with market risk
in the ordinary course of business. In the opinion of management, settlement of
such commitments which were open at December 28, 1996 will have no adverse
impact on the financial condition or results of operations of the Company.

The Company utilizes the above forward contracts, as well as futures and
options contracts, to establish adequate supplies of future grain purchasing
requirements and to minimize the risk of market fluctuations. These contracts
may result in off-balance-sheet market risk which is dependent on fluctuations
in the grain, hog and pork commodity markets. Market risk resulting from a
position in a particular contract may be offset by other on- or off-balance
sheet transactions. The Company continually monitors its overall market
position. Gross contract or notional amounts of futures, options and forward
contracts in place as of December 28, 1996 are as follows:

<TABLE>
<S> <C>
Forward contracts to purchase grain......................... $10,849,000
Futures or option contracts:
To purchase grain......................................... $ 28,000
To sell grain............................................. $ 1,335,000
To sell pork bellies...................................... $ 2,264,000
</TABLE>

The Company leases rolling stock and certain equipment under noncancelable
operating leases. Rental expense under operating leases was approximately
$870,000, $1,779,000 and $963,000 in fiscal 1994, 1995 and the period ended
September 16, 1996, respectively, (Predecessor) and $312,000 in the period ended
December 28, 1996 (Successor). Future minimum rental commitments at December 28,
1996 are as follows:

F-14
<PAGE> 118

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. EMPLOYEE BENEFIT PLANS

SUCCESSOR OPTION PLAN

The Company has a management option plan which provides for options
covering up to 526,315 membership units available to be granted to employees.
Options for 460,000 units have been granted at December 28, 1996. The granted
units are exercisable at $12.00 per unit and vest and become exercisable over a
five year period beginning September 17, 1996. At December 28, 1996, options
covering 100,500 units were vested and exercisable. Vesting is accelerated in
the event of a change of control, as defined. The Company accounts for options
in accordance with Accounting Principles Board Opinion No. 25 (APB 25). Under
APB 25, because the exercise price of the employee options equals the market
value of the underlying units on the date of the grant, no compensation expense
is recognized. A summary of option activity subsequent to the 1996
Reorganization through December 28, 1996 is as follows:

<TABLE>
<CAPTION>
OPTION
UNITS PRICE
----- ------
<S> <C> <C>
Granted in 1996............................................. 460,000 $12.00
-------
Balance at December 28, 1996................................ 460,000
=======
</TABLE>

Under FASB Statement No. 123, certain pro forma information is required as
if the Company had accounted for options under the alternative fair value method
of Statement 123. The Company used a Minimum Valuation model to determine the
per unit fair value of the options at the grant date. The following assumptions
were used in the valuation:

<TABLE>
<S> <C>
Risk-free interest rate..................................... 5.02%
Expected dividend yield..................................... None
Expected volatility......................................... None
Expected life of option..................................... 7 years
</TABLE>

The estimated fair value of the options at the date of grant is $3.56 per
unit.

For purposes of pro forma disclosures, the estimated fair value of the
options at the grant date is amortized to expense, net of related pro forma tax
benefits, over the vesting period of the options. Pro forma option compensation
expense for the period ended December 28, 1996 is not indicative of what annual
pro forma expense may be in the future due to the partial year and the staggered
period over which portions of the options vest and, accordingly, over which the
related pro forma expense would be spread for such portion. Pro forma net income
and net income per unit for the period ended December 28, 1996 is $10,127,000
and $1.01, respectively.

PREDECESSOR OPTION PLAN

Finance had an equity incentive plan to provide incentives to certain
employees and individuals who provided services to the partnership under
consulting agreements. No options were exercisable at December 31, 1995.
Compensation expense, determined in accordance with APB 25, relating to option
grants was approximately $322,000, $322,000 and $80,000 in fiscal 1994, 1995 and
the period ended September 16, 1996, respectively. Due to the 1996
Reorganization described in Note 1, all Predecessor options were canceled and
management determined that there was no fair value of the options granted in
1995 and, accordingly, no pro

F-15
<PAGE> 119

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

forma disclosure under Statement 123 has been made. A summary of Predecessor
option activity through September 16, 1996 is as follows:

<TABLE>
<CAPTION>
UNITS OPTION PRICE
----- ------------
<S> <C> <C>
Balance at December 31, 1993........................ 352,058 $16.00 - 22.00
Canceled in 1994.................................. --
Granted in 1994................................... 282,500
--------
Balance at December 31, 1994........................ 634,558 $16.00 - 28.78
Canceled in 1995.................................. (158,549)
Granted in 1995................................... 233,101
--------
Balance at December 31, 1995........................ 709,110 $.01 - 105.00
Canceled in 1996.................................. (709,110)
--------
Balance at September 16, 1996....................... --
========
</TABLE>

OTHER PLANS

The Company has 401(k) plans covering substantially all employees meeting
certain minimum service requirements. The Company matches 50% of the employee
contribution up to a maximum company contribution of 3% of employee
compensation. Expense related to the plans was approximately $244,000, $227,000
and $543,000 in 1994, 1995 and the period ended September 16, 1996,
respectively, (Predecessor) and $211,000 in the period ended December 28, 1996
(Successor).

8. MEMBERS' EQUITY AND L.L.C. AGREEMENT

Holdings' limited liability company agreement provides for the following:
- No Member shall be personally liable for the expenses, liabilities,
or obligations of the Company and will not be required to make up any
deficiency in such Member's Capital Account upon dissolution or
termination of the Company.

- Two classes of Member units, Class A and Class B, which are identical
and entitle the holders thereof to the same rights and privileges,
except that no Class B Member shall have any right, power or authority
to participate in: (1) the management of the Company in any manner, (2)
any vote or resolution of the Members, or (3) any consent, approval or
other binding action of the Members or the Company.

- Members shall have the sole authority to determine the timing and the
aggregate amount of any distributions to Members.

- The Company shall continue until December 31, 2046 or such later date as
shall be designated by the Members unless sooner terminated as provided
for in the agreement.

Holdings has warrants outstanding at December 28, 1996 to purchase
2,048,192 membership units. See Note 1 under 1996 Reorganization for disclosure
of the exercise price and periods during which the warrants may be exercised.

At December 28, 1996, a total of 2,574,507 member units are reserved for
issuance under the management option plan and outstanding warrants.

Payment of dividends is restricted under the senior bank credit agreement
(Note 4) and, accordingly, all of the Company's retained earnings of $10,456,283
at December 28, 1996 are restricted.

F-16
<PAGE> 120

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. MEMBERS' EQUITY AND L.L.C. AGREEMENT (CONTINUED)

The Company's member units, warrants, and 11% senior secured notes are
subject to registration rights agreements whereby the Company has agreed to file
a shelf registration statement, not later than April 30, 1997, to register these
securities pursuant to Rule 415 under the Securities Act of 1933.

9. PREDECESSOR CAPITAL

As more fully explained in Note 1, the Company completed a financial
reorganization and emerged from Chapter 11 on September 17, 1996. As part of the
reorganization, the Predecessor's preferred and common partnership units
described below were exchanged for certain senior notes and membership units of
the Successor.

Partnership units issued and outstanding at December 31, 1995 related to
the Predecessor's capital were as follows:

<TABLE>
<S> <C>
Redeemable preferred limited partners....................... 268,687 units
Redeemable common limited partner........................... 7,582,115 units
Nonredeemable common general partner........................ 104,058 units
Nonredeemable common limited partner........................ 2,718,865 units
</TABLE>

Finance had previously issued preferred limited partnership units providing
for aggregate preferred limited partner funding of $26,600,000. The preferred
units required annual cash distributions of 12.5% payable semiannually, subject
to the financial capability of Finance, as defined. All distributions were paid
as required through March 15, 1995. Pursuant to its authority under the
agreement, Finance withheld payment of the September 15, 1995 semiannual cash
distribution to the redeemable preferred limited partners, in the amount of
$1,679,294. The unpaid distribution was accrued and is included in the
consolidated balance sheet at December 31, 1995 in the redeemable capital to
preferred limited partners.

The units were subject to a mandatory redemption at the option of the
holders beginning in September 1996, subject to the financial capability of
Finance, as defined in the agreements. The mandatory redemption price was an
amount which would provide the holders with a 20% compounded annual rate of
return, including the effect of the 12.5% distributions. The carrying value of
the preferred units was being accreted to the estimated redemption price over
the period until the initial mandatory redemption date as described above, with
a corresponding charge to common partners' equity. Accordingly, accretion of
$5,853,089, $6,117,009 and $4,544,469 was recognized in fiscal years 1994 and
1995 and the period ended September 16, 1996, respectively.

10. LOSSES ON SUSPENSION OF TEXAS EXPANSION PROJECT AND BUSINESS DISPOSAL

In the second quarter of 1995, the Company announced the suspension of its
expansion in High Plains, Texas. Losses include $10,845,887 primarily
attributable to writedown of certain construction inventories and settlement of
construction contracts. The remaining loss ($17,300,000) is attributable to
adjustment of the carrying value of property and equipment to estimated fair
market value of $25 million as determined by an independent appraisal. The
Company intends to periodically evaluate the desirability of further expansion
of its Texas operations in the future based on the Company's production and
processing needs, operating performance, capital requirements and growth
strategy.

In February 1996 the Company sold a processing facility and certain related
assets. The sale resulted in a loss of $5,200,000 which has been recognized in
the 1995 financial statements to reflect the writedown of the related net assets
to net realizable value. Operating results for the facility for 1995 were net
sales of approximately $10 million and a loss from operations of $2.3 million.

F-17
<PAGE> 121

PSF HOLDINGS, L.L.C. AND PREDECESSOR

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. 1995 EXTRAORDINARY LOSS

As a result of suspending the project described in Note 10, the Company
repaid approximately $110 million of amounts previously drawn on a construction
loan facility, and entered into a corresponding amendment to its former credit
agreement to reduce a $190 million term loan commitment to approximately $10
million. Unamortized deferred financing costs relating to the canceled term loan
commitments were written off in 1995, resulting in an extraordinary loss of
$9,653,056.

12. GUARANTEE OF PSF, INC. SENIOR SECURED NOTES

Holdings and Princeton Development Corp. (Princeton), a wholly-owned
subsidiary of PSF, Inc., each, jointly and severally, have fully and
unconditionally guaranteed the payment of the 11% senior secured notes issued by
PSF, Inc. in connection with the 1996 Reorganization (see Note 4 for a
description of the senior secured notes).

Summarized consolidated financial information for PSF, Inc. and its
wholly-owned subsidiary, Princeton, is as follows (in thousands of dollars).
Amounts are identical to the accompanying consolidated financial statements of
Holdings, since Holdings has no assets or operations other than its stock of
PSF, Inc.

<TABLE>
<S> <C>
At December 28, 1996:
Current assets............................................ $101,736
Noncurrent assets......................................... 203,762
--------
Total assets.............................................. $305,498
========
Current liabilities....................................... $ 20,550
Noncurrent liabilities.................................... 149,419
Stockholder's equity...................................... 135,529
--------
Total liabilities and stockholder's equity................ $305,498
========
Period from September 17, 1996 through December 28, 1996:
Net sales................................................. $ 91,233
Gross profit.............................................. 25,918
Net income................................................ 10,456
</TABLE>

Separate financial statements for Princeton have not been presented, since
they are included in the consolidated financial statements of Holdings and PSF,
Inc. and Princeton's guarantee of PSF, Inc.'s senior secured notes is on a full,
unconditional, and joint and several basis. Princeton's accounts and
transactions represent less than one-half of 1% of the consolidated total
assets, liabilities, equity, net sales, income from operations, and net income
of both Holdings and PSF, Inc.

F-18
<PAGE> 122

======================================================

NO DEALER, SALES REPRESENTATIVE OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, ANY SELLING SECURITYHOLDER OR ANY OTHER PERSON. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY
SECURITIES BY ANYONE IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION
IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH AN OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE OF
THIS PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 9
Use of Proceeds....................... 16
Dividend Policy....................... 16
Selected Consolidated Financial
Data................................ 17
Unaudited Pro Forma Financial Data.... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 27
Management............................ 40
Certain Transactions.................. 51
Selling Securityholders............... 53
Principal Unitholders................. 58
Description of Certain Indebtedness... 59
Description of the Units.............. 60
Description of the Warrants........... 68
Description of the Notes.............. 73
Description of Guarantees of 11%
Senior Secured Notes................ 91
Certain U.S. Federal Income Tax
Consequences........................ 92
Securities Eligible For Future Sale... 100
Plan of Distribution.................. 100
Legal Matters......................... 102
Experts............................... 102
Additional Information................ 102
Index to Financial Statements......... F-1
</TABLE>

UNTIL , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS ELECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS.

======================================================

======================================================
PSF HOLDINGS, L.L.C.
PREMIUM STANDARD FARMS, INC.
PRINCETON DEVELOPMENT CORP.

LLC UNITS

WARRANTS TO PURCHASE
LLC UNITS

11% SENIOR SECURED NOTES DUE
2003 (PARTIAL PAY-IN-KIND)

--------------------
PROSPECTUS
--------------------

, 1997
======================================================
<PAGE> 123

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with the
Offering described in this Registration Statement.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $145,701
Accounting Fees and Expenses................................ $ *
Printing and Engraving Expenses............................. $ *
Legal Fees and Expenses..................................... $ *
Blue Sky Fees and Expenses.................................. $ *
Miscellaneous............................................... $ *
--------
Total.................................................. $ *
========
</TABLE>

- -------------------------
* To be completed by amendment.

The foregoing items, except for the Securities and Exchange Commission fee,
are estimated. All expenses will be borne by the Company.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 18-108 of the Delaware Limited Liability Company Act provides that
subject to the standards and restrictions set forth in its limited liability
company agreement, a limited liability company has the power to indemnify and
hold harmless any member, manager or other person from and against any and all
claims and demands whatsoever.

Section 13.1 of the LLC Agreement provides that Holdings shall indemnify
the Managers, Members, including the Tax Matters Member, and each such Person's
officers, directors, trustees, partners, investment advisors, members,
shareholders, employees and agents, and the employees, officers and agents of
Holdings (all indemnified persons being referred to as "Indemnified Persons"),
from any liability, loss, or damage incurred by the Indemnified Person by reason
of any act performed or omitted to be performed by the Indemnified Person in
connection with the business of Holdings and from liabilities or obligations of
Holdings imposed on such Indemnified Person by virtue of such Indemnified
Person's position with Holdings, including reasonable attorneys' fees and costs
and any amounts expended in the settlement of any such claims of liability, loss
or damage; provided, however, that, if the liability, loss, damage, or claim
arises out of any action or inaction of an Indemnified Person, such
indemnification shall be available only if (a) either (i) the Indemnified
Person, at the time of such action or inaction, determined, in good faith, that
its, his or her course of conduct was in, or not opposed to, the best interests
of Holdings and was authorized under the LLC Agreement, or (ii) in the case of
inaction by the Indemnified Person, the Indemnified Person did not intend its,
his or her inaction to be harmful or opposed to the best interests of Holdings,
and (b) the action or inaction was not undertaken (or omitted) in bad faith nor
did it constitute fraud or willful misconduct by the Indemnified Person, and
provided, further, that such indemnification shall be recoverable only from the
assets of Holdings and not from any assets of the Members. Section 13.1 also
provides that Holdings may pay or reimburse attorneys' fees of an Indemnified
Person as incurred, if such Indemnified Person executes an undertaking to repay
such amount if there is a final determination that such Indemnified Person is
not entitled to be indemnified by Holdings. In addition, Section 13.1 provides
that Holdings may pay for insurance covering liability of the Indemnified
Persons for negligence in operation of Holdings' affairs.

Section 13.2 of the LLC Agreement provides that no Indemnified Person shall
be liable to Holdings or to any Member of Holdings for any loss that arises out
of any act or omission pursuant to the authority granted by the LLC Agreement if
(a) either (i) the Indemnified Person, at the time of such action or omission,
determined, in good faith, that such Indemnified Person's course of conduct was
in, or not opposed to, the best

II-1
<PAGE> 124

interests of Holdings, or (ii) in the case of inaction by the Indemnified
Person, the Indemnified Person did not intend such his, her or its inaction to
be harmful or opposed to the best interests of Holdings, and (b) the conduct of
the Indemnified Person was not undertaken in bad faith nor did it constitute
fraud or willful misconduct by such Indemnified Person. Section 13.2 of the LLC
Agreement further provides that in addition to, and not by way of limitation of,
the foregoing, no Manager of the Company shall be liable to the Company or its
Members for monetary damages for breach of fiduciary duty as a Manager, except
to the extent that exculpation from liability is not permitted under the
Delaware Limited Liability Company Act as in effect at the time such liability
is determined. No amendment or repeal of such Section 13.2 shall apply to or
have any effect on the liability or alleged liability of any Manager of the
Company for or with respect to any acts or omissions of such Manager occurring
prior to such amendment or repeal.

Pursuant to Section 13.5 of the LLC Agreement, an Indemnified Person acting
under the LLC Agreement shall not be liable to Holdings or to any other
Indemnified Person for its good faith reliance on the provisions of the LLC
Agreement.

Section 8.2 of the LLC Agreement provides that Holdings shall indemnify and
reimburse the Tax Matters Member of Holdings for all expenses (including legal
and accounting fees) incurred as Tax Matters Member pursuant to the LLC
Agreement in connection with any administrative or judicial proceeding with
respect to the tax liability of the Members of Holdings as long as the Tax
Matters Member has determined in good faith that its course of conduct was in,
or not opposed to, the best interest of Holdings.

Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was a director, officer, 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. A
corporation may indemnify such person against 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 if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. A corporation may, in advance of the final disposition of any
civil, criminal, administrative or investigative action, suit or proceeding, pay
the expenses (including attorneys' fees) incurred by any officer or director in
defending such action, provided that the director or officer undertakes to repay
such amount if it shall be ultimately determined that he is not entitled to be
indemnified by the corporation.

A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
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 (including attorneys' fees) which he actually and
reasonably incurred in connection therewith. The indemnification provided is not
deemed to be exclusive of any other rights to which an officer or director may
be entitled under any corporation's by-law, agreement, vote or otherwise.

Article 11 of PSF's Certificate of Incorporation and Section 7.1 of PSF's
Bylaws provide that PSF shall indemnify and upon request advance expenses to its
officers, directors, agents and other persons to the maximum extent permitted
from time to time under Delaware law, provided, however, that PSF shall not be
required to indemnify or advance expenses to any person in connection with any
action, suit, proceeding, claim or counterclaim initiated by or on behalf of
such person. Article 10 of PSF's Certificate of Incorporation provides that a
director of PSF shall not be liable to PSF or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to the extent that
exculpation from liability is not permitted under the DGCL as in effect at the
time such liability is determined.

Section 7.2 of PSF's Bylaws provides that PSF may purchase and maintain
insurance on behalf of its officers, directors, employees and agents against
liabilities asserted against or incurred by him/her in that

II-2
<PAGE> 125

capacity or arising from his/her status as a director, officer, employee or
agent, whether or not the corporation would have the power to indemnify him/her
against the same liability under Delaware law.

Article VI of Princeton's Certificate of Incorporation and Article IX of
Princeton's Bylaws provide that Princeton shall indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of Princeton), if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of Princeton, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Further, Princeton shall indemnify its directors, officers, employees and agents
against expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of any threatened,
pending or completed action or suit by or in the right of Princeton to procure a
judgment in its favor, if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of Princeton,
and except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to
Princeton unless and only to the extent that the Delaware Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.

To the extent that a director, officer, employee or agent of Princeton has
been successful on the merits or otherwise in defense of any action, suit or
proceeding described in the preceding paragraph, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith. Any indemnification described in the preceding paragraph shall be
made by Princeton only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct as set
forth above. Such determination shall be made (a) by the Board of Directors of
Princeton by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (b) if such a quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders of Princeton. Expenses (including attorneys' fees) incurred by an
officer or director in defending any such action, suit or proceeding may be paid
by Princeton in advance of its final disposition upon receipt of an undertaking
by or on behalf of such officer or director to repay such amount if it shall
ultimately be determined that he is not entitled to be so indemnified by
Princeton. Such expenses (including attorneys' fees) incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the Board
of Directors of Princeton deems appropriate.

In addition, Princeton may purchase and maintain insurance on behalf of its
directors, officers, employees and agents against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not Princeton would have the power to indemnify him against
such liability under the provisions of Section 145 of the DGCL.

Article V of Princeton's Certificate of Incorporation provides that to the
fullest extent permitted by the DGCL, no director of Princeton shall be
personally liable to Princeton or its stockholders for monetary damages for
breach of fiduciary duty as a director.

Pursuant to the Reorganization Plan, the obligations of any of the
Company's predecessors to indemnify its directors, officers, general partners,
partners, employees, and certain consultants of the Company's predecessors
survived confirmation of the Plan of Reorganization, remain unaffected thereby
and are not discharged, provided, however, that claims brought against any such
indemnified person by (i) any person which is a former purchaser, seller,
underwriter or owner, in each case, acting in such capacity, of former
securities of any predecessor of the Company or of any affiliate thereof, or
brought by or in the name of any such predecessor, in each case, arising out of
or related to any alleged right of rescission of, or damages arising from, any
purchase or sale of such securities under federal or state securities laws
(whether statutory or

II-3
<PAGE> 126

otherwise) or (ii) any other person (a "Third Party Claimant") against any such
indemnified person asserting claims for contribution, reimbursement or indemnity
by such Third Party Claimant arising out of or related to any action, suit or
proceeding against such Third Party Claimant which, had it been brought against
any such indemnified person, would be described in clause (i) above, are
excluded claims and are not covered by such indemnification.

The Company maintains directors' and officers' liability insurance policies
covering certain liabilities of persons serving as officers and directors and
providing reimbursement to the Company for its indemnification of such persons.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In the three years preceding the filing of this Registration Statement, the
Company has issued the following securities that were not registered under the
Securities Act:

On September 17, 1996, the Effective Date, all of the then-outstanding
capital stock of PSF's predecessor, Farms, was cancelled, and all equity
interests in Holdings' predecessor, Finance, and the then-outstanding senior
secured notes issued by Finance were satisfied by issuance of Notes and LLC
Units, and Holdings issued 10,000,000 LLC Units and Warrants to acquire
2,048,192 LLC Units and PSF issued $117,500,000 in principal amount of its Notes
under the Plan of Reorganization pursuant to an exemption from registration
under the United States Bankruptcy Code. On March 15, 1997, PSF issued
$6,390,699 in principal amount of Secondary Notes in payment of interest then
due on the Notes.

On December 23, 1996, pursuant to Holdings' Management Option Plan,
Holdings granted certain employees options to acquire 460,000 LLC Units of
Holdings subject to the terms and conditions set forth in the Management Option
Plan and the respective Unit Option Agreement for such employees.

On March 16, 1997, pursuant to Holdings' Management Option Plan, Holdings
granted HWS & Associates, Inc., a South Carolina corporation of which Horst W.
Schroeder is the president and owner options to acquire 160,000 LLC Units
subject to the terms and conditions set forth in the Management Option Plan and
the Unit Option Agreement between Holdings and HWS & Associates, Inc.

On April 24, 1997, pursuant to Holdings' Management Option Plan, Holdings
granted Michael Townsley options to acquire 12,500 LLC Units subject to the
terms and conditions set forth in the Management Option Plan and the Unit Option
Agreement between Holdings and Mr. Townsley.

In December 1995, Finance issued a $6,500,000 12.25% senior secured note
due 1997 pursuant to a Note Purchase Agreement dated December 15, 1995 among
Finance, Farms and Morgan Stanley Group Inc.

Options to acquire 111,550, 282,500 and 233,101 limited partnership units
of Finance were granted by Finance in 1993, 1994 and 1995, respectively, to
employees under Finance's equity incentive plan. In addition, in 1995, Finance
granted options to Horst W. Schroeder to acquire 208,101 limited partnership
units. All options for Finance limited partnership units were cancelled as of
the Effective Date.

No underwriters were involved in the foregoing sales of securities. Such
sales, unless otherwise indicated herein, were made in reliance upon an
exemption from the registration provisions of the Securities Act set forth in
Section 4(2) thereof relative to sales by an issuer not involving any public
offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S>
2.1 Debtor's Second Amended Joint Plan of Reorganization under
Chapter 11 of the Bankruptcy Code dated September 5, 1996
and confirmed by the Court on September 6, 1996
2.2 Debtor's Amended Joint Disclosure Statement Pursuant to
Section 1125 of the Bankruptcy Code Relating to Debtor's
Amended Joint Plan of Reorganization
3.1 Certificate of Formation of PSF Holdings, L.L.C.
3.2 Second Amended and Restated Limited Liability Company
Agreement of PSF Holdings, L.L.C.
3.3 Certificate of Incorporation of Premium Standard Farms, Inc.
</TABLE>

II-4
<PAGE> 127

Exhibit No.

<S> <C>
3.4 By-Laws of Premium Standard Farms, Inc.
3.5 Certificate of Incorporation of Princeton Development Corp.
3.6 By-Laws of Princeton Development Corp.
4.1 Warrant Agreement, dated September 17, 1996, between PSF Holdings, L.L.C. and Fleet National Bank
4.2 Form of Warrant Certificate
4.3 Indenture, dated September 17, 1996, by and among Premium Standard Forms, Inc., as Issuer, PSF
Holdings, L.L.C., as Guarantor, and Fleet National Bank, as Trustee
4.4 Form of Note (included in Exhibit 4.3)
4.5 Subsidiary Guaranty Agreement between Princeton Development Corp. and Fleet National Bank
4.6 Security and Collatural Agency Agreement
4.7 New L.L.C. Interests Registration Rights Agreement
4.8 Warrant Registration Rights Agreement
4.9 New PIK Notes Registration Rights Agreement
5.1* Opinion of Sonnenschein Nath & Rosenthal
10.1 Second Priority Note Purchase Agreement
10.2 Form of Senior Secured Second Priority Note
10.3 Guaranty of Second Priority Notes, dated September 17, 1996, between PSF Holdings, L.L.C. and Morgan
Stanley Group, Inc.
10.4 Guaranty of Second Priority Notes, dated September 17, 1996, between subsidiaries of Premium Standard
Farms, Inc. and Morgan Stanley Group, Inc.
10.5 Management Option Plan
10.6 Employment Agreement dated January 1, 1997 between PSF and Dennis Harms
10.7 Employment Agreement dated October 1, 1996 between PSF and Robert Manly
10.8 Employment Agreement dated February 27, 1997 between PSF and William Patterson
10.9 Employment Agreement dated November 1, 1994 between PSF's predecessor and Mark Warren
10.10 Employment Agreement dated November 1, 1994 between PSF's predecessor and David Mitchell
10.11 Consulting Agreement dated March 16, 1997 by and among PSF, HWS & Associates, Inc. and Horst W.
Schroeder
10.12 Credit Agreement dated September 17, 1996 among Holdings, PSF and The Chase Manhattan Bank
10.13 Parent Guarantee Agreement, dated September 17, 1996, between PSF Holdings, L.L.C. and The Chase
Manhattan Bank
10.14 Subsidiary Guarantee Agreement dated September 17, 1996, between subsidiaries of Premium Standard
Forms, Inc., and The Chase Manhattan Bank
10.15 Indemnity, Subrogation and Contribution Agreement
10.16 Intercreditor Agreement
10.17 Form of Deed of Trust
10.18 Pledge Agreement
10.19 Security Agreement
10.20 Sale and Purchase Agreement between Premium Standard Farms, Inc. and Marubeni America Corporation,
dated January 1, 1997
10.21 Director Equity Plan
11.1 Computation of Per Unit Earnings
</TABLE>

II-5
<PAGE> 128

<TABLE>
<C> <S>
12.1 Computation of Ratio or Deficiency of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Ernst & Young LLP
23.2* Consent of Sonnenschein Nath & Rosenthal (to be included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature pages)
27.1 Financial Data Schedule
27.2 Financial Data Schedule
</TABLE>

- -------------------------
* To be filed by amendment

(b) Financial Statement Schedules

Financial statement schedules of the Company have been omitted for the
reason that they are not required or are not applicable, or the required
information is shown in the financial statements or notes thereto.

ITEM 17. 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 foregoing provisions, 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 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 its 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 Act and will be governed by the final adjudication of
such issue.

The undersigned registrant hereby undertakes that:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
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 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 and 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 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.

(iii) 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;

(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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; and

(3) 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 offering.

II-6
<PAGE> 129

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be filed on its behalf by the
undersigned, thereunto duly authorized in Kansas City, Missouri on April 30,
1997.

PSF HOLDINGS, L.L.C.

By: /s/ DENNIS W. HARMS
------------------------------------
Dennis W. Harms
President

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and managers of PSF Holdings, L.L.C., hereby
severally constitute and appoint Dennis W. Harms, Robert W. Manly, William R.
Patterson and Robert W. Rippentrop, and each of them singly, our true and lawful
attorneys, with full power to them and each of them singly, to sign for us in
our names in the capacities indicated below, all pre-effective and
post-effective amendments to this Registration Statement, including any filings
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
generally to do all things in our names and on our behalf in such capacities to
enable PSF Holdings, L.L.C. to comply with the provisions of the Securities Act
of 1933, as amended, and all requirements of the Securities and Exchange
Commission.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<C> <S> <C>
/s/ DENNIS W. HARMS President (Principal Executive Officer) April 30, 1997
- ---------------------------------------------
Dennis W. Harms

/s/ ROBERT W. RIPPENTROP Vice President, Treasurer, Assistant April 30, 1997
- --------------------------------------------- Secretary and Controller (Principal
Robert W. Rippentrop Financial and Accounting Officer)

/s/ HORST W. SCHROEDER Manager April 30, 1997
- ---------------------------------------------
Horst W. Schroeder

/s/ ARTHUR NEWMAN Manager April 30, 1997
- ---------------------------------------------
Arthur Newman

/s/ DEAN MEFFORD Manager April 30, 1997
- ---------------------------------------------
Dean Mefford

/s/ RONALD E. JUSTICE Manager April 30, 1997
- ---------------------------------------------
Ronald E. Justice

/s/ MAURICE L. MCGILL Manager April 30, 1997
- ---------------------------------------------
Maurice L. McGill

/s/ PETER K. SHEA Manager April 30, 1997
- ---------------------------------------------
Peter K. Shea
</TABLE>

II-7
<PAGE> 130

SIGNATURES

PREMIUM STANDARD FARMS, INC.

By: /s/ DENNIS W. HARMS
------------------------------------
Dennis W. Harms
Vice Chairman and Chief Executive
Officer

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of Premium Standard Farms, Inc.,
hereby severally constitute and appoint Dennis W. Harms, Robert W. Manly,
William R. Patterson and Robert W. Rippentrop, and each of them singly, our true
and lawful attorneys, with full power to them and each of them singly, to sign
for us in our names in the capacities indicated below, all pre-effective and
post-effective amendments to this Registration Statement, including any filings
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
generally to do all things in our names and on our behalf in such capacities to
enable Premium Standard Farms, Inc. to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<C> <S> <C>
/s/ DENNIS W. HARMS Vice Chairman and Chief Executive April 30, 1997
- --------------------------------------------- Officer (Principal Executive Officer)
Dennis W. Harms

/s/ WILLIAM R. PATTERSON Executive Vice President, Chief April 30, 1997
- --------------------------------------------- Financial Officer and Treasurer
William R. Patterson (Principal Financial and Accounting
Officer)

/s/ HORST W. SCHROEDER Chairman of the Board of Directors April 30, 1997
- ---------------------------------------------
Horst W. Schroeder

/s/ ARTHUR NEWMAN Director April 30, 1997
- ---------------------------------------------
Arthur Newman

/s/ DEAN MEFFORD Director April 30, 1997
- ---------------------------------------------
Dean Mefford

/s/ RONALD E. JUSTICE Director April 30, 1997
- ---------------------------------------------
Ronald E. Justice

/s/ MAURICE L. MCGILL Director April 30, 1997
- ---------------------------------------------
Maurice L. McGill

/s/ PETER K. SHEA Director April 30, 1997
- ---------------------------------------------
Peter K. Shea
</TABLE>

II-8
<PAGE> 131

SIGNATURES

PRINCETON DEVELOPMENT CORP.

By: /s/ HORST W. SCHROEDER

------------------------------------
Horst W. Schroeder
Chairman of the Board of Directors
and President

POWER OF ATTORNEY AND SIGNATURES

We, the undersigned officers and directors of Princeton Development Corp.,
hereby severally constitute and appoint Dennis W. Harms, Robert W. Manly,
William R. Patterson and Robert W. Rippentrop, and each of them singly, our true
and lawful attorneys, with full power to them and each of them singly, to sign
for us in our names in the capacities indicated below, all pre-effective and
post-effective amendments to this Registration Statement, including any filings
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and
generally to do all things in our names and on our behalf in such capacities to
enable Princeton Development Corp. to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<C> <S> <C>
/s/ HORST W. SCHROEDER Chairman of the Board of Directors and April 30, 1997
- --------------------------------------------- President (Principal Executive Officer)
Horst W. Schroeder

/s/ WILLIAM R. PATTERSON Vice President and Treasurer (Principal April 30, 1997
- --------------------------------------------- Financial and Accounting Officer);
William R. Patterson Director

/s/ DENNIS W. HARMS Vice President; Director April 30, 1997
- ---------------------------------------------
Dennis W. Harms
</TABLE>

II-9

<PAGE> 1

EXHIBIT 2.1

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

<TABLE>
<S> <C>
- --------------------------------------------------------x
:
In re :
:
PSF FINANCE L.P., : Chapter 11 Case Nos.
PREMIUM STANDARD FARMS, INC., : 96-1032 (HSB) through 96-1036 (HSB)
COLLINGS FARM, INC., :
PSF FINANCE HOLDINGS INC., and : (Jointly Administered)
PREMIUM HOLDINGS CORP., :
:
Debtors. :
:
- --------------------------------------------------------x
</TABLE>

DEBTORS' SECOND AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
and Debtors in Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000

and

RICHARDS, LAYTON & FINGER, P.A.
Attorneys for the Debtors
and Debtors in Possession
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541

Dated: Wilmington, Delaware
September 5, 1996

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
ARTICLE I - DEFINITION OF TERMS AND RULES OF INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . -1-

ARTICLE II - TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.1 PROFESSIONAL COMPENSATION AND REIMBURSEMENT CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.2 OTHER ADMINISTRATIVE EXPENSE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-
2.3 COMPENSATION TO ATTORNEYS AND ADVISORS TO THE BONDHOLDERS' COMMITTEE, AND THE INDENTURE TRUSTEE
AND THE COLLATERAL TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -9-

ARTICLE III - CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . -10-

ARTICLE IV TREATMENT OF CLAIMS AND EQUITY INTERESTS AND VOTING . . . . . . . . . . . . . . . . . . . . . . . -10-

ARTICLE V - EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
5.1 EXECUTORY CONTRACTS AND UNEXPIRED LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -15-
5.2 APPROVAL OF ASSUMPTION OR REJECTION OF LEASES AND CONTRACTS . . . . . . . . . . . . . . . . . . . -16-
5.3 CURE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
5.4 BAR DATE FOR FILING PROOFS OF CLAIM RELATING TO EXECUTORY CONTRACTS AND UNEXPIRED LEASES
REJECTED PURSUANT TO THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
5.5 INSURANCE POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
5.6 INDEMNIFICATION OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -16-
5.7 COMPENSATION AND BENEFIT PROGRAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-
5.8 RETIREE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -17-

ARTICLE VI - ALLOWANCE OF SECURED BANK CLAIMS AND SECURED NOTE CLAIMS . . . . . . . . . . . . . . . . . . . . . -18-
6.1 SECURED BANK CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
6.2 1992 NOTE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
6.3 1993 NOTE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
6.4 1994 NOTE CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
6.5 1995 NOTE CLAIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-

ARTICLE VII - IMPLEMENTATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -18-
7.1 RESTRUCTURING TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -19-
7.2 POST-EFFECTIVE DATE FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
7.3 ISSUANCE OF NEW SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
7.4 REGISTRATION OF NEW PIK NOTES, NEW LLC INTERESTS AND WARRANTS . . . . . . . . . . . . . . . . . . -20-
</TABLE>

-i-
<PAGE> 3

<TABLE>
<S> <C>
ARTICLE VIII - GOVERNANCE AND MANAGEMENT OF REORGANIZED FINANCE, NEWCO AND OTHER REORGANIZED DEBTORS . . . . . . . -20-
8.1 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -20-
8.2 MEMBERS AND OFFICERS OF REORGANIZED FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -21-
8.3 DIRECTORS AND OFFICERS OF NEWCO AND REORGANIZED DEBTORS . . . . . . . . . . . . . . . . . . . . . . . -21-
8.4 ARTICLES OF INCORPORATION OF NEWCO AND REORGANIZED DEBTORS . . . . . . . . . . . . . . . . . . . . . -22-
8.5 Management Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-

ARTICLE IX - DISTRIBUTIONS UNDER THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
9.1 METHOD OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
9.2 DATE OF DISTRIBUTIONS UNDER THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-
9.3 MANNER OF PAYMENT UNDER PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -22-

ARTICLE X - PROCEDURES FOR TREATING DISPUTED CLAIMS
AND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
10.1 PROSECUTION OF OBJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
10.2 NO DISTRIBUTIONS PENDING ALLOWANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-
10.3 DISTRIBUTIONS AFTER ALLOWANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -23-

ARTICLE XI - CONDITIONS PRECEDENTTO THE EFFECTIVENESS OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . -23-
11.1 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
11.2 EFFECT OF FAILURE OF CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -24-
11.3 WAIVER OF CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-

ARTICLE XII - EFFECT OF CONFIRMATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
12.1 TERM OF BANKRUPTCY INJUNCTIONS OR STAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
12.2 VESTING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
12.3 DISCHARGE OF DEBTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -25-
12.4 PERMANENT INJUNCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -251-

ARTICLE XIII - RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
13.1 GENERAL RELEASE OF RELEASEES AND OTHER PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
13.2 GENERAL RELEASE BY RELEASEES AND OTHER PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-
13.3 BINDING EFFECT OF RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-

ARTICLE XIV - RETENTION OF JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -26-

ARTICLE XV - MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
15.1 PAYMENT OF STATUTORY FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
15.2 COMPLIANCE WITH TAX REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
15.3 RECOGNITION OF GUARANTEE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
15.4 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-
15.5 EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
15.6 EXCULPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
</TABLE>

-ii-

<PAGE> 4

<TABLE>
<S> <C> <C>
15.7 EXEMPTION FROM TRANSFER TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -29-
15.8 AMENDMENT OR MODIFICATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
15.9 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
15.10 REVOCATION OR WITHDRAWAL OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
15.11 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
15.12 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -30-
15.13 SECTION HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -31-
</TABLE>

SCHEDULES TO THE PLAN:

Schedule 5.1 (List of Executory Contracts and Unexpired Leases to Be Rejected
under the Plan)

EXHIBITS TO THE PLAN (CONTAINED IN PLAN SUPPLEMENT):

Intercreditor Agreement A

LLC Agreement B

Management Option Plan C

New LLC Interests Registration Rights Agreement D

New PIK Notes Indenture E

New PIK Notes Registration Rights Agreement F

New Second Priority Note Agreement G

New Senior Credit Agreement H

Warrant Agreement I

Warrants Registration Rights Agreement J

-iii-

<PAGE> 5

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

<TABLE>
<S> <C>
- -------------------------------------------------------x
:
In re :
:
PSF FINANCE L.P., : Chapter 11 Case Nos.
PREMIUM STANDARD FARMS, INC., : 96-1032 (HSB) through 96-1036 (HSB)
COLLINGS FARM, INC., :
PSF FINANCE HOLDINGS INC., and : (Jointly Administered)
PREMIUM HOLDINGS CORP., :
:
Debtors. :
:
- -------------------------------------------------------x
</TABLE>

DEBTORS' SECOND AMENDED JOINT PLAN OF REORGANIZATION
UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

PSF Finance L.P., Premium Standard Farms, Inc., Collings Farm, Inc.,
PSF Finance Holdings Inc. and Premium Holdings Corp. propose the following
Second Amended Joint Plan of Reorganization pursuant to section 1121(a) of
title 11 of the United States Code:

Article I - Definition of Terms and Rules of Interpretation

Unless otherwise required by the context, the words and phrases listed
below shall have the following meanings when used in the Plan. Wherever from
the context it appears appropriate, each term stated in either the singular or
the plural shall include both the singular and the plural, and pronouns stated
in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter. Unless otherwise specified, all section, schedule or
exhibit references in the Plan are to the respective Section in, Article of, or
Schedule or Exhibit to, the Plan. The words "herein," "hereof," "hereto,"
"hereunder" and other words of similar import refer to the Plan as a whole and
not to any particular section, subsection or clause contained in the Plan. The
rules of construction contained in section 102 of the Bankruptcy Code shall
apply to the construction of the Plan. A term used herein that is not defined
herein shall have the meaning assigned to that term under the Bankruptcy Code.

I.1 Administrative Expense Claim means any claim under section 503 of the
Bankruptcy Code and any fees or charges assessed against the estates of the
Debtors under section 1930 of chapter 123 of title 28 of the United States
Code.

I.2 Allowed means (i) with respect to an Administrative Expense Claim, an
Administrative Expense Claim that is allowed or deemed allowed pursuant to
section 503 of the Bankruptcy Code; and

-1-

<PAGE> 6

(ii) with respect to a Claim or Equity Interest, a Claim or Equity Interest (a)
proof of which was timely and properly filed or, if no proof of Claim or Equity
Interest was timely and properly filed, a Claim or Equity Interest which has
been or is hereafter listed by the relevant Debtor on its Schedules as
liquidated in amount and not disputed and not contingent, and (b) that is
allowed or deemed allowed pursuant to section 502 of the Bankruptcy Code.
Unless otherwise specified herein or by order of the Bankruptcy Court,
"Allowed" shall not, for purposes of computation of distributions under the
Plan, include accrual or payment of interest on such Administrative Expense
Claim or Claim from and after the Commencement Date.

I.3 Bank Credit Agreement means that certain Credit Agreement dated as of
December 23, 1994 among Finance, Farms, Chemical Bank, as Fronting Bank, as
Administrative Agent and as Collateral Agent, and the Lenders listed therein,
as amended.

I.4 Bankruptcy Code means title 11 of the United States Code, as
applicable to the Chapter 11 Cases.

I.5 Bankruptcy Court means the United States District Court for the
District of Delaware having jurisdiction over the Chapter 11 Cases and, to the
extent of any reference under section 157 of title 28 of the United States
Code, the unit of such District Court under section 151 of title 28 of the
United States Code.

I.6 Bankruptcy Judge means the United States District Court Judge
presiding over the Chapter 11 Cases and to the extent of a reference of the
Chapter 11 Cases, the United States Bankruptcy Judge presiding over the
Chapter 11 Cases.

I.7 Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under section 2075 of title 28
of the United States Code, and any Local Rules of the Bankruptcy Court.

I.8 Bar Date means the deadline by which proofs of Claim against the
Debtors must be filed, as established by order of the Bankruptcy Court.

I.9 Bondholders' Committee means the committee of certain holders of
Secured Note Claims formed prior to the commencement of the Chapter 11 Cases
that has continued to function during the Chapter 11 Cases.

I.10 Business Day means any day other than a Saturday, a Sunday, or any
other day on which banking institutions in New York, New York are required or
authorized to close by law or executive order.

I.11 Capital Contribution Notes means certain unsecured capital
contribution notes held by CFI that were issued by the Morgan Stanley Funds
over a period of time in an aggregate outstanding amount of $20 million.

I.12 Cash means legal tender of the United States of America and
equivalents thereof.

I.13 Cash Collateral Order means the order of the Bankruptcy Court
authorizing debtor-in-possession financing and use of cash collateral.

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I.14 CFI means Collings Farm, Inc., a Missouri corporation.

I.15 Chapter 11 Cases means the cases under chapter 11 of the Bankruptcy
Code commenced by the Debtors styled In re PSF Finance L.P., et al.

I.16 Claim has the meaning set forth in section 101 of the Bankruptcy
Code.

I.17 Class A New LLC Interests means Class A units of membership interests
in Reorganized Finance issued pursuant to the LLC Agreement.

I.18 Class B New LLC Interests means Class B units of membership interests
in Reorganized Finance issued pursuant to the LLC Agreement.

I.19 Collateral Trust Agreement means that certain Amended and Restated
Collateral Trust and Intercreditor Agreement dated as of September 15, 1992, as
further amended and restated as of October 7, 1993, and as further amended as
of December 23, 1994, and as of March 12, 1995, among Morgan Stanley & Co.
Incorporated, Firstar Financial Services, Citizens Bank of Princeton, Finance
Holdings, Finance, Farms and United States Trust Company of New York, as
Collateral Trustee, as further amended.

I.20 Collateral Trustee means the collateral trustee under the Collateral
Trust Agreement.

I.21 Commencement Date means July 2, 1996, the date on which the Debtors
commenced the Chapter 11 Cases.

I.22 Confirmation Date means the date on which the Confirmation Order is
signed by the Bankruptcy Judge.

I.23 Confirmation Hearing means the hearing held by the Bankruptcy Court
on confirmation of the Plan, as such hearing may be adjourned or continued from
time to time.

I.24 Confirmation Order means the order of the Bankruptcy Court confirming
the Plan pursuant to section 1129 of the Bankruptcy Code.

I.25 Construction Claim means a Claim, whether secured or unsecured,
arising from a contract or subcontract for the construction by Finance of a
farrow/finish complex, feed mill and pork processing facility in Perico, Texas.

I.26 Debtors means, collectively, Finance, Farms, CFI, Finance Holdings
and Premium Holdings.

I.27 Debtors in Possession means the Debtors, as debtors in possession in
the Chapter 11 Cases pursuant to sections 1101 and 1107 of the Bankruptcy Code.

I.28 Disputed means, with respect to a Claim or Equity Interest, any such
Claim or Equity Interest proof of which was timely and properly filed and which
has been or hereafter is listed on the Schedules as unliquidated, disputed, or
contingent, and in either case or in the case of an Administrative Expense
Claim, any such Administrative Expense Claim, Claim or Equity Interest as to

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<PAGE> 8

which any of the Debtors or any other party in interest has interposed a timely
objection or request for estimation in accordance with the Bankruptcy Code and
Bankruptcy Rules, which objection or request for estimation has not been
withdrawn or determined by a Final Order, and any Claim as to which a proof of
claim was required to be filed by order of the Court but as to which a proof of
claim was not timely or properly filed.

I.29 Effective Date means the first Business Day on which the conditions
specified in Article XI of the Plan have been satisfied or waived.

I.30 Equity Interest means an interest in the Debtors evidenced by a
general or limited partnership interest, including Preference Unit Equity
Interests, or by common stock.

I.31 Farms means Premium Standard Farms, Inc., a Missouri corporation.

I.32 Farms/Finance Note means that certain Amended and Restated Demand
Promissory Note dated September 15, 1992, as amended and restated on October 7,
1993 executed by Farms in favor of Finance, as amended.

I.33 Farms/Finance Note Claim means a Claim against Farms arising from the
Farms/Finance Note, reduced by Claims held by Farms against Finance.

I.34 Farms Stock Loan means that certain Secured Demand Promissory Note
executed on August 13, 1991 by Theodore E. Gordon, Jr. and Dennis W. Harms in
favor of Finance in the amount of $1,000,000, secured by the promissors'
interests in the shares of the common stock of Farms.

I.35 Final Order means any order of the Bankruptcy Court as to which the
time to appeal, petition for certiorari, or move for reargument or rehearing
has expired and as to which no appeal, petition for certiorari, or other
proceeding for reargument or rehearing shall then be pending or as to which any
right to appeal, petition for certiorari, reargue or rehear shall have been
waived in writing in form and substance satisfactory to the Debtors or the
Reorganized Debtors or, in the event that an appeal, writ of certiorari,
reargument, or rehearing thereof has been sought, such order of the Bankruptcy
Court shall have been determined by the highest court to which such order was
appealed, or certiorari, reargument, or rehearing shall have been denied and
the time to take any further appeal, petition for certiorari, or move for
reargument or rehearing shall have expired; provided, however, that the
possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of
Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed
relating to such order shall not cause such order not to be a Final Order.

I.36 Finance means PSF Finance L.P., a Delaware limited partnership.

I.37 Finance Holdings means PSF Finance Holdings Inc., a Delaware
corporation.

I.38 Finance Partnership Agreement means that certain Amended and Restated
Agreement of Limited Partnership of PSF Finance L.P. dated as of September 15,
1992, as further amended and restated as of May 22, 1995, as amended.

I.39 General Partnership Interest in Finance means that certain Equity
Interest in Finance held by CFI pursuant to the Finance Partnership Agreement.

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I.40 General Unsecured Claim means any Claim that is not a Priority Tax
Claim, Other Priority Claim, Secured Bank Claim, Secured Note Claim, Secured
Claim, Other Secured Claim, Construction Claim, Farms/Finance Note Claim, or
Other Intercompany Claim.

I.41 Indenture Trustee means the United States Trust Company of
New York, as trustee under the indentures relating to each of the 1992 Notes,
the 1993 Notes and the 1994 Notes.

I.42 Intercreditor Agreement means that certain agreement among
Reorganized Finance, Newco, Chemical Bank, as administrative agent and
collateral agent for senior secured parties named therein, and the junior
collateral trustee, the form of which is contained in the Plan Supplement as
Exhibit A.

I.43 Lenders means the lenders parties to the Bank Credit Agreement.

I.44 Lien means any charge against or interest in property to secure
payment of a debt or performance of an obligation.

I.45 Limited Partnership Interests in Finance means, collectively, those
certain Equity Interests in Finance held by Finance Holdings and Premium
Holdings pursuant to the Finance Partnership Agreement.

I.46 LLC Agreement means an agreement among the members of Reorganized
Finance, the form of which is contained in the Plan Supplement as Exhibit B.

I.47 Management Option Plan means that certain plan adopted by Reorganized
Finance, the form of which is contained in the Plan Supplement as Exhibit C.

I.48 Morgan Stanley Funds means, collectively, Morgan Stanley Capital
Partners III, L.P., MSCP III 892 Investors, L.P., Morgan Stanley Capital
Investors, L.P. and The Morgan Stanley Leveraged Equity Fund II, L.P.

I.49 MS Group means Morgan Stanley Group Inc. or any affiliate of Morgan
Stanley Group Inc. (other than Premium Holdings).

I.50 New LLC Interests means, collectively, Class A New LLC Interests and
Class B New LLC Interests. As of the Effective Date and after giving effect to
the Restructuring Transactions, there shall be 10,000,000 New LLC Interests
issued and outstanding.

I.51 New LLC Interests Registration Rights Agreement means that certain
agreement governing the registration of New LLC Interests, the form of which is
contained in the Plan Supplement as Exhibit D.

I.52 New PIK Notes Indenture means the trust indenture between Newco, as
issuer, Reorganized Finance, as guarantor, and the indenture trustee, the form
of which is contained in the Plan Supplement as Exhibit E.

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<PAGE> 10

I.53 New PIK Notes means the 11% Senior Secured Notes due 2003 in an
aggregate principal amount of $117,500,000, issued pursuant to the New PIK
Notes Indenture.

I.54 New PIK Notes Registration Rights Agreement means that certain
agreement governing the registration of the New PIK Notes, the form of which is
contained in the Plan Supplement as Exhibit F.

I.55 New Second Priority Note Agreement means that certain Senior Secured
Second Priority Note Agreement between Newco, as borrower, Reorganized Finance,
as guarantor, and Morgan Stanley Group Inc., as lender, the form of which is
contained in the Plan Supplement as Exhibit G.

I.56 New Second Priority Notes means the 11% Senior Secured Notes due 2002
in an aggregate principal amount of up to $10,000,000, to be issued pursuant to
the New Second Priority Note Agreement, subject to the provisions thereof.

I.57 New Senior Credit Agreement means that certain agreement among Newco,
as borrower, Reorganized Finance, as guarantor, Chemical Bank, as issuing bank,
collateral agent and administrative agent, and the Lenders, the form of which
is contained in the Plan Supplement as Exhibit H.

I.58 Newco means Premium Standard Farms, Inc., a Delaware corporation to
be organized on or before the Effective Date, which, after giving effect to the
Restructuring Transactions, will be wholly owned by Reorganized Finance.

I.59 1995 Note means the 12 1/4% Senior Secured Note Due 1997 issued
pursuant to the Note Purchase Agreement dated December 15, 1995 among Finance,
as issuer, Farms, as guarantor, and Morgan Stanley Group Inc., as initial
purchaser.

I.60 1995 Note Claim means any Claim against Finance as obligor and
Farms as guarantor by the holder of the 1995 Note for principal and interest
due and owing on such 1995 Note.

I.61 1994 Note Claim means any Claim against Finance as obligor and
Farms as guarantor by the holder of a 1994 Note for principal and interest due
and owing on such 1994 Note.

I.62 1993 Note Claim means any Claim against Finance as obligor and
Farms as guarantor by the holder of a 1993 Note for principal and interest due
and owing on such 1993 Note.

I.63 1992 Note Claim means any Claim against Finance as obligor and
Farms as guarantor by the holder of a 1992 Note for principal and interest due
and owing on such 1992 Note.

I.64 1994 Notes means the 12 1/4% Senior Secured Exchange Notes due 2004,
governed by the Indenture dated as of March 15, 1995 among Finance, as issuer,
Farms, as guarantor, and the Indenture Trustee.

I.65 1993 Notes means the 12% Senior Secured Discount Exchange Notes due
2003, governed by the Indenture dated as of March 15, 1995 among Finance, as
issuer, Farms, as guarantor, and the Indenture Trustee.

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<PAGE> 11

I.66 1992 Notes means the 12% Senior Secured Exchange Notes due 2000,
governed by the Indenture dated as of March 15, 1995 among Finance, as issuer,
Farms, as guarantor, and the Indenture Trustee.

I.67 Other Intercompany Claim means any Claim, other than the
Farms/Finance Note Claim, held by any Debtor against any other Debtor.

I.68 Other Priority Claim means a Claim, other than a Priority Tax Claim,
entitled to priority in right of payment under section 507(a) of the Bankruptcy
Code.

I.69 Other Secured Claim means a Secured Claim other than a Secured Bank
Claim, a Secured Note Claim, a Construction Claim, or a Farms/Finance Note
Claim.

I.70 Plan means this Second Amended Joint Chapter 11 Plan of
Reorganization (including the Plan Supplement, all exhibits, supplements,
appendices and schedules), either in its present form or as it may be altered,
amended, or modified from time to time.

I.71 Plan Supplement means the supplementary volume to the Plan containing
the Exhibits to the Plan, as such exhibits may be amended from time to time
prior to the Confirmation Date.

I.72 Preference Unit Accumulated Liquidation Preference means $31,123,710,
the aggregate amount of the liquidation preference and accumulated dividends to
which holders of Preference Unit Equity Interests are entitled as of the
Commencement Date.

I.73 Preference Unit Equity Interests means the Equity Interests
represented by the Exchangeable Preference Units issued by Finance pursuant to
that certain Amended and Restated Exchangeable Preference Unit Purchase
Agreement dated as of September 15, 1992, as amended and restated as of October
7, 1993, as amended, including any rights of the holders to a liquidation
preference and accumulated dividends with respect to such Equity Interests.

I.74 Premium Holdings means Premium Holdings Corp., an Iowa corporation.

I.75 Priority Tax Claim means a Claim of a governmental unit of the kind
specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

I.76 Pro Rata Share means a proportionate share, so that the ratio of the
consideration distributed on account of an Allowed Claim or Allowed Equity
Interest in a class to the amount of such Allowed Claim or Allowed Equity
Interest is the same as the ratio of the amount of the consideration
distributed on account of all Allowed Claims or Allowed Equity Interests in
such class to the amount of all Allowed Claims or Allowed Equity Interests in
such class.

I.77 Releasees means all present and former officers, directors,
attorneys, agents, advisors, partners and officers and directors of such
partners, of or to the Debtors and consultants who provide management personnel
or who serve as members of management of any of the Debtors.

I.78 Reorganized Debtors means, collectively, Premium Holdings, Finance
Holdings, CFI and Reorganized Finance on and after the Effective Date after
giving effect to the Restructuring Transactions. A "Reorganized Debtor" means
each of Premium Holdings, Finance Holdings, CFI and

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<PAGE> 12

Reorganized Finance, individually, on and after the Effective Date after giving
effect to the Restructuring Transactions.

I.79 Reorganized Finance means a newly formed limited liability company,
called PSF Holdings, L.L.C., organized under Delaware law into which Finance
shall be merged on the Effective Date pursuant to the Restructuring
Transactions.

I.80 Restructuring Transactions means those transactions described in
Section 7.1 herein.

I.81 Schedules means the schedules of assets and liabilities and the
statements of financial affairs filed by the Debtors as required by section 521
of the Bankruptcy Code and Bankruptcy Rule 1007, and all amendments thereto
through the Confirmation Date.

I.82 Secured Bank Claim means a Claim against Finance as obligor and Farms
as guarantor, arising from or relating to the Bank Credit Agreement and
Collateral Trust Agreement. The Allowed amount of such a Claim shall include
all unpaid principal and interest accrued at the non-default rate specified in
the Bank Credit Agreement through the Effective Date, and reasonable fees and
expenses to the extent provided for in the Bank Credit Agreement.

I.83 Secured Claim means a Claim secured by a Lien on any property of the
estate of any Debtor, as determined in accordance with section 506(a) of the
Bankruptcy Code, or, in the event that such Claim is subject to setoff under
section 553 of the Bankruptcy Code, to the extent of such setoff.

I.84 Secured Note Claims means, collectively, the 1992 Note Claim, the
1993 Note Claim, the 1994 Note Claim and the 1995 Note Claim.

I.85 Secured Notes means, collectively, the 1992 Notes, the 1993 Notes,
the 1994 Notes and the 1995 Note.

I.86 Warrant Agreement means that certain Agreement regarding warrants for
the purchase of New LLC Interests, the form of which is contained in the Plan
Supplement as Exhibit I.

I.87 Warrants means certain rights to purchase up to 2,048,192 New LLC
Interests pursuant to the provisions of the Warrant Agreement.

I.88 Warrants Registration Rights Agreement means that certain agreement
governing the registration of Warrants, the form of which is contained in the
Plan Supplement as Exhibit J.

Article II - Treatment of Administrative Expense Claims

II.1 Professional Compensation and Reimbursement Claims. All
entities that are awarded compensation or reimbursement of expenses by the
Bankruptcy Court under subsections 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5)
of the Bankruptcy Code shall be paid in full in such amounts as are Allowed by
the Bankruptcy Court (a) upon the later of (i) the Effective Date and (ii) the
date upon which an order granting such Administrative Expense Claim is signed
by the Bankruptcy Judge, or (b) upon such other terms as may be mutually agreed
to between such holder of an

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<PAGE> 13

Administrative Expense Claim and the Debtors or, on and after the Effective
Date, the Reorganized Debtors.

II.2 Other Administrative Expense Claims. On the Effective Date,
each holder of an Administrative Expense Claim other than those Claims provided
for under Section 2.1 shall be distributed on account of such Administrative
Expense Claim an amount in Cash equal to the full amount of such Administrative
Expense Claim, except to the extent that any entity entitled to payment of such
Administrative Expense Claim agrees to a different treatment of such
Administrative Expense Claim; provided, however, that Administrative Expense
Claims representing liabilities incurred in the ordinary course of business by
a Debtor in Possession or liabilities arising under loans or advances to a
Debtor in Possession, whether or not incurred in the ordinary course of
business, shall be paid by such Reorganized Debtor in accordance with the terms
and subject to the conditions of any agreements governing, instruments
evidencing, or other documents relating to, such transactions.

II.3 Compensation to Attorneys and Advisors to the Bondholders'
Committee, and the Indenture Trustee and the Collateral Trustee.
Notwithstanding anything contained in this Plan to the contrary, the fees and
expenses of the legal and financial advisors to the Bondholders' Committee
shall be paid as set forth in the Cash Collateral Order. To the extent not
previously paid during the Chapter 11 Cases pursuant to the Cash Collateral
Order, the reasonable fees and expenses incurred on or after the Commencement
Date by attorneys and financial advisors retained by the Bondholders' Committee
with the consent of the Debtors prior to the Commencement Date and the
reasonable fees and expenses incurred by the Indenture Trustee and the
Collateral Trustee shall be paid (without application by or on behalf of any
such professionals to the Bankruptcy Court, and without notice and a hearing,
unless specifically required by the Bankruptcy Court upon request of a party in
interest) by Reorganized Finance and Newco as an Administrative Expense Claim
under the Plan. If there is a dispute about the amount of fees and expenses to
be paid to any such professional, the amount of any such fees and expenses
shall be determined by the Bankruptcy Court.

Article III - Classification of Claims and Equity Interests

Claims and Equity Interests are classified for all purposes, including
voting, confirmation, and distribution pursuant to the Plan, as follows:

CLASS Status
<S> <C>
Class 1 - Priority Tax Claims
Subclass 1.A - Finance Priority Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 1.B - Farms Priority Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 1.C - Premium Holdings Priority Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 1.D - Finance Holdings Priority Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 1.E - CFI Priority Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Class 2 - Other Priority Claims
Subclass 2.A - Finance Other Priority Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 2.B - Farms Other Priority Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 2.C - Premium Holdings Other Priority Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 2.D - Finance Holdings Other Priority Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 2.E - CFI Other Priority Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Class 3 - Secured Bank Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Class 4 - Secured Note Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired

</TABLE>

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<TABLE>
<S> <C>
Class 5 - Other Secured Claims
Subclass 5.A - Other Secured Claims Against Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 5.B - Other Secured Claims Against Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Class 6 - Construction Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Class 7 - General Unsecured Claims
Subclass 7.A - Finance General Unsecured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 7.B - Farms General Unsecured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 7.C - Premium Holdings General Unsecured Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 7.D - Finance Holdings General Unsecured Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Subclass 7.E - CFI General Unsecured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Class 8 - Intercompany Claims
Subclass 8.A - Farms/Finance Note Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Subclass 8.B - Other Intercompany Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Class 9 - Equity Interests in Finance
Subclass 9.A - Preference Unit Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Subclass 9.B - Premium Holdings' Limited Partnership Interests in Finance . . . . . . . . . . . . . . . . . . Impaired
Subclass 9.C - Finance Holdings' Limited Partnership Interests in Finance . . . . . . . . . . . . . . . . . . Impaired
Subclass 9.D - CFI's General Partnership Interest in Finance. . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Class 10 - Equity Interests in Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impaired
Class 11 - Equity Interests in Premium Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Class 12 - Equity Interests in Finance Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired
Class 13 - Equity Interests in CFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unimpaired

</TABLE>

Article IV Treatment of Claims and Equity Interests and Voting

The Allowed Claims against, and Equity Interests in, the Debtors shall
receive the treatment and shall be entitled to vote, as follows:

IV.1 CLASS 1 - PRIORITY TAX CLAIMS

Treatment: To the extent unpaid prior to the Effective Date, all
Allowed Priority Tax Claims shall be paid in full by the applicable
Reorganized Debtor if against Finance Holdings, Premium Holdings or
CFI, and, with respect to such Claims against Finance or Farms, by
Newco, in the ordinary course of business in accordance with the terms
and conditions of any law, regulation, agreement, instrument or other
document relating to such Claims.

Voting: Class 1 is unimpaired by the Plan. Each holder of an Allowed
Priority Tax Claim is presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.

IV.2 CLASS 2 - OTHER PRIORITY CLAIMS

Treatment: To the extent unpaid prior to the Effective Date, all
Allowed Other Priority Claims shall be paid in full by the applicable
Reorganized Debtor if against Finance Holdings, Premium Holdings or
CFI, and, with respect to such Claims against Finance or Farms, by
Newco in the ordinary course of business in accordance with the terms
and conditions of any law, regulation, agreement, instrument or other
document relating to such Claims.

Voting: Class 2 is unimpaired by the Plan. Each holder of an Allowed
Other Priority Claim is presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.

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IV.3 CLASS 3 - SECURED BANK CLAIMS

Treatment: On the Effective Date, each holder of an Allowed Secured
Bank Claim shall receive, in full satisfaction of such Allowed Claim,
a payment in Cash equal to the full amount of such Allowed Claim.

Release of Liens: Contemporaneously with the payment of its Allowed
Secured Bank Claim in accordance with this Section 4.3, each holder of
a Secured Bank Claim shall be deemed to have relinquished and released
(i) all of the Liens securing such Claim and (ii) all Claims based
upon guarantees of collection, payment, or performance of any
obligation by Farms.

Voting: Class 3 is impaired by the Plan. Each holder of an Allowed
Secured Bank Claim is entitled to vote to accept or reject the Plan.

IV.4 CLASS 4 - SECURED NOTE CLAIMS

Treatment: On the Effective Date and in accordance with the
Restructuring Transactions, each holder of an Allowed Secured Note
Claim shall receive, in full satisfaction of such Allowed Claim, its
Pro Rata Share of (I) $101,496,978 in principal amount of the New PIK
Notes and (ii) 9,216,789 New LLC Interests, which shall consist of
Class A New LLC Interests and Class B New LLC Interests.

Classes of New LLC Interests: All holders of Allowed Secured Note
Claims (other than MS Group) shall receive Class A New LLC Interests.
MS Group shall receive Class B New LLC Interests on account of its
Allowed Secured Note Claims held on the Effective Date.

Release of Liens: As of the Effective Date, each holder of a Secured
Note Claim shall be deemed to have relinquished and released (i) all
of the Liens securing such Claim and (ii) all Claims based upon
guarantees of collection, payment or performance of any obligation by
Farms.

Voting: Class 4 is impaired by the Plan. Each holder of an Allowed
Secured Note Claim is entitled to vote to accept or reject the Plan.

IV.5 CLASS 5 - OTHER SECURED CLAIMS

Treatment: Notwithstanding any contractual provision or applicable
non-bankruptcy law that entitles the holder of an Allowed Other
Secured Claim to demand or receive payment of such Claim prior to the
stated maturity of such Claim from and after the occurrence of a
default, each Allowed Other Secured Claim shall be reinstated as
against the applicable Reorganized Debtor (or, pursuant to the
Restructuring Transactions, against Newco) and rendered unimpaired in
accordance with section 1124 of the Bankruptcy Code.

Voting: Class 5 is unimpaired by the Plan. Each holder of an Allowed
Other Secured Claim is presumed to have accepted the Plan and is not
entitled to vote to accept or reject the Plan.

IV.6 CLASS 6 - CONSTRUCTION CLAIMS

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Treatment: On the Effective Date, each holder of an Allowed
Construction Claim shall receive, in full satisfaction of such Allowed
Claim, a payment in Cash equal to the full amount of such Allowed
Claim.

Release of Liens (if any): Upon payment in full of an Allowed
Construction Claim, each holder of such Claim shall be deemed to have
relinquished and released any Lien securing such Claim, and shall,
prior to receiving any distribution under the Plan, execute
appropriate written documentation effectuating or confirming such
relinquishment or release.

Voting: Class 6 is impaired by the Plan. Each holder of an Allowed
Construction Claim is entitled to vote to accept or reject the Plan.

IV.7 CLASS 7 - GENERAL UNSECURED CLAIMS

Treatment: To the extent unpaid prior to the Effective Date, all
Allowed General Unsecured Claims shall be paid in full by the
applicable Reorganized Debtor if against Finance Holdings, Premium
Holdings or CFI, and, with respect to such Claims against Finance or
Farms, by Newco in the ordinary course of business in accordance with
the terms and conditions of any agreement, instrument or other
document relating to such Claims.

Voting: Class 7 is unimpaired by the Plan. Each holder of an Allowed
General Unsecured Claim is presumed to have accepted the Plan and is
not entitled to vote to accept or reject the Plan.

IV.8 CLASS 8 - INTERCOMPANY CLAIMS

SUBCLASS 8.A - FARMS/FINANCE NOTE CLAIM

Treatment: On the Effective Date, pursuant to the Restructuring
Transactions, the Farms/Finance Note shall be transferred and assigned
to Reorganized Finance, which shall contribute such note to Newco.
Newco shall receive, by process of law and in satisfaction of the
indebtedness represented by the Farms/Finance Note, and by enforcement
of the Liens on Farms' assets to secure the payment of such
indebtedness, all of the assets of Farms subject to the liabilities as
provided under the Plan.

Voting: Subclass 8.A is impaired by the Plan. The holder of the
Farms/Finance Note Claim is entitled to vote to accept or reject the
Plan.

SUBCLASS 8.B - OTHER INTERCOMPANY CLAIMS

Treatment: On the Effective Date, each holder of an Allowed Other
Intercompany Claim shall receive a distribution of $1,000 per such
claim.

Voting: Subclass 8.B is impaired by the Plan. Each holder of an
Allowed Other Intercompany Claim is entitled to vote to accept or
reject the Plan.

IV.9 CLASS 9 - EQUITY INTERESTS IN FINANCE

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SUBCLASS 9.A - PREFERENCE UNIT EQUITY INTERESTS IN FINANCE

Treatment: On the Effective Date, pursuant to the Restructuring
Transactions, each holder of an Allowed Preference Unit Equity
Interest shall receive, in full satisfaction of such Allowed Equity
Interest, its Pro Rata Share of (i) $5,321,204 in principal amount of
the New PIK Notes and (ii) 483,211 New LLC Interests, which shall
consist of Class A New LLC Interests and Class B New LLC Interests.

Classes of New LLC Interests: All holders of Allowed Preference Unit
Equity Interests (other than MS Group) shall receive Class A New LLC
Interests. MS Group shall receive Class B New LLC Interests on
account of its Allowed Preference Unit Equity Interests held on the
Effective Date.

Voting: Subclass 9.A is impaired by the Plan. Each holder of an
Allowed Preference Unit Equity Interest is entitled to vote to accept
or reject the Plan.

SUBCLASS 9.B - PREMIUM HOLDINGS' LIMITED PARTNERSHIP INTERESTS IN
FINANCE

Treatment: On the Effective Date, pursuant to the Restructuring
Transactions, Premium Holdings, as holder of Allowed Limited
Partnership Interests in Finance, shall receive, in full satisfaction
of such Equity Interests, (i) 78,000 Class A New LLC Interests and
(ii) Warrants to purchase 532,530 Class A New LLC Interests.

Voting: Subclass 9.B is impaired by the Plan. Premium Holdings, as
holder of Allowed Limited Partnership Interests in Finance, is
entitled to vote to accept or reject the Plan.

SUBCLASS 9.C - FINANCE HOLDINGS' LIMITED PARTNERSHIP INTERESTS IN
FINANCE

Treatment: On the Effective Date, pursuant to the Restructuring
Transactions, Finance Holdings, as holder of Allowed Limited
Partnership Interests in Finance, shall receive, in full satisfaction
of such Equity Interests, (i) 219,000 Class B New LLC Interests and
(ii) Warrants to purchase 1,495,180 Class B New LLC Interests.

Voting: Subclass 9.C is impaired by the Plan. Finance Holdings, as
holder of Allowed Limited Partnership Interests in Finance, is
entitled to vote to accept or reject the Plan.

SUBCLASS 9.D - CFI'S GENERAL PARTNERSHIP INTEREST IN FINANCE

Treatment: On the Effective Date, pursuant to the Restructuring
Transactions, CFI, as holder of Allowed General Partnership Interest
in Finance, shall receive, in full satisfaction of such Equity
Interest, (i) 3,000 Class B New LLC Interests and (ii) Warrants to
purchase Class B 20,482 New LLC Interests.

Voting: Subclass 9.D is impaired by the Plan. CFI, as holder of
Allowed General Partnership Interest in Finance, is entitled to vote
to accept or reject the Plan.

IV.10 CLASS 10 - EQUITY INTERESTS IN FARMS

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Treatment: On the Effective Date, all Allowed Equity Interests in
Farms shall be canceled and the holders thereof shall receive no
distribution on account of such interests.

Voting: Class 10 is impaired by the Plan. Each holder of an Allowed
Equity Interest in Farms is presumed to have rejected the Plan and is
not entitled to vote to accept or reject the Plan.

IV.11 CLASS 11 - EQUITY INTERESTS IN PREMIUM HOLDINGS

Treatment: On the Effective Date, each holder of an Allowed Equity
Interest in Premium Holdings shall retain such interest.

Voting: Class 11 is unimpaired by the Plan. The holder of an Allowed
Equity Interest in Premium Holdings is presumed to have accepted the
Plan and is not entitled to vote to accept or reject the Plan.

IV.12 CLASS 12 - EQUITY INTERESTS IN FINANCE HOLDINGS

Treatment: On the Effective Date, each holder of an Allowed Equity
Interest in Finance Holdings shall retain such interest.

Voting: Class 12 is unimpaired by the Plan. Each holder of an
Allowed Equity Interest in Finance Holdings is presumed to have
accepted the Plan and is not entitled to vote to accept or reject the
Plan.

IV.13 CLASS 13 - EQUITY INTERESTS IN CFI

Treatment: On the Effective Date, each holder of an Allowed Equity
Interest in CFI shall retain such interest.

Voting: Class 13 is unimpaired by the Plan. Each holder of an
Allowed Equity Interest in CFI is presumed to have accepted the Plan
and is not entitled to vote to accept or reject the Plan.

ARTICLE V - EXECUTORY CONTRACTS AND UNEXPIRED LEASES

V.1 EXECUTORY CONTRACTS AND UNEXPIRED LEASES. Pursuant to
sections 365(a), 365(f) and 1123(b)(2) of the Bankruptcy Code, all executory
contracts and unexpired leases that exist between a Debtor and any person,
including the Settlement Agreement and Consent Order dated January 29, 1996
between the Missouri Department of Natural Resources and Farms and any other
agreements with the State of Missouri or its subdivisions, shall be deemed
assumed by the applicable Reorganized Debtor, and, subject to the consent of
the Bondholders' Committee, those executory contracts and unexpired leases to
which Farms or Finance is a party shall be deemed assumed and assigned to Newco
pursuant to the Restructuring Transactions, except for any executory contract
or unexpired lease (i) which has been rejected pursuant to an order of the
Bankruptcy Court entered prior to the Confirmation Date, (ii) as to which a
motion for approval of the rejection of such contract or lease has been filed
and served prior to the Confirmation Date, or (iii) which is set forth in
Schedule 5.1.

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V.2 APPROVAL OF ASSUMPTION OR REJECTION OF LEASES AND CONTRACTS.
Entry of the Confirmation Order shall constitute (i) the approval, pursuant to
sections 365(a) and 365(f) of the Bankruptcy Code, of the assumption by the
applicable Reorganized Debtor, or, subject to the consent of the Bondholders'
Committee, the assumption and assignment to Newco of those executory contracts
and unexpired leases to which Farms or Finance is a party, including the
Settlement Agreement and Consent Order dated January 29, 1996 between the
Missouri Department of Natural Resources and Farms and any other agreements
with the State of Missouri or its subdivisions, pursuant to Section 5.1 of this
Plan, (ii) the extension of time pursuant to section 365(d)(4) of the
Bankruptcy Code within which the applicable Reorganized Debtor may assume,
assume and assign to Newco those unexpired leases to which Farms or Finance is
a party, or reject any unexpired leases specified in Section 5.1 of this Plan
through the date of entry of an order approving such assumption, assumption and
assignment, or rejection of such unexpired leases, and (iii) the approval,
pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code of the
rejection of the executory contracts and unexpired leases set forth in Schedule
5.1 that are rejected pursuant to Section 5.1 of this Plan.

V.3 CURE OF DEFAULTS. On the Effective Date, or as soon
thereafter as is practicable, in accordance with section 365(b)(1) of the
Bankruptcy Code, the applicable Reorganized Debtor (or Newco, with respect to
contracts and leases assumed by Finance or Farms) shall cure any and all
defaults under any executory contract or unexpired lease assumed, and under
those executory contracts and unexpired leases to which Farms or Finance is a
party, that are assumed and assigned to Newco, pursuant to the Plan.

V.4 BAR DATE FOR FILING PROOFS OF CLAIM RELATING TO EXECUTORY
CONTRACTS AND UNEXPIRED LEASES REJECTED PURSUANT TO THE PLAN. Claims arising
out of the rejection of an executory contract or unexpired lease pursuant to
this Article shall be filed with the Bankruptcy Court and served upon attorneys
for the Debtors no later than thirty days after the later of (i) notice of
entry of an order approving the rejection of such contract or lease and (ii)
notice of entry of the Confirmation Order. Any Claims not filed within such
time shall be forever barred from assertion against the Reorganized Debtors,
Newco, and their respective properties and agents, successors and assigns.

V.5 INSURANCE POLICIES. All the Debtors' insurance policies and
any agreements, documents, or instruments relating thereto, including, without
limitation, property, general liability, feed mill property, boiler and
machinery, automobile and physical damage, foreign liability, commercial
general liability, excess liability, commercial crime, fiduciary liability,
title insurance and directors' and officers' liability policies, and any
retrospective premium rating plans relating to such policies, are treated as
executory contracts under the Plan and are hereby assumed by the applicable
Debtor, and, subject to the consent of the Bondholders' Committee, those
policies, instruments and agreements to which Farms or Finance is a party, are
assumed and assigned to Newco pursuant to sections 365(a), 365(f) and
1123(b)(2) of the Bankruptcy Code. Nothing contained in this Section shall
constitute a waiver of any claim, right or cause of action that the applicable
Debtor may hold against the insurer under any policy of insurance, or against
the holder of Claims covered by insurance policies.

V.6 INDEMNIFICATION OBLIGATIONS.

(a) CONTINUATION OF INDEMNIFICATION OBLIGATIONS. Except as provided
in Section 5.6(b), the obligations of each Debtor to indemnify, reimburse, or
limit the liability of its present

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and any former directors, officers, general partners, partners, employees, or
consultants who provide management personnel or who serve as members of
management of any of the Debtors that were directors, officers, general
partners, partners, employees, or such consultants, respectively (each, an
"Indemnified Person"), on or after the Commencement Date against any
obligations pursuant to such Debtor's articles of incorporation, by-laws,
partnership agreements, applicable state law, or specific agreement, or any
combination of the foregoing, shall survive confirmation of the Plan, remain
unaffected thereby, and not be discharged irrespective of whether
indemnification, reimbursement, or limitation is owed in connection with an
event occurring before, on, or after the Commencement Date.

(b) TERMINATION OF CERTAIN INDEMNIFICATION OBLIGATIONS. Notwithstanding
any other provisions of the Plan, including, without limitation, Sections 5.1
or 5.6(a), all obligations of the Debtors to indemnify, or to pay contribution
or reimbursement to any Indemnified Person, whether pursuant to its respective
articles of incorporation, by-laws, partnership agreements, applicable law, or
specific agreement, or any combination of the foregoing, in respect of all past,
present and future actions, suits and proceedings against any such Indemnified
Person based upon any act or omission related to service with, for or on behalf
of any of the Debtors or Debtors in Possession or any present or former
affiliate of any Debtor arising out of or related, directly or indirectly, to
any action, suit or proceeding against any such person (i) brought by any person
which is a present or former purchaser, seller, underwriter or owner, in each
case, acting in such capacity, of present or former securities of any Debtor or
of any present or former affiliate thereof, including, without limitation, the
Morgan Stanley Funds or brought by or in the name of any Debtor, in each case,
arising out of or related to any alleged right of rescission of, or damages
arising from, any purchase or sale of such securities under federal or state
securities laws (whether statutory or otherwise) or (ii) brought by any other
person (a "Third Party Claimant") against an Indemnified Person asserting claims
for contribution, reimbursement or indemnity by such Third Party Claimant
arising out of or related to any action, suit or proceeding against such Third
Party Claimant which, had it been brought against an Indemnified Person, would
be described in clause (i) above (any such action, suit, claim or proceeding
described in any of clauses (i) or (ii), an "Excluded Claim"), and any and all
such undertakings and agreements to provide any indemnification, contribution or
reimbursement with respect to any Excluded Claim shall be terminated, and the
Reorganized Debtors and Newco shall have no obligation thereunder pursuant to
this Plan or otherwise.

V.7 COMPENSATION AND BENEFIT PROGRAMS. Unless otherwise modified,
terminated, or rejected prior to the Effective Date, all employment, consulting
and severance practices and policies, and all compensation and benefit plans,
policies and programs of the Debtors applicable to their present and former
directors, officers, employees, consultants, or independent contractors,
including, without limitation, all savings plans, retirement plans, health care
plans, severance benefit plans, incentive plans, workers compensation programs,
and life, disability and other insurance plans, but excluding options for
receipt of stock and/or partnership interests in any of the Debtors, (i) are
treated as executory contracts under the Plan and are hereby assumed by the
applicable Debtor, (ii) subject to the consent of the Bondholders' Committee,
with respect to those executory contracts to which Farms or Finance is a party,
are assumed and assigned to Newco pursuant to sections 365(a), 365(f) and
1123(b)(2) of the Bankruptcy Code, (iii) survive confirmation of the Plan and
remain unaffected thereby, and (iv) shall not be discharged in accordance with
section 1141 of the Bankruptcy Code.

V.8 RETIREE BENEFITS. Payments, if any, due to any person for the
purpose of providing reimbursement payments for retired employees and their
spouses and dependents for medical, surgical, or hospital care benefits, or
benefits in the event of sickness, accident, disability, or death under any

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plan, fund, or program (through the purchase of insurance or otherwise)
maintained or established in whole or in part by the applicable Debtor prior to
the Commencement Date shall be continued for the duration of the period such
Debtor has obligated itself to provide such benefits.

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ARTICLE VI - ALLOWANCE OF SECURED BANK CLAIMS AND SECURED NOTE CLAIMS

VI.1 SECURED BANK CLAIMS. The Secured Bank Claims shall be Allowed
Claims in the principal amount of approximately $67,153,000, plus interest at
the non-default rate, fees, expenses and unreimbursed draws on the letter of
credit issued under the Bank Credit Agreement.

VI.2 1992 NOTE CLAIMS. The 1992 Note Claims shall be Allowed Claims in
the aggregate amount of $129,896,640, representing principal plus accrued but
unpaid interest on the 1992 Notes to the Commencement Date.

VI.3 1993 NOTE CLAIMS. The 1993 Note Claims shall be Allowed Claims in
the aggregate amount of $202,860,976, representing principal plus accrued but
unpaid interest on the 1993 Notes to the Commencement Date.

VI.4 1994 NOTE CLAIMS. The 1994 Note Claims shall be Allowed Claims in
the aggregate amount of $106,666,680, representing principal plus accrued but
unpaid interest on the 1994 Notes to the Commencement Date.

VI.5 1995 NOTE CLAIM. The 1995 Note Claim shall be an Allowed Claim in
the amount of $6,933,334, representing principal plus accrued but unpaid
interest on the 1995 Note to the Commencement Date.

ARTICLE VII - IMPLEMENTATION OF THE PLAN

VII.1 RESTRUCTURING TRANSACTIONS. On or as of the Effective Date,
the distributions provided for under the Plan shall be effectuated pursuant to
the following Restructuring Transactions in the following order:

(a) Finance shall be merged with and into Reorganized Finance,
with Reorganized Finance surviving and Reorganized Premium Holdings,
Reorganized Finance Holdings, Reorganized CFI and holders of Allowed Preference
Unit Equity Interests becoming the initial members of Reorganized Finance with
economic interests in the form of New LLC Interests substantially identical to
their partnership interests in Finance, including that the former holders of
Allowed Preference Unit Equity Interests shall have the right to receive
distributions totaling the Preference Unit Accumulated Liquidation Preference
with respect to their membership interests prior to any of Reorganized Finance,
Reorganized Holdings or Reorganized CFI being entitled to receive any
distribution with respect to their membership interests, except that the
management of Reorganized Finance shall be vested in all of its members, and
all of the members of Reorganized Finance shall have limited liability;

(b) Thereafter, (i) holders of Allowed Secured Note Claims shall
contribute, on a pro rata basis, all but $101,496,978 of their Secured Note
Claims in exchange for New LLC Interests in Reorganized Finance as members,
(ii) former holders of Allowed Preference Unit Equity Interests in Finance will
have a pro rata portion of their New LLC Interests in Reorganized Finance
redeemed in exchange for the obligation of Reorganized Finance to pay
$5,321,204 ("New LLC Debt") and (iii) the LLC Agreement shall be deemed adopted
by all of the members after giving effect to the foregoing clauses (i) and
(ii), and, as so adopted, shall reflect the fact that, following the admission
of holders of Allowed Secured Note Claims as members and the partial redemption
of the interests of former holders of Allowed Preference Unit Equity Interests,
such persons as a group will collectively hold (i) as

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members of Reorganized Finance 97% of the outstanding New LLC Interests of
Reorganized Finance and (ii) debt of Reorganized Finance in the total amount of
$106,818,182, in each case, in aggregate; Reorganized Premium Holdings,
Reorganized Finance Holdings and Reorganized CFI will collectively hold 3% of
the outstanding New LLC Interests of Reorganized Finance. As holders of Class
B New LLC Interests, MS Group (including Reorganized Finance Holdings and
Reorganized CFI) shall have no right to participate in the management of
Reorganized Finance;

(c) Reorganized Premium Holdings shall receive Warrants to
purchase Class A New LLC Interests, and Reorganized Finance Holdings and
Reorganized CFI shall receive Warrants to purchase Class B New LLC Interests;

(d) Reorganized Finance shall transfer to Newco, in exchange for
all the capital stock of Newco, all of the assets of Finance (including the
Farms/Finance Note and all the capital stock of Princeton Development Corp.),
subject to all of the liabilities of Reorganized Finance (including the New LLC
Debt issued to former holders of Allowed Preference Unit Equity Interests and
the remaining Allowed Secured Note Claims that were not exchanged for New LLC
Interests, which indebtedness totals $106,818,182). Moreover, Newco shall
assume, and Reorganized Finance shall thereafter have no further obligation or
responsibility for, such liabilities (other than as guarantor), and Newco shall
issue to the holders of the New LLC Debt and Allowed Secured Note Claims, in
substitution of such obligations assumed by Newco, New PIK Notes in an
aggregate principal amount of $106,818,182;

(e) Newco shall receive, in satisfaction of the Farms/Finance Note
(that was contributed by Reorganized Finance to Newco), all of the assets of
Farms subject to all of the remaining liabilities of Farms, and, as of the
Effective Date, Farms shall be dissolved; and

(f) The Morgan Stanley Funds shall collectively pay $20 million in
cash to Newco in exchange for New PIK Notes having an aggregate principal
amount of $10,681,818 and the cancellation by CFI of the Capital Contribution
Notes.

The foregoing Restructuring Transactions shall be effective as of the Effective
Date pursuant to the Confirmation Order without any further action by the
members, stockholders, directors, or partners of the Reorganized Debtors, Newco
or Farms.

VII.2 POST-EFFECTIVE DATE FINANCING.

(a) Chemical Bank, as agent for the Lenders, shall provide an aggregate of
$90 million in financing for the working capital and operating needs of Newco,
subject to and in accordance with the terms of the New Senior Credit Agreement
and any commitments relating thereto, the form of which is contained in the
Plan Supplement as Exhibit H. The New Senior Credit Agreement shall provide a
revolving credit facility in the amount of $60 million and a term loan in the
amount of $30 million. The obligations of Newco under the New Senior Credit
Agreement shall be guaranteed by Reorganized Finance and shall be secured by a
first priority perfected lien on substantially all of the assets of Newco and
Reorganized Finance. Neither the Plan nor a vote by a Lender to accept the
Plan shall constitute a commitment or other obligation of or by a Lender to
provide such financing.

(b) Morgan Stanley Group Inc. shall execute the New Second Priority Note
Agreement, the form of which is contained in the Plan Supplement as Exhibit G,
pursuant to which Morgan Stanley

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Group Inc. will, subject to the conditions contained therein, purchase up to
$10 million in the New Second Priority Notes if the sum of (i) the unused
amount available under the New Senior Credit Agreement and (ii) total Cash and
certain short-term investments of Newco is less than $5 million. The New
Second Priority Notes, if issued, would be guaranteed by Reorganized Finance
and would be secured by a second priority lien on substantially all of the
assets of Newco. Neither the Plan nor a vote by Morgan Stanley Group Inc. to
accept the Plan shall constitute a commitment or other obligation of or by
Morgan Stanley Group Inc. to enter into the New Second Priority Note Agreement.

VII.3 ISSUANCE OF NEW SECURITIES. The issuance of the following
securities and notes under the Plan by Reorganized Finance and Newco, in
satisfaction of Allowed Claims and Equity Interests, is hereby authorized
without further act or action under applicable law, regulation, order, or rule:

(a) 10,000,000 New LLC Interests shall be issued and distributed
pursuant to the Plan, which shall consist of Class A
New LLC Interests and Class B New LLC Interests;

(b) 1,000 shares of Newco, all of which shall be issued and
distributed pursuant to the Plan;

(d) the New PIK Notes; and

(e) the New LLC Debt issued pursuant to the Restructuring
Transactions.

VII.4 REGISTRATION OF NEW PIK NOTES, NEW LLC INTERESTS AND WARRANTS.
Each entity receiving a distribution of New PIK Notes, New LLC Interests or
Warrants as of the Effective Date shall have the right to become a party to the
New PIK Notes Registration Rights Agreement, the New LLC Interests Registration
Rights Agreement or the Warrants Registration Rights Agreement, respectively,
the forms of which are contained in the Plan Supplement as Exhibits F, D and J,
respectively.

ARTICLE VIII - GOVERNANCE AND MANAGEMENT OF
REORGANIZED FINANCE, NEWCO AND OTHER REORGANIZED DEBTORS

VIII.1 GENERAL. On the Effective Date, the management, control and
operation of each of Reorganized Finance, Newco, Reorganized Premium Holdings,
Reorganized Finance Holdings, and Reorganized CFI shall become the general
responsibility, respectively, of the members of Reorganized Finance, and the
Boards of Directors of Newco, Reorganized Premium Holdings, Reorganized Finance
Holdings and Reorganized CFI.

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VIII.2 MEMBERS AND OFFICERS OF REORGANIZED FINANCE.

The administration and regulation of Reorganized Finance's
affairs, voting by members, and admission of members shall be governed by the
LLC Agreement, a form of which is contained in the Plan Supplement as Exhibit B.
The term of the LLC Agreement shall be fifty years, subject to extension as
provided in the LLC Agreement, unless earlier terminated pursuant to its terms
or under applicable law.

On the Effective Date, the members of Reorganized Finance shall
be the holders of Allowed Secured Note Claims, the holders of Allowed Preference
Unit Equity Interests, Reorganized Premium Holdings, Reorganized Finance
Holdings and Reorganized CFI. The management of Reorganized Finance shall be
vested in its members, except that, following the admission of holders of
Allowed Secured Note Claims as members (pursuant to Section 7.1(b) of the
Restructuring Transactions), MS Group (including Reorganized Finance Holdings
and Reorganized CFI) shall receive Class B New LLC Interests which shall be
non-voting (and all New LLC Interests acquired by them upon exercise of
Warrants shall also be Class B New LLC Interests and shall be non-voting), and
shall have no right to participate in the management of Reorganized Finance.
Each member of Reorganized Finance shall have limited liability.

The initial officers of Reorganized Finance will be the
individuals, satisfactory to the Bondholders' Committee, whose names shall be
disclosed prior to the Confirmation Hearing.

VIII.3 DIRECTORS AND OFFICERS OF NEWCO AND REORGANIZED DEBTORS.

(a) BOARD OF DIRECTORS OF NEWCO. The initial Board of
Directors of Newco shall consist of one (1) management director and five (5)
directors named by the Bondholders' Committee. The names of such directors
shall be disclosed prior to the Confirmation Hearing. Subsequent Boards of
Directors of Newco shall be elected by Reorganized Finance, as sole
shareholder, which shall be managed by the holders of Class A New LLC
Interests.

(b) BOARDS OF DIRECTORS OF REORGANIZED DEBTORS. The initial
Boards of Directors of Reorganized Premium Holdings, Reorganized Finance
Holdings and Reorganized CFI shall be appointed by their respective
stockholders and shall consist of the individuals whose names shall be
disclosed prior to the Confirmation Hearing. Each of the members of such
initial Boards of Directors shall serve in accordance with the articles of
incorporation or bylaws of such Reorganized Debtor.

(c) OFFICERS OF NEWCO AND REORGANIZED DEBTORS. The initial
officers of Newco shall be the individuals, satisfactory to the Bondholders'
Committee, whose names shall be disclosed prior to the Confirmation Hearing.
The initial officers of Reorganized Finance Holdings and Reorganized CFI shall
be those individuals whose names shall be disclosed prior to the Confirmation
Hearing, and the initial officers of Reorganized Premium Holdings shall be those
individuals who were its officers immediately prior to the Effective Date.
Thereafter, such officers shall serve in accordance with any employment
agreement with such entity and applicable nonbankruptcy law.

VIII.4 ARTICLES OF INCORPORATION OF NEWCO AND REORGANIZED DEBTORS.
The articles of incorporation and bylaws of Newco, Reorganized Premium
Holdings, Reorganized Finance Holdings and Reorganized CFI shall contain
provisions necessary (i) to prohibit the issuance of non-

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voting equity securities as required by section 1123(a)(6) of the Bankruptcy
Code, subject to further amendment of such articles of incorporation as
permitted by applicable law; and (ii) to effectuate the provisions of the Plan.

VIII.5 MANAGEMENT OPTION PLAN. Reorganized Finance shall adopt the
Management Option Plan, the form of which is contained in the Plan Supplement
as Exhibit C.

ARTICLE IX - DISTRIBUTIONS UNDER THE PLAN

IX.1 METHOD OF DISTRIBUTIONS. Subject to Bankruptcy Rule 9010, all
distributions to a holder of an Allowed Claim or Allowed Equity Interest shall
be made by the applicable Reorganized Debtor and in the case of Farms and
Finance, by Reorganized Finance or Newco, at the address of such holder as
listed on the Schedules filed with the Bankruptcy Court unless superseded by
the address listed on a proof of Claim or Equity Interest filed by such holder
(or at the last known address of such holder if no proof of Claim or Equity
Interest is filed or if the applicable entity has been notified in writing of a
change of address). If any distribution to any holder is returned as
undeliverable, such Reorganized Debtor, or Reorganized Finance or Newco, as
applicable, shall use reasonable efforts to determine the current address of
such holder, but no distribution to such holder shall be made unless and until
a determination has been made concerning the then current address of such
holder, at which time such distribution shall be made to such holder without
interest. Amounts in respect of any undeliverable distributions made by the
applicable Reorganized Debtor and in the case of Farms and Finance, by
Reorganized Finance or Newco, shall be returned to such Reorganized Debtor, or
Reorganized Finance or Newco, as applicable, until such distribution is
claimed. If no proofs of Claim or Equity Interest are filed and the Schedules
filed with the Bankruptcy Court fail to state addresses for holders of Allowed
Claims or Allowed Equity Interests, the distributions in respect of such
Allowed Claims or Allowed Equity Interests shall be deemed unclaimed property
under section 347(b) of the Bankruptcy Code at the expiration of one year from
the Effective Date. All unclaimed property shall revert to Newco and the claim
or interest of any holder shall be discharged and forever barred.
Notwithstanding the foregoing, all distributions on account of the Secured Bank
Claims shall be paid by wire transfer by Reorganized Finance or Newco to
Chemical Bank, as agent for the holders of the Secured Bank Claims, which shall
redistribute to the holders of the Secured Bank Claims the distributions
received on their behalf.

IX.2 DATE OF DISTRIBUTIONS UNDER THE PLAN. Any distributions and
deliveries to be made as of the Effective Date hereunder shall be made on the
Effective Date, or such later date as a Claim or Equity Interest becomes an
Allowed Claim or Allowed Equity Interest, or as soon as practicable thereafter.
If any payment or act under the Plan is required to be made or performed on a
date that is not a Business Day, then the making of such payment or the
performance of such act may be completed on the next succeeding Business Day,
but shall be deemed to have been completed as of the required date.

IX.3 MANNER OF PAYMENT UNDER PLAN. At the option of Reorganized
Finance, any Cash payment to be made hereunder may be made by a check or wire
transfer (unless otherwise specified in this Plan), or as otherwise required or
provided in applicable agreements. No payment of Cash less than one hundred
dollars shall be made by the applicable Reorganized Debtor and in the case of
Farms and Finance, by Reorganized Finance or Newco, to any holder of a Claim
unless a request

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therefor has been made in writing to the applicable entity. No fractional New
LLC Interests or Warrants shall be distributed.

ARTICLE X - PROCEDURES FOR TREATING DISPUTED CLAIMS AND EQUITY INTERESTS

X.1 PROSECUTION OF OBJECTIONS. Unless otherwise ordered by the
Bankruptcy Court after notice and hearing, the Debtors, the Reorganized Debtors
or Newco shall have the exclusive right (except as to applications for
allowances of compensation and reimbursement of expenses under sections 330 and
503 of the Bankruptcy Code) to make and file objections to proofs of
Administrative Expense Claims, Claims, and Equity Interests. The Debtors or
the applicable Reorganized Debtor and in the case of Farms and Finance,
Reorganized Finance or Newco shall serve a copy of each objection upon the
holder of the Administrative Expense Claim, Claim, or Equity Interest to which
the objection is made as soon as practicable, but in no event later than thirty
days after the Effective Date.

X.2 NO DISTRIBUTIONS PENDING ALLOWANCE. Notwithstanding any other
provision hereof, if any portion of a Claim or Equity Interest is Disputed, no
payment or distribution provided hereunder shall be made on account of any of
such Claim or Equity Interest, unless and until such Disputed Claim or Disputed
Equity Interest becomes Allowed.

X.3 DISTRIBUTIONS AFTER ALLOWANCE. Payments and distributions to
each holder of a Claim or Equity Interest that is Disputed, or is not Allowed,
to the extent that such Claim or Equity Interest ultimately becomes Allowed,
shall be made in accordance with the provisions hereof governing the class or
subclass of Claims or Equity Interests in which such Claim or Equity Interest
is classified. As soon as practicable after the date that the order or
judgment of the Bankruptcy Court Allowing any Disputed Claim or Disputed Equity
Interest becomes a Final Order, the applicable Reorganized Debtor and in the
case of Farms and Finance, Reorganized Finance or Newco, shall distribute to
the holder of such Claim or Equity Interest any payment or property that would
have been distributed to such holder if the Claim or Equity Interest had been
Allowed as of the Effective Date, without any interest on such payment or
property.

ARTICLE XI - CONDITIONS PRECEDENT
TO THE EFFECTIVENESS OF THE PLAN

XI.1 CONDITIONS PRECEDENT. The Plan shall not become effective
unless and until the following conditions have been satisfied or waived by the
Debtors, the Bondholders' Committee, and the lenders under the New Senior
Credit Agreement:

(a) the Confirmation Order, in form and substance satisfactory to
the Debtors, the Bondholders' Committee and the lenders under the New Senior
Credit Agreement, shall have become a Final Order;

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<PAGE> 28

(b) the following agreements, in form satisfactory to the Debtors, the
Bondholders' Committee and the lenders under the New Senior Credit Agreement,
shall have been executed and delivered, and all conditions precedent thereto
shall have been satisfied:

(1) the New Senior Credit Agreement,

(2) the New Second Priority Note Agreement,

(3) the New PIK Notes Indenture,

(4) the Warrant Agreement,

(5) the New LLC Interests Registration Rights Agreement,

(6) the New PIK Notes Registration Rights Agreement,

(7) the Warrants Registration Rights Agreement,

(8) the Intercreditor Agreement,

(9) the LLC Agreement, and

(10) the Management Option Plan;

(d) the Morgan Stanley Funds shall, simultaneously with the
effectiveness hereunder, pay $20 million to Newco in accordance with the
Restructuring Transactions; and

(e) (x) the Bar Date shall have been established as a date not later
than 15 days prior to the Confirmation Date and (y) neither the Bondholders'
Committee nor the Lenders under the New Senior Credit Agreement shall, on or
before the Confirmation Date, have determined that the aggregate amount of
Claims in Classes 5, 6 and 7 against Farms and Finance render the Plan not
feasible.

XI.2 EFFECT OF FAILURE OF CONDITIONS. If, by the earlier of (x)
December 31, 1996 or (y) sixty days after the Confirmation Date, one or more of
the conditions specified in Section 11.1 have not occurred or have not been
waived, and upon notification submitted by the Debtors to the Bankruptcy Court,
attorneys for the Bondholders' Committee and attorneys for the lenders under
the New Senior Credit Agreement, (i) the Confirmation Order shall be vacated,
(ii) no distributions under the Plan shall be made, (iii) the Debtors and all
holders of Claims and Equity Interests shall be restored to the status quo ante
as of the day immediately preceding the Confirmation Date as though the
Confirmation Date had never occurred, and (iv) all the Debtors' obligations
with respect to the Claims and Equity Interests shall remain unchanged and
nothing contained herein shall be deemed to constitute a waiver or release of
any claims by or against the Debtors or any other person, or to prejudice in
any manner the rights of the Debtors or any person in any further proceedings
involving the Debtors.

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<PAGE> 29

XI.3 WAIVER OF CONDITIONS. The Debtors, with the written consent
of the Bondholders' Committee and the lenders under the New Senior Credit
Agreement, may waive, by a writing signed by an authorized representative of
the Debtors and subsequently filed with the Bankruptcy Court, one or more of
the conditions to effectiveness of the Plan as set forth in this Article.

ARTICLE XII - EFFECT OF CONFIRMATION OF PLAN

XII.1 TERM OF BANKRUPTCY INJUNCTIONS OR STAYS. Unless otherwise
provided, all injunctions or stays provided for in the Chapter 11 Cases under
sections 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on
the Confirmation Date, shall remain in full force and effect until the
Effective Date.

XII.2 VESTING OF ASSETS. On the Effective Date, the property and
estates of Finance and Farms shall vest in Reorganized Finance and Newco
pursuant to the Restructuring Transactions, and the property and estates of the
other Debtors shall revest in the respective Reorganized Debtors. From and
after the Effective Date, the Reorganized Debtors and Newco may operate their
businesses, and may use, acquire, and dispose of property free of any
restrictions of the Bankruptcy Code. As of the Effective Date, all property of
the Reorganized Debtors and Newco shall be free and clear of all interests of
holders of Claims and Equity Interests, except as provided in the Plan.

XII.3 DISCHARGE OF DEBTORS. The rights afforded herein and the
treatment of all Claims and Equity Interests herein shall be in exchange for
and in complete satisfaction, discharge, and release of Claims and Equity
Interests of any nature whatsoever, other than environmental obligations or
other contractual obligations with the State of Missouri or any of its
subdivisions under federal or state laws, including any interest accrued on
such Claims from and after the Commencement Date, against the applicable Debtor
and Debtor in Possession, or any of its assets or property. Except as
otherwise provided in the Plan, (i) on the Effective Date, all such Claims
against, and Equity Interests in, the Debtors shall be satisfied, discharged,
and released in full, and (ii) all persons shall be precluded from asserting
against Reorganized Premium Holdings, Reorganized Finance Holdings, Reorganized
CFI, Reorganized Finance, Newco, their successors, or their assets or property
any other or further Claims or Equity Interests based upon any act or omission,
transaction, or other activity of any kind that occurred prior to the
Confirmation Date.

XII.4 PERMANENT INJUNCTION. Except as otherwise expressly provided
in the Confirmation Order, all entities who have held, hold or may hold Claims
against or Equity Interests in any or all of the Debtors, including CFI in its
capacity as the general partner of Finance, are permanently enjoined, on and
after the Effective Date, from (i) commencing or continuing in any manner any
action or other proceeding of any kind with respect to any such Claim or Equity
Interest against the Debtors, (ii) the enforcement, attachment, collection or
recovery by any manner or means of any judgment, award, decree or order against
the Debtors, (iii) creating, perfecting, or enforcing any encumbrance of any
kind against the Debtors or against the property or interests in property of
the Debtors on account of any such Claims, and (iv) asserting any right of
setoff, subrogation, or recoupment of any kind against any obligation due from
the Debtors or against the property or interests in property of the Debtors on
account of any such Claim. Such injunction shall extend to successors of the
Debtors (including, without limitation, Reorganized Premium Holdings,
Reorganized Finance Holdings, Reorganized CFI, Reorganized Finance and Newco)
and their respective properties and interests in property.

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<PAGE> 30

ARTICLE XIII - RELEASES

XIII.1 GENERAL RELEASE OF RELEASEES AND OTHER PARTIES. As of the
Effective Date, each of the Debtors and Debtors in Possession, and each holder
of a Claim against or Equity Interest in any of the Debtors or Debtors in
Possession generally releases all Releasees, in any capacity, the lenders under
the Bank Credit Agreement, the holders of the Secured Notes, the holders of
Preference Unit Equity Interests, the Indenture Trustee and the Collateral
Trustee, from claims, obligations, rights, causes of action and liabilities
held by such Debtor, Debtor in Possession or such holder against such
individuals and entities, whether known or unknown, existing or hereafter
arising, based in whole or in part upon any act or omission or other event
occurring prior to the Commencement Date or during the course of the Chapter 11
Cases, including through the Effective Date, in any way relating to the
Debtors, the Debtors in Possession, the Chapter 11 Cases, the Plan, the Bank
Credit Agreement, the Secured Notes, the Preference Unit Equity Interests and
the Equity Interests in the Debtors and the ownership, management and operation
of the Debtors.

XIII.2 GENERAL RELEASE BY RELEASEES AND OTHER PARTIES. As of the
Effective Date, each of the Releasees, in any capacity, the lenders under the
Bank Credit Agreement, the holders of the Secured Notes, the holders of
Preference Unit Equity Interests, the Indenture Trustee and the Collateral
Trustee, generally releases each of the Debtors, the Debtors in Possession, and
each holder of a Claim against or Equity Interest in any of the Debtors or
Debtors in Possession, in each case in any capacity, from claims, obligations,
rights, causes of action and liabilities held by such Releasee, the Lenders
under the Bank Credit Agreement, the holders of the Secured Notes, the holders
of Preference Unit Equity Interests, the Indenture Trustee and the Collateral
Trustee against any of the Debtors, the Debtors in Possession or any such
Releasee or holder, whether known or unknown, existing or hereafter arising,
based in whole or in part upon any act or omission or other event occurring
prior to the Commencement Date or during the course of the Chapter 11 Cases,
including through the Effective Date, in any way relating to the Debtors, the
Debtors in Possession, the Chapter 11 Cases, the Plan, the Bank Credit
Agreement, the Secured Notes, the Preference Unit Equity Interests and the
Equity Interests in the Debtors and the ownership, management and operation of
the Debtors; provided, however, that this sentence shall not affect the
obligations of the Debtors under Sections 2.3 and 5.6 of the Plan.

XIII.3 BINDING EFFECT OF RELEASES. Each Releasee and each holder of a
Claim and each holder of an Equity Interest, including, without limitation, a
Secured Bank Claim, a Secured Note Claim or a Preference Unit Equity Interest,
and the Indenture Trustee and the Collateral Trustee shall be deemed to have
agreed to the provisions of Sections 13.1 and 13.2 of the Plan, and shall be
bound thereby for all purposes whatsoever.

ARTICLE XIV - RETENTION OF JURISDICTION

The Bankruptcy Court may retain jurisdiction of and, if the Bankruptcy
Court exercises its retained jurisdiction, shall have exclusive jurisdiction of
all matters arising out of, and related to, the Chapter 11 Cases and the Plan
pursuant to, and for the purposes of, sections 105(a) and 1142 of the
Bankruptcy Code and for, among other things, the following purposes:

XIV.1 To hear and determine pending applications for the assumption or
rejection of executory contracts or unexpired leases and the allowance of
Claims resulting therefrom;

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<PAGE> 31

XIV.2 To determine any and all adversary proceedings, applications, and
contested matters;

XIV.3 To ensure that distributions to holders of Allowed Claims and
Allowed Equity Interests are accomplished as provided herein;

XIV.4 To hear and determine any timely objections to Administrative
Expense Claims or to proofs of Claim and Equity Interests filed, both before
and after the Confirmation Date, including, without limitation, any objections
to the classification of any Claim or Equity Interest, and to allow or disallow
any Disputed Claim or Disputed Equity Interest, in whole or in part;

XIV.5 To enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified, or
vacated;

XIV.6 To issue such orders in aid of execution of the Plan, to the extent
authorized by section 1142 of the Bankruptcy Code;

XIV.7 To consider any amendments to or modifications of the Plan, to
cure any defect or omission, or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order;

XIV.8 To hear and determine all applications for awards of compensation
for services rendered and reimbursement of expenses of professionals under
sections 330, 331, and 503(b) of the Bankruptcy Code;

XIV.9 To hear and determine disputes arising in connection with the
interpretation, implementation, or enforcement of the Plan;

XIV.10 To recover all assets of the Debtors and property of the Debtors'
estates, wherever located;

XIV.11 To hear and determine matters concerning state, local and federal
taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code;

XIV.12 To hear any other matter not inconsistent with the Bankruptcy
Code; and

XIV.13 To enter a final decree closing the Chapter 11 Cases.

ARTICLE XV - MISCELLANEOUS PROVISIONS

XV.1 PAYMENT OF STATUTORY FEES. All fees payable pursuant to
section 1930 of title 28 of the United States Code, as determined by the
Bankruptcy Court at the Confirmation Hearing, shall be paid on the Effective
Date.

XV.2 COMPLIANCE WITH TAX REQUIREMENTS. In connection with the
consummation of the Plan, the Debtors shall comply with all withholding and
reporting requirements imposed by any taxing

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<PAGE> 32

authority, and all distributions hereunder shall be subject to such withholding
and reporting requirements.

XV.3 RECOGNITION OF GUARANTEE RIGHTS. The classification of and
manner of satisfying all Claims hereunder, including, without limitation, the
Restructuring Transactions, take into account (i) the existence of guarantees
by Farms of obligations of Finance, (ii) the possibility that the Debtors might
be joint obligors with each other or other entities with respect to an
obligation, and (iii) the priorities established under the Collateral Trust
Agreement. All Claims against the Debtors, including, without limitation,
Farms, based upon any such guarantees or joint obligations shall be discharged
in the manner provided in the Plan; provided that no creditor shall be entitled
to receive more than a single satisfaction of its Allowed Claims.

XV.4 NOTICES. All notices, requests, and demands to or upon the
Debtors, the Reorganized Debtors, Reorganized Finance or Newco to be effective
shall be in writing (including by facsimile transmission) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
actually delivered or, in the case of notice by facsimile transmission, when
received and telephonically confirmed, addressed as follows:

If to the Debtors:

PSF Finance L.P.
Highway 65 North
Princeton, Missouri 64673
Attn: William R. Patterson
Telephone: (816) 748-4647
Facsimile: (816) 748-7100

with a copy to:

Weil, Gotshal & Manges LLP Richards, Layton & Finger, P.A.
767 Fifth Avenue One Rodney Square, P.O. Box 551
New York, New York 10153 Wilmington, Delaware 19899
Attn: Lori R. Fife, Esq. Attn: Thomas L. Ambro, Esq.
Telephone: (212) 310-8000 Telephone: (302) 658-6541
Facsimile: (212) 310-8007 Facsimile: (302) 658-6548

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<PAGE> 33

If to the Bondholders' Committee:

Ropes & Gray Morris, Nichols, Arsht & Tunnel
One International Place 1201 North Market Street
Boston, Massachusetts 02110-2624 Wilmington, Delaware 19801
Attn: Robert L. Nutt, Esq. Attn: William H. Sudell, Esq.
Telephone: (617) 951-7384 Telephone: (302) 658-9200
Facsimile: (617) 951-7050 Facsimile: (302) 658-3989

<TABLE>
<S> <C>
If to the Banks:

Wachtell, Lipton, Rosen & Katz Young, Conaway, Stargatt & Taylor
51 West 52nd Street Rodney Square North, 11th Floor, P.O. Box 391
New York, New York 10019 Wilmington, Delaware 19899
Attn: Harold S. Novikoff, Esq. Attn: James L. Patton, Jr.
Telephone: (212) 403-1000 Telephone: (302) 571-6600
Facsimile: (617) 403-2000 Facsimile: (302) 571-1253
</TABLE>

XV.5 EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS. Each of the
Reorganized Debtors, Reorganized Finance and Newco is authorized in accordance
with their authority under their respective LLC Agreement and articles of
incorporation to execute, file, or record such contracts, instruments,
releases, indentures, and other agreements or documents and take such actions
as may be necessary or appropriate to effectuate and further evidence the terms
and conditions of the Plan and any notes or securities issued pursuant to the
Plan.

XV.6 EXCULPATION. Neither the Reorganized Debtors, Reorganized
Finance, Newco, the Bondholders' Committee, the lenders under the Bank Credit
Agreement, the lenders under the Debtor in Possession financing agreement, the
lenders under the New Senior Credit Agreement, Morgan Stanley Group Inc., the
Indenture Trustee and the Collateral Trustee nor any of their respective
members, officers, directors, employees, attorneys, advisors, agents, general
partners, partners, or consultants who provide management personnel or who
serve as members of management of any of the Debtors, shall have or incur any
liability to any holder of a Claim or Equity Interest for any act or omission
in connection with, or arising out of, the formulation and negotiation of the
Plan, the pursuit of confirmation of the Plan, the consummation of the Plan, or
the administration of the Plan or the property to be distributed under the
Plan, except for willful misconduct or gross negligence, and in all respects,
Reorganized Premium Holdings, Reorganized Finance Holdings, Reorganized CFI,
Reorganized Finance, Newco, the Bondholders' Committee, the lenders under the
Bank Credit Agreement, the lenders under the Debtor in Possession financing
agreement, the lenders under the New Senior Credit Agreement, Morgan Stanley
Group Inc., the Indenture Trustee and the Collateral Trustee, and each of their
respective members, officers, directors, employees, attorneys, advisors,
agents, general partners, partners, and consultants who provide management
personnel or who serve as members of management of any of the Debtors, shall be
entitled to rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan.

XV.7 EXEMPTION FROM TRANSFER TAXES. Pursuant to section 1146(c) of
the Bankruptcy Code, the issuance, transfer, or exchange of notes or equity
securities under the Plan, the creation of any mortgage, deed of trust, or
other security interest, the making or assignment of any lease or sublease, or
the making or delivery of any deed or other instrument of transfer under, in
furtherance of, or in connection with the Plan, including any merger agreements
or agreements of consolidation,

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deeds, bills of sale, or assignments executed in connection with any of the
transactions contemplated under the Plan shall not be subject to any stamp,
real estate transfer, mortgage recording, or other similar tax.

XV.8 AMENDMENT OR MODIFICATION OF THE PLAN. The Debtors, with the
consent of the Bondholders' Committee and the lenders under the New Senior
Credit Agreement, may alter, amend, or modify the treatment of Claims or Equity
Interests provided for under the Plan; provided, however, that the holders of
such Claims or Equity Interests agree or consent to such alteration, amendment,
or modification.

XV.9 SEVERABILITY. If the Bankruptcy Court determines, prior to
the Confirmation Date, that any provision of the Plan is invalid, void, or
unenforceable, such provision shall be invalid, void, or unenforceable with
respect to the holder or holders of the Claims or Equity Interests as to which
the provision is determined to be invalid, void, or unenforceable. The
invalidity, voidness, or unenforceability of any such provision shall in no way
limit or affect the enforceability and operative effect of any other provision
of the Plan. The Plan constitutes a separate chapter 11 plan for each of the
Debtors; provided, however, that a chapter 11 plan for Finance shall not be
confirmed without simultaneous confirmation of a chapter 11 plan for Farms, and
vice versa. Failure to confirm or consummate the Plan as to Finance Holdings,
Premium Holdings or CFI shall not affect confirmation or consummation of a
chapter 11 plan for Finance or Farms.

XV.10 REVOCATION OR WITHDRAWAL OF THE PLAN. The Debtors, with the
consent of the Bondholders' Committee and the lenders under the New Senior
Credit Agreement, reserve the right to revoke or withdraw the Plan prior to the
Confirmation Date. If the Debtors, with the consent of the Bondholders'
Committee and the lenders under the New Senior Credit Agreement, revoke or
withdraw the Plan prior to the Confirmation Date, then the Plan shall be deemed
null and void. In such event, nothing contained herein shall be deemed to
constitute a waiver or release of any claims by the Debtors or any other
person, or to prejudice in any manner the rights of the Debtors or any person
in further proceedings involving the Debtors.

XV.11 BINDING EFFECT. The Plan shall be binding upon and inure to the
benefit of the Debtors, the holders of Claims and Equity Interests, and their
respective successors and assigns.

XV.12 GOVERNING LAW. Except to the extent that the Bankruptcy Code
or other federal law is applicable, or to the extent an Exhibit hereto provides
otherwise, the rights, duties and obligations arising under the Plan shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York, without giving effect to the principles of conflicts of law
of such jurisdiction, except that for the purposes of environmental or other
related contractual obligations to the State of Missouri or its subdivisions,
the laws of the State of Missouri shall govern.

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<PAGE> 35

XV.13 SECTION HEADINGS. Section headings are used in the Plan for
convenience and reference only, and shall not constitute a part of the Plan for
any other purpose.

Dated: Wilmington, Delaware
September 5, 1996

PSF FINANCE L.P.,
a Delaware Limited Partnership COLLINGS FARM, INC.,
a Missouri Corporation

By: Collings Farm, Inc.
Its Sole General Partner By: /s/ Kenneth F. Clifford
Name: Kenneth F. Clifford
Title: Senior Vice President
By: /s/ Kenneth F. Clifford
Name: Kenneth F. Clifford
Title: Senior Vice President

PREMIUM STANDARD FARMS, INC., PREMIUM HOLDINGS CORP.,
a Missouri Corporation an Iowa Corporation

By: /s/ Dennis D. Rippe By: /s/ Theodore J. Gordon, Jr.
Name: Dennis D. Rippe Name: Theodore J. Gordon, Jr
Title: Vice President and Controller Title: Chairman of the Board and
Secretary

PSF FINANCE HOLDINGS INC.,
a Delaware Corporation

By: /s/ Kenneth F. Clifford
Name: Kenneth F. Clifford
Title: Senior Vice President

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<PAGE> 36

Schedule 5.1

(List of Executory Contracts and Unexpired Leases
to Be Rejected Pursuant to the Plan)

[to be supplied prior to or at the Confirmation Hearing]

-32-

<PAGE> 1
EXHIBIT 2.2

UNITED STATES BANKRUPTCY COURT
DISTRICT OF DELAWARE

<TABLE>
<S><C>
- --------------------------------------------x
:
In re :
: Chapter 11 Case Nos.
PSF FINANCE L.P., : 96-1032 (HSB) through 96-1036 (HSB)
PREMIUM STANDARD FARMS, INC., :
COLLINGS FARM, INC., : (Jointly Administered)
PSF FINANCE HOLDINGS INC., :
and PREMIUM HOLDINGS CORP., :
:
Debtors. :
- --------------------------------------------x
</TABLE>

DEBTORS' AMENDED JOINT DISCLOSURE STATEMENT PURSUANT
TO SECTION 1125 OF THE BANKRUPTCY CODE
RELATING TO DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION

WEIL, GOTSHAL & MANGES LLP
Attorneys for the Debtors
and Debtors in Possession
767 Fifth Avenue
New York, New York 10153
(212) 310-8000

and

RICHARDS, LAYTON & FINGER, P.A.
Attorneys for the Debtors
and Debtors in Possession
One Rodney Square
Wilmington, Delaware 19899
(302) 658-6541
Dated: Wilmington, Delaware
July 29, 1996
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
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<S> <C> <C>
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Holders of Claims and Equity Interests Entitled to Vote . . . . . . . . . . . . . . . . . . . 2
B. Voting Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

II. OVERVIEW OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

III. GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
A. PSF's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Employees and Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. The Texas Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6. Regulatory and Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . 11
B. Corporate Farming Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
C. Ownership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
D. Long-Term Debt, Other Debt and Preference Unit Equity Interests . . . . . . . . . . . . . . . 14
1. Bank Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Secured Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. Lien Priorities of Secured Creditors . . . . . . . . . . . . . . . . . . . . . . . . 17
4. Preference Unit Equity Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Certain Interaffiliate Obligations and Other Transactions . . . . . . . . . . . . . . 19

IV. EVENTS PRECEDING THE COMMENCEMENT OF THE
CHAPTER 11 CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
A. Factors That Precipitated the Need for Financial Restructuring . . . . . . . . . . . . . . . . 20
B. Remedial Action Taken by PSF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

V. THE REORGANIZATION CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
A. Commencement of the Reorganization Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
B. Creditors' Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
C. Administration of the Chapter 11 Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

VI. THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
A. Treatment of Compensation and Reimbursement Claims and Other Administrative Expenses . . . . . 25
1. Compensation and Reimbursement Claims . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

<PAGE> 3

Page
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<S> <C>
2. Other Administrative Expense Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3. Compensation to Attorneys and Advisors to Bondholders'
Committee, and the Indenture Trustee and the Collateral Trustee . . . . . . . . . . . . . . 26
B. Classification and Treatment of Claims and Equity Interests . . . . . . . . . . . . . . . . . . . . 26
1. Class 1 - Priority Tax Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2. Class 2 - Other Priority Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3. Class 3 - Secured Bank Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4. Class 4 - Secured Note Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5. Class 5 - Other Secured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6. Class 6 - Construction Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. Class 7 - General Unsecured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.A. Subclass 8.A - Farms/Finance Note Claim . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.B. Subclass 8.B - Other Intercompany Claims . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.A. Subclass 9.A - Preference Unit Equity Interests in Finance . . . . . . . . . . . . . . . . 28
9.B. Subclass 9.B - Premium Holdings' Limited Partnership
Interests in Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.C. Subclass 9.C - Finance Holdings' Limited Partnership
Interests in Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.D. Subclass 9.D - CFI's General Partnership Interest in Finance . . . . . . . . . . . . . . . 29
10. Class 10 - Equity Interests in Farms . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11. Class 11 - Equity Interests in Premium Holdings . . . . . . . . . . . . . . . . . . . . . . 29
12. Class 12 - Equity Interests in Finance Holdings . . . . . . . . . . . . . . . . . . . . . . 29
13. Class 13 - Equity Interests in CFI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
C. Securities to Be Issued Under the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1. New PIK Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2. New LLC Interests and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3. Registration of New LLC Interests, New PIK Notes and Warrants . . . . . . . . . . . . . . 31
D. Treatment of Executory Contracts and Unexpired Leases . . . . . . . . . . . . . . . . . . . . . . . 31
E. Implementation of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
1. Restructuring Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2. Compliance with Farming Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3. Financing to Be Provided As of the Effective Date . . . . . . . . . . . . . . . . . . . . . 36
F. Method of Distributions Under the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
G. Procedures for Treating Disputed Claims and Equity Interests . . . . . . . . . . . . . . . . . . . . 38
H. Conditions Precedent to the Effectiveness of the Plan . . . . . . . . . . . . . . . . . . . . . . . 39
I. Effect of Confirmation of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
J. Other Provisions of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
1. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3. Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4. Exemption From Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5. Amendment or Modification of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>

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<PAGE> 4

Page
----
<S> <C>
VII. GOVERNANCE AND MANAGEMENT OF REORGANIZED FINANCE,
NEWCO AND REORGANIZED DEBTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
A. Management of Reorganized Finance, Newco and Reorganized Debtors . . . . . . . . . . . . . 44
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2. Reorganized Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
3. Boards of Directors of Newco and Reorganized Debtors . . . . . . . . . . . . . . 45
4. Identity of Officers of Newco and Reorganized Debtors . . . . . . . . . . . . . . 45
5. Compensation of Executive Officers . . . . . . . . . . . . . . . . . . . . . . . 46
6. Compensation of Insiders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7. Articles of Incorporation and Bylaws of Newco and
Reorganized Debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
B. Management Option Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

VIII. PROJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

IX. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
A. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

X. VALUATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
A. Estimated Liquidation Value of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 49
B. Reorganization Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

XI. RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
A. Sensitivity to Commodity Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
B. Herd Productivity and Feed Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . 52
C. Impact of Disease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
D. Variance from Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
E. Lack of Trading Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
F. Funding After the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
G. Certain Taxation Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
H. Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
I. Compliance with Local Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

XII. EXEMPTIONS FROM SECURITIES ACT REGISTRATION; REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . 54
A. Issuance of New Securities Pursuant to the Plan . . . . . . . . . . . . . . . . . . . . . 54
B. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

XIII. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . 57
1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
2. Cancellation of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
3. Restructuring Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>

-iii-
<PAGE> 5

Page
----
<S> <C>
4. Possible Applicable High Yield Debt Obligations. . . . . . . . . . . . . . . . . . . . . . . . 60

XIV. VOTING PROCEDURES AND REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
A. Parties in Interest Entitled to Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
B. Classes Impaired and Entitled to Vote Under the Plan . . . . . . . . . . . . . . . . . . . . . 62
C. Vote Required for Acceptance by Class of Claims or Equity Interests . . . . . . . . . . . . . 62

XV. PROCEDURES FOR CONFIRMATION AND CONSUMMATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . 62
A. Confirmation Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
B. Conditions to Confirmation of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
1. Statutory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2. Unfair Discrimination and Fair and Equitable Tests . . . . . . . . . . . . . . . . . 64
3. Feasibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4. Best Interests Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
C. Consummation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

XVI. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . 68
A. Liquidation Under Chapter 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
B. Alternative Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

XVII. CONCLUSION AND RECOMMENDATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
</TABLE>

-iv-
<PAGE> 6

Page
----

EXHIBITS

<S> <C>
AMENDED JOINT PLAN OF REORGANIZATION UNDER CHAPTER 11
OF THE BANKRUPTCY CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A

ORDER APPROVING DISCLOSURE STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C

LIQUIDATION ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D

PROJECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E
</TABLE>

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<PAGE> 7

INTRODUCTION

PSF Finance L.P. ("Finance"), Premium Standard Farms, Inc.
("Farms"), Premium Holdings Corp. ("Premium Holdings"), PSF Finance Holdings
Inc. ("Finance Holdings") and Collings Farm, Inc. ("CFI") (each individually, a
"Debtor" and collectively, the "Debtors") submit this Amended Disclosure
Statement in connection with the solicitation of acceptances of the Debtors'
Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy
Code (the "Plan") filed with the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court") on July 30, 1996. Unless
otherwise defined, all capitalized terms used herein shall have the same
meanings ascribed to them in the Plan.

Attached as Exhibits to or accompanying this Disclosure
Statement are copies of the following:

1. The Plan (Exhibit A);

2. Order of the Bankruptcy Court dated August 1, 1996
approving the Disclosure Statement (Exhibit B);

3. Financial Statements (Exhibit C);

4. Liquidation Analysis (Exhibit D); and

5. Projections (Exhibit E).

In addition, a ballot for the acceptance or rejection of the
Plan is enclosed with this Disclosure Statement submitted to the holders of
Claims and Equity Interests that the Debtors believe may be entitled to vote to
accept or reject the Plan.

On August 1, 1996, after notice and a hearing, the Bankruptcy
Court approved this Disclosure Statement (the "Disclosure Statement Order") as
containing adequate information to enable hypothetical, reasonable investors
typical of the holders of Claims against and Equity Interests in the Debtors to
make an informed judgment whether to accept or reject the Plan. See Exhibit B
to the Plan. APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER,
CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT AS TO THE FAIRNESS OR MERITS
OF THE PLAN, INCLUDING, WITHOUT LIMITATION, THE TRANSACTIONS CONTEMPLATED BY
THE PLAN.

The Disclosure Statement Order, a copy of which is annexed
hereto as Exhibit B, sets forth in detail the deadlines, procedures and
instructions for voting to accept or reject the Plan and for filing objections
to confirmation of the Plan, the record date for voting purposes, and the
applicable standards for tabulating ballots. In addition, detailed voting

-1-
<PAGE> 8

instructions accompany each ballot. Each holder of a Claim or an Equity
Interest entitled to vote on the Plan should read the Disclosure Statement, the
Plan, the Disclosure Statement Order, and the instructions accompanying the
ballots in their entirety before voting on the Plan. These documents contain,
among other things, important information concerning the classification of
Claims and Equity Interests for voting purposes and the tabulation of votes.
No solicitation of votes to accept the Plan may be made except pursuant to
section 1125 of the Bankruptcy Code.

A. Holders of Claims and Equity Interests Entitled to Vote

Under the Bankruptcy Code, only classes or subclasses of
claims or equity interests that are impaired are entitled to vote to accept or
reject a proposed chapter 11 plan. Classes or subclasses of claims or equity
interests in which the holders of claims or interests will not receive or
retain any property under a proposed chapter 11 plan are deemed to have
rejected the plan. The holders of claims or equity interests that are
unimpaired under a proposed chapter 11 plan are deemed to have accepted the
plan.

Claims and Equity Interests in each of Class 3 (Secured Bank
Claims), Class 4 (Secured Note Claims), Class 6 (Construction Claims), Class 8
(Intercompany Claims), Class 9 (Equity Interests in Finance) and each subclass
thereof under the Plan are impaired and, to the extent such Claims and Equity
Interests are Allowed, the holders of such Claims and Equity Interests will
receive distributions under the Plan. Holders of Claims and Equity Interests
in those Classes and Subclasses are entitled to vote to accept or reject the
Plan.

Claims in each of Class 1 (Priority Tax Claims), Class 2
(Other Priority Claims), Class 5 (Other Secured Claims), Class 7 (General
Unsecured Claims), Class 11 (Equity Interests in Premium Holdings), Class 12
(Equity Interests in Finance Holdings), and Class 13 (Equity Interests in CFI)
are unimpaired under the Plan and the holders of Claims in those Classes are
deemed to have accepted the Plan.

Equity Interests in Class 10 (Equity Interests in Farms) will
be canceled and will receive no distributions under the Plan, and, therefore,
the holders of Equity Interests in such class are deemed to have rejected the
Plan.

The Debtors are soliciting acceptances only from holders of
Allowed Claims and Equity Interests in Classes 3, 4, 6, 8 and 9 and each
Subclass thereof.

The Bankruptcy Code defines "acceptance" of a chapter 11 plan
by a class of claims if holders of at least two-thirds in amount, and more than
one-half in number, of the claims of that class that actually vote to accept or
reject the Plan vote to accept the Plan. Votes cast by holders of Claims in
each subclass of a class under the Plan will be tabulated separately by
subclass, and a subclass will have accepted the Plan if holders of at least
two-thirds in amount, and more than one-half in number, of the Claims of each
such subclass that actually vote to accept or reject the Plan vote to accept
the Plan. Acceptance by a class of equity interest holders requires the
acceptance by the holders of two-thirds of the total number

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<PAGE> 9

of shares or interests held by the equity interest holders in that class that
actually vote to accept or reject the Plan. For a discussion of these matters,
see Article XIV "Voting Procedures and Requirements," and Section XV.B,
"Conditions to Confirmation of the Plan."

If a class or subclass of Claims or Equity Interests rejects
the Plan, the Debtors have the right to request confirmation of the Plan under
section 1129(b) of the Bankruptcy Code. Section 1129(b) of the Bankruptcy Code
permits the confirmation of a plan of reorganization, notwithstanding the
rejection of such plan by one or more impaired classes or subclasses of claims
or interests, if it does not discriminate unfairly and is "fair and equitable"
with respect to the rejecting class. If any class or subclass fails to accept
the Plan by the requisite majorities required under section 1126(c) or 1126(d)
of the Bankruptcy Code, as applicable, the Debtors may move before the
Bankruptcy Court to confirm the Plan in accordance with section 1129(b) of the
Bankruptcy Code without amendment or modification to the treatment of the
rejecting Class or Subclass. See Section XV.B "Conditions to Confirmation of
the Plan."

Liabilities incurred in the ordinary course of business by
Debtors in Possession since the Commencement Date, and indebtedness or
obligations arising under loans or advances to or other obligations incurred by
Debtors in Possession, other than loans or advances to or other obligations
incurred by Debtors in Possession under the DIP Credit Agreement (as such term
is defined below), whether or not incurred in the ordinary course of the
Debtors' business, that are described in the Plan as Administrative Expense
Claims will be paid by the applicable Reorganized Debtor (or Newco, to the
extent such Administrative Expense Claims are against Finance or Farms) in
accordance with the terms and subject to the conditions of any agreements
governing, instruments evidencing or other documents relating to such
transactions. Holders of Administrative Expense Claims are not entitled to
vote to accept or reject the Plan.

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<PAGE> 10

B. Voting Procedures

A ballot, appropriate to the Claim or Equity Interest held, is
enclosed for voting on the Plan for those entities that are entitled to vote on
the Plan. If a holder holds Claims or Equity Interests in more than one class
or subclass and is entitled to vote such Claims or Equity Interests, separate
ballots must be used for each class or subclass of Claims or Equity Interests.
TO BE COUNTED AS VOTES TO ACCEPT OR REJECT THE PLAN, BALLOTS MUST BE PROPERLY
EXECUTED AND RECEIVED BY 4:30 P.M. ON AUGUST 1, 1996 (THE "VOTING DEADLINE") BY
ARTHUR ANDERSEN LLP, THE BALLOTING AGENT, AS PROVIDED ON THE BALLOT. ANY
EXECUTED BALLOT RECEIVED BY THE BALLOTING AGENT WHICH DOES NOT INDICATE EITHER
AN ACCEPTANCE OR REJECTION OF THE PLAN SHALL BE DEEMED TO CONSTITUTE AN
ACCEPTANCE OF THE PLAN. See Article XIV "Voting Procedures and Requirements."
The Disclosure Statement Order provides, among other things, that any entity
entitled to vote to accept or reject the Plan may change its vote before the
Voting Deadline (4:30 p.m. on August 1, 1996), by casting a superseding ballot
so that it is received on or before such deadline. Entities desiring to change
their votes after the Voting Deadline may do so, if they file a motion with the
Bankruptcy Court with sufficient notice so that it can be heard and considered
at the confirmation hearing, and they demonstrate "cause" pursuant to
Bankruptcy Rule 3018(a).

Any Claim or Equity Interest in an impaired class or subclass
as to which an objection is pending or which is scheduled by the Debtors as
unliquidated, disputed or contingent is not entitled to vote unless the holder
of such Claim or Equity Interest has obtained an order of the Bankruptcy Court
temporarily Allowing such Claim or Equity Interest for the purpose of voting on
the Plan. See Section XIV.A "Voting Procedures and Requirements -- Parties in
Interest Entitled to Vote."

The Bankruptcy Court entered an order setting August 1, 1996
as the record date for voting on the Plan. Accordingly, only holders of record
as of August 1, 1996 that are otherwise entitled to vote under the Plan will
receive a ballot and may vote.

Entities not voting to accept the Plan will be bound by the
Plan if it is accepted by the requisite holders of Claims and Equity Interests,
as described in Article XIV "Voting Procedures and Requirements," and
confirmed. See Section XV.B, "Conditions to Confirmation of the Plan."

If you are a creditor or Equity Interest holder entitled to
vote on the Plan and did not receive a ballot, received a damaged ballot, or
lost your ballot, please call Todd Overbergen at (713) 237-5181 or if you have
any questions about the Disclosure Statement, the Plan, the Disclosure
Statement Order or the procedures for voting on the Plan, please call Alexander
Simon, Esq. at (212) 310-8694.

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<PAGE> 11

OVERVIEW OF THE PLAN

The following table briefly summarizes the classification and
treatment of Claims and Equity Interests under the Plan.

SUMMARY OF CLASSIFICATION AND TREATMENT
OF CLAIMS AND EQUITY INTERESTS

<TABLE>
<CAPTION>
Estimated
Percent
Class Type Treatment Recovery
----- ---- --------- --------
<S> <C> <C> <C>
-- Compensation and Unimpaired; to be paid in full, in Cash, on 100%
Reimbursement, and Other the Effective Date, or in accordance with
Administrative Expense Claims such terms as may be mutually agreed to by
the holder and the applicable Reorganized
Debtor (or Newco, with respect to Claims
against Finance or Farms).

1 Priority Tax Claims Unimpaired; to the extent unpaid in the 100%
ordinary course of business during the
Chapter 11 Cases, to be paid in full by the
applicable Reorganized Debtor (or Newco, with
respect to Claims against Finance or Farms)
in accordance with the terms and conditions
of governing agreements or applicable law.

2 Other Priority Claims Unimpaired; to the extent unpaid in the 100%
ordinary course of business during the
Chapter 11 Cases, to be paid in full by the
applicable Reorganized Debtor (or Newco, with
respect to Claims against Finance or Farms)
in accordance with the terms and conditions
of governing agreements or applicable law.

3 Secured Bank Claims Impaired; to be paid in full, in Cash, on the 100%
(Allowed in principal amount Effective Date.
of approximately $67,153,000,
plus interest at the non-
default rate, fees, expenses
and unreimbursed draws on the
letter of credit issued under
the Bank Credit Agreement)

4 Secured Note Claims Impaired; distribution of the following, in 45%
(Allowed in an aggregate accordance with the Restructuring
amount of $446,357,630, Transactions:
consisting of $129,896,640 in
Allowed 1992 Note Claims, $101,496,978 in principal amount of New PIK
$202,860,976 in Allowed 1993 Notes, which will have the following terms:
Note Claims, $106,666,680 in
Allowed 1994 Note Claims, and . maturity on the seventh anniversary of
$6,933,334 in Allowed 1995 the Effective Date;
Note Claims) . interest at 11% per annum compounded
semi-annually, non-Cash payment-in-kind
until payment in full of the Term Loan,

</TABLE>

-5-

<PAGE> 12

<TABLE>
<CAPTION>
Estimated
Percent
Class Type Treatment Recovery
----- ---- --------- --------
<S> <C> <C> <C>

thereafter payable in Cash; and
. third lien on all assets of Newco; plus

9,216,789 New LLC Interests representing
approximately 92% of total New LLC Interests
issued on the Effective Date.

5 Other Secured Claims Unimpaired; reinstated and rendered 100%
unimpaired pursuant to section 1124 of the
Bankruptcy Code.

6 Construction Claims Impaired; to be paid in full, in Cash, on the 100%
Effective Date.

7 General Unsecured Claims Unimpaired; to the extent not paid in the 100%
ordinary course of business during the
Chapter 11 Cases, to be paid in full by the
applicable Reorganized Debtor (or Newco, with
respect to Claims against Finance or Farms)
or in accordance with such terms as may be
mutually agreed to by the holder and such
Reorganized Debtor.
8 Intercompany Claims

8.A Farms/Finance Note Claim Impaired; pursuant to the Restructuring 100%
Transactions, the Farms/Finance Note will be
ultimately assigned to Newco, which will
receive, in satisfaction of the Farms/
Finance Note, all of the assets of Farms
subject to the liabilities.

8.B Other Intercompany Claims Impaired; distribution of $1,000 per Claim. N/A

9 Equity Interests in Finance

9.A Preference Unit Equity Impaired; distribution of the following, in 34%
Interests in Finance accordance with the Restructuring
Transactions:

$5,321,204 in principal amount of New PIK
Notes, which will have the following terms:

. maturity on the seventh anniversary of
the Effective Date;
. interest at 11% per annum compounded
semi-annually, non-Cash payment-in-kind
until payment in full of the Term Loan,
thereafter payable in Cash; and
. third lien on all assets of Newco; plus

483,211 New LLC Interests representing
approximately 4.83% of total New LLC
Interests issued on the Effective Date.
</TABLE>

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<PAGE> 13

<TABLE>
<CAPTION>
Estimated
Value of
Class Type Treatment Recovery (1)
----- ---- --------- ------------
<S> <C> <C> <C>

9.B Premium Holdings' Limited Impaired; distribution of the following: $936,000
Partnership Interests in
Finance 78,000 New LLC Interests representing .78% of
total New LLC Interests issued on the
Effective Date; and

Warrants to purchase 532,530 New LLC
Interests in an amount representing
approximately 4.4% of the outstanding New LLC
Interests, on a fully diluted basis, at $45
per New LLC Interest for a ten-year period
following the Effective Date.

9.C Finance Holdings' Limited Impaired; distribution of the following: $2,628,000
Partnership Interests in 219,000 New LLC Interests representing 2.19%
Finance of total New LLC Interests issued on the
Effective Date; and

Warrants to purchase 1,495,180 New LLC
Interests in an amount representing
approximately 12.41% of the outstanding New
LLC Interests, on a fully diluted basis, at
$45 per New LLC Interest for a ten-year
period following the Effective Date.

9.D CFI's General Partnership Impaired; distribution of the following: $36,000
Interest in Finance
3,000 New LLC Interests representing .03% of
total New LLC Interests issued on the
Effective Date; and

Warrants to purchase 20,482 New LLC Interests
in an amount representing approximately .2%
of the outstanding New LLC Interests, on a
fully diluted basis, at $45 per New LLC
Interest for a ten-year period following the
Effective Date.
Estimated
Percent
Recovery
------------

10 Equity Interests in Farms Impaired; no distributions; common stock 0%
canceled.

11 Equity Interests in Premium Unimpaired; retain common stock. 100%
Holdings

12 Equity Interests in Finance Unimpaired; retain common stock. 100%
Holdings

</TABLE>
- --------------------------
1. The estimated value of recovery is based upon the estimated unit
price of each New LLC Interest, times the number of New LLC Interests, without
taking into account any value for the Warrants. The recovery could increase
depending upon the future value of Reorganized Finance and the exercise of the
Warrants.

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<PAGE> 14

<TABLE>
<S> <C> <C> <C>
13 Equity Interests in CFI Unimpaired; retain common stock. 100%
</TABLE>

The Confirmation Hearing

The Bankruptcy Court has scheduled a hearing to consider the
confirmation of the Plan (the "Confirmation Hearing") on September 6, 1996, at
2:30 p.m., at the United States Bankruptcy Court, 824 Market Street, Sixth
Floor, Wilmington, Delaware 19801. The Bankruptcy Court has directed that
objections, if any, to confirmation of the Plan be served and filed on or
before August 30, 1996, at 4:30 p.m. (Eastern Daylight Time), in the manner
described in Article XIV "Voting Procedures and Requirements." The
Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court
without further notice except for the announcement of the adjournment date made
at the Confirmation Hearing or at any subsequent adjourned Confirmation
Hearing.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE
AS OF THE DATE HEREOF UNLESS ANOTHER TIME IS SPECIFIED HEREIN, AND THE DELIVERY
OF THIS DISCLOSURE STATEMENT SHALL NOT CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION STATED SINCE THE DATE HEREOF. HOLDERS OF
CLAIMS AND EQUITY INTERESTS SHOULD CAREFULLY READ THIS DISCLOSURE STATEMENT IN
ITS ENTIRETY PRIOR TO VOTING ON THE PLAN.

FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND EQUITY INTERESTS,
THIS DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN, BUT THE PLAN ITSELF
QUALIFIES ALL SUMMARIES. IF ANY INCONSISTENCY EXISTS BETWEEN THE PLAN AND THE
DISCLOSURE STATEMENT, THE TERMS OF THE PLAN ARE CONTROLLING. THE DISCLOSURE
STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER
TO VOTE TO ACCEPT OR REJECT THE PLAN, AND NOTHING STATED SHALL CONSTITUTE AN
ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, OR BE ADMISSIBLE IN ANY
PROCEEDING INVOLVING THE DEBTORS OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE
EVIDENCE OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON THE DEBTORS OR
HOLDERS OF CLAIMS OR EQUITY INTERESTS. CERTAIN OF THE STATEMENTS CONTAINED IN
THIS DISCLOSURE STATEMENT, BY NATURE, ARE FORWARD LOOKING AND CONTAIN ESTIMATES
AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE
REFLECTIVE OF ACTUAL OUTCOMES. ALL HOLDERS OF CLAIMS AND EQUITY INTERESTS
SHOULD CAREFULLY READ AND CONSIDER FULLY ARTICLE XI "RISK FACTORS" BEFORE
VOTING TO ACCEPT OR REJECT THE PLAN.

SUMMARIES OF CERTAIN PROVISIONS OF AGREEMENTS REFERRED TO IN
THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND
ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO,

-8-
<PAGE> 15

THE FULL TEXT AND TO ALL OF THE PROVISIONS OF THE APPLICABLE AGREEMENT,
INCLUDING THE DEFINITIONS OF CERTAIN TERMS CONTAINED IN SUCH AGREEMENT.

THE DEBTORS BELIEVE THAT THE PLAN ENABLES THEM TO SUCCESSFULLY
REORGANIZE AND ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND PROVIDES FOR THE
BEST RECOVERIES TO HOLDERS OF CLAIMS AND EQUITY INTERESTS. ESSENTIALLY, THE
NET RESULT OF THE PLAN IS TO DELEVERAGE THE BUSINESS OF FARMS AND FINANCE BY
REDUCING APPROXIMATELY $461 MILLION IN DEBT TO APPROXIMATELY $110 MILLION AND
EXCHANGING THE BALANCE OF DEBT FOR EQUITY INTERESTS, AND BY PROVIDING NEW
FINANCING FOR FUTURE OPERATIONS.

ALL HOLDERS OF THE SECURED BANK CLAIMS AND THE HOLDERS OF 95%
OF THE SECURED NOTE CLAIMS HAVE AGREED TO VOTE FOR THE PLAN, SUBJECT TO CERTAIN
CONDITIONS.

III.

GENERAL INFORMATION

A. PSF's Business

1. General

Currently, Farms and Finance (collectively, "PSF") operate the
largest vertically integrated pork producer in the Midwest and are the fourth
largest owner of sows in the United States. PSF has approximately 86,500 sows
in production operations located on over 37,000 acres in northwest Missouri and
approximately 18,000 sows located on approximately 14,000 acres in the Texas
Panhandle area, with an aggregate capacity to produce 2.1 million hogs
annually. PSF uses modern, efficient buildings, sophisticated genetic methods,
and strict control of animal health and diet to produce premium pork and pork
products. PSF's operations include hog-production units, a pork processing
facility capable of processing 7,000 hogs per day, feed mills, genetic
improvement facilities, office and training facilities and additional
production infrastructure. Its Milan, Missouri processing plant is designed to
have the capacity to produce over 270 million pounds of pork and pork products
from the 1.8 million hogs that its 86,500 sows in Missouri are expected to
produce annually.

2. Products

PSF's products consist of fresh and processed pork, which is
sold to (i) retailers and retail distributors in the form of chilled and boxed
bone-in or boneless tenderloins, loins, hams, picnics, butts and bone-in ribs;
(ii) further processors, in the form of containers of chilled bone-in or
boneless hams and picnics, boneless Boston butts, trimmings and other

-9-
<PAGE> 16

products; and (iii) institutional food customers in the form of large
containers of chilled bone-in or boneless loins. PSF's other operations
include live hog sales and processed pork products in the variety meat market,
the feed processing industry and the pet food industry. PSF is a global
marketer and distributor of pork products and is the only United States meat
processor approved for shipment of pork to the members of the European Economic
Community.

3. Employees and Consultants

As of May 1, 1996, PSF had in excess of 1,900 employees
(including part-time personnel) in the combined Missouri and Texas operations.
None of the employees are subject to collective bargaining agreements.

PSF also uses services of consultants as necessary to provide
management expertise and to augment its executive staff. HWS & Associates,
Inc. and Patterson Consulting LLC are the primary consultants engaged by
Finance and Farms, respectively. HWS & Associates, Inc. has agreed to make
available the personal services of Horst W. Schroeder, Chairman of the Board of
Directors of CFI and a member of the advisory committee of Finance, under a
consulting agreement dated as of June 1, 1995, pursuant to which Mr. Schroeder
(i) counsels and assists Finance in the development, implementation and control
of Finance's business objectives and strategies, (ii) assists in developing and
implementing operational and marketing strategies to support PSF's business
plan, and (iii) assists and counsels the management of Farms in implementing
PSF's business plan. Mr. Schroeder is a turn-around specialist and food
industry expert. A former President and member of the Board of Directors of
Kellogg Corporation, Mr. Schroeder has played a key role in restructuring many
troubled entities.

In addition, Patterson Consulting LLC has agreed to make
available the personal services of William R. Patterson, pursuant to a
consulting agreement dated April 12, 1996, as Acting Chief Financial Officer of
Farms. Mr. Patterson is also responsible for management information systems,
purchasing and insurance at Farms. Prior to joining Farms in January 1996, Mr.
Patterson had been a partner at Arthur Andersen LLP for more than 30 years.

4. Properties

PSF conducts its hog processing operations in a 260,000 sq.
ft. processing facility in Missouri and its hog-production operations on
approximately 37,000 acres of land in Missouri and 14,000 acres of land in
Texas. PSF owns an additional 39,000 acres of land in Texas that were
developed in connection with the Texas Expansion (described below). See
Section III.A.5, "General Information -- PSF's Business; Texas Expansion." All
of the hog-production and processing facilities were constructed after 1989.

PSF also owns two modern pelletizing feed mills (one 600,000
tons/year mill in Lucerne, Missouri and another 180,000 tons/year mill in
Princeton, Missouri), which meet all

-10-
<PAGE> 17

the feed requirements of its Missouri operations. The Texas operations include
a 180,000 tons/year mill that was completed in May 1993.

5. The Texas Expansion

In 1994, PSF began the development of a second fully
integrated production and processing operation located in the Texas Panhandle
(the "Texas Expansion"). The first phase in that expansion was the acquisition
in June 1994, of hog-production operations from National Hog Farms of Texas,
Inc. and the adjacent 33,000 acre High Plains Ranch. The second phase of that
expansion included a planned construction of additional hog- production
facilities on the High Plains Ranch, a state-of-the-art processing plant (based
on the Missouri plant), and the acquisition of an adjacent 7,000 acre ranch.
The $350 million Texas Expansion was commenced in January 1995 and was planned
to be completed in the fourth quarter of 1996.

As a consequence of business conditions and results, in May
1995, PSF suspended the completion of the Texas Expansion project.
Approximately $52 million has been expended on the acquisition and development
of the project, and, in light of such suspension, the previously committed
construction financing was amended to reduce it to $10.2 million and to make
complementary revisions to the loan covenants.

6. Regulatory and Environmental Matters

PSF is subject to various federal, state and local laws and
regulations, particularly in the health and environmental areas administered by
the Occupational Safety and Health Administration, the United States Department
of Agriculture, the Food and Drug Administration, the Environmental Protection
Agency and corresponding state agencies such as the Missouri Department of
Natural Resources ("MDNR") and the Texas Natural Resources Conservation
Commission.

Current environmental regulations impose standards and
limitations on PSF's waste treatment lagoons, water treatment facilities and
new construction projects. Animal waste from PSF's hog production facilities
is anaerobically digested (using lagoons in Missouri and solid separators and
aeration tanks in Texas) and the resultant fluids are then applied to
surrounding farm land.

In 1995, there were five alleged spills of hog waste into
public waters in the Missouri operations, allegedly in violation of the
Missouri Clean Water Law and regulations promulgated thereunder. Pursuant to
the Settlement Agreement and Consent Order dated January 29, 1996, between MDNR
and Farms (the "Settlement Agreement"), which addressed all of the five alleged
spills, Farms paid the specified penalties and compensatory damages, and agreed
to certain remedial actions, subject to review and approval by MDNR. Farms
believes that it has been and is in full compliance with the terms of the
Settlement Agreement.

Reorganized Finance and Newco, on the Effective Date, will
assume the Settlement Agreement and intend to continue to abide by and comply
with the terms thereof or

-11-
<PAGE> 18

any other agreements made with the State of Missouri or its subdivisions.
Subsequent to the Effective Date, Reorganized Finance and Newco are projected
to have sufficient and adequate resources and revenues to satisfy any
obligations under the Settlement Agreement and to meet foreseeable
environmental problems. There is no intention to discharge obligations under
the Settlement Agreement or any other agreements or varying or amending the
terms of those Agreements. It is the intention of Reorganized Finance and
Newco to fully comply with the environmental laws and regulations of the State
of Missouri, including, but not limited to, the Settlement Agreement.

B. Corporate Farming Law

Several states, including Missouri, but excluding Texas, have
enacted "corporate farming laws," which restrict the ability of corporations to
engage in farming activities. Missouri has a corporate farming law which, with
certain exceptions, bars corporations from owning agricultural land and
engaging in farming activities. The exceptions to this law include
corporations owned directly by individuals and which derive at least two-thirds
of their income from farming (known as "authorized farm corporations"), such as
Farms, and corporations engaged in farming prior to September 28, 1975 (known
as "grandfathered corporations"), such as CFI.

PSF's operations have been structured to comply with Missouri
corporate farming law and its exemption for authorized farm corporations.
PSF's assets and operations are divided between Finance and Farms, each of
which is an operating entity. In general, all the agricultural real property
and farming activities in Missouri are concentrated in Farms, an authorized
farm corporation. All other personal property (including the hogs), all
non-agricultural real property (including the Missouri processing plant, feed
mills and Missouri headquarters), the Texas operations and the bulk of capital
are concentrated in Finance, a limited partnership not expressly included
within the scope of the Missouri corporate farming law. In addition, Finance's
general partner, CFI, is a grandfathered corporation. Pursuant to an Agreement
dated as of January 24, 1995, between Finance and Farms (the "Operating
Agreement"), Farms, using the breeding stock, feed and personal property
provided by Finance, breeds the hogs and produces feeder pigs and finished hogs
for Finance, and provides certain other management services. The Operating
Agreement provides that Finance shall reimburse Farms for substantially all
costs incurred in performing these services, as well as certain additional
specified amounts.

In addition, in 1993, Missouri enacted a statute that provides
an additional exemption from the corporate farming law for hog-farming
operations such as those of Farms conducted in the three counties in northern
Missouri in which Farms operates (the "County Exemption"). This exemption,
however, is subject to certain county population limitations which may be
exceeded in one or more of the three counties in which Farms operates when the
next federal decennial census occurs in the year 2000, which might cause the
County Exemption to be thereafter unavailable unless the statute is amended.

Missouri also restricts the ability of an alien or a "foreign
business" (i.e., a business entity in which a "controlling interest" is owned
by aliens) to own agricultural land in

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<PAGE> 19

Missouri. To the Debtors' knowledge, no foreign interests own what would be
considered a "controlling interest" in either Farms or Finance.

-13-
<PAGE> 20

C. Ownership Structure

The organizational structure of the Debtors and their
relationships to each other are as follows:

<TABLE>
<S><C>
EXISTING PSF STRUCTURE
--------------------------------------------------------

99% Certain
1%(GP) ___________________________ Secured
______|__________________ Noteholders
| | |
Various Shareholders | | |
(including Harms & Premium Holdings, L.P. | 2 55% 2
Gordon) | ____________|_ MSLEF II _____________ MSCP III
|___________________________________________ | 2.5%| 18% | | __________|____| |45%
79.5% | | | | | 41% |59% | ___|
Harms & Gordon Premium Holdings Finance ___| |_ CFI
| | Holdings ___ |
100% | | |73% | 1%(GP)
| | 26% | __________|
Farms |____________________________ Finance ____________________
| |
| 100% | 100%
Princeton |
Development High Plains Ranch, Inc.
Corp. (inactive)
(apartment complex)

</TABLE>

Farms. Farms, a Missouri corporation, is owned in equal
proportions by its two founders, Messrs. Dennis W. Harms and Theodore J.
Gordon, Jr. Finance holds an option to acquire 100% of that equity in the
event of a change in Missouri corporate farming law. See Section III.D.5,
"General Information -- Long-Term Debt, Other Debt and Preference Unit Equity
Interests; Certain Interaffiliate Obligations and Other Transactions." As
described above, Farms conducts hog-raising activities in Missouri and owns all
the agricultural real property and hog-production equipment located in
Missouri.

Finance. Finance, a Delaware limited partnership, is owned by
three partners: CFI, which holds a general partnership interest representing
1% of common partnership units; Finance Holdings, which holds a limited
partnership interest representing approximately 73% of common partnership
units; and Premium Holdings, which holds a limited partnership interest
representing approximately 26% of common partnership units. Finance conducts
hog-

__________________________________

-14-
<PAGE> 21

raising activities in Texas and owns all the real and personal property located
in Texas and non-agricultural real and personal property in Missouri. Finance
has two wholly owned subsidiaries: Princeton Development Corp. ("Princeton
Development"), which owns a rental apartment complex in Princeton, Missouri,
and High Plains Ranch, Inc., which is inactive and has no assets. These
subsidiaries are not debtors in these Chapter 11 Cases.

CFI. CFI, a Missouri corporation, is the sole general partner
of Finance. CFI is wholly owned by The Morgan Stanley Leveraged Equity Fund
II, L.P., Morgan Stanley Capital Partners III, L.P., Morgan Stanley Capital
Investors, L.P., and MSCP III 892 Investors, L.P. (collectively, the "Morgan
Stanley Funds").

Finance Holdings. Finance Holdings, a Delaware corporation,
is one of the two common limited partners of Finance holding approximately 73%
of common partnership units, and the sole general partner of Premium Holdings
L.P., holding 1% of the general partnership interest. The Morgan Stanley Funds
wholly own Finance Holdings.

Premium Holdings. Premium Holdings, an Iowa corporation, is
the other common limited partner of Finance, holding approximately 26% of
common partnership units in Finance. The outstanding shares of common stock of
Premium Holdings are dispersed among certain individuals (including Messrs.
Harms and Gordon) and certain institutions who, in the aggregate, own 79.5% of
such shares. The Morgan Stanley Funds own approximately 18% of the shares of
common stock of Premium Holdings, and Premium Holdings L.P., a non-debtor
entity in which Finance Holdings is the general partner, owns 2.5% of the
shares of such common stock.

D. Long-Term Debt, Other Debt
and Preference Unit Equity Interests

The long-term debt of Finance and Farms generally consists of
obligations under or pursuant to (i) the Bank Credit Agreement, (ii) the
Secured Notes, and (iii) interaffiliate indebtedness. Finance also has
outstanding certain Preference Unit Equity Interests. A chart describing the
collateral security, if any, for each type of indebtedness is set forth in
Section III.D.3, "General Information -- Long-Term Debt, Other Debt and
Preference Unit Equity Interests; Lien Priorities of Secured Creditors."

1. Bank Credit Agreement

Pursuant to the Credit Agreement dated as of December 23, 1994
(as amended, the "Bank Credit Agreement"), among Finance, Farms, the financial
institutions listed therein, and Chemical Bank as fronting bank, as
administrative agent and as collateral agent (collectively, the "Lenders"),
Finance obtained a term loan (the "Term Loan") from certain Lenders (the "Term
Loan Lenders") and a revolving credit loan (the "Revolving Credit Facility")
from certain Lenders (the "Revolving Credit Facility Lenders"). Farms provided
an unsecured guarantee of the payment of Finance's obligations under the Bank
Credit Agreement.

-15-
<PAGE> 22

Revolving Credit Facility

Principal, Maturity and Interest. The maximum availability
under the Revolving Credit Facility is $80 million. As of the Commencement
Date, approximately $57 million in principal amount was outstanding under the
Revolving Credit Facility (excluding the letter of credit). The maturity date
is December 31, 1999. The interest rate is the applicable base rate from time
to time, plus 1.5%, payable quarterly in arrears.

Borrowing Base. The availability of credit under the
Revolving Credit Facility is measured by a borrowing base formula tied to,
among other things, the live hog market value and eligible accounts receivable.

Collateral. Finance's obligations under the Revolving Credit
Facility are collaterally secured by, among other things, a first lien on
Finance's working capital assets, including all inventory, accounts receivable,
cash and certain contract rights. For a more detailed explanation of the
collateral security, see Section III.D.3, "General Information -- Long-Term
Debt, Other Debt and Preference Unit Equity Interests; Lien Priorities of
Secured Creditors."

Term Loan

Principal, Maturity and Interest. The outstanding principal
amount of the Term Loan, as of the Commencement Date, was approximately $10.2
million. The maturity date is June 30, 1999. The interest rate is the
applicable base rate from time to time, plus 1.5%, payable quarterly in
arrears. Amortization of principal on the Term Loan was to commence in the
second quarter of 1997.

Collateral. Finance's obligations under the Term Loan are
collaterally secured by, among other things, a shared first lien on certain
fixed assets located in Texas (including the National Hog Farms property and
the High Plains Ranch property), a shared second lien on the Texas Working
Capital Assets and a first lien on certain other Texas fixed assets. For a
more detailed explanation of the collateral security, see Section III.D.3,
"General Information -- Long-Term Debt, Other Debt and Preference Unit Equity
Interests; Lien Priorities of Secured Creditors."

Collateral Sharing. To the extent the proceeds of the
collateral securing the Revolving Credit Facility or the Term Loan are
insufficient to repay the obligations related to such indebtedness, the
Revolving Credit Facility Lenders and the Term Loan Lenders agreed to share pro
rata in the proceeds of the total collateral security pledged to both groups of
Lenders, based on the amount of each Lender's outstanding loans.

Finance has been in default under the Bank Credit Agreement
since April 15, 1996.

-16-
<PAGE> 23

2. Secured Notes

As of the Commencement Date, Finance had four series of
Secured Notes outstanding:

- 12% Senior Secured Exchange Notes due 2000 (the "1992 Notes")
issued pursuant to the Indenture dated as of March 15, 1995
(the "1992 Note Indenture"), among Finance, Farms and United
States Trust Company of New York as trustee;

- Senior Secured Discount Exchange Notes due 2003 (the "1993
Notes") issued pursuant to the Indenture dated as of March 15,
1995, among the same parties;

- 12 1/4% Senior Secured Exchange Notes due 2004 (the "1994
Notes") issued pursuant to the Indenture dated as of March 15,
1995, among the same parties; and

- 12 1/4% Senior Secured Note due 1997 (the "1995 Note") issued
pursuant to the Note Purchase Agreement dated as of December
15, 1995, among Finance, Farms and Morgan Stanley Group Inc.
("Morgan Stanley Group").

On the Commencement Date, the 1992 Notes, 1993 Notes, and 1994
Notes were held by six institutions for their own account or for funds and
other accounts advised by such institutions. The 1995 Note currently is held
by Morgan Stanley Group. Morgan Stanley & Co. Incorporated ("MS&Co."), after
the Commencement Date, has agreed to purchase a substantial amount of the
Secured Notes and Preference Unit Equity Interests from funds and accounts
managed by one institution. As a result, the amount of New PIK Notes and
non-voting New LLC Interests to be issued to Morgan Stanley Group and its
affiliates pursuant to the Plan may increase by a material amount. MS&Co. may
sell this position at any time and may do so promptly. As provided in the
"lock-up" agreement, MS&Co. would be bound by the terms thereof.

The 1992 Notes, 1993 Notes and 1994 Notes were registered
under the Securities Act of 1933, as amended, and were deregistered on or about
April 17, 1996, with the consent of the Securities and Exchange Commission.

1992 Notes. As of the Commencement Date, the aggregate
allowed amount of principal and interest for the 1992 Notes (the "1992 Note
Claims") was $129,896,640. The stated maturity is September 15, 2000. The
interest rate is 12% per annum, payable semiannually each March 15 and
September 15. No interest has been paid on the 1992 Notes since September 15,
1995. On March 15, 1996, Finance defaulted in the payment of interest then due
and payable on the 1992 Notes. Under the terms of the 1992 Note Indenture,
such default matured into an Event of Default 30 days after such default.
Farms guaranteed the payment of the 1992 Notes and collaterally secured such
guarantee.

-17-
<PAGE> 24

1993 Notes. The aggregate principal amount of the 1993 Notes
at maturity is $207,761,000 ($150 million gross sale proceeds at the time of
issuance). As of the Commencement Date, the aggregate allowed amount of
principal and interest for the 1993 Notes (the "1993 Note Claims") was
$202,860,976. The interest rate is accrued at the rate of 12% per annum, with
no cash interest accruing prior to September 15, 1996. Commencing March 15,
1997, cash interest on the 1993 Notes would be payable March 15 and September
15 of each year. The stated maturity is September 15, 2003. Farms guaranteed
the payment of the 1993 Notes and collaterally secured such guarantee.

1994 Notes. As of the Commencement Date, the aggregate
allowed amount of principal and interest for the 1994 Notes (the "1994 Note
Claim") was $106,666,680. The stated maturity is June 15, 2004. The interest
rate is 12 1/4% per annum, payable semiannually each June 15 and December 15.
Farms has been current in making interest payments on the 1994 Notes through
December 15, 1995. Farms guaranteed the payment of the 1994 Notes, but has not
collaterally secured such guarantee.

1995 Note. As of the Commencement Date, the aggregate allowed
amount of principal and interest for the 1995 Note (the "1995 Note Claim") was
$6,933,334. The stated maturity is March 31, 1997, subject to extension, at
the holder's option, to May 31, 1997. The interest rate is 12 1/4% per annum,
payable semiannually each June 1 and December 1. Farms guaranteed the payment
of the 1995 Note and has collaterally secured such guarantee.

3. Lien Priorities of Secured Creditors

The relative lien priorities among the Revolving Credit
Facility, the Term Loan, the 1992 Notes, the 1993 Notes, the 1994 Notes and the
1995 Note are established pursuant to the Amended and Restated Collateral Trust
and Intercreditor Agreement dated as of September 15, 1992, as amended (the
"Collateral Trust Agreement"), among Finance, Farms, Finance Holdings, Firstar
Financial Services (a division of Firstar Bank Milwaukee, N.A.), Citizens Bank
of Princeton, MS&Co., and United States Trust Company of New York as collateral
trustee. The following is a summary of such priorities; capitalized terms used
in the chart are defined in the Collateral Trust Agreement:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Type of Description of Collateral Security Previously
Indebtedness Granted to the Lenders and the Holders of Secured Notes
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Revolving Credit First liens on Working Capital Lender Collateral wherever located.
Facility
- ----------------------------------------------------------------------------------------------------------------------------
Term Loan First liens on (i) 1994 Additional Finance Real Property, (ii) 1994 Additional Finance Personal
Property, (iii) 1994 Additional Finance Equipment to the extent not securing obligations to the
Equipment Finance Lenders, and (iv) 1994 Additional Finance Account Collateral, such liens to be
shared pari passu with the 1994 Notes and the 1995 Note;

First liens on (i) Chisum Ranch and the Headquarters Site located in Hartley and Dallam Counties
in Texas, respectively, (ii) property located in Dallam County, Texas and Hartley County, Texas,
and (iii) Additional Finance Equipment that constitutes Additional Specified Texas Property and
does not secure the obligations

</TABLE>

-18-
<PAGE> 25

<TABLE>
<CAPTION>
Type of Description of Collateral Security Previously
Indebtedness Granted to the Lenders and the Holders of Secured Notes
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C>
of the Equipment Finance Lenders;

Second liens on (i) Additional Finance Equipment that constitutes Additional Specified Texas
Property and secures the obligations to the Equipment Finance Lenders, and (ii) Additional Finance
Livestock that constitutes Additional Specified Texas Property.

- ----------------------------------------------------------------------------------------------------------------------------
1992 Notes, 1993 First liens on (i) Finance/Noteholder Real Property, and (ii) Finance/Noteholder Personal
Notes and 1995 Note, Property;
pari passu
First liens on (i) Finance Account Collateral, (ii) the Farms/Finance Note and collateral securing
such note, and (iii) Finance Equipment to the extent not securing obligations to the Equipment
Finance Lenders; and

Second liens on (i) Finance Livestock, (ii) certain bank deposits, and (iii) Finance Equipment to
the extent securing obligations to the Equipment Finance Lenders.

- ----------------------------------------------------------------------------------------------------------------------------
Farms' Guarantee of First liens on (i) PSF Account Collateral, (ii) PSF/Noteholder Real Property, and (iii)
1992 Notes, 1993 PSF/Noteholder Personal Property.
Notes and 1995 Note,
pari passu

- ----------------------------------------------------------------------------------------------------------------------------
1994 Notes and 1995 First liens on (i) 1994 Additional Finance Real Property, (ii) 1994 Additional Finance Personal
Note, pari passu Property, (iii) 1994 Additional Finance Equipment to the extent not securing obligations to the
Equipment Finance Lenders, and (iv) 1994 Additional Finance Account Collateral, such liens to be
shared pari passu with the Term Loan and the 1995 Note; and

Second liens on (i) 1994 Additional Finance Livestock, and (ii) 1994 Additional Finance Equipment
to the extent securing obligations to the Equipment Finance Lenders, such liens to be shared pari
passu with the Term Loan and the 1995 Note.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

4. Preference Unit Equity Interests

In September 1992, Finance privately placed $26,600,000 of
preferred limited partnership interests in Finance (collectively, the
"Preference Unit Equity Interests"), pursuant to the Amended and Restated
Exchangeable Preference Unit Purchase Agreement dated as of September 15, 1992,
as amended and restated as of October 7, 1993. Farms guaranteed the
obligations of Finance with respect to the Preference Unit Equity Interests on
an unsecured basis. The Preference Unit Equity Interests, which mature on
October 1, 1996, carry the dividend rate of 12.5% per annum payable in cash
semiannually. Unpaid distributions are cumulative and compounded, and are paid
when sufficient funds are available. The outstanding amount of the Preference
Unit Equity Interests as of the Commencement Date was approximately $31
million, including accretions. On the Commencement Date, the Preference Unit
Equity Interests were held by (i) five institutions for their own account or
for funds and other accounts managed by such institutions (which are also
holders of one or more series of the Secured Notes), which held in the
aggregate 99% of such interests, and (ii) CFI, which holds 1% of such
interests.

-19-
<PAGE> 26

5. Certain Interaffiliate Obligations
and Other Transactions

Farms/Finance. As of the Commencement Date, Farms' long-term
debt included a secured demand note dated September 15, 1992, as amended and
restated on October 7, 1993, issued to Finance relating to the construction
funding provided by Finance to Farms (the "Farms/Finance Note"). Interest on
the Farms/Finance Note is accreted monthly at the Federal short-term rate. The
obligations of Farms under the Farms/Finance Note are secured by substantially
all the assets of Farms, such obligations being subordinated to the security
interests granted by Farms as collateral security for the guarantees of payment
of the 1992 Notes, 1993 Notes and 1995 Note. The Farms/Finance Note and the
related collateral have been pledged by Finance to the Collateral Trustee for
the benefit of the holders of the 1992 Notes, 1993 Notes and 1995 Note.
Approximately $216 million was outstanding under the Farms/Finance Note as of
December 31, 1995. The net amount of the Claims of Finance against Farms under
the Farms/Finance Note, after deducting approximately $48 million owed by
Finance to Farms for transactions pursuant to the Operating Agreement, is
approximately $172 million (the "Farms/Finance Note Claim").

Finance Holdings/Finance. At the time Finance was created, it
granted Finance Holdings a put on Finance Holdings' common limited partnership
interests in Finance pursuant to that certain Amended and Restated Put
Agreement dated as of September 15, 1992, as amended (the "Put Agreement").
The put may be exercised in the event of certain changes in Missouri corporate
farming law and has not been exercised as of the Commencement Date. The put is
secured by a subordinated security interest in Finance's assets, including an
assignment of Finance's security interest under the Farms/Finance Note. Farms
guaranteed Finance's obligations under the put on a secured basis.

Harms & Gordon/Finance. In August 1991, Messrs. Harms and
Gordon jointly borrowed $1 million from Finance to finance the purchase of the
capital stock of Farms (the "Farms Stock Loan"). The Farms Stock Loan is
secured by the capital stock of Farms. The obligations of Messrs. Harms and
Gordon with respect to the Farms Stock Loan are non-recourse and, accordingly,
there is no personal liability associated with the Farms Stock Loan. The Farms
Stock Loan bears interest at the Federal short-term rate. Pursuant to the
Stock Option Agreement, dated as of August 13, 1991 (the "Option Agreement"),
Finance holds an option to acquire all of the capital stock of Farms from
Messrs. Harms and Gordon at a price equal to the adjusted net asset value of
Farms. The option may be exercised in the event of certain changes in Missouri
corporate farming law and has not been exercised as of the Commencement Date.

CFI/Finance. As of the Commencement Date, CFI owed
approximately $268,700 to Finance.

Premium Holdings/Finance. As of the Commencement Date,
Premium Holdings owed approximately $270,000 for professional fees, debt
issuance costs and other expenses that Finance paid on behalf of Premium
Holdings.

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CFI/Morgan Stanley Funds. As of the Commencement Date, CFI
was a holder of certain unsecured capital contribution notes issued by the
Morgan Stanley Funds over a period of time in an aggregate outstanding amount
of $20 million (collectively, the "Capital Contribution Notes").

IV.

EVENTS PRECEDING THE COMMENCEMENT OF THE CHAPTER 11 CASES

A. Factors That Precipitated the Need
for Financial Restructuring

- Commodities Prices. PSF's operations and financial
condition are significantly affected by the cost of feed stocks and by the
selling prices for hogs, pork and pork products, all of which are determined by
constantly changing market forces of supply and demand over which PSF has no
control. PSF's feed component costs are primarily dependent on crop conditions
in the United States, which can be volatile as a result of a number of factors,
the most important of which are weather, current and projected feed stock
supplies and prices, grain export prices and supports, and the federal
government's agricultural policies.

Poor harvest results for 1995 caused feed stock prices to
increase significantly in 1996, while hog prices descended to unprecedented low
levels. Live hog market prices did not begin to increase until the end of the
first quarter of 1996. Such commodities prices are of material importance to
the Debtors. The cost of feed in any swine livestock business ranges between
55% and 65% of the total cost to raise an animal to market weight. The average
market price of corn rose between 1994 and 1995 from $2.60 per bushel to $2.99
per bushel, reaching approximately $5.07 per bushel as at May 22, 1996. During
the same period of time, the average market price of soybeans rose from $182.07
per ton to $187.84 per ton, reaching approximately $238 per ton as at May 22,
1996.

During the same period of time, the average market price of
live hogs plummeted to reach levels not experienced on a comparative basis
during the last 20 years. For example, in November 1994, the average live hog
market price was $28.76 per hundredweight (100 pounds). This is in marked
contrast to the average live hog market price of $43.70 per hundredweight in
November 1993. Although the current average live hog market price has risen to
$63.00 per hundredweight, as at May 22, 1996, operating income continued to be
significantly negatively affected by the unprecedented cost of feed stocks.

Escalation of prices for feed stocks and volatility in live
hog prices have had a materially adverse effect on the operations of Farms.
Farms estimates that, on an annual basis, a $1 per hundredweight change in live
hog market prices has an impact of approximately $4.7 million in annual
revenues, a $.10 per bushel change in corn prices has an

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impact of approximately $1.4 million in annual revenues, and a $10/ton change
in soybean prices has an impact of approximately $1.4 million on Farms'
revenues.

- Herd Productivity and Processing Plant. Furthermore,
in 1995, which was the first complete year of full capacity operations, PSF
experienced productivity problems with its sow herd. The number of pigs born
alive per litter, the farrowing death loss and the nursery death loss, the
number of pigs placed per sow per year, the grow/finish death loss, and the
feed conversion ratio, were, for the most part, materially less than
anticipated. All of these factors contributed to lower than projected
revenues.

- Personnel. Recruitment and retention of qualified
personnel have been a challenge for PSF. PSF initially has experienced a
shortage of sufficiently qualified people for necessary positions. That
situation has been substantially remedied.

- Leverage. The majority of PSF's facilities have been
recently built and required substantial capital expenditures, which were
financed at high rates of interest. As a consequence, PSF is highly leveraged
with a debt to total capitalization ratio exceeding 90%, which is much higher
than its competitors. PSF's interest expense in 1995 aggregated approximately
$62 million.

- Reduction in Credit Availability. Since the
availability of credit to PSF under the Revolving Credit Facility is tied to,
among other things, the live hog market prices and eligible accounts
receivable, the fall in the live hog market prices contracted PSF's borrowing
capacity under the Revolving Credit Facility. In February 1996, the Revolving
Credit Facility Lenders exercised powers under that facility to reduce
availability of credit thereunder. Since that time, PSF has been unable to
borrow any additional amounts under the Revolving Credit Facility. PSF has
also experienced some contraction of normal trade credit with the resulting
need for increased working capital funds.

B. Remedial Action Taken by PSF

In response to the problems described above, PSF implemented a
number of actions and strategies in an attempt to improve its operations. For
instance, PSF implemented a cost-cutting program involving, among other things,
workforce reductions of approximately 175 employees, reductions in annualized
management compensation of approximately $1.1 million as at May 15, 1995, and
other actions intended to reduce operating costs at PSF's Missouri and Texas
facilities.

PSF also began selling or disposing of certain assets which
were not integral to its operations. In February 1996, PSF sold Mariah(R)
Foods, an Indiana processor of live hogs and producer of smoked hams, for the
gross purchase price of approximately $2 million, plus an additional adjustment
for inventory. In December 1995, PSF sold Bird Farm(R), a Midwestern marketer
of sausage and other pork products, to its original owners, for a nominal

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amount in order to avoid substantial liabilities associated with its
operations. The sale of Bird Farm(R) resulted in a loss of approximately
$250,000 to PSF.

Notwithstanding the foregoing efforts, the contraction of bank
credit availability, the high cost of capital, the limitations of normal trade
credit terms, and volatility in live hog and feed stock prices, led to
liquidity problems and recurring losses. Consequently, the need for a
restructuring of PSF's existing highly leveraged capital structure became
manifest. PSF extensively reviewed and analyzed the constituent parts of its
business and developed a comprehensive business plan for the years 1996 through
1998 (the "Business Plan"). After a review and analysis of its position in the
live hog and pork processing industry and the reassessment of its viability,
PSF undertook to implement a financial restructuring.

During the end of 1995, PSF initiated discussions with the
Lenders and holders of the Secured Notes as to the need to restructure and
reorganize its business and finances. In early 1996, an informal committee of
certain holders of the Secured Notes (the "Bondholders' Committee") was
organized in connection with a restructuring of the obligations evidenced by
the Secured Notes. The Bondholders' Committee currently consists of
representatives of Putnam Investment Management, The Prudential Insurance
Company of America, Inc., GEM Capital Corporation (Cypress), and Loews
Corporation, which together hold approximately 85% of the Secured Notes.
Negotiations as to the terms and conditions of a restructuring and a proposed
chapter 11 plan extended over a period of several months. The Lenders and the
Bondholders' Committee each engaged professionals to review and assess the
business of, and restructuring proposals made by, PSF. Concurrently, PSF
conducted negotiations with the Lenders with respect to providing financing
during the administration of cases under chapter 11 of the Bankruptcy Code, if
necessary, and providing additional financing upon emergence from chapter 11.
As a consequence of these discussions and negotiations, the parties have agreed
to a restructuring transaction which forms the basis of the Plan. The parties
believe that such restructuring, as incorporated into the Plan, if implemented,
would remedy PSF's financial distress and enhance PSF's overall
creditworthiness and viability.

The Lenders, the members of the Bondholders' Committee, Morgan
Stanley Group Inc. and MS&Co. executed a "lock-up" agreement, dated as of July
1, 1996, pursuant to which they agreed to vote to accept the Plan and no other
chapter 11 plan for the Debtors and not to transfer their Claims except to
entities that agree to be bound by the terms of the agreement. In addition,
each holder of a Secured Bank Claim severally agreed to enter into the New
Senior Credit Agreement at the time of consummation of the Plan, subject to the
terms and conditions of the New Senior Credit Agreement. PSF agreed to pursue
diligently the plan confirmation process. The obligations under the agreement
terminate if (i) the order approving the Disclosure Statement is not entered by
September 1, 1996, (ii) the Effective Date of the Plan does not occur by
October 31, 1996, (iii) an event occurs having a material adverse change on
PSF's business, assets or operations, or (iv) the Bankruptcy Court enters an
order, the practical effect of which is to render it highly unlikely that the
Plan can be consummated.

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<PAGE> 30

THE REORGANIZATION CASES

A. Commencement of the Reorganization Cases

Consistent with the agreements reached with the Lenders and
the Bondholders' Committee, the Chapter 11 Cases were commenced on July 2,
1996, and a disclosure statement and a chapter 11 plan were concurrently filed.
The Debtors continue to operate their business and manage their properties as
Debtors in Possession pursuant to sections 1107 and 1108 of the Bankruptcy
Code.

B. Creditors' Committee

In light of the prearranged chapter 11 plan, the existence and
continued functioning of a Bondholders' Committee, the Bankruptcy Court's order
authorizing the Debtors to pay prepetition ordinary course liabilities (with
certain exceptions) and the acquiescence of the major unsecured creditors, the
United States Trustee elected in the exercise of its discretion not to appoint
a statutory committee of unsecured creditors.

C. Administration of the Chapter 11 Cases

- Operational Matters. On the Commencement Date, the
Debtors obtained a series of orders from the Bankruptcy Court designed to
minimize any disruption of business operations and to facilitate their
reorganization.

- Payment of Debt Incurred in the Ordinary Course of
Business. The objective of the Chapter 11 Cases is to restructure the
outstanding indebtedness to institutional creditors holding the Secured Notes
and the outstanding Preference Unit Equity Interests held by institutional
equity security holders. It is essential to the Plan that relationships with
trade vendors and other holders of debt incurred in the ordinary course of
business, and relationships with employees and consultants, not be disrupted or
impaired. In that connection, by order dated July 2, 1996, the Bankruptcy
Court authorized the Debtors to pay, in their discretion, all undisputed
indebtedness and obligations (other than the indebtedness or liabilities that
are impaired and to be restructured under the Plan and the liabilities relating
to the Texas Expansion) incurred in the ordinary course of business as such
indebtedness and obligations mature in accordance with their terms, and to pay
salaries, wages, benefits and other amounts owed to employees and consultants.
These include obligations that were, or may have been, incurred prior to the
Commencement Date.

- DIP Credit Agreement, Use of Cash Collateral and
Adequate Protection. In order to have sufficient funds to operate during the
course of the Chapter 11 Cases and to provide confidence to suppliers and
employees, PSF entered into that certain Credit Agreement, dated as of July 2,
1996, among Finance, as borrower, Farms as guarantor, Chemical

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<PAGE> 31

Bank as agent, and the Lenders named in such agreement (together with related
documents delivered pursuant to such agreements, the "DIP Credit Agreement").

By order dated July 2, 1996, the Bankruptcy Court authorized
PSF to obtain credit pursuant to the DIP Credit Agreement in an amount not
exceeding $39 million (the "Interim DIP Financing Order"). As there were no
objections to the Interim DIP Financing Order, it became a final order on July
24, 1996 (the "DIP Financing Order"), and PSF may obtain credit to incur
obligations not exceeding the commitment amount of $99,831,517. The DIP Credit
Agreement is scheduled to expire, in the absence of an event of default
thereunder, on the earlier of December 31, 1996, or the Effective Date of a
consummated plan of reorganization for PSF, subject to extension to June 1997.

Pursuant to the DIP Financing Order, PSF is required to and
has provided adequate protection to the Lenders for the use of cash collateral
during the pendency of the Chapter 11 Cases and for the liens primed by the DIP
Financing Documents. The adequate protection consists of (i) the granting of
new liens and security interests to the Lenders to secure the amount, if any,
equal to the excess of (a) the aggregate diminution after the Commencement Date
of the value of the Lenders' collateral over (b) the aggregate reductions after
the Commencement Date in the Secured Bank Claims from the proceeds of such
collateral, (ii) the payment of current interest to the Lenders at the
non-default rate during the pendency of the Chapter 11 Cases on account of the
indebtedness outstanding under the Bank Credit Agreement, (iii) application of
substantially all cash in the possession and control of PSF to pay down the
prepetition obligations under the Bank Credit Agreement, and (iv) the granting
of administrative expense priority to the holders of the Secured Notes for
Claims arising from diminution of value of their liens during the pendency of
the Chapter 11 Cases and payment of reasonable professional fees and expenses
of attorneys and financial advisors to the Bondholders' Committee.

- Bar Date Order. On July 23, 1996, the Bankruptcy
Court entered an order establishing August 15, 1996, as the last date by which
proofs of claim against the Debtors had to be filed (the "Bar Date Order"). On
or before July 26, 1996, notice of entry of the Bar Date Order was given to all
current holders of claims against the Debtors.

VI.

THE PLAN

The Debtors believe that (i) the Plan will result in
substantially greater recoveries for the holders of Allowed Claims and Equity
Interests than would otherwise be recovered if PSF were liquidated under
chapter 7 of the Bankruptcy Code, and (ii) the Plan will afford PSF the
opportunity and ability to continue in business as a viable going concern.

The Plan is annexed hereto as Exhibit A and forms a part of
this Disclosure Statement. The following is a summary of the Plan:

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<PAGE> 32

A. Treatment of Compensation and Reimbursement
Claims and Other Administrative Expenses

1. Compensation and Reimbursement Claims

Compensation and reimbursement Claims are Administrative
Expense Claims for compensation of professionals and reimbursement of expenses
incurred by such professionals, pursuant to subsections 503(b)(2), 503(b)(3),
503(b)(4), and 503(b)(5) of the Bankruptcy Code (the "Compensation and
Reimbursement Claims"). All payments for Compensation and Reimbursement Claims
will be made in accordance with the procedures established by the Bankruptcy
Code, the Bankruptcy Rules, the Local Rules and requirements of the office of
the United States Trustee guidelines relating to the allowance of interim and
final compensation for services rendered and reimbursement of expenses. The
Bankruptcy Court will review and determine all applications of compensation for
services rendered and reimbursement of expenses.

Section 503(b) of the Bankruptcy Code also provides for
payment of compensation to creditors, indenture trustees and other entities
making a "substantial contribution" to a reorganization case, and to attorneys
for and other professional advisors to such entities. Such requests must be
approved by the Bankruptcy Court after a hearing on notice at which the Debtors
and other parties in interest may participate and, if appropriate, object to
the allowance of any compensation and reimbursement of expenses.

Each holder of a Compensation and Reimbursement Claim (i)
shall file its respective final application for an allowance of compensation
for services rendered and reimbursement of expenses incurred by the date that
is forty-five (45) days after the Effective Date, and (ii) will be paid in full
such amounts as are Allowed by the Bankruptcy Court (a) upon the later of the
Effective Date and the date upon which the order relating to the allowance of
any such Administration Expense Claim becomes a Final Order or (b) upon such
other terms as may be mutually agreed between such holder of such Claim and the
Reorganized Debtors.

2. Other Administrative Expense Claims

Other Administrative Expense Claims are rights to payment as a
cost or expense of administration of the Chapter 11 Cases that are allowed
under sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation, any actual and necessary costs and expenses of preserving the
estates, any actual and necessary costs or expenses of operating the business
of the Debtors, any indebtedness or obligations incurred by the Debtors in
Possession in connection with the conduct of their business, including, without
limitation, for the indebtedness or acquisition or lease of property, and fees
or charges assessed against the estates of the Debtors under section 1930,
chapter 123, title 28, United States Code.

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<PAGE> 33

The Plan provides that Administrative Expense Claims will be
paid in full on the Effective Date. Liabilities incurred in the ordinary
course of business by the Debtors in Possession after the Commencement Date and
indebtedness or obligations arising under loans or advances to the Debtors in
Possession, whether or not incurred in the ordinary course of the business of
the Debtors will be paid by the Reorganized Debtors in accordance with the
terms and subject to the conditions of any agreements governing, instruments
evidencing on other documents relating to such transactions.

3. Compensation to Attorneys and Advisors to Bondholders'
Committee, and the Indenture Trustee and the Collateral
Trustee

Notwithstanding anything contained in the Plan or this
Disclosure Statement to the contrary, the fees and expenses of the legal and
financial advisors to the Bondholders' Committee will be paid as set forth in
the DIP Financing Order. To the extent not previously paid during the Chapter
11 Cases pursuant to the DIP Financing Order, the reasonable fees and expenses
incurred on or after the Commencement Date by attorneys and financial advisors
retained by the Bondholders' Committee with the consent of the Debtors prior to
the Commencement Date and the reasonable fees and expenses incurred by the
Indenture Trustee and the Collateral Trustee will be paid (without application
by or on behalf of any such professionals to the Bankruptcy Court, and without
notice and a hearing, unless specifically required by the Bankruptcy Court upon
request of a party in interest) by Reorganized Finance and Newco as an
Administrative Expense Claim under the Plan. If there is a dispute about the
amount of fees and expenses to be paid to any such professional, the amount of
any such fees and expenses will be determined by the Bankruptcy Court.

B. Classification and Treatment of Claims and Equity Interests

1. Class 1 - Priority Tax Claims - Priority Tax Claims are those
Claims for taxes entitled to priority in payment under section
507(a)(8) of the Bankruptcy Code. Allowed Priority Tax Claims
will be paid in the ordinary course of business during the
Chapter 11 Cases and, to the extent unpaid, will be paid in
full by the applicable Reorganized Debtor if against Finance
Holdings, Premium Holdings or CFI, and, with respect to such
Claims against Finance or Farms, by Newco in accordance with
the terms and conditions of governing agreements or applicable
law.

2. Class 2 - Other Priority Claims - Other Priority Claims are
Claims which are entitled to priority in accordance with
section 507(a) of the Bankruptcy Code (other than
Administrative Expense Claims and Priority Tax Claims).
Allowed Other Priority Claims will be paid in the ordinary
course of business during the Chapter 11 Cases and, to the
extent unpaid, will be paid in full by the applicable
Reorganized Debtor if against Finance Holdings, Premium
Holdings or CFI, and, with respect to such Claims against
Finance or Farms, by Newco in accordance with the terms and
conditions of governing agreements or

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applicable law. The Debtors estimate that there are no unpaid
Allowed Other Priority Claims.

3. Class 3 - Secured Bank Claims - Secured Bank Claims are those
Claims against Finance as obligor and Farms as guarantor
arising from or relating to the Bank Credit Agreement,
including Claims under the Revolving Credit Facility and the
Term Loan. Pursuant to the Plan, on the Effective Date, each
holder of an Allowed Secured Bank Claim will receive, in full
satisfaction of such Allowed Claim, Cash equal to the full
amount of such Allowed Claim. As of the Effective Date, (i)
all of the liens and security interests securing Secured Bank
Claims, and (ii) all Secured Bank Claims based upon guarantees
of collection, payment or performance of any obligation by
Farms, will be deemed relinquished and released. Pursuant to
the Plan, the Secured Bank Claims are Allowed Claims in the
principal amount of approximately $67,153,000, plus interest
at the non-default rate, fees, expenses and unreimbursed draws
on the letter of credit issued under the Bank Credit
Agreement.

4. Class 4 - Secured Note Claims - Secured Note Claims are those
Claims against Finance as borrower and Farms as guarantor
arising from the 1992 Notes, the 1993 Notes, the 1994 Notes
and the 1995 Note. Pursuant to the Plan and in accordance
with the Restructuring Transactions, on the Effective Date,
each holder of an Allowed Secured Note Claim will receive in
full satisfaction of such Allowed Claim its Pro Rata Share of
$101,496,978 in principal amount of New PIK Notes to be issued
by Newco and 9,216,789 New LLC Interests representing
approximately 92% of total New LLC Interests issued on the
Effective Date. As of the Effective Date, (i) all of the
liens and security interests securing Secured Note Claims; and
(ii) all Claims based upon guarantees of collection, payment
or performance of any obligation by Farms, will be deemed
relinquished and released. Pursuant to the Plan, the Secured
Note Claims are Allowed in the aggregate amount of
$446,357,630, representing principal plus accrued but unpaid
interest to the Commencement Date, as follows: (i)
$129,896,640 in 1992 Note Claims, (ii) $202,860,976 in 1993
Note Claims, (iii) $106,666,680 in 1994 Note Claims, and (iv)
$6,933,334 in 1995 Secured Note Claims.

5. Class 5 - Other Secured Claims - Other Secured Claims are
Secured Claims (other than the Secured Bank Claims, the
Secured Note Claims, the Construction Claims, and the
Farms/Finance Note Claim) that are secured by a lien, pledge,
or a security interest in the Debtors' real or personal
property, including Claims arising from certain financing
leases for machinery, equipment, or other personal property of
Finance or Farms. Pursuant to the Plan, all Allowed Other
Secured Claims will be reinstated as against the applicable
Reorganized Debtor (or, pursuant to the Restructuring
Transactions, against Newco) and rendered unimpaired pursuant
to section 1124 of the

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<PAGE> 35

Bankruptcy Code on the later of the Effective Date or the date
such Claim becomes an Allowed Claim.

6. Class 6 - Construction Claims - Construction Claims are those
Claims, whether secured or unsecured, arising from a contract
or subcontract related to the Texas Expansion. Pursuant to
the Plan, each holder of an Allowed Construction Claim will
receive, in full satisfaction of such Claim, Cash in the full
amount of such Allowed Claim, on the later of the Effective
Date or the date that such Claim becomes an Allowed Claim.
Upon payment in full of an Allowed Construction Claim pursuant
to the Plan, each holder of such Allowed Claim shall be deemed
to have relinquished and released any Lien securing such
Claim, and shall, prior to receiving any distribution under
the Plan, execute appropriate written documentation
effectuating or confirming such relinquishment or release.
The Debtors estimate that the Allowed Construction
Claims aggregate approximately $3.8 million.

7. Class 7 - General Unsecured Claims - General Unsecured Claims
are all unsecured Claims, other than (i) Compensation and
Reimbursement Claims, (ii) Other Administrative Expense
Claims, (iii) Priority Tax Claims, (iv) Other Priority Claims,
(v) Construction Claims, (vi) Farms/Finance Note Claim, and
(vii) Other Intercompany Claims. General Unsecured Claims
include, among other things, Claims of the Debtors' trade
vendors and suppliers and Claims arising from the Debtors'
rejection of executory contracts and unexpired leases.
Pursuant to the Plan, to the extent unpaid prior to the
Effective Date, all Allowed General Unsecured Claims will be
paid in full by the applicable Reorganized Debtor if against
Finance Holdings, Premium Holdings or CFI, and, with respect
to such Claims against Finance or Farms, by Newco in
accordance with the terms and conditions of governing
agreements, custom or trade practice.

8.A. Subclass 8.A - Farms/Finance Note Claim - The Farms/Finance
Note Claim is a Claim held by Finance against Farms for funds
advanced to Farms for construction, capital expenditures and
operating needs, and is secured by a pledge of certain real
and personal property of Farms. On the Effective Date,
pursuant to the Restructuring Transactions, the Farms/Finance
Note Claim will be transferred and assigned to Reorganized
Finance, which, in turn, will transfer and assign such note to
Newco. On the Effective Date, Newco will receive, by process
of law and in satisfaction of the indebtedness represented by
the Farms/Finance Note, and by enforcement of the Liens on
Farms' assets to secure the payment of such indebtedness, all
of the assets of Farms subject to the liabilities of Farms as
provided under the Plan.

8.B. Subclass 8.B - Other Intercompany Claims - Other Intercompany
Claims are all Claims held by one Debtor against any other
Debtor, excluding the

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Farms/Finance Note Claim. On the Effective Date, each holder
of an Allowed Other Intercompany Claim will receive payment of
$1,000 per such claim.

9.A. Subclass 9.A - Preference Unit Equity Interests in Finance -
The Preference Unit Equity Interests in Finance arise from the
Preference Unit Equity Interests issued by Finance in 1992 to
certain of the holders of the Secured Notes and CFI. Pursuant
to the Plan and in accordance with the Restructuring
Transactions, each holder of an Allowed Preference Unit Equity
Interest will receive, in full satisfaction of such Equity
Interest, its Pro Rata Share of $5,321,204 in principal amount
of New PIK Notes to be issued by Newco and 483,211 New LLC
Interests representing approximately 4.83% of total New LLC
Interests issued on the Effective Date.

9.B. Subclass 9.B - Premium Holdings' Limited Partnership Interests
in Finance - The Limited Partnership Interests in Finance held
by Premium Holdings are Equity Interests arising from Premium
Holdings' 26% common limited partnership interest in Finance.
On the Effective Date, Premium Holdings will receive, in full
satisfaction of such Equity Interests, (i) 78,000 New LLC
Interests representing .78% of total New LLC Interests issued
on the Effective Date, and (ii) Warrants to purchase 532,530
New LLC Interests in an amount representing approximately 4.4%
of the outstanding New LLC Interests, on a fully diluted
basis.

9.C. Subclass 9.C - Finance Holdings' Limited Partnership Interests
in Finance - The Limited Partnership Interests in Finance held
by Finance Holdings are Equity Interests arising from Finance
Holdings' 73% common limited partnership interest in Finance.
On the Effective Date, Finance Holdings will receive, in full
satisfaction of such Equity Interests, (i) 219,000 New LLC
Interests representing 2.19% of total New LLC Interests issued
on the Effective Date, and (ii) Warrants to purchase 1,495,180
New LLC Interests in an amount representing approximately
12.41% of the outstanding New LLC Interests, on a fully
diluted basis.

9.D. Subclass 9.D - CFI's General Partnership Interest in Finance -
The General Partnership Interest in Finance held by CFI is an
Equity Interest arising from CFI's 1% general partnership
interest in Finance. On the Effective Date, CFI will receive,
in full satisfaction of such Equity Interest, (i) 3,000 of New
LLC Interests representing .03% of total New LLC Interests
issued on the Effective Date, and (ii) Warrants to purchase
20,482 New LLC Interests in an amount representing
approximately .2% of the outstanding New LLC Interests, on a
fully diluted basis.

10. Class 10 - Equity Interests in Farms - Class 10 consists of
all Equity Interests of Farms. Pursuant to the Plan, all
Allowed Equity Interests in Farms will be

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canceled and the holders thereof will receive no
distributions on account of such interests.

11. Class 11 - Equity Interests in Premium Holdings - Class 11
consists of all Equity Interests of Premium Holdings.
Pursuant to the Plan, each holder of an Allowed Equity
Interest in Premium Holdings will retain such interest.

12. Class 12 - Equity Interests in Finance Holdings - Class 12
consists of all Equity Interests of Finance Holdings.
Pursuant to the Plan, each holder of an Allowed Equity
Interest in Premium Holdings will retain such interest.

13. Class 13 - Equity Interests in CFI - Class 13 consists of all
Equity Interests of CFI. Pursuant to the Plan, each holder of
an Allowed Equity Interest in CFI will retain such interest.

C. Securities to Be Issued Under the Plan

1. New PIK Notes

The New PIK Notes will be issued by Newco pursuant to a trust
indenture (the "New PIK Notes Indenture"), which will be qualified under the
Trust Indenture Act of 1939, as amended. An indenture trustee will be selected
before the Confirmation Hearing.

The New PIK Notes will be issued in an original aggregate
principal amount of $117,500,000, to be distributed as follows: (i)
$101,496,978 to the holders of the Secured Note Claims, (ii) $5,321,204 to the
holders of Preference Unit Equity Interests, and (iii) $10,681,818 to the
Morgan Stanley Funds. The New PIK Notes will bear interest at a fixed annual
rate of 11%, compounded semiannually. Interest will be paid in-kind until
payment in full of the New Term Loan, and thereafter will be payable in Cash.
The New PIK Notes will mature on the seventh anniversary of the Effective Date.
To the extent not prohibited by the New Senior Credit Agreement or the New
Second Priority Note Agreement, the PIK Notes will be subject to optional
redemption by Newco at any time at a premium starting at 111% of principal
amount, declining to par at the fifth anniversary of the Effective Date, and to
optional redemption by the holders of the New PIK Notes upon a change in
control.

The New PIK Notes will be guaranteed by Reorganized Finance
and will be collaterally secured by a lien on all assets of Newco, which lien
will be junior to the indebtedness and liens under the New Senior Credit
Agreement and to the indebtedness and liens under the New Second Priority Note
Agreement.

The New PIK Notes Indenture will contain customary and usual
affirmative covenants, including compliance with laws, payment of taxes and
maintenance of corporate existence, properties and insurance, and negative
covenants, including limitations on (i) the incurrence of new indebtedness and
liens, subject to permitted exceptions, (ii) disposition of assets, (iii)
transactions with affiliates, and (iv) restricted payments. Events of default
for the

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New PIK Notes will be usual for the indebtedness of this kind, with customary
grace and notice provisions, including non-payment of principal and interest,
violation of covenants, cross-default and cross-acceleration, material
judgments, bankruptcy, and invalidity of security documents.

2. New LLC Interests and Warrants

Pursuant to the Restructuring Transactions described in
Section VI.E.1, "The Plan -- Implementation of the Plan; Restructuring
Transactions," on the Effective Date, Finance will be merged into Reorganized
Finance to be formed prior to the Effective Date. All of the partnership
interests in Finance, including, without limitation, the general partnership
interest, the common limited partnership interests, and the Preference Unit
Equity Interests will be canceled on the Effective Date. Options to acquire
common limited partnership interests in Finance are executory contracts and
will be rejected as of the Effective Date.

In connection with the merger of Finance into a limited
liability company and pursuant to the Restructuring Transactions, holders of
Allowed Secured Note Claims and Allowed Preference Unit Equity Interests and
Premium Holdings, Finance Holdings and CFI (Classes 4 and Subclasses 9.A, 9.B,
9.C and 9.D, respectively) will receive all of the outstanding New LLC
Interests in Reorganized Finance, which will be a limited liability company.

Pursuant to the Plan and the LLC Agreement (described in
Section VII.A.2, "Governance and Management of Reorganized Finance, Newco and
Reorganized Debtors -- Management of Reorganized Finance, Newco and Reorganized
Debtors; Reorganized Finance"), and after giving effect to the Restructuring
Transactions, Reorganized Finance will issue 10,000,000 New LLC Interests,
which, subject to dilution for any employee options, will be distributed as
follows: (i) 9,216,789 New LLC Interests, in the aggregate, to the holders of
Allowed Secured Note Claims, (ii) 483,211 New LLC Interests, in the aggregate,
to the holders of Preference Unit Equity Interests, (iii) 78,000 New LLC
Interests to Reorganized Premium Holdings, (iv) 219,000 New LLC Interests to
Reorganized Finance Holdings, and (v) 3,000 New LLC Interests to Reorganized
CFI.

Pursuant to the Plan, Reorganized Finance will issue Warrants
to purchase up to 2,048,192 New LLC Interests (based on there being 10,000,000
such interests outstanding as of the Effective Date) at an exercise price of
$45 per share. The Warrants will be distributed as follows: (i) Warrants to
purchase 532,530 New LLC Interests, to Reorganized Premium Holdings, (ii)
Warrants to purchase 1,495,180 New LLC Interests, to Reorganized Finance
Holdings, and (iii) Warrants to purchase 20,482 New LLC Interests, to
Reorganized CFI. The Warrants will expire ten years following the Effective
Date. The terms and provisions of the Warrants are set forth in the Warrant
Agreement, the form of which is contained in the Plan Supplement as Exhibit I.

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The LLC Agreement provides that all New LLC Interests will
have voting rights, except that those New LLC Interests to be received by
Morgan Stanley Group Inc. and its affiliates (other than Premium Holdings) will
have no voting rights for the New LLC Interests (including any New LLC
Interests acquired by them upon exercise of Warrants) for so long as they hold
such interests. Certain of the entities which will receive equity securities
of Reorganized Finance have agreed among themselves to enter into an agreement
on the Effective Date which will impose certain rights to participate, or to
cause other parties to such agreement to participate, in sales of substantial
portions of the equity interests in Reorganized Finance.

3. Registration of New LLC Interests,
New PIK Notes and Warrants

The holders of each of the New LLC Interests, the New PIK
Notes and the Warrants will receive registration rights entitling them to (i)
have their securities included in a four-year shelf registration, (ii) certain
"piggy-back" registration rights with respect to other registration statements,
and (iii) certain demand registration rights after expiration of the four-year
shelf, in each case, in accordance with the terms of the registration rights
agreements, the forms of which are contained in the Plan Supplement as Exhibits
D, F and J, respectively.

D. Treatment of Executory Contracts and Unexpired Leases

Pursuant to sections 365(a), 365(f) and 1123(b)(2) of the
Bankruptcy Code, all executory contracts and unexpired leases that exist
between a Debtor and any person, including the Settlement Agreement and any
other agreements with the State of Missouri or its subdivisions, shall be
deemed assumed by the applicable Reorganized Debtor, and, subject to the
consent of the Bondholders' Committee, those executory contracts and unexpired
leases to which Farms or Finance is a party shall be assumed and assigned to
Newco, other than those executory contracts and unexpired leases (i) which have
been rejected pursuant to an order of the Bankruptcy Court entered prior to the
Confirmation Date, (ii) as to which a motion for approval of the rejection of
such contracts or leases has been filed and served prior to the Confirmation
Date, or (iii) which are set forth in Schedule 5.1 to the Plan. The Put
Agreement, the Option Agreement and all options for Finance limited partnership
interests and for Premium Holdings common stock are executory contracts and
will be rejected as of the Effective Date. Farms' guarantee of Finance's
obligations under the Put Agreement will be canceled and the liens on Farms'
property pledged as collateral for Farms' guarantee will be extinguished as of
the Effective Date. All of the notes, pledges, liens and security interests
related to the Farms Stock Loan and the Put Agreement will also be extinguished
as of the Effective Date.

The Confirmation Order will constitute an order of the
Bankruptcy Court approving all such (i) assumptions, (ii) subject to the
consent of the Bondholders' Committee, assumptions and assignments to Newco of
those executory contracts and unexpired leases to which Farms or Finance is a
party, including the Settlement Agreement and any other agreements with the
State of Missouri or its subdivisions, and (iii) rejections of executory
contracts and unexpired leases set forth in Schedule 5.1 to the Plan as of the
Effective Date.

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<PAGE> 40

The Plan requires that all Claims for damages, if any, arising from the
rejection of an executory contract or unexpired lease be evidenced by a proof
of claim that is filed with the Bankruptcy Court and served upon attorneys for
the Debtors no later than thirty (30) days after the later of (i) notice of
entry of an order approving the rejection of such contract or lease and (ii)
notice of entry of the Confirmation Order. Failure to file a timely proof of
claim will result in such Claim being forever barred.

Pursuant to the Plan, all the Debtors' insurance policies and
any related agreements, documents or instruments, including, without
limitation, property, general liability, feed mill property, boiler and
machinery, automobile and physical damage, foreign liability, commercial
general liability, excess liability, commercial crime, fiduciary liability,
title insurance and directors' and officers' liability policies, and any
retrospective premium rating plans relating to such policies, are treated as
executory contracts and are assumed by the applicable Reorganized Debtor and,
subject to the consent of the Bondholders' Committee, those policies,
instruments and agreements to which Farms or Finance is a party, are assumed
and assigned to Newco.

Unless otherwise modified, terminated, or rejected prior to
the Effective Date, all employment, consulting and severance policies, and all
compensation and benefit plans, policies and programs of the Debtors applicable
generally to their present and former directors, officers, employees,
consultants or independent contractors, including, without limitation, all
savings plans, retirement and supplemental retirement plans, health care plans,
disability plans, severance benefit plans, incentive plans, and life,
accidental death and dismemberment insurance plans, but excluding options for
receipt of stock and/or partnership interests of any of the Debtors, (i) are
treated as executory contracts under the Plan and are assumed by the applicable
Debtor, (ii) subject to the consent of the Bondholders' Committee, with respect
to those executory contracts to which Farms or Finance is a party, are assumed
and assigned to Newco pursuant to sections 365(a), 365(f) and 1123(b)(2) of the
Bankruptcy Code, (iii) survive confirmation of the Plan and remain unaffected
thereby, and (iv) shall not be discharged in accordance with section 1141 of
the Bankruptcy Code.

Pursuant to the Plan, payments, if any, due to any person for
the purpose of providing reimbursement payments for retired employees and their
spouses and dependents for medical, surgical, or hospital care benefits, or
benefits in the event of sickness, accident, disability, or death under any
plan, fund, or program (through the purchase of insurance or otherwise)
maintained or established in whole or in part by the applicable Debtor prior to
the Commencement Date will be continued for the duration of the period such
Debtor has obligated itself to provide such benefits.

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<PAGE> 41

E. Implementation of the Plan

1. Restructuring Transactions

On or as of the Effective Date, the distributions provided for
under the Plan shall be effectuated pursuant to the following transactions (the
"Restructuring Transactions") in the following order:

a. Finance shall be merged with and into Reorganized
Finance, with Reorganized Finance surviving and Reorganized Premium Holdings,
Reorganized Finance Holdings, Reorganized CFI and holders of Allowed Preference
Unit Equity Interests becoming the initial members of Reorganized Finance with
economic interests in the form of New LLC Interests substantially identical to
their partnership interests in Finance, including that the former holders of
Allowed Preference Unit Equity Interests shall have the right to receive
distributions totaling the Preference Unit Accumulated Liquidation Preference
with respect to their membership interests prior to any of Reorganized Finance,
Reorganized Holdings or Reorganized CFI being entitled to receive any
distribution with respect to their membership interests, except that the
management of Reorganized Finance shall be vested in all of its members, and
all of the members of Reorganized Finance shall have limited liability;

b. Thereafter, (i) holders of Allowed Secured Note
Claims shall contribute, on a pro rata basis, all but $101,496,978 of their
Secured Note Claims in exchange for New LLC Interests in Reorganized Finance as
members, (ii) former holders of Allowed Preference Unit Equity Interests in
Finance will have a pro rata portion of their New LLC Interests in Reorganized
Finance redeemed in exchange for the obligation of Reorganized Finance to pay
$5,321,204 ("New LLC Debt") and (iii) the LLC Agreement shall be deemed adopted
by all of the members after giving effect to the foregoing clauses (i) and
(ii), and, as so adopted, shall reflect the fact that, following the admission
of holders of Allowed Secured Note Claims as members and the partial redemption
of the interests of former holders of Allowed Preference Unit Equity Interests,
such persons as a group will collectively hold (i) as members of Reorganized
Finance 97% of the outstanding New LLC Interests of Reorganized Finance and
(ii) debt of Reorganized Finance in the total amount of $106,818,182, in each
case, in aggregate; Reorganized Premium Holdings, Reorganized Finance Holdings
and Reorganized CFI will collectively hold 3% of the outstanding New LLC
Interests of Reorganized Finance and Morgan Stanley Group Inc. and its
affiliates (other than Premium Holdings) will have no right to participate in
the management of Reorganized Finance;

c. Reorganized Premium Holdings, Reorganized Finance
Holdings and Reorganized CFI shall receive Warrants to purchase New LLC
Interests;

d. Reorganized Finance shall transfer to Newco, in
exchange for all the capital stock of Newco, all of the assets of Finance
(including the Farms/Finance Note and all the capital stock of Princeton
Development Corp.), subject to all of the liabilities of Reorganized Finance
(including the New LLC Debt issued to former holders of Allowed

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<PAGE> 42

Preference Unit Equity Interests and the remaining Allowed Secured Note Claims
that were not exchanged for New LLC Interests, which indebtedness totals
$106,818,182). Moreover, Newco shall assume, and Reorganized Finance shall
thereafter have no further obligation or responsibility for, such liabilities
(other than as guarantor), and Newco shall issue to the holders of the New LLC
Debt and Allowed Secured Note Claims, in substitution of such obligations
assumed by Newco, New PIK Notes in an aggregate principal amount of
$106,818,182;

e. Newco shall receive, in satisfaction of the
Farms/Finance Note (that was contributed by Reorganized Finance to Newco), all
of the assets of Farms subject to all of the remaining liabilities of Farms,
and, as of the Effective Date, Farms shall be dissolved; and

f. The Morgan Stanley Funds shall collectively pay $20
million in cash to Newco in exchange for New PIK Notes having an aggregate
principal amount of $10,681,818 and the cancellation by CFI of the Capital
Contribution Notes.

The foregoing Restructuring Transactions shall be effective as
of the Effective Date pursuant to the Confirmation Order without any further
action by the members, stockholders, directors, or partners of the Reorganized
Debtors, Newco or Farms.

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<PAGE> 43

The following chart illustrates the structure of the Debtors
after giving effect to the Restructuring Transactions:

Post-Reorganization PSF Structure Flowchart
Post-Reorganization PSF Structure
--------------------------------------------------------

<TABLE>
<S><C>
Former Secured
99% Certain Former Noteholders and __
1%(GP) ___________________________ Secured Preference Unit |
______|__________________ Noteholders Holders |
| | | |
Various Shareholders | | | |
(including Harms & Premium Holdings L.P. | 3 55% 3 |
Gordon) | ____________|_ MSLEF II _____________ MSCP III |
|___________________________________________ | 2.5%| 18% | | __________|____| |45% |
79.5% | | | | | 41% |59% | ___| |
Premium Holdings Finance ___| |_ CFI |
| Holdings ___ | |
| |2.19% | .03% |
| | __________| |
| .78% Reorganized 97% |
|____________________________ Finance ___________________________|
(an LLC)
|
| 100%
|
Newco
(a Delaware
Corporation)
</TABLE>

2. Compliance with Farming Laws

As of the Effective Date, Farms will no longer be the owner of
the Missouri agricultural real property and Newco will not qualify as an
"authorized farm corporation." The Restructuring Transactions, however,
qualify under another exception to the Missouri corporate farming restrictions
for corporations that acquire agricultural land in connection with the
collection of debts or the enforcement of a lien or claim on such land. In
this regard, on the Effective Date, (i) the holders of the Secured Note Claims
and the Preference Unit Equity Interests will have acquired ownership of 97% of
the New LLC Interests in Reorganized Finance in partial exchange for their
claims and interests and Reorganized Finance will convey the Farms/Finance Note
to Newco, and (ii) Newco will acquire the agricultural land and other assets of
Farms in cancellation of the Farms/Finance Note Claim.

Under this exemption for agricultural land acquired in payment
of a debt, PSF believes that Newco may own such agricultural land and conduct
its hog operations thereon (including farming activities). This exemption does
not authorize Newco to acquire additional agricultural land in Missouri beyond
that acquired from Farms on the Effective Date, but PSF

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<PAGE> 44

does not presently contemplate the need for additional agricultural land in
Missouri, and other options may be available if such land is required in the
future. Furthermore, the 1993 statute described in Section III.B, "General
Information -- Corporate Farming Law," provides an additional exemption for
Newco's hog-farming operations to the extent of its availability.

With respect to restrictions on ownership of agricultural land
in Missouri by aliens or foreign businesses, the only significant foreign
interests known to the Debtors that contemplate having an ownership interest in
Reorganized Finance on the Effective Date is Hanwa Co., Ltd., which based on
its holding of the Secured Note Claims would own less than a 5% interest in
Reorganized Finance, which interest would not be a controlling interest in
Reorganized Finance or Newco. Therefore, Newco would not be a "foreign
business" prohibited from acquiring Missouri agricultural land. The LLC
Agreement contains provisions restricting ownership of New LLC Interests by
foreign entities.

3. Financing to Be Provided As of the Effective Date

New Senior Credit Facilities

To enable PSF to exit chapter 11, the Lenders are providing an
aggregate of $90 million in financing for the working capital and operating
needs of Newco on and after the Effective Date subject to and in accordance
with the terms of a credit agreement, among Newco, as borrower, Reorganized
Finance, as guarantor, Chase Manhattan Bank, N.A., as issuing bank, collateral
agent and administrative agent, and the Lenders (the "New Senior Credit
Agreement"), the form of which is contained in the Plan Supplement as Exhibit
H.

The facilities to be provided under the New Senior Credit
Agreement will consist of a revolving credit facility in the amount of $60
million (the "New Revolving Credit Facility") and a term loan facility in the
amount of $30 million (the "New Term Loan"). Availability under the New
Revolving Credit Facility will be based upon a borrowing base formula. Letters
of credit may be issued under the New Revolving Credit Facility up to a
sublimit of $5 million.

The repayment of any indebtedness under the New Senior Credit
Agreement will be (i) secured by a first priority perfected lien on
substantially all of the assets of Newco, Reorganized Finance and Princeton
Development, and (ii) guaranteed by Reorganized Finance and Princeton
Development.

The New Revolving Credit Facility will mature on September 30,
1999, and the New Term Loan will mature on September 30, 2001. The New Term
Loan will be amortized on a quarterly basis, beginning on September 30, 1997,
in the amount of $1.5 million each quarter, with a final amortization of $6
million payable at maturity, and will contain other mandatory prepayment
provisions.

At Newco's option, the interest rates per annum applicable to
loans under the New Senior Credit Agreement will be (i) Chemical Bank's
Alternate Base Rate plus 2-1/2% or

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<PAGE> 45

(ii) Adjusted LIBOR plus 3-1/2%; provided, however, that the applicable margin
over the Alternate Base Rate and Adjusted LIBOR shall decrease to 1-1/2% and 2-
1/2%, respectively, at such time following the six-month anniversary of the
Closing Date as Newco shall have repaid $2,500,000 in principal amount of the
New Term Loan. Interest will be payable monthly in arrears. Commitment fees
will be equal to 1/2% per annum on the average daily undrawn amount of the New
Revolving Credit Facility. Amounts not paid when due will bear interest at a
default rate which will be the applicable interest rate (including the
applicable margin) plus 2% (or if there is no applicable interest rate, the
Alternate Base Rate plus 2%). The letter of credit fee under the New Revolving
Credit Facility will be 3% per annum on the undrawn amount of each letter of
credit issued and outstanding. Newco will also pay to the Issuing Bank
standard fronting, issuance and drawing fees with respect to each letter of
credit issued.

The New Senior Credit Agreement will include mandatory
prepayment provisions and affirmative and negative covenants customary for
facilities of this type. In addition, such agreement will contain minimum
EBITDA requirements and limits on capital expenditure levels, and customary
events of default (with customary grace and notice provisions) typical for
facilities of this type.

New Second Priority Notes

Morgan Stanley Group is providing up to $10 million in
financing for working capital and operating needs of Newco after the Effective
Date, pursuant to the terms of the New Second Priority Note Agreement, the form
of which is contained in the Plan Supplement as Exhibit G.

The New Second Priority Notes will be purchased, subject to
conditions contained therein, only if the sum of the unused amount available
under the New Senior Credit Agreement and total Cash and certain short-term
investments of Newco is less than $5 million. The obligation of Morgan Stanley
Group to purchase the New Second Priority Notes will terminate two years after
the Effective Date. The maturity of the New Second Priority Notes is six years
from the Effective Date, subject to earlier redemption. The New Second
Priority Notes will bear interest at the rate of 11% per annum payable in cash,
quarterly in arrears.

The New Second Priority Notes will be guaranteed by
Reorganized Finance and will be secured by a second priority lien on
substantially all assets of Newco, junior to the lien of the lenders under the
New Senior Credit Agreement but senior to the lien of the New PIK Notes.

The New Second Priority Notes will incorporate by reference
all events of default and covenants for the New PIK Notes, except that
acceleration of the New Second Priority Notes will be triggered only by
acceleration under the New Senior Credit Agreement or the New PIK Notes
Indenture, or breach of specified covenants. The New Second Priority Notes
will include additional covenants to preserve the relative priority of the New
Second Priority Notes vis-a-vis other secured debt and the collateral securing
such notes.

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<PAGE> 46

F. Method of Distributions Under the Plan

Subject to Bankruptcy Rule 9010, all distributions to a holder
of an Allowed Claim or Allowed Equity Interest shall be made by the applicable
Reorganized Debtor and in the case of PSF, by Reorganized Finance or Newco, at
the address of such holder as listed on the Schedules filed with the Bankruptcy
Court unless superseded by the address listed on a proof of Claim or Equity
Interest filed by such holder (or at the last known address of such holder if
no proof of Claim or Equity Interest is filed or if the applicable entity has
been notified in writing of a change of address). If any distribution to any
holder is returned as undeliverable, such Debtor, or Reorganized Finance or
Newco, as applicable, shall use reasonable efforts to determine the current
address of such holder, but no distribution to such holder shall be made unless
and until a determination has been made concerning the then current address of
such holder, at which time such distribution shall be made to such holder
without interest. Amounts in respect of any undeliverable distributions made
by the applicable Reorganized Debtor and in the case of PSF, by Reorganized
Finance or Newco, shall be returned to Reorganized Finance until such
distribution is claimed. If no proofs of Claim or Equity Interest are filed
and the Schedules filed with the Bankruptcy Court fail to state addresses for
holders of Allowed Claims or Allowed Equity Interests, the property
distributable to the holders of such Allowed Claims or Allowed Equity Interests
shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code
at the expiration of one year from the Effective Date. After such date, all
unclaimed property shall revert to Newco and the claim of any holder to such
property shall be discharged and forever barred. Notwithstanding the
foregoing, all distributions on account of the Secured Bank Claims shall be
paid by Reorganized Finance or Newco by wire transfer to the agent bank for the
Lenders for redistribution to the Lenders.

Any distributions and deliveries to be made as of the
Effective Date under the Plan shall be made on the Effective Date, or such
later date as a Claim or Equity Interest becomes an Allowed Claim or Allowed
Equity Interest, or as soon as practicable thereafter. If any payment or act
under the Plan is required to be made or performed on a date that is not a
Business Day, then the making of such payment or the performance of such act
may be completed on the next succeeding Business Day, but shall be deemed to
have been completed as of the required date.

At the option of Reorganized Finance, any Cash payment to be
made under the Plan may be made by a check or wire transfer (unless otherwise
specified in the Plan) or as otherwise required or provided in applicable
agreements. No payment of Cash of less than $100.00 shall be made by the
applicable Reorganized Debtor and in the case of PSF, by Reorganized Finance or
Newco to any holder of a Claim unless a request therefor has been made in
writing to Reorganized Finance. No fractional New LLC Interests or Warrants
shall be distributed.

G. Procedures for Treating Disputed Claims and Equity Interests

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<PAGE> 47

Unless otherwise ordered by the Bankruptcy Court after notice
and hearing, the Debtors, the Reorganized Debtors or Newco will have the
exclusive right (except as to applications for allowances of compensation and
reimbursement of expenses under sections 330 and 503 of the Bankruptcy Code) to
make and file objections to proofs of Administrative Expense Claims, Claims,
and Equity Interests. The Debtors or the applicable Reorganized Debtor and in
the case of Farms and Finance, Reorganized Finance or Newco shall serve a copy
of each objection upon the holder of the Administrative Expense Claim, Claim,
or Equity Interest to which the objection is made as soon as practicable, but
in no event later than thirty (30) days after the Effective Date.

Notwithstanding any other provision of the Plan, if any
portion of a Claim or Equity Interest is Disputed, no payment or distribution
provided under the Plan will be made on account of any of such Claim or Equity
Interest, unless and until such Disputed Claim or Disputed Equity Interest
becomes Allowed.

Payments and distributions to each holder of a Claim or Equity
Interest that is Disputed, or is not Allowed, to the extent that such Claim or
Equity Interest ultimately becomes Allowed, will be made in accordance with the
provisions of the Plan governing the class or subclass of Claims or Equity
Interests in which such Claim or Equity Interest is classified. As soon as
practicable after the date that the order or judgment of the Bankruptcy Court
Allowing any Disputed Claim or Disputed Equity Interest, or any other Claim or
Equity Interest that was not previously Allowed becomes a Final Order, the
applicable Reorganized Debtor and in the case of PSF, Reorganized Finance or
Newco, will distribute to the holder of such Claim or Equity Interest any
payment or property that would have been distributed to such holder if the
Claim or Equity Interest had been Allowed as of the Effective Date, without any
interest on such payment or property.

H. Conditions Precedent to the Effectiveness of the Plan

The Plan shall not become effective unless and until all of
the following conditions have been satisfied or waived by the Debtors, the
Bondholders' Committee and the lenders under the New Senior Credit Agreement:

(a) the Confirmation Order, in form and substance
satisfactory to the Debtors, the Bondholders' Committee and the lenders under
the New Senior Credit Agreement, shall have become a Final Order;

(b) the following agreements, in form satisfactory to the
Debtors, the Bondholders' Committee, and the lenders under the New Senior
Credit Agreement shall have been executed and delivered, and all conditions
precedent thereto shall have been satisfied:

(1) the New Senior Credit Agreement,

(2) the New Second Priority Note Agreement,

(3) the New PIK Notes Indenture,

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<PAGE> 48

(4) the Warrant Agreement,

(5) the New LLC Interests Registration Rights
Agreement,

(6) the New PIK Notes Registration Rights
Agreement,

(7) the Warrants Registration Rights agreement,

(8) the Intercreditor Agreement,

(9) the LLC Agreement, and

(10) Management Option Plan;

(d) the Morgan Stanley Funds shall, simultaneously with the
effectiveness of the Plan, pay $20 million to Newco in accordance with the
Restructuring Transactions; and

(e) (x) a deadline for filing proofs of Claim against the
Debtors shall have been established by order of the Bankruptcy Court, as a date
not later than 15 days prior to the Confirmation Date and (y) neither the
Bondholders' Committee nor the Lenders under the New Senior Credit Agreement
shall, on or before the Confirmation Date, have determined that the aggregate
amount of Claims in Classes 5, 6 and 7 against PSF render the Plan not
feasible.

If, by the earlier of (x) December 31, 1996 or (y) sixty days
after the Confirmation Date, one or more of the foregoing conditions have not
occurred or have not been waived, and upon notification submitted by the
Debtors to the Bankruptcy Court, attorneys for the Bondholders' Committee, and
attorneys for the lenders under the New Senior Credit Agreement, (i) the
Confirmation Order shall be vacated, (ii) no distributions under the Plan shall
be made, (iii) the Debtors and all holders of Claims and Equity Interests shall
be restored to the status quo ante as of the day immediately preceding the
Confirmation Date as though the Confirmation Date had never occurred, and (iv)
all the Debtors' obligations with respect to the Claims and Equity Interests
shall remain unchanged and nothing contained in the Plan shall be deemed to
constitute a waiver or release of any claims or Claims by or against the
Debtors or any other person, or to prejudice in any manner the rights of the
Debtors or any person in any further proceedings involving the Debtors.

The Debtors, with the written consent of the Bondholders'
Committee and the lenders under the New Senior Credit Agreement, may waive, by
a writing signed by an authorized representative of the Debtors and
subsequently filed with the Bankruptcy Court, one or more of the conditions to
effectiveness of the Plan.

I. Effect of Confirmation of the Plan

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<PAGE> 49

On the Effective Date, the property and estates of Finance and
Farms shall vest in Reorganized Finance and Newco as provided in the
Restructuring Transactions, and shall be free and clear of all interests of
holders of Claims and Equity Interests, except as otherwise provided in the
Plan. Unless otherwise provided herein, all injunctions or stays provided for
in the Chapter 11 Cases under sections 105 or 362 of the Bankruptcy Code or
otherwise, and in existence on the Confirmation Date, shall remain in full
force and effect until the Effective Date.

The rights afforded in the Plan and the treatment of all
Claims and Equity Interests provided for in the Plan shall be in exchange for
and in complete satisfaction, discharge, and release of Claims and Equity
Interests of any nature whatsoever, other than environmental obligations or
other contractual obligations with the State of Missouri or any of its
subdivisions under federal or state laws, including any interest accrued on
such Claims from and after the Commencement Date, against the applicable Debtor
and Debtor in Possession, or any of its assets or property. Except as
otherwise provided in the Plan, (i) on the Effective Date, all such Claims
against, and Equity Interests in, the Debtors shall be satisfied, discharged,
and released in full, and (ii) all persons shall be precluded from asserting
against Reorganized Premium Holdings, Reorganized Finance Holdings, Reorganized
CFI, Reorganized Finance, Newco, their successors, or their assets or property
any other or further Claims or Equity Interests based upon any act or omission,
transaction, or other activity of any kind that occurred prior to the
Confirmation Date.

J. Other Provisions of the Plan

1. Exculpation

Neither the Reorganized Debtors, Reorganized Finance, Newco,
the Bondholders' Committee, the Lenders under the Bank Credit Agreement, the
lenders under the DIP Credit Agreement, the lenders under the New Senior Credit
Agreement, Morgan Stanley Group Inc., the Indenture Trustee and the Collateral
Trustee, nor any of their respective members, officers, directors, employees,
attorneys, advisors, agents, general partners, partners, or consultants who
provide management personnel or who serve as members of management of any of
the Debtors, shall have or incur any liability to any holder of a Claim or
Equity Interest for any act or omission in connection with, or arising out of,
the formulation and negotiation of the Plan, the pursuit of confirmation of the
Plan, the consummation of the Plan, or the administration of the Plan or the
property to be distributed under the Plan, except for willful misconduct or
gross negligence, and, in all respects, Reorganized Premium Holdings,
Reorganized Finance Holdings, Reorganized CFI, Reorganized Finance, Newco, the
Bondholders' Committee, the Lenders under the Bank Credit Agreement, the
lenders under the DIP Credit Agreement, the lenders under the New Senior Credit
Agreement, Morgan Stanley Group Inc., the Indenture Trustee and the Collateral
Trustee, and each of their respective members, officers, directors, employees,
attorneys, advisors, agents, general partners, partners, and consultants who
provide management personnel or who serve as members of management of any of
the Debtors, shall be entitled to rely upon the advice of attorneys and other
professional advisors with respect to their duties and responsibilities under
the Plan.

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2. Releases

General Release of Releasees and Other Entities. Pursuant to
the Plan, as of the Effective Date, each of the Debtors and Debtors in
Possession, and each holder of a Claim against or Equity Interest in any of the
Debtors or Debtors in Possession generally releases all present and former
officers, directors, attorneys, agents, advisors, partners and officers and
directors of such partners, of or to the Debtors, and consultants who provide
management personnel or who serve as members of management of any of the
Debtors (collectively, the "Releasees"), in any capacity, the Lenders under the
Bank Credit Agreement, the holders of the Secured Notes, the holders of
Preference Unit Equity Interests, the Indenture Trustee and the Collateral
Trustee from claims, obligations, rights, causes of action and liabilities held
by such Debtor, Debtor in Possession or such holder against such individuals
and entities, whether known or unknown, existing or hereafter arising, based in
whole or in part upon any act or omission or other event occurring prior to the
Commencement Date or during the course of the Chapter 11 Cases, including
through the Effective Date, in any way relating to the Debtors, the Debtors in
Possession, the Chapter 11 Cases, the Plan, the Bank Credit Agreement, the
Secured Notes, the Preference Unit Equity Interests and the Equity Interests in
the Debtors, the Indenture Trustee and the Collateral Trustee and the
ownership, management and operation of the Debtors.

General Release by Releasees and Certain Entities. As of the
Effective Date, each of the Releasees, in any capacity, the Lenders under the
Bank Credit Agreement, the holders of the Secured Notes, the holders of
Preference Unit Equity Interests, the Indenture Trustee and the Collateral
Trustee generally releases each of the Debtors, the Debtors in Possession, and
each holder of a Claim against or Equity Interest in any of the Debtors or
Debtors in Possession, in each case in any capacity, from claims, obligations,
rights, causes of action and liabilities held by such Releasee, the Lenders
under the Bank Credit Agreement, the holders of the Secured Notes, the holders
of Preference Unit Equity Interests, the Indenture Trustee and the Collateral
Trustee against any of the Debtors, the Debtors in Possession or any such
Releasee or holder, whether known or unknown, existing or hereafter arising,
based in whole or in part upon any act or omission or other event occurring
prior to the Commencement Date or during the course of the Chapter 11 Cases,
including through the Effective Date, in any way relating to the Debtors, the
Debtors in Possession, the Chapter 11 Cases, the Plan, the Bank Credit
Agreement, the Secured Notes, the Preference Unit Equity Interests and the
Equity Interests in the Debtors and the ownership, management and operation of
the Debtors; provided, however, that this sentence shall not affect the
obligations of the Debtors under Sections 2.3 and 5.6 of the Plan.

Binding Effect of Releases. Each Releasee and each holder of
a Claim and each holder of an Equity Interest, including, without limitation, a
Secured Bank Claim, a Secured Note Claim or a Preference Unit Equity Interest,
the Indenture Trustee and the Collateral Trustee will be deemed to have agreed
to the provisions of Sections 13.1 and 13.2 of the Plan, and shall be bound
thereby for all purposes whatsoever.

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3. Indemnification Obligations

The Plan generally provides that the obligations of each
Debtor to indemnify its present and any former directors, officers, general
partners, partners, employees, and consultants who provide management personnel
or who serve as members of management of any of the Debtors, that were
directors, officers, general partners, partners, employees, or such consultants
at any time (each, an "Indemnified Person") on or after the Commencement Date
against any obligations pursuant to such Debtor's certificate or articles of
incorporation, bylaws, partnership agreement, applicable state law or specific
agreement, or any combination of the foregoing, will survive confirmation of
the Plan, remain unaffected thereby and not be discharged, irrespective of
whether indemnification is owed in connection with an event occurring before,
on or after the Commencement Date. To the knowledge of the Debtors, no claims
giving rise to a right of indemnification have been asserted against any
director, officer, general partner, partner, employee, or consultant who
provides management personnel or who serves as a member of management of any of
the Debtors, prior to the Commencement Date.

Notwithstanding any provision of the Plan, including, without
limitation, Sections 5.1 or 5.6(a), all obligations of the Debtors to
indemnify, or to pay contribution or reimbursement to any Indemnified Person,
whether pursuant to its respective articles of incorporation, by-laws,
partnership agreements, applicable law, or specific agreement, or any
combination of the foregoing, in respect of all past, present and future
actions, suits and proceedings against any such Indemnified Person based upon
any act or omission related to service with, for or on behalf of any of the
Debtors or Debtors in Possession or any present or former affiliate of any
Debtor arising out of or related, directly or indirectly, to any action, suit
or proceeding against any such person (i) brought by any person which is a
present or former purchaser, seller, underwriter or owner, in each case, acting
in such capacity, of present or former securities of any Debtor or of any
present or former affiliate thereof, including, without limitation, the Morgan
Stanley Funds or brought by or in the name of any Debtor, in each case, arising
out of or related to any alleged right of rescission of, or damages arising
from, any purchase or sale of such securities under federal or state securities
laws (whether statutory or otherwise) or (ii) brought by any other person (a
"Third Party Claimant") against an Indemnified Person asserting claims for
contribution, reimbursement or indemnity by such Third Party Claimant arising
out of or related to any action, suit or proceeding against such Third Party
Claimant which, had it been brought against an Indemnified Person, would be
described in clause (i) above (any such action, suit, claim or proceeding
described in any of clauses (i) or (ii), an "Excluded Claim"), and any and all
such undertakings and agreements to provide any indemnification, contribution
or reimbursement with respect to any Excluded Claim shall be terminated, and
the Reorganized Debtors and Newco shall have no obligation thereunder pursuant
to the Plan or otherwise.

4. Exemption From Transfer Taxes

Pursuant to section 1146(c) of the Bankruptcy Code, the
issuance, transfer, or exchange of notes or equity securities under the Plan,
the creation of any mortgage, deed of trust, or other security interest, the
making or assignment of any lease or sublease, or the

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making or delivery of any deed or other instrument of transfer under, in
furtherance of, or in connection with, the Plan, including any merger
agreements or agreements of consolidation, deeds, bills of sale, or assignments
executed in connection with any of the transactions contemplated under the Plan
shall not be subject to any stamp, real estate transfer, mortgage recording, or
other similar tax.

5. Amendment or Modification of the Plan

The Debtors, with the consent of the Bondholders' Committee
and the lenders under the New Senior Credit Agreement, may alter, amend, or
modify the treatment of Claims or Equity Interests provided for under the Plan
to the extent provided in the Bankruptcy Code, or as agreed or consented to by
the holders of such Claims or Equity Interests.

6. Severability

The Plan constitutes a separate chapter 11 plan for each of
the Debtors; provided, however, that the chapter 11 plan for Finance will not
be confirmed without simultaneous confirmation of the chapter 11 plan for
Farms, and vice versa. Failure to confirm or consummate the Plan as to Finance
Holdings, Premium Holdings or CFI will not affect confirmation or consummation
of the chapter 11 plan for Finance or Farms.

VII.

GOVERNANCE AND MANAGEMENT OF REORGANIZED FINANCE,
NEWCO AND REORGANIZED DEBTORS

A. Management of Reorganized Finance,
Newco and Reorganized Debtors

1. General

On the Effective Date, the management, control and operation
of each of Reorganized Finance, Newco, Reorganized Premium Holdings,
Reorganized Finance Holdings, and Reorganized CFI will become the general
responsibility, respectively, of the members of Reorganized Finance, and the
Boards of Directors of Newco, Reorganized Premium Holdings, Reorganized Finance
Holdings and Reorganized CFI.

2. Reorganized Finance

As described above, pursuant to the Restructuring
Transactions, Finance will be merged into a newly formed limited liability
company organized under the Delaware Limited Liability Company Act (the "LLC
Act"). The administration and regulation of Reorganized Finance's affairs,
voting by members, and admission of members will be governed by a limited
liability company agreement (the "LLC Agreement"), a form of which is contained
in the Plan Supplement as Exhibit B. The term of the LLC Agreement will be
fifty years,

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subject to extension as provided in the LLC Agreement, unless earlier
terminated pursuant to its terms or under applicable law.

On the Effective Date, the members of Reorganized Finance will
be the holders of Allowed Secured Note Claims, the holders of Allowed
Preference Unit Equity Interests, Reorganized Premium Holdings, Reorganized
Finance Holdings, and Reorganized CFI. The management of Reorganized Finance
will be vested in its members, and each member will have limited liability
under the LLC Act. All New LLC Interests will have voting rights, except that,
following the admission of Allowed Secured Note Claims as members pursuant to
the Restructuring Transactions, those New LLC Interests held by Morgan Stanley
Group, Inc. and its affiliates (other than Premium Holdings) will have no right
to vote their New LLC Interests (including any New LLC Interests acquired by
them upon exercise of Warrants) for so long as they hold such interests.
Morgan Stanley Group Inc. and its affiliates (other than Premium Holdings) also
will have no right, after such time, to participate in the management of
Reorganized Finance.

3. Boards of Directors of Newco and Reorganized Debtors

The initial Board of Directors of Newco shall consist of one
(1) management director and five (5) directors named by the Bondholders'
Committee. The names of such directors will be disclosed prior to the
Confirmation Hearing. Subsequent Boards of Directors of Newco shall be elected
by the holders of New LLC Interests of Reorganized Finance, except that Morgan
Stanley Group Inc. and its affiliates (other than Premium Holdings) will have
no right to vote their New LLC Interests (including any New LLC Interests
acquired by them upon exercise of Warrants).

The initial Boards of Directors of Reorganized Premium
Holdings, Reorganized Finance Holdings and Reorganized CFI shall be appointed
by their respective stockholders and shall consist of the individuals whose
names shall be disclosed prior to the Confirmation Hearing. Each of the
members of such initial Boards of Directors shall serve in accordance with the
articles of incorporation or bylaws of such Reorganized Debtor.

4. Identity of Officers of Newco and Reorganized Debtors

The initial officers of Newco will be the individuals,
satisfactory to the Bondholders' Committee, whose names will be disclosed prior
to the Confirmation Hearing. The initial officers of Reorganized CFI,
Reorganized Finance Holdings and Reorganized Premium Holdings will be those
individuals who were officers of the applicable Debtor immediately prior to the
Effective Date. Thereafter, such officers will serve in accordance with any
employment agreement with such entity and applicable non-bankruptcy law.

5. Compensation of Executive Officers

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The following table sets forth all cash compensation paid by
the Debtors in fiscal year 1995 to each of the five highly compensated
executives of each entity, and to all executive officers as a group, for
services rendered in all of their respective capacities in fiscal year 1995:

Premium Standard Farms, Inc. and PSF Finance L.P.
Compensation of Executive Officers for Calendar Year 1995

<TABLE>
<CAPTION>
Name of Individual Capacities in Which Served Compensation
- ------------------ -------------------------- ------------
<S> <C> <C>
Dennis W. Harms CEO, President, and Co-Chairman $ 290,413
of the Board of Farms

Theodore J. Co-Chairman of the Board 273,819
Gordon, Jr. of Farms

Kevin Becker Chief Financial Officer 328,942
(no longer employed
by Debtors)

Rick Anderson Sr. Vice President of Construction 214,215
and Engineering

John Stadler President of the Premium Standard 206,592
(currently Foods Division of Finance and Sr.
serves as a Vice President of Pork Processing
consultant) of Farms

All executive officers
as a group, including the
above-referenced persons $2,483,199
</TABLE>

6. Compensation of Insiders

Pursuant to section 1129(a)(5)(B) of the Bankruptcy Code, the
amount of compensation to be paid to any insider to be employed or retained by
the Reorganized Debtors and Newco will be disclosed prior to the Confirmation
Hearing.

7. Articles of Incorporation and Bylaws
of Newco and Reorganized Debtors

The articles of incorporation and bylaws of Newco, Reorganized
CFI, Reorganized Finance Holdings and Reorganized Premium Holdings will contain
provisions necessary (i) to prohibit the issuance of non-voting equity
securities as required by section

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1123(a)(6) of the Bankruptcy Code, subject to further amendment of such
articles of incorporation as permitted by applicable law; and (ii) to
effectuate the provisions of the Plan.

B. Management Option Plan

Reorganized Finance will adopt a Management Option Plan, the
form of which is contained in the Plan Supplement as Exhibit C. Under the
Management Option Plan, the Board of Directors of Reorganized Finance may, in
its discretion, authorize the issuance of options to Newco's employees to
purchase up to a total of 526,315 New LLC Interests.

VIII.

PROJECTIONS

Consolidated Projected Financial Statements

The Bankruptcy Code conditions confirmation of the Plan on,
among other things, a finding by the Bankruptcy Court that confirmation is not
likely to be followed by the liquidation or the need for further financial
reorganization of the Consolidated Company. See Section XV.B.3 "Conditions to
Confirmation of the Plan -- Feasibility." In this connection, the Debtors
developed the projections of operations, cash flows and financial position for
fiscal years ending December 31, 1996 through December 31, 2000, giving effect
to the adjustments necessary to reflect the confirmation and consummation of
the Plan, which is assumed to occur as of July 31, 1996 and for the subsequent
4-1/2 fiscal years ending December 31, 2000 (the "Projections"), annexed hereto
as Exhibit E.

The Projections should be read in conjunction with the
assumptions, qualifications, and the footnotes to tables containing the
Projections contained herein.

THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO COMPLYING
WITH THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS. THE INDEPENDENT
ACCOUNTANTS FOR THE DEBTORS, ERNST & YOUNG LLP, AND THE FINANCIAL ADVISORS TO
THE DEBTORS, ARTHUR ANDERSEN LLP, HAVE NOT EXAMINED OR COMPILED THE
ACCOMPANYING PROSPECTIVE FINANCIAL INFORMATION AND ACCORDINGLY DO NOT EXPRESS
AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO.

THE DEBTORS DO NOT PUBLISH THEIR BUSINESS PLAN AND STRATEGIES
OR PROJECTIONS OF THEIR ANTICIPATED FINANCIAL POSITION OR RESULTS OF
OPERATIONS. ACCORDINGLY, THE DEBTORS DO NOT INTEND, AND DISCLAIM ANY
OBLIGATION, TO (i) FURNISH AN UPDATED BUSINESS PLAN OR PROJECTIONS TO HOLDERS
OF CLAIMS OR EQUITY INTERESTS PRIOR TO THE EFFECTIVE DATE OR TO ANY OTHER
ENTITY AFTER THE EFFECTIVE DATE, OR (ii) MAKE SUCH UPDATED INFORMATION PUBLICLY
AVAILABLE.

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THE PROJECTIONS PROVIDED IN THE DISCLOSURE STATEMENT, ALTHOUGH
PRESENTED WITH NUMERICAL SPECIFICITY, ARE BASED UPON A SERIES OF ESTIMATES AND
ASSUMPTIONS, WHICH MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO
SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES,
MANY OF WHICH ARE BEYOND THE CONTROL OF THE DEBTORS. IF CURRENT TRENDS AS TO
HOG PRICES WERE TO CONTINUE, THE EBITDA RESULTS FOR 1996 COULD INCREASE BY A
RANGE OF $5 MILLION TO $7 MILLION AND THERE COULD BE CORRESPONDING INCREASES IN
1997. THE DEBTORS ESTIMATE A $1 CHANGE IN LIVE HOG MARKET PRICES WOULD HAVE AN
IMPACT OF APPROXIMATELY $4.7 MILLION IN ANNUAL REVENUES. CONVERSELY, A CHANGE
IN CURRENT TRENDS COULD ADVERSELY AFFECT THE PROJECTIONS. ACCORDINGLY, NO
REPRESENTATIONS CAN BE MADE AS TO THE ACCURACY OF THESE FINANCIAL PROJECTIONS
OR TO THE CAPACITY OF THE DEBTORS TO ACHIEVE THE PROJECTED RESULTS. SOME
ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE, AND EVENTS AND CIRCUMSTANCES
OCCURRING SUBSEQUENT TO THE DATE ON WHICH THESE PROJECTIONS WERE PREPARED MAY
BE DIFFERENT FROM THOSE ASSUMED, OR MAY BE UNANTICIPATED, AND, ACCORDINGLY, MAY
AFFECT FINANCIAL RESULTS IN A MATERIAL AND POSSIBLY ADVERSE MANNER. THE
PROJECTIONS, THEREFORE, MAY NOT BE RELIED UPON AS A GUARANTEE OR OTHER
ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR.

THE FOREGOING ASSUMPTIONS AND RESULTANT COMPUTATIONS WERE MADE
SOLELY FOR PURPOSES OF PREPARING THE PROJECTIONS. ALTHOUGH THE DEBTORS EXPECT
TO UTILIZE A CONSISTENT METHODOLOGY, THE CHANGES BETWEEN THE AMOUNTS OF ANY OR
ALL OF THE FOREGOING ITEMS AS ASSUMED IN THE PROJECTIONS AND THE ACTUAL AMOUNTS
THEREOF AS OF THE EFFECTIVE DATE MAY BE MATERIAL.

The accompanying projected consolidated pro forma balance
sheets, income statements and cash flows for the 4 1/2-year period ending
December 31, 2000, have been prepared assuming the confirmation of the Plan
occurs on or about August 31, 1996.

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IX.

FINANCIAL INFORMATION

A. General

Finance and Farms were current in making their required
periodic filings on Forms 10-K and 10-Q until they voluntarily suspended their
registration on or about April 17, 1996. Such filings contained the audited
consolidated balance sheets, and the related consolidated statements of
operations, stockholders' equity and cash flows. Such filings are publicly
available for review by holders of Claims, Equity Interests and other parties
in interest.

The consolidated financial statements as of December 31, 1995
and December 31, 1994, together with the Report of Independent Public
Accountants, for Finance, which includes Farms, and the unaudited consolidated
financial statements as of July 1, 1996, are incorporated as Exhibit C hereto
and form a part of this Disclosure Statement.

The Debtors are required to file monthly financial statements
with the Office of the United States Trustee and the Clerk of the Bankruptcy
Court. Accordingly, such financial information is on file with the Bankruptcy
Court and is publicly available for review by holders of Claims, Equity
Interests and other entities.

VALUATION

A. Estimated Liquidation Value of Assets

As a condition to confirmation of the Plan, section
1129(a)(7)(A)(ii) of the Bankruptcy Code requires that each holder of a Claim
or Equity Interest in an impaired class of Claims or Equity Interests that has
not voted to accept the Plan must be distributed an account of such Claim or
Equity Interest consideration of a value not less than that which it would
receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code
on the Effective Date. The information contained in Exhibit D attached hereto
provides a summary of the liquidation values of the Debtors' properties and
interests in property, on a consolidated basis, assuming a chapter 7
liquidation in which a trustee appointed by the Bankruptcy Court would
liquidate the properties and interests in property comprising the estates of
the Debtors. Reference should be made to the Liquidation Analysis annexed as
Exhibit D hereto for a complete discussion and presentation of such liquidation
analysis. The Liquidation Analysis was prepared by management of the Debtors.

Underlying the Liquidation Analysis are a number of estimates
and assumptions that, although developed and considered reasonable by
management of the Debtors, are

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inherently subject to significant economic and competitive uncertainties and
contingencies beyond the control of the Debtors and management. The
Liquidation Analysis is also based upon assumptions with regard to liquidation
decisions that are subject to change. Accordingly, the values reflected may
not be realized if the Debtors were actually to be the subject of such a
liquidation. The chapter 7 liquidation period is assumed to be a period of six
months following the operations of the Debtors in Possession for four months.
This period would allow for the collection of receivables, sale of properties
and interests in property, and the winding down of operations.

B. Reorganization Value

The Debtors have been advised by Arthur Andersen LLP ("Arthur
Andersen") with respect to the fair market value of the Debtors' business
enterprise following their capital restructuring under the Plan. As of July 1,
1996, the range of enterprise values (which includes the value of the Debtors'
business and the value of certain other assets) of the Reorganized Debtors,
after distributions of Cash under the Plan, was estimated for purposes of the
Plan by the Debtors, based on advice from Arthur Andersen, to be approximately
between $251 million and $271 million. Based upon the estimated reorganization
value of the Reorganized Debtors and an estimated total debt (including capital
lease obligations) with a total value of approximately $151 million, the
Debtors have employed an estimated range of equity value for the Reorganized
Debtors of approximately $111 million to $120 million or approximately $11.10
per unit to $12.00 per unit of New LLC Interests based upon distribution of 10
million units of New LLC Interests under the Plan. The foregoing valuations
are based on a number of assumptions, including a successful reorganization of
the Debtors' finances in a timely manner, the achievement of the forecasts
reflected in the financial projections, the amount of available cash at the
Effective Date, the availability of certain tax attributes, favorable market
conditions and commodities prices, no material changes between July 1, 1996,
and the Plan becoming effective in accordance with its terms.

Estimates of value do not purport to be appraisals or
necessarily reflect the values which may be realized if assets are sold. The
estimates of value represent hypothetical reorganization enterprise values of
the Reorganized Debtors as the continuing owner and operator of the Debtors'
business and assets. Such estimates were developed solely for purposes of
formulation and negotiation of a plan of reorganization and analysis of
projected relative recoveries to creditors thereunder. Such estimates reflect
computations of the estimated reorganization value of the Reorganized Debtors
through the application of various valuation techniques and does not purport to
reflect or constitute appraisals, liquidation values or estimates of the actual
market value that may be realized through the sale of any securities to be
issued pursuant to the Plan, which may be significantly different than the
amounts set forth herein. The value of an operating business, such as the
business of the Debtors, is subject to uncertainties and contingencies which
are difficult to predict, and will fluctuate with changes in factors affecting
the financial conditions and prospects of such a business. AS A RESULT, THE
ESTIMATE OF THE RANGE OF REORGANIZATION VALUES SET FORTH HEREIN IS NOT
NECESSARILY INDICATIVE OF ACTUAL OUTCOMES,

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WHICH MAY BE SIGNIFICANTLY MORE OR LESS FAVORABLE THAN THOSE SET FORTH HEREIN.
BECAUSE SUCH ESTIMATE IS INHERENTLY SUBJECT TO UNCERTAINTIES, NEITHER THE
DEBTORS, ARTHUR ANDERSEN, NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR ITS
ACCURACY. IN ADDITION, THE VALUATION OF NEWLY ISSUED SECURITIES IS SUBJECT TO
ADDITIONAL UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO
PREDICT. Actual market prices of such securities at issuance will depend upon,
among other things, prevailing interest rates, conditions in the financial
markets, the anticipated initial securities holdings of the prepetition
creditors, some of which may prefer to liquidate their investment rather than
hold it on a long- term basis, and other factors which generally influence the
prices of securities. It should be noted that there is presently no trading
market for New LLC Interests, and there can be no assurance that a trading
market for New LLC Interests will develop.

Arthur Andersen has undertaken its valuation analysis for
purposes of determining the value available to distribute to holders of Claims
against, and Equity Interests in, the Debtors and analyzing relative recoveries
by such entities thereunder. The analysis is based on the financial
projections by management of the Debtors as well as current market conditions,
commodities prices, and statistics. The values are of July 1, 1996. Arthur
Andersen used the market and income approaches to the valuation of PSF's
business. These valuation techniques reflect both the market's current view of
the industry and PSF's five-year Business Plan. The estimated range for the
reorganization value of Reorganized Debtors' business, after cash distributions
in the Plan, is from $251 million to $271 million, with a midpoint value of
$261 million.

In preparing a range of the estimated enterprise value of
Reorganized Debtors, Arthur Andersen: (i) reviewed certain historical
financial information of the Debtors for recent years and interim periods; (ii)
reviewed certain internal financial and operating data of the Debtors,
including five-year financial projections provided by management relating to
their business and prospects; (iii) met with certain members of senior
management of the Debtors to discuss operations and future prospects; (iv)
reviewed publicly available financial data and considered the market values of
public companies generally deemed comparable to the operating business of the
Debtors; (v) reviewed the financial terms to the extent publicly available of
certain acquisitions of companies believed to be comparable to the operating
business of the Debtors; (vi) considered certain economic and industry
information relevant to the operating business of the Debtors; (vii) made site
visits to the hog production facilities in Missouri and Texas and the Milan,
Missouri meat-processing plant; and (viii) conducted such other analyses as
Arthur Andersen deemed appropriate. Although Arthur Andersen conducted a
review and analysis of the Debtors' business, operating assets and liabilities
and Business Plan, Arthur Andersen assumed and relied on the accuracy and
completeness of all financial and other information furnished to it by the
Debtors and other firms retained by the Debtors, and publicly available
information. In addition, Arthur Andersen did not independently verify
management's projections in connection with such valuation. Arthur Andersen
did not perform any attest or audit functions under generally accepted
accounting principles on the Debtors' historical financial statements or
financial projections in the Business Plan.

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THE ESTIMATED ENTERPRISE VALUE, EQUITY VALUE AND PER UNIT
VALUE OF NEW LLC INTERESTS IS HIGHLY DEPENDENT UPON ACHIEVING FUTURE FINANCIAL
RESULTS SET FORTH IN THE FINANCIAL PROJECTIONS WHICH ARE NOT GUARANTEED.

THE VALUATIONS REPRESENT ESTIMATED REORGANIZATION VALUES AND
DO NOT NECESSARILY REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC OR PRIVATE
MARKETS. THE EQUITY VALUE ASCRIBED IN THE ANALYSIS DOES NOT PURPORT TO BE AN
ESTIMATE OF THE POST-REORGANIZATION MARKET TRADING VALUE. SUCH TRADING VALUE,
IF ANY, MAY BE MATERIALLY DIFFERENT FROM THE REORGANIZATION EQUITY VALUE RANGES
ASSOCIATED WITH THE VALUATION ANALYSIS.

XI.

RISK FACTORS

HOLDERS OF CLAIMS AGAINST, AND EQUITY INTERESTS IN, THE
DEBTORS SHOULD CAREFULLY READ AND CONSIDER THE FACTORS SET FORTH BELOW, AS WELL
AS THE OTHER INFORMATION SET FORTH IN THIS DISCLOSURE STATEMENT (AND THE
DOCUMENTS DELIVERED TOGETHER HEREWITH AND/OR INCORPORATED BY REFERENCE), PRIOR
TO VOTING TO ACCEPT OR REJECT THE PLAN. THESE RISK FACTORS SHOULD NOT,
HOWEVER, BE REGARDED AS CONSTITUTING THE ONLY RISKS INVOLVED IN CONNECTION WITH
THE PLAN AND ITS IMPLEMENTATION.

A. Sensitivity to Commodity Prices

PSF's gross profitability is primarily dependent on the price
of its pork and pork products and the cost of feed stocks. The prices of these
products are highly volatile as a result of a number of factors beyond PSF's
control. As a consequence, PSF's revenues and costs could be materially
impacted by significant changes in such prices and PSF could encounter
liquidity problems.

B. Herd Productivity and Feed Efficiency

PSF's sow herd productivity and feed efficiency are primary
measures by which PSF evaluates its operating performance. Sow productivity,
as measured by the number of pigs which reach 45-50 pounds per sow per year, is
a measure of the performance of PSF's breeding, gestation, farrowing and
nursery operations. Changes in sow productivity can have a material effect on
profitability and margins because a substantial portion of the costs of
operating a sow unit are either fixed or related to the number of sows. Sow
productivity is influenced by a number of factors, including the rapid growth
of production, sow base and number of employees, the health condition of PSF's
hogs, and their genetics and environment.

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The feed conversion ratio is measured by the number of pounds of feed consumed
to produce a pound of live weight in hogs in PSF's finishing units and is a
measure of the performance of PSF's hog-finishing operations. Changes in feed
efficiency affect per head feed consumption and hence the cost of feed, a
primary cost component in PSF's hog-production operations. Feed efficiency is
affected by a number of factors, including the rapid growth of production and
number of new employees, the health condition of PSF's animals, and the
nutrient value of available feed ingredients.

While PSF's sow productivity and feed efficiency have
fluctuated within a relatively narrow range, there can be no assurance that
such a trend will continue in the future.

C. Impact of Disease

The ability to maintain health and control disease is a large
factor in the productivity and profitability of a hog operation. Disease may
reduce the number of pigs weaned per sow and hamper the growth of pigs to
finished size. PSF experienced several outbreaks of disease in recent years.
In the second quarter of 1994, there was an outbreak of TGE, a viral disease of
swine herds, which affected fourteen of PSF's forty-seven 1,100-head sow units
then in operation in Missouri. A similar outbreak of TGE occurred in the Texas
operations in December 1994. There were several outbreaks of TGE and PURRS, a
respiratory disease affecting swine herds, in 1995. Although PSF believes that
its production system, the geographic separation of its units and biosecurity
measures have minimized the effect of disease outbreaks, no assurance can be
made that outbreaks of disease will not occur in the future.

D. Variance from Projections

The Projections reflect numerous assumptions concerning the
anticipated future performance of the Reorganized Debtors, many of which are
beyond their control and some of which may not materialize. The Projections
include, among other things, assumptions concerning general economic conditions
and commodity prices and the ability to control expenses and increase growth
margin. Although the Reorganized Debtors believe that the assumptions
underlying the projected financial statements are reasonable, unanticipated
future events and circumstances occurring subsequent to the preparation of the
Projections may affect the actual financial results of the Reorganized Debtors.
Therefore, the actual results achieved throughout the periods covered by the
Projections will vary from the projected results, which variations may be
material and adverse.

E. Lack of Trading Market

After the Effective Date and issuance of the New PIK Notes,
there can be no assurance that an active trading market will develop therefor,
or, if developed, that it will continue for such securities. In addition,
there can be no assurance as to the degree of price volatility in any market
for such securities if one develops. Accordingly, no assurance can be given
that a holder of any such securities will be able to sell such securities in
the future or as

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to the price at which any sale may occur. If such markets were to exist, such
securities could trade at prices higher or lower than the value attributed to
such securities hereunder, depending upon many factors, including, without
limitation, the prevailing interest rates, markets for similar securities,
industry conditions, and the performance of, and investor expectations for, the
Reorganized Debtors.

F. Funding After the Effective Date

As described in Section VI.E.3, "The Plan -- Implementation of
the Plan; Financing to Be Provided As of the Effective Date," the Reorganized
Debtors have reached an agreement with (i) Chase Manhattan Bank, N.A. and the
Lenders under the New Senior Credit Agreement to refinance the existing bank
indebtedness of the Debtors and to fund the distributions provided for under
the Plan, and (ii) Morgan Stanley Group under the New Second Priority Note
Agreement to provide additional working capital under certain circumstances.
Funding under each of the New Senior Credit Agreement and the New Second
Priority Note Agreement is subject to material conditions precedent. No
assurance can be given that such conditions precedent shall be satisfied or
waived by the Lenders under the New Senior Credit Agreement and by Morgan
Stanley Group under the New Second Priority Note Agreement.

In addition, the New Senior Credit Agreement contains certain
restrictions on the operations of Newco and Reorganized Finance and requires
that they achieve and maintain certain financial ratios. Such restrictions
will likely include, among other things, limitations on their ability to incur
additional indebtedness, to create, incur or permit the existence of certain
liens, to make certain investments, to make capital expenditures in excess of
certain amounts, to sell assets over a certain value, to make certain payments
with respect to outstanding stock of Newco, to effect certain fundamental
changes and to enter into certain types of transactions. There can be no
assurance that Newco and Reorganized Finance will be able to achieve and
maintain compliance with the prescribed financial ratio tests or other
requirements of the New Senior Credit Agreement. Failure to achieve or
maintain compliance with such financial ratio tests or other requirements under
the New Senior Credit Agreement would result in a default and could lead to the
acceleration of the obligations of Newco and Reorganized Finance under the New
Senior Credit Agreement, which, in turn, could have a material adverse effect
on the Reorganized Debtors.

G. Certain Taxation Matters

For a summary of the federal income tax consequences of the
Plan to the Debtors, see Article XIII, "Certain Federal Income Tax Consequences
of the Plan."

H. Competition

PSF faces significant competition in all of its markets.
Certain of its competitors may possess significantly greater financial,
technical and other resources than it has. If any of such competitors were to
devote additional resources to their hog-production

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and pork-processing businesses, PSF's results of operations could be adversely
affected. Some of these larger competitors may also be able to use their
substantial financial resources to decrease pork and pork product pricing in
the markets in which the Debtors operate.

I. Compliance with Local Laws

Although the Debtors believe that the Restructuring
Transactions contemplated under the Plan are in full compliance with applicable
state and local laws, there can be no assurance that the propriety of such
restructuring will not be challenged at any time following confirmation of the
Plan.

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XII.

EXEMPTIONS FROM SECURITIES ACT
REGISTRATION; REGISTRATION RIGHTS

A. Issuance of New Securities Pursuant to the Plan

With respect to the New PIK Notes, the New LLC Interests, and
the Warrants (collectively, the "New Securities"), the Debtors intend to rely
upon the exemption from the registration requirements of the Securities Act
(and of equivalent state securities or "blue sky" laws) provided by section
1145(a)(1) of the Bankruptcy Code. Generally, section 1145(a)(1) of the
Bankruptcy Code exempts the issuance of securities from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and equivalent state securities and "blue sky" laws if the following conditions
are satisfied: (i) the securities are issued by a debtor (or its successor)
under a plan of reorganization; (ii) the recipients of the securities hold a
claim against, an interest in, or a claim for an administrative expense
against, the debtor; and (iii) the securities are issued entirely in exchange
for the recipient's claim against or interest in the debtor, or are issued
"principally" in such exchange and "partly" for cash or property. The Debtors
believe that the exchange of the New Securities will satisfy the aforementioned
requirements.

The New Securities may be resold by the holders thereof
without restriction (other than the transfer restrictions described in Section
VI.E.2 "Implementation of the Plan -- Compliance with Farming Laws") unless, as
more fully described below, any such holder is deemed to be an "underwriter"
with respect to such securities, as defined in section 1145(b)(1) of the
Bankruptcy Code. Generally, section 1145(b)(1) of the Bankruptcy Code defines
an "underwriter" as any person who (i) purchases a claim against, or interest
in, a bankruptcy case, with a view towards the distribution of any security to
be received in exchange for such claim or interest, (ii) offers to sell
securities issued under a bankruptcy plan on behalf of the holders of such
securities, (iii) offers to buy securities issued under a bankruptcy plan from
persons receiving such securities, if the offer to buy is made with a view
towards distribution of such securities, or (iv) is an issuer as contemplated
by section 2(11) of the Securities Act. Although the definition of the term
"issuer" appears in section 2(4) of the Securities Act, the reference
(contained in section 1145(b)(1)(D) of the Bankruptcy Code) to section 2(11) of
the Securities Act purports to include as "underwriters" all persons who
directly, or indirectly through one or more intermediaries, control, are
controlled by, or are under common control with, an issuer of securities.
"Control" (as such term is defined in Rule 405 of Regulation C under the
Securities Act) means the possession, direct or indirect, of the power to
direct or cause the direction of the policies of a person, whether through the
ownership of voting securities, by contract, or otherwise. Accordingly, an
officer or director of a reorganized debtor (or its successor) under a plan of
reorganization may be deemed to be a "control person," particularly if such
management position is coupled with the ownership of a significant percentage
of the debtor's (or successor's) voting securities. Moreover, the legislative
history of section 1145 of the Bankruptcy Code suggests that a creditor who
owns at least 10% of the voting securities of a reorganized debtor may be
presumed to be a "control person."

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Rule 144A under the Securities Act provides a non-exclusive
"safe harbor" exemption from the registration requirements of the Securities
Act for resales of "restricted securities" (within the meaning of the
Securities Act) to "qualified institutional buyers," irrespective of whether
the seller purchased his or its securities with a view towards reselling them
pursuant to Rule 144A. Under Rule 144A, a "qualified institutional buyer" is
defined to include, among other persons (e.g., "dealers" registered as such
pursuant to section 15 of the Exchange Act and "banks" as defined in section
3(a)(2) of the Securities Act), any entity which purchases securities for its
own account (or for the account of another qualified institutional buyer) and
which (in the aggregate) owns and invests on a discretionary basis at least
$100 million in the securities of unaffiliated issuers. Subject to certain
qualifications, Rule 144A does not exempt the offer or sale of securities
which, at the time of their issuance, were securities of the same class of
securities then listed on a national securities exchange (registered as such
under section 6 of the Exchange Act), or quoted in a U.S. automated
inter-dealer quotation system of a registered national securities association
(e.g., NASDAQ). Because none of the New Securities to be exchanged on the
Effective Date will, at such time, be securities of a class then listed or
quoted as described above, holders of New Securities who, in each case, are
deemed to be "underwriters" within the meaning of section 1145(b)(1) of the
Bankruptcy Code or who may otherwise be deemed to be "affiliates" or "control
persons" of Reorganized Finance or Newco within the meaning of Rule 405 of
Regulation C under the Securities Act should, assuming that all other
conditions of the Rule 144A are met, be entitled to avail themselves of the
safe harbor resale provisions thereof.

To the extent that Rule 144A is unavailable, such holders may,
under certain circumstances, be able to sell their securities pursuant to the
more limited safe harbor resale provisions of Rule 144 under the Securities
Act. Generally, Rule 144 provides that if certain conditions are met (e.g.,
volume limitations, manner of sale, availability of current information about
the issuer, etc.), specified persons who resell "restricted securities" or who
resell securities which are not restricted but who are "affiliates" of the
issuer of the securities sought to be resold, will not be deemed to be
"underwriters" as defined in section 2(11) of the Securities Act. Under
paragraph (k) of Rule 144, the aforementioned conditions to resale will no
longer apply to restricted securities sold for the account of a holder who is
not an affiliate of Reorganized Finance (in the case of the New LLC Interests
or the Warrants) or Newco (in the case of the New PIK Notes) at the time of
such resale and who has not been such during the three-month period next
preceding such resale, so long as a period of at least three years have elapsed
since the later of (i) the Effective Date and (ii) the date on which such
holder acquired its securities from an affiliate of Reorganized Finance or
Newco, as the case may be.

Because the Debtors are not subject to the periodic reporting
and informational requirements of sections 13 and 15(d) of the Exchange Act,
each of Reorganized Finance and Newco will undertake in connection with any
proposed resale by a holder of New Securities under Rule 144A, to provide such
holder and any prospective purchaser (or his or its authorized representative)
with current business and financial information as prescribed by paragraph (d)
(4) of Rule 144A. Similarly, each of Reorganized Finance and Newco will
undertake in connection

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with any proposed resale under Rule 144 (other than pursuant to paragraph (k)
of Rule 144) to make available the current information required by paragraph
(c) (2) of Rule 144.

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B. Registration Rights

As discussed above, although upon their issuance pursuant to
section 1145(a)(1) of the Bankruptcy Code the New Securities may generally be
resold by the holders thereof without registration under the Securities Act (or
under equivalent state securities or "blue sky" laws), a holder may be unable
to resell his or its securities if such holder is deemed to be (i) an
"underwriter" within the meaning of section 1145(b)(1) of the Bankruptcy Code,
or (ii) an "affiliate" or "control person" of Reorganized Finance (in the case
of the New LLC Interests or the Warrants) or Newco (in the case of the New PIK
Notes) within the meaning of the Securities Act. In order to enable holders of
New Securities to sell their securities without restriction (and to obviate the
need to satisfy the requirements relating to applicable exemptions from federal
and state securities law registration), Reorganized Finance and Newco have
agreed to provide the holders of New PIK Notes, New LLC Interests, and
Warrants, respectively, with certain registration rights under separate
agreements to that effect which will be entered into among such holders and
Reorganized Finance and Newco, as applicable, on the Effective Date
(respectively, the "New PIK Notes Registration Rights Agreement," the "New LLC
Interests Registration Rights Agreement" and the "Warrants Registration Rights
Agreement," the form of each being included in the Plan Supplement, and
collectively, the "Registration Rights Agreements").

The Registration Rights Agreements will provide certain
demand, "piggy-back," and shelf registration rights to holders of the New
Securities upon the terms and subject to the conditions set forth in Exhibits
D, F and J to the Plan.

The Registration Rights Agreements will contain certain
"hold-back" provisions relating to the ability of a holder of securities who
participates in a Demand Registration to effect any public sale or other
distribution of its securities during certain periods both prior to and after
the effectiveness of certain offerings of securities of Reorganized Finance and
Newco, and will also contain customary provisions regarding indemnification and
contribution and the furnishing of information by holders for inclusion in the
prospectus relating to the Demand Registration.

THE FOREGOING SUMMARY DISCUSSION IS GENERAL IN NATURE AND HAS
BEEN INCLUDED IN THIS DISCLOSURE STATEMENT SOLELY FOR INFORMATIONAL PURPOSES.
THE DEBTORS MAKE NO REPRESENTATIONS CONCERNING, AND DO NOT HEREBY PROVIDE ANY
OPINION OR ADVICE WITH RESPECT TO, THE SECURITIES LAW AND BANKRUPTCY LAW
MATTERS DESCRIBED ABOVE. IN LIGHT OF THE COMPLEX AND SUBJECTIVE INTERPRETIVE
NATURE OF WHETHER A PARTICULAR RECIPIENT OF NEW SECURITIES MAY BE DEEMED TO BE
AN "UNDERWRITER" WITHIN THE MEANING OF SECTION 1145(b)(1) OF THE BANKRUPTCY
CODE AND/OR AN "AFFILIATE" OR "CONTROL PERSON" UNDER APPLICABLE FEDERAL AND
STATE SECURITIES LAWS AND, CONSEQUENTLY, THE UNCERTAINTY CONCERNING THE
AVAILABILITY OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND EQUIVALENT STATE SECURITIES AND "BLUE SKY" LAWS, THE DEBTORS ENCOURAGE
EACH HOLDER OF SECURITIES TO CONSIDER

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CAREFULLY AND CONSULT WITH ITS OWN LEGAL ADVISOR(S) WITH RESPECT TO SUCH (AND
ANY RELATED) MATTERS.

XIII.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN

The following discussion summarizes certain federal income tax
consequences of the implementation of the Plan to the Debtors. This summary
does not address the income tax consequences to the holders of Claims or Equity
Interests (other than certain Claims and Equity Interests held by the Debtors),
as such Claims and Equity Interests (other than Secured Note Claims and Equity
Interests in CFI) will be either retained or satisfied in full under the Plan,
or, in the case of Equity Interests in Farms, extinguished without
consideration. In the case of holders of Secured Note Claims and Equity
Interests in CFI, the Debtors have been advised that such holders have engaged
or received independent counsel as to the federal income tax consequences of
the Plan.

The following summary is based on the Internal Revenue Code of
1986, as amended (the "Tax Code"), Treasury Department regulations promulgated
and proposed thereunder, judicial decisions and published administrative rules
and pronouncements of the Internal Revenue Service ("IRS") as in effect on the
date hereof. Changes in such rules or new interpretations thereof may have
retroactive effect and could significantly affect the federal income tax
consequences described below.

The federal income tax consequences of the Plan are complex,
subject to significant uncertainties and, with respect to the federal income
tax consequences to holders of Claims and Equity Interests, may vary based upon
the individual circumstances of each holder. The Debtors have not requested a
ruling from the IRS or an opinion of counsel with respect to any of the tax
aspects of the Plan. Thus, no assurance can be given as to the interpretation
that the IRS will adopt. In addition, this summary does not address foreign,
state or local tax consequences of the Plan.

ACCORDINGLY, EACH HOLDER OF A CLAIM OR EQUITY INTEREST IS
URGED TO CONSULT ITS OWN TAX ADVISOR AS TO THE CONSEQUENCES OF THE PLAN TO IT
AND THE DEBTORS UNDER FEDERAL AND APPLICABLE STATE, LOCAL AND FOREIGN TAX LAWS.

1. General. For federal income tax purposes, CFI expects to
report net operating loss ("NOL") carryforwards of approximately $2 million as
of December 31, 1995; Finance Holdings expects to report NOL carryforwards of
approximately $150 million as of December 31, 1995; Premium Holdings expects to
report NOL carryforwards and/or suspended losses of at least $30 million as of
March 31, 1996 (the end of its fiscal year); and Farms expects to report NOL
carryforwards of approximately $17 million as of December 31, 1995. In
addition, both CFI and Farms have substantial tax basis in their assets. In
contrast, Finance Holdings and Premium Holdings have little or no remaining tax
basis in their assets. Since its inception,

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Finance has been treated as a partnership for federal income tax purposes.
Accordingly, all items of income, gain, loss and deduction earned or incurred
by Finance have been allocated among, and are includable in the computation of
taxable income (or loss) of, its partners (CFI, Finance Holdings and Premium
Holdings).

Upon implementation of the Plan, certain of the Debtors will
incur substantial cancellation of debt. As discussed below, as a result of the
implementation of the Plan and the substantial cancellation of debt, each of
the corporate Debtors' NOL carryforwards may be substantially reduced and, in
some cases, eliminated, and the tax basis of the assets of CFI will be
substantially reduced.

2. Cancellation of Debt. In general, the cancellation or
discharge of a debt obligation for an amount less than the adjusted issue price
(generally, the amount received upon incurring the debt plus the amount of any
previously amortized original issue discount, including any accrued but unpaid
interest) gives rise to cancellation of debt ("COD") income to the debtor for
federal income tax purposes, except to the extent that one or more statutory or
case law exceptions to COD apply.

An exception exists for corporate debtors if the COD income
arises in a case under the Bankruptcy Code pursuant to a confirmed bankruptcy
plan. Under this bankruptcy exception, a corporate debtor in bankruptcy in a
case under the Bankruptcy Code pursuant to a confirmed bankruptcy plan does not
include COD income arising from the implementation of such plan, but instead
must reduce certain tax attributes, including NOL carryforwards and tax basis,
by the amount of the excluded COD income. The reduction in tax attributes is
made after the determination of any tax imposed for the taxable year of the
discharge. Accordingly, any reduction in the tax attributes of Farms due to
any COD resulting from the satisfaction and discharge of the Farms/Finance Note
Claim will not affect the determination of the federal income tax liability of
Farms in respect of the transfer of their assets to Newco under the Plan.

In the case of Finance, a partnership, any resulting COD
income would be allocated among its partners and excludable by them under the
bankruptcy exception. Whether any COD income will result upon the satisfaction
of the Secured Note Claims in exchange for new debt and New LLC Interests
depends upon whether a so-called "equity-for-debt" exception to COD income
applies in the case of partnerships. (See discussion of "Restructuring
Transactions -- Merger of Finance into a Limited Liability Company", below,
regarding the continuation of Reorganized Finance's status as a partnership for
federal income tax purposes.) Although Congress recently repealed a similar
equity-for-debt exception with respect to corporate debtors, such repeal was
limited expressly to corporations. Although not affected by such repeal, the
existence of an equity-for-debt exception to COD income where the outstanding
debt of a partnership is exchanged for an equity interest in the partnership
remains unclear under existing law. Absent an administrative ruling or
pronouncement from the IRS sanctioning the application of an equity-for-debt
exception, the Debtors do not intend to rely upon such an exception.
Accordingly, upon implementation of the Plan, and based upon the estimated
reorganization value of the Reorganized Debtors (see "Valuation --
Reorganization Value") and the Allowed amount of the Secured Note Claims as of
the Commencement Date, the discharge of

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the Secured Note Claims pursuant to the Plan will result in approximately $235
million to $243 million of COD income.

As among CFI, Finance Holdings and Premium Holdings, the
Debtors believe that it is likely that the COD income attributable to the
discharge of the Secured Note Claims (all of which is recourse debt) will be
allocated to CFI, as the sole general partner of Finance, to the extent of
Finance's insolvency immediately before the discharge of such Claims, and
intend to report accordingly. This will result in virtually all of the COD
income being allocated to CFI, with the result that, under the bankruptcy
exception discussed above, CFI's NOL carryforwards would be eliminated and
CFI's tax basis in its assets would be substantially reduced. The remainder of
the COD income will be allocated among CFI, Finance Holdings and Premium
Holdings in accordance with the profit-sharing provisions of the current
partnership agreement for Finance. There is no assurance, however, that the
IRS would not take a contrary position. For example, the IRS might attempt to
allocate the full amount of the resulting COD income in accordance with the
profit-sharing provisions of the current partnership agreement, i.e., 99% to
Finance Holdings and Premium Holdings.

In addition, CFI will suffer further reduction in its tax
basis in its assets due to the elimination of any personal liability for the
continuing indebtedness of Reorganized Finance and Newco, leaving it with a tax
basis in its assets (principally its interest in Reorganized Finance) of at
most a couple of million dollars.

3. Restructuring Transactions.

a. Merger of Finance into a Limited Liability Company.
Pursuant to the Restructuring Transactions, Finance will be merged with and
into a newly formed Delaware limited liability company. Although Reorganized
Finance will be a limited liability company, it has been structured to qualify
as a partnership for federal income tax purposes, subject to the "publicly
traded partnership" provisions of the Tax Code. Neither the Plan nor the
operating agreement for Reorganized Finance will impose any restriction on the
transferability of the New LLC Interests (other than for transfers of the New
LLC Interests to foreign entities), although certain notice provisions will
apply. In addition, transferability of a control interest in Reorganized
Finance may be restricted under Missouri corporate farming law if the County
Exemption ceases to be applicable. See Section III.B, "General Information --
Corporate Farming Law." If and when the New LLC Interests are considered
traded on an "established securities market" or otherwise "readily tradable on
a secondary market (or the substantial equivalent thereof)" within the meaning
of the publicly traded partnership provisions of the Tax Code, Reorganized
Finance would become taxable as a corporation for federal income tax purposes.
No assurance can be given as to whether or when a trading market in the New LLC
Interests will develop.

The discussion of the federal income tax consequences of the
Plan herein assumes that Reorganized Finance, like Finance, will be treated as
a partnership for federal income tax purposes. Accordingly, for federal income
tax purposes, the Debtors believe that Reorganized Finance should be treated as
a continuation of Finance (absent a deemed termination of the

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partnership for federal income tax purposes in the event of a subsequent
transfer of 50% or more of the New LLC Interests within any 12-month period),
and no gain or loss should be recognized by the Debtors as a result of the
merger.

b. Transfer of Assets of Reorganized Finance to Newco. The
transfer by Reorganized Finance of all of its assets to Newco in exchange for
all of the capital stock of Newco is intended to qualify as an exchange under
section 351 of the Tax Code, whereby Newco obtains a carryover tax basis in the
transferred assets (increased by any gain recognized by Reorganized Finance
upon the exchange) and a tacked holding period for such assets. However, there
is no assurance that the IRS will not assert a contrary position or that the
tax benefit of the portion of the carryover tax basis in excess of the fair
market value of such assets will not otherwise be limited.

Although it is possible that some gain may be recognized by
the Debtors for federal income tax purposes (as determined on an asset-by-asset
basis) upon the transfer of Reorganized Finance's assets to Newco, the Debtors
anticipate that current year losses will be sufficient to offset the entire
amount of such gain.

Under section 351, Reorganized Finance would have a tax basis
in the capital stock of Newco equal to the tax basis in the assets transferred,
increased by any gain recognized by it upon such transfer and decreased by the
amount of the liabilities assumed by Newco (or to which the assets are
otherwise subject) and by the amount of any other non-stock consideration
received. The holding period which Reorganized Finance would have in such
stock would include Finance's holding period of the assets transferred, to the
extent the assets transferred were held as capital assets or described in
section 1231(b) of the Tax Code (thus excluding inventory and depreciable and
real property held for not more than one year). For federal income tax
purposes, the allocation among the holders of New LLC Interests of any loss
incurred upon a subsequent sale of the stock of Newco, to the extent
Reorganized Finance has a tax basis in such stock on the Effective Date in
excess of the fair market value of the stock, is uncertain.

c. Transfer of Assets of Farms. Farms does not expect to
recognize any gain for federal income tax purposes upon the transfer of its
assets to Newco in satisfaction of the Farms/Finance Note.

d. Distribution of Warrants to CFI, Finance Holdings and
Premium Holdings. Neither CFI, Finance Holdings nor Premium Holdings expects
to recognize gain upon the receipt of the Warrants for federal income tax
purposes.

4. Possible Applicable High Yield Debt Obligations. If the
New PIK Notes are issued with original issue discount ("OID") resulting in a
yield to maturity (based on the "issue price" of the Notes for federal income
tax purposes) at least five percentage points over the applicable federal rate
in effect for the calendar month in which the New PIK Notes are issued (6.73%
for 1996), such notes would be treated as applicable high-yield discount
obligations ("AHYDO") within the meaning of section 163(e)(5) of the Tax Code.
If the New PIK Notes

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are treated as AHYDOs, all OID deductions would at least be deferred until
actually paid in cash and, to the extent the resulting yield to maturity is in
excess of six percentage points over the applicable federal rate, would be
disallowed.

Unless the New PIK Notes are traded on an "established
securities market" within generally 30 days of their issuance and initially
trade at a discount, the Debtors do not anticipate that the New PIK Notes would
be considered AHYDOs and that the foregoing deferral and disallowance rules
would apply.

Pursuant to Treasury regulations, an "established securities
market" includes a system of general circulation (including a computer listing
disseminated to subscribing brokers, dealers, or traders) that provides a
reasonable basis to determine fair market value by disseminating either recent
price quotations or actual prices of recent sales transactions.

XIV.

VOTING PROCEDURES AND REQUIREMENTS

A. Parties in Interest Entitled to Vote

Any holder of a Claim or Equity Interest against the Debtors
on the date on which the Disclosure Statement Order is approved, and whose
Claim or Equity Interest has not previously been disallowed by the Bankruptcy
Court, is entitled to vote to accept or reject the Plan if (i) such Claim or
Equity Interest is impaired under the Plan and is not of a class that is deemed
to have rejected the Plan under section 1126(g) of the Bankruptcy Code and (ii)
either (a) such holder's Claim has been scheduled by the Debtors (and such
Claim is not scheduled as disputed, contingent or unliquidated) or (b) such
holder has filed a proof of claim or interest on or before the last date set by
the Bankruptcy Court for such filings. Any Claim or Equity Interest as to
which an objection has been filed is not entitled to vote, unless the
Bankruptcy Court, upon application of the holder to whose Claim or Equity
Interest an objection has been made, temporarily Allows such Claim or Equity
Interest to the extent that it deems proper for the purpose of accepting or
rejecting the Plan. Any such application will be heard and determined by the
Bankruptcy Court prior to the Confirmation Hearing. A vote may be disregarded
if the Bankruptcy Court determines, after notice and a hearing, that such vote
was not solicited or procured in good faith or in accordance with the
provisions of the Bankruptcy Code.

B. Classes Impaired and Entitled to Vote Under the Plan

The following Classes and Subclasses of Claims and Equity
Interests are impaired under the Plan and are entitled to vote to accept or
reject the Plan: Class 3 (Secured Bank Claims), Class 4 (Secured Note Claims),
Class 6 (Construction Claims), Class 8 (Intercompany Claims) and Class 9
(Equity Interests in Finance) and each subclass thereof. Claims in each of
Class 1 (Priority Tax Claims), Class 2 (Other Priority Claims), Class 5 (Other
Secured Claims), Class 7 (General Unsecured Claims), Class 11 (Equity Interests
in Premium Holdings), Class 12 (Equity Interests in Finance Holdings), and
Class 13 (Equity Interests in CFI) are unimpaired

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under the Plan and the holders of Claims in those Classes and Subclasses are
conclusively presumed to have accepted the Plan, and the solicitation of
acceptance with respect to such classes and subclasses is not required under
section 1126(f) of the Bankruptcy Code. Equity Interests in Class 10 (Equity
Interests in Farms) are conclusively presumed to have rejected the Plan, and
the solicitation of votes with respect to such class is not required under
section 1126(g) of the Bankruptcy Code.

C. Vote Required for Acceptance
by Class of Claims or Equity Interests

The Bankruptcy Code defines acceptance of a plan by a class or
subclass of claims as acceptance by holders of at least two- thirds in dollar
amount, and more than one-half in number, of the claims of that class that are
actually voted for acceptance or rejection of the plan of reorganization.
Accordingly, acceptance by a class or subclass of claims occurs only if at
least two-thirds in amount and a majority in number of the holders of claims
voting cast their ballots in favor of acceptance.

The Bankruptcy Code defines acceptance of a plan of
reorganization by a class or subclass of equity interests as acceptance by
holders of at least two-thirds in amount of the allowed equity interests in
that class which actually cast ballots for acceptance or rejection of the plan
of reorganization.

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XV.

PROCEDURES FOR CONFIRMATION
AND CONSUMMATION OF THE PLAN

A. Confirmation Hearing

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy
Court, after notice, to hold a hearing on confirmation of the Plan. After
filing a petition for relief under chapter 11 of the Bankruptcy Code, the
Debtors will prosecute confirmation of the Plan. In connection therewith, the
Bankruptcy Court will hold the Confirmation Hearing, notice of which will be
provided to, among other entities, holders of Claims or Equity Interests in
Class 3 (Secured Bank Claims), Class 4 (Secured Note Claims), Class 6
(Construction Claims), Class 8 (Intercompany Claims) and Class 9 (Equity
Interests in Finance) and each subclass thereof. The Confirmation Hearing may
be adjourned from time to time by the Bankruptcy Court without further notice
except for an announcement of the adjourned date made at the Confirmation
Hearing or any adjournment thereof. Objections to confirmation must be made in
writing, specifying in detail the name and address of the entity objecting, the
grounds for the objection, and the nature and amount of the Claim or Equity
Interest held by the objector. Objections must be filed with the Bankruptcy
Court, with a copy to chambers of the Bankruptcy Judge, together with proof of
service, and served upon the parties so designated in the notice of the
Confirmation Hearing on or before the time and date designated in such notice
as being the last date for serving and filing objections to confirmation of the
Plan. Objections to confirmation of the Plan are governed by Bankruptcy Rule
9014 and any local rules of the Bankruptcy Court. UNLESS AN OBJECTION TO
CONFIRMATION IS TIMELY SERVED AND FILED, IT WILL NOT BE CONSIDERED BY THE
BANKRUPTCY COURT.

B. Conditions to Confirmation of the Plan

1. Statutory Requirements

At the Confirmation Hearing, the Bankruptcy Court will confirm
the Plan only if all of the conditions to confirmation under section 1129 of
the Bankruptcy Code are satisfied. Such conditions include the following:

- The Plan complies with the applicable provision of
the Bankruptcy Code.

- Each of the Debtors has complied with the applicable
provisions of the Bankruptcy Code.

- The Plan has been proposed in good faith and not be
any means proscribed by law.

- Any payment made or promised by any of the Debtors or
by an entity issuing securities or acquiring property under the Plan for
services or for costs and expenses in,

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<PAGE> 75

or in connection with, the Chapter 11 Cases, or in connection with the Plan and
incident to the Chapter 11 Cases, has been disclosed to the Bankruptcy Court;
and any such payment made before the confirmation of the Plan is reasonable, or
if such payment is to be fixed after confirmation of the Plan, such payment is
subject to the approval of the Bankruptcy Court as reasonable.

- Each of the Debtors has disclosed the identity and
affiliations of any individual proposed to serve, after confirmation of the
Plan, as a director or officer of such Debtor and the appointment to, or
continuance in, such office of such individual is consistent with the interests
of creditors and equity interest holders and with public policy, and such
Debtor has disclosed the identity of any insider that will be employed or
retained by such Debtor, and the nature of any compensation for such insider.

- With respect to each impaired class or subclass of
Claims or Equity Interests, each holder of an impaired Claim or impaired Equity
Interest either has accepted the Plan or will receive or retain under the Plan,
on account of the Claims or Equity Interests held by such entity, property of a
value, as of the Effective Date, that is not less than the amount that such
entity would receive or retain if the Debtors were liquidated on such date
under chapter 7 of the Bankruptcy Code.

- If the Debtors do not move to confirm the Plan
non-consensually, each class or subclass of Claims or Equity Interests entitled
to vote has either accepted the Plan or is not impaired under the Plan.

- Except to the extent that the holder of a particular
Claim has agreed to a different treatment of such Claim, the Plan provides that
Administrative Expense Claims, Priority Tax Claims and Other Priority Claims
will be paid in full on the Effective Date, or as soon thereafter as is
practicable.

- At least one impaired class of Claims has accepted
the Plan, determined without including any acceptance of the Plan by any
insider holding a Claim in such class.

- Confirmation of the Plan is not likely to be followed
by the liquidation or the need for further financial reorganization of the
Debtors or any successor to the Debtors under the Plan.

- All fees payable under section 1930 of title 28 have
been paid on or prior to the Effective Date.

- The Plan provides for the continuation, after the
Effective Date, of payment of all retiree benefits at the level established
under section 1114 of the Bankruptcy Code at any time prior to confirmation of
the Plan for the duration of the period each of the Debtors has obligated
itself to provide such benefits.

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<PAGE> 76

The Company believes that the Plan will satisfy all the
statutory provisions of chapter 11 of the Bankruptcy Code, that each of the
Debtors has complied or will have complied with all the provisions of the
Bankruptcy Code, and that the Plan is being proposed and will be submitted to
the Bankruptcy Court in good faith.

2. Unfair Discrimination and Fair and Equitable Tests

If any impaired class or subclass does not accept the Plan,
the Debtors nevertheless may move for confirmation of the Plan. To obtain such
confirmation, it must be demonstrated to the Bankruptcy Court that the Plan
"does not discriminate unfairly" and is "fair and equitable" with respect to
such class.

A plan of reorganization "does not discriminate unfairly" if
(i) the legal rights of a rejecting class are treated in a manner that is
consistent with the treatment of other classes whose legal rights are related
to the legal rights of the rejecting class, and (ii) no class receives payments
in excess of that which it is legally entitled to receive for its Claims or
Equity Interests. The Debtors believe that under the Plan all impaired classes
and subclasses of Claims and Equity Interests are treated in a manner that is
consistent with the treatment of other classes of Claims and Equity Interests
to which their legal rights are related, if any, and no class or subclass of
Claims or Equity Interests will receive payments or property with an aggregate
value greater than the aggregate value of the Allowed Claims and Allowed Equity
Interests in such class or subclass. Accordingly, the Debtors believe that the
Plan does not discriminate unfairly as to any impaired class or subclass of
Claims or Equity Interests.

The Bankruptcy Code establishes different "fair and equitable"
tests for secured creditors, unsecured creditors and equity interest holders as
follows:

- Secured Creditors - Either (i) each impaired secured
creditor retains its liens securing its secured claim and it receives on
account of its secured claim deferred cash payments having a present value
equal to the amount of its allowed secured claim, (ii) each impaired secured
creditor realizes the indubitable equivalent of its allowed secured claim, or
(iii) the property securing the claim is sold free and clear of liens, with
such liens to attach to the proceeds and the treatment of such liens on
proceeds as provided in clause (i) or (ii) of this subparagraph.

- Unsecured Creditors - Either (i) each impaired
unsecured creditor receives or retains under the plan property of a value equal
to the amount of its allowed claim or (ii) the holders of claims and interests
that are junior to the claims of the dissenting class will not receive any
property under the plan of reorganization, subject to the applicability of the
judicial doctrine of contributing new value.

- Equity Interest Holders - Either (i) each equity
interest holder will receive or retain under the plan of reorganization
property of a value equal to the greater of (a) the fixed liquidation
preference or redemption price, if any, of such stock or (b) the value of the
stock or (ii) the holders of interests that are junior to the stock will not
receive any property under the

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<PAGE> 77

plan of reorganization, subject to the applicability of the judicial doctrine
of contributing new value.

The Debtors believe that the Plan may be confirmed on a
non-consensual basis if the holders of impaired Claims vote to reject the Plan.
If necessary, the Debtors will show at the Confirmation Hearing that the Plan
provides recoveries to the holders of such Allowed Claims that satisfy the
conditions of section 1129(b) of the Bankruptcy Code.

THE DEBTORS MAY MOVE FOR CONFIRMATION OF THE PLAN IF LESS THAN THE REQUISITE
HOLDERS OF CLAIMS OR EQUITY INTERESTS VOTE TO ACCEPT THE PLAN.

3. Feasibility

The Bankruptcy Code conditions confirmation of a plan of
reorganization on, among other things, a finding that it is not likely to be
followed by the liquidation or the need for further financial reorganization of
a debtor. For purposes of determining whether the Plan satisfies this
condition, the Debtors have analyzed the capacity of Newco to service its debt
obligations under the Plan. As part of this analysis, the Debtors reviewed the
Projections. The Projections, and the significant assumptions on which they
are based, are included in Article VIII, "Projections," and the Projections
annexed as Exhibit E to the Disclosure Statement. Based upon its analysis of
such projections, the Debtors believe that Newco will be able to make all
payments required to be made under the Plan.

The Projections are based on the assumption that the Plan will
be confirmed by the Bankruptcy Court and, for projection purposes, that the
Effective Date under the Plan and distributions thereunder occur on or about
August 31, 1996. The Debtors have prepared the Projections based upon certain
assumptions that they believe to be reasonable under the circumstances. Those
assumptions considered to be significant are described in Article VIII,
"Projections," and the Projections annexed as Exhibit E to the Disclosure
Statement. The Projections have not been examined or compiled by independent
accountants. The Debtors make no representation as to the accuracy of the
Projections or the ability of Newco to achieve the projected results. Many of
the assumptions on which the Projections are based are subject to significant
uncertainties. Inevitably, some assumptions will not materialize and
unanticipated events and circumstances may affect the actual financial results.
Therefore, the actual results achieved may vary from the projected results and
the variations may be material. It is urged that all of the assumptions be
examined carefully in evaluating the Plan.

4. Best Interests Test

With respect to each impaired class of holders of Claims and
Equity Interests, confirmation of the Plan requires that each such holder
either (i) accept the Plan or (ii) receive or retain under the Plan property of
a value, as of the Effective Date, that is not less than the value such holder
would receive or retain if the Debtors were liquidated under chapter 7 of the
Bankruptcy Code.

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<PAGE> 78

To determine what holders of Claims and Equity Interests of
each impaired class would receive if the Debtors were liquidated, the
Bankruptcy Court must determine the proceeds that would be generated from the
liquidation of the properties and interests in property of the Debtors in a
chapter 7 liquidation case. The proceeds that would be available for
satisfaction of Allowed General Unsecured Claims against, and Equity Interests
in, the Debtors would consist of the proceeds generated by disposition of the
unencumbered equity in the properties and interests in property of the Debtors
and the cash held by the Debtors at the time of the commencement of the
liquidation case. Such proceeds would be reduced by the costs and expenses of
the liquidation and by such additional administration and priority claims that
may result from the termination of the business of the Debtors and the use of
chapter 7 for the purposes of liquidation.

The costs of liquidation under chapter 7 of the Bankruptcy
Code would include the fees payable to a trustee in bankruptcy, and the fees
that would be payable to additional attorneys and other professionals that such
a trustee may engage, plus any unpaid expenses incurred by the Debtors during
the Chapter 11 Cases, such as compensation for attorneys, financial advisors,
accountants and costs and expenses of members of the Committee that are Allowed
in the chapter 7 case. In addition, Claims would arise by reason of the breach
or rejection of obligations incurred and executory contracts entered into or
assumed by the Debtors during the pendency of the Chapter 11 Cases.

The foregoing types of Claims and such other Claims which may
arise in the liquidation cases or result from the pending Chapter 11 Cases
would be paid in full from the liquidation proceeds before the balance of those
proceeds would be made available to pay unsecured Claims arising on or before
the Commencement Date.

To determine if the Plan is in the best interests of each
impaired class or subclass, the present value of the distributions from the
proceeds of the liquidation of the properties and interests in property of the
Debtors (net of the amounts attributable to the aforesaid claims) is then
compared with the present value offered to such classes or subclasses of Claims
and Equity Interests under the Plan.

In applying the "best interests" test, it is possible that
Claims and Equity Interests in the chapter 7 cases may not be classified
according to the seniority of such Claims and Equity Interests as provided in
the Plan. In the absence of a contrary determination by the Bankruptcy Court,
all unsecured Claims arising on or before the Commencement Date which have the
same rights upon liquidation would be treated as one class for the purposes of
determining the potential distribution of the liquidation proceeds resulting
from the chapter 7 cases of the Debtors. The distributions from the
liquidation proceeds would be calculated ratably according to the amount of the
Claim held by each creditor. The Debtors believe that the most likely outcome
of liquidation proceedings under chapter 7 would be the application of the rule
of absolute priority of distributions. Under that rule, no junior creditor
receives any distribution until all senior creditors are paid in full with
interest, and no stockholder receives any distribution until all creditors are
paid in full with interest. Consequently, the Debtors believe that under
chapter 7,

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<PAGE> 79

no holders of Allowed Claims or Equity Interests (other than the holders of
Allowed Secured Bank Claims and Secured Note Claims) would receive any
distribution.

After consideration of the effects that a chapter 7
liquidation would have on the ultimate proceeds available for distribution to
creditors in the Chapter 11 Cases, including: (i) the increased costs and
expenses of a liquidation under chapter 7 arising from fees payable to a
trustee in bankruptcy and professional advisors to such trustee; (ii) the
erosion in value of assets in a chapter 7 case in the context of the
expeditious liquidation required under chapter 7 and the "forced sale"
environment in which such a liquidation would occur; (iii) the adverse effects
on the marketability of business segments as a result of the departure of key
employees and the loss of customers; and (iv) the substantial increases in
claims which would be satisfied on a priority basis or on parity with creditors
in the Chapter 11 Cases, the Debtors have determined that confirmation of the
Plan will provide each holder of a Claim or Equity Interest with a greater
recovery than it would receive pursuant to liquidation of the Debtors under
chapter 7 of the Bankruptcy Code.

The Debtors' Liquidation Analysis is attached hereto as
Exhibit D.

The Debtors also believe that the value of any distributions
from the liquidation proceeds to each class of Allowed Claims in a chapter 7
case would be less than the value of distributions under the Plan because such
distributions in a chapter 7 case would not occur for a substantial period. It
is likely that distribution of the proceeds of the liquidation could be delayed
for one year or more after the completion of such liquidation in order to
resolve Claims and prepare for distributions.

C. Consummation

The Plan will be consummated on the first business day on
which all of the conditions to the effectiveness of the Plan have been
satisfied or waived. The Debtors believe that the Effective Date will occur on
or about September 16, 1996 and that the distributions under the Plan will
commence on or about such date. The Debtors cannot, however, provide any
assurances that the Effective Date will occur on such date or on any other
date.

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<PAGE> 80

XVI.

ALTERNATIVES TO CONFIRMATION
AND CONSUMMATION OF THE PLAN

A. Liquidation Under Chapter 7

If no chapter 11 plan can be confirmed, the Chapter 11 Cases
may be converted to cases under chapter 7 of the Bankruptcy Code in which a
trustee would be elected or appointed to liquidate the assets of the Debtors.
A discussion of the effect that a chapter 7 liquidation would have on the
recovery of the holders of Claims and Equity Interests is set forth in Section
XV.B.4, "Procedures for Confirmation and Consummation of the Plan -- Conditions
to Confirmation of the Plan; Best Interests Test" and the Liquidation Analysis
annexed as Exhibit D to the Disclosure Statement. The Debtors believe that
liquidation under chapter 7 would result in (i) smaller distributions being
made to creditors than those provided for in the Plan because of the additional
administrative expenses involved in the appointment of a trustee and attorneys
and other professionals to assist such trustee, (ii) additional expenses and
claims, some of which would be entitled to priority, which would be generated
during the liquidation and from the rejection of executory contracts in
connection with the cessation of the Debtors' operations, and (iii) failure to
realize the greater going-concern value of the Debtors' assets.

B. Alternative Plan of Reorganization

If the Plan is not confirmed, the Debtors or any other party
in interest could attempt to formulate a different plan of reorganization.
Such a plan might involve either a reorganization and continuation of the
Debtors' business or an orderly liquidation of their assets. During the course
of negotiations of the Plan, the Debtors explored various other alternatives
and concluded that the Plan represented the best alternative to reorganize and
to protect the interests of creditors and other parties in interest. The
Debtors have not changed their conclusions.

The Debtors believe that the Plan permits them to use the
provisions of chapter 11 expeditiously to preserve their business and allow
rehabilitation, to pay their general unsecured creditors in full, and to
accomplish the deleveraging of the Debtors' financial condition. The Debtors
believe that a restructuring outside of chapter 11 would not achieve the same
benefits or realize greater recovery for creditors and other parties in
interest than that provided for in the Plan.

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<PAGE> 81

XVII.

CONCLUSION AND RECOMMENDATION

The Debtors believe that the Plan achieves the objectives of
chapter 11 and is in the best interests of all holders of Claims and Equity
Interests, and urge all holders of Claims and Equity Interests to vote to
accept the Plan.

Dated: Wilmington, Delaware
July 29, 1996

PSF FINANCE L.P.,
a Delaware Limited Partnership

By: Collings Farm, Inc.
Its Sole General Partner

By: /s/ Kenneth F. Clifford
------------------------
Name: Kenneth F. Clifford
Title: Senior Vice President

PREMIUM STANDARD FARMS, INC.,
a Missouri Corporation

By: /s/ Dennis W. Harms
--------------------
Name: Dennis W. Harms
Title: President and Chief Executive Officer

COLLINGS FARM, INC.,
a Missouri Corporation

By: /s/ Kenneth F. Clifford
------------------------
Name: Kenneth F. Clifford
Title: Senior Vice President

PSF FINANCE HOLDINGS INC.,
a Delaware Corporation

By: /s/ Kenneth F. Clifford
-------------------------
Name: Kenneth F. Clifford
Title: Executive Vice President

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<PAGE> 82

PREMIUM HOLDINGS CORP.,
an Iowa Corporation

By: Dennis W. Harms
---------------
Name: Dennis W. Harms
Title: President

-76-

<PAGE> 1
EXHIBIT 3.1

CERTIFICATE OF FORMATION OF PSF HOLDINGS, L.L.C.

This Certificate of Formation is being executed as of September 9, 1996,
for the purpose of forming a limited liability company pursuant to the
Delaware Limited Liability Company Act, 6 Del. C. Sections 18-101 et seq.

The undersigned, being duly authorized to execute and file this Certificate
of Formation, does hereby certify as follows:

A. Name. The name of the limited liability company is PSF Holdings,
L.L.C. (the "Company").

B. Registered Office and Registered Agent. The Company's registered office
in the State of Delaware is located at 1209 Orange Street,
Wilmington, Delaware 19801. The registered agent of the Company for
service of process at such address is The Corporation Trust Company.

C. Dissolution. The latest date on which the Company is to dissolve is
December 31, 2046.

IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of
Formation as of the day and year first written above.

/s/ Alyson B. Gal
--------------------------
Authorized Person
Alyson B. Gal

/s/ Dina Brewer
--------------------------
Authorized Person
Dina Brewer

/s/ Alexander Simon
--------------------------
Authorized Person
Alexander Simon

<PAGE> 1

EXHIBIT 3.2

EXECUTION COPY.

PSF HOLDINGS, L.L.C.

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

Dated as of April 16, 1997

<PAGE> 2

Table of Contents

Page

ARTICLE 1 DEFINITIONS............................................... 2

ARTICLE 2 FORMATION AND PURPOSE..................................... 2
2.1 Formation....................................... 2
2.2 Name............................................ 2
2.3 Registered Office/Agent......................... 2
2.4 Term............................................ 2
2.5 Purpose......................................... 2
2.6 Specific Powers................................. 3
2.7 Certificate..................................... 4

ARTICLE 3 MEMBERSHIP AND CAPITAL.................................... 4
3.1 Members......................................... 4
3.2 Return of Capital Contributions, etc............ 4
3.3 Additional Members; Classes of Members.......... 4
3.4 Units........................................... 5
3.5 Percentage Interest............................. 5
3.6 Additional Units................................ 5
3.7 Rights to Repurchase Interest of Employee Members 6

ARTICLE 4 STATUS OF MEMBERS......................................... 7
4.1 Limited Liability............................... 7
4.2 Return of Distributions of Capital.............. 7

ARTICLE 5 DESIGNATION, RIGHTS, AUTHORITIES, POWERS,
RESPONSIBILITIES AND DUTIES OF THE BOARD OF MANAGERS
AND MEMBERS............................................... 7

5.1 Management by Board of Managers...................... 7
5.1.1 Appointment of Managers......................... 7
5.1.2 Resignation of Managers......................... 8
5.1.3 Authority; Actions of the Board of Managers..... 8
5.1.4 Meetings of the Board of Managers............... 8
5.1.5 Compensation.................................... 9
5.2 Rights of Members.................................... 9
5.2.1 Voting Rights................................... 9
5.2.2 Class B Members................................. 10
5.2.3 Meetings of the Members......................... 11
5.2.4 Compensation.................................... 12
5.2.5 Representatives................................. 12
5.2.6 Restrictions on Powers.......................... 13

<PAGE> 3
5.3 Officers; Agents....................................... 13
5.3.1 Power to Appoint.................................. 13
5.3.2 Officers.......................................... 13
5.3.3 Management Option Plan Committee.................. 13

ARTICLE 6 BOOKS, RECORDS, ACCOUNTING, AND REPORTS..................... 14
6.1 Books and Records..................................... 14
6.2 Delivery to Member; Inspection; etc................... 14
6.3 Financial Statements.................................. 15
6.4 Filings............................................... 15
6.5 Non-Disclosure........................................ 15
6.6 Record holders of Interests........................... 16

ARTICLE 7 DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS............ 16
7.1 Board of Managers' Determination...................... 16
7.2 Distributions......................................... 16
7.3 Accounting for Partnership Profit and Loss............ 16
7.3.1 Capital Account.................................. 16
7.3.2 Allocation of Net Profit and Net Loss, etc. --
General Rule..................................... 16
7.3.3 Special Allocations and Capital Account Adjustments 17
7.3.4 Interpretation................................... 18
7.3.5 Withholdings..................................... 18
7.3.6 Changes in Members' Interest..................... 18
7.3.7 Property Distributions and Installment Sales..... 18
7.3.8 Adjustments to Capital Accounts.................. 19

ARTICLE 8 TAX MATTERS MEMBERS......................................... 19
8.1 Tax Matters Member.................................... 19
8.2 Indemnity of Tax Matters Member....................... 19
8.3 Information Furnished................................. 20
8.4 Notice of Proceedings, etc............................ 20
8.5 Notices to Tax Matters Member......................... 20

ARTICLE 9 TRANSFER OF INTERESTS....................................... 20
9.1 Transfer by Members................................... 20
9.2 Assignee.............................................. 21
9.3 Restriction on Foreign Ownership of Units............. 22
9.4 Other Restrictions on Transfer........................ 22

ARTICLE 10 ADMISSION AS MEMBER......................................... 23
10.1 Requirements......................................... 23
10.2 Consent.............................................. 23
10.3 No Dissolution....................................... 23
10.4 Admission upon exercise of Warrants and Options...... 24

ARTICLE 11 LIMITATIONS ON RIGHTS AND POWERS OF THE MEMBERS;
AMENDMENTS.................................................... 24

<PAGE> 4
11.1 Specific Limitations................................ 24
11.2 Amendments to Agreement............................. 24

ARTICLE 12 DISSOLUTION OF COMPANY..................................... 25
12.1 Termination of Membership........................... 25
12.2 Events of Dissolution or Liquidation................ 25
12.3 Liquidation......................................... 25
12.4 Distributions to Members............................ 25
12.5 No Action for Dissolution........................... 25
12.6 No Further Claim.................................... 26

ARTICLE 13 INDEMNIFICATION............................................ 26
13.1 General............................................. 26
13.2 Exculpation......................................... 27
13.3 Persons Entitled to Indemnity....................... 27
13.4 Procedure Agreements................................ 27
13.5 Fiduciary and Other Duties.......................... 27

ARTICLE 14 RIGHT TO CONVERT TO CORPORATE FORM......................... 28

ARTICLE 15 LIMITED LIABILITY.......................................... 28

ARTICLE 16 MISCELLANEOUS.............................................. 29
16.1 Additional Documents................................ 29
16.2 General............................................. 29
16.3 Notices............................................. 29
16.4 Execution of Papers................................. 29
16.5 Disputed Matters.................................... 30
16.6 Gender and Number................................... 30
16.7 Severability........................................ 30
16.8 Massachusetts Business Trust Legend................. 31
16.9 Headings............................................ 31
16.10 No Third Party Rights............................... 31

Exhibit A Defined Terms.............................................. 1

Exhibit B Members and Percentage Interests........................... 1

Exhibit C Officers................................................... 1
<PAGE> 5

PSF HOLDINGS, L.L.C.

SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT

THIS LIMITED LIABILITY COMPANY AGREEMENT of PSF Holdings, L.L.C. is dated
as of April 16, 1997, by and among the Persons set forth in Exhibit B hereto,
and certain other Persons from time to time admitted as Members of the Company
and becoming a party hereto, and amends and restates, in its entirety, the
Amended and Restated Limited Liability Company Agreement of PSF Holdings,
L.L.C. dated as of September 17, 1996.

WHEREAS, PSF Holdings, L.L.C. was initially organized as a limited
liability company under the laws of Delaware on September 10, 1996, pursuant to
an order of the United States Bankruptcy Court for the District of Delaware
entered September 6, 1996 (the "Confirmation Order") in the Chapter 11 cases of
PSF Finance L.P., a Delaware limited partnership organized on August 6, 1991,
and certain affiliated entities (case nos. 96-1032 (HSB) et al.), confirming
the Debtors' Second Amended Joint Plan of Reorganization under Chapter 11 of
the Bankruptcy Code (the "Plan") with the Pre-Merger Members being the members
of PSF Holdings, L.L.C.

WHEREAS, on September 17, 1996, pursuant to the Confirmation Order and
pursuant to the Plan, the former partners of PSF Finance L.P. (collectively,
the "Original Partners") caused PSF Finance L.P. to be converted to a limited
liability company under the laws of Delaware by merger with PSF Holdings,
L.L.C. (the "Merger") pursuant to the Revised Uniform Limited Partnership Act
of the State of Delaware and the Act (as so merged, the "Company"), thereby
becoming the original Members of the Company (the "original Members"), the
Pre-Merger Members having withdrawn in connection with the Merger.

WHEREAS, the Original Partners that became the original Members of this
Company and certain additional Persons admitted as Members (collectively, the
"Members") adopted the Amended and Restated Limited Liability Company
Agreement, dated as of September 17, 1996, in order to continue the business
and affairs of PSF Finance L.P. as a limited liability company and to set forth
the understanding of the Members with respect to, among other things, the
management of the business and affairs of the Company, the allocation of
profits and losses among the Members, the respective rights and obligations of
the Members to each other and to the Company, and certain other matters.

WHEREAS, the Members desire to amend and restate the Amended and Restated
Limited Liability Company Agreement.

NOW, THEREFORE, the Members agree as follows:

<PAGE> 6

ARTICLE 1

DEFINITIONS

For purposes of this Agreement, certain capitalized terms have
specifically defined meanings which are either set forth or referred to in
Exhibit A attached hereto and incorporated herein by reference.

ARTICLE 2

FORMATION AND PURPOSE

2.1 Formation. The Members hereby continue the business of PSF
Finance L.P. and the Company pursuant to and in accordance with the Act. The
rights and liabilities of the Members and Assignees of all such Members shall
be determined pursuant to the Act and this Agreement. To the extent that the
rights or obligations of any Member or Assignee are different by reason of any
provision of this Agreement than they would be in the absence of such
provision, this Agreement shall, to the extent permitted by the Act, control.

2.2 Name. The name of the Company is "PSF Holdings, L.L.C.". The
business of the Company may be conducted under that name or, upon compliance
with applicable laws, any other name that the Board of Managers deems
appropriate or advisable. The Board of Managers shall file, or shall cause to
be filed, any fictitious name certificates and similar filings, and any
amendments thereto, that the Board of Managers considers appropriate or
advisable.

2.3 Registered Office/Agent. The registered office required to be
maintained by the Company in the State of Delaware pursuant to the Act shall
initially be c/o Corporation Trust Company at 1209 Orange Street, Wilmington,
DE 19801. The name and address of the registered agent of the Company pursuant
to the Act shall initially be Corporation Trust Company at 1209 Orange Street,
Wilmington, DE 19801. The Company may, upon compliance with the applicable
provisions of the Act, change its registered office or registered agent from
time to time in the discretion of the Board of Managers.

2.4 Term. The term of the Company shall continue until December 31,
2046 or such later date as shall be designated by the Board of Managers unless
sooner terminated as hereinafter provided.

2.5 Purpose. The Company is formed for the object and purpose of,
and the nature of the business to be conducted and promoted by the Company is
owning a corporation engaged in the raising, farrowing, processing, finishing
and marketing of hogs, and all other business activities which may lawfully be
engaged in by a limited liability company pursuant to the Act which the Board
of Managers determines are necessary, advisable, convenient or incidental to
the business of the Company.

2
<PAGE> 7

2.6 Specific Powers. Without limiting the generality of Section 2.5
hereof, the Company shall have the power and authority to take any and all
actions necessary, appropriate, proper, advisable, incidental or convenient to
or for the furtherance of the purpose set forth in Section 2.5, including, but
not limited to, the power:

2.6.1 to conduct its business, carry on its operations and have
and exercise the powers granted to a limited liability company by the Act
in any state, territory, district or possession of the United States, or
in any foreign country that may be necessary, convenient or incidental to
the accomplishment of the purpose of the Company;

2.6.2 to acquire by purchase, lease, contribution of property or
otherwise, own, hold, operate, maintain, finance, improve, lease, sell,
convey, mortgage, transfer, demolish or dispose of any real or personal
property that may be necessary, convenient or incidental to the
accomplishment of the purpose of the Company;

2.6.3 to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any Member, any Affiliate
thereof, or any agent of the Company necessary to, in connection with,
convenient to, or incidental to the accomplishment of the purpose of the
Company;

2.6.4 to purchase, take, receive, subscribe for or otherwise
acquire, own, hold, vote, use, employ, sell, mortgage, lend, pledge, or
otherwise dispose of, and otherwise use and deal in and with, shares or
other interests in or obligations of domestic or foreign corporations,
associations, general or limited partnerships, trusts, limited liability
companies, or individuals or direct or indirect obligations of the United
States or of any government, state, territory, governmental district or
municipality or of any instrumentality of any of them;

2.6.5 to lend money, to invest and reinvest its funds, and to take
and hold real and personal property for the payment of funds so loaned or
invested;

2.6.6 to sue and be sued, complain and defend, and participate in
administrative or other proceedings, in its name or otherwise;

2.6.7 to appoint employees and agents of the Company, and define
their duties and fix their compensation;

2.6.8 to indemnify any Person in accordance with the Act or
otherwise to the extent not prohibited by the Act or other applicable
law;

2.6.9 to cease its activities and cancel its Certificate;

2.6.10 to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other
action with respect to any lease, contract or security agreement in
respect of any assets of the Company;

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<PAGE> 8

2.6.11 to borrow money and issue evidences of indebtedness, and to
secure the same by a mortgage, pledge or other lien on any or all of the
assets of the Company;

2.6.12 to make contracts of guaranty and suretyship which are
necessary or convenient to the conduct, promotion or attainment of the
business of a corporation all or a majority of the outstanding stock of
which is owned, directly or indirectly, by the Company.

2.6.13 to pay, collect, compromise, litigate, arbitrate or
otherwise adjust or settle any and all other claims or demands of or
against the Company or to hold such proceeds against the payment of
contingent liabilities; and

2.6.14 to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to the
accomplishment of the purpose of the Company.

2.7 Certificate. William R. Patterson is hereby designated as an
authorized person, within the meaning of the Act, to execute, deliver and file
any amendments or restatements of the Certificate and any other certificates
and any amendments or restatements thereof necessary for the Company to qualify
to do business in a jurisdiction in which the Company may wish to conduct
business, provided, however, that such designation is subject in all events to
the right of the Board of Managers to cancel any such designation and to
designate another such authorized person as the Board of Managers deems
necessary from time to time.

ARTICLE 3

MEMBERSHIP AND CAPITAL

3.1 Members. The Members in the Company shall be listed on Exhibit B
hereto (which may reflect nominee names of the beneficial holders), which sets
forth the agreed Capital Contribution and the agreed Capital Account (as
adjusted pursuant to Section 7.3.8) of each Member as of the date hereof, and
the number and class of Units held by such Members on the date hereof.

3.2 Return of Capital Contributions, etc. No Member shall have the
right to demand a return of all or any part of such Member's Capital
Contributions. Any return of the Capital Contributions of any Member shall be
made solely from the assets of the Company and only in accordance with the
terms of this Agreement. Interest may be paid to each Member with respect to
such Member's Capital Contributions on terms and at a rate to be determined
from time to time by the Board of Managers.

3.3 Additional Members; Classes of Members. Except for transferees
of Interests who become Members pursuant to Article 10 and Members to whom
Interests are issued pursuant to Section 3.6, no additional Members shall be
admitted to the Company without the consent of the Board of Managers and the
Required Members. For purposes of

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the Act, the Members shall constitute two classes of Members, the Class A
Members and the Class B Members, unless and to the extent that this Agreement
specifically provides for different classes or groups of Members of the Company.

3.4 Units.

3.4.1 For convenience in determining the rights and interests of
Persons that may from time to time hold warrants or options to acquire an
interest in the Company and become Members, the Interests of each Member
shall be divided into Units.

3.4.2 The Units shall be divided into two classes, Class A Units
(the "Class A Units") and Class B Units (the "Class B Units" and,
together with the Class A Units, the "Units"). Except as otherwise
provided in Section 5.2.2, the Class A Units and Class B Units shall be
identical and will entitle the holders thereof to the same rights and
privileges. Notwithstanding anything herein to the contrary (i) each
Class B Unit Transferred to a party other than a MS Member shall, upon
the election of such party, convert into one Class A Unit immediately
following such Transfer, and (ii) each Class A Unit Transferred to a MS
Member shall convert automatically, immediately following such Transfer,
without further action on the part of any party, into one Class B Unit;
provided that in the case of clauses (i) and (ii) above, in the event of
any change in the Units of the Company by reason of merger,
consolidation, recapitalization, split, division or subdivision,
combination, conversion, exchange of Units or other change in the capital
or organization structure of the Company, then the number and kind of
Units shall be appropriately and equitably adjusted so that the holders
of such Units shall receive upon conversion, purchase or Transfer of the
Units, the number of Units or other securities or property that such
holder would have received in respect of the Units had such Units been
converted, purchased or Transferred immediately prior to such event.

3.4.3 The Board of Managers may provide that the Units shall be
certificated. Unless and until such action, the Units shall be
uncertificated, and the Units and Percentage Interests of each Member
shall be evidenced by Exhibit B, as amended from time to time to reflect
the issuance or repurchase of any Units, the admission of new Members and
any other adjustments required under this Agreement, including under
Section 7.3.8.

3.5 Percentage Interest. The percentage interests of each Member in
the profits and capital of the Company (each a "Percentage Interest") shall be
determined by dividing the number of Units held by such Member by the number of
Units then held by all Members and multiplying the result by 100, and shall be
adjusted each time Units are issued or repurchased by the Company.

3.6 Additional Units. The Company may issue additional Units for
cash, property or services on such terms as the Board of Managers deems
appropriate; provided that the consent of the Required Members is obtained in
advance, in accordance with the terms of this Agreement. Upon the issuance of
any additional Units pursuant to this Section

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<PAGE> 10

3.6, the Percentage Interests of the Members shall be redetermined as provided
in Section 3.5.

3.7 Rights to Repurchase Interests of Employee Members. The Company
shall acquire and shall have the right to acquire the Interest of any Employee
Member as provided below.

3.7.1 If an Employee Member ceases to be an employee of the Company
or an Affiliate of the Company and if the Employee Member was terminated
from such service or employment as a result of death or Disability, the
Company shall purchase and the Employee Member or his representative
shall sell to the Company the entire Interest of such Employee Member for
Fair Value.

3.7.2 If an Employee Member ceases to be an employee of the Company
or an Affiliate of the Company, and if such Employee Member was not
terminated from such service or employment as a result of death or
Disability, the Company shall have the right for a period of six months
following the last date on which such Employee Member was a Member or an
employee of the Company or an Affiliate of the Company to repurchase the
entire Interest of such Employee Member for Fair Value or, if such
Employee's Interest had not vested or was otherwise subject to
restrictions, at such price as may be specified in the agreement or plan
pursuant to which such unvested or restricted Interest was acquired.

3.7.3 If the Company is obligated to repurchase the Interest of an
Employee Member pursuant to Section 3.7.1 hereof, the closing date for
the repurchase shall be 90 days after the last date on which such
Employee Member was an employee of the Company or an Affiliate of the
Company. If the Company determines to purchase the Interest of an
Employee Member pursuant to Section 3.7.2, hereof, the Company shall give
written notice of its intention to so repurchase such Interest on or
before the expiration of the six month notice period provided in Section
3.7.2 which notice shall designate as the closing date for the repurchase
a date which shall not be later than 30 days after the date of such
notice. The closing date pursuant to the first or the second sentence of
this Section 3.7.3 shall be extended by the amount of time, if any,
needed to determine the Fair Value of the Interest being purchased. At
the closing, the Company shall purchase such Interest by check or wire
transfer and the Employee Member or his representative shall execute such
documents or instruments of transfer as the Company may reasonably
request in order to transfer the Interest being purchased to the Company.
If the Employee Member or his representative fails or refuses to execute
such documents or instruments of transfer, the President or any Vice
President of the Company at the time in office is hereby appointed as
attorney-in-fact for the Employee Member in order to execute such
documents or instruments of transfer and the Company may hold the
purchase price until the documents or instruments of transfer become
effective. Regardless of when the actual transfer takes place, the
Employee Member or his representative will cease to have any interest in
the profits or losses of the Company occurring after the closing date
established or designated in the manner set forth above.

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<PAGE> 11

ARTICLE 4

STATUS OF MEMBERS

4.1 Limited Liability. No Member shall be bound by or personally
liable for the expenses, liabilities, or obligations of the Company as more
fully set forth in Article 15 hereof. In no event shall any Member be required
to make up any deficiency in such Member's Capital Account upon the dissolution
or termination of the Company.

4.2 Return of Distributions of Capital. Except as otherwise
expressly required by law, a Member, in its capacity as such, shall have no
liability in excess of (a) the amount of its Capital Contributions, (b) its
share of any assets and undistributed profits of the Company, (c) its
obligation to make other payments expressly provided for in this Agreement, and
(d) to the extent required by law, the amount of any Distributions wrongfully
distributed to it. Except as required by law, no Member shall be obligated by
this Agreement to return any Distribution to the Company or to pay the amount
of any Distribution for the account of the Company or to any creditor of the
Company. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Member is obligated to
return or pay any part of any Distribution, the obligation shall be that of
such Member alone and not of any other Member. The amount of any Distribution
returned to the Company by a Member or paid by a Member for the account of the
Company or to a creditor of the Company shall be added to the account or
accounts from which it was subtracted when it was distributed to the Member.

ARTICLE 5

DESIGNATION, RIGHTS, AUTHORITIES, POWERS,
RESPONSIBILITIES AND DUTIES OF THE
BOARD OF MANAGERS AND MEMBERS

5.1 Management by Board of Managers. In accordance with Section 18-402
of the Act, the management of the business and affairs of the Company shall be
vested in a Board of Managers. The Board of Managers shall have complete
authority and discretion to make any and all decisions concerning the business
and affairs of the Company and to exercise any and all powers of the Company,
except as limited by the Act, the Certificate, or as specifically reserved to
the Members pursuant to this Agreement. Each Manager shall have one (1) vote
in all matters coming before the Board of Managers. Notwithstanding the
foregoing, the Board of Managers may delegate the day to day management and the
power to execute documents to the persons holding titles such as Chief
Executive Officer, President, Executive Vice President, Vice President, Chief
Operating Officer, Chief Financial Officer, Secretary, Treasurer or Controller
or such other officers as may be appointed pursuant to Section 5.3 of this
Agreement.

5.1.1 Appointment of Managers. Upon the execution of this
Agreement, Horst W. Schroeder, Arthur Newman, Dean Mefford, Ronald E.
Justice, Maurice L. McGill and Peter K. Shea shall constitute the initial
Board of Managers. Except as otherwise set forth herein, the Board of
Managers shall be elected at the

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annual meeting of the Members or at a special meeting called for that
purpose or by written consent, provided, however, that such election of the
Board of Managers by the Members shall in any event occur annually at or about
the third Tuesday in May. Each of the initial Managers shall serve until the
next annual meeting of Members, or until such Managers' successors are duly
elected and qualified. Upon the resignation, death or incapacity of any
Manager, the remaining Managers shall constitute the Board of Managers.
Subject to the foregoing, if at any time any Manager then serving dies, becomes
incapacitated or resigns, and such vacancy results in there being less than
three Managers, the remaining Managers, by vote or resolution, shall appoint a
successor Manager or successor Managers so that there will be at least three
(3) Managers.

5.1.2 Resignation of Managers. Each Manager may resign as a Manager
at any time.

5.1.3 Authority; Actions of the Board of Managers.

(a) Authority. Absent express authorization by the Board of
Managers, no individual Manager will have the power or the
authority to act on behalf of, or to bind, the Company.

(b) Actions of Board of Managers. Unless otherwise
specifically set forth in this Agreement, the affirmative act of
the majority vote of a quorum of the Managers at any meeting of the
Board of Managers shall be the act of the Board of Managers.
Notwithstanding anything else contained in this Agreement, the
Board of Managers may not take any action that requires the
agreement or consent of all or a specified percentage of the
Members unless and until all or such specified percentage of the
Members have agreed or consented to such action.

5.1.4 Meetings of the Board of Managers.

(a) Regular Meetings. Regular meetings of the Board of
Managers shall be held on such dates, at such time, and at such
places, within or without the State of Delaware, as shall have been
established by the Board of Managers and publicized among all of
the Managers. Not less than seven (7) nor more than thirty (30)
days' notice of any regular meeting shall be given to each Manager.
Notice shall specify the place, day, and hour of the meeting and
shall include an agenda of the matters to be considered at such
meeting.

(b) Special Meetings. A special meeting of the Board of
Managers may be called by the President or by any two (2) of the
then Managers and shall be held on such date, at such time, and at
such place as may be established by the Managers. Not less than
three (3) nor more than thirty (30) days' notice of any special
meeting shall be given to each Manager.

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Notice shall specify the place, day, and hour of the meeting and
shall include an agenda of the matters to be considered at such
meeting.

(c) Emergency Meetings. An emergency meeting of the Board of
Managers may be called by the Managers in the event any Manager
perceives a threat to the continued viability of the Company, and
shall be held on such date, at such time, and at such place as may
be established by the Managers. Twenty-four (24) hours notice of
any emergency meeting shall be given to each Manager. The place,
day, and hour of the meeting and the purpose or purposes for which
an emergency meeting is called shall be stated in the notice.

(d) Quorum. At any meeting, a majority of the members of the
Board of Managers shall constitute a quorum for all purposes. If a
quorum fails to attend any meeting, a majority of the Managers
present may adjourn the meeting to another date, time and place
with notice to the Managers given in the same manner as for an
emergency meeting of the Board of Managers.

(e) Participation by Conference Telephone. The Managers may
participate in a meeting by means of conference telephone or other
similar communications equipment that enables all of the Managers
participating in the meeting to hear each other. Such
participation constitutes presence in person at the meeting.

(f) Written Consents. Action may be taken by the Board of
Managers without a meeting if all of the Managers consent to such
action in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board of Managers. Any consent
of the Managers may be executed in counterparts. Each counterpart
shall constitute an original, and all of the counterparts together
shall constitute a single consent of the Managers.

5.1.5 Compensation. No Manager shall receive any compensation for
service as a Manager unless approved by the Board of Managers.

5.2 Rights of Members. The Members shall be entitled to the following
rights:

5.2.1 Voting Rights. In addition to any voting rights to which the
Members are entitled under the Act, except as otherwise provided in
Section 5.2.2, the Members shall have the right to vote on all matters
which are submitted to the Members for approval by the Board of Managers
or required by this Agreement, and to vote on the following matters which
are required to be submitted to the Members for approval by the Board of
Managers:

(a) An increase in the number of Units which may be issued
under the Management Option Plan;

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<PAGE> 14

(b) Amendment of this Agreement;

(d) Election of the Board of Managers;

(e) The merger or consolidation of the Company with any other
Person;

(f) Change of the status of the Company from one in which
management is vested in the Board as Managers to one in which
management is vested in the Members;

(g) The sale, lease, exchange or other disposition, other than
by mortgage, deed of trust, or pledge, of all, or substantially
all, of the assets and property of the Company;

(h) The authorization of any transaction, agreement or action
that otherwise contravenes this Agreement; and

(i) An amendment of the Certificate which the Board of
Managers reasonably believes may have an adverse effect on the
Members.

The foregoing actions shall require approval by the affirmative vote of the
Required Members, subject to Section 11.2.1.

5.2.2 Class B Members. Notwithstanding Section 5.2.1 or any other
provision of this Agreement, no Class B Member shall have any right,
power or authority to participate in the management of the Company in any
manner. Without limiting the generality of the immediately preceding
sentence, no Class B Member shall have the right, power or authority (i)
to initiate or participate in any vote or resolution of the Members
adopted in accordance with the procedures set forth below or otherwise
pursuant to this Agreement, (ii) to initiate or participate in the
granting of any consent or approval required to be granted by the Members
pursuant to this Agreement (except as provided in the proviso contained
in Section 11.2.1), (iii) to initiate or participate in any action
permitted to be taken in the discretion or at the direction of the
Members, as a group, or on the part of the Members by or through any
determination, designation, appointment or other action of the Members,
as a group, as provided in this Agreement, or (iv) to execute any
documents that are binding on the Company or otherwise to take any action
to bind the Company in any respect.

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<PAGE> 15

5.2.3 Meetings of the Members.

(a) Regular Meetings. Regular meetings of the Members may be
held on such dates, at such times and at such places, within or
without the State of Delaware, as may be established by, and
publicized among, the Members, but in any event, on the third
Tuesday in May of each year at 10:00 a.m. at the executive offices
of the Company, or at such other date, time and place as shall be
determined by the Board of Managers. Not less than thirty (30) nor
more than sixty (60) days' notice of a regular meeting shall be
given to each Member. Notice shall specify the place, day, and
hour of the meeting and shall include an agenda of the matters to
be considered at such meeting.

(b) Special Meetings. A special meeting of the Members may be
called by the President, Board of Managers or any Member or Members
collectively holding more than forty percent (40%) of the issued
and outstanding Units entitled to vote, and shall be held on such
date, at such time, and at such place as may be established by the
President, Board of Managers or the Member(s), as the case may be,
calling the special meeting. Not less than seven (7) nor more than
fifteen (15) days' notice of any special meeting shall be given to
each Member. Notice shall specify the place, day, and hour of the
meeting and shall include an agenda of the matters to be considered
at such meeting.

(c) Emergency Meetings. An emergency meeting of the Members
may be called by the President, Board of Managers or by any Member
or Members collectively holding more than forty percent (40%) of
the issued and outstanding Units, and shall be held on such date,
at such time, and at such place as may be established by the
President, Board of Managers or the Member(s), as the case may be,
calling the emergency meeting. Forty-eight (48) hours notice of
any emergency meeting shall be given to each Member by overnight
delivery, by facsimile, or by telephone. The purpose or purposes
for which an emergency meeting is called shall be stated in the
notice.

(d) Quorum. Except as set forth in the Act or provided
otherwise in this Agreement, at any meeting of the Members, Members
holding at least a majority of the Units then owned by all Members
permitted to vote shall constitute a quorum for all purposes. If a
quorum fails to attend any meeting, the Members present may adjourn
the meeting to another date, time and place with notice to the
Members given in the same manner as for an emergency meeting of the
Members. Each Member shall have the right to determine for itself
who shall represent it at meetings of the Members.

(e) Voting by Members. Each Member entitled to vote shall be
entitled to vote in proportion to such Member's Percentage Interest
on all matters submitted to the Members. Except as otherwise
provided in this

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<PAGE> 16

Agreement, when a quorum is present at any meeting, the vote of
Members present and holding a majority of the Units owned by all of
the Members present at such meeting and permitted to vote on such
matters shall be at the act of the Members.

(f) Waiver of Notice. Whenever notice is required to be given
to a Member, (i) a waiver in writing signed by a Member, whether
before or after the time stated in the notice, is equivalent to the
giving of notice, and (ii) a Member's attendance at a meeting (a)
waives objection to lack of notice or defective notice of the
meeting, unless such Member at the beginning of the meeting objects
to holding, or transacting business at, the meeting, and (b) waives
objection to consideration of a particular matter at a meeting that
is not within the purpose or purposes described in the meeting
notice, if any, unless such Member objects to considering the
matter when it is presented.

(g) Participation by Conference Telephone. The Members may
participate in a meeting by means of conference telephone or other
similar communications equipment that enables all of the Members
participating in the meeting to hear each other. Such
participation constitutes presence in person by such Member at the
meeting.

(h) Written Consents. Any action required or permitted to be
taken at any meeting of the Members may be taken without a meeting
if Members owning a majority of the Units owned by all Members
entitled to vote, consent to such action in writing, and the
writing or writings are filed with the minutes of the proceedings
of the Members. Any consent of the Members may be executed in
counterparts. Each counterpart shall constitute an original, and
all of the counterparts together shall constitute a single consent
of the Members.

5.2.4 Compensation. In the discretion of the Members permitted to
vote, Members authorized by vote or resolution to undertake specific
actions, projects or tasks for the Company may be paid such fees for such
services and be reimbursed for such Member's reasonable expenses incurred
in the performance of such duties as the Members from time to time may
determine. Nothing contained in this Section 5.2.4 shall be construed to
preclude any Member from serving as an officer of the Company or in any
other capacity in receiving reasonable compensation therefor.

5.2.5 Representatives. Each Member may designate one or more
individuals to act as its representative (a "Representative").
Representatives need not be residence of the State of Delaware. Any
Representative may be removed, with or without cause, only by the Member
which designated such Representative. Members that are affiliated may
designate the same individual to act as Representative for each of them,
but each such Member shall have the independent right to revoke such
designation and appoint a new Representative.

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5.2.6 Restrictions on Powers. No individual Member shall have the
power or the authority to act on behalf of or to bind the Company or any
other Member.

5.3 Officers; Agents.

5.3.1 Power to Appoint. In accordance with Section 5.1, the Board
of Managers by vote or resolution of the Board of Managers shall have the
power to appoint officers to act for the Company with such titles, if
any, as the Board of Managers deems appropriate and to delegate to such
officers or agents such of the powers as are granted to the Board of
Managers hereunder, including the power to execute documents on behalf of
the Company, as the Board of Managers may in its sole discretion
determine; provided, however, that all such officers shall at all times
be subject to the supervision and control of the Board of Managers. The
officers or agents so appointed may include persons holding titles such
as Chief Executive Officer, President, Executive Vice President, Vice
President, Chief Operating Officer, Chief Financial Officer, Secretary,
Treasurer or Controller. Unless the authority of the officer in question
is limited in the document appointing such officer or is otherwise
specified by the Board of Managers, any officer so appointed shall have
the same authority to act for the Company as a corresponding officer of a
Delaware corporation would have to act for a Delaware corporation in the
absence of a specific delegation of authority and as more specifically
set forth in Exhibit C hereto; provided, however, that unless such power
is specifically delegated to the officer in question either for a
specific transaction or generally, no such officer shall have the power
to lease or acquire real property, to borrow money, to issue notes,
debentures, securities, equity or other interests of or in the Company,
to make investments in (other than the investment of surplus cash in the
ordinary course of business) or to acquire securities of any Person, to
vote any securities owned by the Company, to give guarantees or
indemnities, to merge, liquidate or dissolve the Company, to cause the
Company to lose its status as a partnership for income tax purposes or to
sell or lease all or any substantial portion of the assets of the
Company. The Board of Managers, in their sole discretion, may by vote or
resolution of the Board of Managers ratify any act previously taken by an
officer or agent acting on behalf of the Company.

5.3.2 Officers. The officers of the Company shall be Dennis W.
Harms, President, Robert W. Rippentrop, Vice President, Treasurer,
Assistant Secretary and Controller, James A. Heeter, Secretary and
William R. Patterson, Vice President, which officers shall be deemed to
have delegated to them the power to take such actions from time to time
on behalf of the Company as are necessary and appropriate, subject, in
all events to the supervision of the Board of Managers. Each of such
officers shall serve in their respective capacities at the pleasure of
the Board of Managers and may be terminated by the Board of Managers at
any time.

5.3.3 Management Option Plan Committee. Subject to further action
by the Board of Managers, the compensation committee of the board of
directors of

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<PAGE> 18

PSF, as such committee is constituted from time to time, is
appointed as the "Committee" under the Management Option Plan, and shall
have all of the powers and duties provided under the Management Option
Plan for such Committee, subject, in all events to the supervision of the
Board of Managers.

ARTICLE 6

BOOKS, RECORDS, ACCOUNTING, AND REPORTS

6.1 Books and Records. The Company shall maintain or cause to be
maintained all of the following:

6.1.1 A current list of the full name and last known
business or residence address of each Member, together with
information regarding the amount of cash and the agreed value
of any other property or services contributed by each Member
and which each Member has agreed to contribute in the future,
and the date on which each Member became a Member of the
Company;

6.1.2 A copy of the Certificate and this Agreement
(including Exhibit B reflecting the record holders of the
Interests, from time to time), including any and all
amendments to either thereof, together with executed copies of
any powers of attorney pursuant to which the Certificate, this
Agreement, or any amendments have been executed;

6.1.3 Copies of the Company's federal, state, and
local income tax or information returns and reports, if any,
for the six most recent taxable years;

6.1.4 The audited financial statements of the Company
for the six most recent Fiscal Years; and

6.1.5 The Company's books and records for at least the
current and past six Fiscal Years.

6.2 Delivery to Member; Inspection; etc. Upon the request of any
Member, for any purpose reasonably related to such Member's interest as a
member of the Company, but subject to such reasonable standards (including
standards governing what information and documents are to be furnished at what
time and location and at what expense) as the Members may from time to time
establish, including such standards established for the request in question,
the Board of Managers shall cause to be made available to the requesting Member
the information required to be maintained by Sections 6.1.1 through 6.1.4 and
such other information regarding the business and affairs of the

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Company as is just and reasonable; provided that any Member shall be entitled,
upon request, to receive a copy of this Agreement, including Exhibit B, as then
in effect and reflecting the Interests (including the Percentage Interests and
Units held by Members on such date), certified by the Board of Managers, the
Secretary, or any other officer of the Company authorized by the Board of
Managers, as true and correct as of such date.

6.3 Financial Statements. The Board of Managers shall cause books of
account to be maintained reflecting the operations of the Company and shall
cause to be prepared for and furnished to the Members at least quarterly, at
the Company's expense and no later than forty five days after the end of the
first three Fiscal Quarters, consolidated financial statements of the Company
and its subsidiaries prepared in accordance with generally accepted accounting
principles and, once each year, no later than ninety days following the end of
the Company's Fiscal Year, consolidated financial statements prepared on an
annual basis accompanied by a report thereon containing the opinion of an
accounting firm chosen by the Board of Managers.

6.4 Filings. At the Company's expense the Board of Managers shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities and to have prepared and to furnish to each
Member such information with respect to the Company as is necessary to enable
the Members to prepare their federal, state and local income tax returns. The
Company shall prepare and furnish Form K-1s to the members no later than
seventy-five days following the end of its Fiscal Year. The Board of Managers,
at the Company's expense, shall also cause to be prepared and timely filed,
with appropriate federal, state and local regulatory and administrative bodies,
all reports required to be filed by the Company with those entities under then
current applicable laws, rules, and regulations. The reports shall be prepared
on the accounting or reporting basis required by the regulatory bodies.

6.5 Non-Disclosure. Each Member agrees that, except as otherwise
consented to by the Members, all non-public information furnished to it
pursuant to this Agreement and identified as such will be kept confidential and
will not be disclosed by such Member, or by any of its directors, trustees,
investment advisers, agents, representatives, or employees, in any manner
whatsoever, in whole or in part, except that (i) each Member shall be permitted
to disclose such information to those of its directors, trustees, investment
advisers, agents, representatives, and employees who need to be familiar with
such information in connection with such Member's investment in the Company, so
long as such directors, trustees, investment advisers, agents, representatives
and employees agree to keep such information confidential on the terms set
forth herein, (ii) each Member shall be permitted to disclose such information
to its partners and stockholders so long as they agree to keep such information
confidential on the terms set forth herein, (iii) each Member shall be
permitted to disclose information to the extent required by law (including,
without limitation, by governmental and quasi-governmental regulators), and
(iv) each Member shall be permitted to disclose information to the extent
necessary for the enforcement of any right of such Member arising under this
Agreement.

15
<PAGE> 20

6.6 Record holders of Interests. Except as may be otherwise required
by law or by this Agreement, and subject to Article 9 hereof, the Company shall
be entitled to treat the record holders of the Interests as the Members
hereunder.

ARTICLE 7

DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS

7.1 Board of Managers' Determination. The Board of Managers shall
have the sole authority to determine the timing and the aggregate amount of any
Distributions to Members; provided, however, to the extent the Company has
available cash resources, the Company shall make a Tax Distribution to the
Members entitled thereto in cash unless such Tax Distribution would violate a
covenant of the Company.

7.2 Distributions. Subject to Section 7.1, Distributions from the
Company to its Members shall be made as follows:

7.2.1 First, the Company shall distribute to the Members as a Tax
Distribution on or before April 1 of each Fiscal Year an amount equal to
the Members' Estimated Tax Liability. For purposes of this paragraph,
the "Members' Estimated Tax Liability" means the product of (i) the
Taxable Income from Operations of the Company times (ii) the Tax
Distribution Rate for the immediately preceding Fiscal Year, all as
reasonably determined by the Board of Managers. Any Tax Distribution for
a Fiscal Year shall be distributed among the Members pro rata in
accordance with their respective Percentage Interests.

7.2.2 Second, to all Members pro rata in accordance with their
respective Percentage Interests.

Notwithstanding any provision to the contrary contained in this Agreement, the
Company shall not make a Distribution to any Member on account of its interest
in the Company if such Distribution would violate Section 18-607 of the Act or
other applicable law.

7.3 Accounting for Partnership Profit and Loss.

7.3.1 Capital Accounts. A separate account (each a "Capital
Account") shall be established and maintained for each Member which
shall reflect (a) the amount of cash and the fair market value of any
other property contributed by such Member to the Company as a Capital
Contribution, (b) any adjustment required pursuant to Section 7.3.8 and
(c) such Member's share of the Net Profit of the Company and shall be
charged with (d) the amount of cash and the fair market value of any
other property distributed to such Member and (e) such Member's share
of the Net Losses of the Company.

7.3.2 Allocation of Net Profit and Net Loss, etc. -- General Rule.
Except as provided in Section 7.3.3, the Net Profit and Net Loss of the
Company shall be allocated

16
<PAGE> 21

among the Members for tax purposes pro rata in accordance
with their respective Percentage Interests.

7.3.3 Special Allocations and Capital Account Adjustments.

(a) Adjustments for Contributions. In the event there is a
difference between the Book Value at which any property is accepted as a
contribution to the capital of the Company and the adjusted tax basis of
such property or adjustments are made to the Book Value of the Assets and
Capital Accounts pursuant to Section 7.3.8, the income, gain, loss and
deductions attributable to such differences shall solely for federal
income tax purposes, be specially allocated as and to the extent required
by section 704 of the Code and any applicable Treasury Regulations.

(b) Certain Nondeductible Expenses. Each Member's Capital Account
shall be charged for such Member's allocable share (based on such
Member's Percentage Interest) of allocable expenditures of the Company
described in section 705(a)(2)(B) of the Code (relating to expenditures
which are neither deductible nor properly chargeable to capital) and
expenditures which, pursuant to the Regulations under section 704(b) of
the Code, are characterized as section 705(a)(2)(B) expenditures.

(c) Certain Elections. In the event that the Company makes an
election under section 754 of the Code, the amounts of any adjustments to
the bases of the assets of the Company made pursuant to section 743 of
the Code shall not be reflected in the Capital Accounts of the Members,
but the amounts of any adjustments to the bases of the assets of the
Company made pursuant to section 734 of the Code as a result of the
distribution of property by the Company to a Member shall be reflected in
the Capital Accounts of the Members in the manner provided by the
Regulations under section 704(b).

(d) Qualified Income Offset, Etc. There is hereby included in this
Agreement such provisions governing the allocation of taxable income and
loss (prior to making the remaining federal income tax allocations in
conformity with Section 7.3.2 hereof) (and items thereof) as may be
necessary to provide that the Company contains a so-called "Qualified
Income Offset" and complies with all provisions relating to the
allocation of so-called "Non-recourse Deductions" and "Partner
Non-recourse Deductions" and the chargeback thereof as are required to
comply with the Treasury Regulations under section 704 of the Code,
provided, however, the incorporation of such provisions and any
appropriate curative allocations necessary to effect compliance with the
aforesaid Code provisions shall affect only the computation of taxable
net income and loss and the allocation thereof as between Members and
shall not otherwise affect the amount or timing of any distribution of
cash or property to any Member provided for in this Agreement.

(e) Interim Closing of Company Books. Upon the admission of any
Person acquiring more than a de minimis Percentage Interest on other than
the first day of the Company's fiscal year, there shall be an interim
closing of the books of the

17
<PAGE> 22

Company and the Net Profit or Net Loss of the Company (and any items of
income, gain, deduction or loss required to be specially allocated
pursuant to this Section 7.3.3) arising prior to such interim closing
shall be allocated exclusively to Persons who were Members prior to such
date. The Members acknowledge and agree that no Tax Distribution shall
be payable with respect to that portion of the Company's fiscal year (and
the fiscal year of its predecessor limited partnership) that precedes the
date of this Agreement.

7.3.4 Interpretation. It is the intent of the Members that the
provisions hereof relating to each Member's distributive share of income,
gain, loss, deductions, or credits (or item thereof) shall comply with
the provisions of sections 704(b) and section 704(c) of the Code and the
applicable Treasury Regulations. In furtherance of the foregoing, the
Members agree to resolve any ambiguity in the provisions of this
Agreement in a manner that will preserve, protect and further the
intention of the Members to cause this Agreement to comply with the
aforesaid Code provisions for federal income tax purposes.
Notwithstanding the foregoing, no Member shall have the right to require
or compel any distribution of cash or property not authorized or provided
for by the provisions of this Agreement or withhold any distribution of
cash or property provided for by the provisions of this Agreement on the
ground that such action is necessary to cause the provisions hereof to
conform to the provisions of the Treasury Regulations.

7.3.5 Withholdings. The Board of Managers is authorized to withhold
from Distributions, or with respect to allocations, to the Members and to
pay over to the appropriate federal, state, local or foreign government
any amounts required to be so withheld. The Board of Managers shall
allocate any such amounts to the Members in respect of whose Distribution
or allocation the tax was withheld and shall treat such amounts as
actually distributed to such Members.

7.3.6 Changes in Members' Interest. If during any Fiscal Year of
the Company there is a change in any Member's Interest in the Company,
the Net Profit or Net Loss shall be allocated to the Members so as to
take into account the varying Interests of the Members in the Company in
a manner that complies with the provisions of section 706 of the Code and
the Regulations thereunder.

7.3.7 Property Distributions and Installment Sales. If any assets
of the Company shall be distributed in kind pursuant to this Article 7,
such assets shall be distributed to the Members entitled thereto in the
same proportion as the Members would have been entitled to cash
distributions. The amount by which the fair market value of any property
to be distributed in kind to the Members exceeds or is less than the book
values of such property shall, to the extent not otherwise recognized by
the Company, be taken into account in determining Net Profit and Net Loss
and determining the Capital Accounts of the Members as if such property
had been sold at its fair market value. If any assets are sold in
transactions in which, by reason of the provisions of section 453 of the
Code or any successor thereto, gain is realized but not recognized, such
gain shall be taken into account when realized in computing gain

<PAGE> 23

or loss of the Company for purposes of allocation of Net Profit or Net
Loss under this Article 7, and, if such sales shall involve substantially
all the assets of the Company, the Company shall be deemed to have been
dissolved and terminated to the extent required by the Treasury
Regulations under section 704(b) of the Code notwithstanding any election
by the Members to continue the Company for purposes of collecting the
proceeds of such sales.

7.3.8 Adjustments to Capital Accounts. Unless the Board of Managers
shall determine otherwise, the Book Values of all the Company's assets
shall be adjusted to equal their respective gross fair market values, as
determined by the Board of Managers (and the Capital Accounts of the
Members shall be adjusted accordingly), as of the following times: (a)
the acquisition of an additional Interest from the Company by any new or
existing Member, in exchange for more than a de minimis additional
Capital Contribution (b) the distribution by the Company to a Member of
more than a de minimis amount of assets of the Company as consideration
for an Interest; and (c) the liquidation of the Company; provided,
however, that adjustments pursuant to clauses (a) and (b) above shall be
made only if the Board of Managers reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interests of the Members in the Company.

ARTICLE 8

TAX MATTERS MEMBER
------------------

8.1 Tax Matters Member. The Board of Managers shall, in a timely
fashion after the date hereof, and at any time thereafter when, because of the
withdrawal of such designated Member or otherwise, there is no Tax Matters
Member, designate a Member as the Tax Matters Member, and such designated
Member shall thereafter be the Tax Matters Member of the Company as provided in
the Regulations under Code section 6231 and analogous provisions of state law.
The Tax Matters Member shall represent the Company, at the Company's expense,
in connection with all examinations of the Company's affairs by tax authorities
including any resulting administrative or judicial proceedings, and shall take
actions as directed by the Company with respect to the tax matters of the
Company.

8.2 Indemnity of Tax Matters Member. The Company shall indemnify and
reimburse the Tax Matters Member for all expenses (including legal and
accounting fees) incurred as Tax Matters Member pursuant to this Article 8 in
connection with any administrative or judicial proceeding with respect to the
tax liability of the Members as long as the Tax Matters Member has determined
in good faith that its course of conduct was in, or not opposed to, the best
interest of the Company. The payment of all such expenses shall be made before
any Distributions are made to the Members. The taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent provided herein or required by law, is a
matter in the sole discretion of the Tax Matters Member and the provisions on
limitations of liability of the Tax Matters Member and indemnification set
forth in Article 13 shall be fully applicable to the Tax Matters Member in his
capacity as such.

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<PAGE> 24

8.3 Information Furnished. To the extent and in the manner provided
by applicable law and Regulations, the Tax Matters Member shall furnish the
name, address, Percentage Interest, and taxpayer identification number of each
Member or any Assignee to the Internal Revenue Service.

8.4 Notice of Proceedings, etc. The Tax Matters Member shall use its
best efforts to keep each Member and Assignee informed of any administrative
and judicial proceedings for the adjustment at the Company level of any item
required to be taken into account by a Member for income tax purposes or any
extension of the period of limitations for making assessments of any tax
against a Member with respect to any Company item, or of any agreement with the
Internal Revenue Service that would result in any material change either in
income or loss as previously reported.

8.5 Notices to Tax Matters Member. Any Member that receives a notice
of an administrative proceeding under Code Section 6233 relating to the Company
shall promptly notify the Tax Matters Member of the treatment of any Company
item on such Member's federal income tax return that is or may be inconsistent
with the treatment of that item on the Company's return. Any Member that
enters into a settlement agreement with the Secretary with respect to any
Company item shall notify the Tax Matters Member of such agreement and its
terms within sixty days after its date.

ARTICLE 9

TRANSFER OF INTERESTS
---------------------

9.1 Transfer by Members.

9.1.1 No Member shall sell, assign, pledge, encumber, dispose of
or otherwise transfer (each a "Transfer"), any Units or all or any part
of the economic or other rights that comprise its Interest unless ten
days' prior written notice (or such shorter time period as is agreed to
by the Company) is given to the Company; provided that the ten day period
may be increased to thirty days in the event the Company, in its sole
discretion, advises the Member seeking to Transfer Units that such
Transfer may cause a termination of the Company for tax purposes; and
provided further that no prior written notice need be given in connection
with Transfers by Collings Farm, Inc. or PSF Finance Holdings, Inc. to
their respective stockholders in connection with the dissolution of such
corporations.

9.1.2 No Transfer of all or any part of a Member's Interest may be
made pursuant to Section 9.1 unless and until the Company shall have
received, if requested:

(a) an opinion of responsible counsel (who may be
counsel for the Company or an in-house counsel to a Member),
satisfactory in form and substance to the Company and its
counsel to the effect that such Transfer would not violate the
Securities Act of 1933, as amended, or

20
<PAGE> 25

any state securities or blue sky laws applicable to the
Company or the Interest to be transferred; and

(b) the agreement in writing of the Assignee to comply with all
of the terms and provisions of this Agreement.

9.1.3 Each Member hereby severally agrees that:

(a) it will not transfer all or any part of its Interest in the
Company except as permitted by this Agreement; and

(b) in no event shall all or any part of an Interest be
transferred to a minor or an incompetent except in trust or
pursuant to the Uniform Gifts to Minors Act.

9.1.4 A transferee of an Interest shall not be admitted as a
Member of the Company, but shall remain an Assignee with respect to the
Interest transferred unless admitted as a Member pursuant to Article 10.
Unless a transferee is admitted as a Member of the Company pursuant to
Article 10, the Transfer of all of a Member's interest in the profits,
losses and capital of the Company shall not cause such Member to cease to
be a Member of the Company.

9.1.5 Any Transfer in contravention of any of the provisions of
this Article 9 shall be void and of no effect, and shall not bind nor be
recognized by the Company.

9.2 Assignee. If the provisions of this Article 9 have been
complied with, an Assignee shall be entitled to receive distributions of cash
or other property, and allocations of Net Profit and Net Loss and of items of
income, deduction, gain, loss, or credit, from the Company attributable to the
Economic Interest assigned to the Assignee from and after the effective date of
the Transfer, and shall have the right to receive a copy of the financial
statements and tax information required herein to be provided to Members, but
an Assignee shall have no other rights of a Member, including without
limitation the right to vote as a Member on matters set forth herein or in the
Act, which rights of a Member shall continue to be held by the Member making
such assignment, unless and until such Assignee is admitted as a Member
pursuant to the provisions of Article 10. The Company and the Board of
Managers shall be entitled to treat the transferor as the absolute owner of the
Economic Interest transferred to the Assignee in all respects, and shall incur
no liability for Distributions, allocations of Net Profit or Net Loss, or
transmittal of reports and notices required to be given to Members that are
made in good faith to the transferor until the effective date of the Transfer.
The effective date of Transfer shall be the first day of the calendar month
following the month in which the Board of Managers has received an executed
instrument of assignment in compliance with this Article 9 or the first day of
a later month if specified in the executed instrument of Transfer but under no
circumstances prior to the day following the expiration of the notice period
required by Section 9.1.1, provided, however, that the Board of Managers shall
have the right to establish a different effective date, as the Board of
Managers deems to be in the best interests of the Company. As

<PAGE> 26

between the Company and the Assignee, the Assignee shall be deemed an Assignee
on the effective date of the Transfer. Each Assignee will succeed to
the same portion of the balance of the Capital Account of the transferor, as of
the effective date of Transfer as the Economic Interest which was transferred
bears to the entire Interest of the transferor. For purposes of Article 7 and
Section 9.1, the Economic Interest of any Assignee shall be treated as if such
Interest were held by a Member.

9.3 Restrictions on Foreign Ownership of Units

(a) No Person whose ownership of Units would cause the Company to become
a Foreign Business shall at any time acquire or own, beneficially or of record,
any Units. Without limiting the foregoing, and as a protective measure
intended to ensure that the Company does not become a Foreign Business, no
Person who is an Alien or a Foreign Business shall at any time directly or
indirectly acquire or own in the aggregate more than 5% of the outstanding
Units of the Company without the prior written approval by the Company.

(b) If any Person acquires or owns Units of the Company in violation of
Section 9.3(a), such Person shall forthwith dispose of such number of Units as
will reduce its ownership of Units to 5% or less of the outstanding Units or
such lesser percentage as is required for the Company not to be a Foreign
Business. Such disposition shall be consummated within thirty days (or such
earlier date as the Company determines) of the date that the Company notifies
such Person that it is in violation of Section 9.3(a). If such Units are not
disposed of within such period, (i) the Company shall not be required or
permitted to pay any distribution with respect to such Units held by such
Person and (ii) such Person shall not be entitled to vote on any matter, or
otherwise participate in the management of the Company, with respect to any
Units owned by it. In addition, the Company may, at any time and in its sole
discretion, redeem such Units at their Fair Value. The redemption price for
such Units may be paid in cash, property or rights, including securities of the
Company or other Person.

(c) No Transfer of all or any part of a Member's Interest may be made to
Morgan Stanley Group, Inc., or any successor thereto, or an Affiliate of Morgan
Stanley Group Inc. (other than Premium Holdings Corp.) if the Company, within
ten days following receipt of the written notice delivered under Section 9.1.1,
notifies the Member (with a copy to the other party to the proposed Transfer if
such address is known by the Company) in writing that the acquisition of Units
would cause the Company to become a Foreign Business.

9.4 Other Restrictions on Transfer. No Transfer of all or any part
of a Member's Interest may be made to the Morgan Stanley Group Inc., or any
successor thereto, or an Affiliate of Morgan Stanley Group Inc. (other than
Premium Holdings Corp.) if the number of Class A Units held by any Member
(other than Members advised by Putnam Investment Management, Inc., Putnam
Advisory Company, Inc., and Putnam Fiduciary Trust Company) and its Affiliates
as of September 17, 1996 would equal or exceed 25% of the Class A Units issued
and outstanding following such Transfer. The Company shall within

22
<PAGE> 27

ten days following receipt of the written notice delivered under Section 9.1.1
notify in writing the Member who provides the notice (with a copy to the other
party to the proposed Transfer if such address is known by the Company) if the
proposed Transfer would cause a violation of this Section 9.4.

ARTICLE 10

ADMISSION AS MEMBER
-------------------

10.1 Requirements. An Assignee shall not be admitted to the Company
as a Member unless all of the following conditions are first satisfied:

(a) A duly executed and acknowledged written
instrument of Transfer is filed with the Company, specifying
the Interests being transferred and setting forth the
intention of the Member effecting the Transfer that the
Assignee succeed to a portion or all of such Member's Interest
as a Member;

(b) If requested by the Company, the Assignee
delivers to the Company an opinion of counsel, in form and
substance reasonably satisfactory to the Company, to the
effect provided in clause (a) of Section 9.1.2 with respect to
the admission of the Assignee as a Member;

(c) The Member effecting the Transfer and Assignee
execute and acknowledge any other instruments that the Company
reasonably deems necessary or desirable for admission of the
Assignee, including the written acceptance and adoption by the
Assignee of the provisions of this Agreement and execution,
acknowledgment, and delivery to the Company of a special power
of attorney as provided in Section 16.4;

(d) The Member effecting the Transfer or the Assignee
pays to the Company a transfer fee sufficient to cover all
reasonable expenses connected with the admission; and

(e) Article 9 of this Agreement has been complied
with.

10.2 Consent. Each Member hereby agrees that upon satisfaction of
the terms and conditions of this Article 10 with respect to an Assignee, such
Assignee shall be admitted as a Member.

10.3 No Dissolution. If a Member transfers all of its interest in
the profits, losses and capital of the Company and the Assignee of such
interest is admitted as a Member pursuant to Article 10, such Assignee shall be
admitted to the Company as a Member effective on the effective date of the
Transfer or such other date as may be specified when the Member is admitted,
and, immediately following such admission, the transferor Member shall cease to
be a Member of the Company.

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<PAGE> 28

10.4 Admission upon exercise of Warrants and Options

A holder of warrants or options for Units of the Company, upon exercise of
such warrants or options in accordance with the terms thereof and issuance of
Units, shall be admitted to the Company as a Member upon written acceptance and
adoption by such holder of the provisions of this Agreement and execution,
acknowledgment and delivery of a special power of attorney as provided in
Section 16.4. Each Member hereby agrees that upon satisfaction of the terms
and conditions of this Section 10.4 with respect to a holder of a warrant or
options for Units, such holder, upon issuance of Units, shall be admitted as a
Member.

ARTICLE 11

LIMITATIONS ON RIGHTS AND POWERS OF THE MEMBERS; AMENDMENTS
-----------------------------------------------------------

11.1 Specific Limitations. No Member shall have the right or power
to: (a) withdraw or reduce its Capital Contribution except as a result of the
dissolution of the Company or as otherwise provided by law or in this
Agreement, (b) make voluntary Capital Contributions or to contribute any
property to the Company other than cash, (c) bring an action for partition
against the Company or any Company assets, (d) cause the termination and
dissolution of the Company, except as set forth in this Agreement, or (e) upon
the distribution of its Capital Contribution require that property other than
cash be distributed in return for its Capital Contribution. Each Member hereby
irrevocably waives any and all rights that it may have to maintain an action
for partition of any of the Company's property. Except as otherwise set forth
in this Agreement, no Member shall have priority over any other Member either
as to the return of its Capital Contribution or as to Net Profit, Net Loss, or
Distributions. Other than upon the termination and dissolution of the Company
as provided by this Agreement, there has been no time agreed upon when the
Capital Contribution of any Member will be returned.

11.2 Amendments to Agreement.

11.2.1 This Agreement may be modified or amended, but only with
the prior written consent of the Required Members; provided, however,
that this Agreement may not be amended without the approval of any Member
being affected thereby if (i) the amendment does not treat all Members
equally based on their pro rata interests, (ii) the amendment would
reduce the allocation to any Member of any Net Profit, Net Loss, or
distribution of cash or property from that which is provided or
contemplated herein, (iii) the amendment would alter Section 5.2.2
without the consent of Morgan Stanley Group Inc., or any successor
thereto, or (iv) the amendment would alter the provisions of this Section
11.2.1.

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<PAGE> 29

11.2.2 The Board of Managers shall cause to be prepared and filed
any amendment to the Certificate that may be required to be filed under
the Act as a consequence of any amendment to this Agreement.

11.2.3 Any modification or amendment to this Agreement pursuant to
this Section 11.2 shall be binding on all Members.

ARTICLE 12

DISSOLUTION OF COMPANY
----------------------

12.1 Termination of Membership. No Member shall resign from the
Company except that, subject to the restrictions set forth in Articles 9 and 10
hereof, any Member may transfer its Interest in the Company to an Assignee and
an Assignee may become a Member in place of the Member which assigned its
Interest.

12.2 Events of Dissolution or Liquidation. The Company shall be
dissolved upon the happening of any of the following events: (a) December 31,
2046 unless such date is extended pursuant to Section 2.4, (b) the written
determination of the Members, (c) the death, retirement, resignation, insanity,
expulsion, bankruptcy or dissolution of the Class A Members, unless there are
at least two remaining Members and the business of the Company is continued by
the consent of remaining Members owning a majority of the Units owned by the
Remaining Members within 90 days following the occurrence of any such event, or
(d) the entry of a decree of judicial dissolution under Section 18-802 of the
Act.

12.3 Liquidation. Upon dissolution of the Company for any reason
unless the Company is continued pursuant to Section 12.2(c) hereof, the Company
shall immediately commence to wind up its affairs. A reasonable period of time
shall be allowed for the orderly termination of the Company's business,
discharge of its liabilities, and distribution or liquidation of the remaining
assets so as to enable the Company to minimize the normal losses attendant to
the liquidation process. The Company's property and assets or the proceeds
from the liquidation thereof shall be distributed so as not to contravene the
Act but in compliance with Section 12.4; provided, however, that Distributions
to Members shall be made after their Capital Accounts have been adjusted to
reflect all Net Profits and Net Losses of the Company through the date of
distribution. A full accounting of the assets and liabilities of the Company
shall be taken and a statement thereof shall be furnished to each Member within
thirty days after the distribution of all of the assets of the Company. Such
accounting and statements shall be prepared under the direction of the Board of
Managers. Upon such final accounting, the Company shall terminate and an
authorized person, appointed pursuant to Section 2.7, shall cancel the
Certificate in accordance with the Act.

12.4 Distributions to Members. All Distributions to Members
pursuant to Section 12.3 shall be made in accordance with the provisions of
Section 7.2.2.

12.5 No Action for Dissolution. The Members acknowledge that
irreparable damage would be done to the goodwill and reputation of the Company
if any

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<PAGE> 30

Member should bring an action in court to dissolve the Company under
circumstances where dissolution is not required by Section 12.2. Accordingly,
except where the Board of Managers has failed to liquidate the Company as
required by Section 12.2 and except as specifically provided in Section
18-802(a) of the Act, each Member hereby waives and renounces its right to
initiate legal action to seek dissolution or to seek the appointment of a
receiver or trustee to liquidate the Company.

12.6 No Further Claim. Upon dissolution, each Member shall look
solely to the assets of the Company for the return of its capital, and if the
Company's property remaining after payment or discharge of the debts and
liabilities of the Company, including debts and liabilities owed to one or more
of the Members, is insufficient to return the aggregate Capital Contributions
of each Member, such Members shall have no recourse against the Company, the
Board of Managers, the Members or any other Member.

ARTICLE 13

INDEMNIFICATION
---------------
13.1 General. The Company shall indemnify, defend, and hold harmless
the Managers, the Members, including the Tax Matters Member, and each such
Person's officers, directors, trustees, partners, investment advisors, members,
shareholders, employees, and agents, and the employees, officers, and agents of
the Company, (all indemnified persons being referred to as "Indemnified
Persons" for purposes of this Article 13), from any liability, loss, or damage
incurred by the Indemnified Person by reason of any act performed or omitted to
be performed by the Indemnified Person in connection with the business of the
Company and from liabilities or obligations of the Company imposed on such
Person by virtue of such Person's position with the Company, including
reasonable attorneys' fees and costs and any amounts expended in the settlement
of any such claims of liability, loss, or damage; provided, however, that, if
the liability, loss, damage, or claim arises out of any action or inaction of
an Indemnified Person, indemnification under this Section 13.1 shall be
available only if (a) either (i) the Indemnified Person, at the time of such
action or inaction, determined, in good faith, that its, his or her course of
conduct was in, or not opposed to, the best interests of the Company and was
authorized hereunder, or (ii) in the case of inaction by the Indemnified
Person, the Indemnified Person did not intend its, his or her inaction to be
harmful or opposed to the best interests of the Company, and (b) the action or
inaction was not undertaken (or omitted) in bad faith nor did the action or
inaction constitute fraud or willful misconduct by the Indemnified Person, and
provided, further, that indemnification under this Section 13.1 shall be
recoverable only from the assets of the Company and not from any assets of the
Members. The Company may pay or reimburse attorneys' fees of an Indemnified
Person as incurred, if such Indemnified Person executes an undertaking to repay
the amount so paid or reimbursed if there is a final determination by a court
of competent jurisdiction that such Indemnified Person is not entitled to
indemnification under this Article 13. The Company may pay for insurance
covering liability of the Indemnified Persons for negligence in operation of
the Company's affairs.

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<PAGE> 31

13.2 Exculpation. No Indemnified Person shall be liable, in
damages or otherwise, to the Company or to any Member for any loss that arises
out of any act performed or omitted to be performed by it or him pursuant to
the authority granted by this Agreement if (a) either (i) the Indemnified
Person, at the time of such action or inaction, determined, in good faith, that
such Indemnified Person's course of conduct was in, or not opposed to, the best
interests of the Company, or (ii) in the case of inaction by the Indemnified
Person, the Indemnified Person did not intend such Indemnified Person's
inaction to be harmful or opposed to the best interests of the Company, and (b)
the conduct of the Indemnified Person was not undertaken in bad faith nor did
such conduct constitute fraud or willful misconduct by such Indemnified Person.
In addition to, and not by way of limitation of, the foregoing, no Manager of
the Company shall be liable to the Company or its Members for monetary damages
for breach of fiduciary duty as a Manager, except to the extent that
exculpation from liability is not permitted under the Act as in effect at the
time such liability is determined. No amendment or repeal of this Section 13.2
shall apply to or have any effect on the liability or alleged liability of any
Manager of the Company for or with respect to any acts or omissions of such
Manager occurring prior to such amendment or repeal.

13.3 Persons Entitled to Indemnity. Any Person who is within the
definition of "Indemnified Person" at the time of any action or inaction in
connection with the business of the Company shall be entitled to the benefits
of this Article 13 as an "Indemnified Person" with respect thereto, regardless
whether such Person continues to be within the definition of "Indemnified
Person" at the time of such Indemnified Person's claim for indemnification or
exculpation hereunder.

13.4 Procedure Agreements. The Company may enter into an agreement
with any of its officers, employees and agents, Managers or Members, setting
forth procedures consistent with applicable law for implementing the
indemnities provided in this Article 13.

13.5 Fiduciary and Other Duties.

13.5.1 An Indemnified Person acting under this Agreement shall not
be liable to the Company or to any other Indemnified Person for its good
faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties (including
fiduciary duties) and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to replace
such other duties and liabilities of such Indemnified Person.

13.5.2 Whenever in this Agreement an Indemnified Person is
permitted or required to make a decision (a) in its "discretion" or under
a grant of similar authority or latitude, the Indemnified Person shall be
entitled to consider only such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give
any consideration to any interest of or factors affecting the Company or
any other Person, or (b) in its "good faith" or "reasonable judgment" or
under another express standard, the Indemnified Person shall act under
such express standard and

27
<PAGE> 32

shall not be subject to any other or different standard imposed by this
Agreement or other applicable law.

ARTICLE 14

RIGHT TO CONVERT TO CORPORATE FORM
----------------------------------

The Board of Managers, with the approval of the Required Members, may
elect at any time to require that the Company be converted into a corporation,
which conversion may be effected by merger or by such other form of transaction
as may be available under applicable law. In such conversion, the Interests of
the Members (determined as though such Interests included Distributions to
which the Members would then be entitled under Section 7.2 if the Company were
liquidated at the value of the Company determined in connection with such
conversion), option holders and warrant holders of the Company shall be the
basis for the allocation of shares, options or warrants in the corporation. In
connection with a conversion to a corporation, MS Members shall, upon the
election of such MS Members, be allocated non-voting shares, options, or
warrants, as applicable, convertible upon transfer to a transferee at the
election of such transferee to voting shares of the class received by other
Members; provided that the MS Members shall not be allocated voting shares,
options, or warrants, as applicable, if in so doing, compliance with the
Investment Company Act of 1940 would become materially more burdensome to such
MS Members. Such non-voting shares, options or warrants, as applicable, shall
otherwise be identical and shall entitle the MS Members to the same rights and
privileges as those shares, options or warrants allocated to the non-MS Members
in any such conversion to a corporation. Upon such an election, to convert to a
corporation, the Members, option holders and warrant holders shall as soon as
practicable thereafter execute, acknowledge, and deliver, or cause to be
executed, acknowledged, and delivered, all instruments and documents that may
be reasonably requested by the Members to best effectuate the conversion of the
Company to a corporation while continuing in full force and effect, to the
extent consistent with such conversion, the terms, provisions, and conditions
of this Agreement and the rights of Persons holding options or warrants to
acquire Interests in the Company.

ARTICLE 15

LIMITED LIABILITY
-----------------

Except as otherwise provided by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Indemnified Person shall be obligated personally for any such debt, obligation
or liability of the Company solely by reason of being an Indemnified Person.
All persons dealing with the Company shall look solely to the assets of the
Company for the payment of the debts, obligations or liabilities of the
Company.

28
<PAGE> 33

ARTICLE 16

MISCELLANEOUS
-------------

16.1 Additional Documents. At any time and from time to time after
the date of this Agreement, upon the request of the Board of Managers, each
Member shall do and perform, or cause to be done and performed, all such
additional acts and deeds, and shall execute, acknowledge, and deliver, or
cause to be executed, acknowledged, and delivered, all such additional
instruments and documents, as may be reasonably required to effectuate the
purposes and intent of this Agreement.

16.2 General. This Agreement: (i) shall be binding upon the
executors, administrators, estates, heirs, and legal successors of the Members;
(ii) shall be governed by and construed in accordance with the laws of the
State of Delaware; (iii) may be executed in more than one counterpart as of the
day and year first above written; and (iv) contains the entire contract among
the Members as to the subject matter hereof. The waiver of any of the
provisions, terms, or conditions contained in this Agreement shall not be
considered as a waiver of any of the other provisions, terms, or conditions
hereof.

16.3 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or receipt (which may be evidenced by a return receipt
if sent by registered mail or by signature if delivered by courier or delivery
service), addressed (a) if to any Member, at the address of such Member set
forth in the records of the Company or at such other address as such Member
shall have furnished to the Company in writing as the address to which notices
are to be sent hereunder, (b) if to the Board of Managers at 423 West 8th
Street, Suite 200, Kansas City, Missouri 64105, or at such other address as the
Board of Managers shall have furnished to the Members in writing as the address
to which notices are to be sent hereunder, and (c) if to the Company at 423
West 8th Street, Suite 200, Kansas City, Missouri 64105, or at such other
address as the Company shall have furnished to the Members in writing as the
address to which notices are to be sent hereunder.

16.4 Execution of Papers. The Members agree to execute such
instruments, documents, and papers as the Board of Managers deems necessary or
appropriate to carry out the intent of this Agreement. Each Member, including
each new and substituted Member, by the execution of this Agreement or by
agreeing in writing to be bound by the provisions of this Agreement,
irrevocably constitutes and appoints the Board of Managers or any Person
designated by the Board of Managers to act on their behalf for purposes of this
Section 16.4 its true and lawful attorney-in-fact with full power and authority
in its name, place, and stead to execute, acknowledge, deliver, swear to, file,
and record at the appropriate public offices such documents as may be necessary
or appropriate to carry out the provisions of this Agreement, including but not
limited to:

(a) all certificates and other instruments (specifically including
counterparts of this Agreement), and any amendment thereof,
that the Board of Managers deems appropriate to qualify or
continue the Company as a

<PAGE> 34
limited liability company in any jurisdiction in which the
Company may conduct business or in which such qualification or
continuation is, in the opinion of the Board of Managers,
necessary to protect the limited liability of the Members;

(b) all amendments to this Agreement adopted in
accordance with the terms hereof and all instruments that the
Board of Managers deems appropriate to reflect a change or
modification of the Company in accordance with the terms of
this Agreement; and

(c) all conveyances and other instruments that the
Board of Managers deems appropriate to reflect the dissolution
of the Company, in accordance with the terms of this
Agreement.

The appointment by each Member of the Board of Managers as its
attorney-in-fact shall be deemed to be a power coupled with an interest, in
recognition of the fact that each of the Members under this Agreement will be
relying upon the power of the Board of Managers to act as contemplated by this
Agreement in any filing and other action by him or her on behalf of the
Company, and shall survive the bankruptcy, dissolution, death, adjudication of
incompetence or insanity of any Member giving such power and the transfer or
assignment of all or any part of such Member's Interests; provided, however,
that in the event of a Transfer by a Member of all of its Interest, the power
of attorney given by the transferor shall survive such assignment only until
such time as the Assignee shall have been admitted to the Company as a
substituted Member and all required documents and instruments shall have been
duly executed, filed, and recorded to effect such substitution.

16.5 Disputed Matters. Except as otherwise provided in this
Agreement, any controversy or dispute arising out of this Agreement, the
interpretation of any of the provisions hereof, or the action or inaction of
the Board of Managers or any Manager or Member hereunder shall be submitted to
arbitration in Wilmington, Delaware before the American Arbitration Association
under the commercial arbitration rules then obtaining of said Association. Any
award or decision obtained from any such arbitration proceeding shall be final
and binding on the parties, and judgment upon any award thus obtained may be
entered in any court having jurisdiction thereof. To the fullest extent
permitted by law, no action at law or in equity based upon any claim arising
out of or related to this Agreement shall be instituted in any court by any
Member except (a) an action to compel arbitration pursuant to this Section 16.5
or (b) an action to enforce an award obtained in an arbitration proceeding in
accordance with this Section 16.5.

16.6 Gender and Number. Whenever required by the context, as used in
this Agreement the singular number shall include the plural, the plural shall
include the singular, and all words herein in any gender shall be deemed to
include the masculine, feminine and neuter genders.

16.7 Severability. If any provision of this Agreement is determined
by a court to be invalid or unenforceable, that determination shall not affect
the other provisions hereof, each of which shall be construed and enforced as
if the invalid or unenforceable portion were not contained herein. That
invalidity or unenforceability shall not affect any

30
<PAGE> 35

valid and enforceable application thereof, and each said provision shall be
deemed to be effective, operative, made, entered into or taken in the manner
and to the full extent permitted by law.

16.8 Massachusetts Business Trust Legend. A copy of the Agreement
and Declaration of Trust of certain Members that are Massachusetts business
trusts is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Agreement is executed on
behalf of the trustees of such Trusts as trustees and not individually, and
that the obligations of or arising out of this Agreement are not binding upon
any of the trustees or the shareholders of such Trusts individually but are
binding only upon the assets and property of such trusts, or separate series
thereof.

16.9 Headings. The headings used in this Agreement are used for
administrative convenience only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.

16.10 No Third Party Rights. The provisions of this Agreement are
for the benefit of the Company, the Board of Managers, the Members, Indemnified
Persons, and no other Person, including creditors of the Company shall have any
right or claim against the Company, the Board of Managers or any Manager or
Member by reason of this Agreement or any provision hereof or be entitled to
enforce any provision of this Agreement.

[Remainder of page intentionally left blank]

31
<PAGE> 36

[THIS PAGE INTENTIONALLY LEFT BLANK]

32
<PAGE> 37

IN WITNESS WHEREOF, the parties have executed this Limited Liability
Company Agreement as of the day and year first set forth above.

PUTNAM ASSET ALLOCATION FUNDS - BALANCED
PORTFOLIO
PUTNAM ASSET ALLOCATION FUNDS - CONSERVATIVE
PORTFOLIO
PUTNAM ASSET ALLOCATION FUNDS - GROWTH
PORTFOLIO
PUTNAM BALANCED RETIREMENT FUND
PUTNAM CONVERTIBLE OPPORTUNITIES AND INCOME
TRUST
PUTNAM DIVERSIFIED INCOME TRUST
PUTNAM EQUITY INCOME FUND
THE GEORGE PUTNAM FUND OF BOSTON
PUTNAM GLOBAL GOVERNMENTAL INCOME TRUST
PUTNAM HIGH INCOME CONVERTIBLE AND BOND FUND
PUTNAM HIGH YIELD ADVANTAGE FUND
PUTNAM HIGH YIELD TRUST
PUTNAM INCOME FUND
PUTNAM MANAGED HIGH YIELD TRUST
PUTNAM MASTER INTERMEDIATE INCOME TRUST
PUTNAM MASTER INCOME TRUST
PUTNAM CAPITAL MANAGER TRUST - PCM DIVERSIFIED
INCOME FUND
PUTNAM CAPITAL MANAGER TRUST - PCM HIGH YIELD
FUND
PUTNAM PREMIER INCOME TRUST

By /s/ Paul M. O'Neil
------------------------------
Name: Paul M. O'Neil
Title: Vice President

THE PUTNAM ADVISORY COMPANY, INC. ON BEHALF OF
AMERITECH PENSION TRUST
SOUTHERN FARM BUREAU ANNUITY INSURANCE
COMPANY

By /s/ Paul M. O'Neil
------------------------------
Name: Paul M. O'Neil
Title: Vice President

33
<PAGE> 38

PUTNAM FIDUCIARY TRUST COMPANY ON BEHALF OF
PUTNAM HIGH YIELD MANAGED TRUST

By /s/ Paul M. O'Neil
------------------------------
Name: Paul M. O'Neil
Title: Vice President

PUTNAM INVESTMENT MANAGEMENT, INC. ON BEHALF OF
PUTNAM DIVERSIFIED INCOME PORTFOLIO/SMITH
BARNEY/TRAVELERS SERIES FUND

By /s/ Paul M. O'Neil
------------------------------
Name: Paul M. O'Neil
Title: Vice President

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, AS
INVESTMENT MANAGER FOR THE GENERAL MOTORS
RETIREMENT PROGRAM FOR SALARIED EMPLOYEES
HIGH YIELD ACCOUNT

By
------------------------------

THE PRUDENTIAL SERIES FUND, INC. HIGH YIELD
BOND PORTFOLIO
THE U.S. HIGH YIELD FUND SICAV

BY THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
AN INVESTMENT ADVISER

By
------------------------------
Name:
Title:

34
<PAGE> 39

MORGAN STANLEY GROUP, INC.

By /s/ Philip N. Duff
-----------------------------------------
Name: Philip N. Duff
Title: Chief Financial Officer

OCM OPPORTUNITIES FUND, L.P.

BY OAKTREE CAPITAL MANAGEMENT, LLC,
Its General Partner

By /s/ Richard Masson
-----------------------------------------
Name: Richard Masson
Title: Principal

By /s/ Kenneth Liang
-----------------------------------------
Name: Kenneth Liang
Title: Managing Director & General Counsel

COLUMBIA/HCA MASTER RETIREMENT TRUST

BY OAKTREE CAPITAL MANAGEMENT, LLC,
Its Investment Manager

By /s/ Richard Masson
-----------------------------------------
Name: Richard Masson
Title: Principal

By /s/ Kenneth Liang
-----------------------------------------
Name: Kenneth Liang
Title: Managing Director & General Counsel

35
<PAGE> 40

PAN FIXED INCOME FUND LTD.

By /s/ Carol Raworth
-----------------------------------------
Name: Carol Raworth
Title: Director

PAN INTERNATIONAL LTD.

By /s/ Carol Raworth
-----------------------------------------
Name: Carol Raworth
Title: Director

COLLINGS FARM, INC.

By
-----------------------------------------
Name:
Title:

PSF FINANCE HOLDINGS INC.

By
-----------------------------------------
Name:
Title:

PREMIUM HOLDINGS CORP.

By /s/ Theodore E. Gordon, Jr.
-----------------------------------------
Name: Theodore E. Gordon, Jr.
Title: Chairman

36
<PAGE> 41

THE HIGH YIELD INCOME FUND, INC.
PRUDENTIAL HIGH YIELD FUND

BY THE PRUDENTIAL INVESTMENT CORPORATION,
AS INVESTMENT ADVISER

By_________________________________________
Name:
Title:

CONTINENTAL ASSURANCE COMPANY
ON BEHALF OF ITS SEPARATE ACCOUNT
CONTINENTAL ASSURANCE COMPANY
PENSION INVESTMENT FUND

By_________________________________________
Name:
Title:

GEM CAPITAL MANAGEMENT, INC.
AS INVESTMENT ADVISOR FOR:

DELTA AIRLINES RETIREMENT RUST
LOS ANGELES FIRE & POLICE PENSION PLAN
MT. SINAI SCHOOL OF MEDICINE
XEROX PROFIT SHARING

By_________________________________________
Name:
Title:

37
<PAGE> 42

Exhibit A
---------

DEFINED TERMS
-------------

"Accredited Investor" has the meaning assigned to such term under
Regulation D promulgated pursuant to Section 4(2) of the Securities Act.

"Act" shall mean the Delaware Limited Liability Company Act (6 Del. C.
Section 18-101, et seq.) as amended and in effect from time to time.

"Affiliate" shall mean, with respect to any specified Person, any Person
that directly or through one or more intermediaries controls or is controlled
by or is under common control with the specified Person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through ownership of voting securities, by contract or
otherwise.

"Agreement" shall mean the Second Amended and Restated Limited Liability
Company Agreement of the Company to which this Exhibit A is attached, as such
agreement may be amended from time to time.

"Alien" shall mean an alien as defined under Missouri Revised Statutes
Section Section 442.560-442.591 and any regulations thereunder.

"Assignee" shall mean a Person that has acquired the right from a Member
to (i) share in Net Profit and Net Loss of the Company, (ii) receive
Distributions and (iii) receive the allocation of income, gain, loss deductions
or credits (and items thereof) of the Company to which the transferor Member
was entitled in accordance with the provisions of Article 9, but has not been
admitted as a Member of the Company in accordance with the provisions of
Article 10.

"Board of Managers" means the Board of Managers as provided in Section
5.1.

"Book Gain" or "Book Loss" shall mean the gain or loss recognized by the
Company for book purposes in any Fiscal Year or other period by reason of the
sale, exchange or other disposition of any Company asset. Such Book Gain or
Book Loss shall be computed by reference to the Book Value of such asset as of
the date of such sale, exchange or other disposition, rather than by reference
to the tax basis of such asset as of such date, and each and every reference
herein to "gain" or "loss" shall be deemed to refer to Book Gain or Book Loss,
rather than to tax gain or tax loss, unless otherwise expressly provided
herein.

"Book Value" of an asset shall mean, as of any particular date, the value
at which the asset is properly reflected on the books and records of the
Company as of such date. The initial Book Value of each asset shall be its
cost, unless such asset was contributed to the Company by a Member, in which
case the initial Book Value shall be the fair market value, as agreed to by the
Members or determined by the Members, and such Book Value shall thereafter be
adjusted for Depreciation with respect to such asset rather than for the cost

1
<PAGE> 43

recovery deductions to which the Company is entitled for income tax purposes
with respect thereto.

"Capital Account" is defined in Section 7.3. An Assignee may acquire an
interest in a Capital Account as provided in Section 9.2.

"Capital Contribution" shall mean with respect to any Member, the amount
of money plus the fair market value of any other property contributed to the
Company (net of any liabilities assumed by the Company and any liabilities to
which contributed property is subject) with respect to the Interest held by
such Member pursuant to the terms of this Agreement.

"Certificate" shall mean the Certificate of Formation of the Company and
any and all amendments thereto and restatements thereof filed on behalf of the
Company with the office of the Secretary of State of the State of Delaware
pursuant to the Act.

"Class A Members" means Members holding Class A Units.

"Class B Members" means Members holding Class B Units.

"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the corresponding provisions of any future federal tax law.

"Committee" shall have the meaning provided in the Management Option Plan.

"Company" shall mean the limited liability company to which this Agreement
relates that was formed upon the merger of PSF Finance L.P. and PSF Holdings,
L.L.C., by action of the original Members.

"Depreciation" shall mean for each Fiscal Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except if the
Book Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of any such year or other period, Depreciation shall
be an amount that bears the same relationship to the Book Value of such asset
as the depreciation, amortization, or other cost recovery deduction computed
for tax purposes with respect to such asset for the applicable period bears to
the adjusted tax basis of such asset at the beginning of such period, or if
such asset has a zero adjusted tax basis, Depreciation shall be an amount
determined under any reasonable method selected by the Members, with the advice
of the Company's independent accountants.

"Disability" shall mean a disability as a result of any illness, injury,
accident or condition of either a physical or psychological nature which
renders an individual unable to perform substantially all of such individual's
duties or responsibilities as an employee of the Company or an Affiliate of the
Company for three consecutive months or shorter periods aggregating three
months in any 12-month period. The existence of a Disability shall be
determined in accordance with any applicable employment agreement in effect
between such

2
<PAGE> 44

individual and the Company or an Affiliate of the Company or, in the absence
of such agreement, by the Company, whose determination shall be final and
binding.

"Distribution" shall mean cash or property distributed to a Member or a
Member's Assignee in respect of the Member's Interest in the Company.

"Economic Interest" shall mean all rights of an Assignee with respect to
an Interest.

"Employee Member" shall mean each Member who has been issued Units or has
acquired Units pursuant to options granted to such Person in connection with
such Person's employment with the Company or an Affiliate of the Company.

"Fair Value". The term "Fair Value" as applied to all or any portion of
the Interest of any Member shall mean the fair market value of the Interest in
question as determined by the Board of Managers in good faith.

"Fiscal Quarter" shall mean each quarter of the Fiscal Year.

"Fiscal Year" shall mean the taxable year of the Company, which shall be
the calendar year unless otherwise determined by the Board of Managers in
accordance with applicable laws.

"Foreign Business" shall mean a foreign business as defined under Missouri
Revised Statutes Sections 442.560-442.591 and any regulations thereunder.

"Indemnified Persons" is defined in Section 13.1.

"Interest" shall mean the entire interest of a Member in the capital and
profits of the Company, including the right of such Member to any and all
benefits to which a Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all the terms and
provisions of this Agreement.

"Management Option Plan" shall mean the Amended and Restated PSF Holdings,
L.L.C. 1996 Management Option Plan effective as of September 17, 1996, as
amended on March 14, 1997, and from time to time thereafter.

"Managers" means the Persons designated or elected from time to time to
the Board of Managers of the Company, acting in their capacity as Managers.

"Members" shall mean the Persons listed as members on Exhibit B hereto and
any other Person that both acquires an Interest in the Company and is admitted
to the Company as a Member.

"Members' Estimated Tax Liability" is defined in Section 7.2.1.

"MS Member" means Morgan Stanley Group Inc., any successor thereto by
operation of law, or any Affiliate of Morgan Stanley Group Inc. or such
successor (other than

3
<PAGE> 45

Premium Holdings Corp.) for so long as Morgan Stanley Group Inc. or such
Affiliate or such successor is a Member.

"Net Profit" and "Net Loss" shall mean, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss, respectively,
for such year or period, determined in accordance with section 703(a) of the
Code (taking into account all items of income, gain, loss, or deduction
required to be stated separately pursuant to section 703(a)(1) of the Code),
with the following adjustments:

(i) any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Net Profit or
Net Loss pursuant to this provision shall be added to such taxable
income or loss;

(ii) any expenditures of the Company described in section
705(a)(2)(B) of the Code (relating to expenditures which are neither
deductible nor properly chargeable to capital) or treated as Code
section 705(a)(2)(B) expenditures pursuant to section
1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise taken
into account in computing Net Profit or Net Loss pursuant to this
provision, shall be subtracted from such taxable income or loss;

(iii) Book Gain or Book Loss from the sale or other disposition of
any asset of the Company shall be taken into account in lieu of any
tax gain or tax loss recognized by the Company by reason of such
sale or other disposition; and

(iv) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such fiscal year or other period, computed as provided in this
Agreement.

"Percentage Interest" is defined in Section 3.5.

"Person" shall mean an individual, partnership, joint venture,
association, corporation, trust, estate, limited liability company, limited
liability partnership, or any other legal entity, and for purposes of Section
9.3 only, shall also include a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

"PSF" shall mean Premium Standard Farms, Inc., a Delaware corporation, a
wholly owned subsidiary of the Company.

"Regulations" shall mean the Treasury regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended
from time to time (including the corresponding provisions of any future
regulations).

"Required Members" shall mean a Member or Members, other than a MS Member,
holding more than 50% of the aggregate Percentage Interests allocated to all
Members, other than MS Members.

4
<PAGE> 46

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Tax Distribution" shall mean Distributions made from time to time
pursuant to Section 7.2.1.

"Tax Distribution Rate" shall mean the highest marginal combined federal,
state and local income tax rate applicable to any of the Members (determined
after giving effect to the deduction (if allowable) of state and local income
taxes for federal income tax purposes and the deduction for local income taxes
(if allowable) for state income tax purposes).

"Tax Matters Member" is defined in Section 8.1.

"Taxable Income from Operations" shall mean (i) the net amount of (A)
income and gains (not including income and gains exempt from federal income
tax) over (B) deductions and losses (not including any expenditures of the
Company described in Code Section 705(a)(2)(B) or any expenditures treated as
if so described pursuant to Regulations Section 1.704-1(b)(2)(iv)(i)) that was
recognized by the Company and allocated among the Members for federal income
tax purposes pursuant to Section 7.3.2 for the immediately preceding Fiscal
Year, excluding any income, gains, deductions or losses arising in such Fiscal
Year from the disposition of substantially all of the assets of the Company.

"Transfer" is defined in Section 9.1.1.

"Units" is defined in Section 3.4.

5
<PAGE> 47

Exhibit B
---------

<TABLE>
<CAPTION>
NAME OF MEMBER NO. OF CLASS OF PERCENTAGE AGREED CAPITAL
UNITS UNITS INTEREST CONTRIBUTION
<S> <C> <C> <C> <C>

Putnam Asset
Allocation Funds -
Balanced Portfolio 12,885 A 0.1289% $154,620

Putnam Asset
Allocation Funds -
Conservative
Portfolio 4,186 A 0.0419% $50,232

Putnam Asset
Allocation Funds -
Growth Portfolio 3,305 A 0.0331% $39,660

Putnam Balanced
Retirement Fund 11,013 A 0.1101% $132,156

Putnam Convertible
Opportunities and
Income Trust 22,025 A 0.2203% $264,300

Putnam Diversified
Income Trust 979,968 A 9.7997% $11,759,616

Putnam Equity Income
Fund 1,101 A 0.0110% $13,212

The George Fund of
Boston 22,025 A 0.2203% $264,300

Putnam Global
Governmental Income
Trust 11,327 A 0.1133% $135,924

Putnam High Income
Convertible and Bond
Fund 33,430 A 0.3343% $401,160

Putnam High Yield
Advantage Fund 707,186 A 7.0719% $8,486,232

Putnam High Yield Trust 1,185,708 A 11.8571% $14,228,496

Putnam Income Fund 44,051 A 0.4405% $528,612

Putnam Managed High
Yield Trust 57,579 A 0.5758% $690,948

</TABLE>

1
<PAGE> 48
<TABLE>
<CAPTION>
NAME OF MEMBER NO. OF CLASS OF PERCENTAGE AGREED CAPITAL
UNITS UNITS INTEREST CONTRIBUTION
<S> <C> <C> <C> <C>
Putnam Master
Intermediate Income
Trust 71,533 A 0.7153% $858,396

Putnam Master Income
Trust 100,386 A 1.0039% $1,204,632

Putnam Capital
Management Trust - PCM
Diversified Income
Fund 52,810 A 0.5281% $633,720

Putnam Capital
Management Trust - PCM
High Yield Fund 157,853 A 1.5785% $1,894,236

Putnam Premier Income
Trust 250,248 A 2.5025% $3,002,976

Ameritech Pension Trust 31,938 A 0.3194% $383,256

Southern Farm Bureau
Annuity Insurance
Company 18,722 A 0.1872% $224,664

Putnam High Yield
Managed Trust 35,429 A 0.3543% $425,148

Putnam Diversified
Income Portfolio/Smith
Barney/Travelers
Series Fund 2,203 A 0.0220% $26,436

General Motors
Retirement Program for
Salaried Employees
High Yield Account 55,064 A 0.5506% $660,768

The Prudential Series
Fund, Inc., High Yield
Bond Portfolio 22,025 A 0.2203% $264,300

The U.S. High Yield
Fund SICAV 77,873 A 0.7787% $934,476

The High Yield Income
Fund, Inc. 27,924 A 0.2792% $335,088

</TABLE>
2
<PAGE> 49
<TABLE>
<CAPTION>
NAME OF MEMBER NO. OF CLASS OF PERCENTAGE AGREED CAPITAL
UNITS UNITS INTEREST CONTRIBUTION
<S> <C> <C> <C> <C>
Prudential High Yield
Fund 951,717 A 9.5172% $11,420,604

Continental Assurance
Company Pension
Investment Fund 742,247 A 7.4225% $8,906,964

Delta Airlines
Retirement Trust 97,610 A 0.9761% $1,171,320

Los Angeles Fire &
Police Pension Plan 351,942 A 3.5194% $4,223,304

Mt. Sinai School of
Medicine 56,194 A 0.5619% $674,328

Xerox Profit Sharing 166,973 A 1.6697% $2,003,676

Pan Fixed Income Fund
Ltd. 40,945 A 0.4095% $491,340

Pan International Ltd. 12,114 A 0.1211% $145,368

Collings Farm, Inc. 3,000 B 0.0300% $36,000

PSF Finance Holdings
Inc. 219,000 B 2.1900% $2,628,000

Premium Holdings Corp. 78,000 A 0.7800% $936,000

Morgan Stanley Group,
Inc. 2,112,664 B 21.1266% $25,351,968

OCM Opportunities
Fund, L.P. 1,212,087 A 12.1209% $13,453,007

Columbia/HCA Master

Retirement Trust 46,710 A 0.4671% $560,557

</TABLE>

3
<PAGE> 50
Exhibit C
---------

OFFICERS

1. Officers. Officers and agents of the Company, if any, shall be
appointed by the Board of Managers in their discretion. An officer may be but
none need be a Member or Manager. Any two or more offices may be held by the
same person. Any officer may be required by the Board of Managers to secure
the faithful performance of the officer's duties to the Company by giving bond
in such amount and with sureties or otherwise as the Board of Managers may
determine.

2. Powers. Subject to the limitations set forth in Section 5.3 of the
Agreement, each officer shall have, in addition to the duties and powers herein
set forth, the duties and powers set forth in Section 5.3 of the Agreement or
delegated to such officer as provided in said Section 5.3.

3. Appointment. Officers may be appointed by the Board of Managers at
any time. At any time or from time to time the Board of Managers may delegate
to any officer its power to elect or appoint any other officer or any agents.

4. Tenure. Each officer shall hold office until the first meeting of the
Board of Managers following the beginning of the next fiscal year and until
such officer's respective successor is chosen and qualified unless a shorter
period shall have been specified by the terms of such officer's election or
appointment, or in each case until such officer sooner dies, resigns, is
removed or becomes disqualified. Each agent shall retain their authority at
the pleasure of the Board of Managers, or the officer by whom such agent was
appointed or by the officer who then holds agent appointive power.

5. Resignation; Removal; Vacancies. Any officer or agent may resign by
delivering a written letter of resignation to the President, the Secretary or
to the Board of Managers addressed to the Company, which resignation shall not
require acceptance and, unless otherwise specified in the letter of
resignation, shall be effective upon receipt. The Board of Managers or the
officer appointing the officer or agent may remove any officer or agent at any
time without giving any reason for such removal and no officer or agent or
shall be entitled to any damages by virtue of such officer's removal from
office or such position as agent. If any office becomes vacant, the position
may be filled by the Board of Managers or in such other manner as the officer
in question was appointed.

6. President and Vice President. Unless the Board of Managers shall
designate a Manager to serve as Chairman, the Chief Executive Officer, shall
preside, or designate the person who shall preside, at all meetings of the
Board of Managers.

1
<PAGE> 51

Unless the Board of Managers otherwise specifies, the President shall be
the chief executive officer and shall have direct charge of all business
operations of the Company and, subject to the control of the Board of Managers,
shall have general charge and supervision of the business of the Company.

Any vice presidents shall have duties as shall be designated from time to
time by the Board of Managers or the President.

7. Treasurer and Assistant Treasurers. Unless the Board of Managers
otherwise specifies, the Treasurer shall be the chief financial officer of the
Company and shall be in charge of its funds and valuable papers, and shall have
such other duties and powers as may be designated from time to time by the
Board of Managers or the President. If no Controller is elected, the Treasurer
shall, unless the Board of Managers otherwise specifies, also have the duties
and powers of the Controller.

Any Assistant Treasurers shall have such duties and powers as shall be
designated from time to time by the Board of Managers, the President or the
Treasurer.

8. Controller and Assistant Controllers. If a Controller is elected, the
Controller shall, unless the Board of Managers otherwise specifies, be the
chief accounting officer of the Company and be in charge of its books of
account and accounting records, and of its accounting procedures. The
Controller shall have such other duties and powers as may be designated from
time to time by the Board of Managers, the President or the Treasurer.

Any Assistant Controller shall have such duties and powers as shall be
designed from time to time by the Board of Managers, the President, the
Treasurer or the Controller.

9. Secretary and Assistant Secretaries. The Secretary shall record all
proceedings of the Board of Managers and the Members in a book or series of
books to be kept therefor and shall file therein all actions by written consent
of the Board of Managers and the Members. In the absence of the Secretary from
any meeting, an Assistant Secretary, or if there be one or no Assistant
Secretary is present, a temporary secretary chosen at the meeting, shall record
the proceedings thereof. The Secretary shall keep or cause to be kept records,
which shall contain the names and record addresses of all Members. The
Secretary shall have such other duties and powers as may from time to time be
designated by the Board of Managers or the President.

Any Assistant Secretaries shall have such duties and powers as shall be
designated from time to time by the Board of Managers, the President or the
Secretary.

10. Execution of Papers. Except as the Board of Managers may generally
or in particular cases authorize the execution thereof in some other manner,
and subject to the limitations set forth in Sections 5.3 of the Agreement, all
deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other
obligations made, accepted or endorsed by the Company shall be signed by the
President, a Vice President or the Treasurer.

<PAGE> 1
EXHIBIT 3.3

CERTIFICATE OF INCORPORATION

PREMIUM STANDARD FARMS, INC.

1. The name of this corporation is Premium Standard Farms, Inc.

2. The registered office of this corporation in the State of Delaware is
located at 1013 Centre Road, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is Corporation Service
Company.

3. The purpose of this corporation 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.

4. The total number of shares of stock that this corporation shall have
authority to issue is one thousand (1000) shares of Common Stock, $0.01 par
value per share. Each share of Common Stock shall be entitled to one vote.

5. The name and mailing address of the incorporator is: James A. Heeter,
c/o Sonnenschein Nath & Rosenthal, 4520 Main Street, Suite 1100, Kansas City,
Missouri 64111.

6. Except as otherwise provided in the provisions establishing a class of
stock, the number of authorized shares of any class of stock may be increased
or decreased (but not below the number of shares thereof then outstanding) by
the affirmative vote of the holders of a majority of the voting power of the
corporation entitled to vote irrespective of the provisions of Section
242(b)(2) of the General Corporation Law of the State of Delaware.

7. This corporation is subject to the requirements of Section 1123(a)(6)
of the United States Bankruptcy Code (11 U.S.C. 1123(a)(6)) and shall be
prohibited from issuing any nonvoting equity securities.

8. The election of directors need not be by written ballot unless the
by-laws shall so require.

9. In furtherance and not in limitation of the power conferred upon the
board of directors by law, the board of directors shall have power to make,
adopt, alter, amend and repeal from time to time by-laws of this corporation,
subject to the right of the stockholders entitled to vote with respect thereto
to alter and repeal by-laws made by the board of directors.

<PAGE> 2

10. A director of this corporation shall not be liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent that exculpation from liability is not permitted
under the General Corporation Law of the State of Delaware as in effect at the
time such liability is determined. No amendment or repeal of this paragraph 10
shall apply to or have any effect on the liability or alleged liability of any
director of the corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment or repeal.

11. This corporation shall, to the maximum extent permitted from time to
time under the law of the State of Delaware, indemnify and upon request advance
expenses to any person who is or was a party or is threatened to be made a
party to any threatened, pending or completed action, suit, proceeding or
claim, whether civil, criminal, administrative or investigative, by reason of
the fact that such person is or was or has agreed to be a director or officer
of this corporation or while a director or officer is or was serving at the
request of this corporation as a director, officer, partner, trustee, employee
or agent of any corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, against
expenses (including attorney's fees and expenses), judgments, fines, penalties
and amounts paid in settlement incurred (and not otherwise recovered) in
connection with the investigation, preparation to defend or defense of such
action, suit, proceeding or claim; provided, however, that the foregoing shall
not require this corporation to indemnify or advance expenses to any person in
connection with any action, suit, proceeding, claim or counterclaim initiated
by or on behalf of such person. Such indemnification shall not be exclusive of
other indemnification rights arising under any by-law, agreement, vote of
directors or stockholders or otherwise and shall inure to the benefit of the
heirs and legal representatives of such person. Any person seeking
indemnification under this paragraph 10 shall be deemed to have met the
standard of conduct required for such indemnification unless the contrary shall
be established. Any repeal or modification of the foregoing provisions of this
paragraph 10 shall not adversely affect any right or protection of a director
or officer of this corporation with respect to any acts or omissions of such
director or officer occurring prior to such repeal or modification.

12. The books of this corporation may (subject to any statutory
requirements) be kept outside the State of Delaware as may be designated by the
board of directors or in the by-laws of this corporation.

THE UNDERSIGNED, the sole incorporator named above, hereby certifies that the
facts stated above are true as of this 15th day of August, 1996.

/s/ James A. Heeter
--------------------------------------
James A. Heeter

-2-
<PAGE> 3
CERTIFICATE OF CORRECTION FILED TO CORRECT A
CERTAIN ERROR IN THE CERTIFICATE OF
INCORPORATION OF
PREMIUM STANDARD FARMS, INC.
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON AUGUST 16, 1996

Premium Standard Farms, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

1. The name of the corporation is Premium Standard Farms, Inc.

2. That a Certificate of Incorporation was filed by the Secretary
of State of Delaware on August 16, 1996 and that said Certificate requires
correction as permitted by Section 103 of the General Corporation Law of the
State of Delaware.

3. The inaccuracy or defect of said Certificate to be corrected is
as follows: The Registered Agent was not listed correctly in the Certificate
of Incorporation.

4. Article 2 of the Certificate is corrected to read as follows:

2. The registered office of this corporation in the State
of Delaware is located at 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of
its registered agent at such address is The Corporation
Trust Company.

IN WITNESS WHEREOF, said Premium Standard Farms, Inc. has caused this
Certificate to be signed by James A. Heeter, its Incorporator, this 26th day of
August, 1996.

PREMIUM STANDARD FARMS, INC.

By /s/ James A. Heeter
-----------------------------
James A. Heeter, Incorporator

<PAGE> 1

EXHIBIT 3.4

BY-LAWS

PREMIUM STANDARD FARMS, INC.

Section 1. LAW, CERTIFICATE OF INCORPORATION AND BY-LAWS

1.1 These by-laws are subject to the certificate of incorporation
of the corporation. In these by-laws, references to law, the certificate of
incorporation and by-laws mean the law, the provisions of the certificate of
incorporation and the by-laws as from time to time in effect.

Section 2. STOCKHOLDERS

2.1 Annual Meeting. The annual meeting of stockholders shall be
held at 10:00 A.M. on the third Tuesday in May in each year, unless that day be
a legal holiday at the place where the meeting is to be held, in which case the
meeting shall be held at the same hour on the next succeeding day not a legal
holiday, or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the meeting, at
which they shall elect a board of directors and transact such other business as
may be required by law or these by-laws or as may properly come before the
meeting.

2.2 Special Meetings. A special meeting of the stockholders may
be called at any time by the chairman of the board, if any, the president or
the board of directors. A special meeting of the stockholders shall be called
by the secretary, or in the case of the death, absence, incapacity or refusal
of the secretary, by an assistant secretary or some other officer, upon
application of a majority of the directors. Any such application shall state
the purpose or purposes of the proposed meeting. Any such call shall state the
place, date, hour, and purposes of the meeting.

2.3 Place of Meeting. All meetings of the stockholders for the
election of directors or for any other purpose shall be held at such place
within or without the State of Delaware as may be determined from time to time
by the chairman of the board, if any, the president or the board of directors.
Any adjourned session of any meeting of the stockholders shall be held at the
place designated in the vote of adjournment.

2.4 Notice of Meetings. Except as otherwise provided by law, a
written notice of each meeting of stockholders stating the place, day and hour
thereof and, in the case of a special meeting, the purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before the meeting, to each stockholder entitled to vote thereat, and to each
stockholder who, by law, by the certificate of incorporation or by these
by-laws, is entitled to notice, by leaving such notice with him or at his
residence or usual place of business, or by depositing it in the United States
mail, postage prepaid, and addressed to such stockholder at his
<PAGE> 2

address as it appears in the records of the corporation. Such notice shall be
given by the secretary, or by an officer or person designated by the board of
directors, or in the case of a special meeting by the officer calling the
meeting. As to any adjourned session of any meeting of stockholders, notice of
the adjourned meeting need not be given if the time and place thereof are
announced at the meeting at which the adjournment was taken except that if the
adjournment is for more than thirty days or if after the adjournment a new
record date is set for the adjourned session, notice of any such adjourned
session of the meeting shall be given in the manner heretofore described. No
notice of any meeting of stockholders or any adjourned session thereof need be
given to a stockholder if a written waiver of notice, executed before or after
the meeting or such adjourned session by such stockholder, is filed with the
records of the meeting or if the stockholder attends such meeting without
objecting at the beginning of the meeting to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any meeting of the stockholders or any
adjourned session thereof need be specified in any written waiver of notice.

2.5 Quorum of Stockholders. At any meeting of the stockholders a
quorum as to any matter shall consist of a majority of the votes entitled to be
cast on the matter, except where a larger quorum is required by law, by the
certificate of incorporation or by these by-laws. Any meeting may be adjourned
from time to time by a majority of the votes properly cast upon the question,
whether or not a quorum is present. If a quorum is present at an original
meeting, a quorum need not be present at an adjourned session of that meeting.
Shares of its own stock belonging to the corporation or to another corporation,
if a majority of the shares entitled to vote in the election of directors of
such other corporation is held, directly or indirectly, by the corporation,
shall neither be entitled to vote nor be counted for quorum purposes; provided,
however, that the foregoing shall not limit the right of any corporation to
vote stock, including but not limited to its own stock, held by it in a
fiduciary capacity.

2.6 Action by Vote. When a quorum is present at any meeting, a
plurality of the votes properly cast for election to any office shall elect to
such office and a majority of the votes properly cast upon any question other
than an election to an office shall decide the question, except when a larger
vote is required by law, by the certificate of incorporation or by these
by-laws. No ballot shall be required for any election unless requested by a
stockholder present or represented at the meeting and entitled to vote in the
election.

2.7 Action without Meetings. Unless otherwise provided in the
certificate of incorporation, any action required or permitted to be taken by
stockholders for or in connection with any corporate action 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, 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 Delaware
by hand or certified or registered mail, return receipt requested, to its
principal place of business or to an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Each such written

-2-
<PAGE> 3

consent shall bear the date of signature of each stockholder who signs the
consent. No written consent shall be effective to take the corporate action
referred to therein unless written consents signed by a number of stockholders
sufficient to take such action are delivered to the corporation in the manner
specified in this paragraph within sixty days of the earliest dated consent so
delivered.

If action is taken by consent of stockholders and in accordance with
the foregoing, there shall be filed with the records of the meetings of
stockholders the writing or writings comprising such consent.

If action is taken by less than unanimous consent of stockholders,
prompt notice of the taking of such action without a meeting shall be given to
those who have not consented in writing and a certificate signed and attested
to by the secretary that such notice was given shall be filed with the records
of the meetings of stockholders.

In the event that the action which is consented to is such as would
have required the filing of a certificate under any provision of the General
Corporation Law of the State of Delaware, if such action had been voted upon by
the stockholders at a meeting thereof, the certificate filed under such
provision shall state, in lieu of any statement required by such provision
concerning a vote of stockholders, that written consent has been given under
Section 228 of said General Corporation Law and that written notice has been
given as provided in such Section 228.

2.8 Proxy Representation. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a stockholder
is entitled to participate, whether by waiving notice of any meeting, objecting
to or voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date unless such proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and, if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. The authorization of a proxy may but
need not be limited to specified action, provided, however, that if a proxy
limits its authorization to a meeting or meetings of stockholders, unless
otherwise specifically provided such proxy shall entitle the holder thereof to
vote at any adjourned session but shall not be valid after the final
adjournment thereof.

2.9 Inspectors. The directors or the person presiding at the
meeting may, and shall if required by applicable law, appoint one or more
inspectors of election and any substitute inspectors to act at the meeting or
any adjournment thereof. Each inspector, before entering upon the discharge of
his duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his ability. The inspectors, if any, shall determine the number of shares of
stock outstanding and the voting

-3-
<PAGE> 4

power of each, the shares of stock represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting, the inspectors shall make a report in writing of any
challenge, question or matter determined by them and execute a certificate of
any fact found by them.

2.10 List of Stockholders. The secretary shall prepare and make,
at least ten days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, arranged in alphabetical order
and showing the address of each stockholder and the number of shares registered
in his name. The stock ledger shall be the only evidence as to who are
stockholders entitled to examine such list or to vote in person or by proxy at
such meeting.

Section 3. BOARD OF DIRECTORS

3.1 Number. The corporation shall have one or more directors, the
number of directors to be determined from time to time by vote of a majority of
the directors then in office. Except in connection with the election of
directors at the annual meeting of stockholders, the number of directors may be
decreased only to eliminate vacancies by reason of death, resignation or
removal of one or more directors. No director need be a stockholder.

3.2 Tenure. Each director shall hold office until the next annual
meeting and until his successor is elected and qualified, or until he sooner
dies, resigns, is removed or becomes disqualified.

3.3 Powers. The business and affairs of the corporation shall be
managed by or under the direction of the board of directors who shall have and
may exercise all the powers of the corporation and do all such lawful acts and
things as are not by law, the certificate of incorporation or these by-laws
directed or required to be exercised or done by the stockholders.

3.4 Vacancies. Vacancies and any newly created directorships
resulting from any increase in the number of directors may be filled by vote of
the holders of the particular class or series of stock entitled to elect such
director at a meeting called for the purpose, or by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director,
in each case elected by the particular class or series of stock entitled to
elect such directors. When one or more directors shall resign from the board,
effective at a future date, a majority of the directors then in office,
including those who have resigned, who were elected by the particular class or
series of stock entitled to elect such resigning director or directors shall
have power to fill such vacancy or vacancies, the vote or action by writing
thereon to take effect when such resignation or resignations shall become
effective. The directors shall have and may exercise all their powers
notwithstanding the existence of one or more vacancies in their number, subject
to any requirements of law or of the certificate of incorporation or of these
by-laws as to the number of directors required for a quorum or for any vote or
other actions.

-4-
<PAGE> 5

3.5 Committees. The board of directors may, by vote of a majority
of the whole board, (a) designate, change the membership of or terminate the
existence of any committee or committees, each committee to consist of one or
more of the directors; (b) designate one or more directors as alternate members
of any such committee who may replace any absent or disqualified member at any
meeting of the committee; and (c) determine the extent to which each such
committee shall have and may exercise the powers of the board of directors in
the management of the business and affairs of the corporation, including the
power to authorize the seal of the corporation to be affixed to all papers
which require it and the power and authority to declare dividends or to
authorize the issuance of stock; excepting, however, such powers which by law,
by the certificate of incorporation or by these by-laws they are prohibited
from so delegating. In the absence or disqualification of any member of such
committee and his alternate, if any, the member or members thereof present at
any meeting and not disqualified from voting, whether or not constituting a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in the place of any such absent or disqualified member. Except
as the board of directors may otherwise determine, any committee may make rules
for the conduct of its business, but unless otherwise provided by the board or
such rules, its business shall be conducted as nearly as may be in the same
manner as is provided by these by-laws for the conduct of business by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors upon request.

3.6 Regular Meetings. Regular meetings of the board of directors
may be held without call or notice at such places within or without the State
of Delaware and at such times as the board may from time to time determine,
provided that notice of the first regular meeting following any such
determination shall be given to absent directors. A regular meeting of the
directors may be held without call or notice immediately after and at the same
place as the annual meeting of stockholders.

3.7 Special Meetings. Special meetings of the board of directors
may be held at any time and at any place within or without the State of
Delaware designated in the notice of the meeting, when called by the chairman
of the board, if any, the president, or by one-third or more in number of the
directors, reasonable notice thereof being given to each director by the
secretary or by the chairman of the board, if any, the president or any one of
the directors calling the meeting.

3.8 Notice. It shall be reasonable and sufficient notice to a
director to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to him at his usual or
last known business or residence address or to give notice to him in person or
by telephone at least twenty-four hours before the meeting. Notice of a
meeting need not be given to any director if a written waiver of notice,
executed by him before or after the meeting, is filed with the records of the
meeting, or to any director who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to him. Neither notice of a
meeting nor a waiver of a notice need specify the purposes of the meeting.

-5-
<PAGE> 6

3.9 Quorum. Except as may be otherwise provided by law, by the
certificate of incorporation or by these by-laws, at any meeting of the
directors a majority of the directors then in office shall constitute a quorum;
a quorum shall not in any case be less than one-third of the total number of
directors constituting the whole board. Any meeting may be adjourned from time
to time by a majority of the votes cast upon the question, whether or not a
quorum is present, and the meeting may be held as adjourned without further
notice.

3.10 Action by Vote. Except as may be otherwise provided by law,
by the certificate of incorporation or by these by-laws, when a quorum is
present at any meeting the vote of a majority of the directors present shall be
the act of the board of directors.

3.11 Action Without a Meeting. Any action required or permitted to
be taken at any meeting of the board of directors or a committee thereof may be
taken without a meeting if all the members of the board or of such committee,
as the case may be, consent thereto in writing, and such writing or writings
are filed with the records of the meetings of the board or of such committee.
Such consent shall be treated for all purposes as the act of the board or of
such committee, as the case may be.

3.12 Participation in Meetings by Conference Telephone. Members of
the board of directors, or any committee designated by such board, may
participate in a meeting of such board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other or by any other means
permitted by law. Such participation shall constitute presence in person at
such meeting.

3.13 Compensation. In the discretion of the board of directors,
each director may be paid such fees for his services as director and be
reimbursed for his reasonable expenses incurred in the performance of his
duties as director as the board of directors from time to time may determine.
Nothing contained in this section shall be construed to preclude any director
from serving the corporation in any other capacity and receiving reasonable
compensation therefor.

3.14 Interested Directors and Officers.

(a) No contract or transaction between the corporation and one or
more of its directors or officers, or between the corporation and any other
corporation, partnership, association, or other organization in which one or
more of the corporation's directors or officers are directors or officers, or
have a financial interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or participates in the
meeting of the board or committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such purpose,
if:

(1) The material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the board
of directors or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes

-6-
<PAGE> 7

of a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or

(2) The material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or

(3) The contract or transaction is fair as to the
corporation as of the time it is authorized, approved or ratified, by the board
of directors, a committee thereof, or the stockholders.

(b) Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors or of a
committee which authorizes the contract or transaction.

Section 4. OFFICERS AND AGENTS

4.1 Enumeration; Qualification. The officers of the corporation
shall be a president, a treasurer, a secretary and such other officers, if any,
as the board of directors from time to time may in its discretion elect or
appoint including without limitation a chairman of the board, one or more vice
presidents and a controller. The corporation may also have such agents, if
any, as the board of directors from time to time may in its discretion choose.
Any officer may be but none need be a director or stockholder. Any two or more
offices may be held by the same person. Any officer may be required by the
board of directors to secure the faithful performance of his duties to the
corporation by giving bond in such amount and with sureties or otherwise as the
board of directors may determine.

4.2 Powers. Subject to law, to the certificate of incorporation
and to the other provisions of these by-laws, each officer shall have, in
addition to the duties and powers herein set forth, such duties and powers as
are commonly incident to his office and such additional duties and powers as
the board of directors may from time to time designate.

4.3 Election. The officers may be elected by the board of
directors at their first meeting following the annual meeting of the
stockholders or at any other time. At any time or from time to time the
directors may delegate to any officer their power to elect or appoint any other
officer or any agents.

4.4 Tenure. Each officer shall hold office until the first
meeting of the board of directors following the next annual meeting of the
stockholders and until his respective successor is chosen and qualified unless
a shorter period shall have been specified by the terms of his election or
appointment, or in each case until he sooner dies, resigns, is removed or
becomes disqualified. Each agent shall retain his authority at the pleasure of
the directors, or the officer by whom he was appointed or by the officer who
then holds agent appointive power.

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<PAGE> 8

4.5 Chairman of the Board of Directors, President and Vice
President. The chairman of the board, if any, shall have such duties and
powers as shall be designated from time to time by the board of directors.
Unless the board of directors otherwise specifies, the chairman of the board,
or if there is none the chief executive officer, shall preside, or designate
the person who shall preside, at all meetings of the stockholders and of the
board of directors.

Unless the board of directors otherwise specifies, the president shall
be the chief executive officer and shall have direct charge of all business
operations of the corporation and, subject to the control of the directors,
shall have general charge and supervision of the business of the corporation.

Any vice presidents shall have such duties and powers as shall be set
forth in these by-laws or as shall be designated from time to time by the board
of directors or by the president.

4.6 Treasurer and Assistant Treasurers. Unless the board of
directors otherwise specifies, the treasurer shall be the chief financial
officer of the corporation and shall be in charge of its funds and valuable
papers, and shall have such other duties and powers as may be designated from
time to time by the board of directors or by the president. If no controller
is elected, the treasurer shall, unless the board of directors otherwise
specifies, also have the duties and powers of the controller.

Any assistant treasurers shall have such duties and powers as shall be
designated from time to time by the board of directors, the president or the
treasurer.

4.7 Controller and Assistant Controllers. If a controller is
elected, he shall, unless the board of directors otherwise specifies, be the
chief accounting officer of the corporation and be in charge of its books of
account and accounting records, and of its accounting procedures. He shall
have such other duties and powers as may be designated from time to time by the
board of directors, the president or the treasurer.

Any assistant controller shall have such duties and powers as shall be
designated from time to time by the board of directors, the president, the
treasurer or the controller.

4.8 Secretary and Assistant Secretaries. The secretary shall
record all proceedings of the stockholders, of the board of directors and of
committees of the board of directors in a book or series of books to be kept
therefor and shall file therein all actions by written consent of stockholders
or directors. In the absence of the secretary from any meeting, an assistant
secretary, or if there be none or he is absent, a temporary secretary chosen at
the meeting, shall record the proceedings thereof. Unless a transfer agent has
been appointed the secretary shall keep or cause to be kept the stock and
transfer records of the corporation, which shall contain the names and record
addresses of all stockholders and the number of shares registered in the name
of each stockholder. He shall have such other duties and powers as may from
time to time be designated by the board of directors or the president.

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<PAGE> 9

Any assistant secretaries shall have such duties and powers as shall
be designated from time to time by the board of directors, the president or the
secretary.

Section 5. RESIGNATIONS AND REMOVALS

5.1 Any director or officer may resign at any time by delivering
his resignation in writing to the chairman of the board, if any, the president,
or the secretary or to a meeting of the board of directors. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time, and without in either case the necessity of its being accepted unless the
resignation shall so state. A director (including persons elected by
stockholders or directors to fill vacancies in the board) may be removed from
office with or without cause by the vote of the holders of a majority of the
issued and outstanding shares of the particular class or series entitled to
vote in the election of such director. The board of directors may at any time
remove any officer either with or without cause. The board of directors may at
any time terminate or modify the authority of any agent.

Section 6. VACANCIES

6.1 If the office of the president or the treasurer or the
secretary becomes vacant, the directors may elect a successor by vote of a
majority of the directors then in office. If the office of any other officer
becomes vacant, any person or body empowered to elect or appoint that officer
may choose a successor. Each such successor shall hold office for the
unexpired term, and in the case of the president, the treasurer and the
secretary until his successor is chosen and qualified or in each case until he
sooner dies, resigns, is removed or becomes disqualified. Any vacancy of a
directorship shall be filled as specified in Section 3.4 of these by-laws.

Section 7. INDEMNIFICATION OF DIRECTORS AND OFFICERS

7.1 Indemnification Provision. The terms and conditions of the
indemnification provision set forth in paragraph 10 of the corporation's
certificate of incorporation are hereby incorporated into and made a part of
these bylaws, through this reference.

7.2 Insurance. The corporation may, from time to time, purchase
and maintain insurance on behalf of an individual who is or was a director,
officer, employee or agent of the corporation, or who, while a director,
officer, employee or agent of the corporation, is or was serving at the request
of the corporation as a director, officer, partner, trustee, employee or agent
of another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise, against liability asserted against
or incurred by him/her in that capacity or arising from his/her status as a
director, officer, employee, or agent, whether or not the corporation would
have the power to indemnify him/her against the same liability under the law of
the State of Delaware.

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<PAGE> 10

Section 8. CAPITAL STOCK

8.1 Stock Certificates. Each stockholder shall be entitled to a
certificate stating the number and the class and the designation of the series,
if any, of the shares held by him, in such form as shall, in conformity to law,
the certificate of incorporation and the by- laws, be prescribed from time to
time by the board of directors. Such certificate shall be signed by the
chairman or vice chairman of the board, if any, or the president or a vice
president and by the treasurer or an assistant treasurer or by the secretary or
an assistant secretary. Any of or all the signatures on the certificate may be
a facsimile. In case an officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed on such certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent, or registrar at the time of its issue.

8.2 Loss of Certificates. In the case of the alleged theft, loss,
destruction or mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof, upon such terms, including receipt of a bond
sufficient to indemnify the corporation against any claim on account thereof,
as the board of directors may prescribe.

Section 9. TRANSFER OF SHARES OF STOCK

9.1 Transfer on Books. Subject to the restrictions, if any,
stated or noted on the stock certificate, shares of stock may be transferred on
the books of the corporation by the surrender to the corporation or its
transfer agent of the certificate therefor properly endorsed or accompanied by
a written assignment and power of attorney properly executed, with necessary
transfer stamps affixed, and with such proof of the authenticity of signature
as the board of directors or the transfer agent of the corporation may
reasonably require. Except as may be otherwise required by law, by the
certificate of incorporation or by these by-laws, the corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the
right to receive notice and to vote or to give any consent with respect thereto
and to be held liable for such calls and assessments, if any, as may lawfully
be made thereon, regardless of any transfer, pledge or other disposition of
such stock until the shares have been properly transferred on the books of the
corporation.

It shall be the duty of each stockholder to notify the corporation of
his post office address.

9.2 Record Date. 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 such record date is fixed by the board of directors, the record date for
determining the

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<PAGE> 11

stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next 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.

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 such 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 the General Corporation Law of the State of Delaware,
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 Delaware by hand or certified or
registered mail, return receipt requested, to its principal place of business
or to an officer or agent of the corporation having custody of the book in
which proceedings of meetings of stockholders are recorded. If no record date
has been fixed by the board of directors and prior action by the board of
directors is required by the General Corporation Law of the State of Delaware,
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.

In order that the corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purpose 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 payment, exercise or other
action. If no such 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 10. CORPORATE SEAL

10.1 Subject to alteration by the directors, the seal of the
corporation shall consist of a flat-faced circular die with the word "Delaware"
and the name of the corporation cut or engraved thereon, together with such
other words, dates or images as may be approved from time to time by the
directors.

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<PAGE> 12

Section 11. EXECUTION OF PAPERS

11.1 Except as the board of directors may generally or in
particular cases authorize the execution thereof in some other manner, all
deeds, leases, transfers, contracts, bonds, notes, checks, drafts or other
obligations made, accepted or endorsed by the corporation shall be signed by
the chairman of the board, if any, the president, a vice president or the
treasurer.

Section 12. FISCAL YEAR

12.1 The fiscal year of the corporation shall end on the 31st of
December.

Section 13. AMENDMENTS

13.1 These by-laws may be adopted, amended or repealed by vote of a
majority of the directors then in office or by vote of a majority of the voting
power of the stock outstanding and entitled to vote. Any by-law, whether
adopted, amended or repealed by the stockholders or directors, may be amended
or reinstated by the stockholders or the directors.

-12-

<PAGE> 1

EXHIBIT 3.5

CERTIFICATE OF INCORPORATION

PRINCETON DEVELOPMENT CORP.

ARTICLE I

Name

The name of the corporation is Princeton Development Corp.
(the "Corporation").

ARTICLE II

Registered Office and Registered Agent

The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent of the
Corporation at such address is The Corporation Trust Company.

ARTICLE III

Corporate Purpose

The purpose of the Corporation 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 (the "General Corporation Law").

ARTICLE IV

Capital Stock

The total number of shares of all classes of stock that the
Corporation shall have authority to issue is 1,000, all of which shall be
shares of Common Stock, par value $.01 per share.
<PAGE> 2
2

ARTICLE V

Directors

(1) Elections of directors of the Corporation need not be
by written ballot, except and to the extent provided in the By-laws of the
Corporation.

(2) To the fullest extent permitted by the General
Corporation Law as it now exists and as it may hereafter be amended, no
director of the Corporation shall be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director.

ARTICLE VI

Indemnification of Directors, Officers and Others

(1) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is 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 expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the Corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person seeking
indemnification did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.

(2) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation,
<PAGE> 3

partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation and except that no indemnification shall
be made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

(3) To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections (1) and (2)
of this Article VI, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.

(4) Any indemnification under Sections (1) and (2) of
this Article VI (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth
in such Sections (1) and (2). Such determination shall be made (a) by the
Board of Directors of the Corporation by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (b) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders of the Corporation.

(5) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation authorized in this Article VI. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board of Directors of the
Corporation deems appropriate.

(6) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this Article VI
shall not be
<PAGE> 4

deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
an official capacity and as to action in another capacity while holding such
office.

(7) The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is 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
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of Section 145 of the General Corporation
Law.

(8) For purposes of this Article VI, 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,
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 venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article VI with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.

(9) For purposes of this Article VI, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves service by, such director,
officer, employee or agent with respect to any employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VI.

(10) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VI shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
<PAGE> 5

ARTICLE VII

By-laws

The directors of the Corporation shall have the power to
adopt, amend or repeal by-laws.

ARTICLE VIII

Reorganization

Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.

ARTICLE IX

Amendment

The Corporation reserves the right to amend, alter, change or
repeal any provision of this Certificate of Incorporation, in the manner now or
hereafter prescribed by law, and all rights conferred on stockholders in this
Certificate of Incorporation are subject to this reservation.
<PAGE> 6

ARTICLE X

Incorporator

The name and mailing address of the sole incorporator is as
follows:

<TABLE>
<CAPTION>
Name
----
Mailing Address
---------------
<S> <C>
Paul G. Prince Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
</TABLE>

I, THE UNDERSIGNED, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this Certificate of
Incorporation, hereby declaring and certifying that this is my act and deed and
the facts herein stated are true, and accordingly have hereunto set my hand
this seventh day of December, 1992.

/s/ Paul G. Prince
------------------------------
Paul G. Prince

<PAGE> 1

EXHIBIT 3.6

========================================

BY-LAWS

PRINCETON DEVELOPMENT CORP.

========================================
<PAGE> 2

BY-LAWS

PRINCETON DEVELOPMENT CORP.

ARTICLE I

OFFICES

SECTION 1.01. Registered Office. The registered office of
Princeton Development Corp. (the "Corporation") in the State of Delaware shall
be at the principal office of The Corporation Trust Company in the City of
Wilmington, County of New Castle, and the registered agent in charge thereof
shall be The Corporation Trust Company.

SECTION 1.02. Other Offices. The Corporation may also have
an office or offices at any other place or places within or without the State
of Delaware as the Board of Directors of the Corporation (the "Board") may from
time to time determine or the business of the Corporation may from time to time
require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

SECTION 2.01. Annual Meetings. The annual meeting of
stockholders of the Corporation for the election of directors of the
Corporation ("Directors"), and for the transaction of such other business as
may properly come before such meeting, shall be held at such place, date and
time as shall be fixed by the Board and designated in the notice or waiver of
notice of such annual meeting; provided, however, that no annual meeting of
stockholders need be held if all actions, including the election of Directors,
required by the General Corporation Law of the State of Delaware (the "General
Corporation Law") to be taken at such annual meeting are taken by written
consent in lieu of meeting pursuant to Section 2.09 hereof.

SECTION 2.02. Special Meetings. Special meetings of
stockholders for any purpose or purposes may be called by the Board or either
Co-Chairman of the Board or the Secretary of the Corporation or by the
recordholders of at least a majority of the shares of common stock of the
Corporation issued and outstanding ("Shares") and entitled to vote thereat, to
be held at such place, date and time as shall be designated in the notice or
waiver of notice thereof.

SECTION 2.03. Notice of Meetings. (a) Except as otherwise
provided by law, written notice of each annual or special meeting of
stockholders stating the place, date and time of such meeting and, in the case
of a special meeting, the purpose or purposes for which such meeting is to be
held, shall be given personally or by first-class mail (airmail in the case of
<PAGE> 3

international communications) to each recordholder of Shares (a "Stockholder")
entitled to vote thereat, not less than 10 nor more than 60 days before the
date of such meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
Stockholder at such Stockholder's address as it appears on the records of the
Corporation. If, prior to the time of mailing, the Secretary of the
Corporation (the "Secretary") shall have received from any Stockholder a
written request that notices intended for such Stockholder are to be mailed to
some address other than the address that appears on the records of the
Corporation, notices intended for such Stockholder shall be mailed to the
address designated in such request.

(b) Notice of a special meeting of Stockholders may be
given by the person or persons calling the meeting, or, upon the written
request of such person or persons, such notice shall be given by the Secretary
on behalf of such person or persons. If the person or persons calling a
special meeting of Stockholders give notice thereof, such person or persons
shall deliver a copy of such notice to the Secretary. Each request to the
Secretary for the giving of notice of a special meeting of Stockholders shall
state the purpose or purposes of such meeting.

SECTION 2.04. Waiver of Notice. Notice of any annual or
special meeting of Stockholders need not be given to any Stockholder who files
a written waiver of notice with the Secretary, signed by the person entitled to
notice, whether before or after such meeting. Neither the business to be
transacted at, nor the purpose of, any meeting of Stockholders need be
specified in any written waiver of notice thereof. Attendance of a Stockholder
at a meeting, in person or by proxy, shall constitute a waiver of notice of
such meeting, except when such Stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of
any business on the grounds that the notice of such meeting was inadequate or
improperly given.

SECTION 2.05. Adjournments. Whenever a meeting of
Stockholders, annual or special, is adjourned to another date, time or place,
notice need not be given of the adjourned meeting if the date, time and place
thereof are announced at the meeting at which the adjournment is taken. If the
adjournment is for more than 30 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 entitled to vote thereat. At the adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.

SECTION 2.06. Quorum. Except as otherwise provided by law or
the Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), the recordholders of a majority of the Shares entitled to vote
thereat, present in person or by proxy, shall constitute a quorum for the
transaction of business at all meetings of Stockholders, whether annual or
special. If, however, such quorum shall not be present in person or by proxy
at any meeting of Stockholders, the Stockholders entitled to vote thereat may
adjourn the meeting from time to time in accordance with Section 2.05 hereof
until a quorum shall be present in person or by proxy.
<PAGE> 4

SECTION 2.07. Voting. Each Stockholder shall be entitled to
one vote for each Share held of record by such Stockholder. Except as
otherwise provided by law or the Certificate of Incorporation, when a quorum is
present at any meeting of Stockholders, the vote of the recordholders of a
majority of the Shares constituting such quorum shall decide any question
brought before such meeting.

SECTION 2.08. Proxies. Each Stockholder entitled to vote at
a meeting of Stockholders or to express, in writing, consent to or dissent from
any action of Stockholders without a meeting may authorize another person or
persons to act for such Stockholder by proxy. Such proxy shall be filed with
the Secretary before such meeting of Stockholders or such action of
Stockholders without a meeting, at such time as the Board may require. No
proxy shall be voted or acted upon more than three years from its date, unless
the proxy provides for a longer period.

SECTION 2.09. Stockholders' Consent in Lieu of Meeting. Any
action required by the General Corporation Law to be taken at any annual or
special meeting of Stockholders, and any action which may be taken at any
annual or special meeting of Stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the recordholders of Shares having not
less than the minimum number of votes necessary to authorize or take such
action at a meeting at which the recordholders of all Shares entitled to vote
thereon were present and voted.

ARTICLE III

BOARD OF DIRECTORS

SECTION 3.01. General Powers. The business and affairs of
the Corporation shall be managed by the Board, which may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
law, the Certificate of Incorporation or these By-laws directed or required to
be exercised or done by Stockholders.

SECTION 3.02. Number and Term of Office. The number of
Directors shall be three or such other number as shall be fixed from time to
time by the Board. Directors need not be Stockholders. Directors shall be
elected at the annual meeting of Stockholders or, if, in accordance with
Section 2.01 hereof, no such annual meeting is held, by written consent in lieu
of meeting pursuant to Section 2.09 hereof, and each Director shall hold office
until his successor is elected and qualified, or until his earlier death or
resignation or removal in the manner hereinafter provided.

SECTION 3.03. Resignation. Any Director may resign at any
time by giving written notice to the Board, either Co-Chairman of the Board of
the Corporation (the "Co-Chairman", or collectively the "Co-Chairmen") or the
Secretary. Such resignation shall take effect at the time specified in such
notice or, if the time be not specified, upon receipt thereof
<PAGE> 5

by the Board, either Co-Chairman or the Secretary, as the case may be. Unless
otherwise specified therein, acceptance of such resignation shall not be
necessary to make it effective.

SECTION 3.04. Removal. Any or all of the Directors may be
removed, with or without cause at any time by vote of the recordholders of a
majority of the Shares then entitled to vote at an election of Directors, or by
written consent of the recordholders of Shares pursuant to Section 2.09 hereof.

SECTION 3.05. Vacancies. Vacancies occurring on the Board as
a result of the removal of Directors without cause may be filled only by vote
of the recordholders of a majority of the Shares then entitled to vote at an
election of Directors, or by written consent of such recordholders pursuant to
Section 2.09 hereof. Vacancies occurring on the Board for any other reason,
including, without limitation, vacancies occurring as a result of the creation
of new directorships that increase the number of Directors, may be filled by
such vote or written consent or by vote of the Board or by written consent of
the Directors pursuant to Section 3.08 hereof. If the number of Directors then
in office is less than a quorum, such other vacancies may be filled by vote of
a majority of the Directors then in office or by written consent of all such
Directors pursuant to Section 3.08 hereof. Unless earlier removed pursuant to
Section 3.04 hereof, each Director chosen in accordance with this Section 3.05
shall hold office until the next annual election of Directors by the
Stockholders and until his successor shall be elected and qualified.

SECTION 3.06. Meetings. (a) Annual Meetings. As soon as
practicable after each annual election of Directors by the Stockholders, the
Board shall meet for the purpose of organization and the transaction of other
business, unless it shall have transacted all such business by written consent
pursuant to Section 3.08 hereof.

(b) Other Meetings. Other meetings of the Board shall be
held at such times as either Co-Chairman, the Secretary or a majority of the
Board shall from time to time determine.

(c) Notice of Meetings. The Secretary shall give written
notice to each Director of each meeting of the Board, which notice shall state
the place, date, time and purpose of such meeting. Notice of each such meeting
shall be given to each Director, if by mail, addressed to him at his residence
or usual place of business, at least two days before the day on which such
meeting is to be held, or shall be sent to him at such place by telecopy,
telegraph, cable, or other form of recorded communication, or be delivered
personally or by telephone not later than the day before the day on which such
meeting is to be held. A written waiver of notice, signed by the Director
entitled to notice, whether before or after the time of the meeting referred to
in such waiver, shall be deemed equivalent to notice. Neither the business to
be transacted at, nor the purpose of any meeting of the Board need be specified
in any written waiver of notice thereof. Attendance of a Director at a meeting
of the Board shall constitute a waiver of notice of such meeting, except as
provided by law.
<PAGE> 6

(d) Place of Meetings. The Board may hold its meetings
at such place or places within or without the State of Delaware as the Board or
either Co-Chairman may from time to time determine, or as shall be designated
in the respective notices or waivers of notice of such meetings.

(e) Quorum and Manner of Acting. One-third of the total
number of Directors then in office (but in no event less than two if the total
number of directorships, including vacancies, is greater than one and in no
event a number less than one-third of the total number of directorships,
including vacancies) shall be present in person at any meeting of the Board in
order to constitute a quorum for the transaction of business at such meeting,
and the vote of a majority of those Directors present at any such meeting at
which a quorum is present shall be necessary for the passage of any resolution
or act of the Board, except as otherwise expressly required by law, the
Certificate of Incorporation or these By-laws. In the absence of a quorum for
any such meeting, a majority of the Directors present thereat may adjourn such
meeting from time to time until a quorum shall be present.

(f) Organization. At each meeting of the Board, one of
the following shall act as chairman of the meeting and preside, in the
following order of precedence:

(i) the Co-Chairmen acting together;

(ii) either Co-Chairman;

(iii) any Director chosen by a majority of the Directors
present.

The Secretary or, in the case of his absence, any person (who shall be an
Assistant Secretary, if an Assistant Secretary is present) whom the chairman of
the meeting shall appoint shall act as secretary of such meeting and keep the
minutes thereof.

SECTION 3.07. Committees of the Board. The Board may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more Directors. The Board may
designate one or more Directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
Director to act at the meeting in the place of any such absent or disqualified
member. Any committee of the Board, to the extent provided in the resolution
of the Board designating such committee, shall have and may exercise all the
powers and authority of the Board in the management of the business and affairs
of the Corporation, any may authorize the seal of the Corporation to be affixed
to all papers which may require it; provided, however, that no such committee
shall have such power or authority in reference to amending the Certificate of
Incorporation (except that such a committee may, to the extent authorized in
the resolution or resolutions providing for the issuance of shares of stock
<PAGE> 7

adopted by the Board as provided in Section 151(a) of the General Corporation
Law, fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes of stock of the Corporation or fix the
number of shares of any series of stock or authorize the increase or decrease
of the shares of any series), adopting an agreement of merger or consolidation
under Section 251 or 252 of the General Corporation Law, recommending to the
Stockholders the sale, lease or exchange of all or substantially all the
Corporation's property and assets, recommending to the Stockholders a
dissolution of the Corporation or the revocation of a dissolution, or amending
these By-laws; provided further, however, that, unless expressly so provided in
the resolution of the Board designating such committee, no such committee shall
have the power or authority to declare a dividend, to authorize the issuance of
stock, or to adopt a certificate of ownership and merger pursuant to Section
253 of the General Corporation Law. Each committee of the Board shall keep
regular minutes of its proceedings and report the same to the Board when so
requested by the Board.

SECTION 3.08. Directors' Consent in Lieu of Meeting. Any
action required or permitted to be taken at any meeting of the Board or of any
committee thereof may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by all the members of the Board or such committee and such
consent is filed with the minutes of the proceedings of the Board or such
committee.

SECTION 3.09. Action by Means of Telephone or Similar
Communications Equipment. Any one or more members of the Board, or of any
committee thereof, may participate in a meeting of the Board or such committee
by means of conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person at
such meeting.

SECTION 3.10. Compensation. Unless otherwise restricted by
the Certificate of Incorporation, the Board may determine the compensation of
Directors. In addition, as determined by the Board, Directors may be
reimbursed by the Corporation for their expenses, if any, in the performance of
their duties as Directors. No such compensation or reimbursement shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation therefor.

ARTICLE IV

OFFICERS

SECTION 4.01. Officers. The officers of the Corporation
shall be the Co-Chairman,the Secretary and a Treasurer and may include one
or more Vice Presidents and one
<PAGE> 8

or more Assistant Secretaries and one or more Assistant Treasurers.
Any two or more offices may be held by the same person.

SECTION 4.02. Authority and Duties. All officers shall have
such authority and perform such duties in the management of the Corporation as
may be provided in these By-laws or, to the extent not so provided, by
resolution of the Board.

SECTION 4.03. Term of Office, Resignation and Removal. (a)
Each officer shall be appointed by the Board and shall hold office for such
term as may be determined by the Board. Each officer shall hold office until
his successor has been appointed and qualified or his earlier death or
resignation or removal in the manner hereinafter provided. The Board may
require any officer to give security for the faithful performance of his
duties.

(b) Any officer may resign at any time by giving written
notice to the Board, either Co-Chairman or the Secretary. Such resignation
shall take effect at the time specified in such notice or, if the time be not
specified, upon receipt thereof by the Board, either Co-Chairman or the
Secretary, as the case may be. Unless otherwise specified therein, acceptance
of such resignation shall not be necessary to make it effective.

(c) All officers and agents appointed by the Board shall
be subject to removal, with or without cause, at any time by the Board or by
the action of the recordholders of a majority of the Shares entitled to vote
thereon.

SECTION 4.04. Vacancies. Any vacancy occurring in any office
of the Corporation, for any reason, shall be filled by action of the Board.
Unless earlier removed pursuant to Section 4.03 hereof, any officer appointed
by the Board to fill any such vacancy shall serve only until such time as the
unexpired term of his predecessor expires unless reappointed by the Board.

SECTION 4.05. The Co-Chairmen. Each Co-Chairman shall have
the power to call special meetings of Stockholders, to call special meetings of
the Board and, if present, to preside at all meetings of Stockholders and all
meetings of the Board. The Co-Chairmen shall be the co-chief executive
officers of the Corporation and shall have general and active management and
control of the business and affairs of the Corporation, subject to the control
of the Board, and shall see that all orders and resolutions of the Board are
carried into effect. The Co-Chairmen shall perform all duties incident to the
office of Chairman of the Board and chief executive officer of the Corporation
and all such other duties as may from time to time be assigned to both or
either of them by the Board or these By-laws.

SECTION 4.06. Vice Presidents. Vice Presidents, if any, in
order of their seniority or in any other order determined by the Board, shall
generally assist the Co-Chairmen and perform such other duties as the Board or
the either Co-Chairman shall prescribe, and in the absence or disability of the
Co-Chairmen, shall perform the duties and exercise the powers of the
Co-Chairmen.
<PAGE> 9

SECTION 4.07. The Secretary. The Secretary shall, to the
extent practicable, attend all meetings of the Board and all meetings of
Stockholders and shall record all votes and the minutes of all proceedings in a
book to be kept for that purpose, and shall perform the same duties for any
committee of the Board when so requested by such committee. He shall give or
cause to be given notice of all meetings of Stockholders and of the Board,
shall perform such other duties as may be prescribed by the Board, either
Co-Chairman and shall act under the supervision of the Co-Chairmen. He shall
keep in safe custody the seal of the Corporation and affix the same to any
instrument that requires that the seal be affixed to it and which shall have
been duly authorized for signature in the name of the Corporation and, when so
affixed, the seal shall be attested by his signature or by the signature of the
Treasurer of the Corporation (the "Treasurer") or an Assistant Secretary or
Assistant Treasurer of the Corporation. He shall keep in safe custody the
certificate books and stockholder records and such other books and records of
the Corporation as the Board or either Co-Chairman may direct and shall perform
all other duties incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Board or either Co-Chairman.

SECTION 4.08. Assistant Secretaries. Assistant Secretaries
of the Corporation ("Assistant Secretaries"), if any, in order of their
seniority or in any other order determined by the Board, shall generally assist
the Secretary and perform such other duties as the Board or the Secretary shall
prescribe, and, in the absence or disability of the Secretary, shall perform
the duties and exercise the powers of the Secretary.

SECTION 4.09. The Treasurer. The Treasurer shall have the
care and custody of all the funds of the Corporation and shall deposit such
funds in such banks or other depositories as the Board, or any officer or
officers, or any officer and agent jointly, duly authorized by the Board,
shall, from time to time, direct or approve. He shall disburse the funds of
the Corporation under the direction of the Board and the Co-Chairmen. He shall
keep a full and accurate account of all moneys received and paid on account of
the Corporation and shall render a statement of his accounts whenever the Board
or either Co-Chairman shall so request. He shall perform all other necessary
actions and duties in connection with the administration of the financial
affairs of the Corporation and shall generally perform all the duties usually
appertaining to the office of treasurer of a corporation. When required by the
Board, he shall give bonds for the faithful discharge of his duties in such
sums and with such sureties as the Board shall approve.

SECTION 4.10. Assistant Treasurers. Assistant Treasurers of
the Corporation ("Assistant Treasurers"), if any, in order of their seniority
or in any other order determined by the Board, shall generally assist the
Treasurer and perform such other duties as the Board or the Treasurer shall
prescribe, and, in the absence or disability of the Treasurer, shall perform
the duties and exercise the powers of the Treasurer.
<PAGE> 10

ARTICLE V

CHECKS, DRAFTS, NOTES, AND PROXIES

SECTION 5.01. Checks, Drafts and Notes. All checks, drafts
and other orders for the payment of money, 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, from time to time, by resolution of the Board.

SECTION 5.02. Execution of Proxies. Either Co-Chairman, or,
in the absence or disability or both of them, any Vice President, may
authorize, from time to time, the execution and issuance of proxies to vote
shares of stock or other securities of other corporations held of record by the
Corporation and the execution of consents to action taken or to be taken by any
such corporation. All such proxies and consents, unless otherwise authorized
by the Board, shall be signed in the name of the Corporation by either
Co-Chairman or any Vice President.

ARTICLE VI

SHARES AND TRANSFERS OF SHARES

SECTION 6.01. Certificates Evidencing Shares. Shares shall
be evidenced by certificates in such form or forms as shall be approved by the
Board. Certificates shall be issued in consecutive order and shall be numbered
in the order of their issue, and shall be signed by either Co-Chairman or any
Vice President and by the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer. If such a certificate is manually signed by one such
officer, any other signature on the certificate may be a facsimile. In the
event any such officer who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to hold such office or to be
employed by the Corporation before such certificate is issued, such certificate
may be issued by the Corporation with the same effect as if such officer had
held such office on the date of issue.

SECTION 6.02. Stock Ledger. A stock ledger in one or more
counterparts shall be kept by the Secretary, in which shall be recorded the
name and address of each person, firm or corporation owning the Shares
evidenced by each certificate evidencing Shares issued by the Corporation, the
number of Shares evidenced by each such certificate, the date of issuance
thereof and, in the case of cancellation, the date of cancellation. Except as
otherwise expressly required by law, the person in whose name Shares stand on
the stock ledger of the Corporation shall be deemed the owner and recordholder
thereof for all purposes.

SECTION 6.03. Transfers of Shares. Registration of transfers
of Shares shall be made only in the stock ledger of the Corporation upon
request of the registered holder of such shares, or of his attorney thereunto
authorized by power of attorney duly executed and filed with
<PAGE> 11

the Secretary, and upon the surrender of the certificate or certificates
evidencing such Shares properly endorsed or accompanied by a stock power duly
executed, together with such proof of the authenticity of signatures as the
Corporation may reasonably require.

SECTION 6.04. Addresses of Stockholders. Each Stockholder
shall designate to the Secretary an address at which notices of meetings and
all other corporate notices may be served or mailed to such Stockholder, and,
if any Stockholder shall fail to so designate such an address, corporate
notices may be served upon such Stockholder by mail directed to the mailing
address, if any, as the same appears in the stock ledger of the Corporation or
at the last known mailing address of such Stockholder.

SECTION 6.05. Lost, Destroyed and Mutilated Certificates.
Each recordholder of Shares shall promptly notify the Corporation of any loss,
destruction or mutilation of any certificate or certificates evidencing any
Share or Shares of which he is the recordholder. The Board may, in its
discretion, cause the Corporation to issue a new certificate in place of any
certificate theretofore issued by it and alleged to have been mutilated, lost,
stolen or destroyed, upon the surrender of the mutilated certificate or, in the
case of loss, theft or destruction of the certificate, upon satisfactory proof
of such loss, theft or destruction, and the Board may, in its discretion,
require the recordholder of the Shares evidenced by the lost, stolen or
destroyed certificate or his legal representative to give the Corporation a
bond sufficient to indemnify the Corporation against any claim made against it
on account of the alleged loss, theft or destruction of any such certificate or
the issuance of such new certificate.

SECTION 6.06. Regulations. The Board may make such other
rules and regulations as it may deem expedient, not inconsistent with these
By-laws, concerning the issue, transfer and registration of certificates
evidencing Shares.

SECTION 6.07. Fixing Date for Determination of Stockholders
of Record. 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, or to express consent to, or to dissent from, corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock,
or for the purpose of any other lawful action, the Board may fix, in advance, a
record date, which shall not be more than 60 nor less than 10 days before the
date of such meeting, nor more than 60 days prior to any other such action. A
determination of the Stockholders entitled to notice of or to vote at a meeting
of Stockholders shall apply to any adjournment of such meeting; provided,
however, that the Board may fix a new record date for the adjourned meeting.
<PAGE> 12

ARTICLE VII

SEAL

SECTION 7.01. Seal. The Board may approve and adopt a
corporate seal, which shall be in the form of a circle and shall bear the full
name of the Corporation, the year of its incorporation and the words "Corporate
Seal Delaware".

ARTICLE VIII

FISCAL YEAR

SECTION 8.01. Fiscal Year. The fiscal year of the
Corporation shall end on the thirty-first day of December of each year unless
changed by resolution of the Board.

ARTICLE IX

INDEMNIFICATION AND INSURANCE

SECTION 9.01. Indemnification. (a) The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is 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 expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

(b) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is 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
expenses (including attorneys' fees)
<PAGE> 13

actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.

(c) To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 9.01(a) and
(b) of these By-laws, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.

(d) Any indemnification under Section 9.01(a) and (b) of
these By-laws (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances because
he has met the applicable standard of conduct set forth in Section 9.01(a) and
(b) of these By-laws. Such determination shall be made (i) by the Board by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (iii) by the stockholders of
the Corporation.

(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation pursuant to this Article IX. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board deems appropriate.

(f) The indemnification and advancement of expenses
provided by, or granted pursuant to, other Sections of this Article IX shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any law,
by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in
another capacity while holding such office.

(g) For purposes of this Article IX, 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
<PAGE> 14

existence had continued, would have had power and authority to indemnify its
directors, officers, 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 venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Article IX with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if
its separate existence had continued.

(h) For purposes of this Article IX, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves service by, such director,
officer, employee or agent with respect to any employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article IX.

(i) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article IX shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.

SECTION 9.02. Insurance for Indemnification. The Corporation
may purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is 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 and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of Section 145 of the General Corporation Law.

ARTICLE X

AMENDMENTS

SECTION 10.01. Amendments. Any By-law (including these
By-laws) may be adopted, amended or repealed by the vote of the recordholders
of a majority of the Shares then entitled to vote at an election of Directors
or by written consent of Stockholders pursuant to Section 2.09 hereof, or by
vote of the Board or by a written consent of Directors pursuant to Section 3.08
hereof.

<PAGE> 1
EXHIBIT 4.1

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EXECUTION COPY

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

WARRANT AGREEMENT

between

PSF HOLDINGS, L.L.C.

and

FLEET NATIONAL BANK

as Warrant Agent

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

Dated as of September 17, 1996

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<PAGE> 2

<TABLE>
<CAPTION>
TABLEE OF CONTENTS

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<S> <C>
ARTICLE 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE 2 - ISSUANCE OF WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. Initial Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Initial Unit Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Form of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4. Execution of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5. Countersignature of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE 3 - EXERCISE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE 4 - EXERCISE PRICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE 5 - EXERCISE OF WARRANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.2. Cashless Exercise in the Event of Cash Tender Offer. . . . . . . . . . . . . . . . . . 6
5.3. When Exercise Effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.4. Delivery of Certificates, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.5. Fractional Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 6 - ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.1. Adjustment of Exercise Price and the Number of Units of Interests . . . . . . . . . . 7
6.2. Interest-Splits, Combinations, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3. Certain Combinations, Mergers, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4. Issuance of Options or Convertible Securities . . . . . . . . . . . . . . . . . . . . 8
6.5. Issuance of Additional Units for less than Fair Value. . . . . . . . . . . . . . . . 10
6.6. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.7. Certain Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.8. Consideration Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.9. Deferral of Certain Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.10. Changes in Options and Convertible Securities . . . . . . . . . . . . . . . . . . . . 11
6.11. Expiration of Options and Convertible Securities . . . . . . . . . . . . . . . . . . . 11
6.12. Other Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.13. Calculation to Nearest Cent and One-hundredth of Unit . . . . . . . . . . . . . . . . 12
6.14. No Change in Warrant Terms on Adjustment . . . . . . . . . . . . . . . . . . . . . . . 12
6.15. Substantively Equivalent Actions Requiring Adjustment . . . . . . . . . . . . . . . . 12

ARTICLE 7 - CONSOLIDATION, MERGER, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1. Cancellation of Warrants upon Sale of the Company . . . . . . . . . . . . . . . . . . 12
7.2. Assumption of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 8 - NO DILUTION OR IMPAIRMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE 9 - NOTICE OF ADJUSTMENTS; REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.1. Notice of Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9.2. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE 10 - NOTIFICATION OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

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<TABLE>
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<S> <C>
10.1. Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.2. Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

ARTICLE 11 - COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 12 - PAYMENT OF TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 13 - LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE 14 - WARRANT REGISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.1. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.2. Transfer or Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14.3. Valid and Enforceable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.4. Endorsement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.5. No Service Charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14.6. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE 15 - WARRANT AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.1. Obligations Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.2. No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.3. Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.4. Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.5. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.6. Agent Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.7. Right to Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.8. Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.9. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.10. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.11. Resignation; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
15.12. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.13. Successor Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE 16 - REMEDIES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.1. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.2. Warrant Holder Not Deemed a Member . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16.3. Right of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE 17 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17.2. Reservation and Authorization of Units; Registration with or Approval of
any Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17.3. Governing Law and Consent to Forum . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.4. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
17.6. Agreement of Holders of Warrant Certificates . . . . . . . . . . . . . . . . . . . . . 25
17.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.8. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.9. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

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Page
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EXHIBITS AND SCHEDULES

Exhibit A: Form of Warrant Certificate
Schedule 2.1: Schedule of Warrants

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<PAGE> 5

WARRANT AGREEMENT

THIS WARRANT AGREEMENT, is made and entered into as of September 17,
1996 (the "Agreement"), by and between PSF Holdings, L.L.C., a Delaware limited
liability company (the "Company"), and Fleet National Bank, a national banking
association, as Warrant Agent (the "Warrant Agent").

WITNESSETH:

WHEREAS, in connection with the financial restructuring of certain
predecessors in interest of the Company pursuant to the joint plan of
reorganization of PSF Finance L.P. and affiliated entities confirmed by order
of the United States Bankruptcy Court for the District of Delaware entered
September 6, 1996 (the "Plan"), the Company proposes to issue warrants which,
in the aggregate, are exercisable to purchase up to 2,048,192 Units (as defined
below), subject to adjustment as provided herein (the "Warrants").

WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to act, in connection with the
issuance, transfer, exchange, replacement and exercise of the Warrant
Certificates and other matters as provided herein; and

WHEREAS, the Company desires to enter into this Agreement to set forth
the terms and conditions of the Warrants and the rights of the holders thereof;

NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual agreements set forth herein, and for the benefit of the Warrant holders,
the Company and the Warrant Agent hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used herein, the terms set forth below shall have the respective
meanings set forth below. Capitalized terms used in this Agreement and not
defined herein shall have the respective meanings provided in the LLC
Agreement.

"Additional Units" means any Units issued or sold by the Company after
the date hereof, other than (i) Units issued upon exercise of the Warrants and
(ii) Units issued in connection with any employee or director incentive plan.

"Agreement" means this Warrant Agreement, as the same may be amended
or modified from time to time hereafter.

"Bankruptcy Code" means Title 11, United States Code.
<PAGE> 6

"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware.

"Business Day" or "Business Date" means any day other than a Saturday
or a Sunday or a day on which commercial banking institutions in New York City,
New York are authorized or required by law to be closed; provided that any
reference in this Agreement to "days" (unless Business Days are specified)
shall mean calendar days.

"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act or the Exchange
Act, whichever is the relevant statute for the particular purpose.

"Company" means PSF Holdings, L.L.C., a Delaware limited liability
company.

"Convertible Securities" shall have the meaning provided in Section
6.4 hereof.

"Distribution" shall have the meaning provided in Section 6.4 hereof.

"Effective Date" has the meaning provided in the Plan.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be amended and in effect at the
time. Reference to a particular section of the Securities Exchange Act of
1934, as amended, shall include a reference to the comparable section, if any,
of any such successor Federal statute.

"Exercise Period" has the meaning provided in Article 3.

"Exercise Price" has the meaning provided in Article 4.

"Fair Value" means fair market value, as determined by an Investment
Banker; provided, however, that in the case of determinations under Section 5.5
"Fair Value" shall be determined by the Members acting in good faith.

"Holders" means the registered holders of the Warrants from time to
time.

"Investment Banker" means an independent investment banking firm not
regularly retained by the Company of recognized national standing which is (i)
selected by the Company and (ii) reasonably acceptable to the Majority Holders.

"LLC Agreement" means the amended and restated limited liability
company agreement of the Company dated as of September 17, 1996, as from time
to time in effect.

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<PAGE> 7

"Majority Holders" means the holders of Warrants exercisable for in
excess of 50% of the aggregate number of Units then purchasable upon exercise
of all Warrants then outstanding.

"MS Member" means Morgan Stanley Group, Inc. or any Affiliate of
Morgan Stanley Group, Inc. (other than Premium Holdings Corp.)

"Non-Sale Transaction" shall have the meaning provided in Section 6.3
hereof.

"Options" shall have the meaning provided in Section 6.4 hereof.

"Original Issue Date" has the meaning provided in Section 2.1.

"Plan" shall have the meaning provided in the recitals to this
Agreement.

"Public Offering" means any offering of Units to the public pursuant
to an effective registration statement under the Securities Act.

"Sale Transaction" means a transaction or series of related
transactions which, whether by consolidation, merger, business combination,
reorganization or sale of all or substantially all of the assets of the Company
(or of a successor to the Company pursuant to Section 6.3), effects a sale of
the Company (or of such successor to the Company) to a third party; provided
that a consolidation, merger, business combination, reorganization or sale of
all or substantially all assets shall be deemed to effect a sale of the Company
(or such successor to the Company) if 25% or less of the aggregate
consideration received by holders of Units with respect to their Units (or, in
the case of any such successor to the Company, of holders of equity interests
in the Company with respect to such interests) in connection with such
transaction or transactions consists of equity securities of the surviving
entity in the case of a consolidation, merger, business combination or
reorganization, or of the transferee in the case of a sale of all or
substantially all assets.

"Securities Act" means the Securities Act of 1933, as amended, or any
successor Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be amended and in effect at the time.
Reference to a particular section of the Securities Act of 1933, as amended,
shall include a reference to the comparable section, if any, of any such
successor Federal statute.

"Warrant Agent" means Fleet National Bank, and its successors
appointed pursuant to Article 16 hereof.

"Warrant Certificates" has the meaning provided in Section 2.3 and
shall include any Warrant Certificate issued upon partial exercise of the
Warrants represented by a Warrant Certificate.

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<PAGE> 8

"Warrants" means the Warrants issued hereunder to purchase up to an
aggregate of 2,048,192 Units, subject to adjustment as provided herein, and
shall include any Warrants issued upon transfer of any such Warrants.

ARTICLE 2

ISSUANCE OF WARRANTS

2.1. Initial Issuance. On the date hereof (the "Original Issue
Date"), which is also the Effective Date, the Company shall, pursuant to the
Plan, deliver (i) to Premium Holdings Corp. and certain of its shareholders, as
reflected on Schedule 2.1, certificates representing Warrants to purchase an
aggregate of 532,530 Units; (ii) to PSF Finance Holdings, Inc., a certificate
representing Warrants to purchase 1,495,180 Units; and (iii) to Collings Farm,
Inc., a certificate representing Warrants to purchase 20,482 Units, in each case
subject to adjustment as provided herein.

2.2. Initial Unit Amount. The number of Units purchasable upon
exercise of the Warrants shall initially be one Unit per Warrant, subject to
adjustment from and after the Original Issue Date as provided in Article 6
hereof.

2.3. Form of Warrant Certificates. The certificates evidencing the
Warrants (the "Warrant Certificates") shall be evidenced by certificates
substantially in the form attached hereto as Exhibit A. Each Warrant
Certificate shall be dated as of the date on which it is countersigned by the
Warrant Agent, which shall be on the Original Issue Date or, in the event of a
division, exchange, substitution or transfer of any of the Warrants, on the date
of such event. The Warrant Certificate may have such further legends and
endorsements stamped, printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation pursuant thereto or with any rule or regulation of any securities
exchange on which the Warrants may be listed.

2.4. Execution of Warrant Certificates. Warrant Certificates shall
be executed on behalf of the Company by its Chief Executive Officer, President,
any Vice President, its Treasurer, or its Secretary, or by any other officer of
the Company duly authorized by the members to perform such function, in each
case, either manually or by facsimile signature printed thereon. In case any
such officer of the Company whose signature shall have been placed upon any
Warrant Certificate shall cease to be such before countersignature by the
Warrant Agent or issuance and delivery thereof, such Warrant Certificate
nevertheless may be countersigned by the Warrant Agent and issued and delivered
with the same force and effect as though such Person had not ceased to be such a
duly authorized officer of the Company.

2.5. Countersignature of Warrant Certificates. Warrant Certificates
shall be manually countersigned by an authorized signatory of the Warrant Agent
and shall not be valid for any purpose unless so countersigned. Such

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<PAGE> 9

manual countersignature shall constitute conclusive evidence of such
authorization. The Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of this Section 2.5, and deliver any new Warrant
Certificates, as directed by the Company pursuant to Section 2.1 and as and
when required pursuant to the provisions of Articles 5, 13 and 14. Each
Warrant Certificate shall, when manually countersigned by an authorized
signatory of the Warrant Agent, entitle the registered holder thereof to
exercise the rights as the holder of the number of Warrants set forth thereon
(subject to the adjustments provided herein), subject to the provisions of this
Agreement.

ARTICLE 3

EXERCISE PERIOD

Each Warrant shall entitle the Holder thereof to purchase from the
Company one Unit (subject to the adjustments provided herein) (i) in the case
of a Holder which is not a MS Member, at any time during the ten year period
that commences on the Original Issue Date, and that terminates at 5:00 p.m.,
New York City time on the first Business Day after the tenth anniversary of the
Original Issue Date (the "Termination Date") and (ii) in the case of any Holder
which is a MS Member, at any time during the period that commences on January
1, 2000 and that terminates on the Termination Date, in each case, subject to
earlier cancellation of the Warrants as provided in Section 7.1 hereof (the
"Exercise Period"); provided that notwithstanding the foregoing, until the
Termination Date, the MS Members shall have the right to exercise the Warrants
in accordance with the provisions hereof in connection with, and immediately
prior to the consummation of, any (i) Sale Transaction, (ii) Non-Sale
Transaction or (iii) event which would cause an adjustment to the number of
Units purchasable upon the exercise of the Warrants or the Exercise Price under
Article 6, unless, in the case of clause (ii) or (iii) above, by exercising
such Warrants, compliance with the Investment Company Act of 1940 would become
materially more burdensome to such MS Member or any of its Affiliates.

ARTICLE 4

EXERCISE PRICES

The Exercise Price for the Warrants shall be $45.00 per Unit (subject
to adjustment pursuant to Article 6 hereof).

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<PAGE> 10

ARTICLE 5

EXERCISE OF WARRANTS

5.1. Manner of Exercise. Subject to Article 3, a Warrant represented
by a Warrant Certificate may be exercised by the registered holder thereof
during normal business hours on any Business Day, by surrendering such Warrant
Certificate, with the subscription form set forth therein duly executed by such
holder, by hand or by mail at the office of the Warrant Agent as provided in
Section 17.1 or, if such exercise shall be in connection with an underwritten
Public Offering, at the location designated by the Company. Such Warrant
Certificate shall be accompanied by payment in respect of each Warrant that is
exercised, which shall be made by certified or official bank or bank cashier's
check payable in United States currency to the order of the Company. Such
payment shall be in an amount equal to the product of the number of Units
(subject to adjustment as provided herein) designated in such subscription form
multiplied by the original Exercise Price (subject to adjustment as provided
herein). Upon such surrender and payment, such holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and nonassessable Units determined as provided in Articles 2 and 3, and as and
if adjusted pursuant to Article 6.

5.2. Cashless Exercise in the Event of Cash Tender Offer.
Notwithstanding the foregoing Section 5.1, cashless exercise shall be permitted
by all Holders in the event that a cash tender offer is made for all Units and
the Warrant Holder commits to tender; and in the case of such a cash tender
offer, each tendering Warrant Holder shall be entitled to receive, upon the
consummation thereof, an amount equal to the excess, if any, of the cash
consideration per Unit over the then applicable Exercise Price per Unit, in each
case, multiplied by the number of Units which the Holder would be entitled to
receive with respect to its tendered Warrants.

5.3. When Exercise Effective. Each exercise of any Warrant
pursuant to Section 5.1 shall be deemed to have been effected immediately prior
to the close of business on the Business Day on which the Warrant Certificate
representing such Warrant, duly executed, with accompanying payment shall have
been delivered as provided in Section 5.1, and at such time the Person or
Persons in whose name or names the certificate or certificates for Units shall
be issuable upon such exercise as provided in Section 5.4 shall be deemed to
have become the holder or holders of record thereof.

5.4. Delivery of Certificates, etc. (a) As promptly as practicable
after the exercise of any Warrant, and in any event within five Business Days
thereafter (or, if such exercise is in connection with an underwritten Public
Offering, concurrently with such exercise), the Company at its expense (other
than as to payment of transfer taxes which will be paid by the holder) will
cause the Warrant Agent to provide and deliver to such holder, or as such holder
may otherwise direct in writing (subject to Article 14),

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<PAGE> 11

(i) an amended LLC Agreement evidencing the membership
interests in the Company after giving effect to such exercise, and

(ii) if less than all the Warrants represented by a Warrant
Certificate are exercised, a new Warrant Certificate or Certificates
of the same tenor and for the aggregate number of Warrants that were
not exercised, executed and countersigned in accordance with Sections
2.4 and 2.5.

(b) The Warrant Agent shall countersign any new Warrant Certificate,
register it in such name or names as may be directed in writing by such holder,
and shall deliver it to the person entitled to receive the same in accordance
with this Section 5.4. The Company, whenever required by the Warrant Agent,
will supply the Warrant Agent with Warrant Certificates executed on behalf of
the Company for such purpose.

5.5. Fractional Units. No fractional Units shall be issued upon
any exercise of Warrants. If more than one Warrant Certificate shall be
delivered for exercise at one time by the same holder, the number of full Units
that shall be issuable upon exercise shall be computed on the basis of the
aggregate number of Warrants exercised. As to any fraction of a Unit, the
Company shall pay a cash adjustment in respect thereto in an amount equal to the
product of (x) the Fair Value per Unit as of the Business Day next preceding the
date of such exercise multiplied by (y) such fraction of a Unit.

ARTICLE 6

ADJUSTMENTS

6.1. Adjustment of Exercise Price and the Number of Units of
Interests. The number of Units purchasable upon the exercise of Warrants and
the Exercise Price shall be subject to adjustment from time to time as follows:

6.2. Interest-Splits, Combinations, etc. In case the Company shall
hereafter (A) make a distribution of Units on Units, (B) subdivide its
outstanding Units, (C) combine outstanding Units into a smaller number of Units,
or (D) issue by reclassification of Units any other class of units of limited
liability membership interests in the Company, the number of Units for which
Warrants may be exercised in effect immediately prior to (i) the record date, in
the case of a distribution, and (ii) the date of such action in the case of a
subdivision, combination or issuance, shall be adjusted so that the Holder of
any Warrant thereafter exercised shall be entitled to receive the number of
Units (or number of units of such other class) which such Holder would have
owned immediately following such action had such Warrant been exercised
immediately prior thereto. In such event, the Exercise Price per Unit shall
also be increased or decreased, as necessary, such that the aggregate Exercise
Price payable for the Units as so adjusted shall equal the aggregate Exercise
Price payable for the Units prior to such adjustment. An adjustment made
pursuant to this paragraph shall become effective immediately after (i) the
record date, in the case of a distribution, or (ii) the

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<PAGE> 12

effective date of any such subdivision, combination or issuance. If, as a
result of any adjustment made pursuant to this paragraph, the Holder of any
Warrant thereafter exercised shall become entitled to receive units of limited
liability membership interests in two or more classes of limited liability
membership interests in the Company, an Investment Banker shall determine the
allocation of the adjusted Exercise Price between or among such units of such
classes of such membership interests in the Company.

6.3. Certain Combinations, Mergers, etc. Other than in the case
of a Sale Transaction (as provided in Section 7.1), in the event of any
consolidation or merger of the Company with or into another entity (other than a
merger in which the Company is the continuing entity and which does not result
in any reclassification or change of the then outstanding Units) or of a
transfer of all or substantially all of the assets of the Company (any such
consolidation, merger, transfer or sale which does not constitute a Sale
Transaction being hereinafter referred to as a "Non-Sale Transaction"), in each
case, as a condition of such Non-Sale Transaction, the Company or such successor
or transferee entity, as the case may be, shall forthwith make lawful and
adequate provision whereby the Holder of each Warrant then outstanding shall
have the right thereafter to receive on exercise of such Warrant the kind and
amount of equity interests, other securities and property receivable upon such
consolidation or merger by a holder of Units immediately prior to such Non-Sale
Transaction. Such provisions shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article 6. The above provisions of this Section 6.3 shall similarly
apply to successive consolidations, mergers or transfers of all or substantially
all of the Company's assets which are Non-Sale Transactions.

6.4. Issuance of Options or Convertible Securities. In the event
the Company shall, at any time or from time to time after the date hereof,
issue, sell, distribute or fix a record date for the determination of holders of
any class of securities entitled to receive, or otherwise grant in any manner
(including by assumption) any rights to subscribe for or to purchase, or any
warrants or options for the purchase of, Additional Units or any securities
convertible into or exchangeable for Additional Units (any such rights, warrants
or options being herein called "Options" and any such convertible or
exchangeable securities being herein called "Convertible Securities") or any
Convertible Securities (other than upon exercise of any Options), whether or not
such Options or the rights to convert or exchange such Convertible Securities
are immediately exercisable, and the price per Unit at which the Units are
issuable upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution or granting of such Options or any such Convertible Security,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Options or the conversion of such
Convertible Securities, by (ii) the total maximum number of Units issuable upon
the exercise of all such Options or the conversion of such Convertible
Securities) shall be less than the Fair

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<PAGE> 13

Value per Unit on either (i) the record date, in the case of a distribution of
such Options or Convertible Securities to Holders of any class of securities,
or (ii) the actual date, in the case of an issuance, sale, distribution or
granting of such Options or Convertible Securities to Persons other than
Holders of any class of securities (either case being herein called a
"Distribution") then, effective upon (i) the record date, in the case of a
Distribution to holders of any class of securities or (ii) the date of
Distribution in the case of any other Distribution, the Exercise Price shall be
reduced to the price (calculated to the nearest cent) determined by multiplying
the Exercise Price in effect immediately prior to such Distribution by a
fraction, (x) the numerator of which shall be the sum of (i) number of Units
outstanding immediately prior to such Distribution multiplied by the Fair Value
per Unit on the record date or the actual date of such Distribution, as the
case may be, plus (ii) the consideration, if any, received by the Company upon
such Distribution, and (y) the denominator of which shall be the product of (A)
the total number of Units outstanding immediately after such Distribution
multiplied by (B) the Fair Value per Unit on the record date or actual date of
such Distribution, as the case may be. For purposes of the foregoing, the
total maximum number of Units issuable upon exercise of all such Options or
upon the conversion or exchange of all such Convertible Securities or upon the
conversion or exchange of the total maximum amount of the Convertible
Securities issuable upon the exercise of all such Options shall be deemed to
have been issued as of the record date or actual date of such Distribution, as
the case may be, and thereafter shall be deemed to be outstanding and the
Company shall be deemed to have received as consideration therefor such price
per Unit, determined as provided above. Except as provided in Section 6.10, no
additional adjustment of the Exercise Price shall be made upon the actual
exercise of such Options or upon conversion or exchange of the Convertible
Securities or upon conversion of exchange of the Convertible Securities
issuable upon the exercise of any such Options.

6.5. Issuance of Additional Units for less than Fair Value. In the
event that the Company at any time from and after the date hereof shall issue or
sell Additional Units without consideration or for consideration in an amount
per Additional Unit which is less than the Fair Value per Unit, then, and in
each such case, the Exercise Price shall be reduced, concurrently with such
issue or sale, to a price determined by multiplying such current Exercise Price
by a fraction (x) the numerator of which shall be the sum of (i) the number of
Units outstanding immediately prior to such issue or sale multiplied by the Fair
Value per Unit on the date of such issue or sale plus (ii) the aggregate
consideration, if any, received by the Company upon such issue or sale and (y)
the denominator of which shall be the product of (A) the total number of Units
outstanding after such issue or sale multiplied by (B) the Fair Value per Unit
on the date of such issue or sale; provided that any Additional Units issued in
a Public Offering shall be deemed to have been issued for Fair Value for
purposes hereof; and provided further, that any Additional Units issued upon
exercise or conversion of any Options or Convertible Securities provided under
Section 6.4 hereof shall not be the subject of any further adjustment under this
Section 6.5.

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<PAGE> 14

6.6. Distributions. In the event the Company shall, at any time or
from time to time after the date hereof, take a record of the holders of its
Units for the purpose of entitling them to receive a dividend or other
distribution of cash, evidences of its indebtedness, other securities or other
property (other than Options or Convertible Securities, which are provided for
above), or any options, warrants or other rights to subscribe for or purchase
any of the foregoing, then the Exercise Price in effect as of a date
immediately prior to the record date shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
cent) determined by multiplying the Exercise Price in effect prior to such
adjustment by a fraction, the numerator of which shall be the Fair Value per
Unit on the record date for such distribution minus the Fair Value of the
dividend or distribution applicable to one Unit and the denominator of which
shall be the Fair Value per Unit on the record date for such dividend or other
distribution.

6.7. Certain Distributions. If the Company shall make any
distribution payable in Options or Convertible Securities, then, for purposes
of the foregoing, such Options or Convertible Securities shall be deemed to
have been issued or sold without consideration.

6.8. Consideration Received. If any Units, Options or Convertible
Securities shall be issued, sold or distributed for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the then Fair Value of such consideration. If any
Options shall be issued in connection with the issuance and sale of other
securities of the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Options by the parties
thereto, such Options shall be deemed to have been issued without
consideration; provided, however, that, if such Options have an exercise price
equal to or greater than the Fair Value of the Units on the date of issuance of
such Options, then such Options shall be deemed to have been issued for
consideration equal to such exercise price.

6.9. Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of Units
purchasable upon the exercise of each Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least 1% of the
Exercise Price; provided that any adjustments which by reason of this Section
6.9 are not required to be made shall be carried forward and taken into account
in any subsequent adjustment.

6.10. Changes in Options and Convertible Securities. If the
exercise price provided for any Options, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exchangeable
for Units shall change at any time (other than by reason of provisions designed
to protect against dilution upon an event which results in an equivalent,
related

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<PAGE> 15

adjustment pursuant to this Article 6), the Exercise Price then in effect and
the number of Units purchasable upon the exercise of each Warrant shall
forthwith be readjusted (effective only with respect to any exercise of the
Warrant after such readjustment) to the Exercise Price and number of Units so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed Exercise Price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.

6.11. Expiration of Options and Convertible Securities. If, at any
time after any adjustment to the number of Units purchasable upon the exercise
of each Warrant shall have been made pursuant to any of Sections 6.4 or 6.10 or
this Section 6.11, any Options or Convertible Securities shall have expired
unexercised, the number of such Units so purchasable upon the exercise of any
unexercised Warrants shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only Units deemed to have been issued in connection with such Options
or Convertible Securities were the Units, if any, actually issued or sold upon
the exercise of such Options or Convertible Securities and (ii) such Units, if
any, were issued or sold for the consideration actually received by the Company
upon such exercise plus the aggregate consideration, if any, actually received
by the Company for the issuance, sale, distribution or granting of all such
Options or Convertible Securities, whether or not exercised; provided that no
such readjustment shall have the effect of decreasing the number of such Units
so purchasable by an amount (calculated by adjusting such decrease to account
for all other adjustments made pursuant to this Article 6 following the date of
the original adjustment referred to above) in excess of the amount of the
adjustment initially made in respect of the issuance, sale, distribution or
granting of such Options or Convertible Securities.

6.12. Other Adjustments. In the event that at any time, as a result
of an adjustment made pursuant to this Article 6, the Holders shall become
entitled to receive any securities of the Company other than Units, thereafter
the number of such other securities so receivable upon exercise of the Warrants
and the Exercise Price applicable to such exercise shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Units contained in this
Article 6.

6.13. Calculation to Nearest Cent and One-hundredth of Unit. All
calculations under this Article 6 shall be made to the nearest cent or to the
nearest one-hundredth of a Unit, as the case may be.

6.14. No Change in Warrant Terms on Adjustment. Irrespective of any
adjustment in the Exercise Price or the number of Units (or any inclusion of
Options or Convertible Securities) issuable upon exercise, Warrants theretofore
or thereafter issued may continue to express the same prices and number of
Units as are stated in the similar Warrants issued on the Original

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<PAGE> 16

Issue Date, and the Exercise Price and such number of Units issuable upon
exercise provided thereon shall be deemed to have been so adjusted.

6.15. Substantively Equivalent Actions Requiring Adjustment. If at
any time the Company shall take any action with respect to the Units which is
the substantive equivalent of a transaction which would require an adjustment
under this Article 6, but which is not, by its literal terms, covered in any of
the foregoing Sections 6.1 through 6.14, then, notwithstanding the failure of
this Article 6 to expressly describe such transaction, the number of Units for
which the Warrants are exercisable and/or the Exercise Price shall be adjusted
in the same manner as would be required for a transaction which is provided for
in this Article 6 and which is the substantive equivalent of such transaction.

ARTICLE 7

CONSOLIDATION, MERGER, ETC.

7.1. Cancellation of Warrants upon Sale of the Company.
Notwithstanding any other provision of this Agreement, including, without
limitation, Article 3 or Section 6.3 hereof, in the event of a Sale
Transaction, then any Warrants which are not exercised prior to, or in
connection with, the consummation of such Sale Transaction shall be canceled
upon the consummation of such transaction, and the holders of such canceled
Warrants shall not be entitled to receive any property with respect to their
canceled Warrants.

7.2. Assumption of Obligations. The Company will not effect a
merger, consolidation or sale of all or substantially all of its assets, other
than a Sale Transaction, unless, prior to the consummation of such Non-Sale
Transaction, each Person (other than the Company) which may be required to
deliver any securities, cash or other property upon the exercise of the
Warrants as provided herein assumes, by written instrument delivered to the
Warrant Agent, with a copy delivered to each Holder, the obligations of the
Company under this Warrant Agreement and under each of the Warrants, including,
without limitation, the obligation to deliver such securities, cash or property
as may be required pursuant to Article 6 hereof.

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<PAGE> 17

ARTICLE 8

NO DILUTION OR IMPAIRMENT

The Company will not, by amendment of the LLC Agreement or through any
consolidation, merger, reorganization, transfer of assets, dissolution,
issuance or sale of securities or any other voluntary action or omission, avoid
or seek to avoid the observance or performance of any of the terms of this
Agreement or any of the Warrants issued hereunder, but will at all times in
good faith observe and perform all such terms and take all such action as may
be necessary or appropriate in order to protect the rights of each holder of a
Warrant against dilution or other impairment of the kind provided herein;
provided, however, that, subject to compliance with the applicable provisions
of this Agreement, the Company shall not be prohibited by this Article 8 or by
any provision of this Agreement from making decisions providing for, inter
alia, any Sale Transaction or any other transaction which, in the judgment of
the members, is in the best interests of the Company and its members. Without
limiting the generality of the foregoing, the Company (a) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Units upon the exercise of all
of the Warrants from time to time outstanding, (b) will not take any action
that results in any adjustment of the Units upon exercise of the Warrants if
the total number of Units issuable after the action upon the exercise of all of
the Warrants would exceed the total number of Units then authorized to be
issued by the LLC Agreement to the extent that the authorization of such
issuance is required to be so authorized, (c) will not issue any class of
membership interests that is preferred as to the distribution of assets upon
voluntary or involuntary dissolution, liquidation or winding-up, unless such
stock is sold for a cash consideration at least equal to the amount of such
preference upon voluntary or involuntary dissolution, liquidation or winding-up
and (d) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this
Agreement.

ARTICLE 9

NOTICE OF ADJUSTMENTS; REPORTS

9.1. Notice of Adjustment. Whenever the number of Units or other
interest or property issuable upon the exercise of each Warrant or the Exercise
Price is adjusted, as herein provided, the Company shall cause the Warrant
Agent promptly to mail by first class mail, postage prepaid, to each Holder,
and shall deliver to the Warrant Agent, a certificate of a firm of independent
public accountants selected by the Members (which may be the regular
accountants employed by the Company) setting forth the number of Units or other
securities issuable upon the exercise of each Warrant or the Exercise Price
after such adjustment, as applicable, setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made (including a description of the basis on which Fair

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<PAGE> 18

Value was determined, if applicable). The Warrant Agent shall be entitled to
rely on such certificate and shall be under no duty or responsibility with
respect to any such certificate, except to exhibit the same from time to time
to any Holder desiring an inspection thereof during reasonable business hours.
The Warrant Agent shall not at any time be under any duty or responsibility to
any Holders to determine whether any facts exist that may require any
adjustment of the number of Units (or other securities) issuable on exercise of
the Warrants or of the Exercise Price, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed in
making such adjustment or the validity or value (of the kind or amount) of any
Units or other securities or any property which may be issuable on exercise of
the Warrants or which may be relevant to the determination of any such
adjustment. The Warrant Agent shall not be responsible for any failure of the
Company to make any payment or to issue, transfer or deliver any Units or to
deliver any documents or information or other interests or property upon the
exercise of any Warrant.

9.2. Reports. In each case of any adjustment or readjustment in
the Units issuable upon the exercise of the Warrants, the Company at its
expense will promptly compute such adjustment or readjustment after giving
effect to such, in accordance with the terms of this Agreement and shall
prepare a report setting forth such adjustment or readjustment and showing in
reasonable detail the method of calculation thereof and the facts upon which
such adjustment or readjustment is based. The Company will forthwith mail a
copy of each such report to the Warrant Agent, which shall promptly mail a copy
to each Holder. The Warrant Agent will cause the same to be available for
inspection at its office at the address provided under Section 17.1 during
normal business hours by any holder of a Warrant or any prospective purchaser
of a Warrant designated by the holder thereof.

ARTICLE 10

NOTIFICATION OF CERTAIN EVENTS

10.1. Corporate Action. In the event of:

(a) any taking by the Company of a record of the holders of Units for
the purpose of determining the holders thereof who are entitled to receive any
distribution of any kind, or any right to subscribe for, purchase or otherwise
acquire any units of interest of any class or any other securities or property,
or to receive any other right or interest of any kind; or

(b) (i) any capital reorganization of the Company, (ii) any
reclassification of the Units, (iii) any Non-Sale Transaction, (iv) any Sale
Transaction, or (v) an exchange offer for Units; or

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<PAGE> 19

the Company shall cause to be filed with the Warrant Agent and mailed to each
Holder a notice specifying (x) the date or expected date on which any such
record is to be taken for the purpose of such distribution, rights, event,
transaction or amendment (or vote thereon) and the amount and character of any
such distribution, exchange, rights, or vote, or, if a record is not to be
taken, the date as of which the record holders of Units entitled to such
dividend, distribution, exchange or rights are to be determined, and the amount
and character of such dividend, distribution or rights, or (y) the date or
expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, sale, transfer, exchange offer,
dissolution, liquidation or winding up is expected to become effective, and the
time, if any such time is to be fixed, as of which record holders of Units
shall be entitled to exchange their Units for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, sale, transfer, exchange offer, dissolution, liquidation
or winding up and in the case of a Sale Transaction, the fact that such
transaction will result in the cancellation of the Warrants. Such notice shall
be delivered not less than 20 days prior to such date therein provided, in the
case of any such date referred to in clause (x) of the preceding sentence, and
not less than 30 days prior to such date therein provided, in the case of any
such date referred to in clause (y) of the preceding sentence. Failure to give
such notice within the time provided or any defect therein shall not affect the
legality or validity of any such action.

10.2. Available Information. The Company shall promptly file with
the Warrant Agent, which shall deliver to the Holders, copies of its annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. If the Company is not required to
make such filings, the Company shall promptly deliver to the Warrant Agent,
which shall deliver to the Holders, copies of its audited annual financial
statements, its quarterly financial statements and any other reports and
financial statements that are provided to any holders of equity or debt
securities of the Company (other than bank debt) in their capacity as holders
of such securities.

ARTICLE 11

COMPLIANCE WITH LAW

The Company will use its best efforts, at its expense and on a
continual basis, to assure that all Units that may be issued upon exercise of
Warrants may be so issued and delivered without violation of any Federal or
state securities law or regulation, or any other law or regulation applicable
to the Company or any of its subsidiaries; provided that with respect to any
such exercise involving a sale or transfer of Warrants or any such securities
issuable upon such exercise, the Company shall have no obligation to register
such Warrants or securities except as provided in any registration agreement in
effect for the benefit of such Holders.

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<PAGE> 20

ARTICLE 12

PAYMENT OF TAXES

The Company will pay any and all documentary stamp or similar issue
taxes payable to the United States of America or any State, or any political
subdivision or taxing authority thereof or therein, in respect of the issuance
or delivery of Units on exercise of Warrants; provided that the Company shall
not be required to pay any tax that may be payable in respect of any transfer
of a Warrant or any transfer involved in the issuance and delivery of Units in
a name other than that of the Holder of the Warrants to be exercised, and no
such issuance or delivery shall be made unless and until the person requesting
such issuance has paid to the Company the amount of any such tax or has
established, to the reasonable satisfaction of the Company, that such tax has
been paid.

ARTICLE 13

LOSS OR MUTILATION

Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and of an indemnity bond
reasonably satisfactory to them in form or amount, or (in the case of
mutilation) upon surrender and cancellation thereof, then, in the absence of
notice to the Company or the Warrant Agent that the Warrants represented
thereby have been acquired by a bona fide purchaser, the Company shall execute
and deliver to the Warrant Agent and, upon the Company's request, an authorized
signatory of the Warrant Agent shall manually countersign and deliver, to the
Holder of the lost, stolen, destroyed or mutilated Warrant Certificate, in
exchange for or in lieu thereof, a new Warrant Certificate of the same tenor
and for a like aggregate number of Warrants. Upon the issuance of any new
Warrant Certificate under this Article 13, the Company may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the reasonable
fees and expenses of the Warrant Agent) in connection therewith. Every new
Warrant Certificate executed and delivered pursuant to this Article 13 in lieu
of any lost, stolen or destroyed Warrant Certificate shall be entitled to the
same benefits of this Agreement equally and proportionately with any and all
other Warrant Certificates, whether or not the allegedly lost, stolen or
destroyed Warrant Certificate shall be at any time enforceable by anyone. The
provisions of this Article 13 are exclusive and shall preclude (to the extent
lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen or destroyed Warrant Certificates.

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<PAGE> 21

ARTICLE 14

WARRANT REGISTRATION

14.1. Registration. The Warrant Certificates shall be issued in
registered form only and shall be registered in the names of the record holders
of the Warrant Certificates to whom they are to be delivered. The Company
shall maintain or cause to be maintained a register in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Warrants and of transfers or exchanges of Warrant Certificates
as provided in this Agreement. Such register shall be maintained at the office
of the Company or the Warrant Agent located at the respective address therefor
as provided in Section 17.1. Such register shall be open for inspection upon
notice at all reasonable times by the Warrant Agent and each Holder.

14.2. Transfer or Exchange. Subject to Section 2.1 hereof, at the
option of the holder, Warrant Certificates may be exchanged or transferred for
other Warrant Certificates for a like aggregate number of Warrants, upon
surrender of the Warrant Certificates to be exchanged at the office of the
Company or the Warrant Agent maintained for such purpose at the respective
address therefor as provided in Section 17.1, and upon payment of the charges
herein provided. Whenever any Warrant Certificates are so surrendered for
exchange or transfer, the Company shall execute, and an authorized signatory of
the Warrant Agent shall manually countersign and deliver, the Warrant
Certificates that the holder making the exchange is entitled to receive.

14.3. Valid and Enforceable. All Warrant Certificates issued upon
any registration of transfer or exchange of Warrant Certificates shall be the
valid obligations of the Company, evidencing the same obligations, and entitled
to the same benefits under this Agreement, as the Warrant Certificates
surrendered for such registration of transfer or exchange.

14.4. Endorsement. Every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Company or
the Warrant Agent) be duly endorsed, or be accompanied by an instrument of
transfer substantially in the form attached to the Warrant Certificate and duly
executed by the Holder thereof or such Holder's officer or representative duly
authorized in writing.

14.5. No Service Charge. No service charge shall be made for any
registration of transfer or exchange of Warrant Certificates.

14.6. Cancellation. Any Warrant Certificate surrendered for
registration of transfer, exchange or the exercise of the Warrants represented
thereby shall, if surrendered to the Company, be delivered to the Warrant
Agent, and all Warrant Certificates surrendered or so delivered to the Warrant
Agent shall be promptly canceled by the Warrant Agent. Any such Warrant
Certificate shall not be reissued by the Company and, except as provided in
this Article 14 in case of an exchange or transfer, in Article 13 in case of a

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<PAGE> 22

mutilated Warrant Certificate and in Article 5 in case of the exercise of less
than all the Warrants represented thereby, no Warrant Certificate shall be
issued hereunder in lieu thereof. The Warrant Agent shall deliver to the
Company from time to time or otherwise dispose of such canceled Warrant
Certificates in a manner reasonably satisfactory to the Company.

ARTICLE 15

WARRANT AGENT

15.1. Obligations Binding. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the terms and conditions set
forth in this Article 15. The Company, and the holders of Warrants by their
acceptance thereof, shall be bound by all of such terms and conditions.

15.2. No Liability. The Warrant Agent shall not by countersigning
Warrant Certificates or by any other act hereunder be accountable with respect
to or be deemed to make any representations as to the validity or authorization
of the Warrants or the Warrant Certificates (except as to its countersignature
thereon), as to the validity, authorization or value (or kind or amount) of any
Units or other property delivered or deliverable upon exercise of any Warrant,
or as to the purchase price of such Units, securities or other property. The
Warrant Agent shall not (i) be liable for any recital or statement of fact
contained herein or in the Warrant Certificates or for any action taken,
suffered or omitted by the Warrant Agent in good faith in the belief that any
Warrant Certificate or any other document or any signature is genuine or
properly authorized, (ii) be responsible for determining whether any facts
exist that may require any adjustment of the Exercise Price and/or the number
of Units purchasable upon exercise of Warrants, or with respect to the nature
or extent of any such adjustments when made, or with respect to the method of
adjustment employed, (iii) be responsible for any failure on the part of the
Company to issue, transfer or deliver any Units or other property upon the
surrender of any Warrant for the purpose of exercise or to comply with any
other of the Company's obligations contained in this Agreement or in the
Warrant Certificates or (iv) be liable for any act or omission in connection
with this Agreement except for its own bad faith, negligence or willful
misconduct.

15.3. Instructions. The Warrant Agent is hereby authorized to
accept instructions with respect to the performance of its duties hereunder
from the Chief Executive Officer, President, any Vice President, the Secretary,
the Treasurer or any Assistant Treasurer of the Company and to apply to any
such officer for advice or instructions. The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in good faith in accordance
with the instructions of any such officer.

15.4. Agents. The Warrant Agent may execute and exercise any of the
rights and powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, provided reasonable
care has been exercised in the selection and in the continued

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<PAGE> 23

employment of any such attorney, agent or employee. The Warrant Agent shall
not be under any obligation or duty to institute, appear in, or defend any
action, suit or legal proceeding in respect hereof, but this provision shall
not affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper. The Warrant Agent shall promptly notify the Company
in writing of any claim made or action, suit or proceeding instituted against
the Warrant Agent arising out of or in connection with this Agreement.

15.5. Cooperation. The Company will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further acts, instruments and assurances as may reasonably be required by
the Warrant Agent in order to enable the Warrant Agent to carry out or perform
its duties under this Agreement.

15.6. Agent Only. The Warrant Agent shall act solely as agent. The
Warrant Agent shall not be liable except for the performance of such duties as
are specifically set forth herein, and no implied covenants or obligations
shall be read into this Agreement against the Warrant Agent, whose duties and
obligations shall be determined solely by the express provisions hereof.

15.7. Right to Counsel. The Warrant Agent may at any time consult
with legal counsel satisfactory to it (who may be legal counsel for the
Company) and the Warrant Agent shall incur no liability or responsibility to
the Company or to any Warrant holder for any action taken, suffered or omitted
by the Warrant Agent in good faith in accordance with the opinion or advice of
such counsel.

15.8. Compensation. The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder and to reimburse the Warrant
Agent for its reasonable expenses hereunder; and further agrees to indemnify
the Warrant Agent and hold it harmless against any and all liabilities,
including, but not limited to, judgments, costs and counsel fees, for anything
done, suffered or omitted by the Warrant Agent in the execution of its duties
and powers hereunder, except for any such liabilities that arise as a result of
the Warrant Agent's bad faith, negligence or willful misconduct.

15.9. Accounting. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all moneys received by the Warrant Agent on behalf of the Company on the
purchase of Units through the exercise of Warrants.

15.10. No Conflict. The Warrant Agent may contract with or lend money
to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement, and nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any
other legal entity; provided, however, that the Warrant Agent, in its capacity
as Warrant Agent, must refrain from buying, selling or dealing in the Warrants
and must refrain from allowing information received by it in its capacity as
Warrant Agent and not publicly available to be obtained from it by Fleet

-19-
<PAGE> 24

National Bank, other than in its capacity as Warrant Agent, or any stockholder,
director, officer or employee of the Warrant Agent and used for purposes of
buying, selling or dealing in the Warrants.

15.11. Resignation; Termination. The Warrant Agent may resign its
duties and be discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's negligence or
willful misconduct), after giving 30 days' prior written notice to the Company.
The Company may remove the Warrant Agent upon 30 days written notice, and the
Warrant Agent shall thereupon in like manner be discharged from all further
duties and liabilities hereunder, except as to liabilities arising as a result
of the Warrant Agent's bad faith, negligence or willful misconduct. The
Company shall cause to be mailed (by first class mail, postage prepaid) to each
registered holder of a Warrant at such holder's last address as shown on the
register of the Company, at the Company's expense, a copy of such notice of
resignation or notice of removal, as the case may be. Upon such resignation or
removal the Company shall promptly appoint in writing a new warrant agent who
shall be reasonably acceptable to the Majority Holders. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation by the resigning Warrant Agent or after
such removal, then the holder of any Warrant may apply to any court of
competent jurisdiction for the appointment of a new warrant agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such a court, the duties of the Warrant Agent shall be carried out by the
Company. Any successor warrant agent, whether appointed by the Company or by
such a court, shall be a corporation, incorporated under the laws of the United
States or of any State thereof and authorized under such laws to exercise
corporate trust powers, be subject to supervision and examination by Federal or
State authority, and have a combined stated capital and capital surplus of not
less than $50,000,000 as set forth in its most recent published annual report
of condition. After acceptance in writing of such appointment by the new
warrant agent it shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant
Agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning or removed Warrant Agent. Not later than the effective date of any
such appointment the Company shall file notice thereof with the resigning or
removed Warrant Agent and shall forthwith cause a copy of such notice to be
mailed (by first class mail, postage prepaid) to each registered holder of a
Warrant at such holder's last address as shown on the register of the Company.
Failure to give any notice provided for in this Section 15.11, or any defect in
any such notice, shall not affect the legality or validity of the resignation
of the Warrant Agent or the appointment of a new warrant agent, as the case may
be.

15.12. Change of Warrant Agent. If at any time the name of the
Warrant Agent shall be changed and at such time any of the Warrant Certificates
shall have been countersigned but not delivered, the Warrant

-20-
<PAGE> 25
Agent may adopt the countersignature under its prior name and deliver Warrant
Certificates so countersigned; and if at that time any of the Warrant
Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force and effect provided in the Warrant Certificates and this Agreement.

15.13. Successor Warrant Agent. Any corporation into which the
Warrant Agent or any new warrant agent may be merged or any corporation
resulting from any consolidation to which the Warrant Agent or any new warrant
agent shall be a party or any corporation succeeding to all or substantially
all the agency business of the Warrant Agent or any new warrant agent shall be
a successor Warrant Agent under this Agreement without any further act,
provided that such corporation would be eligible for appointment as a new
warrant agent under the provisions of Section 15.11 of this Article 15. The
Company shall promptly cause notice of the succession as Warrant Agent of any
such successor Warrant Agent to be mailed (by first class mail, postage
prepaid) to each registered holder of a Warrant at his last address as shown on
the register of the Company.
ARTICLE 16

REMEDIES, ETC.

16.1. Remedies. The Company stipulates that the remedies at law of
each holder of a Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant Agreement are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a decree
for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

16.2. Warrant Holder Not Deemed a Member. Prior to the exercise of
the Warrants represented thereby no holder of a Warrant Certificate, as such,
shall be entitled to any rights as a Member of the Company, including, but not
limited to, any management rights, the right to vote, the right to share in
profits or losses and distributions from the Company, to exercise any
preemptive right or to receive any notice of meetings of Members, and no such
holder shall be entitled to receive notice of any proceedings of the Company
except as provided in this Agreement. Nothing contained in this Agreement
shall be construed as imposing any liabilities on such holder to purchase any
securities or as a Member of the Company, whether such liabilities are asserted
by the Company or by creditors or Members of the Company or otherwise.

16.3. Right of Action. All rights of action in respect of this
Agreement are vested in the registered holders of the Warrants. Any registered
holder of any Warrant, without the consent of the Warrant Agent or the
registered holder of any other Warrant, may in such holder's own behalf and for
such holder's own benefit enforce, and may institute and maintain any

-21-
<PAGE> 26

suit, action or proceeding against the Company suitable to enforce, or
otherwise in respect of, such holder's right to exercise such holder's Warrants
in the manner provided in the Warrant Certificate representing such Warrants
and the Company's obligations under this Agreement and the Warrants.

ARTICLE 17

MISCELLANEOUS

17.1. Notices. Any notice, demand or delivery authorized by this
Agreement shall be sufficiently given or made if hand delivered, with receipt
acknowledged, or sent by first class mail, postage prepaid, addressed to any
registered holder of a Warrant at such holder's last known address appearing on
the register of the Company, or by telecopy with transmission confirmed, and to
the Company or the Warrant Agent as follows:

If to the Company, to it at:

PSF Holdings, L.L.C.
Highway 65 North
Princeton, New Jersey 64673
Attention: Chief Financial Officer
Telephone: 816-748-4647
Facsimile: 816-748-7100

If to the Warrant Agent:

Fleet National Bank
Corporate Trust Operations,
CT/MO/0224
777 Main Street
Hartford, Connecticut 06115
Attn: Reorg. Dept.
Telephone: (860) 986-1271
Facsimile: (860) 986-7908

or such other address as shall have been furnished in writing, in accordance
with this Section 17.1, to the party giving or making such notice, demand or
delivery.

17.2. Reservation and Authorization of Units; Registration with or
Approval of any Governmental Authority. From and after the Original Issue Date,
at any time that it is necessary for Units to be reserved for issuance in order
for Units to be issuable upon exercise of the Warrants, the Company shall at all
times reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued Units as will be sufficient to permit the
exercise in full of all outstanding Warrants. All such reserved Units, if any,
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of

-22-
<PAGE> 27

such Warrant, shall be duly and validly issued and fully paid and
nonassessable. Before taking any action which would result in an adjustment in
the number of Units for which each Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public from any public
regulatory body or bodies having jurisdictions thereof. If any Units are
required to be reserved for issuance upon exercise of Warrants and such
reserved Units require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law before such Units may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such Units to be
duly registered.

17.3. Governing Law and Consent to Forum. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY AND THE PARTIES
EACH HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE COURT
SITTING IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PERSON TO SERVE PROCESS
IN ANY MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.

17.4. Benefits of this Agreement. This Agreement shall be binding
upon and inure to the benefit of the Company and the Warrant Agent and their
respective successors and assigns, and the registered and beneficial holders
from time to time of the Warrants and of holders of the Units, where
applicable. Nothing in this Agreement is intended or shall be construed to
confer upon any other person, any right, remedy or claim under or by reason of
this Agreement or any part hereof.

17.5. Indemnification. In the event that any Holder of Warrants is
named as a party in any litigation in which the Company and/or its members are
named as defendants, and in which such Holder, as a holder of Warrants, is
sought to be held liable as a member of the Company, then the Company agrees to
pay such Holders' reasonable expenses in connection with such litigation,
including attorneys' fees and costs and disbursements; provided that such
obligation of the Company hereunder shall apply solely to the defense of any
such claim that the Holder is liable as a member. The Company shall not be
required to pay the fees and expenses of more than one counsel for all Holders
in any such litigation and, in the event that the Company has retained counsel
to defend the members in such litigation, the Company shall have the option to
use the same counsel to defend such Holders in the litigation. Any amounts
which the Company is obligated to pay under this Section 17.5 shall be
recoverable only from the assets of the Company and not from any assets of its
members. Notwithstanding anything to the contrary in this Section 17.5, the
Company shall not be liable hereunder to the extent that any litigation or

-23-
<PAGE> 28

expenses resulting from the same are found by final judgment of a court of
competent jurisdiction to have resulted from such Holder's gross negligence,
bad faith or willful misconduct. In the event of any dispute as to the
Company's obligation to pay any legal fees or expenses hereunder, the Company
may pay or reimburse attorneys' fees of a Holder as incurred, if such Person
executes an undertaking to repay the amount so paid or reimbursed if there is a
final determination by a court of competent jurisdiction that such Indemnified
Person is not entitled to indemnification under this Section 17.5.

17.6. Agreement of Holders of Warrant Certificates. Every holder of
a Warrant Certificate, by accepting the same, covenants and agrees with the
Company, the Warrant Agent and with every other holder of a Warrant Certificate
that the Warrant Certificates are transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in this Agreement,
and the Company and the Warrant Agent may deem and treat the person in whose
name the Warrant Certificate is registered as the absolute owner for all
purposes whatsoever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.

17.7. Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and
the same instrument.

17.8. Amendments. This Agreement may not be modified or amended or
the provisions hereof waived without the prior written consent of the Company
and the holders of Warrants exercisable for 66 2/3% or more of the aggregate
number of Units then purchasable upon exercise of all Warrants then
outstanding.

17.9. Severability. Wherever possible, each provision of this
Agreement shall be interpreted so as to be effective and consistent with
applicable law, but if any provision of this Agreement is determined to be
invalid or prohibited by applicable law, the Agreement shall be construed such
that, to the extent practicable, so as to give effect to any portion of such
provision which is not invalid or so prohibited, and such provision and this
Agreement shall remain valid and enforceable except to the extent of such
invalidity or prohibition.

17.10. Headings. The table of contents hereto and the descriptive
headings of the several sections hereof are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.

-24-
<PAGE> 29

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

PSF Holdings, L.L.C.

By: /s/ W.R. Patterson
-------------------------
Name:
Title:

Fleet National Bank

By: /s/ Paul D. Allen
-------------------------
Name: Paul D. Allen
Title: Vice President

-25-

<PAGE> 1
EXHIBIT 4.2

EXHIBIT A

FORM OF WARRANT CERTIFICATE

[FORM OF FACE OF WARRANT CERTIFICATE]

Warrant Number of Warrant(s):
<PAGE> 2

No. ______ ______

Exercisable During the Period Commencing September ___ 1996
and Terminating at 5:00 p.m. on the first Business Date after September ___,
2006
except as provided below

WARRANT TO PURCHASE
UNITS OF LIMITED LIABILITY MEMBERSHIP INTERESTS
OF
PSF HOLDINGS, L.L.C.

This Certifies that __________ or registered assigns, is the owner of
the number of WARRANTS set forth above, each of which represents the right (i)
in the case of a Holder which is not a MS Member, at any time after September
__, 1996 and on or before 5:00 p.m., New York City time, on the first Business
Date after September ___, 2006 (the "Termination Date") and (ii) in the case of
any Holder which is a MS Member, at any time on or after January 1, 2000, and
on or before the Termination Date (except that the MS Members shall have the
right to exercise the Warrants prior to January 1, 2000, in accordance with the
provisions of Article 3 of the Warrant Agreement), subject to earlier
cancellation as provided below, to purchase from PSF Holdings, L.L.C., a
Delaware limited liability company (the "Company"), at the price of ___ (the
"Exercise Price"), one Unit of the limited liability membership interests in
the Company as such membership interests were constituted as of September ___,
1996, subject to adjustment as provided in the Warrant Agreement hereinafter
referred to, upon surrender hereof, with the subscription form on the reverse
hereof duly executed, by hand or by mail to Fleet National Bank or to any
successor thereto, as the warrant agent under the Warrant Agreement, at the
office of such successor maintained for such purpose (any such warrant agent
being herein called the "Warrant Agent"), and simultaneous payment in full (by
certified or official bank or bank cashier's check payable to the order of the
Company) of the Exercise Price in respect of each Warrant represented by this
Warrant Certificate that is so exercised, all subject to the terms and
conditions hereof and of the Warrant Agreement.

Upon any partial exercise of the Warrants represented by this Warrant
Certificate, there shall be issued to the holder hereof a new Warrant
Certificate representing the Warrants that were not exercised.

No fractional units may be issued upon the exercise of rights to
purchase hereunder, and as to any fraction of a unit otherwise issuable, the
Company will make a cash adjustment in lieu of such issuance, as provided in
the Warrant Agreement.

This Warrant Certificate is issued under and in accordance with a
Warrant Agreement, dated as of September 17, 1996 (the "Warrant Agreement"),

-2-
<PAGE> 3

between the Company and Fleet National Bank, as Warrant Agent, and is subject
to the terms and provisions contained therein, all of which terms and
provisions the holder of this Warrant Certificate consents to by acceptance
hereof. Copies of the Warrant Agreement are on file at the above-mentioned
office of the Warrant Agent and may be obtained by writing to the Warrant
Agent.

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS WARRANT SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

This Warrant Certificate shall not be valid for any purpose until it
shall have been manually countersigned by an authorized signatory of the
Warrant Agent.

Witness the facsimile seal of the Company and the signature of its
duly authorized officer.

Dated: PSF HOLDINGS, L.L.C.

By:_________________________
Title:

Countersigned:

Fleet National Bank,
as Warrant Agent

By:_________________________
Authorized Signatory

-3-
<PAGE> 4

[FORM OF REVERSE OF WARRANT CERTIFICATE]

PSF HOLDINGS, L.L.C.

The transfer of this Warrant Certificate and all rights hereunder is
registrable by the registered holder hereof, in whole or in part, on the
register of the Company upon surrender of this Warrant Certificate at the
office or agency of the Company or the office of the Warrant Agent maintained
for such purpose at Corporate Trust Operations, CT/MO/0224, 777 Main Street,
Hartford, CT 06115, attention: Reorg. Dept. duly endorsed or accompanied by a
written instrument of transfer duly executed and in form satisfactory to the
Company and the Warrant Agent, by the registered holder hereof or his attorney
duly authorized in writing and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer or registration thereof.
Upon any partial transfer the Company will cause to be delivered to such holder
a new Warrant Certificate or Certificates with respect to any portion not so
transferred.

This Warrant Certificate may be exchanged at the office or agency of
the Company or the office of the Warrant Agent maintained for such purpose at
Corporate Trust Operations, CT/MO/0224, 777 Main Street, Hartford, CT 06115,
attention: Reorg. Dept., for Warrant Certificates representing the same
aggregate number of Warrants, each new Warrant Certificate to represent such
number of Warrants as the holder hereof shall designate at the time of such
exchange.

Prior to the exercise of the Warrants represented hereby, the holder
of this Warrant Certificate, as such, shall not be entitled to any rights of a
member of the Company, including, but not limited to, the right to vote, to
receive distribution, to exercise any preemptive right or, except as provided
in the Warrant Agreement, to receive any notice of meetings of members, and
shall not be entitled to receive notice of any proceedings of the Company
except as provided in the Warrant Agreement. Nothing contained herein shall be
construed as imposing any liabilities upon the holder of this Warrant
Certificate to purchase any securities or as a member of the Company, whether
such liabilities are asserted by the Company or by creditors or stockholders of
the Company or otherwise.

Upon the exercise of the Warrants represented hereby in accordance
with the terms and conditions hereof and of the Warrant Agreement, and without
any further action, the Holder shall become a member of the Company, with all
of the rights and obligations of a member of the Company pursuant to the LLC
Agreement (as defined in the Warrant Agreement). By the exercise of this
Warrant, the Holder shall be deemed to have accepted all of the terms and
conditions the LLC Agreement and to have agreed to abide by its terms.
This Warrant Certificate shall be void and all rights represented
hereby shall cease unless exercised on or before the close of business on the
first Business Day following September 17, 2006.

-4-
<PAGE> 5

SUBSCRIPTION FORM
(TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT)

TO PSF Holdings, L.L.C.
Fleet National Bank, as Warrant Agent
Attention: Reorg. Dept.

The undersigned (i) irrevocably exercises the Warrants represented by
the within Warrant Certificate, (ii) purchases one Unit of limited liability
membership interests of PSF Holdings, L.L.C. for each Warrant so exercised and
herewith makes payment in full of the purchase price of $45.00 in respect of
each Warrant so exercised as provided in the Warrant Agreement (such payment
being by certified or official bank or bank cashier's check payable to the
order of PSF Holdings, L.L.C., all on the terms and conditions provided in the
within Warrant Certificate and the Warrant Agreement,) (in each respect, before
giving effect to the adjustments provided in the Warrant Agreement referred to
in the within Warrant Certificate), (iii) surrenders this Warrant Certificate
and all right, title and interest therein to PSF Holdings, L.L.C., (iv) directs
that the securities or other property deliverable upon the exercise of such
Warrants be registered or placed in the name and at the address provided below
and delivered thereto and (v) acknowledges and agrees that the undersigned is a
member of PSF Holdings, L.L.C. in accordance with the LLC Agreement.

If the box immediately following is checked, the undersigned thereby
certifies that it is a "MS Member" (as defined in the Warrant Agreement). / /

DATED: ____________, 19__

_________________________
(OWNER)*

_________________________
(SIGNATURE OF AUTHORIZED
REPRESENTATIVE)

_________________________
(STREET ADDRESS)

_________________________
(CITY) (STATE) (ZIP CODE)

-1-
<PAGE> 6
_____________________________
SECURITIES OR PROPERTY TO BE
ISSUED AND DELIVERED TO:
SIGNATURE GUARANTEED**

PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER

NAME _________________________________________________________________

STREET ADDRESS __________________________________________________________

CITY, STATE AND ZIP CODE ___________________________________________________

-2-
<PAGE> 7

EXHIBIT B
FORM OF ASSIGNMENT

FOR VALUE RECEIVED, THE UNDERSIGNED REGISTERED HOLDER OF THE WITHIN
WARRANT CERTIFICATE HEREBY SELLS, ASSIGNS AND TRANSFERS UNTO THE ASSIGNEE NAMED
BELOW ALL OF THE RIGHTS OF THE UNDERSIGNED UNDER THE WITHIN WARRANT
CERTIFICATE, WITH RESPECT TO THE NUMBER OF WARRANTS SET FORTH BELOW:

NAME OF NO. OF
ASSIGNEE ADDRESS WARRANTS
-------- ------- --------

PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
OF ASSIGNEE

___________

AND DOES HEREBY IRREVOCABLY CONSTITUTE AND APPOINT __________ ATTORNEY TO MAKE
SUCH TRANSFER ON THE BOOKS OF PSF HOLDINGS, L.L.C. MAINTAINED FOR THE PURPOSE,
WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.

DATED: __________, 19__

NAME _________________________*

SIGNATURE OF AUTHORIZED
REPRESENTATIVE ________________

SIGNATURE GUARANTEED ________**

_______________
* THE SIGNATURE MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE
OF THE WITHIN WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER.
<PAGE> 8

** THE SIGNATURE MUST BE GUARANTEED BY A SECURITIES TRANSFER AGENTS
MEDALLION PROGRAM ("STAMP") PARTICIPANT OR AN INSTITUTION RECEIVING PRIOR
APPROVAL FROM THE WARRANT AGENT.

-1-

<PAGE> 1
EXHIBIT 4.3

- --------------------------------------------------------------------------------
EXECUTION COPY

PREMIUM STANDARD FARMS, INC.

Issuer

PSF HOLDINGS, L.L.C.

Guarantor

FLEET NATIONAL BANK

Trustee

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

Indenture

Dated as of September 17, 1996

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

$117,500,000

11% SENIOR SECURED NOTES
DUE 2003
(Partial Pay-in-Kind)

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

<PAGE> 2

Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:

<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section
- ---------------
<S> <C> <C>
Section 310 (a) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(a) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(a) (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(a) (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.13
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
7.2 (a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 (b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 (c)
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 (a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 (a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 (a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 (b)
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4;
10.17; 10.22
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2
(c) (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c) (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1, 6.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1; 6.3
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.14
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
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<CAPTION>
Trust Indenture Indenture
Act Section
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<S> <C>
last sentence
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.13
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not
Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 (c)
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7

________________
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Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.

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TABLE OF CONTENTS

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ARTICLE I - Definitions and Other Provisions
of General Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.3. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.4. Acts of Holders; Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.5. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.6. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.7. Application of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.8. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.9. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.10. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.11. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.13. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE II - Security Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.1. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.2. Forms of Face of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.3. Form of Reverse of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.4. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.5. Form of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.6. Form of Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ARTICLE III - The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.1. Title and Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.2. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.3. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.4. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.5. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.7. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.8. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.9. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.10. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE IV - Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.1. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.2. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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ARTICLE V - Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.3. Collection of Debt and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.4. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.5. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . . . . 43
SECTION 5.6. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.7. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium and Interest. . . . . . . . . . . . 45
SECTION 5.9. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.10. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.11. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.12. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.13. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.14. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.15. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE VI - The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.1. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.2. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.3. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities. . . . . . . . . . . . . . . . . . . . . . 49
SECTION 6.5. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.6. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.7. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6.8. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.9. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.10. Resignation and Removal; Appointment of Successor. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . . . 53
SECTION 6.13. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . . 53

ARTICLE VII - Holders' Lists and Reports by Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.2. Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.3. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.4. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

ARTICLE VIII - Merger, Consolidation, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.1. Company or the Guarantor May Merge, Consolidate, etc....
Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.2. Successor Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

ARTICLE IX - Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.1. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.2. Supplemental Indentures With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.3. Execution of Supplemental Indentures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

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SECTION 9.4. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.5. Conformity with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.6. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.7. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

ARTICLE X - Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.1. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.2. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 10.3. Money for Security Payments to be Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.4. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 10.5. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.6. Payment of Taxes and Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.7. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 10.8. Limitation on Consolidated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 10.9. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 10.10. Limitations Concerning Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 10.11. Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.12. Limitation on Issuance of Capital Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.13. Dividends and Distributions; Liens Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . 68
SECTION 10.14. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 10.15. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.16. Limitation on Related Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.17. Provision of Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.18. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.19. Environmental and Safety Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.20. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.21. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.22. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.23. Compliance with Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

ARTICLE XI - Redemption of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.1. Right of Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.2. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.3. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11.4. Selection by Trustee of Securities to be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 11.5. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 11.6. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.7. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.8. Securities Redeemed in Part 77

ARTICLE XII - Defeasance and Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.1. Company's Option to Effect Defeasance or Covenant Defeasances . . . . . . . . . . . . . . . . . . 78
SECTION 12.2. Defeasance and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.3. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 12.4. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 12.5. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 12.6. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
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ARTICLE XIII - Meeting of Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 13.1. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 13.2. Call, Notice and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 13.3. Persons Entitled to Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 13.4. Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 13.5. Determination of Voting Rights; Conduct and Adjournment of Meetings. . . . . . . . . . . . . . . 83
SECTION 13.6. Counting Votes and Recording Action of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 84

ARTICLE XIV - Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 14.1. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 14.2. Execution and Delivery of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 14.3. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 14.4. No waiver, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 14.5. Modification, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

ARTICLE XV - Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 15.1. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 15.2. Recording, Opinion of Counsel, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 15.3. Trust Indenture Act Requirements; Release of Collateral . . . . . . . . . . . . . . . . . . . . . 90
SECTION 15.4. Release of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 15.5. Impairment of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 15.6. Authorization of Receipt of Funds by the Trustee Under the Security Documents . . . . . . . . . . 91

ARTICLE XVI - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 16.1. Usury Savings Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

EXHIBIT A - Form of Subsidiary Guaranty Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Form of Security and Collateral Agency Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C - Form of Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
EXHIBIT D - Form of Indemnity, Subrogation and Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E - Form of Texas Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F - Form of Missouri Deed of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G - Form of Intercreditor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
EXHIBIT H - Form of Assignment of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
EXHIBIT I - Form of Consent and Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
</TABLE>

-iv-
<PAGE> 8

INDENTURE, dated as of September 17, 1996 between Premium Standard
Farms, Inc., a Delaware corporation (herein called the "Company"), having its
principal office at Highway 65 North, Princeton, Missouri 64673, PSF Holdings,
L.L.C., a Delaware limited liability company (herein called the "Guarantor"),
having its principal office at Highway 65 North, Princeton, Missouri 64673, and
Fleet National Bank, a national banking association having its principal office
at One Monarch Place, Springfield, Massachusetts 01144, as Trustee (herein
called the "Trustee").

RECITALS OF THE COMPANY

WHEREAS, the Company has duly authorized the creation of an issue of
up to $117,500,000 aggregate original principal amount of its 11% Senior
Secured Notes due 2003 (the "Securities") of substantially the tenor
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.

WHEREAS, all things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company and the Guarantor in accordance with their and
its terms, have been done.

WHEREAS, pursuant to the Amended Joint Plan of Reorganization, dated
July 29, 1996 of PSF Finance L.P., a Delaware limited partnership, and certain
of its affiliates (the "Plan") confirmed on September 17, 1996 by an order of
the bankruptcy court pursuant to Section 1129 of the United States Bankruptcy
Code, $117,500,000 aggregate original principal amount of the Securities are to
be issued to the holders of, and in exchange for the claims of, the 12% Senior
Secured Exchange Notes due 2000, 12% Senior Secured Exchange Discount Notes due
2003, 12 1/4% Senior Secured Exchange Notes due 2004, 12 1/4% Senior Secured
Notes due 1997 and 12 1/2% Exchangeable Preference Units of PSF Finance L.P.
and to an affiliate of PSF Finance L.P. in exchange for a specified amount of
cash and cancellation of certain capital contribution notes held by Collings
Farm, Inc., a Missouri corporation.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises, and the exchange of certain
claims and the purchase of the Securities by certain Holders pursuant to the
Plan, the Company and the Guarantor, jointly and severally, covenant and agree,
for the equal and proportionate benefit of all Holders of the Securities, with
the Trustee as follows:
<PAGE> 9

ARTICLE I

Definitions and Other Provisions
of General Application

SECTION 1.1. Definitions.

For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;

(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;

(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles;

(4) unless otherwise specifically set forth herein, all
calculations or determinations of a person shall be performed or made
on a consolidated basis in accordance with generally accepted
accounting principles;

(5) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to
any particular Article, Section or other subdivision; and

(6) whenever the Trustee or Collateral Agent requires
information as to the rights and obligations of the parties to the
Note Agreement (including without limitation the identities of the
Purchasers and holders of Second Priority Notes and the amounts of
Second Priority Obligations for principal, interest and other claims
owed to them each) it may request the Company to provide such
information by an Officers' Certificate, upon which the Trustee and
Collateral Agent may conclusively rely and which the Company covenants
promptly to provide.

Certain terms, used principally in Article VI (The Trustee), are
defined in that Article.

"Act", when used with respect to any Holder, has the meaning specified
in Section 1.4 hereof.

"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of

2
<PAGE> 10

such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

"Asset Disposition" shall mean, with respect to any Person, any sale,
lease, transfer, condemnation, loss in an insured event or other disposition
(including by way of merger, consolidation or sale and leaseback transaction,
but excluding any sales of assets or property that (i) are substantially
concurrently replaced with the proceeds of such sale and (ii) are no longer
used or useful in the business of such Person) in one transaction or a series
of related transactions by such Person or any of its subsidiaries to any Person
other than the Guarantor, the Company or any of its Wholly Owned Subsidiaries
of (a) any of the Capital Stock of any subsidiary of such Person, (b) all or
substantially all of the Real Property, Leaseholds or Personal Property of such
Person or any of its subsidiaries or (c) any other Real Property, Leaseholds or
Personal Property of such Person or any of its subsidiaries, except, in the
case of clause (c), for (i) sales of inventory, livestock, processed pork
inventories, breeding stock, grain, feedstock or Hedge Agreements in the
ordinary course of business and (ii) any sale, lease, transfer or other
disposition in one transaction or a series of related transactions of Real
Property, Leaseholds or Personal Property with a value not in excess of
$250,000.

"Assignment of Contracts" shall mean the Assignment of Contracts
between the Company and the Collateral Agent, substantially in the form of
Exhibit H.

"Average Life" means, as of the date of determination with respect to
any Debt, the quotient obtained by dividing (a) the sum of the products of (i)
the number of years from such date to the date or dates of each successive
scheduled principal payment of such Debt multiplied by (ii) the amount of each
such principal payment by (b) the sum of all such principal payments.

"Benefit Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of ERISA, and in respect of which the
Company or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.

"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.

"Board Resolution" means a resolution certified by the Secretary or an
Assistant Secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the State of New
York are authorized or obligated by law or executive order to close.

3
<PAGE> 11

"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of real or personal property of
such Person which is required to be classified and accounted for as a capital
lease or a liability on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles. The stated maturity
of such obligation shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which such lease may
be terminated by the lessee without payment of a penalty.

"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person.

"Change of Control" has the meaning specified in Section 10.18.

"Code" means the Internal Revenue Code of 1986, as amended.

"Collateral" means all of the property and possessions, and the
proceeds thereof, pledged and mortgaged under the Security Documents and all
the "Trust Premises" as defined in each Mortgage.

"Collateral Agent" means the Trustee, in its capacity as Collateral
Agent under the Security Documents.

"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934,
or, if at any time after the execution of this instrument such Commission is
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.

"Common Stock" of any Person means Capital Stock of such Person that
does not rank prior, as to the payment of dividends or as to the distribution
of assets upon any voluntary or involuntary liquidation, dissolution or winding
up of such Person, to shares of Capital Stock of any other class of such
Person.

"Company" means Premium Standard Farms, Inc., a Delaware corporation,
until a successor Person shall have become such pursuant to the applicable
provisions of this Indenture and thereafter shall mean such successor Person.

"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman or Vice- Chairman of the
Board, its President, a Vice President, its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.

"Consent and Agreement" shall mean the Consent and Agreement of Pig
Improvement Company, Inc., substantially in the form of Exhibit I.

4
<PAGE> 12

"Consolidated" means, when used in reference to any term, that term as
applied to the accounts of the Company, the Guarantor and all of their
Subsidiaries, or such of their Subsidiaries as may be specified, consolidated
(or combined) in accordance with generally accepted accounting principles and
with appropriate deductions for minority interests in such Subsidiaries.

"Consolidated EBITDA" means, with respect to any Person for any
period, (a) the sum of the amounts for such period of Consolidated Net Income,
plus, to the extent deducted in determining such Consolidated Net Income, (i)
Consolidated Interest Expense, (ii) federal, state and local income taxes,
(iii) depreciation expense, (iv) amortization expense and (v) any non-cash
charges or non-cash losses, minus (b) to the extent included in determining
such Consolidated Net Income, the sum of the amounts for such period of (i)
interest income, (ii) any non-cash gains and (iii) any extraordinary gains and
gains received by such Person from sales of assets (other than sales of
inventory, breeding stock, grain, feedstock or Hedge Agreements in the ordinary
course of business).

"Consolidated Interest Expense" for any Person means for any period
the Consolidated interest expense included in a Consolidated income statement
(without deduction of interest income) of such Person and its Subsidiaries for
such period included in the Consolidated financial statements in accordance
with generally accepted accounting principles.

"Consolidated Net Income" of any Person means for any period the
Consolidated net income (or loss) of such Person for such period determined on
a Consolidated basis in accordance with generally accepted accounting
principles; provided that there shall be excluded therefrom (a) the net income
(or net loss) of any Person acquired by such Person or a Subsidiary of such
Person in a pooling-of-interests transaction for any period prior to the date
of such transaction, (b) the net income (or net loss) of any Subsidiary of such
Person which is subject to restrictions which prevent the payment of dividends
or the making of distributions to such Person to the extent of such
restrictions, (c) the net income (or net loss) of any Person that is not a
Subsidiary of such Person except to the extent of the amount of dividends or
other distributions actually paid to such Person by such other Person during
such period, (d) gains or losses on Asset Dispositions by such Person, (e) all
extraordinary gains and extraordinary losses and (f) amortization of any
discount arising out of the sale of the Securities.

"Consolidated Net Worth" of any Person as of any date of determination
means the stockholders' equity of such Person and its Subsidiaries at such date
determined in accordance with generally accepted accounting principles on a
Consolidated basis.

"Corporate Trust Office" means the principal office of the Trustee in
Boston, Massachusetts, New York, New York, or such other jurisdiction within
the United States as the Company may approve, at which at any particular time
its corporate trust business shall be administered.

5
<PAGE> 13

"Corporation" means a corporation, association, company, joint-stock
company, partnership or business trust.

"Credit Agreement" means the Credit Agreement, dated as of September
17, 1996, among the Company, the lending banks identified therein and The Chase
Manhattan Bank, a New York banking corporation, as administrative agent for
such lending banks, providing initially for a revolving credit loan of up to
$60,000,000 (the "Credit Loan") and a term loan of $30,000,000 (the "Term
Loan"), secured by a first priority lien on substantially all of the assets of
the Company pursuant to the Security Document of even date therewith, as at any
time amended, extended or otherwise modified, restated or refinanced.

"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
the Company or any Subsidiary against fluctuations in currency values.

"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments
including obligations Incurred in connection with the acquisition of property,
assets or businesses (but excluding trade accounts payable or similar accrued
liabilities arising in the ordinary course of business), (iii) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptance or similar facilities issued for the account of such
Person, (iv) every obligation of such Person upon which interest charges are
customarily paid, (v) every obligation of such Person issued or assumed as the
deferred and unpaid purchase price of property or services (but excluding trade
accounts payable or similar accrued liabilities arising in the ordinary course
of business), (vi) every Capital Lease Obligation of such Person, (vii) the
maximum fixed mandatory redemption or repurchase price of Redeemable Stock of
such Person at the time of determination, (viii) all Debt of others secured by
a Lien on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, and (ix) every obligation of the type referred to in
Clauses (i) through (viii) of another Person and all dividends of another
Person the payment of which, in either case, such Person has guaranteed or is
responsible or liable for, directly or indirectly, as obligor, guarantor or
otherwise, if and to the extent any of the foregoing debt would appear as a
liability upon a balance sheet of such person prepared on a Consolidated basis
in accordance with generally accepted accounting principles.

"Defaulted Interest" has the meaning specified in Section 3.7.

"Effective Date" means the date of the effectiveness of the Plan.

"Environmental and Safety Laws" mean any applicable treaties, laws,
rules, regulations, codes, ordinances, decrees, judgments, injunctions, or
binding agreements issued, promulgated or entered into by any Governmental
Authority, relating in any way to the environment, preservation or reclamation

6
<PAGE> 14

of natural resources, the management, release or threatened release of any
Hazardous Material or to employee health and safety matters, including the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Toxic Substances Control Act, the Occupational
Safety and Health Act, the Emergency Planning and Community Right-to-Know Act,
the Hazardous Materials Transportation Act and any similar or implementing
state or local law, and all amendments or regulations promulgated thereunder.

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

"Event of Default" has the meaning specified in Section 5.1.

"Excess EBITDA" shall mean, for any period of four consecutive fiscal
quarters, the excess, if any, of (a) the Consolidated EBITDA of the Guarantor,
the Company and any Subsidiaries for such period over (b) the Consolidated
EBITDA required to have been achieved for such period pursuant to Section 6.12
of the Credit Agreement.

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

"Expiration Date" has the meaning specified in the definition of Offer
to Purchase.

"Governmental Actions" means authorizations, approvals, consents,
waivers, exceptions, licenses, filings, registrations, rulings, permits,
certificates, exemptions and other similar actions or requirements by, with of
from any Governmental Authority.

"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory body.

"Guarantee" means the guarantee contained in Article XIV hereof given
by the Guarantor or any guarantee contained in a Subsidiary Guarantee
Agreement, each as amended, extended or otherwise modified from time to time.

"Guarantor" means PSF Holdings, L.L.C., a Delaware limited liability
company, and its successors and assigns.

"Hazardous Materials" means all explosive or radioactive substances or
wastes, hazardous or toxic substances or wastes, pollutants, solid, liquid or
gaseous wastes, including petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls ("PCBs") or
PCB-containing materials or equipment, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any
Environmental and Safety Law.

7
<PAGE> 15

"Hedge Agreement" of any Person means any contract for, or option,
put, Currency Agreement or similar arrangement relating to, the purchase by
such Person of (a) grain, soy meal and other feed ingredients or related
hedging activities conducted in accordance with prudent business practice and
(b) hogs and related hedging activities conducted in accordance with prudent
business practice, in each case that are created to protect such Person against
price fluctuations and not for speculative purposes.

"Holder" means a Person in whose name a Security is registered in the
Security Register.

"Inactive Subsidiary" shall mean, at any time, any Subsidiary of the
Company that has no Debt at such time, less than $1,000 in assets at such time
and has not engaged in any business activities within the previous 6 months.

"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Debt or other
obligation or the recording, as required pursuant to generally accepted
accounting principles or otherwise, of any such Debt or other obligation on the
balance sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided,
however, that a change in generally accepted accounting principles that results
in an obligation of such Person that exists at such time becoming Debt shall
not be deemed an Incurrence of such Debt.

"Indemnity Agreement" shall mean the Indemnity, Subrogation and
Contribution Agreement, dated of even date herewith, substantially in the form
of Exhibit C hereto, as amended, supplemented or otherwise modified from time
to time, among the Company and the Subsidiary Guarantors identified therein.

"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.

"Intercreditor Agreement" shall mean the Intercreditor Agreement, of
even date herewith, substantially in the form of Exhibit G hereto, among the
Company, the Guarantor, the Collateral Agent and the Senior Collateral Agent.

"Interest Coverage Ratio" means, with respect to the Company as of any
date, the ratio of (i) the aggregate amount of the Consolidated EBITDA of the
Guarantor, the Company and their Subsidiaries for the period since the
Effective Date but in no event more than four fiscal quarters for which
financial information in respect thereof is available immediately prior to such
date to (ii) the aggregate amount of the Consolidated Interest Expense of the
Guarantor, the Company and their Subsidiaries during such period since the
Effective Date but in no event more than four fiscal quarters.

"Interest Payment Date" has the meaning specified in Section 2.2.

8
<PAGE> 16

"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution to (by means of transfers
of cash or other property to others or payments for property or services for
the account or use of others, or otherwise), or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of Debt
issued by any other Person, other than (i) loans or advances made to employees
in the ordinary course of business not in excess of $100,000 outstanding at any
time to any employee and (ii) advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of any
Person or its Subsidiaries and any securities received in settlement thereof.

"Leaseholds" of any Person shall mean all the right, title and
interest of such person as lessee or licensee in, to and under leases or
licenses of Real Property or fixtures annexed or to be annexed thereto.

"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement (other than any easement not materially
impairing usefulness or marketability), encumbrance, preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever on or with respect to such property or assets (including, without
limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).

"Majority Holders" means the holders of more than 50% of the sum of
(i) the aggregate outstanding principal amount of the Second Priority Notes and
(ii) the aggregate outstanding amount of the unused Purchase Commitments under
the Note Agreement and (iii) the aggregate outstanding principal amount of the
Securities at the time outstanding, as respectively determined from the records
of the Company and the Security Register, acting as a single class.

"Management Option Plan" means the 1996 Management Option Plan of the
Guarantor.

"Material Adverse Effect" means (a) a materially adverse effect on the
business, assets, operations or condition, financial or otherwise, of the
Company and its Subsidiaries (taken as a whole) or (b) a material impairment of
the rights of the Holders hereunder.

"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.

"Member" means a Person admitted as an owner of a membership interest
in a limited liability company.

9
<PAGE> 17

"Mineral Rights" shall mean rights and interests held by third parties
in the oil, gas and other minerals estate (including mineral and royalty
interests).

"Mortgages" means the mortgages, deeds of trust, leasehold mortgages,
assignments of leases and rents, amendments and modifications thereto pursuant
to Section 2.02 of the Security Agreement or Section 10.22 hereof to effect the
security interests intended by the Security Agreement, substantially in the
form of Exhibits E and F hereto, as amended, supplemented or otherwise modified
from time to time.

"Morgan Stanley Note Agreement" means the commitment to purchase up to
$10,000,000 in aggregate principal amount of Senior Secured Second Priority
Notes due 2002 (the "Second Priority Notes") under the Note Purchase Agreement
dated as of September 17, 1996, among the Company, the Guarantor and Morgan
Stanley Group Inc., as the same may from time to time be amended, extended or
otherwise modified, restated or refinanced.

"MSCP" shall mean Morgan Stanley Capital Partners III, L.P., a
Delaware limited liability partnership.

"MS Group" shall mean Morgan Stanley Group Inc., a Delaware
corporation.

"New Finishing Facility" shall mean a hog finishing facility acquired
or constructed by the Company after the Effective Date.

"New Finishing Facility Debt Service" shall mean, with respect to any
New Finishing Facility Debt, for any period the sum of the scheduled principal
and interest payments required to be made with respect to such New Finishing
Facility Debt during such period. For purposes of Section 10.8(vi), New
Finishing Facility Debt that bears interest at a floating rate for any period
shall be deemed to bear interest at a fixed rate for such period equal to the
interest rate thereon at the beginning of such period.

"New Finishing Facility Debt" shall mean Debt of the Company
(including Debt of others guaranteed by the Company) incurred after the
Effective Date to finance the construction or acquisition of New Finishing
Facilities, so long as the instruments governing such Debt do not contain (a)
any financial covenants or (b) any other covenants or defaults that are more
onerous to the Company than those contained in this Agreement (except for any
such covenants that relate solely to the New Finishing Facility financed
thereby).

"Non-Surviving Combination" shall have the meaning specified in
Section 8.1.

"Note Agreement" means the Morgan Stanley Note Agreement.

"Obligations" shall have the meaning specified in Section 14.1.

10
<PAGE> 18

"Offer" has the meaning specified in the definition of Offer to
Purchase.

"Offer to Purchase" means a written offer (the "Offer") sent by the
Company by first class mail, postage prepaid, to each Holder at its address
appearing in the Security Register on the date of the Offer, offering to
purchase up to the principal amount of Securities specified in such Offer at
the purchase price specified in such Offer (as determined pursuant to this
Indenture). Unless otherwise required by applicable law, the Offer shall
specify an expiration date (the "Expiration Date") of the Offer to Purchase
which shall be, subject to any contrary requirements of applicable law, not
less than 30 days or more than 65 days after the date of such Offer and a
settlement date (the "Purchase Date") for the purchase of Securities within
five Business Days after the Expiration Date. The Company shall notify the
Trustee at least 15 Business Days (or such shorter period as is acceptable to
the Trustee) prior to the mailing of the Offer of the Company's obligation to
make an Offer to Purchase, and the Offer shall be mailed by the Company or, at
the Company's request, by the Trustee in the name and at the expense of the
Company. The Offer shall contain information concerning the business of the
Company and its Subsidiaries which the Company in good faith believes will
enable such Holders to make an informed decision with respect to the Offer to
Purchase (which at a minimum will include (i) the most recent annual and
quarterly financial statements, (ii) a description of material developments in
the Company's business subsequent to the date of the latest of such financial
statements referred to in clause (i) (including a description of the events
requiring the Company to make the Offer to Purchase), (iii) if applicable,
appropriate pro forma financial information concerning the Offer to Purchase
and the events requiring the Company to make the Offer to Purchase, and (iv)
any other information required by applicable law to be included therein). The
Offer shall contain all instructions and materials necessary to enable such
Holder to tender Securities pursuant to the Offer to Purchase. The Offer shall
also state:

(1) the Section of the Indenture pursuant to which the Offer
to Purchase is being made;

(2) the Expiration Date and the Purchase Date;

(3) the aggregate principal amount of the Outstanding
Securities offered to be purchased by the Company pursuant to the Offer
to Purchase (including, if less than 100%, the manner by which such has
been determined pursuant to the Section hereof requiring the Offer to
Purchase) (the "Purchase Amount");

(4) the purchase price (expressed as a percentage of
principal amount) to be paid by the Company for each Security accepted
for payment (as specified pursuant to this Indenture) (the "Purchase
Price");

(5) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that Securities

11
<PAGE> 19
tendered must be tendered in an integral multiple of $1,000 principal
amount;

(6) the place or places where Securities are to be
surrendered for tender pursuant to the Offer to Purchase;

(7) that interest on any Security not tendered or tendered
but not purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;

(8) that on the Purchase Date the Purchase Price will become
due and payable upon each Security accepted for payment pursuant to the
Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date;

(9) that each Holder electing to tender a Security pursuant
to the Offer to Purchase will be required to surrender such Security at
the place or places specified in the Offer prior to the close of
business on the Expiration Date, such Security being, if the Company or
the Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing;

(10) that Holders will be entitled to withdraw all or any
portion of Securities tendered if the Company (or its Paying Agent)
receives, not later than the close of business two Business Days prior
to the Expiration Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Security the Holder tendered, the certificate number of the
Security the Holder tendered and a statement that such Holder is
withdrawing all or a portion of such tender;

(11) that if Securities in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not
withdrawn pursuant to the Offer to Purchase, the Company shall purchase
all such Securities; and

(12) that in the case of any Holder whose Security is
purchased only in part, the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unpurchased portion of the
Security so tendered.

Any Offer to Purchase shall be governed by and effected in accordance with
applicable securities laws and regulations and the Offer for such Offer to
Purchase. An Offer to Purchase made pursuant to Section 10.10(b) hereof may
require Holders to furnish to the Trustee written notice of intention to have

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securities purchased on or before the date 35 days preceding the Purchase Date
as provided in that Section.

"Officer" means the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, or the Secretary or Assistant Secretary of the Company.

"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the President or any Vice President and
by the Chief Financial Officer, the Treasurer, the Secretary or the Assistant
Secretary of the Company or the Guarantor and delivered to the Trustee and
containing the statements provided for in Section 1.2.

"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee, and
containing the statements provided for in Section 1.2.

"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:

(i) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;

(ii) Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust for the Holders of
such Securities; provided, that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made; except that if any such Security so called for redemption shall
not be paid upon surrender thereof in accordance with said notice, such
Security shall be deemed Outstanding until such time as it is paid; and

(iii) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of which there
shall have been presented to the Trustee proof satisfactory to it that
such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor of the Securities or an Affiliate of the
Company (other than a Permitted Holder) or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Securities
which the Trustee knows to be so owned shall be so disregarded. Securities so

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<PAGE> 21

owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or an Affiliate of the Company
(other than a Permitted Holder) or of such other obligor.

"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.

"Permitted Holders" means any of Morgan Stanley Co. Incorporated,
Putnam Investment Management, GEM Capital Management Inc., The Prudential
Insurance Company of America, Loews Corporation and Hanwa Co., Limited, any of
the Affiliates of any of them and any funds or institutional accounts managed
or advised by any of them.

"Permitted Investments" shall include:

(i) certificates of deposit with final maturities of two years or
less issued by commercial banks organized under the laws of
either the United States of America having capital and surplus
in excess of $100,000,000;

(ii) commercial paper with minimum grade of A1 or P1;

(iii) a direct obligation of the United States of America or of a
United States of America agency with a maturity of two years
or less;

(iv) money market preferred stock rated "A" or above;

(v) shares of money market mutual or similar funds having assets
in excess of $100,000,000;

(vi) Hedge Agreements entered into by the Company or any Subsidiary
to the extent any such agreement is otherwise permitted
hereunder;

(vii) bank accounts maintained in any commercial bank;

(viii) endorsements of instruments for collection in the ordinary
course of business;

(ix) Investments in Wholly-Owned Subsidiaries;

(x) Guarantees by the Company of New Finishing Facility Debt of
others; and

(xi) any Investment made solely with the Proceeds of an Asset
Disposition, the payment or application of which is not
restricted by Section 10.10;

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"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company, unincorporated organization or
government or any agency or political subdivision thereof.

"Personal Property" of any Person shall mean the right, title and
interest of such person in assets, properties and items other than Real
Property and Leaseholds.

"Plan" has the meaning set forth in the Recitals hereto.

"Pledge Agreement" means the Pledge Agreement of even date herewith,
substantially in the form of Exhibit C hereto, among the Guarantor, the
Company, the Subsidiary Pledgers (as identified therein) and the Collateral
Agent, as amended, supplemented or otherwise modified from time to time.

"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.

"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of such Person of any class or classes (however designated)
that ranks prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.

"Proceeds" has the meaning specified in Section 10.10.

"Purchase Amount" has the meaning specified in the definition of Offer
to Purchase.

"Purchase Commitment" means the commitment to purchase $10,000,000
aggregate principal amount of Second Priority Notes at any time outstanding
under the Note Agreement.

"Purchase Date" has the meaning specified in the definition of Offer
to Purchase.

"Purchase Price" has the meaning specified in the definition of Offer
to Purchase.

"Purchasers" shall mean the Purchasers under the Note Agreement.

"Qualified Capital Stock" of any Person means any and all Capital
Stock of such Person other than Redeemable Stock.

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<PAGE> 23

"Real Property" of any Person shall mean all the fee ownership right,
title and interest of such Person in and to land, improvements therein and
thereon, fixtures annexed or to be annexed thereto and any insurance and
condemnation proceeds relating thereto other than Leaseholds.

"Redeemable Stock" of any Person means any equity security of any
Person (not including any warrants/stock issued under the Management Option
Plan) that by its terms or otherwise is required to be redeemed prior to the
Stated Maturity of the Securities or is redeemable at the option of the holder
thereof at any time prior to the Stated Maturity of the Securities.

"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.

"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.

"Regular Record Date" for the interest payable on any Interest Payment
Date means the fifteenth day of February and August in each year (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date.

"Responsible Officer", when used with respect to the Trustee, means
any officer of the Trustee assigned by the Trustee to administer its corporate
trust matters and shall include any officer in its corporate trust department.

"Restricted Payments" has the meaning specified in Section 10.9.

"Second Priority Notes" has the meaning specified in the definition of
Morgan Stanley Note Agreement.

"Second Priority Obligations" means the obligations of the Company and
the Guarantor under the Morgan Stanley Note Agreement and the Second Priority
Notes.

"Secondary Security" has the meaning specified in Section 3.7.

"Securities" means the securities designated as such in the first
Recital hereto, any Secondary Securities and any Securities issued hereunder
upon transfer of, in exchange for or in lieu of any other Security or portion
thereof theretofore issued hereunder.

"Security Agreement" means the Security and Collateral Agency
Agreement of even date herewith, substantially in the form of Exhibit B hereto,
among the Company, the Guarantor, the Subsidiary Guarantors and the Trustee, as
Collateral Agent, for the benefit of the Holders, the Purchasers and the
holders of the Second Priority Notes, as amended, supplemented or otherwise
modified from time to time.

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<PAGE> 24

"Security Documents" means the Security Agreement, the Pledge
Agreement, the Assignment of Contracts, the Mortgages, and each of the
ancillary agreements required by any of the foregoing and any agreements and
other instruments and documents executed and delivered pursuant to Section
10.22, each as amended, supplemented or otherwise modified from time to time.

"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.

"Senior Collateral Agent" means The Chase Manhattan Bank, as
administrative agent under the Credit Agreement and collateral agent under the
security documents relating to the Credit Agreement, and its successors.

"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 3.7.

"Stated Maturity" when used with respect to any Security or any
installment of interest thereof means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.

"Subsidiary" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person, or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof but shall not include any Inactive Subsidiary.

"Subsidiary Guarantee Agreement" shall mean any guarantee agreement,
substantially in the form of Exhibit A hereto, executed by a Subsidiary
pursuant to Section 10.22, pursuant to which such Subsidiary guaranties payment
of the Securities on substantially the same terms and conditions set forth in
Article XIV.

"Subsidiary Guarantor" means each Subsidiary which executes a
Subsidiary Guarantee Agreement.

"Successor Company" shall have the meaning specified in Section
8.1(b)(2).

"Surviving Entity" has the meaning specified in Section 8.1(a).

"Term Loan" has the meaning specified in the definition of "Credit
Agreement".

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"Term Loan Payout Date" means the date on which the Term Loan is paid
in full, whether upon maturity or by earlier prepayment.

"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by such amendment, the
Trust Indenture Act of 1939 as so amended

"United States Bankruptcy Code" means Title 11, United States Code, as
amended, or any similar United States Federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.

"U.S. Government Obligations" has the meaning specified in Section
12.4.

"Vice President" means any vice president, whether or not designated
by a number or a word or words added before or after the title "Vice
President".

"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.

"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Voting Stock of which (other than director's
qualifying shares) shall at the time be owned by such Person or by one or more
Wholly Owned Subsidiaries of such Person.

SECTION I.2. Compliance Certificates and Opinions.

Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture. Each such certificate or opinion shall
be given in the form of an Officers' Certificate, if to be given by Officers of
the Company, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the Trust Indenture Act and any other
requirements set forth in this Indenture.

Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall be in form
satisfactory to the Trustee and shall include

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(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;

(2) 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;

(3) a statement that, in the opinion of each such individual, he
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 complied with; and

(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.

Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm is
independent.

SECTION I.3. Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons may certify or give an opinion as to such matters in
one or several documents.

Any certificate or opinion of an Officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of
counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representation with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or opinion of counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Officer or Officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

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SECTION I.4. Acts of Holders; Record Dates.

(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders must, except as otherwise provided in Article XIII, be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the actions embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Holders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and (subject to
Section 6.1) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.

(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining
the Holders entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action, or to vote on any action,
authorized or permitted to be given or taken by Holders. If not set by the
Company prior to the first solicitation of a Holder made by any Person in
respect of any such action, or, in the case of any such vote, prior to such
vote, the record date for any such action or vote shall be the 30th day (or, if
later, the date of the most recent list of Holders required to be provided
pursuant to Section 7.1) prior to such first solicitation or vote, as the case
may be, with regard to any record date, only the Holders on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action.

(d) The ownership of Securities shall be proved by the Security
Register.

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(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Security.

SECTION I.5. Notices, Etc., to Trustee and Company.

Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,

(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust
Office, One Federal Street, Boston, Massachusetts 02110, Attention:
Corporate Trust Department; or

(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class certified
postage prepaid, return receipt requested, to the Company addressed
to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.

SECTION I.6. Notice to Holders; Waiver.

Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders
is given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.

In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.

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SECTION I.7. Application of Trust Indenture Act.

The Trust Indenture Act shall apply as a matter of law (or to the
extent not so required, as a matter of contract) to this Indenture for purposes
of interpretation, construction and definition of the rights and obligations
hereunder. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall
be deemed to apply to this Indenture as so modified or to be excluded, as the
case may be.

SECTION I.8. Effect of Headings and Table of Contents.

The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.

SECTION I.9. Successors and Assigns.

All covenants and agreements in this Indenture by the Company and the
Guarantor shall bind their respective successors and assigns, whether so
expressed or not.

SECTION I.10. Separability Clause.

In case any provision in this Indenture or in the Securities 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 I.11. Benefits of Indenture.

Nothing in this Indenture or in the Securities, expressed or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and (subject to Article XIII hereof) the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.

SECTION I.12. Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EACH OF THE COMPANY AND THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK OR ANY
FEDERAL COURT SITTING IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND EACH IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. NOTHING HEREIN

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<PAGE> 30

SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
COMPANY OR THE GUARANTOR IN ANY OTHER JURISDICTION.

SECTION I.13. Legal Holidays.

In any case where any Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of interest or principal (and premium, if any) need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the Interest Payment Date, Redemption Date, Purchase
Date or at the Stated Maturity, provided that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Purchase
Date or Stated Maturity, as the case may be.

ARTICLE ARTICLE II

Security Forms

SECTION II.1. Forms Generally.

The Securities and the Trustee's certificates of authentication shall
be in substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.

The definitive Securities shall be printed, lithographed or engraved
or produced by any combination of these methods on steel engraved borders or
may be produced in any other manner all as determined by the officers executing
such Securities, as evidenced by their execution of such Securities.

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<PAGE> 31

SECTION II.2 Forms of Face of Security.

The form of the face of the Securities shall be substantially as
follows:

PREMIUM STANDARD FARMS, INC.

11% SENIOR SECURED NOTES DUE 2003

No.__________ $______________

Premium Standard Farms, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ______________________, or
registered assigns, the principal amount of ___________________ Dollars on
September 17, 2003, and to pay interest on the unpaid principal amount from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of the original issuance hereof, at the rate of 11% per
annum in cash in United States dollars until the principal hereof is paid or
made available for payment and at the rate of 11% per annum on any overdue
principal and premium and on any overdue installment of interest (but not to
exceed the maximum rate permitted by applicable law) until paid as specified on
the reverse hereof; provided, that on each Interest Payment Date prior to the
Term Loan Payout Date, the Company may, as hereafter provided, pay such
interest in whole or in part through the issuance of additional Securities
("Secondary Securities") in an aggregate principal amount equal to the amount
of interest (rounded to the nearest whole dollar) that would be payable with
respect to this Security if such interest were paid in cash; provided, further,
that interest payable on or after the Term Loan Payout Date or on or after the
Maturity of this Security shall be payable only in cash.

The Company shall pay interest semi-annually on March 15 and September
15 of each year, commencing March 15, 1997 or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date").
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the February 15 or August 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided (including by issuing
Secondary Securities as herein provided) for will forthwith cease to be payable
to the Holder on such Regular Record Date and may either be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not

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inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.

On each such Interest Payment Date prior to the Term Loan Payout Date
as provided in the proviso to the first paragraph hereof, the Company may pay
interest by the issuance of Secondary Securities and, the Trustee shall, upon
the Company's Order, authenticate and deliver Secondary Securities for original
issuance to the Holder of this Security on the relevant record date, as shown
by the records of the Security Registrar, in the aggregate principal amount
required to pay such interest (rounded up to the next whole dollar). Each
issuance of Secondary Securities shall be made as nearly as possible pro rata,
and any rounding may be made, with respect to the aggregate principal amount of
Outstanding Securities held by each Holder.

Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Trustee, Security
Registrar or Paying Agent maintained for that purpose in New York, New York, 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; provided, however,
that at the option of the Company payment of any interest may be made by
mailing a check (or Secondary Securities, if applicable) therefor to the
address of the Person entitled thereto as such address shall appear in the
Security Register.

This Security is one of the Securities issued and to be issued from
time to time and in accordance with the Indenture (as hereinafter defined), all
equally secured by a Security and Collateral Agency Agreement, dated as of even
date with the Indenture (hereinafter as amended and supplemented the "Security
Agreement") among the Guarantor (as hereinafter defined), the Company and the
Trustee, as Collateral Agent, and related Mortgages (collectively, the
"Security Documents"), to which Security Documents reference is made for a
description of the property mortgaged and pledged (the "security"), the nature
and extent of this security, the other indebtedness of the Company secured
thereby, and the other provisions thereof; provided, however, that the liens of
said Security Documents are subject to the terms and provisions of an
Intercreditor Agreement, dated of even date therewith, among the Guarantor, the
Company, the Senior Collateral Agent, and the Trustee, as Collateral Agent, to
which reference is made for a description of the terms and provisions thereof;
and provided, further, that the rights and interests of the holders of the
Securities in the proceeds of the security under the Indenture and the Security
Documents are junior in priority to those of the holders of the Second Priority
Notes (as hereafter defined) of the Company.

Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

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<PAGE> 33

Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid
or obligatory for any purpose.

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<PAGE> 34

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated: _________________________

PREMIUM STANDARD FARMS, INC.

By _________________________________

SECTION II. 3. Form of Reverse of Security.

The form of the reverse of the Securities shall be substantially as
follows:

This Security is one of a duly authorized issue of Securities of the
Company designated as its 11% Senior Secured Notes due 2003 (the "Securities")
issued under an Indenture, dated as of September 17, 1996 (herein called the
"Indenture"), between the Company, PSF Holdings, L.L.C., a Delaware limited
liability company (the "Guarantor"), and Fleet National Bank, as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture). The Securities are limited in aggregate principal amount to
$117,500,000 plus the aggregate principal amount of Secondary Securities issued
pursuant to the Indenture. Reference is hereby made to the Indenture and all
indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.

The Securities are subject to redemption, in whole or in part, upon
not less than 20 nor more than 60 days' notice by mail, at the election of the
Company at any time at the following Redemption Prices (expressed as
percentages of principal amount), if redeemed during the 12-month period
beginning September 1, of each of the years indicated below:

Redemption
Year Price
---- ----------
1996 111%

1997 108%

1998 105%

1999 103%

2000 101%

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<PAGE> 35

2001 100%

The Redemption Prices as defined above, together in the case of any such
redemption with accrued interest to the Redemption Date, shall be paid in cash
upon surrender of such Securities in accordance with such notice, but interest
installments whose Stated Maturity is on or prior to such Redemption Date will
be payable to the Holders of such Securities, or one or more Predecessor
Securities, of record at the close of business on the relevant Record Dates
referred to on the face hereof, in cash or Secondary Securities, if applicable,
all as provided in the Indenture.

This Security does not have the benefit of any sinking fund.

The Indenture provides that, subject to certain conditions, if a
Change of Control or Asset Disposition occurs, the Company shall be required to
make an Offer to Purchase for the Securities at a purchase price equal to 101%
of the principal amount thereof or par, as the case may be, together in either
case with all accrued and unpaid interest through the Purchase Date.

Interest on the Debt evidenced by this Security is expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of the Debt evidenced by this Security or otherwise, shall the
interest contracted for, charged or received by the Holder exceed the maximum
amount permissible under applicable law. If under any circumstances whatsoever
the fulfillment of any provisions of this Security, the Indenture or any other
document evidencing, securing, guaranteeing or otherwise pertaining to the Debt
evidenced by this Security, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, then
ipso facto, the obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstances any Holder shall ever receive
anything of value as interest or deemed interest by applicable law under this
Security, the Indenture or any other document evidencing, securing,
guaranteeing or otherwise pertaining to the Debt evidenced by this Security or
otherwise an amount that would exceed the highest lawful rate, such amount that
would be excessive interest shall be applied to the reduction of the principal
amount owing on the Debt of this Security held by the Holder, and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance
of principal of the Debt of this Security held by the Holder, such excess shall
be refunded to the Company. In determining whether or not the interest paid or
payable with respect to any Debt of the Company to the Holder, under any
specific contingency, exceeds the highest lawful rate, the Company and the
Holder shall, to the maximum extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of interest
throughout the term of such Debt so that the actual rate of interest on account
of such Debt does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of such Debt, to the end that no
such portion shall bear interest at a rate greater than that permitted by law.
The terms and

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<PAGE> 36

provisions of this paragraph shall control and supersede every other
conflicting provision of this Security and the Indenture.

In the event of redemption or purchase pursuant to an Offer to
Purchase of this Security in part only, a new Security or Securities of like
tenor for the unredeemed or unpurchased portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.

The Indenture contains provisions for defeasance at any time of (i)
the entire Debt of this Security and (ii) certain restrictive covenants and
Events of Default with respect to this Security, in each case upon compliance
with certain conditions set forth further therein.

The Indenture and the Security Documents provide that the security
described therein is pledged and mortgaged to the Collateral Agent for the
benefit of the holders of up to $10,000,000 aggregate principal amount of the
Company's Senior Secured Second Priority Notes due 2002 (the "Second Priority
Notes") and the Holders of the Securities, provided that the proceeds of such
security, if any, shall be applied first to the payment in full of the Second
Priority Notes and thereafter to the payment of the Securities.

The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages of the aggregate principal amount of the Securities at
the time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.

No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay (subject to Section 16.1 of said
Indenture) the principal of (and premium, if any) and interest on this Security
at the times, place and rate, and in the coin or currency or through issuance
of Secondary Securities, as herein prescribed.

As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office or the office or agency of the Company in New York, New
York, or at any other office designated by the Company under the Indenture,
duly endorsed by, or accompanied by a written instrument of transfer in form

29
<PAGE> 37

satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and like tenor and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.

The Securities are issuable only in registered form without coupons in
denominations of $1.00 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Securities are
exchangeable for a like tenor and aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.

No service charge shall be made for any such registration of transfer
or exchange, provided, however, that the Company may require payment of (i) a
service charge with respect to any transfer or exchange as a result of which
the number of Securities not in a denomination of $1,000 or any integral
multiple thereof would be increased, and (ii) of a sum sufficient to cover any
tax or other governmental charge payable in connection with such transfer or
exchange.

Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

Interest on this Security shall be computed on the basis of a 360-day
year of twelve 30-day months.

All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.

THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

--------------------
OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company
pursuant to Sections 10.10 or 10.18 of the Indenture, check the box: / /

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<PAGE> 38

If you want to elect to have only a part of this Security purchased by
the Company pursuant to Section 10.10 or 10.18 of the Indenture, state the
amount: $__________

Dated:________________ Your Signature:_______________________________
(Sign exactly as name appears on the
other side of this Security)

Signature Guaranteed by:

_________________________________
Participant in a Recognized
Signature Guarantee Medallion
Program

SECTION II. 4. Form of Trustee's Certificate of Authentication.

The form of certificate of authentication shall be substantially as
follows:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Securities referred to in the within-mentioned
Indenture.

FLEET NATIONAL BANK,
as Trustee

Dated:_____________________ By______________________________________
Authorized Signatory

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<PAGE> 39

SECTION II.5. Form of Guarantee.

The form of guarantee shall be substantially as follows:

For value received, PSF Holdings, L.L.C., a Delaware limited liability
company, hereby unconditionally guarantees to the Holder of the Security upon
which this Guarantee is endorsed the due and punctual payment, as set forth in
the Indenture pursuant to which such Security and this Guarantee are issued, of
the principal of, premium (if any) and interest on, such Security when and as
the same shall become due and payable for any reason according to the terms of
such Security and Article XIV of the Indenture. The Guarantee of the Security
upon which the Guarantee is endorsed will not become effective until the
Trustee signs the certificate of authentication on such Security.

PSF HOLDINGS, L.L.C.

By __________________________

SECTION II.6. Form of Legend.

The form of legend on each Security as required by the Intercreditor
Agreement shall be substantially as follows:

THE LIENS ON THE COLLATERAL WHICH SECURE THE SECURITIES REFERRED TO IN
THE WITHIN-MENTIONED INDENTURE, OF WHICH THIS SECURITY IS ONE, ARE
SUBJECT TO THE TERMS AND PROVISIONS OF THE WITHIN-MENTIONED
INTERCREDITOR AGREEMENT AND SECURITY AGREEMENT.

ARTICLE III

The Securities

SECTION III.1. Title and Terms.

The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $117,500,000
plus the aggregate principal amount of Secondary Securities issued hereunder,
except for Securities authenticated and delivered upon registration or transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Sections
3.4, 3.5, 3.6, 9.6, 10.10, 10.18 and 11.8.

The Securities shall be known and designated as the "11% Senior
Secured Notes due 2003" of the Company. The Stated Maturity of the Securities
shall be September 17, 2003. The Securities shall bear interest on the unpaid
principal amount of such Securities at the rate of 11% per annum, payable
semi-annually on March 15 and September 15, commencing March 15, 1997, until
the principal thereof is paid or made available for payment, in the manner set

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<PAGE> 40

forth in the form of Security and in Section 3.7. Interest on any overdue
principal, interest (to the extent lawful) or premium, if any, shall be payable
on demand.

The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Trustee, Security Registrar or
Paying Agent maintained in New York, New York for such purpose and at any other
office or agency maintained for such purpose; provided, however, that, at the
option of the Company, payment of any interest may be made by mailing a check
(or Secondary Securities, if applicable) therefor to the address of the Person
entitled thereto as such address shall appear in the Security Register.

The Securities shall be subject to repurchase by the Company pursuant
to an Offer to Purchase as provided in Sections 10.10 and 10.18 of the
Indenture.

The Securities shall be redeemable as provided in Article XI.

The Securities shall be subject to defeasance at the option of the
Company as provided in Article XII.

SECTION III.2. Denominations.

The Securities shall be issuable only in registered form without
coupons and only in denominations of $1.00 and any integral multiple thereof.

SECTION III.3. Execution, Authentication, Delivery and Dating.

The Securities shall be executed on behalf of the Company by its
Chairman of the Board, the Chief Executive Officer, its President or one of its
Vice Presidents. The signature of any of these officers on the Securities may
be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.

The Trustee shall authenticate Securities for original issue in an
aggregate principal amount of $117,500,000 upon receipt of the following:

(a) a Company Order for authentication, specifying the name,
address, FID number and principal amount for each Holder as
provided in the Plan;

(b) an executed copy of the Intercreditor Agreement;

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<PAGE> 41

(d) an Officers' Certificate and Opinion of Counsel, each stating,
inter alia, that such Securities have been duly and validly
issued in accordance with the Plan and this Indenture and are
entitled to the rights and benefits set forth herein; and

(e) an Officer's Certificate stating that the Effective Date has
occurred.

Subject to Section 6.1, the Trustee shall be fully protected in
relying upon the foregoing documents.

At any time and from time to time after the Effective Date and upon
notice to the Trustee on or before the relevant Record Date, the Company may
deliver Secondary Securities executed by the Company and the Guarantor to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided. In authenticating such Securities, and accepting the
additional responsibilities under the Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon an Officers' Certificate and Opinion of
Counsel, each dated the date of authentication and stating, inter alia, that
such Securities have been duly and validly issued in accordance with the terms
of this Indenture and are entitled to the rights and benefits set forth herein.

Each Security shall be dated the date of its authentication.

No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such
Security has been duly authenticated and delivered hereunder.

SECTION III.4. Temporary Securities.

Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such temporary Securities.

If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the

34
<PAGE> 42

Corporate Trust Office or any office or agency of the Company designated
pursuant to Section 10.2, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
principal amount of definitive Securities of authorized denominations. Until
so exchanged the temporary Securities shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities.

SECTION III.5 Registration, Registration of Transfer and Exchange.

The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.2 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as the Security Registrar may prescribe, the Company
shall provide for the registration of Securities and transfers of Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers of Securities as herein provided.

By accepting delivery of their Securities, the Holders accept and
agree to be bound by the terms and provisions of this Indenture and the
Security Documents.

Upon surrender for registration of transfer of any Security at the
Corporate Trust Office or an office or agency of the Company designated
pursuant to Section 10.2 for such purpose, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Securities of any authorized
denominations and of a like tenor and aggregate principal amount as the
Security transferred or tendered.

At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like tenor and aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company and the Guarantor shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive.

All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.

Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.

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<PAGE> 43

No service charge shall be made for any registration of transfer or
exchange of Securities, provided, however, that the Company may require payment
of (i) a service charge with respect to any transfer or exchange as a result of
which the number of Securities not in a denomination of $1,000 or any integral
multiple thereof would be increased, and (ii) of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Securities, other than exchanges
pursuant to Section 3.4, 9.6, 10.10, 10.18 or 11.8.

The Company shall not be required (i) to issue, register the transfer
of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 11.4 and ending at the close
of business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.

SECTION III.6. Mutilated, Destroyed, Lost and Stolen Securities.

If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security and (ii) such security or indemnity as may be required by them to save
each of them and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company and the Guarantor shall execute and upon a
Company Order (which requirement may be waived by the Trustee) the Trustee
shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of like tenor and principal amount and bearing a
number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.

Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefit of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.

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<PAGE> 44

The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

SECTION III.7. Payment of Interest; Interest Rights Preserved.

On each Interest Payment Date prior to the Term Loan Payout Date, the
Company may pay interest on each Security through the issuance of additional
Securities ("Secondary Securities") in an aggregate principal amount equal to
the amount of interest (rounded up to the next whole dollar) that would be
payable with respect to such Security if such interest were paid in cash;
provided that interest payable on any date on or after the Term Loan Payout
Date or on or after the Maturity of any Security shall be payable solely in
cash.

On each such Interest Payment Date, the Trustee shall, upon Company
Order, authenticate and deliver Secondary Securities for original issuance to
each holder of Securities on the relevant record date, as shown by the records
of the Security Register, in the aggregate principal amount required to pay
such interest (rounded up to the next whole dollar). Any Secondary Securities
so issued shall be dated the applicable Interest Payment Date, shall bear
interest from and after such date, shall mature on September 17, 2003, and
shall be governed by, and subject to the terms, provisions and conditions of,
this Indenture and shall have the same rights and benefits as Securities
previously issued.

The Company shall have the right to aggregate amounts of interest
payable in the form of Secondary Securities to a Holder of Outstanding
Securities and issue to such Holder a single Secondary Security in payment
thereof.

Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.

Any interest on any Security which is payable, but is not punctually
paid or duly provided for (including by the issuance of Secondary Securities as
herein provided), on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below:

(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at the close
of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company
shall notify the Trustee in writing of the amount of Defaulted
Interest

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<PAGE> 45

proposed to be paid on each Security and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount (in the form of money or, if the Term Loan Payout
Date has not occurred, at the Company's option, Secondary Securities)
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the
Trustee for such deposit prior to the date of the proposed payments,
such money or Secondary Securities when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall be
not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the
name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to
the following Clause (2).

(2) The Company may establish a procedure to make payment
of any Defaulted Interest consistent with any lawful procedure and
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by
such exchange, if, after notice given by the Company to the Trustee of
the proposed payment pursuant to this Clause, such manner of payment
is approved by the Trustee.

Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

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<PAGE> 46

SECTION III.8 Persons Deemed Owners.

Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of, (and premium, if
any) and (subject to Section 3.7) interest on, such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

SECTION III.9. Cancellation.

All Securities surrendered for payment, redemption, registration of
transfer or exchange or pursuant to any Offer to Purchase pursuant to Sections
10.10 and 10.18 shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of as directed by a Company Order.

SECTION III.10. Computation of Interest.

Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.

ARTICLE VI

Satisfaction and Discharge

SECTION IV.1. Satisfaction and Discharge of Indenture.

This Indenture shall cease to be of further effect (except as to any
surviving obligations of the Company specified below), and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture (including, but not
limited to, Article XII hereof), when

(1) either

(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid
as provided in Section 3.6 and (ii) Securities for whose
payment money has

39
<PAGE> 47

theretofore been deposited in trust and thereafter repaid to
the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for
cancellation; or

(B) all such Securities not theretofore delivered to
the Trustee for cancellation

(i) have become due and payable, or

(ii) will become due and payable at their Stated Maturity
within one year, or

(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense,
of the Company,

and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for the purpose money in an amount sufficient to pay and
discharge the entire Debt on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any)
and interest to the date of such deposit (in the case of Securities
which have become due and payable) or to the Stated Maturity or
Redemption Date, as the case may be;

(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and

(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture pursuant to
this Article IV, the Company's obligations with respect to the Securities under
Sections 3.4, 3.5, 3.6, 10.2 and 10.3, obligations of the Company to the
Trustee under Section 6.7 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of Clause (1) of this Section, the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the
obligations of the Trustee under Section 4.2 and the last paragraph of Section
10.3 shall survive.

SECTION IV.2. Application of Trust Money.

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Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be segregated
and held in trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through any
Paying Agent as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee.

ARTICLE V

Remedies

SECTION V.1. Events of Default.

"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):

(1) default in the payment of any interest upon any
Security when it becomes due and payable, and continuance of such
default for a period of 30 days; or

(2) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or

(3) default in the payment of principal (or premium, if
any) or interest pursuant to an Offer to Purchase pursuant to Sections
10.10 and 10.18; or

(4) default in the performance, or breach, of Section
8.1; or

(5) default under the Second Priority Obligations or any
other Debt or other evidence of Debt of the Company or the Guarantor
or any Subsidiary in a principal amount of $10,000,000 or more, or
under any mortgage, indenture or security agreement with respect
thereto, which default shall constitute a failure to pay principal of
such Debt when due at final maturity thereof or shall have resulted in
such Debt becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable; or

(6) default in the performance, or breach, of any
covenant, representation or warranty of the Company or the Guarantor
in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section
specifically dealt with), and continuance of such default or breach
for a period of 30 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of the
Outstanding

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Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or

(7) a final judgment or final judgments for the payment of
money are entered against the Company or the Guarantor or any
Subsidiary in an aggregate amount in excess of $10,000,000 by a court
or courts of competent jurisdiction, which judgments remain
undischarged, unstayed or unbonded for a period (during which
execution shall not be effectively stayed) of 60 days; or

(8) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
or the Guarantor or any Subsidiary in an involuntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or (B) a decree or
order adjudging the Company or the Guarantor or any Subsidiary a
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or
in respect of the Company or the Guarantor or any Subsidiary or of any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 90 consecutive days; or

(9) the commencement by the Company or the Guarantor or
any Subsidiary of a voluntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree
or order for relief in respect of the Company or the Guarantor or any
Subsidiary in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or the Guarantor or any
Subsidiary or of any substantial part of its property, or the making
by it of an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debts generally as they
become due, or the taking of action by the Company or the Guarantor or
any Subsidiary in furtherance of any such action; or

(10) any Security Document shall, at any time, cease to be
in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the Company
or the Guarantor or the Collateral Agent shall not have or shall cease
to have a valid, perfected and subsisting Lien on the Collateral
(other

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than Collateral released as provided in the Security Documents and the
Intercreditor Agreement); or any Lien shall have a priority equal to
or greater than the Liens on the Collateral, except as permitted by
Section 10.14; or

(11) this Indenture or the Securities for any reason other
than satisfaction in full of the obligations thereunder shall cease to
be, or shall be asserted by the Company or the Guarantor not to be, in
full force and effect and enforceable in accordance with its terms or
is declared null and void.

SECTION V.2. Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than an Event of Default specified in
Section 5.1(8) or (9)) occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 50% in principal amount of
Outstanding Securities may declare the principal amount of all the Securities
to be due and payable immediately, by a notice in writing to the Company (and
to the Trustee if given by Holders), and upon any such declaration such
principal amount and any accrued interest shall, subject to Section 16.1
hereof, become immediately due and payable. If an Event of Default specified
in Section 5.1(8) or (9) occurs, the principal amount of and any accrued
interest on the Securities then Outstanding shall, subject to Section 16.1
hereof, become immediately due and payable without any declaration or other Act
on the part of the Trustee or any Holder.

At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this Article provided, the Holders of a majority
in principal amount of Outstanding Securities, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if

(1) the Company has paid or deposited with the Trustee a
sum of money (or, if applicable, Secondary Securities) sufficient to
pay

(A) all amounts due the Trustee under Section 6.7
and reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel,

(B) all overdue interest on all Securities,

(C) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required
to have been purchased on the Purchase Date pursuant to an
Offer to Purchase made by the Company) and, interest thereon
at the rate provided by the Securities (but not to exceed the
maximum rate permitted by applicable law), and

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(D) interest upon overdue interest at the rate
provided by the Securities but not to exceed the maximum rate
permitted by applicable law; and

(2) all Events of Default, other than the non-payment of
the principal of Securities which have become due solely by such
declaration of acceleration, have been cured or waived as provided in
Section 5.13.

No such rescission shall affect any subsequent default or impair any right
consequent thereon.

SECTION V.3. Collection of Debt and Suits for Enforcement by Trustee.

The Company covenants that if

(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or

(2) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to Purchase made by the Company, at the Purchase Date thereof,

the Company will, upon demand of the Trustee or the Holders of not less than
25% in principal amount of the Outstanding Securities, pay to the Trustee, for
the benefit of the Holders of such Securities, the whole amount (in money
and/or Secondary Securities, if applicable) then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the
rate provided by the Securities, and, in addition thereto, 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, other than costs and expenses incurred through
negligence or bad faith.

If the Company fails to pay such amounts (in money and/or Secondary
Securities, if applicable) forthwith upon such demand, the Trustee, in its own
name and as trustee of an express trust, or subject to Section 5.7 hereof, the
Holders of not less than 25% in principal amount of the Outstanding Securities
may institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.

If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem

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most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.

SECTION V.4. Trustee May File Proofs of Claim.

In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys 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 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 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 6.7.

No provision of this Indenture 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 Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.

SECTION V.5. Trustee May Enforce Claims Without Possession of Securities.

All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.

SECTION V.6. Application of Money Collected.

Any money or Secondary Securities collected by the Trustee pursuant to
this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal (or premium, if any) or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:

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FIRST, to the payment out of any money collected of all
amounts due the Trustee under Section 6.7;

SECOND, out of any money collected, to the payment in full of
the Second Priority Obligations (the amounts so applied to be
distributed among the Purchasers and the holders of the Second
Priority Notes pro rata first in accordance with the amounts of
accrued and unpaid interest on the Second Priority Notes, second in
accordance with the amounts of principal due with respect to the
Second Priority Notes and third in accordance with the other Second
Priority Obligations owed to them on the date of any such
distribution);

THIRD, to the payment in full of the Securities Obligations
(the Secondary Securities so applied to be distributed among the
Holders pro rata in accordance with the amounts of interest owed to
them and all moneys so applied to be distributed among the Holders pro
rata in accordance with the amounts of Securities Obligations owed to
them on the date of any such distribution after giving effect to any
contemporaneous distribution of Secondary Securities); and

FOURTH, to the Grantors, their respective successors or
assigns, or as a court of competent jurisdiction may otherwise direct.

SECTION V.7. Limitation on Suits.

No Holder of any Security shall have any right to institute any
proceeding (including an involuntary proceeding under the United States
Bankruptcy Code), judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless

(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;

(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default
in its own name as Trustee hereunder;

(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;

(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and

(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities;

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it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.

SECTION V.8 Unconditional Right of Holders to Receive Principal, Premium
and Interest.

Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 16.1) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of an Offer to Purchase made by the Company and accepted
as to such Security, on the Purchase Date) and to institute suit against the
Company and/or the Guarantor for the enforcement of any such payment (including
the commencement of an involuntary proceeding under the United States
Bankruptcy Code), and such rights may not be impaired without the consent of
such Holder.

SECTION V.9. Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Guarantor, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.

SECTION V.10. Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 3.6 or to unclaimed moneys paid over to the Company under
the last paragraph of Section 10.3, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.

SECTION V.11. Delay or Omission Not Waiver.

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No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or
Article XIV or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.

SECTION V.12. Control by Holders.

The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, provided that

(1) such direction shall not be in conflict with any rule
of law or with this Indenture, and

(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.

SECTION V.13. Waiver of Past Defaults.

The Holders of not less than a majority in principal amount of the
Outstanding Securities may on behalf of the Holders of all the Securities waive
any past default hereunder and its consequences, except a default

(1) in the payment of the principal of (or premium, if
any) or interest on any Security (including any Security which is
required to have been purchased pursuant to an Offer to Purchase which
has been made by the Company), or

(2) in respect of a covenant or provision hereof which
under Article IX cannot be modified or amended without the consent of
the Holder of each Outstanding Security affected.

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.

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SECTION V.14. 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, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit
to file an undertaking to pay the costs of such suit, and may assess costs
against any such party litigant, in the manner and to the extent provided in
the Trust Indenture Act; provided, that neither this Section nor the Trust
Indenture Act shall be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the
Trustee.

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SECTION V.15. Waiver of Stay or Extension Laws.

The Company and the Guarantor each covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.

ARTICLE VI

The Trustee

SECTION VI.1. Certain Duties and Responsibilities.

The duties and responsibilities of the Trustee shall be as provided by
this Indenture and the Trust Indenture Act. Without limiting the generality of
the foregoing, 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 their exercise, as a
prudent man would exercise or use under the same circumstances in the conduct
of his own affairs. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Trustee shall not be deemed to have notice of any Event of Default or event
which with the passage of time might become an Event of Default unless (i) the
Trustee has received written notice thereof, addressed to a Responsible Officer
or (ii) in the case of an Event of Default under Section 5.1(1) or 5.1(2), the
Trustee to the knowledge of a Responsible Officer is the sole Paying Agent.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection
to the Trustee shall be subject to the provisions of this Section.

The Trustee is expressly authorized and directed to enter into (i) the
Intercreditor Agreement, substantially in the form of Exhibit G hereto, for the
purpose of confirming that the lien of the Security Documents on the assets of
the Company or the Guarantor is junior to the lien of the security documents
relating to the Credit Agreement, (ii) the Security Agreement, substantially in
the form of Exhibit B hereto, (iii) any other Security Documents provided for
in the Security Agreement and (iv) any related

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financing statements or other required filings, all as specified in any
Officers' Certificates and Opinions of Counsel submitted to the Trustee.

SECTION VI.2. Notice of Defaults.

The Trustee shall give the Holders notice of any default hereunder as
and to the extent provided by the Trust Indenture Act; provided, however, that
in the case of any default of the character specified in Section 5.1(6), no
such notice to Holders need be given until at least 30 days after the delivery
of a Notice of Default as provided herein or such longer period of time as the
Trustee shall determine that the withholding of such notice is in the interests
of the Holders. For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would become, an Event
of Default.

SECTION VI.3. Certain Rights of Trustee.

Subject to the provisions of Section 6.1:

(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of Debt or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;

(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;

(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate;

(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;

(e) 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 pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;

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(f) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture;

(g) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of Debt or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or
attorney; and

(h) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.

SECTION VI.4. Not Responsible for Recitals or Issuance of Securities.

The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be responsible for the
statements relating to the Securities set forth in any Offer, registration
statement or private placement memorandum applicable thereto.

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SECTION VI.5. May Hold Securities.

The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 6.8 and 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar or such other agent.

SECTION VI.6. Money Held in Trust.

Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law or this Agreement. The
Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed in writing with the Company.

SECTION VI.7. Compensation and Reimbursement.

The Company agrees

(A) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

(B) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and

(C) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability, damage, cost or expense incurred without
negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or
duties hereunder.

The obligations of the Company under this Section 6.7 to compensate or
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustee as such
or otherwise distributable to Holders of Securities, except funds in trust for
the benefit of the holders of particular Securities.

When the Trustee incurs expenses or renders services after the
occurrence of an Event of Default specified in Section 5.1(8) or (9), the

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expenses and the compensation for the services are intended to constitute
expenses of administration in proceedings under any law therein referred to.
To the extent that such payment of reasonable compensation, expenses,
liabilities and counsel fees out of the estate in any such proceedings shall be
denied for any reason, payment of the same shall be secured by a lien on, and
shall be paid out of, any and all distributions, dividends, moneys, securities
and other property which the Holders of the Securities may be entitled to
receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise.

"Trustee" for purposes of this Section 6.7 shall include any
predecessor Trustee, but the negligence or bad faith of any Trustee shall not
affect the rights of any other Trustee under this Section 6.7.

SECTION VI.8. Disqualification; Conflicting Interests.

If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.

SECTION VI.9. Corporate Trustee Required; Eligibility.

There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the continental United States. If such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of a Federal, state, territorial or District of Columbia supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.

SECTION VI.10. Resignation and Removal; Appointment of Successor.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.

(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

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(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.

(d) If at any time:

(A) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Security for at least six months, or

(B) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the Company
or by any such Holder, or

(C) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;

then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.

(f) The successor Trustee shall give notice of each resignation and
each removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.

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SECTION VI.11. Acceptance of Appointment by Successor.

Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its
charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts.

No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.

SECTION VI.12. Merger, Conversion, Consolidation or Succession to Business.

Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to, or successor to the
corporate trust business of, such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.

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SECTION VI.13. Preferential Collection of Claims Against Company.

If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).

ARTICLE VII

Holders' Lists and Reports by Trustee and Company

SECTION VII.1. Company to Furnish Trustee Names and Addresses of Holders.

The Company will furnish or cause to be furnished to the Trustee

(a) semi-annually, not more than 15 days after each Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date, and

(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;

provided, however, that if and so long as the Trustee shall be the Security
Registrar, no such list need be furnished pursuant to clause (a) or (b) of this
Section 7.1.

SECTION VII.2. Preservation of Information; Communications to Holders.

(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.

(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.

(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason of
any disclosure of information as to names and addresses of Holders made
pursuant to the Trust Indenture Act.

SECTION VII.3. Reports by Trustee.

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(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times (May 1, in the case of annual reports) and in
the manner provided pursuant thereto.

(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.

SECTION VII.4. Reports by Company.

The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant to such Act; provided that any
such information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.

ARTICLE VIII

Merger, Consolidation, Etc.

SECTION VIII.1. Company or the Guarantor May Merge, Consolidate, etc.... Only
on Certain Terms.

(a) The Guarantor shall not consolidate with or merge into any
other Person or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all its properties and assets as an entirety, unless
either (i) the Guarantor shall be the continuing Person, or (ii) the Person (if
other than the Guarantor) formed by such consolidation or into which the
Guarantor is merged or the Person which acquires by conveyance, transfer, lease
or disposition the properties and assets of the Guarantor (the "Surviving
Entity") shall be a corporation duly organized and validly existing under the
laws of the United States of America or any state thereof and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the Guarantee and the performance
and observance of any covenant of this Indenture and the Security Documents on
the part of the Guarantor to be performed and observed; and

(i) immediately after giving effect to such transaction,
and treating any Debt Incurrred by the Guarantor as a
result of such transaction as having been Incurred at
the time of such transaction, (A) the Guarantor or
the Surviving Entity would not be liable with respect
to any Debt which is not permitted under Section 10.8
hereof and (B) the Consolidated Net Worth of the
Guarantor, the Company or the Surviving

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Entity and their Subsidiaries would be no less than
the Consolidated Net Worth of the Guarantor, the
Company and their Subsidiaries immediately prior to
such transactions.

(ii) no Event of Default under Section 5.1 has occurred or
is continuing at the time of such transaction; and

(iii) the Guarantor has delivered to the Trustee an
Officers' Certificate stating that the consolidation,
merger, conveyance, transfer, lease or other
disposition and, if a supplemental indenture is
required in connection with such transaction, such
supplemental indenture complies with this Article and
all conditions precedent herein provided for relating
to such transaction have been complied with.

(b) The Company shall not consolidate with or merge into any other
Person or permit any other Person to consolidate with or merge into the Company
or transfer, convey, sell, lease or otherwise dispose of all or substantially
all of its properties or assets as an entirety, unless:

(1) the Company is the surviving Person; or

(2) in case the Company shall consolidate with or merge with
or into another Person or transfer, convey, sell, lease or otherwise
dispose of all or substantially all of its properties or assets as an
entirety, and the Company is not the surviving Person (a "Non-Surviving
Combination"), the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by transfer,
conveyance, sale, lease or otherwise the assets of the Company
substantially as an entirety (for purposes of this Article VIII, a
"Successor Company") shall be a corporation organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee in
form satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
and the performance of every covenant of this Indenture on the part of
the Company to be performed or observed; and

(i) immediately after giving effect to such transaction,
and treating any Debt Incurred by the Company as a result of
such transaction as having been Incurred at the time of such
transaction, (A) the Company or the Successor Company would
not be liable with respect to any Debt which is not permitted
under Section 10.8 hereof and (B) the Consolidated Net
Worth of the Guarantor, the Company or the Successor Company
and their Subsidiaries would be no less than the Consolidated
Net Worth of the Guarantor, the Company and their Subsidiaries
immediately prior to such transaction;

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(ii) no Event of Default under Section 5.1 has occurred or
is continuing at the time of such transaction; and

(iii) the Company has delivered to the Trustee an Officers'
Certificate stating that such consolidation, merger,
conveyance, transfer, lease or acquisition and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture, complies with this
Article and that all conditions precedent herein provided for
relating to such transaction have been complied with.

SECTION VIII.2. Successor Substituted.

Upon any consolidation or merger, or any conveyance, transfer or lease
of the properties and assets of the Company or the Guarantor substantially as
an entirety in accordance with Section 8.1, the successor Person shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company or the Guarantor, as the case may be, under this Indenture with the
same effect as if such successor Person had been named as the Company or the
Guarantor, as the case may be, herein, and thereafter the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities.

ARTICLE IX

Supplemental Indentures

SECTION IX.I. Supplemental Indentures Without Consent of Holders.

Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

(1) to evidence the succession of another Person to the
Company or the Guarantor and the assumption by any such successor of
the covenants of the Company or the Guarantor, as the case may be,
herein and in the Securities; or

(2) to add to the covenants of the Company or the
Guarantor for the benefit of the Holders, or to surrender any right or
power herein conferred upon the Company or the Guarantor; or

(3) to secure the Securities pursuant to the requirements
of Section 10.22 or otherwise; or

(4) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not be inconsistent

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with the provisions of this Indenture, provided that such action
pursuant to this Clause (4) shall not adversely affect the interests
of the Holders in any material respect; or

(5) to comply with the requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the Trust Indenture Act.

The Company shall provide notice of any supplemental indenture to the
Holders of Outstanding Securities promptly after the execution of such
supplemental indenture pursuant to this Section 9.1, such notice to state the
substance of the contents of such supplemental indenture.

SECTION IX.2. Supplemental Indentures With Consent of Holders.

With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, the Company, when authorized by a
Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or modifying
in any manner the rights of the Holders under this Indenture; provided,
however, that no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Security affected thereby;

(1) change the Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or
the coin or currency (including Secondary Securities, if applicable)
in which, any Security or any premium or interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment on or after the Maturity thereof (or, in the case of
redemption, on or after the Redemption Date or in the case of an Offer
to Purchase which has been made, on or after the applicable Purchase
Date), or

(2) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is required for
any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or

(3) modify any of the provisions of this Section, Section
5.13 or Section 10.21, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, or

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(4) following the making of an Offer with respect to an
Offer to Purchase pursuant to Section 10.10 or 10.18, modify the
provisions of this Indenture with respect to such Offer to Purchase in
a manner adverse to such Holder.

It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.

SECTION IX.3. Execution of Supplemental Indentures.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive and (subject to Section 6.1) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise,
except for any supplemental indenture required in order to comply with the
requirements of the Trust Indenture Act.

SECTION IX.4. Effect of Supplemental Indentures.

Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.

SECTION IX.5. Conformity with Trust Indenture Act.

Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.

SECTION IX.6. Reference in Securities to Supplemental Indentures.

Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article, may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.

SECTION IX.7. Revocation and Effect of Consents.

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Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives
written notice of revocation before the date the amendment or waiver becomes
effective. An amendment or waiver becomes effective in accordance with its
terms and thereafter binds every Holder.

ARTICLE X

Covenants

SECTION X.1. Payment of Principal, Premium and Interest.

The Company will duly and punctually pay the principal of (and
premium, if any) and interest on the Securities in accordance with the terms of
the Securities and this Indenture.

SECTION X.2. Maintenance of Office or Agency.

The Company will maintain in New York, New York an office or agency of
the Trustee, Security Registrar or Paying Agent where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may be served. The
Company will 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, and the Company hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.

The Company may also from time to time designate one or more other
offices or agencies (in or outside New York, New York) where the Securities 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 agency of the Trustee, Security Registrar or Paying Agent
in New York, New York for such purposes. The Company will 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.

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SECTION X.3. Money for Security Payments to be Held in Trust.

Whenever the Company shall have one or more Paying Agents, it shall,
prior to each due date of the principal of (and premium, if any) or interest on
any Securities, deposit with a Paying Agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium or interest, and (unless such Paying Agent is the Trustee) the Company
will promptly notify the Trustee of its action or failure so to act.

The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:

(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;

(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest; and

(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.

Any money deposited with the Trustee or any Paying Agent in trust for
the payment of the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company upon delivery of a Company Request; and the Holder of such Security
shall thereafter, as an unsecured general 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 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 a newspaper
published in the English language, customarily published on each Business Day
and of general circulation in New York, New York, 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 publication, any unclaimed balance of
such money then remaining will be repaid to the Company.

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SECTION X.4. Existence.

Subject to Article VIII, the Company and the Guarantor will, and will
cause each of their Subsidiaries to, do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(charter and statutory) and franchises; provided, however, that the Company or
the Guarantor shall not be required to preserve any such right or franchise if
its Board of Directors or Members, as the case may be, in good faith shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company or the Guarantor, as the case may be, and that
the loss thereof is not disadvantageous in any material respect to the Holders;
and, provided, further, that the Guarantor may convert to a Delaware
corporation if its Members determine that such a conversion to corporate form
is in its best interests.

SECTION X.5. Maintenance of Properties.

The Company and the Guarantor will, and will cause each of their
Subsidiaries to, cause all properties used or useful in the conduct of its
business or the business of each Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company or
the Guarantor may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and to
comply in all material respects with all applicable laws, rules, regulations
(including zoning, building, Environmental and Safety Law, ordinance, code or
approval or agreements that affects its properties) and decrees and orders of
any Governmental Authority, whether now or hereafter enacted; provided,
however, that nothing in this Section shall prevent the Company or the
Guarantor from discontinuing the operation or maintenance of any of such
properties if such discontinuance is, as determined by its Board of Directors
or Members, as the case may be, or by an Officer (or other agent employed by
the Company or the Guarantor) of the Company or the Guarantor having managerial
responsibility for any such property, in good faith, desirable in the conduct
of its business or the business of any Subsidiary and not disadvantageous in
any material respect to the Holders.

SECTION X.6. Payment of Taxes and Other Claims.

The Company and the Guarantor will, and will cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (1) all taxes, assessments and governmental
charges levied upon the income, profits or property of the Company, the
Guarantor or such Subsidiaries, and (2) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Company, the Guarantor or any Subsidiaries; provided, however, that neither
the Company, the Guarantor nor any Subsidiary shall be required to pay or
discharge or cause to be paid or discharged any such tax, assessment,

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charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings.

SECTION X.7. Maintenance of Insurance.

The Company and the Guarantor shall, and shall cause each of their
Subsidiaries to, keep at all times all of their properties and possessions
which are of an insurable nature insured with insurers believed by the Company
to be responsible and reputable insurance companies or associations against
loss or damage, in such amounts and against such risks as is customary in the
hog production and pork processing businesses, and, in any event, at a minimum
to the same extent that property of similar character is usually so insured by
corporations similarly situated and owning like properties in accordance with
good business practice.

SECTION X.8. Limitation on Consolidated Debt.

Neither the Guarantor nor the Company will, nor will they cause or
permit any of their respective Subsidiaries to, Incur any Debt except:

(i) Debt of the Company and the Guarantor under (A) the Credit
Agreement, (B) the Morgan Stanley Note Agreement and the
Second Priority Notes and (C) the Securities and this
Indenture;

(ii) Debt of the Company arising from reimbursement and other
obligations in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided in the
ordinary course of business in an aggregate amount not to
exceed $2,500,000 at any time outstanding;

(iii) Debt of the Company (other than Debt permitted by clause (vi)
of this Section) to finance the purchase or lease of
equipment, buildings and real estate in an aggregate principal
amount not to exceed $15,000,000 at any time outstanding;

(iv) Debt of the Company Incurred in the ordinary course of
business arising from Hedge Agreements;

(v) Debt arising from intercompany loans between the Guarantor and
the Company;

(vi) New Finishing Facility Debt in an aggregate
principal amount not to exceed $15,000,000 at any time
outstanding; provided, however, that the Company shall be
permitted to incur New Finishing Facility Debt only to the
extent that (a) the New Finishing Facility Debt Service with
respect thereto (and with respect to all other New Finishing
Facility Debt incurred in the same quarter) for the period of
four consecutive fiscal quarters following the Incurrence
thereof would not exceed one-third of the Excess EBITDA for
the period of four consecutive fiscal quarters

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most recently ended (and until delivery by the Company of the
financial statements required by Section 10.17(a) with respect
to the fiscal quarter ended September 30, 1996, the aggregate
principal amount of New Finishing Facilities Debt that may be
Incurred pursuant to this clause (a) shall be deemed to be an
amount not in excess of $2,000,000) and (b) the lender or, in
the case of any Capital Lease Obligation, the lessor with
respect to any New Finishing Facility shall have entered into
an agreement, whereby it shall (A) waive any statutory or
common law lien it may have on the part of the Collateral
located at such New Finishing Facility and (B) grant the
Trustee access thereto, whether before or after the occurrence
of an Event of Default;

(vii) Debt assumed in connection with any mergers or consolidations
of another Person with the Company or a Subsidiary or in
connection with any acquisitions by the Company or a
Subsidiary of all or part of the assets of another Person to
the extent that the cumulative aggregate consideration
(including all such assumed Debt) paid by the Company or a
Subsidiary in connection therewith does not exceed
$10,000,000, provided, that additional such Debt beyond such
$10,000,000 may be incurred only if the aggregate principal
amount of such additional Debt shall not exceed 50% of the
fair market value of the assets of the other Person being
acquired in such merger, consolidation or acquisition;

(viii) Intercompany loans (A) made by the Company to any Subsidiary
that is a Wholly Owned Subsidiary, or (B) made by any
Subsidiary to the Company or any other Subsidiary that is a
Wholly Owned Subsidiary;

(ix) in addition to the Debt permitted by clauses (i) through
(viii) of this Section 10.8, the Company may become and remain
liable with respect to unsecured Debt, if at the date of and
after giving effect to the Incurrence of such Debt on a pro
forma basis, the Interest Coverage Ratio is equal to or
greater than 2.25 to 1.0; and

(x) Debt issued in exchange for or the net proceeds of which are
used to exchange, refinance or refund outstanding Debt of the
Company; in each case that is otherwise permitted by this
Section 10.8, so long as (A) the principal amount of any Debt
issued pursuant to this clause (x) does not exceed the
principal amount of, premium, if any, and accrued interest on,
and fees and expenses with respect to, the respective Debt
exchanged, refinanced or refunded, plus any transaction costs,
fees and expenses incurred in connection with or related to
such exchange, refinancing or refunding, (B) the Debt issued
pursuant to this clause (x) does not mature prior to the
stated maturity of, and does not have an Average Life shorter
than the remaining Average Life of, the respective Debt
exchanged, refinanced or refunded, and (C) where

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the Debt exchanged, refinanced or refunded is subordinated to
the obligations of the Company or such Subsidiary under this
Indenture, the respective Debt issued pursuant to this clause
(x) is, to the same extent, also subordinated to such
obligations.

SECTION X.9. Limitation on Restricted Payments.

(a) Neither the Guarantor nor the Company will, nor will they cause
or permit any of their respective Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any distribution, of any
kind or character (whether in cash, property or securities),
in respect of the Capital Stock of the Guarantor, the Company
or any Subsidiary, excluding any dividends or distributions
payable solely in shares of such Capital Stock (other than
Redeemable Stock) or in options, warrants or other rights to
acquire such Capital Stock (other than Redeemable Stock);

(ii) purchase, redeem or otherwise acquire or retire for value any
such Capital Stock of the Guarantor, the Company or any
Subsidiary;

(iii) make any Investment in, or payment on a guarantee of any
obligation of, any Person other than the Guarantor, the
Company or a Subsidiary; and

(iv) redeem, defease (including, but not limited to, legal or
covenant defeasance), repurchase, retire or otherwise acquire
or retire for value prior to any scheduled maturity, repayment
or sinking fund payment, Debt (other than the Securities)
which is subordinate in right of payment to the Securities;

(the transactions described in Clauses (i) through (iv) being referred to
herein as "Restricted Payments"), if at the time of and after giving effect to
any proposed Restricted Payment:

(A) an Event of Default, or an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default, shall have
occurred and be continuing; or

(B) the aggregate of all Restricted Payments from the date of this
Indenture exceeds the sum of

(I) 50% of cumulative Consolidated Net Income of the
Guarantor, the Company and their Subsidiaries (or, in the case
Consolidated Net Income of the Guarantor, the Company and
their Subsidiaries shall be negative, less 100% of such
deficit) from the date of this Indenture through the last day
of the last full fiscal quarter immediately preceding such
Restricted Payment; plus

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(II) the net proceeds received by the Company or the
Guarantor from the issuance or sale of Debt that is convertible
into Capital Stock after the date of this Indenture, to the
extent that such Debt has been actually converted into Capital
Stock (other than Redeemable Stock) through the last day of the
last full fiscal quarter immediately preceding such Restricted
Payment.

(b) Notwithstanding anything to the contrary contained in this
Section 10.9, the following Restricted Payments will be permitted on the
respective terms and conditions specified below:

(i) any Restricted Payment declared or made between Guarantor and
the Company;

(ii) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the
Guarantor (including options on such shares or related Capital
Stock appreciation rights or similar securities) held by
officers or employees, or former officers or employees (or
their estates or beneficiaries thereunder), or by any Benefit
Plan, upon death, disability, retirement or termination of
employment or pursuant to the terms of such Benefit Plan or
any other related agreement, provided that the aggregate cash
consideration paid for such purchase, redemption, acquisition,
cancellation or other retirement after the Closing Date shall
not exceed $1,000,000 in any one year;

(iii) the purchase of shares of Capital Stock of the Guarantor for
the purpose of contributing such Capital Stock to any Benefit
Plan or permitting any Benefit Plan to make payments to the
participants therein in cash rather than in such shares of
Capital Stock;

(iv) a Wholly Owned Subsidiary of the Company may (x) declare and
pay dividends or make distributions to the Company or any
other Wholly Owned Subsidiary of the Company and (y) transfer
any of its properties or assets to the Company or any other
Wholly Owned Subsidiary of the Company;

(v) Permitted Investments; and

(vi) dividends or other distribution in respect of the Company's
Capital Stock up to 50% of cumulative Consolidated Net Income
of the Guarantor, the Company and their Subsidiaries from the
date of this Indenture through the last day of the last full
final quarter immediately preceding such Restricted Payment.

provided that, in the case of any Restricted Payment made pursuant to paragraph
(ii) or (iii) above, no Default or Event of Default shall have occurred and be
continuing, or shall occur as a consequence thereof.

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SECTION X.10 Limitations Concerning Disposal of Assets.

(a) Neither the Guarantor nor the Company will, nor will they cause
or permit any Subsidiary to, make any Asset Disposition unless:

(i) (A) 75% of the consideration received from any such
Asset Disposition is received in cash, net of all legal,
title and recording tax expenses, commissions and other
reasonable fees and expenses incurred, and any taxes
actually payable as a consequence of such
disposition (the "Proceeds") and (B) such consideration
is at least equal to the fair market value (as determined
in good faith by the Board of Directors or the President
or the Chief Financial Officer or acting Chief Financial
Officer of the Company or the Guarantor) of the assets
being sold; and

(ii) (A) the Proceeds are applied to purchase, or such
Person enters into a definitive agreement to purchase,
within 180 days after receipt of such Proceeds, assets
or businesses used or engaged in the line of business
referred to in Section 10.16 hereof; and (B) to the
extent Proceeds are not applied as provided in clause
(A), either to repay within 180 days after the date of
such receipt with respect to the Term Loan or Morgan
Stanley Note Agreement in the amount of such Proceeds or
to make an Offer to Purchase in accordance with Section
10.10(b) hereof Securities at 100% of their principal
amount plus accrued interest, or both.

(b) If all or a portion of the Proceeds of any Asset Disposition are
to be applied to make an Offer to Purchase pursuant to Section 10.10(a)(ii)(B)
hereof, the Company shall, within 180 days after receipt of such Proceeds,
deliver to the Trustee an Officers' Certificate stating its intention to offer
to purchase Securities pursuant to that Section. Within 15 days thereafter,
the Trustee shall in accordance with Section 11.4 hereof select the Securities
which are to be the subject of such offer. Within 15 days thereafter, the
Company shall mail or cause the Trustee to mail an Offer to Purchase to each
Holder whose Securities have been selected to be the subject of such an Offer
to Purchase. The Offer to Purchase shall offer to purchase Securities, the
aggregate principal amount of which (including any Secondary Securities issued
with respect thereto between the date of the offer to Purchase and the Purchase
Date), together with accrued interest thereon to the Purchase Date, shall equal
to the amount of Proceeds required to be so applied.

A Holder receiving an Offer to Purchase pursuant to this Section may
elect to have purchased the Securities to which the Offer to Purchase relates
by furnishing to the Trustee on or before 35 days preceding the Purchase Date,
written notice of its election to have all such Securities so purchased. In
the event that less than all of the Holders receiving an Offer to Purchase
elect to have the Securities subject thereto purchased, the Company or the
Trustee (in the name of the Company and at its expense) shall, no later than

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25 days preceding the Purchase Date, mail an additional Offer to Purchase to
the Holders of the Securities, if any, who have provided written notice of
election to have Securities purchased and all of whose Securities would not
otherwise have been purchased.

The Company shall perform its obligations specified in the Offer to
Purchase. Prior to the Purchase Date, the Company shall (i) accept for
purchase Securities or portions thereof tendered pursuant to the Offer to
Purchase, (ii) deposit with the Trustee money sufficient to pay the Purchase
Price of all Securities or portions thereof so accepted, and (iii) deliver to
the Trustee all the Securities so accepted together with an Officers'
Certificate stating Securities or portions thereof accepted for payment by the
Company. The Trustee shall promptly mail or deliver to Holders of Securities
so accepted payment in an amount equal to the Purchase Price, and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new Security
or Securities equal in principal amount to any unpurchased portion of the
Security surrendered as requested by the Holder. Any Security not accepted for
payment shall be promptly mailed or delivered by the Company to the Holder
thereof.

SECTION X.11. Permitted Investments.

The Company shall not, nor will any Subsidiary be permitted to, make
any Investment other than a Permitted Investment.

SECTION X.12. Limitation on Issuance of Capital Stock of Subsidiaries.

The Company and the Guarantor shall not permit, directly or
indirectly, any Subsidiary that owns (or has a Subsidiary that owns) any
Collateral or that guarantees (or has a Subsidiary that guarantees) any
obligation under this Indenture to issue or sell any shares of its Capital
Stock, except to the Company or a Wholly Owned Subsidiary of the Company.

SECTION X.13. Dividends and Distributions; Liens Affecting Subsidiaries.

The Company and the Guarantor will not, and will not permit any
Subsidiary of the Company to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Subsidiary owned by the Company, the Guarantor or any other Subsidiary, (b) pay
any Debt owed to the Company, the Guarantor or any Subsidiary, (c) make loans
or advances to the Company, the Guarantor or any Subsidiary or (d) transfer any
of its property or assets to the Company, the Guarantor or any Subsidiary;
provided, however, that this Section 10.13 shall not restrict or prohibit any
such encumbrances or restrictions existing:

(i) in this Indenture or any agreement in effect on the
Effective Date or in any amendments, restatements, refinancings or
other modifications of this Indenture or any such other agreement,
provided

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that the encumbrance or restrictions contained therein are
comparable to, or no less restrictive than, those originally set forth
therein;

(ii) under or by reason of applicable law, rule or
regulation (including applicable currency control laws and applicable
state corporate statutes restricting the payment of dividends in
certain circumstances);

(iii) with respect to any Person or the property or assets
of such Person acquired by the Company or any Subsidiary at the time of
such acquisition, which encumbrances or restrictions are not applicable
to any Person or the property or assets of any Person other than such
Person; or

(iv) in the case of clause (d) of this Section 10.13,
that restrict in a customary manner the subletting, assignment or
transfer of any property or asset that is a lease, license, conveyance
or contract or similar property or asset.

SECTION X.14. Limitations on Liens.

The Guarantor and the Company shall not, and shall not permit any of
their Subsidiaries to, Incur any Lien on property or assets now owned or
hereinafter acquired; except for:

(a) Liens Incurred to secure the Credit Agreement, the Morgan
Stanley Note Agreement and the Securities and this Indenture;

(b) Liens on equipment to secure Debt permitted pursuant to
Section 10.8(iii);

(c) Liens securing Debt permitted pursuant to Section 10.8(x) to
the extent issued in exchange for, or the net proceeds of which are used to
exchange, refinance or refund, directly or indirectly, Debt referred to in
Sections 10.8(i)(A) and (B), 10.8(iii), 10.8(vi) or 10.8(vii);

(d) Liens for taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings, provided, that adequate
reserves with respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with generally accepted
accounting principles;

(e) Landlords', carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course
of business and with respect to amounts which are not yet delinquent or are
being contested in good faith by appropriate proceedings;

(f) Pledges or deposits made in the ordinary course of business in
connection with (A) leases, performance bonds and similar obligations, (B)
workers' compensation, unemployment insurance and other social security

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legislation, (C) Liens imposed under the Packers and Stockyards Act of 1921, as
amended from time to time, and (D) to secure the performance of surety bonds
and appeal bonds required (1) in the ordinary course of business or in
connection with the enforcement of rights or claims of the Company or a
Subsidiary or (2) in connection with judgments that do not exceed $250,000 in
the aggregate;

(g) Liens, easements, rights-of-way, zoning restrictions, Mineral
Rights and other similar restrictions, charges or encumbrances which do not
interfere with the ordinary conduct of the business of the Company and which do
not materially detract from the value of the property to which they attach or
materially impair the use thereof by the Company, the Guarantor or any
Subsidiary;

(h) Any attachment or judgment Lien, unless the judgment it
secured shall not, within 30 calendar days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have been
discharged within 30 calendar days after the expiration of any such stay;

(i) Liens securing Debt permitted by Section 10.8(vii), provided
that such Liens attach solely to the assets of the acquired entity and do not
extend to or cover any other assets of the Company or any of its Subsidiaries;

(j) Liens in favor of the Trustee for its own benefit and for the
benefit of the Holders;

(k) Any interest or title of a lessor pursuant to a lease
constituting a Capital Lease Obligation;

(l) Any renewal of or substitution for any Lien permitted by any
of the preceding clauses, provided that the Debt secured is not increased nor
the Lien extended to any additional assets (other than proceeds and
accessions);

(m) Liens upon New Finishing Facilities to secure New Finishing
Facility Debt permitted hereunder;

(n) Liens on any Hedge Agreements resulting solely from the
purchase of such Hedge Agreements on margin; and

(o) Liens (including Liens consisting of Mineral Rights) in
existence on the Effective Date. and identified on Schedule 10.14(o).

Notwithstanding the foregoing, the Company shall not grant, or permit
to exist, any lien on or security interest in any Collateral in contravention
of Section 4.03 of the Security Agreement.

SECTION X.15. Limitation on Transactions with Affiliates.

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The Company and the Guarantor shall not, and shall not permit any
Subsidiary to, directly or indirectly, enter into any transaction not in the
ordinary course of its business (excluding (i) transactions between the Company
and Subsidiaries or between or among Subsidiaries, and (ii) transactions
permitted under Section 10.9), with any Affiliate other than Permitted Holders,
unless a majority of its Board of Directors or its Members, as the case may be,
shall determine in its good faith judgment and evidenced by a Board Resolution
that:

(1) the terms of such transaction are in the best interests
of the Company, the Guarantor or such Subsidiary; and

(2) such transaction is on terms no less favorable to the
Company, the Guarantor or such Subsidiary than those that could be
obtained in a comparable arm's-length transaction with an entity that
is not an Affiliate.

Notwithstanding anything to the contrary contained herein, so long as
no Event of Default shall have occurred and be continuing, the foregoing
provisions shall not limit or apply to (i) any transaction or series of
transactions (A) which the Board of Directors of the Company or the Members of
the Guarantor, as the case may be, shall determine, in good faith, is in the
best interest of the Company and (B) as to which the Company shall have
delivered to the Trustee a written opinion of an independent nationally
recognized investment banking firm stating that this transaction is fair to the
Company or the Guarantor, as the case may be, from a financial point of view;
(ii) any Restricted Payment not prohibited by Section 10.9; (iii) payments
pursuant to any tax sharing agreement or arrangement among the Guarantor, the
Company and any Subsidiaries; and (iv) any transactions between the Guarantor,
the Company or any of its Subsidiaries and MS Group or any of its Affiliates
involving the provision of financial, investment banking, management consulting
or underwriting services by MS Group or any of its Affiliates, provided that
the fees payable to MS Group or any of its Affiliates do not exceed the usual
and customary fees of MS Group or any such Affiliate charged to persons that
are not Affiliates of MS Group or any of its Affiliates (through direct equity
ownership, warrants, contract rights or otherwise).

SECTION X.16. Limitation on Related Business.

The Company and the Guarantor will not, and will not permit any
Subsidiary to, engage in any business other than the businesses in which they
are engaged on the date of this Indenture and business activities reasonably
complementary or incidental thereto.

SECTION X.17. Provision of Financial Information.

The Company shall file with the Trustee:

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(a) within 45 days after the close of each quarterly accounting
period in each fiscal year of the Company, the Consolidated balance sheets of
the Guarantor, the Company and their Subsidiaries as at the end of such
quarterly accounting period and the related Consolidated statements of income
and cash flow for such quarterly accounting period, together with a
management's discussion and analysis relating thereto, all of which shall be
certified by an Officer of the Company and the Guarantor as fairly presenting
the Consolidated financial condition and results of operations of the Company
and the Guarantor in accordance with generally accepted accounting principles
consistently applied, subject to normal year-end audit adjustments;

(b) within 90 days after the end of each fiscal year of the Company,
the Consolidated balance sheets of the Guarantor, the Company and their
Subsidiaries as at the end of such fiscal year and the related Consolidated
statements of income and cash flow for such fiscal year, certified by
independent certified public accountants of recognized national standing,
together with (i) a management's discussion and analysis relating thereto and
(ii) a statement of such accounting firm that its audit of such financial
statements was conducted in accordance with generally accepted auditing
standards; and

(c) together with the delivery of financial statements under
paragraph (a) or (b) above, a certificate of an Officer of the Company
certifying that, as of the date of such certificate and as to his or her
knowledge, the Company is in compliance with all conditions and covenants under
this Indenture and, since the date of the last such certificate delivered by
the Company, no Event of Default has occurred or, if such Event of Default has
occurred, specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto.

(d) The Company shall, upon receipt of notice from any Holder that is
proposes to sell any Securities pursuant to the exemption provided by the
Commission's Rule 144A (or any successor thereto), provide at its expense the
information required by such Rule, including without limitation a brief
statement of the nature of the Company's business and its products and services
and the financial information required by such Rule.

SECTION X.18. Change of Control.

(a) Upon the occurrence of a Change of Control (as defined below),
each Holder of a Security shall have the right to have such Security
repurchased by the Company. The Company shall, within 30 days following the
date of the consummation of a transaction resulting in a Change of Control,
mail an Offer with respect to an Offer to Purchase all Securities Outstanding
on the Purchase Date at a Purchase Price equal to 101% of their principal
amount together with all accrued and unpaid interest to the Purchase Date;
provided, however, that installments of interest whose Stated Maturity is on or
prior to the Purchase Date shall be payable to the Holders of such Securities,
or one or more Predecessor Securities, registered as such at the close of
business on the relevant Record Dates according to their terms and the
provisions of

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Section 3.7. Each Holder shall be entitled to tender all or any portion of the
Securities owned by such Holder or payable to such Holder on any intervening
Interest Payment Date.

(b) The Company shall perform its obligations specified in the Offer
for the Offer to Purchase. Prior to the Purchase Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Offer, (ii) deposit with the Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust as provided in Section 10.3)
money sufficient to pay the Purchase Price of all Securities or portions
thereof so accepted and (iii) deliver or cause to be delivered to the Trustee
all Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof accepted for payment by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Securities so accepted
payment in an amount equal to the Purchase Price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Security or
Securities equal in principal amount to any unpurchased portion of the Security
surrendered as requested by the Holder. Any Security not accepted for payment
shall be promptly mailed or delivered by the Company to the Holder thereof.

(c) "Change of Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange
Act of 1934 as in effect on the date hereof) other than one or more Permitted
Holders shall own directly or indirectly, beneficially or of record, shares
representing more than 35% of the aggregate ordinary voting power represented
by the issued and outstanding membership interests of the Guarantor; (b) a
majority of the seats (other than vacant seats) on the Board of Directors of
the Company shall at any time be occupied by persons who were neither (i)
nominated by the Board of Directors of the Company nor (ii) appointed by
directors so nominated; (c) any change in control (or similar event, however
denominated) with respect to the Company or the Guarantor shall occur under and
as defined in any indenture or agreement in respect of Debt to which the
Company or the Guarantor is a party; or (d) the Company ceases for any reason
to be a Wholly Owned Subsidiary of the Guarantor (other than as a result of the
merger of the Company into the Guarantor).

SECTION X.19. Environmental and Safety Compliance.

The Company shall, and shall cause its Subsidiaries to, comply with
all Environmental and Safety Laws, except where failure so to comply could not
reasonably be expected to result in a Material Adverse Effect, and provide
prompt written notice to the Trustee following the receipt of any written
notice of any material violation of any Environmental and Safety Laws from any
Governmental Authority.

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SECTION X.20. Statement by Officers as to Default.

(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year ending after the date hereof, an Officers'
Certificate, stating whether or not to the knowledge of the signers thereof the
Company and the Guarantor are in compliance with all conditions and covenants
under this Indenture, including without limitation Section 8.1 and Sections
10.4 to 10.20, inclusive, and if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which they may have
knowledge. Said Officers' Certificate shall be accompanied by or combined with
a certificate signed by an Officer and containing the statements required by
Section 314(a)(4) of the Trust Indenture Act.

(b) The Company shall deliver to the Trustee, as soon as possible and
in any event within 10 days after the Company becomes aware of the occurrence
of an Event of Default or an event which, with notice or the lapse of time or
both, would constitute an Event of Default, an Officers' Certificate setting
forth the details of such Event of Default or default, and the action which the
Company proposes to take with respect thereto.

(c) The Company shall deliver to the Trustee, promptly after becoming
aware thereof, notice of the commencement of, any action, suit or proceeding
that, if adversely determined, could reasonably be expected to result in a
Material Adverse Effect.

SECTION X.21. Waiver of Certain Covenants.

The Company and the Guarantor may omit in any particular instance to
comply with any covenant or condition set forth in Section 8.1 and Sections
10.4 to 10.20, inclusive, if the Holders of at least a majority in principal
amount of the Outstanding Securities shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect; provided, however, with respect to an Offer to Purchase as to
which an Offer has been mailed, no such waiver may be made or shall be
effective against any Holder tendering Securities pursuant to such Offer, and
the Company may not omit to comply with the terms of such Offer as to such
Holder.

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SECTION X.22. Further Assurances.

The Company and the Guarantor shall, upon request of the Trustee,
execute and deliver such further instruments and do such further acts as may
reasonably be necessary or proper to carry out more effectively the provisions
of this Indenture, including without limitation any instruments necessary to
preserve, protect or perfect the validity of security interests created or
intended to be created in the Collateral under the Security Documents.

The Guarantor and the Company will cause each of their existing and
subsequently acquired or organized Subsidiaries (other than an Inactive
Subsidiary) and each of their Subsidiaries that ceases to be an Inactive
Subsidiary (a) to execute and deliver to the Trustee a Subsidiary Guarantee
Agreement pursuant to which such Subsidiary will guarantee payment of the
Securities on substantially the same terms and conditions as those set forth in
Article XIV, and (b), at such time as there shall be two or more Subsidiary
Guarantors to execute and deliver to the Trustee the Indemnity, Subrogation and
Contribution Agreement (or a supplement thereto) and (c) each other applicable
Security Document in favor of the Trustee as may be deemed necessary by the
Company or the Trustee to create a valid, perfected and enforceable security
interest in the Collateral of such Subsidiary.

In addition, from time to time, each of the Company and the Guarantor
shall, and shall cause each of their existing and subsequently acquired or
organized Subsidiaries (other than an Inactive Subsidiary) and each of their
Subsidiaries that ceases to be an Inactive Subsidiary (a) whenever it files any
further instruments and documents or takes any other action to better assure,
preserve, protect and perfect the security granted to the holders of the First
Priority Debt, it will forthwith notify the Collateral Agent thereof and (b)
will promptly, at its own expense, execute, acknowledge, deliver and cause to
be duly filed comparable instruments and documents and take such comparable
actions to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby to the same extent as may be granted
to the First Priority Debt.

SECTION X.23. Compliance with Security Documents.

Each of the Company and the Guarantor shall, and shall cause each of
their Subsidiaries to, comply with all of their respective covenants,
commitments and undertakings under each of the Security Documents to which it
is a party.

ARTICLE XI

Redemption of Securities

SECTION XI.1. Right of Optional Redemption.

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The Securities may be redeemed at the election of the Company, as a
whole or from time to time in part, at any time and at the Redemption Prices
specified in the form of Security hereinbefore set forth, together with accrued
interest to the Redemption Date.

SECTION XI.2. Applicability of Article.

Redemption of Securities at the election of the Company, as permitted
or required by any provision of this Indenture, shall be made in accordance
with such provision and this Article.

SECTION XI.3. Election to Redeem; Notice to Trustee.

The election of the Company to redeem any Securities pursuant to
Section 11.1 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company of less than all the Securities, the
Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date and of the principal amount of Securities
to be redeemed.

SECTION XI.4. Selection by Trustee of Securities to be Redeemed.

If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected not more than 45 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities not previously
called for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $1,000 or any integral multiple thereof) of the principal amount of
Securities of a denomination larger than $1,000 and which need not, unless the
Company otherwise directs, provide for the selection of amounts which are less
than $1,000.

The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.

For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.

SECTION XI.5. Notice of Redemption.

Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.

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All notices of redemption shall state:

(1) the Redemption Date,

(2) the Redemption Price,

(3) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,

(4) if an Interest Payment date will occur on or before the
Redemption date, that the interest then payable will be paid to the
Holder as of the appropriate Record Date,

(5) that on the Redemption Date the Redemption Price,
together with all accrued and unpaid interest to the Redemption Date,
will become due and payable upon each such Security to be redeemed and
that interest thereon will cease to accrue on and after said date, and

(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued and unpaid
interest.

Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

SECTION XI.6. Deposit of Redemption Price.

On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 10.3) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.

SECTION XI.7. Securities Payable on Redemption Date.

Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
shall be paid by the Company at the Redemption Price, together with accrued
interest to the Redemption Date; provided, however, that installments of
interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor

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Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.7.

If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.

SECTION XI.8. Securities Redeemed in Part.

Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
Section 10.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service charge
(except as otherwise provided in Section 3.5), a new Security or Securities of
like tenor, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.

ARTICLE XII

Defeasance and Covenant Defeasance

SECTION XII.1. Company's Option to Effect Defeasance or Covenant Defeasances.

The Company may at its option by Board Resolution, at any time, elect
to have either Section 12.2 or Section 12.3 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
XII.

SECTION XII.2. Defeasance and Discharge.

Upon the Company's exercise of the option provided in Section 12.1
applicable to this Section, the Company shall be deemed to have been discharged
from its obligations with respect to the Outstanding Securities on the date the
conditions set forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed to have paid
and discharged the entire Debt represented by the Outstanding Securities and to
have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 12.4 and as more fully
set forth in such Section, payments in respect of the principal of (and
premium, if any) and interest on such Securities when such payments are due,
the Company's obligations with respect to such

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Securities under Sections 3.4, 3.5, 3.6, 10.2 and 10.3, the rights, powers,
trusts, duties and immunities of the Trustee hereunder and this Article XII.
Subject to compliance with this Article XII, the Company may exercise its
option under this Section 12.2 notwithstanding the prior exercise of its option
under Section 12.3.

SECTION XII.3. Covenant Defeasance.

Upon the Company's exercise of the option provided in Section 12.1
applicable to this Section (i) the Company shall be released from its
obligations under Section 10.5 through 10.19, inclusive, and clauses (i) and
(iii) of Section 8.1(b) and (ii) (except with respect to surviving obligations
of the Company under Section 12.2) the occurrence of an event specified in
Section 5.1(6) shall not be deemed to be an Event of Default, on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"). For this purpose, such covenant defeasance means that 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 Section, Clause or Article,
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section, Clause or Article or by reason of any reference in any such
Section, Clause or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.

SECTION XII.4. Conditions to Defeasance or Covenant Defeasance.

The following shall be the conditions to application of either Section
12.2 or Section 12.3 to the then Outstanding Securities:

(1) The Company shall (a) irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 6.9 who shall agree to comply with the
provisions of this Article XII applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, no later than one day before the due date of any
payment, money in an amount, or (C) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the
principal of, premium, if any, and each installment of interest on the
Securities at Maturity in accordance with the terms of this Indenture
and of such Securities, and (b) if such payment of any Securities at
Maturity results from a redemption of Securities, the Company shall
have given, or made arrangements satisfactory to the Trustee for
giving due notice thereof. For this purpose, "U.S. Government
Obligations" means securities that

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are (x) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the Securities Act of 1933, as amended) as
custodian with respect to any such U.S. Government Obligation or a
specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.

(2) No Event of Default or event which with notice or lapse
of time or both would become an Event of Default shall have occurred
and be continuing on the date of such deposit or, insofar as
subsections 5.1(8) and (9) are concerned, at any time during the
period ending on the 121st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied
until the expiration of such period).

(3) Such defeasance or covenant defeasance shall not cause
the Trustee to have a conflicting interest as defined in Section 6.8
and for purposes of the Trust Indenture Act with respect to any
securities of the Company.

(4) Such defeasance or covenant defeasance shall not result
in a breach or violation of, or constitute a default under, this
Indenture or any other agreement or instrument to which the Company is
a party or by which it is bound.

(5) The Company shall have delivered to the Trustee an
Officers' Certificate and Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the defeasance
under Section 12.2 or the covenant defeasance under Section 12.3 (as
the case may be) have been complied with.

(6) In the case of an election under Section 12.2, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (y) 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 shall confirm that, the Holders of the
Outstanding Securities will not

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recognize gain or loss for Federal income tax purposes as a result of
such deposit, defeasance and discharge 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 deposit, defeasance and
discharge had not occurred.

(7) In the case of an election under Section 12.3, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the Outstanding Securities will not
recognize gain or loss for Federal income tax purposes as a result of
such deposit and 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 deposit and covenant
defeasance had not occurred.

(8) The Company shall have delivered to the Trustee an
Officers' Certificate to the effect that the Securities, if then
listed on any securities exchange, will not be delisted as a result of
such deposit.

(9) Such defeasance or covenant defeasance shall not result
in the trust arising from such deposit constituting an investment
company as defined in the Investment Company Act of 1940, as amended,
or such trust shall be qualified under such act or exempt from
regulation thereunder.

SECTION XII.5. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.

Subject to the provisions of the last paragraph of Section 10.3, all
money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee -- collectively, for
purposes of this Section 12.5, the "Trustee") pursuant to Section 12.4 in
respect of the Securities shall be held in trust for the benefit of the Holders
of the Securities and applied by the Trustee in accordance with the provisions
of such Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Securities, of all sums
due and to become due thereon in respect of principal (and 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 U.S. Government Obligations
deposited pursuant to Section 13.4 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 Securities.

Anything in this Article XII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 12.4 which, in the opinion of a nationally recognized firm of

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independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance.

SECTION XII.6. Reinstatement.

If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 12.2 or 12.3 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
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article XII until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 12.2 or 12.3;
provided, however, that if the Company makes any payment of principal of (and
premium, if any) or interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
the Paying Agent.

ARTICLE XIII

Meeting of Holders of Securities

SECTION XIII.1. Purposes for Which Meetings May Be Called.

A meeting of Holders of Securities may be called at any time and from
time to time pursuant to this Article to make, give or take any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be made, given or taken by Holders of Securities.

SECTION XIII.2. Call, Notice and Place of Meetings.

(a) The Trustee may at any time call a meeting of Holders of
Securities for any purpose specified in Section 13.1, to be held at such time
and at such place in New York, New York as the Trustee shall determine. Notice
of every meeting of Holders of Securities, setting forth the time and the place
of such meeting and in general terms the action proposed to be taken at such
meeting, shall be given, in the manner provided in Section 1.6, not less than
20 nor more than 180 days prior to the date fixed for the meeting.

(b) In case at any time the Company pursuant to a Board Resolution,
or the Holders of at least 25% in principal amount of the Outstanding
Securities shall have requested the Trustee to call a meeting of the Holders of
Securities for any purpose specified in Section 13.1, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have mailed a notice of meeting as provided
above or shall not thereafter proceed to cause the meeting to be held as
provided herein, then the Company or the Holders of Securities in the amount

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above specified, as the case may be, may determine the time and the place in
New York, New York for such a meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection (a) of this
Section.

SECTION XIII.3. Persons Entitled to Vote at Meetings.

To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (1) a Holder of one or more Outstanding Securities, or (2) a
Person appointed by an instrument in writing as proxy of a Holder or Holders.
The only Persons who shall be entitled to be present or to speak at any meeting
of Holders of Securities shall be the Persons entitled to vote at such meeting
and their counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.

SECTION XIII.4. Quorum; Action.

The Persons entitled to vote a majority in principal amount of the
Outstanding Securities shall constitute a quorum for a meeting of Holders of
Securities. In the absence of a quorum within 30 minutes of the time appointed
for any such meeting, the meeting shall, if convened at the request of Holders
of Securities, be dissolved, or may, if convened in any other manner, be
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such meeting. In the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for a period of not less than 10 days as determined by the chairman
of the meeting prior to the adjournment of such adjourned meeting. Notice of
the reconvening of any such adjourned meeting shall be given as provided in
Section 13.2(a), except that such notice need be given not less than ten days
prior to the date on which the meeting is scheduled to be reconvened. Notice
of the reconvening of any such adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding
Securities which shall constitute a quorum.

Except as limited by the proviso to Section 9.2, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted by the affirmative vote of the Holders
of a majority in principal amount of the Outstanding Securities; provided,
however, that, except as limited by the proviso to Section 9.2, any resolution
with respect to any consent or waiver which this Indenture expressly provides
may be given by the Holders of not less than a majority in principal amount of
the Outstanding Securities may be adopted at a meeting or an adjourned meeting
duly convened and at which a quorum is present as aforesaid only by the
affirmative vote of the Holders of a majority in principal amount of the
Outstanding Securities; and provided, further, that, except as limited by the
proviso to Section 9.2, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action which this
Indenture expressly provides may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Securities may be adopted at a meeting or any adjourned

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meeting duly reconvened and at which a quorum is present by such specified
percentage in principal amount of the Outstanding Securities.

Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all
the Holders of Securities, whether or not present or represented at the
meeting.

SECTION XIII.5. Determination of Voting Rights; Conduct and Adjournment of
Meetings.

(a) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of
Securities and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem appropriate. Except as
otherwise permitted or required by any such regulations, the holding of
Securities shall be proved in the manner specified in Section 1.4 and the
appointment of any proxy shall be proved in the manner specified in Section 1.4
or by having the signature of the person executing the proxy guaranteed by any
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office, branch or agency in the United States. Such
regulations may provide that written instruments appointing proxies, regular on
their face, may be presumed valid and genuine without the proof specified
above.

(b) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders of Securities as provided in Section 13.2(b), in
which case the Company or the Holders of Securities that called the meeting, as
the case may be, shall in like manner appoint a temporary chairman. A
permanent chairman and permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority in principal amount of the
Outstanding Securities represented at the meeting.

(c) At any meeting each Holder of a Security or proxy shall be
entitled to one vote for each $1.00 principal amount (or its equivalent) of the
Outstanding Securities held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security or proxy.

(d) Any meeting of Holders of Securities duly called pursuant to
Section 13.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in principal amount of the Outstanding
Securities represented at the meeting; and the meeting may be held as so
adjourned without further notice.

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SECTION XIII.6. Counting Votes and Recording Action of Meetings.

The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy
and the principal amounts and serial numbers of the Outstanding Securities held
or represented by them. The permanent chairman of the meeting shall appoint
two inspectors of votes who shall count all votes cast at the meeting for or
against any resolution and who shall make and file with the secretary of the
meeting their verified written reports in duplicate of all votes cast at the
meeting. A record, at least in duplicate, of the proceedings of each meeting
of Holders of Securities shall be prepared by the Secretary of the meeting and
there shall be attached to said record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was given as provided in Section 13.2 and,
if applicable, Section 13.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

ARTICLE XIV

Guarantee

SECTION XIV.1. Guarantee.

The Guarantor hereby, jointly and severally with any Subsidiary
Guarantors, unconditionally and irrevocably guaranties to each Holder and to
the Trustee, and their respective successors and assigns, the due and punctual
payment of principal of and, within applicable grace periods, interest on the
Securities when due, whether at Stated Maturity, by acceleration, by redemption
or Offer to Purchase or otherwise, and all other monetary obligations of the
Company under this Indenture and the Securities and the due and punctual
performance within applicable grace period of all other obligations of the
Company under this Indenture and the Securities (the foregoing being
hereinafter collectively called the "Obligations"). The Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice or further assent from the Guarantor, and that the Guarantor
will remain bound by this Article XIV notwithstanding any extension or renewal
of any Obligation.

The Guarantor waives presentation to, demand of payment from and
protest to the Company of any of the Obligations, and also waives notice of
protest for nonpayment. The Guarantor waives notice of any default under the
Securities or the Obligations. The Obligations of the Guarantor hereunder
shall not be affected by (a) the failure of any Holder or the Trustee to

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assert any claim or demand or to enforce any right or remedy against the
Company or any other person under this Indenture, the Securities or any other
agreement or otherwise; (b) any extension or renewal of any thereof; (c) any
rescission, waiver, amendment or modification of any of the terms or provisions
of this Indenture, the Securities or any other agreement; (d) the release of
any security held by any Holder or the Trustee for the Obligations or any of
them; (e) the failure of any Holder or the Trustee to exercise any right or
remedy against any other guarantor of the Obligations or (f) (except as
provided in Section 14.3 ) any change in the ownership of any Guarantor.

The Guarantor further agrees that its Guarantee herein constitutes a
guaranty of payment when due (and not a guaranty of collection) and waives any
right to require that any resort be had by any Holder or the Trustee to any
security held for payment of the Obligations.

The Obligations of the Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, and recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of
the Obligations or otherwise. Without limiting the generality of the
foregoing, the Obligations of the Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any act or thing or omission or delay to
do any other act or thing which may or might in any manner or to any extent
vary the risk of the Guarantor or would otherwise act as a discharge of the
Guarantor as a matter of law or equity.

The Guarantor further agrees that its Guarantee herein shall continue
to be effective or be reinstated, as the case may be, if at any time payment,
or any part thereof, of principal of or interest on any Obligation is rescinded
or must otherwise be restored by any Holder or the Trustee upon the bankruptcy
or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against the
Guarantor by virtue hereof, upon the failure of the Company to pay the
principal of or interest on any Obligation when and as the same shall become
due, whether at Stated Maturity, by acceleration, by redemption or otherwise,
or to perform its obligations specified in any Offer to Purchase, the Guarantor
hereby, jointly and severally with any Subsidiary Guarantors, promises to and
will, upon receipt of written demand by the Trustee, forthwith pay or cause to
be paid, in cash, to the Holders or the Trustee an amount equal to the sum of
(i) the unpaid principal amount of such Obligations, (ii) accrued and unpaid
interest on such Obligations (but not to exceed the maximum rate permitted by
applicable law) and (iii) all other monetary Obligations of the Company to the
Holders and the Trustee.

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The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any Obligations guarantied
hereby until payment in full of all Obligations. The Guarantor further agrees
that, as between the Guarantor, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guarantied
hereby may be accelerated as provided in Article V for the purposes of such
Guarantor's Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guarantied hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article V, such Obligations (whether or not due
and payable) shall forthwith become due and payable by the Guarantor for
purposes of this Section.

The Guarantor also agrees, jointly and severally, with any Subsidiary
Guarantors, to pay any and all costs and expenses (including reasonable
attorneys' fees) incurred by the Trustee or any Holder in enforcing any rights
under this Section.

SECTION XIV.2. Execution and Delivery of Guarantee.

To evidence its Guarantee set forth in Section 14.1, the Guarantor
agrees that a notation of such Guarantee substantially in the form set forth in
Section 2.5 hereof, shall be endorsed on each Security authenticated and
delivered by the Trustee and that such endorsement shall be executed on behalf
of the Guarantor by an Officer or a holder of a power of attorney authorized to
execute the Guarantee by manual or facsimile signature.

The Guarantor agrees that its Guarantee set forth in Section 14.1
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guarantee.

If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security on which a Guarantee
is endorsed, the Guarantee shall be valid nevertheless.

The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this indenture on behalf of the Guarantor.

SECTION XIV.3. Successors and Assigns.

This Article XIV shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in this Indenture and in the Securities shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions of this Indenture.

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SECTION XIV.4. No waiver, etc.

Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article XIV
shall operate as a waiver thereof, nor shall a single or partial exercise
thereof preclude any other or further exercise of any right, power or
privilege. The rights, remedies and benefits of the Trustee and the Holders
herein expressly specified are cumulative and not exclusive of any other
rights, remedies and benefits which either may have under this Article at law,
in equity, by statute or otherwise.

SECTION XIV.5. Modification, etc.

No modification, amendment or waiver of any provision of this Article
XIV, nor the 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
Trustee, subject to the prior written consent of the Holders, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on any Guarantor in any case
shall entitle the Guarantor or any other guarantor to any other or further
notice or demand in the same, similar or other circumstances.

ARTICLE XV

Security Documents

SECTION XV.1. Security Documents.

(a) In order to secure the due and punctual payment of the Second
Priority Notes and the Securities, the Company, the Guarantor and the Trustee,
in its capacity as Collateral Agent, have entered into or will enter into, as
the case may be, the Security Documents to create the security interests
thereunder and for related matters. The Company and the Guarantor covenant and
agree that they have full right, power and lawful authority to grant, bargain,
sell, release, convey, hypothecate, assign, mortgage, pledge, transfer, confirm
and grant a security interest in the property constituting the Collateral, in
the manner and form done in the Security Documents or intended to be done, and
that (a) each will forever warrant and defend the title to the same against the
claims of all Persons whatsoever in each case free and clear of all Liens
whatsoever, except Liens permitted by Section 10.14, (b) each will execute,
acknowledge and deliver to the Trustee, as such Collateral Agent, such further
assignments, transfers, assurances or other instruments and will do or cause to
be done all such acts and things as may be necessary or proper to assure and
confirm to the Trustee, as Collateral Agent, its interest in the Collateral, or
any part thereof, as from time to time constituted, and the right, title and
interest in and to the Security Documents so as to render the same available
for the security and benefit of this Indenture and of the Second Priority Notes
and the Securities.

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<PAGE> 99

(b) Each Holder, by accepting the Securities, consents and agrees
to all of the terms and provisions of the Security Documents, including the
relative priority of the interests of the Second Priority Notes and the
Securities with respect to the Collateral, as the same may be amended from time
to time pursuant to the provisions of the Security Documents and this
Indenture, and authorizes and directs the Trustee to enter into each of
Security Documents to which it is a party and to perform its obligations and
exercise its rights thereunder in accordance therewith; provided, however, that
if any provision of the Security Documents limits, qualifies, or conflicts with
the duties imposed by the provisions of the Trust Indenture Act, the Trust
Indenture Act controls.

(c) So long as the Morgan Stanley Note Agreement or any Second
Priority Note remains in effect, as between the holders of the Second Priority
Notes and the Holders of the Securities, the Collateral (including for this
purpose the Real Property covered by the Mortgages) as now or hereafter
constituted shall be held for the benefit of all such holders without
distinction as security for the Second Priority Obligations and the
Obligations, except that, after foreclosure any proceeds shall be applied first
to the payment in full of the Second Priority Obligations pursuant to Section
5.6. Thereafter, as amongst the Holders, the Collateral (including for this
purpose the Real Property covered by the Mortgages) as now or hereafter
constituted shall be held for the equal and ratable benefit of the Holders
without preference, priority or distinction of any thereof over any other by
reason of difference in time of issuance, sale or otherwise, as security for
the Obligations.

SECTION XV.2. Recording, Opinion of Counsel, Etc.

The Company and the Guarantor will cause, at their own expense, this
Indenture, the Security Documents, and all amendments or supplements thereto,
to be registered, recorded and filed and/or re-recorded and/or re-filed and/or
renewed in such manner and in such place or places, if any, as may be required
by law in order fully to preserve and protect the Liens of the Security
Documents and all parts of the Collateral and to effectuate and preserve the
security of the Holders and all rights of the Trustee.

The Company and the Guarantor shall furnish to the Trustee and the
Collateral Agent:

(a) promptly after the execution and delivery of this Indenture
and each of the Security Documents or other instrument of further assurance, an
Opinion of Counsel stating that, in the opinion of such Counsel, the Security
Documents and other instruments of further assurance, and any required
financing statements with respect thereto, have been properly recorded,
endorsed, registered and filed or other action has been taken, so as to make
effective the Liens intended to be created thereby, and reciting the details of
such action or stating that, in the opinion of such Counsel, no such action is
necessary to make such Liens effective; and

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<PAGE> 100

(b) within 15 days after September 30 in each year beginning with
the year 1997, an Opinion of Counsel, dated as of such date, either stating
that, in the opinion of such counsel, such action has been taken with respect
to the recording, registering, filing, re-recording, re-registering and
re-filing of this Indenture and the Security Documents, financing statements,
supplemental indentures, continuation statements or other instruments of
further assurance as is necessary to maintain the Liens of the Security
Documents and reciting the details of such action, or stating that, in the
opinion of counsel, no such action prior to October 31 of the subsequent year
is necessary to maintain such Lien.

The Trustee shall hold in its possession the Security Documents,
except as it from time to time may be required for actions, suits or
proceedings relating to the Security Documents or for the purpose of enforcing
or realizing upon any right or value thereby represented. The Trustee may,
from time to time, in its sole discretion, for the purpose of convenient
location of the Security Documents, appoint one or more agents to hold physical
custody, for the account of the Trustee, of the Security Documents.

SECTION XV.3. Trust Indenture Act Requirements; Release of Collateral.

The release of any Collateral from the terms of any of the Security
Documents or the release, in whole or in part, of the Liens created by any of
the Security Documents, will not be deemed to impair the security interests
thereunder in contravention of the provisions of this Indenture if and to the
extent the Collateral or Liens are released pursuant to, and in accordance
with, the applicable Security Documents and pursuant to, and in accordance
with, the terms hereof. Subject to the provisions of Section 6.06 of the
Security Agreement, to the extent applicable, without limitation, the Company,
the Guarantor and each other obligor on the Securities shall cause Section
314(d) of the Trust Indenture Act relating to the release of property or
securities from the Liens of the Security Documents to be complied with. Any
certificate required by Section 314(d) of the Trust Indenture Act may be made
by two Officers of the Company, except in cases which Section 314(d) of the
Trust Indenture Act requires that such certificate be made by an independent
Person.

SECTION XV.4. Release of Lien.

(a) In the case of releases other than pursuant to Section 6.06 of
the Security Agreement, so long as no Event of Default has occurred and is
continuing, Collateral may be released from the Lien and security interest
created by this Indenture and the Security Documents at any time or from time
to time in accordance with the provisions of the Security Documents, the Trust
Indenture Act (to the extent applicable and except as otherwise provided in the
Security Documents) and as provided hereby.

(b) Upon the request of the Company pursuant to an Officers'
Certificate and an Opinion of Counsel certifying that all conditions precedent
hereunder and under the Security Documents have been met (and at the sole cost

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<PAGE> 101

and expense of the Company) and upon the satisfaction of such conditions
precedent, the Collateral Agent may release (i) Collateral which may be
released with the consent of the Holders pursuant to Article IX hereof and the
Security Agreement, (ii) Collateral which may be released pursuant to Section
6.07 of the Security Agreement, and (iii) all Collateral upon discharge or
defeasance of this Indenture in accordance with Articles IV or XII hereof and
the Security Agreement.

(c) The release of any Collateral from the terms of this Indenture
and the Security Documents will not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms hereof.

(d) Whenever Collateral is to be released in accordance with this
Section 15.4, the Collateral Agent shall execute any reasonable documents or
termination statements necessary to release the Lien of the Security Documents.

SECTION XV.5. Impairment of Security Interest.

The Guarantor and the Company will not, and will not permit any
Subsidiary to, take or omit to take any action which reasonably might or would
have the result of affecting or impairing the security interests with respect
to the Collateral in contravention of this Indenture, and the Company and the
Guarantor shall not (and shall cause the Subsidiaries not to) grant to, or
suffer to exist in favor of, any Person any interest whatsoever in the
Collateral except as permitted by the Security Documents or this Indenture.
Except for the Credit Agreement, the Guarantor and the Company will not, and
will not permit any Subsidiary to, enter into any agreement or instrument that
by its terms expressly requires that the proceeds received from the sale of any
Collateral, including without limitation any Real Property, be applied to
repay, redeem or otherwise retire any Debt of any Person other than as set
forth in this Article XV and the Security Documents.

SECTION XV.6. Authorization of Receipt of Funds by the Trustee Under the
Security Documents.

The Trustee is authorized to receive any funds for the benefit of
Holders of Securities distributed by the Collateral Agent under the Security
Documents, and to make further distributions of such funds to the Holders
according to the provisions of this Indenture.

ARTICLE XVI

Miscellaneous

SECTION XVI.1. Usury Savings Clause.

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<PAGE> 102

Interest on the Debt evidenced by the Securities is expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of the Debt evidenced by the Securities or otherwise, shall the
interest contracted for, charged or received by the Holders exceed the maximum
amount permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provisions of this Indenture, the Securities or of any other
document evidencing, securing, guaranteeing or otherwise pertaining to the Debt
evidenced by the Securities, at the time performance of such provision shall be
due, shall involve transcending the limit of validity prescribed by law, then
ipso facto, the obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstances any Holder shall ever receive
anything of value as interest or deemed interest by applicable law under this
Indenture, the Securities or any other document evidencing, securing,
guaranteeing or otherwise pertaining to the Debt evidenced by the Securities or
otherwise an amount that would exceed the highest lawful rate, such amount that
would be excessive interest shall be applied to the reduction of the principal
amount owing on the Debt of the Securities held by such Holder, and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance
of principal of the Debt of the Securities held by such Holder, such excess
shall be refunded to the Company. In determining whether or not the interest
paid or payable with respect to any Debt of the Company to the Holders, under
any specific contingency, exceeds the highest lawful rate, the Company and the
Holders shall, to the maximum extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof,
(c) amortize, prorate, allocate and spread the total amount of interest
throughout the term of such Debt so that the actual rate of interest on account
of such Debt does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of such Debt, to the end that no
such portion shall bear interest at a rate greater than that permitted by law.
The terms and provisions of this Section shall control and supersede ever other
conflicting provision of this Indenture and the Securities.

______________________________________________________

This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

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<PAGE> 103

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.

PREMIUM STANDARD FARMS, INC.

By /s/ W.R. Patterson
---------------------------
Name: W.R. Patterson
Title: Vice President

PSF HOLDINGS, L.L.C.

By /s/ W.R. Patterson
----------------------------
Name: W.R. Patterson
Title: Vice President

FLEET NATIONAL BANK

By /s/ Paul D. Allen
----------------------------
Name: Paul D. Allen
Title: Vice President

96
<PAGE> 104

STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK)

On the _____ day of September __, 1996, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a _____________________ of Premium Standard Farms, Inc., one
of the corporations described in and which executed the foregoing instrument;
and that he signed his name thereto by authority of the Board of Directors of
said corporation.

______________________________

STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK)

On the _____ day of September __, 1996, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a _____________________ of PSF Holdings, L.L.C., the limited
liability company described in and which executed the foregoing instrument; and
that he signed his name thereto by authority of the Members of said limited
liability company.

______________________________

STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK)

On the _____ day of September __, 1996, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a _____________________ of Fleet National Bank, one of the
corporations described in and which executed the foregoing instrument; and that
he signed his name thereto by authority of the Board of Directors of said
corporation.

______________________________

<PAGE> 1

EXHIBIT 4.5

SUBSIDIARY GUARANTY AGREEMENT

Princeton Development Corp., a Delaware corporation (such corporation,
and its successors and assigns hereunder, being herein called the "Subsidiary
Guarantor"), agrees with Fleet National Bank, as Trustee under the Indenture
referred to below, for the equal and ratable benefit of the Holders of the 11%
Senior Secured Notes due 2003 of Premium Standard Farms, Inc., a Delaware
corporation (the "Company"), as follows:

The Company, PSF Holdings, L.L.C., a Delaware limited liability
company, and Fleet National Bank, as Trustee (the "Trustee"), have entered into
an Indenture dated as of September 17, 1996 (the "Indenture"), relating to the
Securities in order to secure the Holders of the Securities. The Indenture
requires each Subsidiary existing on the date of the Indenture and each
Subsidiary which becomes or comes into existence as a Subsidiary after the date
of the Indenture to execute and deliver to the Trustee a Subsidiary Guaranty
Agreement pursuant to which such Subsidiary will guaranty payment of the
Securities on substantially the same terms and conditions as those set forth in
Article XIV of the Indenture. The undersigned is a Subsidiary and is executing
this Subsidiary Guaranty Agreement in accordance with the requirements of the
Indenture in order to become a Subsidiary Guarantor under the Indenture and as
consideration for Securities previously purchased.

Capitalized terms used herein without definition shall have the
meanings set forth in the Indenture.

ARTICLE I

Guaranty

SECTION 1.01. Guaranty. For value received, the Subsidiary Guarantor
hereby, jointly and severally with the Guarantor and each of the other
Subsidiary Guarantors, unconditionally and irrevocably guaranties to each
Holder and to the Trustee, and their respective successors and assigns, (a) the
due and punctual payment of principal of and, within applicable grace periods,
interest on the Securities when due, whether at Stated Maturity, by
acceleration, by redemption, pursuant to an Offer to Purchase or otherwise, and
all other monetary obligations of the Company under the Indenture and the
Securities and (b) the due and punctual performance within applicable grace
periods of all other obligations of the Company under the Indenture and the
Securities (all the foregoing being hereinafter collectively called the
"Obligations").

1
<PAGE> 2

The Subsidiary Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice of further assent from
the undersigned, and that the undersigned will remain bound hereby
notwithstanding any extension or renewal of any Obligation.

The Subsidiary Guarantor waives presentation to, demand of payment
from and protest to the Company of any of the Obligations, and also waives
notice of protest for nonpayment. The Subsidiary Guarantor waives notice of
any default under the Securities or the Obligations. The obligations of the
Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other person under the Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of
the terms or provisions of the Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee
for the Obligations or any of them; (e) the failure of any Holder or the
Trustee to exercise any right or remedy against any other guarantor of the
Obligations or (f) (except as provided in Section 1.02) any change in the
ownership of the Guarantor or any Subsidiary Guarantor.

The Subsidiary Guarantor further agrees that its Guaranty herein
constitutes a guaranty of payment, performance and compliance when due (and not
a guaranty of collection) and waives any right to require that any Holder or
the Trustee exhaust any right or take any action against the Company or any
other Person or that any resort be had by any Holder or the Trustee to any
security held for payment of the Obligations.

The obligations of the Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense of setoff, counterclaim, and recoupment
or termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Subsidiary Guarantor herein
shall not be discharged or impaired or otherwise affected by the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any remedy
under the Indenture, the Securities or any other agreement, by any waiver or
modification of any thereof, by any default, failure or delay, wilful or
otherwise, in the performance of the Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of the Subsidiary Guarantor or would
otherwise act as a discharge of the Subsidiary Guarantor as a matter of law or
equity.

The Subsidiary Guarantor further agrees that its Guaranty herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.

2
<PAGE> 3

In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Obligation when and as the same shall
become due, whether at Stated Maturity, by acceleration, by redemption, Offer
to Purchase or otherwise, or to perform or comply with any other Obligation,
the Subsidiary Guarantor hereby, jointly and severally with the Guarantor and
the other Subsidiary Guarantors, promises to and will, upon receipt of written
demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the
Holders or the Trustee an amount equal to the sum of (i) the unpaid principal
amount of such Obligations, (ii) accrued and unpaid interest on such
Obligations (but only to the extent not prohibited by law) and (iii) all other
monetary Obligations of the Company to the Holders and the Trustee.

The Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Obligations
guarantied hereby until payment in full of all Obligations. The Subsidiary
Guarantor further agrees that, as between the Subsidiary Guarantor, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the Obligations guarantied hereby may be accelerated as provided in Article V
of the Indenture for the purposes of the Subsidiary Guarantor's Guaranty
herein, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guarantied hereby, and (y) in
the event of any declaration of acceleration of such Obligations as provided in
Article V of the Indenture, such Obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantor for purposes
of this Section.

The Subsidiary Guarantor also agrees, jointly and severally with the
Guarantor and any other Subsidiary Guarantors, to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.

SECTION 1.02. Releases. Concurrently with any sale, lease, transfer
or other disposition permitted by and in accordance with the terms of the
Indenture (other than to the Company or any Affiliate of the Company), by way
of merger, consolidation or otherwise, of all or substantially all of the
assets of the Subsidiary Guarantor or all of the Capital Stock of the
Subsidiary Guarantor owned by the Company and its Affiliates, the Subsidiary
Guarantor (in the event of such a sale, lease, transfer or other disposition of
all such Capital Stock) or the corporation acquiring the property (in the event
of such a sale, lease, transfer or other disposition, by way of a merger,
consolidation or otherwise, of all or substantially all of the assets of the
Subsidiary Guarantor) shall be released and relieved of its guaranty
obligations. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale, lease,
transfer or other disposition was made by the Company as permitted by and in
accordance with the provisions of the Indenture, the Trustee shall execute any

3
<PAGE> 4

documents reasonably required to evidence the release of the Subsidiary
Guarantor from its guaranty obligations.

SECTION 1.03. Successors and Assigns. Except as provided in Section
1.02, this Guaranty Agreement shall be binding upon the Subsidiary Guarantor
and its successors and assigns and shall inure to the benefit of the successors
and assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in the Indenture and in the Securities shall
automatically extend to and be vested in such transferee or assignee, all
subject to the terms and conditions of the Indenture.

SECTION 1.04. No Waiver, etc. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Subsidiary Guaranty Agreement shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise of any right, power or privilege. The rights, remedies and
benefits of the Trustee and the Holders herein expressly specified are
cumulative and not exclusive of any other rights, remedies and benefits which
either may have under this Subsidiary Guaranty Agreement at law, in equity, by
statute or otherwise.

SECTION 1.05. Modification, etc. No modification, amendment or
waiver of any provision of this Subsidiary Guaranty Agreement, nor the consent
to any departure by the Subsidiary Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Trustee, and
then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice to or demand on the Subsidiary
Guarantor in any case shall entitle the Subsidiary Guarantor or any other
guarantor to any other or further notice or demand in the same, similar or
other circumstances.

ARTICLE II

Miscellaneous

SECTION 2.01. Notices. Any notice or communication to the Subsidiary
Guarantor shall be in writing and delivered in person or mailed by first-class
mail addressed to the address for Subsidiary Guarantor set forth below,

SECTION 2.02. Governing Law. This Subsidiary Guaranty Agreement
shall be governed by, and construed in accordance with, the laws of the State
of New York 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.

SECTION 2.03. Successors. All agreements of the Subsidiary Guarantor
in this Subsidiary Guaranty Agreement shall bind its successors.

4
<PAGE> 5

SECTION 2.04. Multiple Originals. The Subsidiary Guarantor may sign
any number of copies of this Subsidiary Guaranty Agreement. Each signed copy
shall be an original, but all of them together represent the same agreement.
One signed copy is enough to prove this Subsidiary Guaranty Agreement.
Delivery of an executed signature page of this Agreement by facsimile
transmission shall be as effective as delivery of a manual executed counterpart
of the Agreement.

SECTION 2.05. Headings. The headings of the Articles and Sections of
this Subsidiary Guaranty Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.

Dated: September 17, 1996

PRINCETON DEVELOPMENT CORP.

by
/s/ W. R. Patterson
------------------------------
Name:
Title:

Address:

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

<PAGE> 1
EXHIBIT 4.6

SECURITY AND COLLATERAL AGENCY AGREEMENT
dated as of September __, 1996, among PSF
HOLDINGS, L.L.C., a Delaware limited liability
company (the "Guarantor"), PREMIUM STANDARD
FARMS, INC., a Delaware corporation and a
wholly owned subsidiary of the Guarantor (the
"Company"), each subsidiary of the Company
listed on Schedule I hereto (each such
subsidiary individually, a "Subsidiary
Guarantor", and collectively, the "Subsidiary
Guarantors"; the Guarantor, the Company and the
Subsidiary Guarantors are referred to
collectively herein as the "Grantors"), and
FLEET NATIONAL BANK, a national banking
association, as collateral agent (in such
capacity, the "Collateral Agent") for the
Secured Parties (as defined herein).

WHEREAS, the Company proposes to issue up to $10,000,000 aggregate
principal amount of its Senior Secured Second Priority Notes due 2002 (the
"Second Priority Notes") pursuant to the Note Purchase Agreement of even date
herewith among the Company, the Guarantor and Morgan Stanley Group, Inc. (as
from time to time amended and in effect, the "Note Agreement"), the Company's
obligations with respect to the Second Priority Notes and under the Note
Agreement and the other Security Documents, including any amendments,
extensions and modifications thereto, being referred to herein as the "Second
Priority Obligations"; and

WHEREAS, the Company proposes to issue its 11% Senior Secured Notes due
2003 in an original aggregate principal amount of $117,500,000 and interest
thereon in the form of additional such Notes (collectively, the "Securities")
pursuant to the Indenture, the Company's obligations with respect to the
Securities and under the Indenture and the other Security Documents, including
any amendments, extensions and modifications thereto, being referred to herein
as the "Securities Obligations"; and

WHEREAS, the Guarantor and Subsidiary Guarantors, pursuant to the Note
Agreement, the Guaranty Agreements (as defined in the Note Agreement), the
Indenture and the Subsidiary Guaranty Agreements, have guaranteed, or will
hereafter guarantee, the due payment and performance of all of the Obligations;
and

WHEREAS, concurrently herewith the Guarantor and the Company have
entered into a Credit Agreement, dated as of September __, 1996 and related
security documents (collectively, as from time to time in effect, the "Senior
Loan Documents") with The Chase Manhattan Bank and other lenders identified
therein with respect to borrowings by the Company of up to an aggregate
principal amount not exceeding $90,000,000 (together with interest thereon and
the other fees and expenses provided for in the Senior Loan Documents, the
"First Priority Debt") and pursuant to which the Grantors have granted a first
priority security interest and lien in the Collateral to secure the First
Priority Debt; and

WHEREAS, the Note Agreement and the Indenture contemplate that the
Second Priority Obligations and the Securities Obligations will be secured by
the Collateral assigned, transferred, mortgaged and pledged hereunder and under
the other Security Documents provided for therein or herein by the Grantors to
the Collateral Agent for the benefit of the holders of the Second Priority
Notes and the Securities, any proceeds thereof to be applied first to the
payment in full of
<PAGE> 2
2

the Second Priority Notes and thereafter to the payment in full of the
Securities, all as herein provided, subject to the prior liens and security
interests in such Collateral granted by the Grantors for the benefit of the
First Priority Creditors (as defined herein); and

WHEREAS, the Guarantor, the Company, the Senior Collateral Agent and
the Collateral Agent have entered into an Intercreditor Agreement of even date
herewith (as from time to time in effect, the "Intercreditor Agreement"),
pursuant to which the parties thereto have acknowledged their respective
interests in the Collateral and have set forth the relative positions with
respect thereto of the First Priority Creditors, on the one hand and the
Secured Parties, on the other hand; and

WHEREAS, the holders of the Second Priority Notes in the Note Agreement
have agreed to be bound by the terms and provisions of the Agreement and the
Intercreditor Agreement and the holders of the Securities, in accepting delivery
thereof, have acknowledged that their rights and interests in any proceeds of
the Collateral and Real Estate are third in priority after those of the holders
of the First Priority Debt and the Second Priority Notes and have agreed to be
bound by the terms and provisions of this Agreement and the Intercreditor
Agreement.

Accordingly, the Grantors and the Collateral Agent, on behalf of
itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Definition of Terms Used Herein. Unless the context
otherwise requires, all capitalized terms used but not defined herein shall
have the meanings set forth in the Indenture.

SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:

"Account Debtor" shall mean any person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.

"Accounts" shall mean any and all right, title and interest of any
Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.

"Accounts Receivable" shall mean all Accounts and all right, title and
interest in any returned goods, together with all rights, titles, securities and
guarantees with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens
and pledges, whether voluntary or involuntary, in each case whether now existing
or owned or hereafter arising or acquired.

<PAGE> 3
"Collateral" shall mean all (a) Accounts Receivable, (b) Documents, (c)
Equipment, (d) General Intangibles, (e) Inventory, (f) Proceeds, (g) Payments,
(h) Capital Stock of the Guarantor's and Company's subsidiaries, and (i) cash
and cash accounts (including the Concentration Account, the Collection Deposit
Accounts and any other accounts established in the name of the Company with the
Senior Collateral Agent), whether now owned or hereafter acquired. For
purposes of Article VI hereof, the term Collateral shall also include Real
Property.

"Collection Deposit Account" shall mean a lockbox account of a Grantor
maintained for the benefit of the Secured Parties with the Collateral Agent or
with a Sub-Agent pursuant to a Lockbox and Depository Agreement.

"Concentration Account" shall mean the cash collateral account to be
established at the office of the Collateral Agent in the name of the Collateral
Agent pursuant to the Lockbox and Depository Agreements.

"Copyright License" shall mean any written agreement, now or hereafter
in effect, granting any right to any third party under any Copyright now or
hereafter owned by any Grantor or which such Grantor otherwise has the right to
license, or granting any right to such Grantor under any Copyright now or
hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

"Copyrights" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office,
including those listed on Schedule II.

"Credit Agreement" shall have the meaning assigned to such term in the
Recitals to this Agreement.

"Documents" shall mean all instruments, documents of title, drafts,
notes, acceptances and chattel paper, whether now owned or hereafter acquired,
files, records, ledger sheets and documents covering or relating to any of the
Collateral.

"Equipment" shall mean all equipment, furniture and furnishings, and
all tangible personal property similar to any of the foregoing, including
tools, parts and supplies of every kind and description, and all improvements,
accessions or appurtenances thereto, that are now or hereafter owned by any
Grantor. The term Equipment shall include Fixtures.

"Events of Default" shall mean the Events of Default defined in the
Second Priority Notes and in the Indenture.

"First Priority Creditors" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Senior Collateral Agent, (d) the Issuing Bank,
(e) the beneficiaries of each indemnification obligation undertaken by any
Grantor under any Senior Loan Document and (f) the successors and
<PAGE> 4
4

assigns of each of the foregoing, which capitalized terms if not defined herein
have the meanings provided in the Credit Agreement.

"Fixtures" shall mean all items of Equipment, whether now owned or
hereafter acquired, of any Grantor that become so related to particular real
estate that an interest in them arises under any real estate law applicable
thereto.

"General Intangibles" shall mean all choses in action and causes of
action and all other assignable intangible personal property of any Grantor of
every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, and other agreements), Intellectual Property,
goodwill, registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts
Receivable.

"Grantor" shall have the meaning assigned to that term in the opening
paragraph of this Agreement.

"Indemnity Agreement" shall mean the Indemnity, Subrogation and
Contribution Agreement of even date herewith among the Company and the
Subsidiary Grantors, as from time to time in effect.

"Intellectual Property" shall mean all intellectual and similar
property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection with,
any of the foregoing.

"Intercreditor Agreement" shall have the meaning assigned to that term
in the Recitals to this Agreement.

"Inventory" shall mean all goods of any Grantor, whether now owned or
hereafter acquired, held for sale or lease, or furnished or to be furnished by
any Grantor under contracts of service, or consumed in any Grantor's business,
including all farm products and inventories of the following types: (a) all
hogs, pigs and swine ("Stock"), Stock in gestation, Stock semen and Stock
embryos, including all increase thereof, issue thereof (including conceived but
unborn young), and products thereof, including processed pork, owned or held by
the Grantor, now or hereafter existing, including any of the foregoing that are
returned to or repossessed by or on behalf of any Grantor, and all accessions
thereto, products thereof and documents therefor and (b) all stores and supplies
now owned or hereafter acquired by any Grantor, including feed, seed,
fertilizer, chemicals, pesticides and all other such supplies used in any
Grantor's operations.

"License" shall mean any Patent License, Trademark License, Copyright
License or other license or sublicense to which any Grantor is a party,
including those listed on Schedule
<PAGE> 5
5

III (other than, to the extent so indicated on Schedule III, those license
agreements in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
license thereunder).

"Lockbox and Depository Agreement" shall mean any Lockbox and
Depository Agreement substantially in the form of Annex 1 hereto among a
Grantor, the Collateral Agent and a Sub-Agent.

"Lockbox System" shall have the meaning assigned to such term in
Section 5.02.

"Majority Holders" shall mean the holders of more than 50% of the sum
of (i) the aggregate outstanding principal amount of the Second Priority Notes,
and (ii) the aggregate outstanding amount of the unused Purchase Commitments
under the Note Agreement, and (iii) the aggregate outstanding principal amount
of the Securities, as respectively determined from the records of the Company
and the Security Register under the Indenture, acting as a single class.

"Majority Noteholders" shall mean the holders of more than 50% of the
sum of (i) the aggregate outstanding principal amount of the Second Priority
Notes and (iii) the aggregate outstanding amount of the unused Purchase
Commitments under the Note Agreement.

"Majority Securities Holders" shall mean the holders of more than 50%
of the outstanding principal amount of the Securities.

"Note Agreement" shall have the meaning assigned to such term in the
Recitals to this Agreement.

"Noteholders" shall mean the Purchasers and the holders of the Second
Priority Notes.

"Obligations" shall mean the Second Priority Obligations and the
Securities Obligations.

"Ordinary Course of Business" means, with respect to sales of Inventory
or services performed, all sales of Inventory or services performed by the
Company in the ordinary course of business, but in any event excluding (i) "bulk
transfers" as defined in Section 6-102 of the Uniform Commercial Code, (ii) such
sales and services after the time there shall have occurred an Event of Default
under Section 6.01(8) or (9) and (iii) such sales and services after the time
the Collateral Agent has taken possession of such Inventory after the occurrence
of an Event of Default and the Company has rights in such Inventory pursuant to
Section 9-506 of the Uniform Commercial Code.

"Patent License" shall mean any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention or which a Patent, now or hereafter owned by any Grantor or which any
Grantor otherwise has the right to license, is in existence, or granting to any
Grantor any right to make, use or sell any invention on which a

<PAGE> 6
6

Patent, now or hereafter owned by any third party, is in existence, and all
rights of any Grantor under any such agreement.

"Patents" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all letters patent of the United States or any
other country, all registrations and recordings thereof, and all applications
for letters patent of the United States or any other country, including
registrations, recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country, including
those listed on Schedule IV, and (b) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.

"Payments" shall mean all payments under any governmental subsidy, loan
or payment programs, or the like, including all subsidy deficiency, diversion,
disaster and price support payments and each Grantor's beneficial interest under
any trust or letter of credit established for the benefit of such Grantor (and
others, if applicable) under any Federal or state laws, Agricultural Commodities
Act, the United States Warehouse Act and the like.

"Perfection Certificate" shall mean a certificate substantially in the
form of Annex 2 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by the chief financial
officer and the chief legal officer of the Company.

"Pledge Agreement" shall mean the Pledge Agreement of even date
herewith among the Guarantor, the Company and the Subsidiary Pledgers (as
therein defined) and the Collateral Agent, as amended, supplemented or otherwise
modified from time to time.

"Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property that constitutes
Collateral, and shall include (a) all cash and negotiable instruments received
by or held on behalf of the Collateral Agent pursuant to the Lockbox System,
(b) any claim of any Grantor against any third party for (and the right to sue
and recover for and the rights to damages or profits due or accrued arising out
of or in connection with) (i) past, present or future infringement of any Patent
now or hereafter owned by any Grantor, or licensed under a Patent License, (ii)
past, present or future infringement or dilution of any Trademark now or
hereafter owned by any Grantor or licensed under a Trademark License or injury
to the goodwill associated with or symbolized by any Trademark now or hereafter
owned by any Grantor, (iii) past, or future breach of any License and (iv)
past, present or future infringements of any Copyright now or hereafter owned
by any Grantor or licensed under a Copyright License and (c) any and all other
amounts from time to time paid or payable under or in connection with any of
the Collateral.

"Purchaser" shall mean each Purchaser under the Note Agreement.

<PAGE> 7
7

"Second Priority Notes" has the meaning assigned to such term in the
Recitals to this Agreement.

"Second Priority Obligations" shall have the meaning assigned to such
term in the Recitals to this Agreement.

"Securities Obligations" shall have the meaning assigned to such
term in the Recitals to this Agreement.

"Secured Notes" shall mean the Second Priority Notes and the Securities
at the time outstanding.

"Secured Parties" shall mean (a) the Purchasers and the holders of the
Second Priority Notes, (b) the holders of the Securities, (c) the Trustee and
(d) the Collateral Agent.

"Securityholders" means the holders of the Secured Notes.

"Security Interest" shall mean the security interests granted under
Section 2.01.

"Senior Loan Documents" shall have the meaning assigned to that term in
the Recitals to this Agreement.

"Senior Security Agreement" shall mean the Security Agreement of even
date herewith among the Grantors and The Chase Manhattan Bank, as collateral
agent for the benefit of the First Priority Creditors, as amended or modified
from time to time.

"Stock" shall have the meaning assigned to that term in the definition
of Inventory.

"Sub-Agent" shall mean a financial institution that shall have
delivered to the Collateral Agent an executed Lockbox and Depository Agreement.

"Trademark License" shall mean any written agreement, now or hereafter
in effect, granting to any third party any right to use any Trademark now or
hereafter owned by any Grantor or which any Grantor otherwise has the right to
license, or granting to any Grantor any right to use any Trademark now or
hereafter owned by any third party, and all rights of any Grantor under any
such agreement.

"Trademarks" shall mean all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
corporate names, company names, business names, fictitious business names,
trade styles, trade dress, logos, other source or business identifiers, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including registrations
and registration applications in the United States Patent and Trademark Office,
any State of the United States or any similar offices in any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule V, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that uniquely
reflect or embody such goodwill.
<PAGE> 8
8

SECTION 1.03. Rules of Interpretation. The rules of interpretation
specified in Section 1.1 of the Indenture shall be applicable to this Agreement.

SECTION 1.04. Actions by Securityholders. Any request, demand,
authorization, direction, notice, consent or waiver or other action hereunder to
be given or taken by Securityholders, by Noteholders, Holders or Purchasers must
be embodied in and evidenced by one or more instruments in substantially similar
tenor signed by such Persons in person or by agent duly appointed in writing;
and such action shall become effective when such instrument or instruments are
delivered to the Collateral Agent. Such instrument or instruments (and the
actions embodied therein and evidenced thereby) are herein sometimes referred to
as the "Actions" of the Persons signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Collateral Agent and the Company, if made in the manner provided in this
Section.

The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgements of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Collateral Agent deems sufficient.

Any request, demand, authorization, direction, notice, comment or waiver or
other Action hereunder of any Purchaser or the holder of any Second Priority
Note or any of the Securities shall bind all future successors and assigns of
such Purchaser and shall bind every future holder of the same security and the
holder of any security issued upon the transfer or exchange thereof or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Collateral Agent or any Guarantor in reliance thereon, whether or not notation
of such action is made upon such security.

SECTION 1.05. Application of Trust Indenture Act. The Trust Indenture Act
shall apply as a matter of law (or to the extent not so required, as a matter of
contract) to this Agreement and the other Security Documents for purposes of
interpretation, construction and definition of rights and obligations hereunder
and under the other Security Documents. If any provision hereof limits,
qualifies or conflicts with a provision of the Trust Indenture Act that is
required under such Act to be a part of and govern this Agreement, the latter
shall control. If any provision hereof or thereof modifies or excludes any
provision of the Trust Indenture Act that may be so modified or excluded, the
latter provision shall be deemed to apply to the Agreement or such other
Security Document as so modified or excluded, as the case may be.

SECTION 1.06. Respective Rights of Securityholders The Security Interest
hereunder and the security granted under the other Security Documents are
intended for the benefit of all the Secured Parties, provided, only, that any
proceeds hereunder or thereunder collected by the Collateral Agent are to be
applied, after payment of its fees and expenses, first to payment in full of the
Second Priority Obligations and thereafter to payment of the Securities
Obligations.
<PAGE> 9
9

With respect to all other Actions taken by Securityholders hereunder or
thereunder, the holders of the Second Priority Notes and the Securities shall
act as a single class.

ARTICLE II

SECURITY INTEREST

SECTION 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the benefit of the Secured Parties, a
security interest in all of such Grantor's right, title and interest in, to and
under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.

SECTION 2.02. Other Security. As additional security for the payment
or performance of Obligations, and in confirmation of the grant of the Security
Interest, there are concurrently herewith being, or will hereafter be,
delivered to the Collateral Agent, its successors and assigns, for the benefit
of the Secured Parties, (a) by the Company, the documents identified in
Schedule VI hereto, mortgaging all of its Real Property and the Assignment of
Contracts and (b), by one or more of the Guarantor, the Company and the
Subsidiary Pledgors (as therein defined), the Pledge Agreement, pledging the
Capital Stock of the Subsidiaries, the Indemnity Agreement and the ancillary
agreements referred to therein. The Collateral Agent's rights, interests and
duties under such documents are to be construed and exercised in a manner
consistent with the provisions of this Agreement.

SECTION 2.03. No Assumption of Liability. The Security Interest and
the Mortgages are granted as security only and shall not subject the Collateral
Agent or any other Secured Party to, or in any way alter or modify, any
obligation or liability of any Grantor with respect to or arising out of the
Collateral.
<PAGE> 10
10

ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that;

SECTION 3.01. Title and Authority. Each Grantor has good and valid
rights in and title to the Collateral with respect to which it has purported to
grant the Security Interest hereunder and has full power and authority to grant
to the Collateral Agent the Security Interest in such Collateral and to
execute, deliver and perform its obligations in accordance with the terms of
this Agreement, without the consent or approval of any other person other than
any consent or approval which has been obtained.

SECTION 3.02. Filings. (a) The Perfection Certificate has been duly
prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the Collateral
have been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Section 6 to the Perfection Certificate,
which are all the filings, recordings and registrations (other than filings
required to be made in the United States Patent and Trademark Office and the
United States Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and Copyrights) that
are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
in which the Security Interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the
filing continuation statements. Each Grantor shall ensure that such financing
statements are filed in said offices promptly after the execution and delivery
of this Agreement.

(b) Each Grantor shall ensure that fully executed security agreements
in the form hereof and containing a description of all Collateral consisting of
Intellectual Property shall have been received and recorded within three months
after the execution of this Agreement with respect to United States Patents and
United States registered Trademarks (and Trademarks for which United States
registration applications are pending) and within one month after execution of
this Agreement with respect to United States registered Copyrights by the United
States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C. Section
205 and the regulations thereunder, as applicable, and otherwise as may be
required pursuant to the laws of any other necessary jurisdiction, to protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent (for the ratable benefit of the Secured
Parties) in respect of all Collateral consisting of Patents, Trademarks and
Copyrights in which a security interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, or in any other necessary jurisdiction, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary (other than such actions as are necessary to
<PAGE> 11
11

perfect the Security Interest with respect to any Collateral consisting of
Patents, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).

SECTION 3.03. Validity of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral
securing the payment and performance of the Obligations, (b) subject to the
filings described in Section 3.02 above, a perfected security interest in all
Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United States
(or any political subdivision thereof) and its territories and possessions
pursuant to the Uniform Commercial Code or other applicable law in such
jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected by the filing of such
financing statements in each jurisdiction and upon the receipt and recording of
this Agreement with the United States Patent and Trademark Office and the
United States Copyright Office, as applicable, within the three month period
(commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or 15
U.S.C. Section 1060 or the one month period (commencing as of the date hereof)
pursuant to 17 U.S.C. Section 205 and otherwise as may be required pursuant to
the laws of any other necessary jurisdiction. The Security Interest is and
shall be prior to any other Lien on any of the Collateral, other than Liens
expressly permitted to be prior to the Security Interest pursuant to Section
6.10 of the Note Agreement and Section 10.14 of the Indenture.

SECTION 3.04. Absence of Other Liens. The Collateral is owned by the
Grantors free and clear of any Lien, except for Liens expressly permitted
pursuant to Section 6.10 of the Note Agreement and Section 10.14 of the
Indenture. Other than the filings made with respect to the First Priority
Debt, the Grantor has not filed or consented to the filing of (a) any financing
statement or analogous document under the Uniform Commercial Code or any other
applicable laws covering any Collateral, (b) any assignment in which any
Grantor assigns any Collateral or any security agreement or similar instrument
covering any Collateral with the United States Patent and Trademark Office or
the United States Copyright Office or (c) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar instrument covering
any Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 10.14 of the Indenture.

ARTICLE IV

COVENANTS

SECTION 4.01. Change of Name; Location of Collateral; Records; Place
of Business. (a) Each Grantor agrees promptly to notify the Collateral Agent
in writing of any change (i) in its corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating
to Collateral owned by it or any office or facility at which Collateral owned
by it is located (including the establishment of any such new office or
facility) (iii) in its identity or corporate structure or (iv) in
<PAGE> 12
12

its Federal Taxpayer Identification Number. Each Grantor agrees not to effect
or permit any change referred to in the preceding sentence unless all filings
have been made under the Uniform Commercial Code or otherwise that are required
in order for the Collateral Agent to continue at all times following such change
to have a valid, legal and perfected first priority security interest in all the
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor is damaged or
destroyed.

SECTION 4.02. Periodic Certification. (a) Each year, at the time of
delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 7.4 of the Indenture, the Company shall deliver to the
Collateral Agent a certificate executed by the chief financial officer and the
chief legal officer of the Company (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming that there has
been no change in such information since the date of such certificate or the
date of the most recent certificate delivered pursuant to this Section 4.02 and
(ii) certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect and
perfect the Security Interest for a period of not less than 18 months after the
date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period). Each certificate
delivered pursuant to this Section 4.02 shall identify in the format of Schedule
II, III, IV or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such Schedules or
previously so identified to the Collateral Agent.

(b) Concurrently with the delivery of the certificate required by
clause (a) above, the Company shall deliver to the Collateral Agent an Officer's
Certificate certifying that, based upon their review of the Indenture, the
Security Documents and other relevant information and after consulting with
counsel, the Company is in compliance with its covenants in the Indenture, the
Note Agreement, and Security Documents, including without limitation Sections
3.02, 4.01, 4.04, 4.07 and 4.13 of this Agreement, Sections 2, 15 and 23 of the
Pledge Agreement, Sections 16, 18, 19 and 20 of the Texas Deed of Trust,
Sections 16, 18, 19 and 20 of the Missouri Deed of Trust, Section 10.22 of the
Indenture, and Section 6.11 of the Note Agreement, or if a default under any of
the foregoing is continuing, describing the same and setting forth the actions
being undertaken by the Company to cure the same.

SECTION 4.03. Protection of Security. Each Grantor shall, at its own
cost and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof
<PAGE> 13
against any Lien not expressly permitted pursuant to Section 6.10 of the Note
Agreement and Section 10.14 of the Indenture.

SECTION 4.04 Further Assurances. Each Grantor agrees that, whenever it
files any further instruments and documents or takes any other action to better
assure, preserve, protect and perfect the security granted to the holders of
the First Priority Debt or whenever it is necessary to further assure,
preserve, protect or perfect the Security Interests, it will forthwith notify
the Collateral Agent thereof and will promptly, at its own expense, execute,
acknowledge, deliver and cause to be duly filed comparable instruments and
documents and take such comparable actions to better assure, preserve, protect
and perfect the Security Interest and the rights and remedies created hereby to
the same extent as may be granted to the First Priority Debt.

Without limiting the generality of the foregoing, each Grantor hereby
agrees, from time to time, to supplement this Agreement by supplementing
Schedule II, III, IV or V hereto or adding additional schedules hereto to
after-acquired asset or item that may constitute Copyrights, Licenses, Patents
or Trademarks. Each Grantor agrees that it will use its best efforts to take
such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct with respect to such Collateral
within 30 days after the date it acquires the same.

SECTION 4.05. Inspection and Verification. The Collateral Agent and
such persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers of the Grantors and their independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, health or other condition and status of, or any other
matter relating to, the Collateral, including, in the case of Accounts or
Collateral in the possession of any third person, by contacting Account Debtors
or the third person possessing such Collateral for the purpose of making such a
verification. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with the Secured
Parties or their respective legal, financial or other advisor.

SECTION 4.06. Taxes: Encumbrances. At its option, the Collateral Agent
may discharge past due taxes, assessments, charges, fees, Liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and not permitted pursuant to Section 6.10 of the Note Agreement and
Section 10.14 of the Indenture, and may pay for the maintenance and preservation
of the Collateral to the extent any Grantor fails to do so as required by the
Note Agreement, the Indenture or this Agreement, and each Grantor jointly and
severally agrees to reimburse the Collateral Agent on demand for any payment
made or any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.06 shall be
interpreted as excusing any Grantor from the performance of, or imposing any
obligation on the Collateral Agent or any Secured Party to cure or perform, any
covenants or other promises or any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and maintenance
as set forth herein or in the Note Agreement and the Indenture.

<PAGE> 14
SECTION 4.07. Assignment of Security Interest. If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any other
person to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent. Such assignment
need not by filed of public record unless necessary to continue the perfected
status of the security interest against creditors of and transferees from the
Account Debtor or other person granting the security interest.

SECTION 4.08. Continuing Obligations of the Grantors. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to be
observer and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
there of, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance.

SECTION 4.09. Use and Disposition of Collateral. None of the Grantors shall
make or permit to be made an assignment, pledge or hypothecation of the
Collateral or shall grant any other Lien in respect to the Collateral, except
as expressly permitted by Section 6.10 of the Note Agreement and Section 10.14
of the Indenture. None of the Grantors shall make or permit to be made any
transfer of the Collateral and each Grantor shall remain at all times in
possession of the Collateral owned by it, except that (a) Inventory and Hedge
Agreements may be sold in the ordinary course of business and (b) unless and
until the Collateral Agent shall notify the Grantors that an Event of Default
shall have occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral (which notice may be given by telephone if promptly
confirmed in writing), the Grantors may use and dispose of the Collateral in
any lawful manner not inconsistent with the provisions of this Agreement, the
Note Agreement or the Indenture. Without limiting the generality of the
foregoing, each Grantor agrees that it shall not permit any Inventory to be in
the possession or control of any warehouseman, bailee, agent or processor at
any time unless such warehouseman, bailee, agent or processor shall have been
notified of the Security Interest and shall have agreed in writing to hold the
Inventory subject to the Security Interest and the instructions of the
Collateral Agent and to waive and release any Lien held by it with respect to
such Inventory, whether arising by operation or law or otherwise.

SECTION 4.10. Limitation on Modification of Accounts. None of the Grantors
will grant any extension of the time of payment of any of the Accounts
Receivable, compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partly, any person liable for the payment
thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with its current practices and
in accordance with such prudent and standard practices used in industries that
are the same as or similar to those in which such Grantor is engaged, without
first obtaining the written consent of the Majority Holders.

SECTION 4.11. Insurance. The Grantors, at their own expense, shall maintain
or cause to be maintained insurance covering physical loss or damage to their
properties, including the Inventory and Equipment, in accordance with Section
10.7 of the Indenture, and shall cause such policies to be endorsed or otherwise
amended to name the Collateral Agent as a loss payee, as its interest may
appear, and to provide that such policies may not be terminated without 30
days
<PAGE> 15
prior written notice to the Collateral Agent. Annually with the delivery of
the certificate required by Section 4.02(a) hereof, the Company shall deliver
to the Collateral Agent a list of all the insurance policies maintained by the
Company, together with certification by the insurers that the same are in full
force and effect. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect
thereto. In the event that any Grantor at any time or times shall fail to
obtain or maintain any of the policies of insurance required hereby or to pay
any premium in whole or part relating thereto, the collateral Agent may,
without having any obligation to do so and without waiving or releasing any
obligation or liability of the Grantors hereunder or any Event of Default, in
its sole discretion, obtain and maintain such policies of insurance and pay
such premium and take any other actions with respect thereto as the Collateral
Agent deems advisable. All sums disbursed by the Collateral Agent in
connection with this Section 4.11, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.

SECTION 4.12. Legend. Each Grantor shall legend its Accounts
Receivable and its books, records and documents evidencing or pertaining
thereto with an appropriate reference to the fact that such Accounts Receivable
have been assigned to the Collateral Agent for the benefit of the Secured
Parties and that the Collateral Agent has a security interest therein.

SECTION 4.13. Covenants Regarding Patent. Trademark and Copyright
Collateral. (a) Each Grantor agrees that it will not, nor will it permit any
of its licensees to, do any act, or omit to do any act, whereby any Patent that
is material to the conduct of such Grantor's business may become invalidated or
dedicated to the public, and agrees that it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary and sufficient
to establish and preserve its maximum rights under applicable patent laws.

(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through licensees) will, for each
work covered by a material Copyright, continue to publish, reproduce, display,
adopt and distribute the work with appropriate copyright notice as necessary and
sufficient to establish and preserve its maximum rights under applicable
copyright laws.

(d) In no event shall any grantor, either itself or through any agent,
employee, licensee or designee, file an application for any Patent, Trademark
or Copyright (or for the
<PAGE> 16
16

registration of any Trademark or Copyright) with the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, unless it promptly informs the Collateral Agent,
and executes and delivers to the Collateral Agent and files or records any and
all agreements, instruments, documents and papers as may be necessary to
evidence the Collateral Agent's security interest in such Patent, Trademark or
Copyright.

(e) Each Grantor will take all necessary steps that are consistent
with the practice in any proceeding before the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.

(f) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor shall, if consistent
with good business judgment, promptly sue for infringement, misappropriation or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are appropriate
under the circumstances to protect such Collateral.

(g) Upon and during the continuance of an Event of Default, each
Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.

ARTICLE V

Collections

SECTION 5.01. Senior Lockbox System. (a) The Grantors have
established in the name of the Senior Collateral Agent, and subject to the
control of the Senior Collateral Agent pursuant to certain Lockbox and
Depository Agreements between the Grantors and the Senior Collateral Agent, for
the ratable benefit of the First Priority Creditors, a system of lockboxes and
related deposit accounts into which the Proceeds of all Accounts Receivable and
Inventory shall be deposited and forwarded to the Senior Collateral Agent in
accordance with said Lockbox and Depository Agreements. The Senior Collateral
Agent has been notified of the Security Interest and in the Intercreditor
Agreement the Senior Collateral Agent has acknowledged that it holds any
Collateral in its possession as bailee for the Collateral Agent for the benefit
of the Secured Parties, subject only to the prior rights of the First Priority
Creditors. Until the claims of the First Priority Creditors have been
satisfied in full, the Grantors shall comply with their obligations under the
Senior Loan Documents.
<PAGE> 17
17

SECTION 5.02. Successor Lockbox System. (a) Concurrently with the
satisfaction in full of the claims of the First Priority Creditors, the Grantors
shall establish in the name of the Collateral Agent, and subject to the control
of the Collateral Agent, pursuant to the Lockbox and Depository Agreements, for
the benefit of the Collateral Agent and the Secured Parties, a system of lockbox
and related deposit accounts (the "Lockbox System") into which the Proceeds of
all Accounts Receivable and Inventory, including any then held by the Senior
Collateral Agent as bailee, shall be deposited and forwarded to the Collateral
Agent in accordance with the Lockbox and Depository Agreements and thereafter
shall comply with the provisions of this Article V with respect to all
collections.

(b) All Proceeds of Inventory and Accounts Receivable that have been
received on any Business Day through the Lockbox System will be transferred into
the Concentration Account on such Business Day to the extent required by the
applicable Lockbox and Depository Agreement. All Proceeds stemming from the sale
of a substantial portion of the Collateral (other than Proceeds of Accounts)
that have been received by a Grantor on any Business Day will be transferred
into the Concentration Account on such Business Day. All Proceeds received on
any Business Day by the Collateral Agent pursuant to Section 5.03 will be
transferred into the Concentration Account on such Business Day.

(c) The Concentration Account is, and shall remain, under the sole dominion
and control of the Collateral Agent. Each Grantor acknowledges and agrees that
(i) such Grantor has no right of withdrawal from the Concentration Account, (ii)
the funds on deposit in the Concentration Account shall continue to be
collateral security for all of the Obligations and (iii) upon the occurrence and
during the continuance of an Event of Default, at the Collateral Agent's
election, the funds on deposit in the Concentration Account shall be applied as
provided in Section 6.03. So long as no Event of Default has occurred and is
continuing, the Collateral Agent shall promptly remit any funds on deposit in
the Concentration Account to the General Fund Account and the Company shall have
the right, at any time and from time to time, to withdraw such amounts from the
General Fund Account as it shall deem to be necessary or desirable.

(d) Effective upon notice to the Grantors from the Collateral Agent after
the occurrence and during the continuance of an Event of Default (which notice
may be given by telephone if promptly confirmed in writing), the
Concentration Account will, without any further action on the part of any
Grantor, the Collateral Agent or any Sub-Agent, convert into a closed lockbox
account under the exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of the Collateral Agent hereunder.
Each Grantor irrevocably authorizes the Collateral Agent to notify each
Sub-Agent (i) of the occurrence of an Event of Default and (ii) of the matters
referred to in this paragraph (d). Following the occurrence of an Event of
Default, the Collateral Agent may instruct each Sub-Agent to transfer
immediately all funds held in each deposit account to the Concentration
Account.

SECTION 5.03. Collections. (a) Each Grantor agrees after the claims of the
First Priority Creditors have been fully satisfied, (i) to notify and direct
promptly each Account Debtor and every other person obligated to make payments
on Accounts Receivable or in respect of any Inventory to make all such payments
directly to the Lockbox System established in accordance with Section 5.02, (ii)
to use all reasonable efforts to cause each Account Debtor and every other
person identified in clause (i) above to make all payments with respect to
Accounts Receivable and Inven-
<PAGE> 18
18

tory directly to such Lockbox System and (iii) promptly to deposit all payments
received by it on account of Accounts Receivable and Inventory, whether in the
form of cash, checks, notes, drafts, bills of exchange, money orders or
otherwise, in the Lockbox System in precisely the form in which received (but
with any endorsements of such Grantor necessary for deposit or collection), and
until they are so deposited such payments shall be held in trust by such
Grantor for and as the property of the Collateral Agent.

(b) Without the prior written consent of the Collateral Agent, no
Grantor shall, in a manner adverse to the Secured Parties, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Lockbox System. Until the Collateral Agent shall have advised
the Grantors to the contrary, each Grantor shall, and the Collateral Agent
hereby authorizes each Grantor to, enforce and collect all amounts owing on the
Inventory and Accounts Receivable, for the benefit and on behalf of the
Collateral Agent and the other Secured Parties; provided, however, that such
privilege may at the option of the Collateral Agent be terminated upon the
occurrence and during the continuance of any Event of Default.

SECTION 5.04. Power of Attorney. Each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent and attorney-in-fact, and in such capacity the Collateral Agent shall
have the right, with power of substitution for each Grantor and in each
Grantor's name or otherwise, for the use and benefit of the Collateral Agent
and the Secured Parties, upon the occurrence and during the continuance of an
Event of Default (a) to receive, endorse, assign and/or deliver any and all
notes, acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of any Grantor on any invoice or bill of
lading relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent or any
Secured Party to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any Secured
Party, or to present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or to become
due in respect thereof or any property covered thereby, and no action taken or
omitted to be taken by the Collateral Agent or any Secured Party with respect
to the Collateral or any part thereof shall give rise to any defense,
counterclaim or offset in favor of any Grantor or to any claim or action
against the Collateral Agent or any Secured Party. It is understood and agreed
that the appointment of the Collateral Agent as the agent and attorney-in-fact
of the Grantors for the purposes set forth above is coupled with an interest
and is irrevocable. The provisions of this Section shall in no event relieve
any Grantor of any of its obligations hereunder or under any other Security
Document with
<PAGE> 19
19

respect to the Collateral or any part thereof or impose any obligation on the
Collateral Agent or any Secured Party to proceed in any particular manner with
respect to the Collateral or any part thereof, or in any way limit the exercise
by the Collateral Agent or any Secured Party of any other or further right that
it may have on the date of this Agreement or hereafter, whether hereunder,
under any other Security Document, by law or otherwise.

ARTICLE VI

Remedies

SECTION 6.01. Remedies upon Default. Subject to the provisions of the
Intercreditor Agreement, upon the occurrence and during the continuance of an
Event of Default, each Grantor agrees to deliver each item of Collateral to the
Collateral Agent on demand, and it is agreed that the Collateral Agent shall
have the right (to the extent permitted by law) to take any of or all the
following actions at the same or different times: (a) with respect to any
Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by the applicable Grantors to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any such Collateral throughout the world on
such terms and conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing arrangements
to the extent that waivers cannot be obtained), and (b) with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and
all rights afforded to a secured party under the Uniform Commercial Code, the
provisions of any Mortgage related thereto or other applicable law. Without
limiting the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory requirements of
applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each
such purchaser at any such sale shall hold the property sold absolutely, free
from any claim or right on the part of any Grantor, and each Grantor hereby
waives (to the extent permitted by law) all rights of redemption, stay and
appraisal that such Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted.

such sale is to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange and in the
case of a private sale, shall state the time after which any such sale is to be
made. Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral,
or a portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so, regardless of
the fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may be sold again
upon like notice. At any public (or, to the extent permitted by law, private)
sale made pursuant to this Section, any Secured Party may bid for or purchase,
free (to the extent permitted by law) from any right of redemption, stay,
valuation or appraisal on the part of any Grantor (all said rights being also
hereby waived and released to the extent permitted by law), the Collateral or
any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as
a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Grantor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in
full. As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

SECTION 6.02. Acceleration and Directions by the Security Holders.
Upon the occurrence and during the continuance of a Specified Note Agreement
Event of Default, the Majority Noteholders, acting as a single class, may
accelerate the Second Security Notes and request the Collateral Agent to
exercise its rights and the remedies under this Agreement. Upon receipt of
such request, the Collateral Agent shall give written notice to the Security
holders of the enforcement action proposed by the Majority Noteholders and,
unless the Majority Holders provide other directions to the Collateral Agent as
hereinafter provided within 30 days of such notice, the Collateral Agent shall
proceed in accordance with the Majority Noteholders' request. Thereafter, or
upon the occurrence and during the continuation of any other Event of Default,
the Majority Holders, acting as a single class, shall have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Collateral Agent or exercising any trust or power conferred
upon the Collateral Agent by Actions in accordance with Section 1.04 hereof,
provided, that such direction shall not be in conflict with any rule of law and
that the Collateral
<PAGE> 21
21

Agent may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. For purpose of this Section, a "Specified Note
Agreement Event of Default" shall mean any Event of Default specified in
clauses (ii) (with respect to the Company's failure to
comply with Sections 6.4, 6.5, 6.6, 6.8, 6.9, 6.10 or 6.11 of the Note
Agreement), (vi), (vii) or (viii) of the Second Priority Notes.

SECTION 6.03. Application of Proceeds. After the occurrence and during the
continuance of an Event of Default, any money collected by the Collateral Agent
pursuant to this Agreement or any other Security Document shall be applied by
the Collateral Agent as follows:

FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent (in its capacity as such hereunder and under the
other Security Documents or as Trustee under the Indenture) in
connection with the management, operation and maintenance of any
Collateral after an Event of Default and any collection or sale of the
Collateral or otherwise in connection with this Agreement, any other
Security Document or any of the Obligations, including all court costs
and the reasonable fees and expenses of its agents and legal counsel,
the repayment of all advances made by the Collateral Agent hereunder
or under any other Security Document on behalf of any Grantor and any
other costs or expenses incurred in connection with the exercise of
any right or remedy hereunder or under any other Security Document;

SECOND, to the payment in full of Second Priority Obligations
the amounts so applied to be distributed among the Purchasers and the
holders of the Second Priority Notes pro rata first in accordance
with the amounts of accrued and unpaid interest on the Second Priority
Notes, second in accordance with the amounts of principal due with
respect to the Second Priority Notes and third in accordance with the
other Second Priority Obligations owed to them on the date of any
such distribution);

THIRD, to the Trustee for the payment in full of the Securities
Obligations (the amounts so applied to be distributed among the
holders of Securities pro rata in accordance with the amounts of
Securities Obligations owed to them on the date of any such
distribution); and

FOURTH, to the Grantors, their respective successors or assigns,
or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the Collateral Agent or of the officer making the
sale shall be a sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

SECTION 6.04. Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as
<PAGE> 22

the Collateral Agent shall be lawfully entitled to exercise such rights and
remedies, each Grantor hereby grants to the Collateral Agent an irrevocable,
non-exclusive license (exercisable without payment of royalty or other
compensation to the Grantors) to use, license or sub-license any of the
Collateral consisting of Intellectual Property now owned or hereafter acquired
by such Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may
be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral
Agent shall be exercised, at the option of the Collateral Agent, upon the
occurrence and during the continuation of an Event of Default; provided that
any license, sub-license or other transaction entered into by the Collateral
Agent in accordance herewith shall be binding upon the Grantors notwithstanding
any subsequent cure of an Event of Default.

SECTION 6.05. Trust Indenture Act Requirements; Release of
Collateral.

(a) The release of any Collateral from the terms of, or the release in
whole or in part of the Liens created by this Agreement, any of the Security
Documents or the Indenture, will not be deemed to impair the security interests
thereunder in contravention of the provisions of this Indenture if and to the
extent the Collateral or Liens are released pursuant to, and in accordance
with, the applicable Security Documents and the Indenture.

(b) Subject to the provisions of Sections 6.06 and 6.07 hereof, to the
extent applicable, without limitation, the Company, the Guarantor and each other
obligor on the Secured Notes shall cause Section 314(d) of the Trust Indenture
Act relating to the release of property or securities from the Liens of the
Security Documents to be complied with. Any certificate required by Section
314(d) of the Trust Indenture Act may be made by two officers of the company,
except in cases which Section 314(d) of the Trust Indenture Act requires that
such certificate be made by an independent Person.

(c) In the case of transactions permitted by 6.06(a), the Company may
effect compliance with the provisions of this Section 6.05(c) by delivering to
the Collateral Agent within 15 days after the end of each of the six-month
periods ended on June 30 and December 31 in each year, an Officers' Certificate
to the effect that all such transactions during the preceding six-month period
were made in the ordinary course of business and that all proceeds therefrom
were used by the Company as permitted herein. The fair value of Collateral
released from the Lien of the Security Documents pursuant to Section 6.06(a)
shall not be considered in determining whether the aggregate fair value of
Collateral released from the Lien of the Security Documents in any calendar
year exceeds the 10% threshold specified in Section 314(d)(1) of the Trust
Indenture Act; provided that the Company's right to rely on this sentence at
any time is conditioned upon the Company having furnished to the Collateral
Agent all certificates described in the preceding sentence that were required
to be furnished to the Collateral Agent at or prior to such time.

SECTION 6.06. Disposition of Certain Collateral without Requesting
Release.

(a) Notwithstanding the provisions of Section 6.05 hereof, so long as
the Company complies with the provisions of Section 6.05(c), the Company and
the Guarantor may, pursuant to and in accordance with this Agreement, the other
Security Documents, the Note Agreement and the Indenture, without requesting
the release or consent of the Collateral Agent:
<PAGE> 23
23

(i) sell or dispose of in the ordinary course of business, free
from the Liens of the Security Documents, any machinery, equipment,
furniture, apparatus, tools or implements, materials or supplies or
other similar property ("Subject Property") which, in its reasonable
opinion, may have become obsolete or unfit for use in the conduct of
its businesses or the operation of the Collateral upon replacing the
same with or substituting for the same, new Subject Property
constituting Collateral not necessarily of the same character but
being of at least equal value and utility as the Subject Property so
disposed of, so long as such new Subject Property becomes subject to
the Lien of the Security Documents, which new Subject Property shall
without further action become Collateral subject to the Lien of the
Security Documents;

(ii) abandon, sell, assign, transfer, license or otherwise
dispose of in the ordinary course of business any personal property
the use of which is no longer necessary or desirable in the proper
conduct of the business of the Company or the Guarantor and the
maintenance of their respective earnings and is not material to the
conduct of the business of the Company, the Guarantor and their
Subsidiaries taken as a whole;

(iii) grant in the ordinary course of business, rights-of-way
and easements over or in respect of any of the Company's or the
Guarantor's real property, provided that such grant will not, in the
reasonable opinion of the Company's Board of Directors, impair the
usefulness of such property in the conduct of the Company's or the
Guarantor's business, and will not be prejudicial to the interests of
the Securityholders;

(iv) sell, transfer or otherwise dispose of Inventory in the
Ordinary Course of Business, or

(v) sell, collect, liquidate, factor or otherwise dispose of
Accounts and Accounts Receivable in the ordinary course of business;
or

(vi) make cash payments (including for the scheduled repayment
of Debt) from cash that is at any time part of the Collateral in the
Ordinary Course of business that are not otherwise prohibited by the
Indenture and the Security Documents; provided, however, that such
cash payments may not be made from funds on deposit in the
Concentration Account except as provided in Section 5.02 hereof.

(b) Notwithstanding the provisions of Subsection (a) above, (x) the
Company and the Guarantor shall not dispose of or transfer (by lease,
assignment, sale or otherwise), or pledge, mortgage or otherwise encumber (other
than Liens permitted by Section 6.10 of the Note Agreement and Section 10.14 of
the Indenture), Collateral pursuant to the provisions of Subsection (a) above
with a fair value to the Company equal to 10% or more of the aggregate fair
value of all Collateral then existing (as determined in the good faith judgment
of the Company or the Guarantor and, if required by the Trust Indenture Act, an
independent appraiser), in any transaction or any series of related transactions
without complying with Sections 10.10 of the

<PAGE> 24
24

Indenture and Section 6.05 hereof; and (y) the right of the Company and the
Guarantor to rely upon the provisions of Subsection (a) above from the date of
this Indenture to December 31, 1996 and for each semiannual period thereafter
shall be conditioned upon the Company and the Guarantor delivering to the
Collateral Agent, on or before February 28, 1997 and thereafter within 60 days
following each June 30 and December 31, an Officer's Certificate to the effect
that all of such dispositions by the Company and the Guarantor during such
preceding semiannual period ending on such dates (other than such dispositions,
collections or payments wherein the Company and the Guarantor have complied
with Section 6.05 hereof) were in the ordinary course of their business and
that the proceeds therefrom were used by the Company in connection with its
business.

(c) Any disposition of Collateral made in compliance with the
provisions of this Section 6.06 shall be deemed not to impair the Liens of the
Security Documents in contravention of the provisions of this Indenture.

(d) Upon receipt of a Company Request and subject to Section 314(c) of
the Trust Indenture Act and Section 1.2 of the Indenture, the Collateral Agent
shall execute and deliver, within five business days from the receipt of the
Company Request, any instrument deemed by the Company to be necessary or
appropriate to dispose of portions of the Collateral pursuant to this Section
6.06 if the provisions of this Section 6.06 have been complied with.

SECTION 6.07. Releases.

(a) So long as no Event of Default has occurred and is continuing,
whenever any property of the Company which shall be subject to the Lien of the
Security Documents (including securities pledged under the Pledge Agreement) is
disposed of in accordance with Section 10.10 of the Indenture, the Collateral
Agent shall release the same from the Lien hereof or thereof upon receipt by the
Collateral Agent of the following:

1. A copy of a resolution of the Board of Directors of the
Company, requesting such release;

2. An Officers' Certificate stating in substance as follows:

(a) That the Company has sold or exchanged, or contracted
to sell or exchange, the property so to be released for
a consideration representing, in the opinion of the
signers, its full value to the Company, which
consideration may be cash and/or other property, to be
described in reasonable detail in such certificate;

(b) That the retention of such property is no longer
desirable in the conduct of the business of the
Company; and

(c) That any money stated in said certificate to have been
received in consideration for any such sale or exchange
is being applied in accordance with the applicable
provisions of the Senior Loan Documents, the Note
Agreement or Section 10.10 of the Indenture.

<PAGE> 25
25

3. An Opinion of Counsel to the effect that the Security Documents or
other designated deeds or instruments of conveyance, assignment or transfer
covering any property included in the consideration for such release or
acquired with the proceeds of such sale, are sufficient to subject the same to
the security interest granted by this Agreement or the other Security Documents.

(b) Upon receipt of the Officers' Certificate and Opinion of Counsel
required by Section 15.4(b) of the Indenture, the Collateral Agent must
execute, deliver or acknowledge any necessary or proper instruments of
termination, satisfaction or release to evidence the release of any Collateral
permitted to be released pursuant to this Agreement or the other Security
Documents; and

(c) Whenever Collateral is to be released pursuant to Section 15.4 of the
Indenture, the Collateral Agent will execute any reasonable documents or
termination statement necessary to release the Lien of this Agreement and the
other Security Documents.

SECTION 6.08. Suits to Protect the Collateral. Upon the occurrence of
an Event of Default and subject to the provisions of the Security Documents and
the Intercreditor Agreement, (i) the Collateral Agent may, in its sole
discretion and without the consent of the Holders, take all actions it deems
necessary or appropriate in order to (a) enforce any of the terms of the
Security Documents and (b) collect and receive any and all amounts payable in
respect of the obligations of the Company and the Guarantor and (ii) the
Collateral Agent shall have the power to institute and to maintain such suits
and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts which may be unlawful or in violation of any of the
Security Documents, the Indenture or the Note Agreement, including such suits
and proceedings as the Collateral Agent may deem expedient to preserve or
protect its interests and the interests of the Secured Parties in the
Collateral and in the principal, interest, issues, profits, rents, revenues and
other income arising therefrom (including power to institute and maintain suits
or proceedings to restrain the enforcement of or compliance with any legislative
or other governmental enactment, rule or order would impair the security
interests or be prejudicial to the interests of the Secured Parties or the
Collateral Agent), except as otherwise provided in Sections 7.09(b) and 7.15(b).

SECTION 6.09. Determinations Relating to Collateral. In the event (i)
the Collateral Agent shall receive any written request from the Company or the
Guarantor under any Security Document for consent or approval with respect to
any matter or thing relating to any Collateral or the Company's or the
Guarantor's obligations with respect thereto or (ii) there shall be due to or
from the Collateral Agent under the provisions of any Security Document any
material performance or the delivery of any material instrument, then, in each
such event, the Collateral Agent shall be entitled to hire experts,
consultants, agents and attorneys to advise the Collateral Agent on the manner
in which the Collateral Agent should respond to such request or render any
requested performance. The Collateral Agent shall be fully protected in the
taking of any action recommended or approved by any such expert, consultant,
agent or attorney or agreed to by an Act of the Majority Holders, pursuant to
Section 1.04.

SECTION 6.10. Impairment of Security Interest. The Guarantor and the
Company will not, and will not permit any Subsidiary to, take or omit to take
any action which reasonably might or would have the result of affecting or
impairing the security interests with
<PAGE> 26
26

respect to the Collateral in contravention of this Security Agreement or any
other Security Document and the Company and the Guarantor shall not (and shall
cause the Subsidiaries not to) grant to, or suffer to exist in favor of, any
Person any interest whatsoever in the Collateral except as permitted by the
Security Documents. The Guarantor and the Company will not, and will not
permit any Subsidiary to, enter into any agreement or instrument that by its
terms expressly requires that the proceeds received from the sale of any
Collateral or Real Property be applied to repay, redeem or otherwise retire any
Debt of any Person other than as set forth in Article V of the Indenture, this
Article VI and the other Security Documents.

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 8.1 of the Note Agreement and Sections 1.5 and 1.6 of the
Indenture.

SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Note Agreement, the Indenture, any
other Security Document, any agreement with respect to any of the Obligations
or any other agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent
to any departure from the Note Agreement, the Indenture, any other Security
Document or any other agreement or instrument relating to the foregoing, (c)
any exchange, release or non-perfection of any Lien on other collateral, or any
release or amendment or waiver of or consent under or departure from any
guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.

SECTION 7.03. Survival of Agreement. All convenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the issuance of the Second Priority Notes and
the Securities, regardless of any investigation made by the holders thereof or
on their behalf, and shall continue in full force and effect until this
Agreement shall terminate in accordance with Section 7.14.

SECTION 7.04. Binding Effect: Several Agreement. This Agreement
shall become effective as to any Grantor when a counterpart hereof executed on
behalf of such Grantor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Grantor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their
respective successors and assigns, except that no Grantor shall have the right
to assign or transfer its rights or obligations
<PAGE> 27
27

hereunder or any interest herein or in the Collateral (and any such assignment
or transfer shall be void) except as expressly contemplated by this Agreement
or the Credit Agreement. This Agreement shall be construed as a separate
agreement with respect to each Grantor and may be amended, modified,
supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.

SECTION 7.05. Successors and Assigns. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all covenants, promises and agreements
by or on behalf of any Grantor or the Collateral Agent that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.

SECTION 7.06. Certifying Rights of Collateral Agent. The rights, powers and
protections afforded the Trustee by the Indenture, including without limitation
those enumerated in Section 6.3 thereof, are hereby incorporated herein by
reference and made applicable to the Collateral Agent, provided that references
therein to "Holders" shall for this purpose be deemed to mean "Securityholders".

SECTION 7.07. Collateral Agent's Fees and Expenses: Indemnification. (a)
Each Grantor jointly and severally agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable fees and expenses, including the
reasonable fees, disbursements and other charges of its counsel and of any
experts or agents (the Collateral Agent and such counsel, experts and agents
being collectively referred to as "Indemnitees"), that the Collateral Agent may
incur in connection with (i) the administration of this Agreement and the other
Security Documents (including the customary fees and charges of the Collateral
Agent for any audits conducted by it or on its behalf with respect to the
Accounts Receivable or Inventory), (ii) the custody or preservation of, or the
sale of, collection from or other realization upon any of the Collateral, (iii)
the exercise, enforcement or protection of any of the rights of the Collateral
Agent hereunder or (iv) the failure of any Grantor to perform or observe any of
the provisions hereof.

(b) Without limitation of its indemnification obligations under the other
Security Documents, each Grantor jointly and severally agrees to indemnify the
Collateral Agent and the other Indemnitees against, and hold each of them
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
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.

(c) Any such amounts payable as provided hereunder shall be additional
Obligations secured hereby. The provisions of this Section 7.07 shall remain
operative and in full force and effect regardless of the termination of this
Agreement or any other Security Document, the consummation of the transactions
contemplated hereby, the repayment of any of the Second
<PAGE> 28
28

Priority Notes or the Securities, the invalidity or unenforceability of any
term or provision of this Agreement or any other Security Document, or any
investigation made by or on behalf of the Collateral Agent or any Secured
Party. All amounts due under this Section 7.07 shall be payable on written
demand therefor.

SECTION 7.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.09. Waivers: Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent
hereunder and under the other Security Documents and of the Secured Parties
under the Note Agreement or the Indenture are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or any other Security Document or consent to any
departure by any Grantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Grantor in any case shall entitle such
Grantor or any other Grantor to any other or further notice or demand in
similar or other circumstances.

(b) Except for any waivers, amendments or modifications comparable to
those described in Section 9.1 of the Indenture (references therein to
"Holders" being taken to include the Noteholders), neither this Agreement nor
any other Security Document nor any provision hereof or thereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Grantor or Grantors with respect
to which such waiver, amendment or modification is to apply, subject to
obtaining the prior written consent of the Majority Noteholders and the
Majority Securities Holders, each voting as a separate class, in accordance
with Section 1.04 hereof.

SECTION 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER SECURITY
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER SECURITY DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.10.

SECTION 7.11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the

<PAGE> 29
29

validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or uneforceable provisions.

SECTION 7.12. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 7.04. Delivery of an executed signature page
to this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.

SECTION 7.13. Headings. Article and Section headings used herein are
for the purpose of reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

SECTION 7.14. Jurisdiction: Consent to Service of Process. (a) Each
Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Security Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect
any right that the Collateral Agent or any Secured Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Security
Documents against any Grantor or its properties in the courts of any
jurisdiction.

(b) Each Grantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or the other Loan Documents in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

SECTION 7.15. Termination. (a) This Agreement and the Security Interest
shall terminate when all the Obligations have been paid in full in cash and the
Purchase Commitments (as defined in the Note Agreement) have been terminated.
<PAGE> 30
30

(b) Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under the Note Agreement and the Indenture, or upon the
effectiveness of any written consent to the release of the Security Interest in
any Collateral pursuant to the Note Agreement and the Indenture, the Security
Interest in such Collateral shall be automatically released, provided that in
no event shall all or substantially all of the Collateral be released without
the written consent of the Majority Securities Holders and all the Noteholders.

(c) In connection with any termination or release pursuant to
paragraphs (a) and (b) above, the Collateral Agent shall execute and deliver to
the Grantors, at the Grantors' expense, all Uniform Commercial Code termination
statements and similar documents that the Grantors shall reasonably request to
evidence such termination. Any execution and delivery of termination statements
or documents pursuant to this Section 7.15 shall be without recourse to or
warranty by the Collateral Agent.

SECTION 7.16. Additional Grantors. Pursuant to Section 10.22 of the
Indenture, each Subsidiary (other than any Inactive Subsidiary) of the Company
that was not in existence or not such a Subsidiary on the date of the Indenture
is required to enter into this Security Agreement upon becoming such a
Subsidiary (or upon ceasing to be an Inactive Subsidiary). Upon execution and
delivery by the Collateral Agent and a Subsidiary of an instrument in the form
of Exhibit A to the Indenture, such Subsidiary shall become a Grantor and a
Subsidiary Guarantor hereunder with the same force and effect as if originally
named as a Grantor and a Subsidiary Guarantor herein. The execution and
delivery of any such instrument shall not require the consent of any Subsidiary
Guarantor hereunder. The rights and obligations of each Subsidiary Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Subsidiary Guarantor as a party to this Agreement.

SECTION 7.17. Priorities among Agents. If, as contemplated by Section
10 of the Intercreditor Agreement, it should become necessary to have separate
collateral agents to act for the Second Priority Notes ("Second Priority
Agent"), then (i) all references in the Intercreditor Agreement to the Junior
Collateral Agent shall be taken to refer to the Second Priority Agent so long
as any Second Priority Obligations exist, and thereafter to the Third Priority
Agent, and (ii) all references in the Security Documents to the Collateral
Agent shall be deemed to refer to the Second Priority Agent and the Third
Priority Agent jointly so long as any Second Priority Obligations exist, and
thereafter to the Third Priority Agent.

<PAGE> 31

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

PSF HOLDINGS, L.L.C.

by /s/ W. R. Patterson
-------------------------------
Name:
Title:

PREMIUM STANDARD FARMS, INC.

by /s/ W. R. Patterson
--------------------------------
Name:
Title:

PRINCETON DEVELOPMENT CORP.

by /s/ W. R. Patterson
---------------------------------
Name:
Title:

FLEET NATIONAL BANK, as Collateral Agent

by /s/ Paul D. Allen
---------------------------------
Name: Paul D. Allen
Title: Vice President

<PAGE> 1
EXHIBIT 4.7

EXECUTION COPY

NEW LLC INTERESTS
REGISTRATION RIGHTS AGREEMENT

PSF HOLDINGS, L.L.C.

for the benefit of

THE HOLDERS NAMED HEREIN

Dated as of September 17, 1996

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
1. Definitions......................................1

2. Shelf Registration...............................4

3. Demand Registrations.............................5

4. Piggyback Registration...........................7

5. Blackout Periods.................................8

6. Expenses.........................................9

7. Registration Procedures..........................9

8. Underwritten Offerings..........................13

9. Preparation; Reasonable Investigation...........14

10. Indemnification.................................15

11. Registration Rights to Others...................18

12. Adjustments Affecting Registrable Securities....19

13. Rule 144 and Rule 144A..........................19

14. Amendments and Waivers..........................19

15. Nominees for Beneficial Owners..................19

16. Assignment......................................20

17. Calculation of Percentage of Principal
Amount of Registrable Securities.................20

18. Miscellaneous....................................20

SCHEDULE I

</TABLE>

-2-
<PAGE> 3

NEW LLC INTERESTS REGISTRATION RIGHTS AGREEMENT

NEW LLC INTERESTS REGISTRATION RIGHTS AGREEMENT, dated as of September 17,
1996 (this "Agreement"), by PSF Holdings, L.L.C., a Delaware limited liability
company (the "Company"), for the benefit of the holders of Registrable
Securities (as hereinafter defined) (the "Holders").

This Agreement is being entered into in accordance with the Plan in
connection with the acquisition of Registrable Securities (each as hereinafter
defined) for the benefit of certain holders (the "Initial Holders") pursuant to
the Plan. Each Initial Holder owns the aggregate number of Registrable
Securities specified with respect to such original Holder in Schedule I hereto.

To induce the holders of Registrable Securities to vote in favor of the
Plan and to accept the issuance of such securities by the Company under the
Plan, the Company has undertaken to register the Registrable Securities under
the "Securities Act" (as hereinafter defined) and to take certain other actions
with respect to the Registrable Securities. This Agreement sets forth the
terms and conditions of such undertaking.

In consideration of the premises and the mutual agreements set forth
herein, the Company hereby agrees as follows:

1. Definitions. Unless otherwise defined herein, capitalized terms used herein
and in the recitals above shall have the following meanings:

"Affiliate" of a Person means any Person that directly, or indirectly
through one or more intermediaries, controls, is under common control with, or
is controlled by, such other Person. For purposes of this definition,
"control" means the ability of one Person to direct the management and policies
of another Person, whether by means of contract, securities ownership, or
otherwise.

"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to be
closed.

"Class A Registrable Securities" means the (i) Class A Units held by the
Initial Holders, (ii) any Class A Units issued or issuable with respect to, in
exchange for, or upon exercise of any of the Warrants (as defined in the Plan),
(iii) any Class A Units received upon conversion of a Class B Unit which is at
such time, a Registrable Security hereunder, and (iv) any other securities
issued or issuable with respect to, or in exchange for, the units described in
clause (i), (ii) or (iii), including any issuance by way of a recapitalization,
merger, consolidation, reorganization or otherwise; provided, however, that
Class A Registrable Securities shall cease to be Registrable Securities upon
(a) any sale or distribution thereof pursuant to an effective registration
statement under the Securities Act; (b) any sale or distribution permitting the
recipient thereof to sell such securities without restriction under the
Securities Act and any state securities laws; or (c) the receipt by a Holder of
such Class A Registrable Securities of an opinion,

-1-
<PAGE> 4
satisfactory in form and substance to such Holder, by legal counsel,
reasonably acceptable to such Holder, to the effect that the public sale or
distribution of such Class A Units without restriction under the Securities Act
and any state securities laws does not require the registration of such Class A
Units under the Securities Act and any state securities laws or the use of an
applicable exemption therefrom.

"Class B Registrable Securities" means the (i) Class B Units, issued to
the MS Member as of the date hereof (ii) any Class B Units issued or issuable
with respect to, in exchange for, or upon exercise of any of the Warrants (as
defined in the Plan), (iii) any Class B Units received upon conversion of a
Class A Unit which is, at such time, a Registrable Security hereunder and (iv)
any other securities issued or issuable with respect to, or in exchange for,
the units described in clause (i), (ii), or (iii) including any issuance by way
of a recapitalization, merger, consolidation, reorganization or otherwise;
provided, however, that Class B Registrable Securities shall cease to be Class
B Registrable Securities upon (A) any sale or distribution thereof pursuant to
an effective registration statement under the Securities Act; (B) any sale or
distribution permitting the recipient thereof to sell such securities without
restriction under the Securities Act and any state securities laws; or (C) the
receipt by a Holder of such Class B Registrable Securities of any opinion,
satisfactory in form and substance to such Holder, by legal counsel, reasonably
acceptable to such Holder, to the effect that the public sale or distribution
of such Class B Units without restriction under the Securities Act and any
state securities laws does not require the registration of such Class B Units
under the Securities Act and any state securities laws or the use of any
applicable exemption therefrom.

"Class A Units" has the meaning set forth in the LLC Agreement.

"Class B Units" has the meaning set forth in the LLC Agreement.

"Commission" means the United States Securities and Exchange Commission.

"Company" has the meaning provided in the preamble hereto.

"Company Indemnitee" has the meaning provided in Section 10 hereof.

"Demand Registration" means any registration pursuant to Section 3 hereof.

"Disadvantageous Condition" has the meaning provided in Section 5 hereof.

"Effectiveness Period" has the meaning provided in Section 2 hereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder, or any similar or
successor statute.

"Expenses" means all expenses incident to the Company's performance of or
compliance with its obligations under this Agreement, including, without

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<PAGE> 5

limitation, all registration, filing, listing, stock exchange and NASD fees,
all fees and expenses of complying with state securities or blue sky laws
(including fees, disbursements and other charges of counsel for the
underwriters in connection with blue sky filings), all word processing,
duplicating and printing expenses, messenger and delivery expenses, all rating
agency fees, the fees, disbursements and other charges of counsel for the
Company and of its independent public accountants, including the expenses
incurred in connection with "comfort" letters required by or incurred in
connection with "comfort" letters required by or incident to such performance
and compliance, any fees and disbursements of underwriters customarily paid by
issuers and sellers of securities and the reasonable fees, disbursements and
other charges of one firm of counsel (per registration prepared) chosen by the
Holders of a majority of the aggregate Registrable Securities, but excluding
broker-dealer and underwriting concessions, allowances, discounts and
commissions and applicable transfer taxes, if any, which concessions,
allowances, discounts, commissions and transfer taxes shall be borne by the
seller or sellers of Registrable Securities in all cases.

"Holder" means (i) the Initial Holders and (ii) any transferees of the
Registrable Securities (a) whose securities continue to be Registrable
Securities and (b) who have been assigned the transferor's rights under Section
16 hereof.

"Holder Indemnitee" shall have the meaning provided in Section 10 hereof.

"Initial Shelf Registration" has the meaning set forth in Section 2
hereof.

"Initial Holders" has the meaning set forth in the preamble hereto.

"Initiating Holders" has the meaning set forth in Section 3 hereof.

"LLC Agreement" is the limited liability company agreement of PSF
Holdings, L.L.C., dated as of September 17, 1996, as from time to time in
effect.

"Loss" and "Losses" shall have the meaning provided in Section 10 hereof.

"MS Member" has the meaning set forth in the LLC Agreement.

"NASD" means the National Association of Securities Dealers, Inc.

"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.

"Offering Documents" shall have the meaning provided in Section 10 hereof.

"Person" means any individual, corporation, partnership, firm, limited
liability company, joint venture, association, joint stock company, trust,

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<PAGE> 6
unincorporated organization, governmental or regulatory body or subdivision
thereof or other entity.

"Plan" means the joint plan of reorganization of PSF Finance L.P. and
certain affiliated entities as confirmed by the United States Bankruptcy Court
for the District of Delaware by order entered September 6, 1996.

"PSF" means Premium Standard Farms, Inc., a Delaware corporation and a
wholly owned subsidiary of the Company.

"Public Offering" means a public offering and sale of securities pursuant
to an effective registration statement under the Securities Act.

"Registrable Securities" means, collectively, the Class A Registrable
Securities and the Class B Registrable Securities.

"Requesting Holders" has the meaning set forth in Section 4 hereof.

"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, or any similar or successor
statute.

"Shelf Registration" has the meaning set forth in Section 2 hereof.

"Subsequent Shelf Registration" has the meaning set forth in Section 2
hereof.

2. Shelf Registration.

a. Initial Shelf Registration. The Company shall (i) cause to be filed
as soon as practicable, but not later than April 30, 1997, a shelf
registration statement pursuant to Rule 415 promulgated under the
Securities Act (the "Initial Shelf Registration") providing for the sale
by the Holders, from time to time, of all of the Class A Registrable
Securities and (ii) use its best efforts to have such Initial Shelf
Registration thereafter declared effective by the Commission not later
than June 30, 1997. If some or all of the Holders of Class B Units
desire to effect the registration under the Securities Act of outstanding
Class B Units at any time prior to the termination of the Effectiveness
Period, such Holders may make a written request that the Company effect
the registration under the Securities Act of all or any portion of the
Class B Registrable Securities. Such request will specify the number of
Class B Units proposed to be sold. Upon receipt of such written notice,
the Company shall include such Class B Units in the Shelf Registrations
as soon as practicable.

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<PAGE> 7
to declare effective, a subsequent registration statement for a
secondary offering to be made on a continuous basis pursuant to Rule 415
under the Securities Act covering all of the Class A Registrable
Securities and the Class B Units requested to be registered pursuant to
Section 2(a) which remain outstanding (a "Subsequent Shelf
Registration"). To the extent the Company is aware of such withdrawal or
unavailability prior to the occurrence of same, it shall use its best
efforts to have the Subsequent Shelf Registration filed at such time
prior to such withdrawal or unavailability which is reasonably calculated
to cause the Subsequent Shelf Registration to become effective on or
before the date of such withdrawal or unavailability, and, in any event,
on or before 180 days prior to such withdrawal or unavailability.

c. Amendments or Subsequent Shelf Registrations. If the Initial Shelf
Registration (except as provided in Section 2(b)) or any Subsequent Shelf
Registration ceases to be effective for any reason at any time during the
Effectiveness Period for a reason other than because of the sale of all
of the Registrable Securities covered thereby, subject to Section 2(b),
the Company shall use its best efforts to obtain the prompt withdrawal of
any order suspending the effectiveness thereof, and in any event shall,
within 60 days of such cessation of effectiveness, amend such Initial
Shelf Registration or Subsequent Shelf Registration in a manner
reasonably calculated to obtain the withdrawal of the order suspending
the effectiveness thereof, or shall file an additional "shelf"
registration statement pursuant to Rule 415 covering all of such
Registrable Securities which remain unsold. (Each of the Initial Shelf
Registration and the Subsequent Shelf Registrations is referred to
individually herein as a "Shelf Registration" and collectively as the
"Shelf Registrations.")

d. Effectiveness Period. The Company shall use its best efforts to
keep the Shelf Registration (including the Initial Shelf Registration and
any Subsequent Shelf Registration) continuously effective under the
Securities Act until the earlier to occur of the fourth anniversary of
the date on which the Initial Shelf Registration became effective (the
"Effectiveness Period"), or the date on which all Registrable Securities
covered by the Initial Shelf Registration have been sold; provided,
however, that the Effectiveness Period shall be extended commensurate
with any period during which a Shelf Registration which previously has
been declared effective by the Commission no longer is in effect as
required by this Agreement, or during which sales have been suspended
pursuant to Section 5 or Section 7(g) hereof. If a Subsequent Shelf
Registration is filed, pursuant to Section 2(b) or 2(c) hereof, the
Company shall use its best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as reasonably practicable
after such filing and to keep such Registration Statement continuously
effective for a period after such effectiveness equal to the
Effectiveness Period, less the aggregate number of days during which the
Initial Shelf

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<PAGE> 8
Registration or any Subsequent Shelf Registration was previously in
effect. The intent of this provision is that the Shelf Registration
(including the Initial Shelf Registration and any Subsequent Shelf
Registration) shall be in effect for a number of days, in the aggregate,
equal to four years; provided that a Shelf Registration shall not be
required to be maintained in effect after all of the Registrable
Securities have been sold thereunder or otherwise distributed such that
they are no longer deemed to be Registrable Securities hereunder.

e. Option to Extend Initial Shelf Registration. In lieu of filing the
Subsequent Shelf Registration required under Section 2(b) hereof, the
Company may, in its sole discretion and if permitted by applicable law,
keep the Initial Shelf Registration continuously effective for the
remainder of the Effectiveness Period or, if earlier, until all of the
Registrable Securities eligible to be included in the Shelf Registrations
have been sold hereunder such that they are no longer Registrable
Securities hereunder.

3. Demand Registrations.

a. Demand Rights. After the termination of the Effectiveness Period,
so long as there are "Registrable Securities" hereunder, upon written
notice to the Company from one or more Holders (the "Initiating Holders")
of Registrable Securities holding in the aggregate 25% of Registrable
Securities then outstanding, requesting that the Company effect, pursuant
to this Section 3, the registration of such Initiating Holders'
Registrable Securities under the Securities Act (which notice shall
specify the Registrable Securities so requested to be registered, the
proposed amounts thereof and the intended method or methods of
distribution by such Initiating Holders (including whether the proposed
offering is to be underwritten), the Company shall promptly (but in any
event within 15 days) give written notice of such requested registration
to all Holders of Registrable Securities, and thereupon the Company shall
use its best efforts to effect the registration under the Securities Act
of: (A) the Registrable Securities that the Initiating Holders have
requested the Company to register, for disposition in accordance with the
intended method or methods of distribution stated in their notice to the
Company; and (B) all other Registrable Securities the Holders of which
shall have made a written request to the Company for registration thereof
(which request shall specify such Registrable Securities and the proposed
amounts thereof) within 15 days after the receipt of such written notice
from the Company, as expeditiously as possible (but in any event shall
file such registration statement within 60 days of the receipt of such
request by the Initiating Holders), all to the extent requisite to permit
the disposition by Holders of the Registrable Securities then
constituting Registrable Securities so to be registered.

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<PAGE> 9
b. Frequency; Duration. The Company shall be obligated to effect only
two registrations pursuant to this Section 3 with respect to all Holders
of Registrable Securities. Notwithstanding the foregoing, the Company
shall not be required to effect a Demand Registration pursuant to this
Section 3: (i) if it shall have so effected a Demand Registration during
the previous seven months; or (ii) during the period starting with the
date 30 days prior to the Company's good faith estimate of the date of
filing of, and ending on the date 90 days following the effective date
of, a registration statement pertaining to an underwritten public
offering for the account of the Company with respect to which Holders
have piggyback rights pursuant to Section 4 hereof; provided, however,
that a Demand Registration shall not be deemed to have been effected for
purposes of Section (3)(b)(i) if the applicable registration statement
has not been declared effective and kept effective until the earlier of
(i) 90 days following the date on which such registration statement was
declared effective and (ii) the sale pursuant to such registration
statement of the Registrable Securities covered thereby; and provided,
further, that in the event a request for registration is refused pursuant
to (ii) above, if the Company then elects not to file a registration
statement or, if a registration statement is filed, the Company elects
not to complete the proposed offering, the Company shall notify in
writing the Holders whose request for registration has been refused
pursuant to clause (ii) above, and such Holders shall have the right,
within 10 days after receiving written notice of the Company's election,
to request the Company to effect the registration of Registrable
Securities for the account of Holders, and such registration shall be
considered a Demand Registration under this Section 3.

c. Inclusion of Other Securities. The Company may include in a Demand
Registration securities held by other Persons who have piggyback
registration rights pursuant to written agreements with the Company;
provided that Registrable Securities shall have absolute priority over
any such other securities in connection with any cutback.

4. Piggyback Registration. If the Company or PSF, at any time prior to the
expiration of the Effectiveness Period when there is not in effect a Shelf
Registration for the Registrable Securities, proposes to register any of its
securities under the Securities Act or, at any time after the expiration of the
Effectiveness Period, proposes to register any of its securities, on any forms
(other than in connection with the registration of securities issued or
issuable pursuant to an employee stock option, stock purchase, stock bonus or
similar plan or dividend reinvestment plan or pursuant to a merger, business
combination, exchange offer or transaction of the type specified in Rule 145(a)
under the Securities Act), whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account, the Company shall give prompt written notice to all of the Holders
of the Company or PSF's intention to do so and of such Holders' rights (if any)
under this Section 4, which notice, in any event, shall be

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<PAGE> 10
given at least 20 days prior to the filing with the Commission of such
proposed registration. Upon the written request of any Holder receiving notice
of such proposed registration (a "Requesting Holder") made within 15 days after
the receipt of any such notice (or 10 days if the Company states in such
written notice or gives telephonic notice to the relevant security holders,
with written confirmation to follow promptly thereafter, that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date), which request shall specify the
Registrable Securities intended to be disposed of by such Requesting Holder and
the intended method of such distribution, and the minimum offering price per
unit of Registrable Security at which the Holder is willing to sell its
Registrable Securities, the Company shall, subject to Section 8(b) hereof,
include for registration under the Securities Act all Registrable Securities of
the Requesting Holders; provided that,

i. with respect to a registration of Registrable Securities,
prior to the effective date of the registration statement filed in
connection with such registration, promptly following receipt of
notification by the Company or PSF from the managing underwriter of
the price at which such securities are to be sold, if applicable, the
Company shall so advise each Requesting Holder of such price, and if
such price is below the minimum price which any Requesting Holder
shall have indicated to be acceptable to such Requesting Holder, such
Requesting Holder shall then have the right irrevocably to withdraw
its request to have its Registrable Securities included in such
registration statement, by delivery of written notice of such
withdrawal to the Company within three Business Days of its being
advised of such price, without prejudice to the rights of any Holder
or Holders of Registrable Securities to include Registrable Securities
in any future registration (or registrations) pursuant to this Section
4; and

ii. with respect to a registration of Registrable Securities,
if at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Company or PSF shall determine for any reason not to register or to
delay registration of such other securities, the Company may, at its
election, give written notice to such determination to each Requesting
Holder and (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities
in connection with such registration (but not from any obligation of
the Company to pay the Expenses in connection therewith), without
prejudice, however, to the rights of any Holder to include Registrable
Securities in any future registration (or registrations) pursuant to
this Section 4 and (ii) in the case of a determination to delay
registering its other securities, shall be permitted to delay
registering any

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<PAGE> 11
Registrable Securities, for the same period as the delay in
registering such other securities.

No registration effected under this Section 4 shall relieve the Company of its
obligations under Section 2 or 3 hereof.

5. Blackout Periods. With respect to a Shelf Registration filed or to be filed
pursuant to Section 2 hereof or a Demand Registration requested under Section 3
hereof, if the members of the Company shall determine, in its good faith
reasonable judgment, that to maintain the effectiveness of such registration
statement or to permit such registration statement to become effective (or if
no registration statement has yet been filed, to file such registration
statement) would be significantly disadvantageous to the Company's financial
condition, business or prospects ( a "Disadvantageous Condition") in light of
the existence, or in anticipation, of (i) any acquisition of financing activity
involving the Company, or any subsidiary of the Company, including a proposed
public offering or private placement, (ii) an undisclosed material event, the
public disclosure of which could have a material adverse effect on the Company,
(iii) a proposed material transaction involving the Company or a substantial
amount of its assets, or (iv) any other circumstance or condition the
disclosure of which would materially disadvantage the Company, and the
existence of which renders any to be filed, then filed or effective
registration statement inadequate as failing to include material information,
then the Company may, until such Disadvantageous Condition no longer exists
(but not with respect to more than 180 days in the aggregate nor involving more
than 90 consecutive days during any 12-month period) cause such registration
statement to be withdrawn and the effectiveness of such registration statement
to be terminated, suspend the use of the prospectus contained therein, or if no
registration statement has yet been filed, elect not to file such registration
statement. If the Company determines to take any action pursuant to the
preceding sentence, the Company shall deliver a notice to any Holder of
Registrable Securities covered or to be covered under such withdrawn, suspended
or not to be filed registration statement, which indicates that the
registration statement is no longer effective or will not be filed. Upon the
receipt of any such notice, such Holder(s) in the case of an effective
registration statement shall forthwith discontinue their use and any
dissemination of the prospectus contained in such registration statement. If
any Disadvantageous Condition shall cease to exist, the Company shall promptly
notify any Holders, who shall have ceased selling Registrable Securities
pursuant to an effective registration statement as a result of such
Disadvantageous Condition, indicating such cessation. The Company shall, if
any registration statement required to be filed or maintained under this
Agreement has been withdrawn, suspended or not filed, file promptly, at such
time as it in good faith deems appropriate, an amended, supplemented or new
registration statement, as applicable, covering the Registrable Securities that
were covered by such withdrawn registration statement or to be covered by such
unfiled registration statement.

6. Expenses. The Company shall pay all Expenses in connection with any
registration initiated pursuant to Section 2 or 3 hereof, whether or not such
registration shall become effective.

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<PAGE> 12

7. Registration Procedures. If and whenever the Company is required to
effect any registration under the Securities Act as provided in and subject to
the provisions of Sections 2 and 3 hereof, the Company shall, as expeditiously
as possible:

a. expeditiously prepare and file with the Commission the requisite
registration statement to effect such registration and thereafter use
its reasonable best efforts to cause such registration statement to
become effective; provided, however, that the Company may discontinue
any registration of its securities that are not Registrable Securities
(and, under the circumstances specified in Sections 4 and 7(b) hereof,
its securities that are Registrable Securities) at any time prior to the
effective date of the registration statement relating thereto;

b. prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Securities Act with
respect to the offering of all Registrable Securities covered by such
registration statement until such time as all of such Registrable
Securities have been disposed of during the applicable period in
accordance with the method of disposition set forth in such registration
statement or, with respect to a Shelf Registration, the expiration of
the Effectiveness Period;

c. furnish to each seller of Registrable Securities covered by any
registration statement provided for hereunder such reasonable number of
copies of such drafts and final conformed versions of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits), such reasonable number of copies of such
drafts and final versions of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, and such other documents, as such seller may
reasonably request in writing;

d. use its best efforts (i) to file such applications and documents to
register or qualify all Registrable Securities and other securities
covered by such registration statement under such other securities or
blue sky laws of such states or other jurisdictions of the United States
of America as the sellers of Registrable Securities covered by such
registration statement shall reasonably request in writing, (ii) to keep
such registration or qualification in effect for so long as such
registration statement remains in effect and (iii) to take any other
action that may be reasonably necessary or advisable to enable such
sellers to consummate the disposition in such jurisdictions of the
securities to be sold by such sellers, except that the Company shall not
for any such purpose be required to qualify generally to do business

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<PAGE> 13
as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this subsection (d) be obligated to be so
qualified, to subject itself to taxation in such jurisdiction or to
consent to general service of process in any such jurisdiction;

e. use its best efforts to cause all Registrable Securities covered by
such registration statement to be registered with or approved by such
other federal or state governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and counsel to the
seller or sellers of Registrable Securities to enable the sellers
thereof to consummate the offering of such Registrable Securities;

f. use its best efforts to obtain and, if obtained, furnish a copy to
each seller of Registrable Securities, and each such seller's
underwriters, if any, of

i. an opinion of counsel for the Company, dated the effective date of
such registration statement (and, if such registration involves an
underwritten offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and
substance to counsel to the Holders chosen by Holders of a majority
of the aggregate principal amount of Registrable Securities being
registered, and

ii. a "comfort" letter, dated the effective date of such registration
statement (and, if such registration involves an underwritten
offering, dated the date of the closing under the underwriting
agreement) and signed by the independent public accountants who have
certified the Company's financial statements included or
incorporated by reference in such registration statement, reasonably
satisfactory in form and substance to counsel to the Holders chosen
by Holders of a majority of the aggregate principal amount of
Registrable Securities being registered,

in each case, covering substantially the same matters with respect to
such registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to events
subsequent to the date of such financial statements and matters
contained in such registration statement, as are customarily covered in
opinions of issuer's counsel and in accountants' comfort letters
delivered to underwriters in underwritten Public Offerings of like
securities;

g. notify the sellers of Registrable Securities (providing, if
requested by any such Persons, confirmation in writing) as soon as
practicable after becoming aware of: (A) the filing of any prospectus
or prospectus supplement of the filing or effectiveness (or anticipated
date of effectiveness) of such registration

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<PAGE> 14
statement or any post-effective amendment thereto; (B) any request by
the Commission for amendments or supplements to such registration
statement or the related prospectus or for additional information; (C)
the issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of any
proceedings for such purpose; (D) the receipt by the Company of any
notification with respect to the suspension of the qualification or
registration (or exemption therefrom) of any Registrable Securities for
sale in any jurisdiction in the United States or the initiation or
threatening of any proceeding for such purposes; or (E) the happening of
any event that makes any statement made in such registration statement
or in any related prospectus, prospectus supplement, amendment or
document incorporated therein by reference untrue in any material
respect or that requires the making of any changes in such registration
statement or in any such prospectus, supplement, amendment or other such
document so that it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein (in the case of any prospectus
in the light of the circumstances under which they were made) not
misleading;

h. otherwise comply with all applicable rules and regulations of the
Commission and any other governmental agency or authority having
jurisdiction over the offering, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than
eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and furnish to each seller of
Registrable Securities at least three Business Days prior to the filing
thereof a copy of any amendment or supplement to such registration
statement or prospectus;

i. obtain a CUSIP number for all Registrable Securities;

j. enter into customary agreements and take all such other reasonable
actions in connection therewith in order to expedite or facilitate the
disposition of the Registrable Securities included in such registration
statement;

k. make every reasonable effort to obtain the withdrawal of any order
or other action suspending the effectiveness of any such registration
statement or suspending the qualification or registration (or exemption
therefrom) of the Registrable Securities for sale in any jurisdiction;
and

l. if any event described in subsection (g) hereto occurs, use its best
efforts to cooperate with the Commission to prepare, as soon as
practicable, any amendment or supplement to such registration statement
or such related prospectus and any other additional

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<PAGE> 15

information, or to take other action that may have been requested by
the Commission.

It shall be a condition precedent to the obligations of the Company to
take action pursuant to this Agreement that the selling Holders furnish to the
Company such information regarding themselves and the Registrable Securities
held by them, and the intended methods of disposition of such securities, as
shall be required to effect the registration and sale of their Registrable
Securities.

In the case of a registration pursuant to this Agreement (including any
registration under Section 4 hereof), each Holder agrees that as of the date
that a final prospectus is made available to it for distribution to prospective
purchasers of Registrable Securities it shall cease to distribute copies of any
preliminary prospectus prepared in connection with the offer and sale of such
Registrable Securities. Each Holder further agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
subsection (g) of this Section 7, such Holder shall forthwith discontinue such
Holder's disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until such Holder's receipt
of the copies of the supplemented or amended prospectus contemplated by
subsection (l) of this Section 7 and, if so directed by the Company, shall
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
relating to such Registrable Securities current at the time of receipt of such
notice.

8. Underwritten Offerings.

a. Requested Underwritten Offerings. If requested by the underwriters
(if any) in connection with a registration under Section 2 or 3 hereof,
the Company shall enter into a firm commitment underwriting agreement
with such underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to the Company, a majority of the
Holders whose Registrable Securities are included in such registration,
and the underwriters, and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in
agreements of that type, including, without limitation, indemnification
and contribution to the effect and to the extent provided in Section 10
hereof.

b. Selection of Underwriters. The underwriter or underwriters
of each underwritten offering, if any, of the Registrable Securities to
be registered pursuant to Section 2, 3 or 4 hereof (i) shall be a
nationally recognized underwriter (or underwriters), (ii) shall be
selected by the Holders owning at least a majority of the aggregate
outstanding principal amount of Registrable Securities being sold in any
such underwritten offering and (iii) shall be reasonably acceptable to
the Company (or, with respect to an underwritten offering of securities
of PSF, to PSF).

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<PAGE> 16

c. Piggyback Underwritten Offerings; Priority. If the Company or PSF
proposes to register any of its securities under the Securities Act
(whether pursuant to registration rights afforded to holders of
securities other than Registrable Securities or otherwise) and the
Holders exercise piggyback rights pursuant to Section 4 hereof with
respect to such registration and any such securities are to be
distributed by or through one or more underwriters, the Company shall use
reasonable efforts to arrange for such underwriters to include all of the
Registrable Securities to be offered and sold by the Holders thereof
among the securities of the Company to be distributed by such
underwriters; provided, that, notwithstanding any other provision herein
contained, if the managing underwriter of such underwritten offering
shall advise the Company in writing (with a copy to the Holders) that the
inclusion of the Registrable Securities in such registration would
materially and adversely affect the success of such offering, then the
number of Registrable Securities to be included shall be reduced, pro
rata, to the extent necessary to reduce the Registrable Securities to the
number recommended by the underwriter (which amount may be zero);
provided, however, that in the event that any holders of securities other
than Registrable Securities holding piggyback rights with respect to any
registration have invoked such rights with respect to a registration as
to which the holders of Registrable Securities have also requested
inclusion pursuant to Section 4 hereof, and the underwriter does not
object to the inclusion of the Registrable Securities on the basis of the
character of such securities, but only on the volume of securities to be
included, any cutback of the Registrable Securities shall be no less
favorable to the Registrable Securities than on a pro rata basis with any
cutback of any such other securities holding piggyback rights.

d. Holders of Registrable Securities to be Parties to Underwriting
Agreement. The Holders of Registrable Securities to be distributed by
underwriters in an underwritten offering contemplated by subsections (a)
or (b) of this Section 8 shall be parties to the underwriting agreement
between the Company (or PSF) and such underwriters and any such Holder,
at its option, may require that any or all of the representations and
warranties by, and the other agreements on the part of, the Company to
and for the benefit of the underwriters be made to and for the benefit of
such Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Holders. No such Holder
shall be required to make any representations or warranties to or
agreements with the Company, PSF or the underwriters other than
representations, warranties or agreements regarding such Holder, such
Holder's Registrable Securities and such Holder's intended method of
distribution and indemnification and contribution customary in secondary
offerings to the effect and to the extent provided in Section 10 hereof.

-14-
<PAGE> 17
e. Selection of Underwriters for Piggyback Underwritten Offering. The
underwriter or underwriters of each piggyback underwritten offering
pursuant to this Section 8 shall be a nationally recognized underwriter
(or underwriters) selected by the Company or, with respect to any
offering of securities of PSF, selected by PSF.

9. Preparation; Reasonable Investigation.

a. Registration Statements. In connection with the preparation and
filing of each registration statement under the Securities Act pursuant
to this Agreement, the Company shall give each holder of Registrable
Securities registered under such registration statement, the
underwriters, if any, and its respective counsel and accountants the
reasonable opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with
the Commission, and each amendment thereof or supplement thereto, and
shall give each of them such reasonable opportunities to discuss the
business of the Company with its officers and the independent public
accountants who have certified its financial statements as shall be
necessary, in the reasonable opinion of any such Holders' and such
underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.

b. Confidentiality. Each Holder of Registrable Securities shall
maintain the confidentiality of any confidential information received
from or otherwise made available by the Company to such Holder of
Registrable Securities pursuant to this Agreement and identified in
writing by the Company as confidential and shall enter into such
confidentiality agreements as the Company shall reasonably request.
Information that (i) is or becomes available to a Holder of Registrable
Securities from a public source, (ii) is disclosed to a Holder of
Registrable Securities by a third-party source whom the Holder of
Registrable Securities reasonably believes has the right to disclose such
information or (iii) is or becomes required to be disclosed by a Holder
of Registrable Securities by law, including, but not limited to,
administrative or court orders, shall not be deemed to be confidential
information for purposes of this Agreement; provided, however, that to
the extent sufficient time is available prior to such disclosure being
required to be made pursuant to clause (iii) hereof, the Holders of
Registrable Securities shall promptly notify the Company of any request
for disclosure and any proposed disclosure pursuant to such clause (iii).
The Holders of Registrable Securities shall not grant access, and the
Company shall not be required to grant access, to information under this
Section 9 to any Person who will not agree to maintain the
confidentiality (to the same extent a Holder is required to maintain the
confidentiality) of any confidential information received from or
otherwise made available to it by the Company or

-15-
<PAGE> 18
the holders of Registrable Securities under this Agreement and identified
in writing by the Company as confidential.

10. Indemnification.

a. Indemnification by the Company. In connection with any registration
statement filed by the Company (or any subsidiary) pursuant to this
Agreement, the Company shall, and hereby agrees to, indemnify and hold
harmless, each Holder of any Registrable Securities covered by such
registration statement and each other Person who participates as an
underwriter in the offering or sale of such securities and each other
Person, if any, who "controls" such Holder or any such underwriter, and
their respective directors, officers and partners within the meaning of
section 15 of the Securities Act and section 20 of the Exchange Act
(each, a "Company Indemnitee" for purposes of this Section 10(a)),
against any losses, claims, damages, liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof and
whether or not such indemnified party is a party thereto), joint or
several, and expenses, including, without limitation, the reasonable
fees, disbursements and other charges of legal counsel and reasonable
out-of-pocket costs of investigation, to which such Company Indemnitee
may become subject under the Securities Act or otherwise (collectively, a
"Loss" or "Losses"), insofar as such Losses arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any registration statement under which such securities
were registered pursuant to this Agreement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto (collectively, "Offering Documents"), or
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
in the light of the circumstances in which they were made not misleading;
provided that the Company shall not be liable in any such case to the
extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
made in such Offering Documents in reliance upon and in conformity with
written information furnished to the Company expressly for use therein;
and provided, further, that the Company shall not be liable to any Person
including any Company Indemnitee who participates in the offering or sale
of Registrable Securities or any other Person, if any, who controls such
Person including any Company Indemnitee, in any such case to the extent
that any such Loss arises out of such Person's failure to send or give a
copy of the final prospectus (including any documents incorporated by
reference therein), as the same may be then supplement or amended, to the
Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation of
the sale of Registrable Securities to such person if such statement or
omission was corrected in such final prospectus. Such indemnity shall
remain in full force and effect

-16-
<PAGE> 19
regardless of any investigation made by or on behalf of such Company
Indemnitee and shall survive the transfer of such securities by such
Company Indemnitee.

b. Indemnification by the Offerors and Sellers. In connection with any
registration statement filed by the Company (or PSF) pursuant to this
Agreement in which a Holder has registered for sale Registrable
Securities, each such Holder of Registrable Securities shall, severally,
but not jointly, and hereby agrees to, indemnify and hold harmless the
Company, PSF and each of its respective directors, officers, members and
partners, each other Person who participates as an underwriter in the
offering or sale of such securities, each other Person, if any, who
controls the Company, such subsidiary, any such underwriter and such
underwriter's directors, officers, stockholders and partners (each a
"Holder Indemnitee" for purposes of this Section 10(b)), against all
Losses insofar as such Losses arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Offering Documents (or any document incorporated by reference therein) or
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
in the light of circumstances in which they were made not misleading, if
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Company or such subsidiary expressly for use
therein; provided, however, that the liability of such indemnifying party
under this Section 10(b) shall be limited to the amount of the net
proceeds received by such indemnifying party in the offering giving rise
to such liability. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Holder
Indemnitee and shall survive the transfer of such securities by such
Holder.

-17-
<PAGE> 20

wish, with counsel reasonably satisfactory to such indemnified party,
and after notice from such indemnifying party of its assumption of the
defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred
by the latter in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall be liable
for any settlement of any such action or proceeding effected without its
written consent, which shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability in
respect of such Loss or which requires action on the part of such
indemnified party or otherwise subjects the indemnified party to any
obligation or restriction to which it would not otherwise be subject.

d. Contribution. If the indemnification provided for in this Section
10 shall for any reason be unavailable to an indemnified party under
subsection (a) or (b) of this Section 10 in respect of any Loss, then, in
lieu of the amount paid or payable under subsection (a) or (b) of this
Section 10, the indemnified party and the indemnifying party under
subsection (a) or (b) of this Section 10 shall contribute to the
aggregate Losses (including legal or other expenses reasonably incurred
in connection with investigating the same) (i) in such proportion as is
appropriate to reflect the relative fault of the Company (or its
subsidiary, as applicable) and the prospective sellers of Registrable
Securities covered by the registration statement which resulted in such
Loss or action in respect thereof, as well as any other relevant
equitable considerations, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as shall
be appropriate to reflect the relative benefits received by the Company
or its subsidiary, on the one hand, and such prospective sellers, on the
other hand, from their sale of Registrable Securities; provided that for
purposes of this clause (ii), the relative benefits received by the
prospective sellers shall be deemed not to exceed the amount received by
such sellers. 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 obligations, if any, of the selling holders of
Registrable Securities to contribute as provided in this subsection (d)
are several in proportion to the relative value of their respective
Registrable Securities covered by such registration statement and not
joint. In addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or Loss
effected without such Person's consent.

-18-

<PAGE> 21

e. Other Indemnification. The Company and, in connection with any
registration statement filed by the Company pursuant to Section 2, each
Holder shall, and, in connection with any registration statement filed by
the Company pursuant to Section 3 or 4, each Holder who has registered
for sale Registrable Securities, shall, with respect to any required
registration or other qualification of securities under any Federal or
state law or regulation of any governmental authority other than the
Securities Act, indemnify Holder Indemnitees and Company Indemnities,
respectively, against Losses, or, to the extent that indemnification
shall be unavailable to a Holder Indemnitee or Company Indemnitee in a
manner similar to that specified in the preceding subsections of this
Section 10 (with appropriate modifications).

f. Indemnification Payments. The indemnification and contribution
required by this Section 10 shall be made by periodic payments of the
amount thereof during the course of any investigation or defense, as and
when bills are received or any Loss is incurred.

11. Registration Rights to Others.

If the Company shall at any time hereafter provide to any holder of any
securities of the Company rights with respect to the registration of such
securities under the Securities Act or the Exchange Act, such rights shall not
be in conflict with or adversely affect any of the rights provided in this
Agreement to the holders of Registrable Securities.

12. Adjustments Affecting Registrable Securities.

The Company shall not effect or permit to occur any combination,
subdivision or reclassification of Registrable Securities that would materially
adversely affect the ability of the Holders to include such Registrable
Securities in any registration of its securities under the Securities Act
contemplated by this Agreement.

13. Rule 144 and Rule 144A.

The Company hereby agrees that (i) at any time it is not subject to the
requirements of section 13 or Section 15(d) of the Exchange Act and there
remain outstanding any Registrable Securities, (A) it shall make available to
any Holder upon written request such information as may be required under Rule
144(A)(d)(4) to permit resales of such Registrable Securities pursuant to Rule
144A under the Securities Act and (B) it shall make publicly available such
information concerning the Company specified in paragraphs (a)(5)(i) through
and including (a)(5)(xiv) and in paragraph (a)(5)(xvi) of Rule 15c2-11 under
the Exchange Act to permit resales of such Registrable Securities pursuant to
Rule 144 under the Securities Act; and (ii) during such times the Company is
subject to the requirements of section 13 or section 15(d) of the Exchange Act
and there remain outstanding any Registrable Securities, it shall timely file
the periodic and other reports referred to in paragraph (c)(1) of Rule 144 to
permit resales of such Registrable Securities pursuant to Rule 144 under the
Securities Act.
-19-

<PAGE> 22

Without limiting the generality of the preceding paragraph, the Company
hereby agrees to take all such further actions as any Holder of Registrable
Securities reasonably may request, to the extent required to enable such Holder
to resell its Registrable Securities without registration under the Securities
Act within the limitation of the exemptions therefrom provided by Rule 144A and
Rule 144 under the Securities Act, as such Rules may be amended from time to
time, or any similar Rule or Regulation hereafter promulgated by the
Commission. Upon the reasonable request of any Holder of Registrable
Securities, the Company shall deliver to such Holder written notice as to
whether it has complied with such informational and other requirements.

14. Amendments and Waivers.

Except as otherwise provided herein, the provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company shall have
obtained the prior written consent of the Holders of at least 66 2/3% of the
aggregate Registrable Securities affected by such amendment, modification or
waiver.

15. Nominees for Beneficial Owners.

In the event that any Registrable Security is held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election in
writing delivered to Company, be treated as the Holder of such Registrable
Security for purposes of any request or other action by any Holder or Holders
pursuant to this Agreement or any determination of the number or percentage of
principal amount of Registrable Securities held by any Holder or Holders
contemplated by this Agreement. If the beneficial owner of any Registrable
Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.

16. Assignment.

The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
assigns including any successor-by-merger of the Company. Any Holder may
assign to any permitted transferee of its Registrable Securities holding
Registrable Securities its rights and obligation under this Agreement, provided
that such transferee shall agree in writing with the parties hereto prior to
the assignment to be bound by this Agreement as if it were an original party
hereto, whereupon such assignee shall for all purposes be deemed to be a Holder
under this Agreement.

17. Calculation of Percentage of Principal Amount of Registrable Securities.

For purposes of this Agreement, all references to an aggregate amount of
Registrable Securities or a percentage thereof shall be calculated based upon
the aggregate Registrable Securities outstanding at the time such calculation

-20-
<PAGE> 23

is made and shall exclude any Registrable Securities owned by the Company or
any subsidiary of the Company.

18. Miscellaneous.

a. Further Assurances. Each of the parties hereto shall execute such
documents and other papers and perform such further acts as may be
reasonably required or desirable to carry out the provisions of this
Agreement and the transactions contemplated hereby.

b. Headings. The Headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or
construction of any provisions hereof.

c. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to any of its securities that contain
provisions that conflict with the provisions hereof in any material
respect.

d. Remedies. Each Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. The Company
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 the Company hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.

e. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto in respect of the subject matter
contained herein, and there are no restrictions, promises,
representations, warranties, covenants, or undertakings with respect to
the subject matter hereof, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
undertakings between the parties hereto with respect to the subject
matter hereof.

f. Notices. Any notices or other communications to be given hereunder
by any party to another party shall be in writing, shall be
delivered personally, by telecopy, by certified or registered mail,
postage prepaid, return receipt requested, or by Federal Express or
other comparable delivery service, to the address of the party set forth
on Schedule I hereto or to such other address as the party to whom
notice is to be given may provide in a written notice to the other
parties hereto, a copy of which shall be on file with the Secretary of
the Company. Notice shall be effective when delivered if given
personally, when receipt is acknowledged if telecopied, three days after
mailing if given by registered or certified mail as described above, and
one business day after deposit if given by Federal Express or comparable
delivery service.

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<PAGE> 24

g. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to
agreements made to be performed entirely in such State, without regard
to principles of conflicts of law. The Company and the parties each
hereby irrevocably submit to the jurisdiction of any New York or any
Federal Court sitting in the City of New York in respect of any suit,
action or proceeding arising out of or relating to this Agreement, and
each irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
Nothing herein shall affect the right of any party to serve process in
any manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other jurisdiction.

h. Severability. If one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or
unenforceable in any respect, for any reason, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
in any way affected or impaired thereby, and the provision held to be
invalid, illegal or unenforceable shall be reformed to the minimum
extent necessary, and in a manner as consistent with the purposes
thereof as is practicable, so as to render it valid, legal and
enforceable, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted
by law.

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

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<PAGE> 25
IN WITNESS WHEREOF, the Company has executed this New LLC Interests
Registration Rights Agreement as of the date first above written.

PSF HOLDINGS, L.L.C.

By /s/ W. R. Patterson
------------------------------
Name:
Title:

<PAGE> 26
SCHEDULE I

-24-

<PAGE> 1
EXHIBIT 4.8

EXECUTION COPY

WARRANTS
REGISTRATION RIGHTS AGREEMENT

PSF HOLDINGS, L.L.C.

for the benefit of

THE HOLDERS NAMED HEREIN

------------------------------
Dated as of September 17, 1996
------------------------------

<PAGE> 2

<TABLE>
<S> <C> <C>
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2. Shelf Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. Demand Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

4. Piggyback Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

5. Blackout Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

6. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

7. Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

8. Underwritten Offerings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

9. Preparation; Reasonable Investigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

10. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

11. Registration Rights to Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

12. Adjustments Affecting Registrable Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

13. Rule 144 and Rule 144A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

14. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

15. Nominees for Beneficial Owners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

16. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

17. Calculation of Percentage of Principal Amount of Registrable Warrants. . . . . . . . . . . . . . . . . . . 20

18. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>

-2-
<PAGE> 3
WARRANTS REGISTRATION RIGHTS AGREEMENT

WARRANTS REGISTRATION RIGHTS AGREEMENT, dated as of September 17, 1996
(this "Agreement"), by PSF Holdings, L.L.C., a Delaware limited liability
company (the "Company"), for the benefit of the holders of Registrable Warrants
(as hereinafter defined) (the "Holders").

This Agreement is being entered into in accordance with the Plan in
connection with the acquisition of Registrable Warrants (each as hereinafter
defined) by certain holders (the "Initial Holders") pursuant to the Plan. Each
Initial Holder owns the aggregate number of Registrable Warrants specified with
respect to such original Holder in Schedule I hereto.

To induce the holders of Registrable Warrants to vote in favor of the
Plan and to accept the issuance of such Warrants by the Company under the Plan,
the Company has undertaken to register the Registrable Warrants under the
"Securities Act" (as hereinafter defined) and to take certain other actions
with respect to the Registrable Warrants. This Agreement sets forth the terms
and conditions of such undertaking.

In consideration of the premises and the mutual agreements set forth
herein, the Company hereby agrees as follows:

1. Definitions. Unless otherwise defined herein, capitalized terms
used herein and in the recitals above shall have the following meanings:

"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to be
closed.

"Commission" means the United States Securities and Exchange
Commission.

"Company" has the meaning provided in the preamble hereto.

"Company Indemnitee" has the meaning provided in Section 10 hereof.

"Demand Registration" means any registration pursuant to Section 3
hereof.

"Disadvantageous Condition" has the meaning provided in Section 5
hereof.

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<PAGE> 4
"Effectiveness Period" has the meaning provided in Section 2
hereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, or any similar or
successor statute.

"Expenses" means all expenses incident to the Company's performance of
or compliance with its obligations under this Agreement, including, without
limitation, all registration, filing, listing, stock exchange and NASD fees,
all fees and expenses of complying with state securities or blue sky laws
(including fees, disbursements and other charges of counsel for the
underwriters in connection with blue sky filings), all word processing,
duplicating and printing expenses, messenger and delivery expenses, all rating
agency fees, the fees, disbursements and other charges of counsel for the
Company and of its independent public accountants, including the expenses
incurred in connection with "comfort" letters required by or incurred in
connection with "comfort" letters required by or incident to such performance
and compliance, any fees and disbursements of underwriters customarily paid by
issuers and sellers of securities and the reasonable fees, disbursements and
other charges of one firm of counsel (per registration prepared) chosen by the
Holders of a majority of the Registrable Warrants, but excluding broker-dealer
and underwriting concessions, allowances, discounts and commissions and
applicable transfer taxes, if any, which concessions, allowances, discounts,
commissions and transfer taxes shall be borne by the seller or sellers of
Registrable Warrants in all cases.

"Holder" means (i) the Initial Holders and (ii) any transferees of the
Registrable Warrants (a) whose Warrants continue to be Registrable Warrants and
(b) who have been assigned the transferor's rights under Section 16 hereof.

"Holder Indemnitee" shall have the meaning provided in Section 10
hereof.

"Initial Shelf Registration" has the meaning set forth in Section 2
hereof.

"Initiating Holders" has the meaning set forth in Section 3 hereof.

"Loss" and "Losses" shall have the meaning provided in Section 10
hereof.

"NASD" means the National Association of Securities Dealers, Inc.

"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.

"Offering Documents" shall have the meaning provided in Section 10
hereof.

"Person" means any individual, corporation, partnership, firm, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, governmental or regulatory body or subdivision
thereof or other entity.

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<PAGE> 5
"Plan" means the joint plan of reorganization of PSF Finance L.P. and
certain affiliated entities as confirmed by the United States Bankruptcy Court
for the District of Delaware by order entered September 6, 1996.

"PSF" means Premium Standard Farms, Inc., a wholly owned subsidiary of
the Company.

"Public Offering" means a public offering and sale of securities
pursuant to an effective registration statement under the Securities Act.

"Registrable Warrants" means the Warrants held by the Initial Holders
(and permissible transferees of such Registrable Warrants pursuant to Section
16 hereof which become "Holders" hereunder); provided, however, that
Registrable Warrants shall cease to be Registrable Warrants upon (i) any sale
or distribution thereof pursuant to an effective registration statement under
the Securities Act; (ii) any sale or distribution permitting the recipient
thereof to sell such securities without restriction under the Securities Act
and any state securities laws; or (iii) the receipt by a Holder of such
Registrable Warrants of an opinion, satisfactory in form and substance to such
Holder, by legal counsel, reasonably acceptable to such Holder, to the effect
that the public sale or distribution of such Warrants without restriction under
the Securities Act and any state securities laws does not require the
registration of such Securities under the Securities Act and any state
securities laws or the use of an applicable exemption therefrom.

"Requesting Holders" has the meaning set forth in Section 4 hereof.

"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, or any similar or successor
statute.

"Shelf Registration" has the meaning set forth in Section 2 hereof.

"Subsequent Shelf Registration" has the meaning set forth in Section 2
hereof.

"Warrants" means the warrants to purchase units of limited liability
company interests of the Company issued pursuant to the Plan, including any
warrants issued upon partial exercise, transfer of any such warrants and any
warrants or similar instruments issued or issuable with respect to or in
exchange for any such warrants, including in connection with any
recapitalization, merger, consolidation, reorganization or otherwise.

2. Shelf Registration.

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<PAGE> 6
of the Registrable Warrants and (ii) use its best
efforts to have such Initial Shelf Registration
thereafter declared effective by the Commission
not later than June 30, 1997.

b. Subsequent Shelf Registrations. If the Initial Shelf
Registration is withdrawn or otherwise becomes
unavailable for use prior to the end of the
Effectiveness Period, then promptly following (or, if
possible, prior to) such withdrawal or unavailability
the Company shall file, and shall use its best
efforts to cause the Commission to declare effective,
a subsequent registration statement for a secondary
offering to be made on a continuous basis pursuant to
Rule 415 under the Securities Act covering all of the
Registrable Warrants which remain outstanding
(a "Subsequent Shelf Registration"). To the extent
the Company is aware of such withdrawal or
unavailability prior to the occurrence of same, it
shall use its best efforts to have the Subsequent Shelf
Registration filed at such time prior to such
withdrawal or unavailability which is reasonably
calculated to cause the Subsequent Shelf Registration
to become effective on or before the date of such
withdrawal or unavailability, and, in any event, on or
before 180 days prior to such withdrawal or
unavailability.

c. Amendments or Subsequent Shelf Registrations. If the
Initial Shelf Registration (except as provided in
Section 2(b)) or any Subsequent Shelf Registration
ceases to be effective for any reason at any time
during the Effectiveness Period for a reason other than
because of the sale of all of the Registrable
Warrants covered thereby, subject to Section 2(b),
the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall, within
60 days of such cessation of effectiveness, amend such
Initial Shelf Registration or Subsequent Shelf
Registration in a manner reasonably calculated to
obtain the withdrawal of the order suspending the
effectiveness thereof, or shall file an additional
"shelf" registration statement pursuant to Rule 415
covering all of such Registrable Warrants which
remain unsold. (Each of the Initial Shelf
Registration and the Subsequent Shelf Registrations
is referred to individually herein as a "Shelf
Registration" and collectively as the "Shelf
Registrations.")

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<PAGE> 7
Registration which previously has been declared
effective by the Commission no longer is in effect as
required by this Agreement, or during which sales
have been suspended pursuant to Section 5 or Section
7(g) hereof. If a Subsequent Shelf Registration is
filed, pursuant to Section 2(b) or 2(c) hereof, the
Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared
effective as soon as reasonably practicable after
such filing and to keep such Registration Statement
continuously effective for a period after such
effectiveness equal to the Effectiveness Period, less
the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf
Registration was previously in effect. The intent of
this provision is that the Shelf Registration
(including the Initial Shelf Registration and any
Subsequent Shelf Registration) shall be in effect for
a number of days, in the aggregate, equal to four
years; provided that a Shelf Registration shall not
be required to be maintained in effect after all of
the Registrable Warrants have been sold thereunder or
otherwise distributed such that they are no longer
deemed to be Registrable Warrants hereunder.

e. Option to Extend Initial Shelf Registration. In
lieu of filing the Subsequent Shelf Registration
required under Section 2(b) hereof, the Company may,
in its sole discretion and if permitted by applicable
law, keep the Initial Shelf Registration continuously
effective for the remainder of the Effectiveness
Period or, if earlier, until all of the Registrable
Warrants eligible to be included in the Shelf
Registrations have been sold hereunder such that they
are no longer Registrable Warrants hereunder.

3. Demand Registration.

a. Demand Rights. After the termination of the
Effectiveness Period, so long as Registrable Warrants
remain outstanding, upon written notice to the
Company from one or more Holders (the "Initiating
Holders") of Registrable Warrants holding in the
aggregate 25% of the Registrable Warrants then
outstanding, requesting that the Company effect,
pursuant to this Section 3, the registration of such
Initiating Holders' Registrable Warrants under the
Securities Act (which notice shall specify the
Registrable Warrants so requested to be registered,
the proposed amounts thereof and the intended method
or methods of distribution by such Initiating Holders
(including whether the proposed offering is to be
underwritten), the Company shall promptly (but in any
event within 15 days) give written notice of such
requested registration to all Holders of Registrable
Warrants, and thereupon the Company shall use its
best efforts to effect the registration under the
Securities Act of: (A) the Registrable Warrants that
the Initiating Holders have requested the Company to
register, for disposition in accordance with the
intended method or methods of distribution stated in
their notice to the Company; and (B) all other
Registrable Warrants the Holders of which shall

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<PAGE> 8
have made a written request to the Company for
registration thereof (which request shall specify such
Registrable Warrants and the proposed amounts thereof) within
15 days after the receipt of such written notice from the
Company, as expeditiously as possible (but in any event shall
file such registration statement within 60 days of the receipt
of such request by the Initiating Holders), all to the extent
requisite to permit the disposition by Holders of the
Registrable Warrants then constituting Registrable Warrants so
to be registered.

b. Frequency; Duration. The Company shall be obligated to effect
only one registration pursuant to this Section 3 with respect
to Holders of Registrable Warrants. Notwithstanding the
foregoing, the Company shall not be required to effect a
Demand Registration pursuant to this Section 3 during the
period starting with the date 30 days prior to the Company's
good faith estimate of the date of filing of, and ending on
the date 90 days following the effective date of, a
registration statement pertaining to an underwritten public
offering for the account of the Company with respect to which
Holders have piggyback rights pursuant to Section 4 hereof;
provided, however, that in the event a request for
registration is refused pursuant to this subsection (b), if
the Company then elects not to file a registration statement
or, if a registration statement is filed, the Company elects
not to complete the proposed offering, the Company shall
notify in writing the Holders whose request for registration
has been refused pursuant to clause (ii) above, and such
Holders shall have the right, within 10 days after receiving
written notice of the Company's election, to request the
Company to effect the registration of Registrable Warrants for
the account of Holders, and such registration shall be
considered a Demand Registration under this Section 3.

c. Inclusion of Other Securities. The Company may include
in a Demand Registration securities held by other Persons who
have piggyback registration rights pursuant to written
agreements with the Company or PSF; provided that Registrable
Warrants shall have absolute priority over any such other
securities in connection with any cutback.

4. Piggyback Registration. If the Company or PSF, at any time
prior to the expiration of the Effectiveness Period when there is not in
effect a Shelf Registration for the Registrable Warrants, proposes to register
any of its securities under the Securities Act or, at any time after the
expiration of the Effectiveness Period, proposes to register any of its
securities, on any forms (other than in connection with the registration of
securities issued or issuable pursuant to an employee stock option, stock
purchase, stock bonus or similar plan or dividend reinvestment plan or pursuant
to a merger, business combination, exchange offer or transaction of the type
specified in Rule 145(a) under the Securities Act), whether or not pursuant to
registration rights granted to other holders of its securities and whether or
not for sale for its own account, the Company shall give prompt written notice

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<PAGE> 9
to all of the Holders of its or PSF's intention to do so and of such Holders'
rights (if any) under this Section 4, which notice, in any event, shall be
given at least 20 days prior to the filing with the Commission of such proposed
registration. Upon the written request of any Holder receiving notice of such
proposed registration (a "Requesting Holder") made within 15 days after the
receipt of any such notice (or 10 days if the Company states in such written
notice or gives telephonic notice to the relevant security holders, with
written confirmation to follow promptly thereafter, that (i) such registration
will be on Form S-3 and (ii) such shorter period of time is required because of
a planned filing date), which request shall specify the Registrable Warrants
intended to be disposed of by such Requesting Holder and the intended method of
such distribution, and the minimum offering price per Registrable Warrant at
which the Holder is willing to sell its Registrable Warrants, the Company
shall, subject to Section 8(b) hereof, include for registration under the
Securities Act all Registrable Warrants of the Requesting Holders; provided
that,

i. with respect to a registration of Registrable Warrants,
prior to the effective date of the registration statement
filed in connection with such registration, promptly following
receipt of notification by the Company from the managing
underwriter of the price at which such securities are to be
sold, if applicable, the Company shall so advise each
Requesting Holder of such price, and if such price is below
the minimum price which any Requesting Holder shall have
indicated to be acceptable to such Requesting Holder, such
Requesting Holder shall then have the right irrevocably to
withdraw its request to have its Registrable Warrants included
in such registration statement, by delivery of written notice
of such withdrawal to the Company within three Business Days
of its being advised of such price, without prejudice to the
rights of any Holder or Holders of Registrable Warrants to
include Registrable Warrants in any future registration (or
registrations) pursuant to this Section 4; and

ii. with respect to a registration of Registrable Warrants,
if at any time after giving written notice of its intention to
register any securities and prior to the effective date of the
registration statement filed in connection with such
registration, the Company shall determine for any reason not
to register or to delay registration of such other securities,
the Company may, at its election, give written notice to such
determination to each Requesting Holder and (i) in the case of
a determination not to register, shall be relieved of its
obligation to register any Registrable Warrants in connection
with such registration (but not from any obligation of the
Company to pay the Expenses in connection therewith), without
prejudice, however, to the rights of any Holder to include
Registrable Warrants in any future registration (or
registrations) pursuant to this Section 4 and (ii) in the case
of a determination to delay registering its other securities,
shall be

-7-

<PAGE> 10
permitted to delay registering any Registrable
Warrants, for the same period as the delay in registering
such other securities.

No registration effected under this Section 4 shall relieve the Company of its
obligations under Section 2 or 3 hereof.

5. Blackout Periods. With respect to a Shelf Registration filed
or to be filed pursuant to Section 2 hereof or a Demand Registration requested
under Section 3 hereof, if the Board of Directors of the Company shall
determine, in its good faith reasonable judgment, that to maintain the
effectiveness of such registration statement or to permit such registration
statement to become effective (or if no registration statement has yet been
filed, to file such registration statement) would be significantly
disadvantageous to the Company's financial condition, business or prospects ( a
"Disadvantageous Condition") in light of the existence, or in anticipation, of
(i) any acquisition of financing activity involving the Company, or any
subsidiary of the Company, including a proposed public offering or private
placement, (ii) an undisclosed material event, the public disclosure of which
could have a material adverse effect on the Company, (iii) a proposed material
transaction involving the Company or a substantial amount of its assets, or
(iv) any other circumstance or condition the disclosure of which would
materially disadvantage the Company, and the existence of which renders any to
be filed, then filed or effective registration statement inadequate as failing
to include material information, then the Company may, until such
Disadvantageous Condition no longer exists (but not with respect to more than
180 days in the aggregate nor involving more than 90 consecutive days during
any 12-month period) cause such registration statement to be withdrawn and the
effectiveness of such registration statement to be terminated, suspend the use
of the prospectus contained therein, or if no registration statement has yet
been filed, elect not to file such registration statement. If the Company
determines to take any action pursuant to the preceding sentence, the Company
shall deliver a notice to any Holder of Registrable Warrants covered or to be
covered under such withdrawn, suspended or not to be filed registration
statement, which indicates that the registration statement is no longer
effective or will not be filed. Upon the receipt of any such notice, such
Holder(s) in the case of an effective registration statement shall forthwith
discontinue their use and any dissemination of the prospectus contained in such
registration statement. If any Disadvantageous Condition shall cease to exist,
the Company shall promptly notify any Holders, who shall have ceased selling
Registrable Warrants pursuant to an effective registration statement as a
result of such Disadvantageous Condition, indicating such cessation. The
Company shall, if any registration statement required to be filed or maintained
under this Agreement has been withdrawn, suspended or not filed, file promptly,
at such time as it in good faith deems appropriate, an amended, supplemented or
new registration statement, as applicable, covering the Registrable Warrants
that were covered by such withdrawn registration statement or to be covered by
such unfiled registration statement.

-8-
<PAGE> 11

6. Expenses. The Company shall pay all Expenses in connection with
any registration initiated pursuant to Section 2 or 3 hereof, whether or not
such registration shall become effective.

7. Registration Procedures. If and whenever the Company is required
to effect any registration under the Securities Act as provided in and subject
to the provisions of Sections 2 and 3 hereof, the Company shall, as
expeditiously as possible:

a. expeditiously prepare and file with the Commission the
requisite registration statement to effect such registration
and thereafter use its reasonable best efforts to cause such
registration statement to become effective; provided, however,
that the Company may discontinue any registration of its
securities that are not Registrable Warrants (and, under the
circumstances specified in Sections 4 and 7(b) hereof, its
securities that are Registrable Warrants) at any time prior to
the effective date of the registration statement relating
thereto;

b. prepare and file with the Commission such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with
the provisions of the Securities Act with respect to the
offering of all Registrable Warrants covered by such
registration statement until such time as all of such
Registrable Warrants have been disposed of during the
applicable period in accordance with the method of disposition
set forth in such registration statement or, with respect to a
Shelf Registration, the expiration of the Effectiveness
Period;

c. furnish to each seller of Registrable Warrants covered
by any registration statement provided for hereunder such
reasonable number of copies of such drafts and final conformed
versions of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such reasonable number of copies of such drafts and
final versions of the prospectus contained in such
registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, and such other
documents, as such seller may reasonably request in writing;

d. use its best efforts (i) to file such applications and
documents to register or qualify all Registrable Warrants and
other securities covered by such registration statement under
such other securities or blue sky laws of such states or other
jurisdictions of the United States of America as the sellers
of Registrable Warrants covered by such registration statement
shall reasonably request in writing, (ii) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect and (iii) to take any

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<PAGE> 12
other action that may be reasonably necessary or
advisable to enable such sellers to consummate the disposition
in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such
purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subsection (d) be obligated
to be so qualified, to subject itself to taxation in such
jurisdiction or to consent to general service of process in
any such jurisdiction;

e. use its best efforts to cause all Registrable Warrants
covered by such registration statement to be registered with
or approved by such other federal or state governmental
agencies or authorities as may be necessary in the opinion of
counsel to the Company and counsel to the seller or sellers of
Registrable Warrants to enable the sellers thereof to
consummate the offering of such Registrable Warrants;

f. use its best efforts to obtain and, if obtained,
furnish a copy to each seller of Registrable Warrants, and
each such seller's underwriters, if any, of

i. an opinion of counsel for the Company, dated
the effective date of such registration statement
(and, if such registration involves an underwritten
offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in
form and substance to counsel to the Holders chosen
by Holders of a majority of the Registrable Warrants
being registered, and

ii. a "comfort" letter, dated the effective date of
such registration statement (and, if such
registration involves an underwritten offering, dated
the date of the closing under the underwriting
agreement) and signed by the independent public
accountants who have certified the Company's
financial statements included or incorporated by
reference in such registration statement, reasonably
satisfactory in form and substance to counsel to the
Holders chosen by Holders of a majority of the
aggregate principal amount of Registrable Warrants
being registered,

in each case, covering substantially the same matters with
respect to such registration statement (and the prospectus
included therein) and, in the case of the accountants' comfort
letter, with respect to events subsequent to the date of such
financial statements and matters contained in such
registration statement, as are customarily covered in opinions
of issuer's counsel and in accountants' comfort letters
delivered to underwriters in underwritten Public Offerings
of like securities;

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<PAGE> 13
g. notify the sellers of Registrable Warrants (providing,
if requested by any such Persons, confirmation in writing) as
soon as practicable after becoming aware of: (A) the filing
of any prospectus or prospectus supplement of the filing or
effectiveness (or anticipated date of effectiveness) of such
registration statement or any post-effective amendment
thereto; (B) any request by the Commission for amendments or
supplements to such registration statement or the related
prospectus or for additional information; (C) the issuance by
the Commission of any stop order suspending the effectiveness
of such registration statement or the initiation of any
proceedings for such purpose; (D) the receipt by the Company
of any notification with respect to the suspension of the
qualification or registration (or exemption therefrom) of any
Registrable Warrants for sale in any jurisdiction in the
United States or the initiation or threatening of any
proceeding for such purposes; or (E) the happening of any
event that makes any statement made in such registration
statement or in any related prospectus, prospectus supplement,
amendment or document incorporated therein by reference untrue
in any material respect or that requires the making of any
changes in such registration statement or in any such
prospectus, supplement, amendment or other such document so
that it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein (in the
case of any prospectus in the light of the circumstances under
which they were made) not misleading;

h. otherwise comply with all applicable rules and
regulations of the Commission and any other governmental
agency or authority having jurisdiction over the offering, and
make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months,
beginning with the first full calendar month after the
effective date of such registration statement, which earnings
statement shall satisfy the provisions of section 11(a) of
the Securities Act and Rule 158 promulgated thereunder, and
furnish to each seller of Registrable Warrants at least three
Business Days prior to the filing thereof a copy of any
amendment or supplement to such registration statement or
prospectus;

i. obtain a CUSIP number for all Registrable Warrants;

j. enter into customary agreements and take all such other
reasonable actions in connection therewith in order to
expedite or facilitate the disposition of the Registrable
Warrants included in such registration statement;

k. make every reasonable effort to obtain the withdrawal
of any order or other action suspending the effectiveness of
any such registration statement or

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<PAGE> 14
suspending the qualification or registration (or
exemption therefrom) of the Registrable Warrants for sale in
any jurisdiction; and

l. if any event described in subsection (g) hereto occurs,
use its best efforts to cooperate with the Commission to
prepare, as soon as practicable, any amendment or supplement
to such registration statement or such related prospectus and
any other additional information, or to take other action that
may have been requested by the Commission.

It shall be a condition precedent to the obligations of the Company to
take action pursuant to this Agreement that the selling Holders
furnish to the Company such information regarding themselves and the
Registrable Warrants held by them, and the intended methods of
disposition of such securities, as shall be required to effect the
registration and sale of their Registrable Warrants.

In the case of a registration pursuant to this Agreement (including
any registration under Section 4 hereof), each Holder agrees that as
of the date that a final prospectus is made available to it for
distribution to prospective purchasers of Registrable Warrants it
shall cease to distribute copies of any preliminary prospectus
prepared in connection with the offer and sale of such Registrable
Warrants. Each Holder further agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described
in subsection (g) of this Section 7, such Holder shall forthwith
discontinue such Holder's disposition of Registrable Warrants pursuant
to the registration statement relating to such Registrable Warrants
until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by subsection (l) of this Section 7
and, if so directed by the Company, shall 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 relating to such
Registrable Warrants current at the time of receipt of such notice.

8. Underwritten Offerings.

a. Requested Underwritten Offerings. If requested by the
underwriters (if any) in connection with a registration under
Section 2 or 3 hereof, the Company shall enter into a firm
commitment underwriting agreement with such underwriters for
such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, a majority of the Holders
whose Registrable Warrants are included in such registration,
and the underwriters, and to contain such representations and
warranties by the Company and such other terms as are
generally prevailing in agreements of that type, including,
without limitation, indemnification and contribution to the
effect and to the extent provided in Section 10 hereof.

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<PAGE> 15

b. Selection of Underwriters. The underwriter or
underwriters of each underwritten offering, if any, of the
Registrable Warrants to be registered pursuant to Section 2, 3
or 4 hereof (i) shall be a nationally recognized underwriter
(or underwriters), (ii) shall be selected by the Holders
owning at least a majority of the aggregate Registrable
Warrants being sold in any such underwritten offering and
(iii) shall be reasonably acceptable to the Company or PSF, as
the case may be.

c. Piggyback Underwritten Offerings; Priority. If the
Company or PSF proposes to register any of its securities
under the Securities Act (whether pursuant to registration
rights afforded to holders of securities other than
Registrable Warrants or otherwise) and the Holders exercise
piggyback rights pursuant to Section 4 hereof with respect to
such registration and any such securities are to be
distributed by or through one or more underwriters, the
Company shall use reasonable efforts to arrange for such
underwriters to include all of the Registrable Warrants to be
offered and sold by the Holders thereof among the securities
of the Company to be distributed by such underwriters;
provided, that, notwithstanding any other provision herein
contained, if the managing underwriter of such underwritten
offering shall advise the Company in writing (with a copy to
the Holders) that the inclusion of the Registrable Warrants in
such registration would materially and adversely affect the
success of such offering, then the number of Registrable
Warrants to be included shall be reduced, pro rata, to the
extent necessary to reduce the Registrable Warrants to the
number recommended by the underwriter (which amount may be
zero); provided, however, that in the event that any holders
of securities other than Registrable Warrants holding
piggyback rights with respect to any registration have invoked
such rights with respect to a registration as to which the
holders of Registrable Warrants have also requested inclusion
pursuant to Section 4 hereof, and the underwriter does not
object to the inclusion of the Registrable Warrants on the
basis of the character of such securities, but only on the
volume of securities to be included, any cutback of the
Registrable Warrants shall be no less favorable to the
Registrable Warrants than on a pro rata basis with any cutback
of any such other securities holding piggyback rights.

d. Holders of Registrable Warrants to be Parties to
Underwriting Agreement. The Holders of Registrable Warrants
to be distributed by underwriters in an underwritten offering
contemplated by subsections (a) or (b) of this Section 8 shall
be parties to the underwriting agreement between the Company,
PSF, if applicable, and such underwriters and any such Holder,
at its option, may require that any or all of the
representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of the
underwriters be made to and for the benefit of such Holders
and that any or all of the conditions precedent to the
obligations of such underwriters under

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<PAGE> 16
such underwriting agreement be
conditions precedent to the obligations of
such Holders. No such Holder shall be
required to make any representations or
warranties to or agreements with the Company,
PSF or the underwriters other than
representations, warranties or agreements
regarding such Holder, such Holder's
Registrable Warrants and such Holder's
intended method of distribution and
indemnification and contribution customary in
secondary offerings to the effect and to the
extent provided in Section 10 hereof.

e. Selection of Underwriters for Piggyback
Underwritten Offering. The underwriter or
underwriters of each piggyback underwritten
offering pursuant to this Section 8 shall be
a nationally recognized underwriter (or
underwriters) selected by the Company or, if
such underwritten offering is an offering of
securities of PSF, by PSF.

9. Preparation; Reasonable Investigation.

a. Registration Statements. In connection with
the preparation and filing of each
registration statement under the Securities
Act pursuant to this Agreement, the Company
shall give each holder of Registrable
Warrants registered under such registration
statement, the underwriters, if any, and its
respective counsel and accountants the
reasonable opportunity to participate in the
preparation of such registration statement,
each prospectus included therein or filed
with the Commission, and each amendment
thereof or supplement thereto, and shall give
each of them such reasonable opportunities to
discuss the business of the Company with its
officers and the independent public
accountants who have certified its financial
statements as shall be necessary, in the
reasonable opinion of any such Holders' and
such underwriters' respective counsel, to
conduct a reasonable investigation within the
meaning of the Securities Act.

b. Confidentiality. Each Holder of Registrable
Warrants shall maintain the confidentiality
of any confidential information received from
or otherwise made available by the Company to
such Holder of Registrable Warrants pursuant
to this Agreement and identified in writing
by the Company as confidential and shall
enter into such confidentiality agreements as
the Company shall reasonably request.
Information that (i) is or becomes available
to a Holder of Registrable Warrants from a
public source, (ii) is disclosed to a Holder
of Registrable Warrants by a third-party
source whom the Holder of Registrable
Warrants reasonably believes has the right to
disclose such information or (iii) is or
becomes required to be disclosed by a Holder
of Registrable Warrants by law, including,
but not limited to, administrative or court
orders, shall not be deemed to be
confidential information for purposes of this
Agreement; provided, however, that to the
extent sufficient time is available prior to
such disclosure being required to

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<PAGE> 17
be made pursuant to clause (iii)
hereof, the Holders of Registrable Warrants
shall promptly notify the Company of any
request for disclosure and any proposed
disclosure pursuant to such clause (iii).
The Holders of Registrable Warrants shall not
grant access, and the Company shall not be
required to grant access, to information
under this Section 9 to any Person who will
not agree to maintain the confidentiality (to
the same extent a Holder is required to
maintain the confidentiality) of any
confidential information received from or
otherwise made available to it by the Company
or the holders of Registrable Warrants under
this Agreement and identified in writing by
the Company as confidential.

10. Indemnification.

a. Indemnification by the Company. In
connection with any registration statement
filed by the Company pursuant to this
Agreement, the Company shall, and hereby
agrees to, indemnify and hold harmless, each
Holder of any Registrable Warrants covered by
such registration statement and each other
Person who participates as an underwriter in
the offering or sale of such securities and
each other Person, if any, who "controls" such
Holder or any such underwriter, and their
respective directors, officers and partners
within the meaning of section 15 of the
Securities Act and section 20 of the Exchange
Act (each, a "Company Indemnitee" for purposes
of this Section 10(a)), against any losses,
claims, damages, liabilities (or actions or
proceedings, whether commenced or threatened,
in respect thereof and whether or not such
indemnified party is a party thereto), joint
or several, and expenses, including, without
limitation, the reasonable fees, disbursements
and other charges of legal counsel and
reasonable out-of-pocket costs of
investigation, to which such Company
Indemnitee may become subject under the
Securities Act or otherwise (collectively, a
"Loss" or "Losses"), insofar as such Losses
arise out of or are based upon any untrue
statement or alleged untrue statement of any
material fact contained in any registration
statement under which such securities were
registered pursuant to this Agreement, any
preliminary prospectus, final prospectus or
summary prospectus contained therein, or any
amendment or supplement thereto (collectively,
"Offering Documents"), or any omission or
alleged omission to state therein a material
fact required to be stated therein or
necessary to make the statements therein in
the light of the circumstances in which they
were made not misleading; provided that the
Company shall not be liable in any such case
to the extent that any such Loss arises out of
or is based upon an untrue statement or
alleged untrue statement or omission or
alleged omission made in such Offering
Documents in reliance upon and in conformity
with written information furnished to the
Company expressly for use therein; and
provided, further, that the Company shall not
be liable to any Person including any Company
Indemnitee who participates in the

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<PAGE> 18

offering or sale of Registrable Warrants
or any other Person, if any, who controls such
Person including any Company Indemnitee, in
any such case to the extent that any such Loss
arises out of such Person's failure to send or
give a copy of the final prospectus (including
any documents incorporated by reference
therein), as the same may be then supplement
or amended, to the Person asserting an untrue
statement or alleged untrue statement or
omission or alleged omission at or prior to
the written confirmation of the sale of
Registrable Warrants to such person if such
statement or omission was corrected in such
final prospectus. Such indemnity shall remain
in full force and effect regardless of any
investigation made by or on behalf of such
Company Indemnitee and shall survive the
transfer of such securities by such Company
Indemnitee.

b. Indemnification by the Offerors and Sellers.
In connection with any registration statement
filed by the Company pursuant to this
Agreement in which a Holder has registered
for sale Registrable Warrants, each such
Holder of Registrable Warrants shall,
severally, but not jointly, and hereby agrees
to, indemnify and hold harmless the Company,
PSF, with respect to any offering of PSF
securities as to which the Holders have
exercised piggyback rights, and each of its
respective directors, officers, members and
partners, each other Person who participates
as an underwriter in the offering or sale of
such securities, each other Person, if any,
who controls the Company or PSF, as
applicable, any such underwriter and such
underwriter's directors, officers,
stockholders and partners (each a "Holder
Indemnitee" for purposes of this Section
10(b)), against all Losses insofar as such
Losses arise out of or are based upon any
untrue statement or alleged untrue statement
of a material fact contained in any Offering
Documents (or any document incorporated by
reference therein) or any omission or alleged
omission to state therein a material fact
required to be stated therein or necessary to
make the statements therein in the light of
circumstances in which they were made not
misleading, if such untrue statement or
alleged untrue statement or omission or
alleged omission was made in reliance upon
and in conformity with written information
furnished to the Company expressly for use
therein; provided, however, that the
liability of such indemnifying party under
this Section 10(b) shall be limited to the
amount of the net proceeds received by such
indemnifying party in the offering giving
rise to such liability. Such indemnity shall
remain in full force and effect, regardless
of any investigation made by or on behalf of
the Holder Indemnitee and shall survive the
transfer of such securities by such Holder.

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<PAGE> 19
party, give written notice to the
latter of the commencement of such action;
provided, however, that the failure of any
indemnified party to give notice as provided
herein shall not relieve the indemnifying
party of its obligations under the preceding
subsections of this Section 10, except to the
extent that the indemnifying party is
actually prejudiced by such failure to give
notice. In case any such action is brought
against an indemnified party, the
indemnifying party shall be entitled to
participate in and, unless in such
indemnified party's reasonable judgment a
conflict of interest between such indemnified
and indemnifying parties may exist in respect
of such Loss, to assume and control the
defense thereof, in each case at its own
expense, jointly with any other indemnifying
party similarly notified, to the extent that
it may wish, with counsel reasonably
satisfactory to such indemnified party, and
after notice from such indemnifying party of
its assumption of the defense thereof, the
indemnifying party shall not be liable to
such indemnified party for any legal or other
expenses subsequently incurred by the latter
in connection with the defense thereof other
than reasonable costs of investigation. No
indemnifying party shall be liable for any
settlement of any such action or proceeding
effected without its written consent, which
shall not be unreasonably withheld. No
indemnifying party shall, without the consent
of the indemnified party, consent to entry of
any judgment or enter into any settlement
which does not include as an unconditional
term thereof the giving by the claimant or
plaintiff to such indemnified party of a
release from all liability in respect of such
Loss or which requires action on the part of
such indemnified party or otherwise subjects
the indemnified party to any obligation or
restriction to which it would not otherwise
be subject.

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<PAGE> 20
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 obligations, if any, of the selling
holders of Registrable Warrants to contribute
as provided in this subsection (d) are several
in proportion to the relative value of their
respective Registrable Warrants covered by
such registration statement and not joint. In
addition, no Person shall be obligated to
contribute hereunder any amounts in payment
for any settlement of any action or Loss
effected without such Person's consent.

e. Other Indemnification. The Company and, in
connection with any registration statement
filed by the Company pursuant to Section 2,
each Holder shall, and, in connection with
any registration statement filed by the
Company pursuant to Section 3 or 4, each
Holder who has registered for sale
Registrable Warrants, shall, with respect to
any required registration or other
qualification of securities under any Federal
or state law or regulation of any
governmental authority other than the
Securities Act, indemnify Holder Indemnitees
and Company Indemnitiees, respectively,
against Losses, or, to the extent that
indemnification shall be unavailable to a
Holder Indemnitee or Company Indemnitee in a
manner similar to that specified in the
preceding subsections of this Section 10
(with appropriate modifications).

f. Indemnification Payments. The
indemnification and contribution required by
this Section 10 shall be made by periodic
payments of the amount thereof during the
course of any investigation or defense, as
and when bills are received or any Loss is
incurred.

11. Registration Rights to Others.

If the Company shall at any time hereafter provide to any holder of
any securities of the Company rights with respect to the registration of such
securities under the Securities Act or the Exchange Act, such rights shall not
be in conflict with or adversely affect any of the rights provided in this
Agreement to the holders of Registrable Warrants.

12. Adjustments Affecting Registrable Warrants.

The Company shall not effect or permit to occur any combination,
subdivision or reclassification of Registrable Warrants that would materially
adversely affect the ability of the Holders to include such Registrable
Warrants in any registration of its securities under the Securities Act
contemplated by this Agreement.

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<PAGE> 21

13. Rule 144 and Rule 144A.

The Company hereby agrees that (i) at any time it is not subject to
the requirements of section 13 or Section 15(d) of the Exchange Act and there
remain outstanding any Registrable Warrants, (A) it shall make available to any
Holder upon written request such information as may be required under Rule
144(A)(d)(4) to permit resales of such Registrable Warrants pursuant to Rule
144A under the Securities Act and (B) it shall make publicly available such
information concerning the Company specified in paragraphs (a)(5)(i) through
and including (a)(5)(xiv) and in paragraph (a)(5)(xvi) of Rule 15c2-11 under
the Exchange Act to permit resales of such Registrable Warrants pursuant to
Rule 144 under the Securities Act; and (ii) during such times the Company is
subject to the requirements of section 13 or section 15(d) of the Exchange Act
and there remain outstanding any Registrable Warrants, it shall timely file the
periodic and other reports referred to in paragraph (c)(1) of Rule 144 to
permit resales of such Registrable Warrants pursuant to Rule 144 under the
Securities Act.

Without limiting the generality of the preceding paragraph, the
Company hereby agrees to take all such further actions as any Holder of
Registrable Warrants reasonably may request, to the extent required to enable
such Holder to resell its Registrable Warrants without registration under the
Securities Act within the limitation of the exemptions therefrom provided by
Rule 144A and Rule 144 under the Securities Act, as such Rules may be amended
from time to time, or any similar Rule or Regulation hereafter promulgated by
the Commission. Upon the reasonable request of any Holder of Registrable
Warrants, the Company shall deliver to such Holder written notice as to whether
it has complied with such informational and other requirements.

14. Amendments and Waivers.

Except as otherwise provided herein, the provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the Company shall
have obtained the prior written consent of the Holders of at least 66 2/3% of
the aggregate principal amount of Registrable Warrants affected by such
amendment, modification or waiver.

15. Nominees for Beneficial Owners.

In the event that any Registrable Warrant is held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election in
writing delivered to Company, be treated as the Holder of such Registrable
Warrant for purposes of any request or other action by any Holder or Holders
pursuant to this Agreement or any determination of the number or percentage of
principal amount of Registrable Warrants held by any Holder or Holders
contemplated by this Agreement. If the beneficial owner of any Registrable
Warrants so elects, the Company may require assurances reasonably satisfactory
to it of such owner's beneficial ownership of such Registrable Warrants.

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<PAGE> 22

16. Assignment.

The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns including any successor-by-merger of the Company. Any Holder may
assign to any permitted transferee of its Registrable Warrants its rights and
obligation under this Agreement, provided that such transferee shall agree in
writing with the parties hereto prior to the assignment to be bound by this
Agreement as if it were an original party hereto, whereupon such assignee shall
for all purposes be deemed to be a Holder under this Agreement.

17. Calculation of Percentage of Principal Amount of Registrable
Warrants.

For purposes of this Agreement, all references to an aggregate
principal amount of Registrable Warrants or a percentage thereof shall be
calculated based upon the aggregate number of Registrable Warrants outstanding
at the time such calculation is made and shall exclude any Registrable Warrants
or Warrants, as the case may be, owned by the Company or any subsidiary of the
Company.

18. Miscellaneous.

a. Further Assurances. Each of the parties
hereto shall execute such documents and other
papers and perform such further acts as may
be reasonably required or desirable to carry
out the provisions of this Agreement and the
transactions contemplated hereby.

b. Headings. The Headings in this Agreement are
for convenience of reference only and shall
not control or affect the meaning or
construction of any provisions hereof.

c. No Inconsistent Agreements. The Company will
not hereafter enter into any agreement with
respect to any of its securities that contain
provisions that conflict with the provisions
hereof in any material respect.

d. Remedies. Each Holder, in addition to being
entitled to exercise all rights granted by
law, including recovery of damages, will be
entitled to specific performance of its
rights under this Agreement. The Company
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 the Company hereby
agrees to waive the defense in any action for
specific performance that a remedy at law
would be adequate.

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<PAGE> 23

covenants, or undertakings with respect to the
subject matter hereof, other than those
expressly set forth or referred to herein.
This Agreement supersedes all prior agreements
and undertakings between the parties hereto
with respect to the subject matter hereof.

f. Notices. Any notices or other communications
to be given hereunder by any party to another
party shall be in writing, shall be delivered
personally, by telecopy, by certified or
registered mail, postage prepaid, return
receipt requested, or by Federal Express or
other comparable delivery service, to the
address of the party set forth on Schedule I
hereto or to such other address as the party
to whom notice is to be given may provide in
a written notice to the other parties hereto,
a copy of which shall be on file with the
Secretary of the Company. Notice shall be
effective when delivered if given personally,
when receipt is acknowledged if telecopied,
three days after mailing if given by
registered or certified mail as described
above, and one business day after deposit if
given by Federal Express or comparable
delivery service.

g. Governing Law. This Agreement shall be
governed by and construed in accordance with
the laws of the State of New York applicable
to agreements made to be performed entirely
in such State, without regard to principles
of conflicts of law. The Company and the
parties each hereby irrevocably submit to the
jurisdiction of any New York or any Federal
Court sitting in the City of New York in
respect of any suit, action or proceeding
arising out of or relating to this Agreement,
and each irrevocably accepts for itself and
in respect of its property, generally and
unconditionally, the jurisdiction of the
aforesaid courts. Nothing herein shall
affect the right of any party to serve
process in any manner permitted by law or to
commence legal proceedings or otherwise
proceed against the Company in any other
jurisdiction.

h. Severability. If one or more of the
provisions contained herein, or the
application thereof in any circumstance, is
held invalid, illegal or unenforceable in any
respect, for any reason, the validity,
legality and enforceability of the remaining
provisions contained herein shall not be in
any way affected or impaired thereby, and the
provision held to be invalid, illegal or
unenforceable shall be reformed to the
minimum extent necessary, and in a manner as
consistent with the purposes thereof as is
practicable, so as to render it valid, legal
and enforceable, it being intended that all
rights and obligations of the parties
hereunder shall be enforceable to the fullest
extent permitted by law.

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

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<PAGE> 24
IN WITNESS WHEREOF, the Company has executed this Warrants
Registration Rights Agreement as of the date first above written.

PSF HOLDINGS, L.L.C.

By /s/ W.R. Patterson
------------------------------
Name:
Title:

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<PAGE> 1
EXHIBIT 4.9

EXECUTION COPY

NEW PIK NOTES
REGISTRATION RIGHTS AGREEMENT

PREMIUM STANDARD FARMS, INC.

FOR THE BENEFIT OF

THE HOLDERS NAMED HEREIN

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

DATED AS OF SEPTEMBER 17, 1996

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

<PAGE> 2

1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Shelf Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Demand Registrations. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Piggyback Registration. . . . . . . . . . . . . . . . . . . . . . . . . . 7
5. Blackout Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . 9
8. Underwritten Offerings. . . . . . . . . . . . . . . . . . . . . . . . . 12
9. Preparation; Reasonable Investigation. . . . . . . . . . . . . . . . . . 14
10. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
11. Registration Rights to Others. . . . . . . . . . . . . . . . . . . . . . 18
12. Adjustments Affecting Registrable Notes. . . . . . . . . . . . . . . . . 19
13. Rule 144 and Rule 144A. . . . . . . . . . . . . . . . . . . . . . . . . 19
14. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 19
15. Nominees for Beneficial Owners. . . . . . . . . . . . . . . . . . . . . 19
16. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
17. Calculation of Percentage of Principal Amount of Registrable Notes. . . 20
18. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

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<PAGE> 3
NEW PIK NOTES REGISTRATION RIGHTS AGREEMENT

NEW PIK NOTES REGISTRATION RIGHTS AGREEMENT, dated as of September 17,
1996 (this "Agreement"), by Premium Standard Farms, Inc., a Delaware
corporation (the "Company"), for the benefit of the holders of Registrable
Notes (as hereinafter defined) (the "Holders").

This Agreement is being entered into in accordance with the Plan in
connection with the acquisition of Notes (each as hereinafter defined) by
certain holders (the "Initial Holders") pursuant to the Plan.

To induce the holders of "Registrable Notes" (as hereinafter defined)
to vote in favor of the Plan and to accept the issuance of the Notes by the
Company under the Plan, the Company has undertaken to register Registrable
Notes under the "Securities Act" (as hereinafter defined) and to take certain
other actions with respect to the Registrable Notes. This Agreement sets forth
the terms and conditions of such undertaking.

In consideration of the premises and the mutual agreements set forth
herein, the Company hereby agrees as follows:

1. Definitions. Unless otherwise defined herein, capitalized terms used
herein and in the recitals above shall have the following meanings:

"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to be
closed.

"Commission" means the United States Securities and Exchange
Commission.

"Company" has the meaning provided in the preamble hereto.

"Company Indemnitee" has the meaning provided in Section 10 hereof.

"Demand Registration" means any registration pursuant to Section 3
hereof.

"Disadvantageous Condition" has the meaning provided in Section 5
hereof.

"Effectiveness Period" has the meaning provided in Section 2 hereof.

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<PAGE> 4
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder, or any similar or
successor statute.

"Expenses" means all expenses incident to the Company's performance of
or compliance with its obligations under this Agreement, including, without
limitation, all registration, filing, listing, stock exchange and NASD fees,
all fees and expenses of complying with state securities or blue sky laws
(including fees, disbursements and other charges of counsel for the
underwriters in connection with blue sky filings), all word processing,
duplicating and printing expenses, messenger and delivery expenses, all rating
agency fees, the fees, disbursements and other charges of counsel for the
Company and of its independent public accountants, including the expenses
incurred in connection with "comfort" letters required by or incurred in
connection with "comfort" letters required by or incident to such performance
and compliance, any fees and disbursements of underwriters customarily paid by
issuers and sellers of securities and the reasonable fees, disbursements and
other charges of one firm of counsel (per registration prepared) chosen by the
Holders of a majority of the aggregate principal amount of Registrable Notes,
but excluding broker-dealer and underwriting concessions, allowances, discounts
and commissions and applicable transfer taxes, if any, which concessions,
allowances, discounts, commissions and transfer taxes shall be borne by the
seller or sellers of Registrable Notes in all cases.

"Holder" means (i) the Initial Holders and (ii) any transferees of the
Registrable Notes (a) whose Notes continue to be Registrable Notes and (b) who
have been assigned the transferor's rights under Section 16 hereof.

"Holder Indemnitee" shall have the meaning provided in Section 10
hereof.

"Indenture" means the Indenture between the Company and Fleet National
Bank, as trustee (the "Trustee"), dated as of September 17, 1996, as amended
from time to time, relating to the Notes.

"Initial Shelf Registration" has the meaning set forth in Section 2
hereof.

"Initiating Holders" has the meaning set forth in Section 3 hereof.

"Loss" and "Losses" shall have the meaning provided in Section 10
hereof.

"NASD" means the National Association of Securities Dealers, Inc.

"NASDAQ" means the National Association of Securities Dealers, Inc.
Automated Quotation System.

"Notes" means (i) up to $117,500,000 aggregate principal amount of 11%
Senior Secured Notes due 2003 to be issued pursuant to the Plan and (ii) any
notes issued for the

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<PAGE> 5
payment of interest pursuant to Section 3.7 of the Indenture, and includes any
securities of the Company issued or issuable with respect to such securities by
way of a recapitalization, merger, consolidation, reorganization or otherwise.

"Offering Documents" shall have the meaning provided in Section 10
hereof.

"Parent" means PSF Holdings, L.L.C., being the holder of all of the
equity of the Company, and includes any successor in interest to PSF Holdings,
L.L.C. which is a holder of all of the equity of the Company, whether by
merger, consolidation or reorganization or otherwise.

"Public Offering" means a public offering and sale of securities
pursuant to an effective registration statement under the Securities Act.

"Registrable Notes" means the Notes held by the Initial Holders (and
permissible transferees of such Registrable Notes pursuant to Section 16 hereof
which become "Holders" hereunder); provided, however, that Registrable Notes
shall cease to be Registrable Notes upon (i) any sale or distribution thereof
pursuant to an effective registration statement under the Securities Act; (ii)
any sale or distribution permitting the recipient thereof to sell such
securities without restriction under the Securities Act and any state
securities laws; or (iii) the receipt by a Holder of such Registrable Notes of
an opinion, satisfactory in form and substance to such Holder, by legal
counsel, reasonably acceptable to such Holder, to the effect that the public
sale or distribution of such Notes without restriction under the Securities Act
and any state securities laws does not require the registration of such Notes
under the Securities Act and any state securities laws or the use of an
applicable exemption therefrom; and provided, further, that any Notes described
in clause (ii) of the definition of "Notes" herein shall not be Registrable
Notes if such Notes are issued for the payment of interest on any Notes which
are not then Registrable Notes.

"Requesting Holders" has the meaning set forth in Section 4 hereof.

"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, or any similar or successor
statute.

"Shelf Registration" has the meaning set forth in Section 2 hereof.

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<PAGE> 6
"Subsequent Shelf Registration" has the meaning set forth in Section 2
hereof.

2. Shelf Registration.

b. Subsequent Shelf Registrations. If the Initial Shelf
Registration is withdrawn or otherwise becomes
unavailable for use prior to the end of the
Effectiveness Period, then promptly following (or, if
possible, prior to) such withdrawal or unavailability
the Company shall file, and shall use its best efforts
to cause the Commission to declare effective, a
subsequent registration statement for a secondary
offering to be made on a continuous basis pursuant to
Rule 415 under the Securities Act covering all of the
Registrable Notes which remain outstanding (a
"Subsequent Shelf Registration"). To the extent the
Company is aware of such withdrawal or unavailability
prior to the occurrence of same, it shall use its best
efforts to have the Subsequent Shelf Registration
filed at such time prior to such withdrawal or
unavailability which is reasonably calculated to cause
the Subsequent Shelf Registration to become effective
on or before the date of such withdrawal or
unavailability, and, in any event, on or before 180
days prior to such withdrawal or unavailability.

c. Amendments or Subsequent Shelf Registrations. If the
Initial Shelf Registration (except as provided in
Section 2(b)) or any Subsequent Shelf Registration
ceases to be effective for any reason at any time
during the Effectiveness Period for a reason other
than because of the sale of all of the Registrable
Notes covered thereby, subject to Section 2(b), the
Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall, within
60 days of such cessation of effectiveness, amend such
Initial Shelf Registration or Subsequent Shelf
Registration in a manner reasonably calculated to
obtain the withdrawal of the order suspending the
effectiveness thereof, or shall file an additional
"shelf" registration statement pursuant to Rule 415
covering all of such Registrable Notes which remain
unsold. (Each of the Initial Shelf Registration and
the Subsequent Shelf Registration are referred to
individually herein as a "Shelf Registration" and
collectively as the "Shelf Registrations.")

-4-
<PAGE> 7

d. Effectiveness Period. The Company shall use
its best efforts to keep the Shelf Registration
(including the Initial Shelf Registration and any
Subsequent Shelf Registration) continuously effective
under the Securities Act until the earlier to occur
of the fourth anniversary of the date on which the
Initial Shelf Registration became effective (the
"Effectiveness Period"), or the date on which all
Registrable Notes covered by the Initial Shelf
Registration have been sold; provided, however, that
the Effectiveness Period shall be extended
commensurate with any period during which a Shelf
Registration which previously has been declared
effective by the Commission no longer is in effect as
required by this Agreement, or during which sales
have been suspended pursuant to Section 5 or Section
7(g) hereof. If a Subsequent Shelf Registration is
filed, pursuant to Section 2(b) or 2(c) hereof, the
Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared
effective as soon as reasonably practicable after
such filing and to keep such Registration Statement
continuously effective for a period after such
effectiveness equal to the Effectiveness Period, less
the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf
Registration was previously in effect. The intent of
this provision is that the Shelf Registration
(including the Initial Shelf Registration and any
Subsequent Shelf Registration) shall be in effect for
a number of days, in the aggregate, equal to four
years; provided that a Shelf Registration shall not
be required to be maintained in effect after all of
the Registrable Notes have been sold thereunder or
otherwise distributed such that they are no longer
deemed to be Registrable Notes hereunder.

e. Extend Initial Shelf Registration. In lieu of
filing the Subsequent Shelf Registration required
under Section 2(b) hereof, the Company may, in its
sole discretion and if permitted by applicable law,
keep the Initial Shelf Registration continuously
effective for the remainder of the Effectiveness
Period or, if earlier, until all of the Registrable
Notes eligible to be included in the Shelf
Registrations have been sold hereunder such that they
are no longer Registrable Notes hereunder.

3. Demand Registrations.

a. Demand Rights. After the termination of the
Effectiveness Period, so long as not less than
$25,000,000 of Registrable Notes remain outstanding,
upon written notice to the Company from one or more
Holders (the "Initiating Holders") of Registrable
Notes holding in the aggregate 25% in principal
amount of Registrable Notes then outstanding,
requesting that the Company effect, pursuant to this
Section 3, the registration of such Initiating
Holders' Registrable Notes under the Securities Act
(which notice shall specify the Registrable Notes so
requested to be registered, the proposed amounts
thereof and the intended method or methods of
distribution by such Initiating

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<PAGE> 8
Holders (including whether the proposed
offering is to be underwritten), the Company shall
promptly (but in any event within 15 days) give
written notice of such requested registration to all
Holders of Registrable Notes, and thereupon the
Company shall use its best efforts to effect the
registration under the Securities Act of: (A) the
Registrable Notes that the Initiating Holders have
requested the Company to register, for disposition in
accordance with the intended method or methods of
distribution stated in their notice to the Company;
and (B) all other Registrable Notes the Holders of
which shall have made a written request to the
Company for registration thereof (which request shall
specify such Registrable Notes and the proposed
amounts thereof) within 15 days after the receipt of
such written notice from the Company, as
expeditiously as possible (but in any event shall
file such registration statement within 60 days of
the receipt of such request by the Initiating
Holders), all to the extent requisite to permit the
disposition by Holders of the Registrable Notes then
constituting Registrable Securities so to be
registered.

b. Frequency; Duration. The Company shall be
obligated to effect only two registrations pursuant
to this Section 3 with respect to all Holders of
Registrable Notes. Notwithstanding the foregoing, the
Company shall not be required to effect a Demand
Registration pursuant to this Section 3: (i) if it
shall have so effected a Demand Registration during
the previous seven months; or (ii) during the period
starting with the date 30 days prior to the Company's
good faith estimate of the date of filing of, and
ending on the date 90 days following the effective
date of, a registration statement pertaining to an
underwritten public offering for the account of the
Company with respect to which Holders have piggyback
rights pursuant to Section 4 hereof; provided,
however, that a Demand Registration shall not be
deemed to have been effected for purposes of Section
(3)(b)(i) if the applicable registration statement
has not been declared effective and kept effective
until the earlier of (i) 90 days following the date
on which such registration statement was declared
effective and (ii) the sale pursuant to such
registration statement of the Registrable Notes
covered thereby; and, provided, further that in the
event a request for registration is refused pursuant
to (ii) above, if the Company then elects not to file
a registration statement or, if a registration
statement is filed, the Company elects not to
complete the proposed offering, the Company shall
notify in writing the Holders whose request for
registration has been refused pursuant to clause (ii)
above, and such Holders shall have the right, within
10 days after receiving written notice of the
Company's election, to request the Company to effect
the registration of Registrable Notes for the account
of Holders, and such registration shall be considered
a Demand Registration under this Section 3.

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<PAGE> 9
c. Inclusion of Other Securities. The Company may
include in a Demand Registration securities held by
other Persons who have piggyback registration rights
pursuant to written agreements with the Company or
Parent; provided that Registrable Notes shall have
absolute priority over any such other securities in
connection with any cutback.

4. Piggyback Registration. If the Company or Parent, at any time prior
to the expiration of the Effectiveness Period when there is not in effect a
Shelf Registration for the Registrable Notes, proposes to register any of its
securities under the Securities Act or, at any time after the expiration of the
Effectiveness Period, proposes to register any of its securities, on any forms
(other than in connection with the registration of securities issued or
issuable pursuant to an employee stock option, stock purchase, stock bonus or
similar plan or dividend reinvestment plan or pursuant to a merger, business
combination, exchange offer or transaction of the type specified in Rule 145(a)
under the Securities Act), whether or not pursuant to registration rights
granted to other holders of its securities and whether or not for sale for its
own account, the Company shall give prompt written notice to all of the
Holders of its intention to do so and of such Holders' rights (if any) under
this Section 4, which notice, in any event, shall be given at least 20 days
prior to the filing with the Commission of such proposed registration. Upon
the written request of any Holder receiving notice of such proposed
registration (a "Requesting Holder") made within 15 days after the receipt of
any such notice (or 10 days if the Company states in such written notice or
gives telephonic notice to the relevant security holders, with written
confirmation to follow promptly thereafter, that (i) such registration will be
on Form S-3 and (ii) such shorter period of time is required because of a
planned filing date), which request shall specify the Registrable Notes
intended to be disposed of by such Requesting Holder and the intended method of
such distribution, and the minimum offering price per $1,000 principal amount
of Registrable Note at which the Holder is willing to sell its Registrable
Notes, the Company shall, subject to Section 8(b) hereof, include for
registration under the Securities Act all Registrable Notes of the Requesting
Holders; provided that,

i. with respect to a registration of Registrable
Notes, prior to the effective date of the
registration statement filed in connection with such
registration, promptly following receipt of
notification by the Company from the managing
underwriter of the price at which such securities are
to be sold, if applicable, the Company shall so
advise each Requesting Holder of such price, and if
such price is below the minimum price which any
Requesting Holder shall have indicated to be
acceptable to such Requesting Holder, such Requesting
Holder shall then have the right irrevocably to
withdraw its request to have its Registrable Notes
included in such registration statement, by delivery
of written notice of such withdrawal to the Company
within three Business Days of its being advised of
such price, without prejudice to the rights of any
Holder or Holders of Registrable Notes to include

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<PAGE> 10

Registrable Notes in any future registration
(or registrations) pursuant to this Section 4; and

ii. with respect to a registration of Registrable
Notes, if at any time after giving written notice of
its intention to register any securities and prior to
the effective date of the registration statement
filed in connection with such registration, the
Company shall determine for any reason not to
register or to delay registration of such securities,
the Company may, at its election, give written notice
to such determination to each Requesting Holder and
(i) in the case of a determination not to register,
shall be relieved of its obligation to register any
Registrable Notes in connection with such
registration (but not from any obligation of the
Company to pay the Expenses in connection therewith),
without prejudice, however, to the rights of any
Holder to include Registrable Notes in any future
registration (or registrations) pursuant to this
Section 4 and (ii) in the case of a determination to
delay registering its securities, shall be permitted
to delay registering any Registrable Notes, for the
same period as the delay in registering such other
securities.

No registration effected under this Section 4 shall relieve the Company of its
obligations under Section 2 or 3 hereof.

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<PAGE> 11

shall deliver a notice to any Holder of Registrable Notes covered or to be
covered under such withdrawn, suspended or not to be filed registration
statement, which indicates that the registration statement is no longer
effective or will not be filed. Upon the receipt of any such notice, such
Holder(s) in the case of an effective registration statement shall forthwith
discontinue their use and any dissemination of the prospectus contained in such
registration statement. If any Disadvantageous Condition shall cease to exist,
the Company shall promptly notify any Holders, who shall have ceased selling
Registrable Notes pursuant to an effective registration statement as a result of
such Disadvantageous Condition, indicating such cessation. The Company shall,
if any registration statement required to be filed or maintained under this
Agreement has been withdrawn, suspended or not filed, file promptly, at such
time as it in good faith deems appropriate, an amended, supplemented or new
registration statement, as applicable, covering the Registrable Notes that were
covered by such withdrawn registration statement or to be covered by such
unfiled registration statement.

6. Expenses. The Company shall pay all Expenses in connection
with any registration initiated pursuant to Section 2 or 3 hereof, whether or
not such registration shall become effective.

7. Registration Procedures. If and whenever the Company is
required to effect any registration under the Securities Act as provided in and
subject to the provisions of Sections 2 and 3 hereof, the Company shall, as
expeditiously as possible:

a. expeditiously prepare and file with the
Commission the requisite registration statement to
effect such registration and thereafter use its
reasonable best efforts to cause such registration
statement to become effective; provided, however,
that the Company may discontinue any registration of
its securities that are not Registrable Notes (and,
under the circumstances specified in Sections 4 and
7(b) hereof, its securities that are Registrable
Notes) at any time prior to the effective date of the
registration statement relating thereto;

b. prepare and file with the Commission such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such
registration statement effective and to comply with
the provisions of the Securities Act with respect to
the offering of all Registrable Notes covered by such
registration statement until such time as all of such
Registrable Notes have been disposed of during the
applicable period in accordance with the method of
disposition set forth in such registration statement
or, with respect to a Shelf Registration, the
expiration of the Effectiveness Period;

c. furnish to each seller of Registrable Notes
covered by any registration statement provided for
hereunder such reasonable number of copies of such
drafts and final conformed versions of such
registration statement and of

9
<PAGE> 12

each such amendment and supplement thereto (in each
case including all exhibits), such reasonable number
of copies of such drafts and final versions of the
prospectus contained in such registration statement
(including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule
424 under the Securities Act, and such other
documents, as such seller may reasonably request in
writing;

d. use its best efforts (i) to file such applications and
documents to register or qualify all Registrable Notes
and other securities covered by such registration
statement under such other securities or blue sky laws
of such states or other jurisdictions of the United
States of America as the sellers of Registrable Notes
covered by such registration statement shall
reasonably request in writing, (ii) to keep such
registration or qualification in effect for so long as
such registration statement remains in effect and
(iii) to take any other action that may be reasonably
necessary or advisable to enable such sellers to
consummate the disposition in such jurisdictions of
the securities to be sold by such sellers, except that
the Company shall not for any such purpose be required
to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not
but for the requirements of this subsection (d) be
obligated to be so qualified, to subject itself to
taxation in such jurisdiction or to consent to general
service of process in any such jurisdiction;

e. use its best efforts to cause all Registrable Notes
covered by such registration statement to be
registered with or approved by such other federal or
state governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and
counsel to the seller or sellers of Registrable Notes
to enable the sellers thereof to consummate the
offering of such Registrable Notes;

f. use its best efforts to obtain and, if obtained,
furnish a copy to each seller of Registrable Notes,
and each such seller's underwriters, if any, of

i. an opinion of counsel for the Company,
dated the effective date of such
registration statement (and, if such
registration involves an underwritten
offering, dated the date of the
closing under the underwriting
agreement), reasonably satisfactory in
form and substance to counsel to the
Holders chosen by Holders of a
majority of the aggregate principal
amount of Registrable Notes being
registered, and

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<PAGE> 13
signed by the independent public accountants
who have certified the Company's financial statements
included or incorporated by reference in such
registration statement, reasonably satisfactory in form
and substance to counsel to the Holders chosen by
Holders of a majority of the aggregate principal amount
of Registrable Notes being registered,

in each case, covering substantially the
same matters with respect to such registration
statement (and the prospectus included therein) and, in
the case of the accountants' comfort letter, with
respect to events subsequent to the date of such
financial statements and matters contained in such
registration statement, as are customarily covered in
opinions of issuer's counsel and in accountants'
comfort letters delivered to underwriters in
underwritten Public Offerings of like securities;

g. notify the sellers of Registrable Notes
(providing, if requested by any such Persons,
confirmation in writing) as soon as practicable after
becoming aware of: (A) the filing of any prospectus or
prospectus supplement of the filing or effectiveness
(or anticipated date of effectiveness) of such
registration statement or any post- effective
amendment thereto; (B) any request by the Commission
for amendments or supplements to such registration
statement or the related prospectus or for additional
information; (C) the issuance by the Commission of any
stop order suspending the effectiveness of such
registration statement or the initiation of any
proceedings for such purpose; (D) the receipt by the
Company of any notification with respect to the
suspension of the qualification or registration (or
exemption therefrom) of any Registrable Notes for sale
in any jurisdiction in the United States or the
initiation or threatening of any proceeding for such
purposes; or (E) the happening of any event that makes
any statement made in such registration statement or in
any related prospectus, prospectus supplement,
amendment or document incorporated therein by reference
untrue in any material respect or that requires the
making of any changes in such registration statement or
in any such prospectus, supplement, amendment or other
such document so that it will not contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary to make the statements therein (in the case
of any prospectus in the light of the circumstances
under which they were made) not misleading;

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<PAGE> 14

earnings statement shall satisfy the provisions of section
11(a) of the Securities Act and Rule 158 promulgated
thereunder, and furnish to each seller of Registrable Notes at
least three Business Days prior to the filing thereof a copy of
any amendment or supplement to such registration statement or
prospectus;

i. obtain a CUSIP number for all Registrable Notes;

j. enter into customary agreements and take all such other
reasonable actions in connection therewith in order to
expedite or facilitate the disposition of the Registrable
Notes included in such registration statement;

k. make every reasonable effort to obtain the withdrawal of any
order or other action suspending the effectiveness of any such
registration statement or suspending the qualification or
registration (or exemption therefrom) of the Registrable Notes
for sale in any jurisdiction; and

l. if any event described in subsection (g) hereto occurs, use
its best efforts to cooperate with the Commission to prepare,
as soon as practicable, any amendment or supplement to such
registration statement or such related prospectus and any
other additional information, or to take other action that may
have been requested by the Commission.

It shall be a condition precedent to the obligations of the Company to
take action pursuant to this Agreement that the selling Holders
furnish to the Company such information regarding themselves and the
Registrable Notes held by them, and the intended methods of
disposition of such securities, as shall be required to effect the
registration and sale of their Registrable Notes.

In the case of a registration pursuant to this Agreement (including
any registration under Section 4 hereof), each Holder agrees that as
of the date that a final prospectus is made available to it for
distribution to prospective purchasers of Registrable Notes it shall
cease to distribute copies of any preliminary prospectus prepared in
connection with the offer and sale of such Registrable Notes. Each
Holder further agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in
subsection (g) of this Section 7, such Holder shall forthwith
discontinue such Holder's disposition of Registrable Notes pursuant to
the registration statement relating to such Registrable Notes until
such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (l) of this Section 7 and, if so
directed by the Company, shall 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 relating to such
Registrable Notes current at the time of receipt of such notice.

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<PAGE> 15
8. Underwritten Offerings.

a. Requested Underwritten Offerings. If requested by the
underwriters (if any) in connection with a registration under
Section 2 or 3 hereof, the Company shall enter into a firm
commitment underwriting agreement with such underwriters for such
offering, such agreement to be reasonably satisfactory in substance
and form to the Company, Holders of a majority of the Registrable
Notes included in such registration, and the underwriters, and to
contain such representations and warranties by the Company and such
other terms as are generally prevailing in agreements of that type,
including, without limitation, indemnification and contribution to
the effect and to the extent provided in Section 10 hereof.

b. Selection of Underwriters. The underwriter or underwriters of
each underwritten offering, if any, of the Registrable Notes to be
registered pursuant to Section 2, 3 or 4 hereof (i) shall be a
nationally recognized underwriter (or underwriters), (ii) shall be
selected by the Holders owning at least a majority of the aggregate
outstanding principal amount of Registrable Notes being sold in any
such underwritten offering and (iii) shall be reasonably acceptable
to the Company or, with respect to an offering of securities of
Parent pursuant to which Holders have piggyback rights, to Parent.

c. Piggyback Underwritten Offerings; Priority. If the Company or
Parent proposes to register any of its securities under the
Securities Act (whether pursuant to registration rights afforded to
holders of securities other than Registrable Notes or otherwise) and
the Holders exercise piggyback rights pursuant to Section 4 hereof
with respect to such registration and any such securities are to be
distributed by or through one or more underwriters, the Company
shall use reasonable efforts to arrange for such underwriters to
include all of the Registrable Notes to be offered and sold by the
Holders thereof among the securities of the Company to be
distributed by such underwriters; provided, that, notwithstanding
any other provision herein contained, if the managing underwriter of
such underwritten offering shall advise the Company or Parent in
writing (with a copy to the Holders) that the inclusion of the
Registrable Notes in such registration would materially and
adversely affect the success of such offering, then the number of
Registrable Notes to be included shall be reduced, pro rata among
the Registrable Notes holding such piggyback rights, to the extent
necessary to reduce the Registrable Notes to the number recommended
by the underwriter (which amount may be zero); provided, however,
that any such reduction in the number of Registrable Notes to be
included shall not take effect if the effect of such reduction would
be to allow holders of piggyback rights relating to other debt
securities of the Company to include any of their debt securities in

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<PAGE> 16
any such offering; and provided further that, in the event that
any holders of equity securities holding piggyback rights with
respect to any registration have invoked such rights with respect to
a registration as to which the holders of Registrable Notes have
also requested inclusion pursuant to Section 4 hereof, and the
underwriter does not object to the inclusion of the Registrable
Notes on the basis of the character of such securities, but only on
the volume of securities to be included, any cutback of the
Registrable Notes shall be no less favorable to the Registrable
Notes than on a pro rata basis with any cutback of any such other
securities holding piggyback rights.

d. Holders of Registrable Notes to be Parties to
Underwriting Agreement. The Holders of Registrable Notes to be
distributed by underwriters in an underwritten offering contemplated
by subsections (a) or (b) of this Section 8 shall be parties to the
underwriting agreement between the Company and such underwriters and
any such Holder, at its option, may require that any or all of the
representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of the underwriters be
made to and for the benefit of such Holders and that any or all of
the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the
obligations of such Holders. No such Holder shall be required to
make any representations or warranties to or agreements with the
Company or the underwriters other than representations, warranties
or agreements regarding such Holder, such Holder's Registrable Notes
and such Holder's intended method of distribution and
indemnification and contribution customary in secondary offerings to
the effect and to the extent provided in Section 10 hereof.

e. Selection of Underwriters for Piggyback Underwritten Offering.
The underwriter or underwriters of each piggyback underwritten
offering pursuant to this Section 8 shall be a nationally recognized
underwriter (or underwriters) selected by the Company or, if with
respect to an underwritten offering of securities of Parent, by
Parent.

9. Preparation; Reasonable Investigation.

a. Registration Statements. In connection with the preparation
and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company shall give each holder of
Registrable Notes registered under such registration statement, the
underwriters, if any, and its respective counsel and accountants the
reasonable opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed
with the Commission, and each amendment thereof or supplement
thereto, and shall give each of them such reasonable opportunities
to discuss the business of the Company with its officers and the

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<PAGE> 17
independent public accountants who have certified its financial
statements as shall be necessary, in the reasonable opinion of any
such Holders' and such underwriters' respective counsel, to conduct
a reasonable investigation within the meaning of the Securities Act.

b. Confidentiality. Each Holder of Registrable Notes shall
maintain the confidentiality of any confidential information
received from or otherwise made available by the Company to such
Holder of Registrable Notes pursuant to this Agreement and
identified in writing by the Company as confidential and shall enter
into such confidentiality agreements as the Company shall reasonably
request. Information that (i) is or becomes available to a Holder of
Registrable Notes from a public source, (ii) is disclosed to a
Holder of Registrable Notes by a third-party source whom the Holder
of Registrable Notes reasonably believes has the right to disclose
such information or (iii) is or becomes required to be disclosed by
a Holder of Registrable Notes by law, including, but not limited to,
administrative or court orders, shall not be deemed to be
confidential information for purposes of this Agreement; provided,
however, that to the extent sufficient time is available prior to
such disclosure being required to be made pursuant to clause (iii)
hereof, the Holders of Registrable Notes shall promptly notify the
Company of any request for disclosure and any proposed disclosure
pursuant to such clause (iii). The Holders of Registrable Notes
shall not grant access, and the Company shall not be required to
grant access, to information under this Section 9 to any Person who
will not agree to maintain the confidentiality (to the same extent a
Holder is required to maintain the confidentiality) of any
confidential information received from or otherwise made available
to it by the Company or the holders of Registrable Notes under this
Agreement and identified in writing by the Company as confidential.

10. Indemnification.

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<PAGE> 18
disbursements and other charges of legal counsel and reasonable
out-of-pocket costs of investigation, to which such Company
Indemnitee may become subject under the Securities Act or otherwise
(collectively, a "Loss" or "Losses"), insofar as such Losses arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement under which such securities were registered pursuant to
this Agreement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto (collectively, "Offering Documents"), or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in the
light of the circumstances in which they were made not misleading;
provided that the Company shall not be liable in any such case to
the extent that any such Loss arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged
omission made in such Offering Documents in reliance upon and in
conformity with written information furnished to the Company
expressly for use therein; and provided, further, that the Company
shall not be liable to any Person including any Company Indemnitee
who participates in the offering or sale of Registrable Notes or any
other Person, if any, who controls such Person including any Company
Indemnitee, in any such case to the extent that any such Loss arises
out of such Person's failure to send or give a copy of the final
prospectus (including any documents incorporated by reference
therein), as the same may be then supplement or amended, to the
Person asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written confirmation
of the sale of Registrable Notes to such person if such statement or
omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of such Company Indemnitee and
shall survive the transfer of such securities by such Company
Indemnitee.

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<PAGE> 19
any document incorporated by reference therein) or any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in the
light of circumstances in which they were made not misleading, if
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company expressly for use
therein; provided, however, that the liability of such indemnifying
party under this Section 10(b) shall be limited to the amount of the
net proceeds received by such indemnifying party in the offering
giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on
behalf of the Holder Indemnitee and shall survive the transfer of
such securities by such Holder.

c. Notices of Losses, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a Loss referred to in the preceding subsections
of this Section 10, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party
of its obligations under the preceding subsections of this Section
10, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, the indemnifying party
shall be entitled to participate in and, unless in such indemnified
party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such
Loss, to assume and control the defense thereof, in each case at its
own expense, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from such
indemnifying party of its assumption of the defense thereof, the
indemnifying party shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable for any
settlement of any such action or proceeding effected without its
written consent, which shall not be unreasonably withheld. No
indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release
from all liability in respect of such Loss or which requires action
on the part of such indemnified party or otherwise subjects the
indemnified party to any obligation or restriction to which it would
not otherwise be subject.

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<PAGE> 20
d. Contribution. If the indemnification provided for in this
Section 10 shall for any reason be unavailable to an indemnified
party under subsection (a) or (b) of this Section 10 in respect of
any Loss, then, in lieu of the amount paid or payable under
subsection (a) or (b) of this Section 10, the indemnified party and
the indemnifying party under subsection (a) or (b) of this Section
10 shall contribute to the aggregate Losses (including legal or
other expenses reasonably incurred in connection with investigating
the same) (i) in such proportion as is appropriate to reflect the
relative fault of the Company and the prospective sellers of
Registrable Notes covered by the registration statement which
resulted in such Loss or action in respect thereof, as well as any
other relevant equitable considerations, or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as shall be appropriate to reflect the relative
benefits received by the Company, on the one hand, and such
prospective sellers, on the other hand, from their sale of
Registrable Notes; provided that for purposes of this clause (ii),
the relative benefits received by the prospective sellers shall be
deemed not to exceed the amount received by such sellers. 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 obligations, if any, of the selling holders
of Registrable Notes to contribute as provided in this subsection
(d) are several in proportion to the relative value of their
respective Registrable Notes covered by such registration statement
and not joint. In addition, no Person shall be obligated to
contribute hereunder any amounts in payment for any settlement of
any action or Loss effected without such Person's consent.

e. Other Indemnification. The Company and, in connection with any
registration statement filed by the Company pursuant to Section 2,
each Holder shall, and, in connection with any registration
statement filed by the Company pursuant to Section 3 or 4, each
Holder who has registered for sale Registrable Notes, shall, with
respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any
governmental authority other than the Securities Act, indemnify
Holder Indemnitees and Company Indemnitiees, respectively, against
Losses, or, to the extent that indemnification shall be unavailable
to a Holder Indemnitee or Company Indemnitee in a manner similar to
that specified in the preceding subsections of this Section 10 (with
appropriate modifications).

f. Indemnification Payments. The indemnification and contribution
required by this Section 10 shall be made by periodic payments of
the amount thereof during the course of any investigation or
defense, as and when bills are received or any Loss is incurred.

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<PAGE> 21
11. Registration Rights to Others.

If the Company shall at any time hereafter provide to any holder of
any securities of the Company rights with respect to the registration of such
securities under the Securities Act or the Exchange Act, such rights shall not
be in conflict with or adversely affect any of the rights provided in this
Agreement to the holders of Registrable Notes.

12. Adjustments Affecting Registrable Notes.

The Company shall not effect or permit to occur any combination,
subdivision or reclassification of Registrable Notes that would materially
adversely affect the ability of the Holders to include such Registrable Notes
in any registration of its securities under the Securities Act contemplated by
this Agreement.

13. Rule 144 and Rule 144A.

The Company hereby agrees that (i) at any time it is not subject to
the requirements of section 13 or Section 15(d) of the Exchange Act and there
remain outstanding any Registrable Notes, (A) it shall make available to any
Holder upon written request such information as may be required under Rule
144(A)(d)(4) to permit resales of such Registrable Notes pursuant to Rule 144A
under the Securities Act and (B) it shall make publicly available such
information concerning the Company specified in paragraphs (a)(5)(i) through
and including (a)(5)(xiv) and in paragraph (a)(5)(xvi) of Rule 15c2-11 under
the Exchange Act to permit resales of such Registrable Notes pursuant to Rule
144 under the Securities Act; and (ii) during such times the Company is subject
to the requirements of section 13 or section 15(d) of the Exchange Act and
there remain outstanding any Registrable Notes, it shall timely file the
periodic and other reports referred to in paragraph (c)(1) of Rule 144 to
permit resales of such Registrable Notes pursuant to Rule 144 under the
Securities Act.

Without limiting the generality of the preceding paragraph, the
Company hereby agrees to take all such further actions as any Holder of
Registrable Notes reasonably may request, to the extent required to enable such
Holder to resell its Registrable Notes without registration under the
Securities Act within the limitation of the exemptions therefrom provided by
Rule 144A and Rule 144 under the Securities Act, as such Rules may be amended
from time to time, or any similar Rule or Regulation hereafter promulgated by
the Commission. Upon the reasonable request of any Holder of Registrable
Notes, the Company shall deliver to such Holder written notice as to whether it
has complied with such informational and other requirements.

14. Amendments and Waivers.

Except as otherwise provided herein, the provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the

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<PAGE> 22
provisions hereof may not be given unless the Company shall have obtained the
prior written consent of the Holders of at least 66 2/3% of the aggregate
principal amount of Registrable Notes affected by such amendment, modification
or waiver.

15. Nominees for Beneficial Owners.

In the event that any Registrable Note is held by a nominee for the
beneficial owner thereof, the beneficial owner thereof may, at its election in
writing delivered to Company, be treated as the Holder of such Registrable Note
for purposes of any request or other action by any Holder or Holders pursuant
to this Agreement or any determination of the number or percentage of principal
amount of Registrable Notes held by any Holder or Holders contemplated by this
Agreement. If the beneficial owner of any Registrable Notes so elects, the
Company may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Notes.

16. Assignment.

The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns including any successor-by-merger of the Company. Any Holder may
assign to any permitted transferee of its Registrable Notes holding Registrable
Notes its rights and obligation under this Agreement, provided that such
transferee shall agree in writing with the parties hereto prior to the
assignment to be bound by this Agreement as if it were an original party
hereto, whereupon such assignee shall for all purposes be deemed to be a Holder
under this Agreement.

17. Calculation of Percentage of Principal Amount of Registrable Notes.

For purposes of this Agreement, all references to an aggregate
principal amount of Registrable Notes or a percentage thereof shall be
calculated based upon the aggregate principal amount of Registrable Notes
outstanding at the time such calculation is made and shall exclude any
Registrable Notes or Notes, as the case may be, owned by the Company or any
subsidiary of the Company.

18. Miscellaneous.

a. Further Assurances. Each of the parties hereto shall execute
such documents and other papers and perform such further acts
as may be reasonably required or desirable to carry out the
provisions of this Agreement and the transactions contemplated
hereby.

b. Headings. The Headings in this Agreement are for convenience
of reference only and shall not control or affect the meaning
or construction of any provisions hereof.

-20-
<PAGE> 23
c. No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to any of its securities
that contain provisions that conflict with the provisions
hereof in any material respect.

d. Remedies. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its
rights under this Agreement. The Company 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 the Company hereby agrees to waive the defense
in any action for specific performance that a remedy at law
would be adequate.

e. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect
of the subject matter contained herein, and there are no
restrictions, promises, representations, warranties,
covenants, or undertakings with respect to the subject matter
hereof, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and
undertakings between the parties hereto with respect to the
subject matter hereof.

f. Notices. Any notices or other communications to be given
hereunder by any party to another party shall be in writing,
shall be delivered personally, by telecopy, by certified or
registered mail, postage prepaid, return receipt requested, or
by Federal Express or other comparable delivery service, to
the address of the party set forth on Schedule B hereto or to
such other address as the party to whom notice is to be given
may provide in a written notice to the other parties hereto, a
copy of which shall be on file with the Secretary of the
Company. Notice shall be effective when delivered if given
personally, when receipt is acknowledged if telecopied, three
days after mailing if given by registered or certified mail as
described above, and one business day after deposit if given
by Federal Express or comparable delivery service.

g. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York
applicable to agreements made to be performed entirely in such
State, without regard to principles of conflicts of law. The
Company and the parties each hereby irrevocably submit to the
jurisdiction of any New York or any Federal Court sitting in
the City of New York in respect of any suit, action or
proceeding arising out of or relating to this Agreement, and
each irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Nothing herein shall affect the right
of any party to serve process in any manner permitted by law
or to commence legal proceedings or otherwise proceed against
the Company in any other jurisdiction.

-21-
<PAGE> 24
h. Severability. If one or more of the provisions contained
herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect, for any
reason, the validity, legality and enforceability of the
remaining provisions contained herein shall not be in any way
affected or impaired thereby, and the provision held to be
invalid, illegal or unenforceable shall be reformed to the
minimum extent necessary, and in a manner as consistent with
the purposes thereof as is practicable, so as to render it
valid, legal and enforceable, it being intended that all
rights and obligations of the parties hereunder shall be
enforceable to the fullest extent permitted by law.

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

-22-
<PAGE> 25
IN WITNESS WHEREOF, the Company has executed this New PIK Notes
Registration Rights Agreement as of the date first above written.

PREMIUM STANDARD FARMS, INC.

By /s/ W.R. Patterson
-------------------------
Name:
Title:

-23-

<PAGE> 1
EXHIBIT 10.1

NOTE PURCHASE AGREEMENT

dated as of

September 17, 1996

among

PREMIUM STANDARD FARMS, INC.,

PSF HOLDINGS L.L.C.,
as Guarantor

and

MORGAN STANLEY GROUP INC.

<PAGE> 2

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS

<TABLE>
<S> <C> <C>
SECTION 1.1. Definitions......................... 1
SECTION 1.2. Accounting Terms and Determinations. 13

ARTICLE II

PURCHASE AND SALE OF NOTES

SECTION 2.1. Commitments to Purchase............. 14
SECTION 2.2. Closing............................. 14

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE GUARANTOR

SECTION 3.1. Corporate Existence and Power...... 15
SECTION 3.2. Authorization, Execution and
Enforceability..................... 16
SECTION 3.3. Governmental Authorization......... 16
SECTION 3.4. No Contravention................... 16
SECTION 3.5. Security Interests................. 17
SECTION 3.6. Financial Information.............. 17
SECTION 3.7. Full Disclosure.................... 18
SECTION 3.8. Real Property; Leasehold Interests. 18
SECTION 3.9. Capitalization..................... 19
SECTION 3.10. Solicitation; Access to Information 19
SECTION 3.11. Non-Fungibility.................... 20
SECTION 3.12. Not an Investment Company.......... 20
SECTION 3.13. Solvency........................... 20

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

SECTION 4.1. Purchase for Investment; Authority;
Binding Agreement................... 21

ARTICLE V

CONDITIONS PRECEDENT

SECTION 5.1. Conditions to Effectiveness.......... 21
SECTION 5.2. Conditions to each Purchaser's
Obligations to Purchase.............. 24

</TABLE>

<PAGE> 3

<TABLE>
SECTION 5.3. Conditions to the Company's Obligations
<S> <C>
to Sell.............................. 25

ARTICLE VI

COVENANTS

SECTION 6.1. Information......................... 26
SECTION 6.2. Inspection of Property, Books and
Records; Consultation with
Management.......................... 27

SECTION 6.3. Supplemental Information............ 28
SECTION 6.4. Use of Proceeds..................... 28
SECTION 6.5. Restrictions on Certain Amendments.. 28
SECTION 6.6. Investment Company Act.............. 29
SECTION 6.7. Compliance with Third Priority Note
Indenture........................... 29
SECTION 6.8. Mergers, Consolidations, Etc........ 29
SECTION 6.9. Third Priority Notes................ 31
SECTION 6.10. Permitted Priority Liens............ 31
SECTION 6.11. Security Interests.................. 32

ARTICLE VII

TRANSFERS

SECTION 7.1. Restrictions on Transfer............ 33
SECTION 7.2. Restrictive Legends................. 33
SECTION 7.3. Notice of Proposed Transfers........ 33
SECTION 7.4. Transfer to Single Transferee....... 35

ARTICLE VIII

MISCELLANEOUS

section 8.1. Notices............................. 26
SECTION 8.2. No Waivers; Powers
and Remedies Cumulative; Amendments. 35
SECTION 8.3. Indemnification..................... 36
SECTION 8.4. Expenses; Documentary Taxes......... 38
SECTION 8.5. Payment............................. 38
SECTION 8.6. Successors and Assigns.............. 38
SECTION 8.7. Brokers............................. 39
SECTION 8.8. Collateral Agent; Security Documents 39
SECTION 8.9. Confidentiality..................... 40
SECTION 8.10. NEW YORK LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL.. 41
SECTION 8.11. Severability........................ 41
SECTION 8.12. Counterparts........................ 41
</TABLE>

<PAGE> 4

EXHIBIT A Form of Note
EXHIBIT B Parent Guarantee Agreement
EXHIBIT C Subsidiary Guarantee Agreement
EXHIBIT D Security Agreement
EXHIBIT E Mortgage
EXHIBIT F Pledge Agreement
EXHIBIT G Intercreditor Agreement
EXHIBIT H Company Counsel Opinion
EXHIBIT I Missouri Company Counsel Opinion
EXHIBIT J Indemnity, Subrogation and Contribution Agreement
EXHIBIT K Assignment of Contracts
EXHIBIT L Consent and Agreement

Schedule 1.1(a) Mortgaged Properties
Schedule 1.1(b) Existing Liens
Schedule 3.9(a) Capitalization
Schedule 3.9(b) Subsidiaries

iii

<PAGE> 5

NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT dated as of September 17, 1996 among PREMIUM
STANDARD FARMS, INC., PSF HOLDINGS L.L.C. and MORGAN STANLEY GROUP INC.

The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1. Definitions. The following terms, as used herein, have the
following meanings:

"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means, with respect to any Person, 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 contract or otherwise.

"Agreement" means this Agreement, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.

"Asset Sale" means, with respect to any Person, any sale, lease, transfer,
condemnation, loss in an insured event or other disposition (including by way
of merger, consolidation or sale and leaseback transaction, but excluding any
sales of assets or property that (i) are substantially concurrently replaced
with the proceeds of such sale and (ii) are no longer used or useful in the
business of such Person) in one transaction or a series of related transactions
by such Person or any of its Subsidiaries to any Person other than the
Guarantor, the Company or any of its wholly owned Subsidiaries of (a) any of
the Capital Stock of any Subsidiary of such Person, (b) all or substantially
all of the Real Property, Leaseholds or Personal Property of such Person or any
of its Subsidiaries or (c) any other Real Property, Leaseholds or Personal
Property of such Person or any of its Subsidiaries, except, in the case of
clause (c), for (i) sales of inventory,

<PAGE> 6

livestock, processed pork inventories, breeding stock, grain, feedstock
or Hedging Contracts in the ordinary course of business and (ii) any sale,
lease, transfer or other disposition in one transaction or a series of related
transactions of Real Property, Leaseholds or Personal Property with a value not
in excess of $250,000.

"Assignment of Contracts" means the Assignment of Contracts between the
Company and the Collateral Agent, substantially in the form of Exhibit K, as
amended, supplemented or otherwise modified from time to time.

"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now or hereafter in effect, or any successor thereto.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.

"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination
thereof, which obligations are required to be classified and accounted for as
capital leases on a balance sheet of such Person under GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.

"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or nonvoting) of capital stock, partnership interests (whether general
or limited) or equivalent ownership interests in or issued by such Person, that
in each case are outstanding or issued on or after the date of this Agreement.

"Change in Control" shall be deemed to have occurred if (i)(a) any person
or group (within the meaning of Rule 13d-5 of the Exchange Act as in effect on
the date hereof) other than one or more Permitted Holders shall own directly or
indirectly, beneficially or of record, shares representing more than 35% of the
aggregate ordinary voting power represented by the issued and outstanding
membership interests of the Guarantor; (b) a majority of the seats (other than
vacant seats) on the board of directors of the Company shall at any time be
occupied by persons who were neither (i) nominated by the board of directors of
the Company nor (ii) appointed by directors so nominated; (c)

<PAGE> 7

any change in control (or similar event, however denominated) with
respect to the Company or the Guarantor shall occur under and as defined in any
indenture or agreement in respect of Debt to which the Company or the Guarantor
is a party; or (d) the Company ceases for any reason to be a wholly owned
Subsidiary of the Guarantor (other than as a result of the merger of the
Company into the Guarantor in a transaction permitted by Section 6.8) or (ii) a
"Change of Control", as defined in the Third Priority Note Documents, shall
have occurred.

"Closing" has the meaning set forth in Section 2.2(a).

"Collateral" means all "Collateral" as defined in the Security Agreement,
all "Pledged Collateral" as defined in the Pledge Agreement and all real
property, leasehold interests and other property subject to the Mortgages,
including the "Trust Premises" as defined in each Mortgage.

"Collateral Agent" has the meaning set forth in the Security Agreement.

"Commission" means the Securities and Exchange Commission.

"Company" means Premium Standard Farms, Inc., a Delaware corporation, and
its successors.

"Consent and Agreement" means the Consent and Agreement of Pig Improvement
Company, Inc., substantially in the form of Exhibit L.

"Consolidated Net Worth" of any Person as of any date of determination
means the stockholders' equity of such Person and its Subsidiaries at such date
determined on a consolidated basis.

"Consolidated Subsidiary" means at any date with respect to any Person any
Subsidiary or other entity, the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such
statements were prepared as of such date.

"Court" means the United States Bankruptcy Court for the District of
Delaware.

"Credit Agreement" means the Credit Agreement dated as of September 17,
1996 among the Company, the Guarantor, the Lenders party thereto and The Chase
Manhattan Bank, as Issuing Bank, Administrative Agent and Collateral

<PAGE> 8

Agent, as amended, supplemented or otherwise modified from time to
time. References to the Credit Agreement shall also include any credit
agreement or agreements entered into by the Company to replace, extend, renew,
refund or refinance all or a portion of the debt under the Credit Agreement,
provided that the aggregate principal amount of Debt available thereunder will
not be increased.

"Credit Availability Period" means the two-year period commencing on the
Effective Date.

"Debt" of any Person means, 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 upon which interest charges are customarily paid, (d) all obligations of
such Person under conditional sale or other title retention agreements relating
to property or assets purchased by such Person, (e) all obligations of such
Person issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the
ordinary course of business), (f) all Debt of others secured by (or for which
the holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (g) all Guarantees by
such Person of Debt of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations of such Person in respect of interest rate
protection agreements, foreign currency exchange agreements or other interest
or exchange rate hedging arrangements and (j) all obligations of such Person as
an account party in respect of letters of credit and bankers' acceptances. The
Debt of any Person shall include the Debt of any partnership in which such
Person is a general partner.

"Debtors" means PSF Finance, L.P., Collings Farm, Inc., Premium Standard
Farms, Inc., Premium Holdings Corp. and PSF Finance Holdings, Inc., as debtors
and debtors in possession under the Bankruptcy Code.

"Default" means any Event of Default or any event or condition that
constitutes an Event of Default or that with the giving of notice or lapse of
time or both would, unless cured or waived, become an Event of Default.

"Effective Date" has the meaning set forth in Section 5.1.

<PAGE> 9

"Event of Default" has the meaning set forth in the Notes.

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

"GAAP" has the meaning assigned to it in Section 1.2.

"Guarantee" of or by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(b) to purchase or lease property, securities or services for the purpose of
assuring the owner of such Debt of the payment of such Debt or (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Debt; provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.

"Guarantee Agreements" means the Parent Guarantee Agreement and the
Subsidiary Guarantee Agreement.

"Guarantor" means PSF Holdings L.L.C., a Delaware limited liability
company, and its successors.

"Hedging Contracts" means all contracts for, or options, puts, foreign
exchange contracts, currency swap agreements or similar arrangements relating
to, the purchase by the Company of (a) grain, soy meal and other feed
ingredients or relating hedging activities conducted in accordance with prudent
business practice and (b) hogs and related hedging activities conducted in
accordance with prudent business practice, in each case that are created to
protect the Company against price fluctuations and not for speculative
purposes.

"Inactive Subsidiary" means, at any time, any Subsidiary of the Company
that has no Debt at such time, less than $1,000 in assets at such time and has
not engaged in any business activities within the previous six months.

<PAGE> 10

"Indemnity Agreement" has the meaning set forth in Section 6.11(c).

"Initial Purchaser" means MS Group and/or, subject to Section 8.6(b), any
of its Affiliates designated as an "Initial Purchaser" in writing to the
Company on or prior to the initial Time of Purchase, and their respective
successors.

"Intercreditor Agreement" means the Intercreditor Agreement dated as of
September 17, 1996 among the Guarantor, the Company, The Chase Manhattan Bank,
as Administrative Agent and Collateral Agent for the Lenders, and the
Collateral Agent, substantially in the form of Exhibit G, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.

"Leaseholds" of any Person means all the right, title and interest of such
Person as lessee or licensee in, to and under leases or licenses or Real
Property or fixtures annexed or to be annexed thereto.

"Lender Documents" means the Credit Agreement, together with all notes,
collateral and security documents, guarantees and other documents delivered at
any time in connection therewith, all as amended, supplemented or otherwise
modified from time to time in accordance with their respective terms.

"Lenders" means the banks and other financial institutions from time to
time party to the Credit Agreement.

"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such asset, (b)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement (or any financing lease having
substantially the same economic effect as any of the foregoing) relating to
such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

"Majority Holders" means (i) at any time during the Credit Availability
Period, the Initial Purchaser, and (ii) at any time thereafter, the holders of
more than 50% in aggregate principal amount of the Notes outstanding at such
time; provided, however, that, for purposes of determining the Majority Holders
at any time, those Notes shall not be deemed outstanding which are held at such
time in the name

<PAGE> 11

of, or beneficially by, the Company or any Affiliate of the Company
(other than a member of the Morgan Stanley Group).

"Margin Stock" has the meaning assigned thereto in Regulation G, U or X of
the Board of Governors of the Federal Reserve, as the same may be amended,
supplemented or modified from time to time.

"Material Adverse Effect" means (a) a materially adverse effect on the
business, assets, operations, prospects or condition, financial or otherwise,
of the Company and the Subsidiaries (taken as a whole), (b) a material
impairment of the ability of any Obligor to perform any of its obligations
under any Note Document to which it is or will be a party or (c) a material
impairment of the rights of or benefits available to the Purchasers or holders
of Notes under any Note Document.

"Mineral Rights" means rights and interests held by third parties in the
oil, gas and other minerals estate (including mineral and royalty interests).

"Morgan Stanley" means Morgan Stanley & Co. Incorporated, a Delaware
corporation, and its successors.

"Morgan Stanley Group" means the group consisting of MS Group, Morgan
Stanley, MSLEF II, MSCP III, MSCP III Investors, MSCP Investors and all parents
and Subsidiaries of any one or more of the foregoing.

"Mortgage" has the meaning assigned to that term in Section 5.1(c).

"Mortgaged Properties" means the owned real properties of the Company
specified on Schedule 1.1(a), but shall not include any such real property sold
or otherwise disposed of by the Company in accordance with the provisions of
this Agreement.

"MS Group" means Morgan Stanley Group Inc., a Delaware corporation, and
its successors.

"MSCP Investors" means Morgan Stanley Capital Investors, L.P., a Delaware
limited partnership, and its successors.

"MSCP III" means Morgan Stanley Capital Partners, III, L.P., a Delaware
limited partnership, and its successors.

<PAGE> 12

"MSCP III Investors" means MSCP III 892 Investors, L.P., a Delaware
limited partnership, and its successors.

"MSLEF II" means The Morgan Stanley Leveraged Equity Fund II, L.P., a
Delaware limited partnership, and its successors.

"Net Cash Proceeds" means (a) with respect to any Asset Sale, the proceeds
of such Asset Sale in the form of cash or cash equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or cash equivalents and proceeds from the conversion of other Real
Property, Leaseholds and Personal Property received when converted to cash or
cash equivalents, net of (i) brokerage commissions and other reasonable fees
and expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale; (ii) taxes actually paid or payable in the year
such Asset Sale occurs or in the following year as a result thereof; (iii)
payments required to be made to repay Debt or any other obligation then
outstanding that is secured by a Lien on the property if such Lien is senior to
the Lien thereon of the Collateral Agent for the benefit of the Secured Parties
and is permitted to exist under Section 6.10; and (iv) appropriate amounts to
be provided as a reserve, in accordance with GAAP, against any liabilities
associated with such Asset Sale (provided that to the extent and at such time
any such amounts are released, such amounts shall constitute Net Cash
Proceeds); and (b) with respect to any issuance of Debt or equity securities,
the cash proceeds thereof net of (i) underwriting or placement fees and
expenses directly incurred in connection therewith (including fees and expenses
of counsel) and (ii) taxes actually paid or payable in the year such issuance
occurs or in the following year as a result thereof.

"Note Documents" means this Agreement, the Notes, the Guarantee
Agreements, the Indemnity Agreement, the Intercreditor Agreement and the
Security Documents.

"Notes" means the Company's Senior Secured Second Priority Notes
substantially in the form set forth as Exhibit A hereto.

"Obligor" means the Company, the Guarantor and any Subsidiary Guarantor.

"Order" means the Order entered by the Court approving confirmation of the
Plan of Reorganization, the Recapitalization, the Note Documents, the Other
Transaction

<PAGE> 13
Documents and all related documentation contemplated herein or therein.

"Other Transaction Documents" means the Lender Documents, the Third
Priority Note Documents and the Recapitalization Documents.

"Parent Guarantee Agreement" means the Parent Guarantee Agreement,
substantially in the form of Exhibit B, made by the Guarantor in favor of the
Purchasers and the holders of the Notes, as amended, supplemented or otherwise
modified from time to time.

"Permitted Cash Equivalents" means any investment in:

(i) certificates of deposit with final maturities of two years or
less issued by commercial banks organized under the laws of the United
States of America having capital and surplus in excess of $100,000,000;

(ii) commercial paper with minimum grade of A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc.;

(iii) a direct obligation of the United States of America or of a
United States of America agency with a maturity of two years or less;

(iv) money market preferred stock rated "A" or above by Standard &
Poor's Corporation or Moody's Investors Service, Inc.;

(v) shares of money market mutual or similar funds having assets in
excess of $100,000,000; and

(vi) bank accounts maintained in any commercial bank.

"Permitted Holders" means any of Morgan Stanley, Putnam Investment
Management, GEM Capital Management Inc., The Prudential Insurance Company of
America, Loews Corporation and Hanwa Co., Limited, or any of their respective
Affiliates or any funds or institutional accounts managed or advised by any of
the foregoing.

"Permitted Priority Liens" means:

(i) Liens securing the obligations of the Company under the Lender
Documents;

<PAGE> 14

(ii) Liens securing Debt permitted pursuant to, and subject to the
terms and conditions set forth in, Section 6.01(c) of the Credit
Agreement (as in effect on the Effective Date); provided, however, that
no Lien securing Debt permitted pursuant to Section 6.01(c) of the Credit
Agreement (as in effect on the Effective Date) shall extend to or cover
any Real Property, Leaseholds or Personal Property other than the
equipment being financed with such Debt or other equipment financed by
such lender or lessor or its Affiliates;

(iii) Liens in effect on the Real Property, Leaseholds or Personal
Property of the Company, the Guarantor or any Subsidiary of the Company
at the time of purchase thereof by the Company, the Guarantor or such
Subsidiary or at the time of purchase of such Subsidiary by the Company
or another Subsidiary of the Company (in each case whether by merger,
consolidation, purchase of assets or otherwise); provided, however, that
(x) such Liens are not incurred, created or assumed in connection with,
or in contemplation of, such purchase, (y) such Liens do not extend to or
cover any Real Property, Leaseholds or Personal Property of the Company,
the Guarantor or any Subsidiary of the Company other than the Real
Property, Leaseholds or Personal Property that are, or the Real Property,
Leaseholds or Personal Property of the Subsidiary that is, the subject of
such purchase and (z) such Liens do not (A) materially interfere with the
use, occupancy and operation of any Mortgaged Property or (B) materially
reduce the fair market value of such Mortgaged Property but for such
Lien;

(iv) Liens for taxes not yet due and payable, and Liens for taxes
being contested in good faith;

(v) Liens imposed or given by law, which were incurred in the
ordinary course of business, such as carriers', warehousemen's and
mechanics' liens, Liens imposed under the Packers and Stockyards Act of
1921, as amended from time to time, and other similar Liens arising in
the ordinary course of business and (x) which do not in the aggregate
materially detract from the value of such assets or materially impair the
use thereof in the operation of the business of the Company, the
Guarantor or any Subsidiary of the Company or (y) which are being
contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the assets
subject to any such Lien;

<PAGE> 15
(vi) Liens consisting of pledges or deposits in connection with
workers' compensation, unemployment insurance and other social security
legislation;

(vii) Liens consisting of deposits made in the ordinary course of
business (including surety bonds and appeal bonds) to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations;

(viii) Liens, easements, rights-of-way, zoning restrictions,
Mineral Rights and other similar restrictions, charges or encumbrances
that do not interfere with the ordinary conduct of the business of the
Company and which do not materially detract from the value of the
property to which they attach or materially impair the use thereof by the
Company, the Guarantor or any Subsidiary of the Company;

(ix) Liens upon hog finishing facilities acquired or constructed by
the Company after the Effective Date to secure New Finishing Facility
Debt (as defined in the Credit Agreement, as in effect on the Effective
Date) incurred (x) in accordance with Section 6.01(f) of the Credit
Agreement (as in effect on the Effective Date) or (y) in the form of
Capital Lease Obligations in transactions permitted by Section 6.03 of
the Credit Agreement (as in effect on the Effective Date);

(x) Liens on any Hedging Contract resulting solely from the purchase
of such Hedging Contract on margin; and

(xi) Liens (including Liens consisting of Mineral Rights) in
existence on the Effective Date and identified on Schedule 1.1(b).

"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.

"Personal Property" of any Person means all the right, title and interest
of such Person in assets, properties and items, other than Real Property and
Leaseholds.

"Plan of Reorganization" means the Debtors' Second Amended Joint Plan of
Reorganization under Chapter 11 of the

<PAGE> 16

Bankruptcy Code dated September 5, 1996 and confirmed by the Court on
September 6, 1996.

"Pledge Agreement" has the meaning set forth in Section 5.1(b).

"Purchaser" means the Initial Purchaser and each other Person that becomes
a Purchaser pursuant to Section 8.6, and their respective successors, and
"Purchasers" means all of the foregoing.

"Purchase Commitment" means, (i) with respect to the Initial Purchaser,
initially $10,000,000 less any amount assigned to another Person that becomes a
Purchaser after the date hereof (a "Subsequent Purchaser") pursuant to Section
8.6 and (ii) with respect to any Subsequent Purchaser, the amount of Purchase
Commitment assigned to such Purchaser.

"Real Property" of any Person means all the fee ownership right, title and
interest of such Person in and to land, improvements therein and thereon and
fixtures annexed or to be annexed thereto, other than Leaseholds.

"Recapitalization" means the recapitalization of the Company in accordance
with the Recapitalization Documents.

"Recapitalization Documents" means the Plan of Reorganization and the
Debtors' Amended Joint Disclosure Statement to the Plan of Reorganization dated
July 29, 1996, and approved by the Court on September 6, 1996, including the
exhibits and schedules thereto, and all material agreements, documents and
instruments executed and delivered pursuant thereto or in connection therewith,
in each case as amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof and hereof.

"Reduction Event" means (i) any issuance of Debt or equity securities by
the Company, the Guarantor or any Subsidiary, other than any issuance of Debt
or equity securities (x) pursuant to this Agreement or the Credit Agreement or
(y) pursuant to any Other Transaction Document (other than the Credit
Agreement) as in effect on the date hereof or (ii) an Asset Sale by the
Company, the Guarantor or any Subsidiary.

"Secured Parties" has the meaning set forth in the Security Agreement.

<PAGE> 17

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

"Security Agreement" has the meaning set forth in Section 5.1(b).

"Security Documents" means the Security Agreement, the Pledge Agreement,
the Assignment of Contracts, the Mortgages and all other instruments or
documents delivered by any Obligor in order to grant, perfect or protect Liens
in favor of the Collateral Agent for its benefit and the benefit of the
Purchasers and the holders of the Notes and securing the Obligors' obligations
hereunder and under such instruments and documents, as such instruments and
documents may be amended, supplemented, or otherwise modified from time to
time.

"Subsidiary" means, with respect to any Person, any corporation or other
entity of which a majority of the capital stock or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly controlled by such Person. Unless specified to the contrary,
"Subsidiary" means a Subsidiary of the Company.

"Subsidiary Guarantee Agreement" means the Subsidiary Guarantee Agreement,
substantially in the form of Exhibit C, made by each Subsidiary Guarantor in
favor of the Purchasers and the holders of the Notes, as amended, supplemented
or otherwise modified from time to time.

"Subsidiary Guarantor" means each direct or indirect domestic Subsidiary
of the Company other than any Inactive Subsidiary.

"Third Priority Note Documents" means the Third Priority Notes, the Third
Priority Note Indenture, and all material agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith, in each
case as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof and hereof.

"Third Priority Note Indenture" means the Indenture dated as of September
17, 1996 among the Company, the Guarantor and the Third Priority Note Trustee.

"Third Priority Note Trustee" means Fleet National Bank, as Trustee for
the holders of Third Priority Notes.

<PAGE> 18

"Third Priority Notes" means the Company's 11% Senior Secured Notes due
2003 (Partial Pay-in-Kind).

"Time of Purchase" has the meaning set forth in Section 2.2(a).

"Transfer" means any disposition of Notes that would constitute a sale
thereof under the Securities Act.

SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect as of the
date of this agreement in the United States of America, applied on a consistent
basis (except for changes concurred in by the Company's independent public
accountants) ("GAAP"); provided, however, that for purposes of determining
compliance with the covenants contained in Article VI, all accounting terms
herein shall be interpreted and all accounting determinations hereunder shall
be made in accordance with GAAP as in effect on the date of this Agreement and
applied on a basis consistent with the application used in the financial
statements referred to in Section 3.6.

ARTICLE II

PURCHASE AND SALE OF NOTES

SECTION 2.1. Commitments to Purchase. (a) From time to time during the
Credit Availability Period, the Company may issue and sell to each Purchaser
and, subject to the terms and conditions set forth herein and in reliance on
the representations and warranties of the Company contained herein, such
Purchaser agrees to purchase from the Company, Notes in an aggregate principal
amount at any one time outstanding not to exceed such Purchaser's Purchase
Commitment. The purchase price for the Notes shall be 100% of the principal
amount thereof. Within the foregoing limits, the Company may prepay Notes
pursuant to Section 4 of the Notes and sell additional Notes to each Purchaser
at any time during the Credit Availability Period.

(b) The obligation of each Purchaser hereunder to purchase the Notes will
expire on the earliest of (i) the delivery to the Purchasers by the Company of
a notice of termination of the obligations of the Purchasers hereunder, (ii)
September 17, 1998 and (iii) the occurrence of any

<PAGE> 19

Event of Default specified in clause (vi) or (vii) of Section 3(a) of
the Notes.

SECTION 2.2. Closing. (a) The Company shall give each Purchaser not less
than five Business Days' notice of the closing of each purchase and sale of the
Notes pursuant to Section 2.1(a) (each such closing, a "Closing"). The notice
of each Closing shall specify (i) the date (which date shall be a Business Day)
and time of such Closing and (ii) the aggregate principal amount of Notes to be
purchased at such Closing. The date and time of any Closing is referred to
herein as a "Time of Purchase."

(b) Unless any applicable condition specified in Article V has not been
satisfied with respect to any purchase and sale of Notes, such Purchaser shall,
not later than the Time of Purchase with respect to such purchase and sale,
deliver by wire transfer to the account number of the Company specified by the
Company in writing no later than 9:00 a.m. (New York City time) on the Business
Day immediately preceding such Time of Purchase immediately available funds in
an amount equal to the aggregate purchase price of the Notes so purchased.

(c) At each Closing, against payment as set forth in subsection (b)
above, the Company shall deliver to each Purchaser a single Note representing
the aggregate principal amount of Notes purchased hereunder at such Closing,
registered in the name of such Purchaser, or, if requested by such Purchaser,
separate Notes in other denominations of not less than $500,000 and registered
in such name or names as shall be designated by such Purchaser by notice to the
Company at least two Business Days prior to the Time of Purchase applicable to
such Closing.

<PAGE> 20

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE GUARANTOR

Each of the Company and the Guarantor represents and warrants (including,
in the case of any such representation and warranty made or deemed made before
the consummation of the Recapitalization, at the time such representation and
warranty is made or deemed made and immediately after giving effect to the
consummation of the Recapitalization) that as of the Effective Date and each
Time of Purchase:

SECTION 3.1. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified to do business in, and is in good
standing under, the laws of the State of Missouri, Texas and every jurisdiction
in which the Company is required to be so qualified except where the failure so
to qualify would not result in a Material Adverse Effect. The Company is duly
qualified under the laws of the State of Missouri to engage in farming and to
own agricultural land in the State of Missouri. The Guarantor is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Delaware, and is duly qualified to do business in, and
is in good standing under the laws of every jurisdiction where such
qualification is required except where the failure to so qualify would not
result in a Material Adverse Effect.

SECTION 3.2. Authorization, Execution and Enforceability. The execution,
delivery and performance by each Obligor of each of the Note Documents and the
Other Transaction Documents to which it is a party and the issuance by the
Company of the Notes have been duly and validly authorized and are within the
corporate powers of such Obligor or the Company, as the case may be. Each of
the Note Documents (other than the Notes) and the Other Transaction Documents
to which any Obligor is a party has been duly executed and delivered by such
Obligor and constitutes its valid and binding agreement, enforceable in
accordance with its terms except to the extent that enforcement may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by equitable principles (regardless
of whether enforcement is sought in equity or at law). When executed and
delivered by the Company against payment therefor in accordance with the terms
hereof, the Notes will constitute valid and binding obligations of the

<PAGE> 21

Company, enforceable in accordance with their terms except to the
extent that enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by equitable principles (regardless of whether enforcement is sought in equity
or at law).

SECTION 3.3. Governmental Authorization. The execution and delivery by
each Obligor of each of the Note Documents (other than the Notes) and the Other
Transaction Documents to which it is a party did not and will not, the issuance
and sale by the Company of the Notes will not, and the consummation of the
transactions contemplated hereby and thereby will not, require any action by or
in respect of, or filing with, any governmental body, agency or governmental
official, except (i) such actions or filings that have been undertaken or made
prior to the Effective Date and that will be in full force and effect on and
after the Effective Date or that are not required to be filed on or prior to
the Effective Date and (ii) the filing of financing statements, Mortgages and
other documents delivered to the Initial Purchaser or the Collateral Agent for
filing pursuant to Section 5.1.

SECTION 3.4. No Contravention. The execution and delivery by each Obligor
of the Note Documents (other than the Notes) and the Other Transaction
Documents to which it is a party did not and will not, the issuance and sale by
the Company of the Notes will not, and the consummation of the transactions
contemplated hereby and thereby will not, contravene, violate or constitute a
default under any provision of applicable law or regulation, the certificate of
incorporation, by-laws or limited liability agreement of any Obligor or any
agreement, judgment, injunction, order, decree or other instrument binding upon
any Obligor or any of such Obligor's Subsidiaries or result in the creation or
imposition of any Lien on any asset of such Obligor or any of its Subsidiaries
other than Liens created pursuant to the Security Documents and the Other
Transaction Documents consisting of security agreements and instruments.

SECTION 3.5. Security Interests. Upon the due filing or recordation
thereof, the Security Documents will create, as security for the obligations
purported to be secured thereby, a valid and enforceable perfected security
interest in and Lien on all of the Collateral and all collateral consisting of
Real Property or Leaseholds that are then owned by any Obligor that are then
the subject of the Security Documents, subject only to Liens permitted pursuant
to Section 6.10; provided, however, that neither of the following shall cause
this representation and warranty

<PAGE> 22

to be deemed inaccurate: (i) with respect to any Collateral, failure
to file any financing statement (but only if a duly completed financing
statement shall have been delivered to the Initial Purchaser or the Collateral
Agent in accordance with Section 5.1(e)); and (ii) with respect to any such
Collateral consisting of Real Property or Leaseholds, failure to record any
Mortgage (but only if a duly executed counterpart of such Mortgage shall have
been delivered to the Initial Purchaser or the Collateral Agent in accordance
with Section 5.1(c)).

SECTION 3.6. Financial Information.

(a) The consolidated balance sheets of PSF, Inc. and PSF Finance L.P.
as of December 31, 1995 and the related statements of income and cash flow for
the fiscal year then ended, reported on by Ernst & Young LLP, copies of which
have been delivered to the Initial Purchaser, fairly present, in conformity
with GAAP, the financial position as of such date and the results of operations
and cash flows for such fiscal year of PSF, Inc., PSF Finance L.P. and PSF,
Inc. and PSF Finance L.P., combined.

(b) The combined and combining balance sheets of PSF, Inc. and PSF
Finance L.P. as of June 30, 1996 and the related statements of income and cash
flow for the three months then ended, copies of which have been delivered to
the Initial Purchaser, fairly present, in conformity with GAAP, the financial
position as of such date and the results of operations and cash flows for such
three-month period (subject to normal year-end adjustments) of PSF, Inc., PSF
Finance L.P. and PSF, Inc. and PSF Finance L.P., combined.

(c) Each of the Company and the Guarantor has heretofore delivered to
the Initial Purchaser the unaudited pro forma balance sheet of each of
the Company and the Guarantor as of June 30, 1996, as adjusted for the issuance
and sale of the Notes and the consummation of the transactions contemplated by
the Note Documents and the Other Transaction Documents. Such pro forma balance
sheets have been prepared in good faith by the Company according to "fresh
start" reporting principles, based on the assumptions used to prepare the pro
forma financial information contained in the Business Plan (as defined in the
Credit Agreement (as in effect on the Effective Date)) (which assumptions are
believed by the Company and the Guarantor on the date hereof to be reasonable),
are based on the best information available to the Company and the Guarantor as
of the date of delivery thereof, accurately reflect all adjustments required to
be made to give effect to the transactions contemplated by the Note Documents
and Other

<PAGE> 23

Transaction Documents and present fairly on a pro forma basis the estimated
consolidated financial position of the Company and the Guarantor and their
respective Consolidated Subsidiaries as of June 30, 1996, assuming that the
transactions contemplated by the Note Documents and the Other Transaction
Documents had actually occurred on such date.

SECTION 3.7. Full Disclosure. The information heretofore furnished by the
Company or any other Obligor to any Purchaser for purposes of or in connection
with this Agreement or any transaction contemplated hereby does not, and all
such information hereafter furnished by the Company or any other Obligor to any
Purchaser will not (in each case taken together and on the date as of which
such information is furnished), contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they are made,
not misleading. The Company has disclosed to each Purchaser any and all facts
that materially and adversely affect the business, operations or financial
condition of the Company and its Subsidiaries, taken as a whole, or the ability
of the Company to perform its obligations under any Note Document or any Other
Transaction Document.

SECTION 3.8. Real Property; Leasehold Interests. (a) Each Obligor has
good and marketable title to, or valid leasehold interests in, all its material
properties and assets, except for minor defects in title that do not interfere
with its ability to conduct its business as currently conducted or to utilize
such properties and assets for their intended purposes. All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.10 and Liens that will be discharged in accordance with
the Plan of Reorganization.

(b) Since the Effective Date, each Obligor has complied with all
obligations under all material leases to which it is a party and all such
leases are in full force and effect. Each Obligor enjoys peaceful and
undisturbed possession under all such material leases.

(c) As of the Effective Date, no Obligor has received any notice of, nor
has any knowledge of, any pending or contemplated condemnation proceeding
affecting the Mortgaged Properties or any sale or disposition thereof in lieu
of condemnation.

(d) As of the Effective Date, no Obligor is obligated under any right of
first refusal, option or other

<PAGE> 24

contractual right to sell, assign or otherwise dispose of any Mortgaged
Property or any interest therein.

SECTION 3.9. Capitalization. As of the Effective Date, the authorized
Capital Stock of the Company consists of 1,000 shares of common stock, $.01 par
value. After giving effect to the transactions contemplated by the Note
Documents and the Other Transaction Documents, on the Effective Date (i)
10,000,000 membership interests of the Guarantor will be issued and outstanding
and (ii) 1,000 shares of common stock of the Company will be issued and
outstanding, and each will be owned by such persons and to such extent as set
forth on 3.9(a). The shares of Capital Stock so indicated on Schedule 3.9(a)
have been duly and validly issued, and are fully paid and non-assessable.
Schedule 3.9(b) sets forth as of the Effective Date the name and jurisdiction
of incorporation of each Subsidiary of the Guarantor or the Company and, as to
each such Subsidiary, the percentage of each class of capital stock owned by
the Guarantor, the Company or any Subsidiary of the Guarantor or the Company.

SECTION 3.10. Solicitation; Access to Information. Neither the Company
nor any Person acting on behalf of the Company has, either directly or
indirectly, sold or offered for sale to any Person any of the Notes or any
other similar security of the Company except as contemplated by this Agreement
and by the Other Transaction Documents, and the Company represents that neither
the Company nor any person acting on its behalf other than the Purchasers and
their respective Affiliates will sell or offer for sale to any Person any such
security to, or solicit any offers to buy any such security from, or otherwise
approach or negotiate in respect thereof with, any Person or Persons so as
thereby to bring the issuance or sale of any of the Notes within the provisions
of Section 5 of the Securities Act.

SECTION 3.11. Non-Fungibility. When the Notes are issued and delivered
pursuant to this Agreement, the Notes will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as securities that are (i)
listed on a national securities exchange registered under Section 6 of the
Exchange Act or (ii) quoted in a U.S. automated inter-dealer quotation system.

SECTION 3.12. Not an Investment Company. The Company is not an investment
company, open-end investment trust, unit investment trust or face-amount
certificate company within the meaning of the Investment Company Act of 1940,
as amended.

<PAGE> 25

SECTION 3.13. Solvency. Immediately after the consummation of the
transactions contemplated by the Note Documents and the Other Transaction
Documents to occur on the Effective Date, (i) the fair value of the assets of
each Obligor, at a fair valuation, will exceed its debts and liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable value of
the property of each Obligor will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) each Obligor will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (iv) each Obligor will not have
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

SECTION 4.1. Purchase for Investment; Authority; Binding Agreement. Each
Purchaser represents and warrants to the Company that at each Time of Purchase:

(a) such Purchaser is acquiring its Notes solely for investment
purposes and not with a view toward, or for sale in connection with, any
distribution thereof;

(b) such Purchaser is an Accredited Investor within the meaning of
Rule 501(a) under the Securities Act and the Notes to be acquired by it
pursuant to this Agreement are being acquired for its own account and
such Purchaser will not offer, sell, transfer, pledge, hypothecate or
otherwise dispose of the Notes unless pursuant to a transaction
either registered under, or exempt from registration under, the
Securities Act; and

(c) such Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating the merits and
risks of its investment in the Notes and such Purchaser is capable of
bearing the economic risks of such investment.

<PAGE> 26

ARTICLE V

CONDITIONS PRECEDENT

SECTION 5.1. Conditions to Effectiveness. This Agreement shall become
effective on the date (the "Effective Date") on which all of the following
conditions have been satisfied:

(a) this Agreement shall have been duly executed and delivered by
the Company to the Initial Purchaser;

(b) a security agreement, substantially in the form of Exhibit D
(such agreement, as amended, supplemented or otherwise modified from time
to time, being the "Security Agreement"), and a pledge agreement,
substantially in the form of Exhibit F (such agreement, as amended,
supplemented or otherwise modified from time to time, being the "Pledge
Agreement"), shall be duly executed and delivered by the Company and in
favor of the Collateral Agent for its benefit and the benefit of the
Purchasers, the holders of the Notes and the other secured parties named
therein;

(c) deeds of trust or mortgages covering the Real Property and
Leasehold Interests of each Obligor shall have been duly executed and
delivered by the relevant Obligor in favor of the Collateral Agent for
its benefit and the benefit of the Purchasers, the holders of the Notes
and the other secured parties named therein, substantially in the form of
Exhibit C (such deeds of trust or mortgages (as amended, supplemented or
otherwise modified from time to time) that are executed by the Obligors,
being the "Mortgages");

(d) each of the Parent Guarantee Agreement, the Subsidiary
Guarantee Agreement, the Assignment of Contracts, the Indemnity Agreement
and the Intercreditor Agreement shall have been duly executed and
delivered by each of the parties thereto;

(e) Uniform Commercial Code financing statements showing each
Obligor as debtor and the Collateral Agent as secured party shall have
been filed or delivered to the Initial Purchaser or the Collateral Agent
for filing and all Pledged Securities (as defined in the Pledge
Agreement) shall have been duly and validly pledged thereunder to the
Collateral Agent and certificates representing such securities,
accompanied by instruments of transfer and stock powers endorsed in

<PAGE> 27

blank, shall be in the actual possession of the Senior Collateral Agent
(as defined in the Security Agreement);

(f) each of the Other Transaction Documents shall be in full force
and effect and in form and substance satisfactory to the Initial
Purchaser and each of the conditions to the parties' obligations under
the Other Transaction Documents shall be satisfied or, with the prior
written consent of the Initial Purchaser, waived and the Initial
Purchaser shall have received a copy of each opinion, report or other
document required to be delivered by or on behalf of any Obligor, with a
letter from each person delivering any such opinion, report or other
document authorizing reliance thereon by the Initial Purchaser, all in
form and substance satisfactory to the Initial Purchaser;

(g) the Recapitalization shall have been consummated in accordance
with the Other Transaction Documents;

(h) the Initial Purchaser shall have received evidence satisfactory
to it of the consummation of all other financings and transactions
contemplated to be consummated prior to or on the Effective Date,
including without limitation (i) the closing of the Credit Agreement,
(ii) the issuance of the Third Priority Notes, (iii) the entry by the
Court, on or prior to December 31, 1996, of the Order approving
confirmation of the Plan of Reorganization, the Note Documents and the
Other Transaction Documents and the transactions contemplated thereby,
which Order shall not be subject to any appeal or stay and with respect
to which the Court shall not have entered any reversal, modification or
vacatur, in whole or in part, and (iv) the emergence of the Company and
the Guarantor from Chapter 11 proceedings and the consummation of the
transactions contemplated by the Plan of Reorganization in accordance
with the Plan of Reorganization, all on terms and conditions satisfactory
to the Initial Purchaser;

(i) the Initial Purchaser shall have received an opinion, dated the
Effective Date, of each of Weil, Gotshal & Manges LLP, counsel for the
Company and the Guarantor, and Sonnenschein, Nath & Rosenthal, Missouri
counsel for the Company, in each case in form and substance satisfactory
to the Initial Purchaser and substantially to the effect set forth in
Exhibits H and I respectively, and shall have received, in form and

<PAGE> 28

substance satisfactory to the Initial Purchaser, such corporate
resolutions, certificates and other documents as the Initial Purchaser
shall reasonably request in writing prior to the Effective Date;

(j) the Initial Purchaser shall have received evidence satisfactory
to it that all governmental, shareholder and third party consents and
approvals necessary in connection with the Recapitalization and the other
transactions contemplated by the Note Documents and by the Other
Transaction Documents have been received;

(k) there shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect the Recapitalization
or the Notes or any of the transactions contemplated by the Note
Documents or by the Other Transaction Documents or that could have a
material adverse effect on the Recapitalization or the Notes or any of
the other transactions contemplated by the Note Documents or the Other
Transaction Documents or on the business, condition (financial or
otherwise), operations, performance, properties or prospects of the
Company;

(l) there shall not exist any Default or Event of Default;

(m) the representations and warranties of the Company contained in
each Note Document shall be true and correct in all material respects on
and as of the Effective Date as if made on and as of such time and the
Company shall have performed and complied in all material respects with
all covenants and agreements required by each Note Document to be
performed by it or complied with by it at or prior to the Effective Date;
and

(n) all reasonable expenses due and payable to the Initial
Purchaser or any of its Affiliates in connection with the transactions
contemplated by the Note Documents or the Other Transaction Documents
shall have been paid or duly provided for in full.

Upon the satisfaction of the foregoing conditions, the Initial Purchaser shall
promptly notify the Company of the Effective Date, and such notice shall be
conclusive and binding on all parties hereto.

<PAGE> 29

SECTION 5.2. Conditions to each Purchaser's Obligations to Purchase. The
obligation of each Purchaser to purchase the Notes to be issued and sold by the
Company hereunder pursuant to Section 2.1(a) is subject to the satisfaction of
the following conditions contemporaneously with each Time of Purchase:

(a) the fact that, immediately prior to such Time of Purchase, the
sum of the aggregate amount available for borrowing by the Company under
the Credit Agreement plus the aggregate amount of cash, cash equivalents
and Permitted Cash Equivalents of the Company and its Subsidiaries shall
be less than $5,000,000 and such Purchaser shall have received a
certificate from the Company to the foregoing effect;

(b) the fact that, immediately after such Time of Purchase, the
aggregate outstanding principal amount of the Notes will not exceed the
aggregate amount of the Purchase Commitments;

(c) the fact that the representations and warranties of each
Obligor contained herein and in the other Note Documents shall be true
and correct in all material respects on and as of such Time of Purchase
as if made on and as of such time;

(d) each Purchaser shall have received the Notes, duly executed by
the Company in the denominations and registered in the names specified in
or pursuant to Section 2.2(c);

(e) the fact that, immediately before and after such Time of
Purchase, there shall exist no Default or Event of Default specified in
Section 3(a)(i), 3(a)(vi), 3(a)(vii) or 3(a)(viii) of the Notes;

(f) all reasonable expenses due and payable to such Purchaser or
any of its Affiliates in connection with the transactions contemplated by
the Note Documents shall have been paid or duly provided for in full;

(g) the fact that, at the time of their issuance, the Notes shall
not be of the same class (within the meaning of Rule 144A under the
Securities Act) as securities that are (i) listed on a national
securities exchange registered under Section 6 of the Exchange Act or
(ii) quoted in a U.S. automated inter-dealer quotation system; and

<PAGE> 30

(h) the fact that no order, decree, injunction or judgment
enjoining the issuance of the Notes shall be in effect.

Each purchase and sale of Notes hereunder shall be deemed to be a
representation and warranty by the Company at the Time of Purchase of such
purchase and sale as to the facts specified in clauses (a), (b), (c), (e), (g)
and (h) of this section.

SECTION 5.3. Conditions to the Company's Obligations to Sell. The
obligations of the Company to issue and sell to each Purchaser the Notes
pursuant to this Agreement are subject to the satisfaction, at or prior to each
Time of Purchase, of the following conditions:

(a) the representations and warranties of such Purchaser contained
herein shall be true and correct in all material respects on and as of
such Time of Purchase as if made on and as of such time and such
Purchaser shall have performed and complied in all material respects with
all agreements required by this Agreement to be performed or complied
with by such Purchaser at or prior to such Time of Purchase; and

(b) the issue and sale of the Notes by the Company shall not be
prohibited by any applicable law, court order or governmental regulation.

ARTICLE VI

COVENANTS

Each of the Company and the Guarantor hereby agrees that during the Credit
Availability Period and thereafter so long as any Notes remain outstanding and
unpaid or any other amount is owing to any Purchaser or any holder from time to
time of the Notes, and for the benefit of such Purchasers and such holders:

SECTION 6.1. Information. The Company and the Guarantor will deliver to
each Purchaser and each holder of Notes:

(a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, the consolidated balance sheets
of the Company and the Guarantor as of the end of such fiscal year and
the related consolidated statements of income and cash flows for such
fiscal year, setting forth in each case

<PAGE> 31

in comparative form the figures for the previous fiscal year and the
figures for such fiscal year, all reported on in a manner acceptable to
the Commission without qualification by independent public accountants of
nationally recognized standing;

(b) as soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, the consolidated balance sheets of the Company and the Guarantor
as of the end of such quarter and the related consolidated statements of
income and cash flows for such quarter and for the portion of the fiscal
year of the Company and the Guarantor ended at the end of such quarter,
setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the Company's and
the Guarantor's previous fiscal year, all certified (subject to footnote
presentation and normal year-end adjustments) as to fairness of
presentation, generally accepted accounting principles and consistency by
the chief financial officer or the chief accounting officer of each of
the Company and the Guarantor;

(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer or the chief accounting officer of each of the
Company and the Guarantor stating that no Default has occurred and is
continuing on such date or, if as of the date of such delivery a Default
shall have occurred and be continuing, setting forth the details of such
Default and the action that the Company or the Guarantor, as the case may
be, is taking or proposes to take with respect thereto;

(d) together with each delivery of financial statements pursuant to
(a) above, a written statement by the independent public accountants
giving the report thereon (i) stating that their audit examination has
included a review of the terms of this Agreement as it relates to
accounting matters, (ii) stating whether, in connection with their audit
examination, any Default has come to their attention, and if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof, and (iii) stating that based on their audit
examination nothing has come to their attention that causes them to
believe that the information contained in the certificate delivered
therewith pursuant to (c) above is not correct;

<PAGE> 32

(e) within ten days after any officer of the Company or the
Guarantor obtains knowledge of a Default, a certificate of the chief
financial officer or the chief accounting officer of the relevant entity
setting forth the details thereof and the action that such entity is
taking or proposes to take with respect thereto;

(f) promptly upon the mailing thereof to the members of the
Guarantor or the shareholders of the Company generally, copies of all
financial statements, reports and proxy statements so mailed;

(g) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q
and 8-K (or their equivalents) that the Company or the Guarantor has
filed with the Commission; and

(h) from time to time such additional information regarding the
financial position or business of any of the Guarantor, the Company and
its Subsidiaries as any Purchaser or the holder of any Note may
reasonably request.

SECTION 6.2. Inspection of Property, Books and Records; Consultation with
Management. (a) Each of the Company and the Guarantor will keep, and will
cause each Subsidiary of the Company to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to their respective businesses and activities; and
will permit, and will cause each Subsidiary of the Company to permit,
representatives of the Purchasers to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books
and records and to discuss their respective affairs, finances and accounts with
their respective directors, officers, employees and independent public
accountants, all at such reasonable times and as often as may be desired.

(b) In addition to the foregoing, the Company and the Guarantor will make
their respective officers and directors available from time to time to
representatives of the Purchasers for consultation and advice regarding their
affairs and operations, at such times and in such manner as may be requested by
the Purchasers.

<PAGE> 33

SECTION 6.3. Supplemental Information. If at any time the Company is not
subject to the requirements of Section 13 or 15(d) of the Exchange Act, the
Company will promptly furnish at its expense, upon request, for the benefit of
holders from time to time of Notes, to holders of Notes and prospective
purchasers of Notes information satisfying the requirements of subsection
(d)(4)(i) of Rule 144A (or any successor provision thereof) under the
Securities Act.

SECTION 6.4. Use of Proceeds. The proceeds from the issuance and sale of
the Notes by the Company pursuant to this Agreement shall be used for general
corporate purposes, including the repayment or prepayment of any Debt to the
extent permitted hereunder. None of the proceeds from the Notes have been or
will be used, directly or indirectly, for the purpose of purchasing or carrying
any Margin Stock, for the purpose of reducing or retiring any indebtedness that
was originally incurred to purchase or carry any Margin Stock or for any other
purpose which might cause any of the loans under this Agreement to be
considered a "purpose credit" within the meaning of Regulation G, U or X of the
Board of Governors of the Federal Reserve.

SECTION 6.5. Restrictions on Certain Amendments. Without the consent of
the Majority Holders, neither the Company nor the Guarantor will permit any
waiver, modification, amendment or release of any Third Priority Note Document
that would shorten the average life or stated final maturity of, or require any
earlier scheduled principal payment date or date for the payment of any cash
interest on, any Debt outstanding thereunder.

SECTION 6.6. Investment Company Act. Neither the Company nor the
Guarantor will be or become an investment company, open-end investment trust,
unit investment trust or face-amount certificate company within the meaning of
the Investment Company Act of 1940, as amended.

SECTION 6.7. Compliance with Third Priority Note Indenture. Each of the
Company and the Guarantor will comply with each of the covenants set forth in
Article X of the Third Priority Note Indenture as in effect on the Effective
Date.

<PAGE> 34

SECTION 6.8. Mergers, Consolidations, Etc. (a) The Guarantor shall not
consolidate with or merge into any other Person or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all its properties
and assets as an entirety, unless either (i) the Guarantor shall be the
continuing Person, or (ii) the Person (if other than the Guarantor) formed by
such consolidation or into which the Guarantor is merged or the Person which
acquires by conveyance, transfer, lease or disposition the properties and
assets of the Guarantor (the "Surviving Entity") shall be a corporation duly
organized and validly existing under the laws of the United States of America
or any state thereof and shall expressly assume, by an amendment or supplement
hereto, executed and delivered to each Purchaser and each holder of Notes, in
form satisfactory to each such Purchaser and holder, the Parent Guarantee
Agreement and the performance and observance of any covenant of this Agreement
and the Security Documents on the part of the Guarantor to be performed and
observed and this Agreement and the Security Documents shall remain in full
force and effect; and

(i) immediately after giving effect to such
transaction, and treating any Debt incurred by the
Guarantor as a result of such transaction as having been
incurred at the time of such transaction, (A) the Guarantor
or the Surviving Entity would not be liable with respect to
any Debt which is not permitted under Section 10.8 of the
Third Priority Note Indenture (as in effect on the date
hereof) and (B) the Consolidated Net Worth of the
Guarantor, the Company or the Surviving Entity and their
Subsidiaries would be no less than the Consolidated Net
Worth of the Guarantor, the Company and their Subsidiaries
immediately prior to such transaction;

(ii) no Event of Default under Section 3 of the Notes
has occurred or is continuing at the time of such
transaction; and

(iii) the Guarantor has delivered to each Purchaser
and each holder of Notes a certificate signed by the
chairman of the board, the chief executive officer, the
president or the treasurer of the Guarantor, stating that
such consolidation, merger, conveyance, transfer, lease or
acquisition and, if an amendment or supplement is

<PAGE> 35
required in connection with such transaction, such amendment
or supplement complies with this Section and that all conditions
precedent herein provided for relating to such transaction have
been complied with.

(b) The Company shall not consolidate with or merge into any other Person
or permit any other Person to consolidate with or merge into the Company or
transfer, convey, sell, lease or otherwise dispose of all or substantially all
of its properties or assets as an entirety, unless:

(1) the Company is the surviving Person; or

(2) in case the Company shall consolidate with or merge with or into
another Person or transfer, convey, sell, lease or otherwise dispose of
all or substantially all of its properties or assets as an entirety, and
the Company is not the surviving Person (a "Non-Surviving Combination"),
the Person formed by such consolidation or into which the Company is
merged or the Person which acquires by transfer, conveyance, sale, lease
or otherwise the assets of the Company substantially as an entirety (for
purposes of this Section 6.8, a "Successor Company") shall be a
corporation organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and
shall expressly assume, by an amendment or supplement hereto, executed
and delivered to each Purchaser and each holder of Notes in form
satisfactory to each such Purchaser and holder, the due and punctual
payment of the principal of (and premium, if any) and interest on all the
Notes and the performance of every covenant of this Agreement on the part
of the Company to be performed or observed; and

(i) immediately after giving effect to such
transaction, and treating any Debt incurred by the Company
as a result of such transaction as having been incurred at
the time of such transaction, (A) the Company or the
Successor Company would not be liable with respect to any
Debt which is not permitted under Section 10.8 of the Third
Priority Note Indenture (as in effect on the date hereof)
and (B) the Consolidated Net Worth of the Guarantor, the
Company or the Successor Company and their Subsidiaries
would be no less than the Consolidated Net Worth of the
Guarantor, the Company and their

<PAGE> 36

Subsidiaries immediately prior to such transaction;

(ii) no Event of Default under Section 3 of the Notes
has occurred or is continuing at the time of such
transaction; and

(iii) the Company has delivered to each Purchaser and
each holder of Notes a certificate signed by the chairman
of the board, the chief executive officer, the president or
the treasurer of the Company, stating that such
consolidation, merger, conveyance, transfer, lease or
acquisition and, if an amendment or supplement is required
in connection with such transaction, such amendment or
supplement complies with this Section and that all
conditions precedent herein provided for relating to such
transaction have been complied with.

SECTION 6.9. Third Priority Notes. Neither the Guarantor nor
the Company shall permit, nor suffer any of its Subsidiaries to, purchase,
redeem, retire, defease or otherwise acquire for value, deposit any monies with
any Person with respect to, or make any payment or prepayment of the principal
of or interest on, or any other amount owing in respect of, any Third Priority
Notes other than the payment of interest on the Third Priority Notes required
pursuant to the terms thereof.

SECTION 6.10. Permitted Priority Liens. Other than Permitted
Priority Liens, the Company will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of the Company or any Subsidiary of the
Company having equal or greater priority than the Liens on the Collateral
securing the obligations of the Company under the Note Documents.

SECTION 6.11. Security Interests. (a) Except as otherwise
specified in the Security Documents or in the Intercreditor Agreement,
upon a request by the Collateral Agent, each Obligor will, and will cause each
of its Subsidiaries to, perform any and all acts and execute any and all
documents (including, without limitation, the execution, amendment or
supplementation of any financing statement and continuation statement or other
statement) for filing under the provisions of the Uniform Commercial Code and
the rules and regulations thereunder, or any other statute, rule or regulation
of any applicable federal, state

<PAGE> 37

or local jurisdiction, including any filings in local real estate land
record offices which are necessary or advisable, from time to time, in order to
grant and maintain in favor of the Collateral Agent for its benefit and the
benefit of the Purchasers and the holders of Notes a valid and perfected Lien
on the Collateral.

(b) Each Obligor shall undertake to deliver or cause to be delivered to
the Collateral Agent from time to time such other documentation, instruments,
consents, authorizations, approvals and orders as may be required pursuant to
this Section 6.11 or as the Collateral Agent or the Majority Holders shall deem
reasonably necessary or advisable to perfect or maintain the Liens or the
priority thereof for its benefit and the benefit of the Purchasers and the
holders of Notes, including, without limitation, assets that may become
Collateral after the Effective Date.

(c) The Company will cause each of its subsequently acquired or organized
Subsidiaries (other than any Inactive Subsidiary) and each of its Subsidiaries
that ceases to be an Inactive Subsidiary to execute a supplement to the
Subsidiary Guarantee Agreement and, at such time as there shall be two or more
Subsidiary Guarantors, the Company shall, and shall cause each Subsidiary
Guarantor to, execute and deliver to the Collateral Agent the Indemnity,
Subrogation and Contribution Agreement substantially in the form of Exhibit J
(as amended or modified and in effect from time to time, the "Indemnity
Agreement") and each other applicable Security Document in favor of the
Collateral Agent as shall be deemed necessary by the Majority Holders to create
a valid, perfected and enforceable Lien on and security interest in the
Collateral of such Subsidiary in favor of the Collateral Agent for its benefit
and the benefit of the Purchasers and the holders of the Notes, and the
Collateral Agent shall receive a favorable opinion, in form and substance
satisfactory to the Majority Holders, as to the legal, valid, binding and
enforceable nature of the agreements and instruments delivered to the
Collateral Agent in accordance with this clause (c).

ARTICLE VII

TRANSFERS

<PAGE> 38

SECTION 7.1. Restrictions on Transfer. From and after their respective
dates of issuance, none of the Notes shall be transferable except upon the
conditions specified in Sections 7.2 and 7.3 (which conditions are intended to
ensure compliance with the provisions of the Securities Act in respect of the
Transfer of any of such Notes or any interest therein) and Section 7.4. Each
Purchaser will cause any proposed transferee of any Notes (or any interest
therein) held by it to agree to take and hold such Notes (or any interest
therein) subject to the provisions and upon the conditions specified in this
Section 7.1 and in Sections 7.2 through 7.4.

SECTION 7.2. Restrictive Legends. (a) Each certificate for the Notes
issued to any Purchaser or to a subsequent transferee shall (unless otherwise
permitted by the provisions of Section 7.2(b) or Section 7.3) include a legend
in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE,
AND THEN ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH
IN THE NOTE PURCHASE AGREEMENT DATED AS OF SEPTEMBER 17, 1996 A COPY OF
WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE.

(b) Any holders of Notes registered pursuant to the Securities Act and
qualified under applicable state securities laws may exchange such Notes on
transfer for new securities that shall not bear the legend set forth in
paragraph (a) of this Section 7.2.

SECTION 7.3. Notice of Proposed Transfers. (a) Five Business Days prior
to any proposed Transfer (other than Transfers of Notes (i) registered under
the Securities Act, (ii) to an Affiliate of any Purchaser or a general
partnership, limited liability company or similar entity in which such
Purchaser or an Affiliate of such Purchaser is one of the general partners,
managers or entities performing similar functions or (iii) to be made in
reliance on Rule 144A under the Securities Act) of any Notes, the holder
thereof shall give written notice to the Company of such Notes of such holder's
intention to effect such Transfer, setting forth the manner and circumstances
of the proposed Transfer, and shall be accompanied by (i) such representation
letters in form and substance reasonably satisfactory to the Company to ensure
compliance with the

<PAGE> 39

provisions of the Securities Act and (ii) such letters in form and
substance reasonably satisfactory to the Company from each such transferee
stating such transferee's agreement to be bound by the terms of this Agreement.
Such proposed Transfer may be effected only if the Company shall have received
such notice of transfer, representation letters and other letters referred to
in the immediately preceding sentence, whereupon the holder of such Notes shall
be entitled to Transfer such Notes in accordance with the terms of the notice
delivered by the holder to the Company, subject to Section 7.4. Each
certificate evidencing the Notes transferred as above provided shall bear the
legend set forth in Section 7.2(a) except that such certificate shall not bear
such legend if an opinion of counsel reasonably satisfactory to the Company
addressed to the Company to the effect that neither such legend nor the
restrictions on Transfer in Sections 7.1 through 7.3 are required in order to
ensure compliance with the provisions of the Securities Act.

(b) Five Business Days prior to any proposed Transfer of any Notes to be
made in reliance on Rule 144A under the Securities Act ("Rule 144A"), the
holder thereof shall give written notice to the Company of such holder's
intention to effect such Transfer, setting forth the manner and circumstances
of the proposed Transfer and certifying that such Transfer will be made (i) in
full compliance with Rule 144A and (ii) to a transferee that (A) such holder
reasonably believes to be a "qualified institutional buyer" within the meaning
of Rule 144A and (B) is aware that such Transfer will be made in reliance on
Rule 144A. Such proposed Transfer may be effected only if the Company shall
have received such notice of transfer, whereupon the holder of such Notes shall
be entitled to Transfer such Notes in accordance with the terms of the notice
delivered by the holder to the Company. Each certificate evidencing the Notes
transferred as above provided shall bear the legend set forth in Section
7.2(a).

SECTION 7.4. Transfer to Single Transferee. Unless the Company has
otherwise consented, any Transfer of Notes at any time by any holder thereof,
except in the case of any transfer by the Initial Purchaser or any of its
Affiliates to any of their respective Affiliates, shall be made to a single
transferee and shall include all Notes held by such holder at such time.

<PAGE> 40

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1. Notices. All notices, demands and other communications to
any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages hereof, or such other address as such party may hereinafter
specify for the purpose to the other parties. Each such notice, demand or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified on the signature page
hereof, (ii) if given by mail, four days after such communication is deposited
in the mail with first class postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address specified in this
Section.

SECTION 8.2. No Waivers; Powers and Remedies Cumulative; Amendments. (a)
No failure or delay on the part of any party in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.

(b) No right or remedy herein conferred upon or reserved to the Purchasers
or the holders from time to time of Notes is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy. Every power and remedy given by this Agreement,
by the Notes or any other Note Document or by law may be exercised from time to
time, and as often as shall be deemed expedient, by the Purchasers or the
holders from time to time of the Notes.

(c) Any provision of this Agreement or the Notes may be amended,
supplemented or waived if, but only if, such amendment, supplement or waiver is
in writing and is signed by the Company and the Majority Holders, any provision
of the Security Documents may be amended, supplemented or waived in accordance
with the terms thereof, and the security interest in any Collateral may be
released only with the consent of the Majority Holders; provided, that without
the consent of each Purchaser and each holder of any

<PAGE> 41

Note affected thereby, an amendment, supplement or waiver may not (a)
reduce the aggregate principal amount of Notes whose holders must consent to an
amendment, supplement or waiver, (b) reduce the rate or extend the time for
payment of interest on any Note, (c) reduce the principal amount of or extend
the stated maturity of any Note, (d) make any Note payable in money or property
other than as stated in the Notes or (e) release all or substantially all of
the Collateral.

SECTION 8.3. Indemnification. The Company agrees to indemnify and hold
harmless each Purchaser, its Affiliates, each Person, if any, who controls such
Purchaser, within the meaning of the Securities Act or the Exchange Act (a
"Controlling Person"), each other holder of Notes and the respective limited or
general partners, agents, employees, officers, trustees and directors of any
such Purchaser, its Affiliates, any such Controlling Person and any such holder
(each an "Indemnified Party" and collectively, the "Indemnified Parties"), from
and against any and all losses, claims, damages, liabilities and expenses
(including, without limitation and as incurred, reasonable costs of
investigating, preparing or defending any such claim or action, whether or not
such Indemnified Party is a party thereto, provided that the Company shall not
be obligated to advance such costs to any Indemnified Party other than the
Initial Purchaser unless it has received from such Indemnified Party an
undertaking to repay the Company the costs so advanced if it should be
determined by final judgment of a court of competent jurisdiction that such
Indemnified Party was not entitled to indemnification hereunder with respect to
such costs) that may be incurred by such Indemnified Party in connection with
any investigative, administrative or judicial proceeding brought or threatened
that relates to or arises out of or is in connection with any activities
contemplated by this Agreement, any other Note Document or any other services
rendered in connection herewith, including, but not limited to, losses, claims,
damages, liabilities or expenses arising out of or based upon any untrue
statement or any alleged untrue statement of a material fact or any omission or
any alleged omission to state a material fact in any of the disclosure or
offering or confidential information documents (the "Disclosure Documents")
pertaining to any of the transactions or proposed transactions contemplated
herein (all of the foregoing, "Indemnified Liabilities"), provided that the
Company will not be responsible for any claims, liabilities, losses, damages or
expenses that are determined by final judgment of a court of competent
jurisdiction to result from such Indemnified Party's gross negligence, willful
misconduct or bad faith. To the extent that the

<PAGE> 42

undertaking to indemnify and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Company shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law to the payment and satisfaction of all
Indemnified Liabilities incurred by the Indemnities or any of them except to
the extent set forth in the proviso of the preceding sentence. THE FOREGOING
INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH INDEMNIFIED LIABILITIES ARE IN
ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR
OMISSION OF ANY KIND BY, OR ARISING UNDER STRICT LIABILITY OF, ANY PURCHASER OR
ANY OTHER HOLDER OF NOTES, PROVIDED ONLY THAT NEITHER ANY PURCHASER NOR ANY
OTHER HOLDER OF NOTES SHALL BE ENTITLED UNDER THIS SECTION TO RECEIVE
INDEMNIFICATION FOR THAT PORTION, IF ANY, OF ANY INDEMNIFIED LIABILITIES WHICH
ARISES FROM ITS OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS
DETERMINED IN A FINAL JUDGEMENT. The Company also agrees that no Indemnified
Party shall have any liability for claims, liabilities, damages, losses or
expenses, including legal fees, incurred by the Company in connection with this
Agreement or any other Note Document unless they are determined by final
judgment of a court of competent jurisdiction to result from such Indemnified
Party's gross negligence, willful misconduct or bad faith.

The indemnification, contribution and expense reimbursement obligations
set forth in this Section 8.3 (i) shall be in addition to any liability the
Indemnifying Parties may have to any Indemnified Party at common law or
otherwise, (ii) shall survive the termination of this Agreement and the other
Note Documents and the payment in full of the Notes and (iii) shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Purchaser or any other Indemnified Party.

SECTION 8.4. Expenses; Documentary Taxes. The Company agrees to pay all
reasonable out-of-pocket costs, expenses and other payments in connection with
the purchase and sale of the Notes as contemplated by this Agreement including
without limitation (i) fees and disbursements of special counsel for the
Initial Purchaser incurred in connection with the preparation of the Note
Documents, (ii) all out-of-pocket expenses of the Initial Purchaser, including
fees and disbursements of counsel, in connection with any waiver or consent
hereunder or under the other Note Documents or any amendment hereof or thereof
or any Default or alleged Default hereunder or thereunder and (iii) all
reasonable out-of-pocket expenses of each Purchaser and each holder of Notes,
including fees and disbursements of

<PAGE> 43
counsel, in connection with any collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom. In addition, the Company agrees to
pay any and all stamp, transfer and other similar taxes, assessments or charges
payable in connection with the execution and delivery of this Agreement or any
other Note Document or the issuance of the Notes.

SECTION 8.5. Payment. The Company agrees that, so long as MS Group shall
own any Notes purchased by it from the Company hereunder, the Company will make
payments to MS Group of all amounts due thereon by wire transfer by 1:00 P.M.
(New York City time) on the date of payment to such account as specified
beneath the MS Group's name on the signature page hereof or to such other
account or in such other similar manner as MS Group may designate to the
Company in writing.

SECTION 8.6. Successors and Assigns. (a) This Agreement shall be binding
upon the parties hereto and their respective successors and assigns except that
the Company may not assign or otherwise transfer its rights or obligations
under this Agreement or the other Note Documents to any other Person without
the prior written consent of the Majority Holders. Subject to the provisions
of Article VII, any holder of Notes may transfer its Notes to any Person, and,
subject to Section 8.6(b), any Purchaser may assign all or any part of its
Purchase Commitment to any Person. Upon execution and delivery of an
instrument of assignment and assumption by such transferee to such transferor
Purchaser and the Company, such transferee shall be a Purchaser party to this
Agreement and shall have the rights and obligations of a Purchaser party to
this Agreement as set forth in such instrument, and the transferor Purchaser
shall be released from its obligations hereunder to a corresponding extent.
All provisions hereunder purporting to give rights to Morgan Stanley and its
Affiliates or to holders of Notes are for the express benefit of such Persons.

(b) If any Purchaser shall fail to perform its obligation to purchase
Notes hereunder, the amount of the Purchase Commitment of such Purchaser shall,
at the time of any such failure, be immediately assumed by MS Group so that the
aggregate amount of the Purchase Commitments to purchase Notes provided for
herein shall not be reduced. No such assumption shall relieve any Purchaser
from its Purchase Commitment, and each such defaulting Purchaser agrees to
repay on demand MS Group any Notes purchased by MS Group in respect of such
assumed Purchase Commitment, together with interest thereon from the date of
such purchase to but

<PAGE> 44

excluding the date of repayment at the rate of 12% per annum.

SECTION 8.7. Brokers. The Company represents and warrants that it has
not employed any broker or finder who might be entitled to any brokerage,
finder's or other fee or commission in connection with the Recapitalization or
the sale of the Notes.

SECTION 8.8. Collateral Agent; Security Documents. In order to secure
the due and punctual payment of the obligations under the Note Documents and
the Third Priority Notes, the Company, the Guarantor and the Collateral Agent
have entered into or will enter into, as the case may be, the Security
Agreement and the other Security Documents to grant, bargain, sell, release,
hypothecate, assign, mortgage, pledge, transfer, confirm and grant to the
Collateral Agent for the benefit of the Secured Parties (as defined therein) a
security interest in the property constituting the Collateral described
therein. The Collateral Agent is hereby expressly authorized and directed to
enter into, and to exercise the rights and powers granted by, the Intercreditor
Agreement, the Security Agreement and any other Security Documents. Each
Purchaser and each subsequent holder of the Notes hereby expressly agrees to be
bound by the Intercreditor Agreement and the Security Documents and
acknowledges that, so long as the Notes remain outstanding, the Collateral and
Real Property (as defined in the Security Agreement) are to be held by the
Collateral Agent for the benefit of the Purchasers, the other holders of Notes
and the holders of the Third Priority Notes, and their respective successors
and assigns, without distinction, except that, after foreclosure or upon the
exercise of remedies pursuant to the Security Documents, any proceeds shall be
applied first to the payment in full of all obligations owing hereunder and
under the Notes and thereafter to the payment of the Third Priority Notes.

SECTION 8.9. Confidentiality. Each Purchaser agrees to keep
confidential (and to use its best efforts to cause its respective agents and
representatives to keep confidential) the Information (as defined below) and
all copies thereof, extracts therefrom and analyses or other materials based
thereon, except that any Purchaser or holder of Notes shall be permitted to
disclose Information (a) to such of its respective officers, directors,
employees, agents, affiliates and representatives as need to know such
Information, (b) to the extent requested by any regulatory authority, (c) to
the extent otherwise required by applicable laws and regulations or by any
subpoena or similar legal process, (d) in connection with any suit,

<PAGE> 45
action or proceeding relating to the enforcement of its rights hereunder or
under the other Note Documents, (e) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section
8.9 or (ii) becomes available to any Purchaser or holder of Notes or the
Collateral Agent on a nonconfidential basis from a source other than the
Company or the Guarantor (other than information that clearly indicates that it
is intended to be confidential) or (f) to any actual or prospective assignee of
or participant in any of its rights under this Agreement or the Notes, provided
that such assignee or participant first executes and delivers to such party a
confidentiality letter containing substantially the undertakings set forth in
this Section 8.9. For the purposes of this Section, "Information" shall mean
all financial statements, certificates, reports, agreements and information
(including all analyses, compilations and studies prepared by any Purchase or
holder of Notes based on any of the foregoing) that are received from the
Company or the Guarantor and related to the Company or the Guarantor, any
shareholder of the Company or the Guarantor or any employee, customer or
supplier of the Company or the Guarantor, other than any of the foregoing that
were available to any Purchaser or holder of Notes on a nonconfidential basis
prior to its disclosure thereto by the Company or the Guarantor, and which are
in the case of Information provided after the date hereof, clearly identified
at the time of delivery as confidential. The provisions of this Section 8.9
shall remain operative and in full force and effect regardless of the
expiration and term of this Agreement.

SECTION 8.10. NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER NOTE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER NOTE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

<PAGE> 46

SECTION 8.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

SECTION 8.12. Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be an original with the same effect as if
the signatures thereto and hereto were upon the same instrument.

<PAGE> 47

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

PREMIUM STANDARD FARMS, INC.

By /s/ W.R. Patterson
----------------------------
Name:
Title:

PSF HOLDINGS L.L.C.

By /s/ W.R. Patterson
----------------------------
Name:
Title:

MORGAN STANLEY GROUP INC.

By /s/ Philip N. Duff
----------------------------
Name: Philip N. Duff
Title: Chief Financial Officer

<PAGE> 1

EXHIBIT 10.2

FORM OF NOTE

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD UNLESS IT
HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE, AND THEN ONLY IN COMPLIANCE
WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE NOTE PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 17, 1996, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE.

No. $

PREMIUM STANDARD FARMS, INC.

SENIOR SECURED SECOND PRIORITY NOTE

Premium Standard Farms, Inc., a Delaware corporation (together with its
successors, the "Company"), for value received, hereby promises to pay to

[The Holder]

and registered assigns the principal sum of

_________________ Dollars

by wire transfer of immediately available funds to the Holder's account (the
"Bank Account") at such bank in the United States as may be specified in
writing by the Holder to the Company, on September 17, 2002, in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest,
quarterly in arrears, on the 15th day of each March, June, September and
December (unless such day is not a Business Day, in which event on the next
succeeding Business Day) (each an "Interest Payment Date") of each year in
which this Note remains outstanding, commencing with __________ on the
principal sum hereof outstanding in like coin or currency, at the rate per
annum set forth below, by wire transfer of immediately available funds to the
Bank Account from the most recent Interest

A-1

<PAGE> 2

Payment Date to which interest has been paid on this Note, or if no
interest has been paid on this Note, from [date of issuance], until payment in
full of the principal sum hereof has been made.

This Note shall bear interest for each day at the rate of 11% per annum.
Interest on this Note will be calculated on the basis of a 360-day year and
paid for the actual number of days elapsed.

This Note is one of a duly authorized issue of Senior Secured Second
Priority Notes of the Company (the "Notes") referred to in the Note Purchase
Agreement dated as of September 17, 1996 among the Company, PSF Holdings L.L.C.
and Morgan Stanley Group Inc. ("MS Group") (as the same may be amended from
time to time in accordance with its terms, the "Agreement"). The Notes of any
holder are transferable and assignable in accordance with the limitations set
forth in the Agreement. The Company agrees to issue from time to time
replacement Notes in the form hereof to facilitate such transfers and
assignments.

The Company shall keep at its principal office a register (the "Register")
in which shall be entered the names and addresses of the registered holders of
the Notes and particulars of the respective Notes held by them and of all
transfers of such Notes. References to the "Holder" or "Holders" shall mean
the Person listed in the Register as the payee of any Note. The ownership of
the Notes shall be proven by the Register.

1. Certain Defined Terms. All terms defined in the Agreement and not
otherwise defined herein shall have for purposes hereof the meanings provided
for therein. As used herein, the following additional terms have the
respective meanings set forth below.

2. Covenants. The Company covenants and agrees to observe and perform
each of its obligations and undertakings contained in Article VI of the
Agreement, except to the extent that any such observance and performance is
waived in writing by the Majority Holders in accordance with the terms of the
Agreement, and all such obligations and undertakings are expressly assumed
herein by the Company and made for the benefit of the Holders.

3. Events of Default.

(a) Event of Default and Acceleration of Maturity. In case one or more
of the following Events of Default (whatever the reason for such Event of
Default and

A-2

<PAGE> 3

whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body) shall
have occurred and be continuing:

(i) the Company shall fail to pay when due (whether at maturity,
upon any redemption, by declaration or otherwise) any principal of any
Note, or shall fail to pay within 30 days of the due date thereof any
interest on any Note or any fees or any other amount payable hereunder or
under the Agreement;

(ii) the Company or any other Obligor shall fail to observe or
perform any covenant or agreement contained in the Agreement or any other
Note Document or herein (other than those covered by clause (a) above)
for 30 days after notice thereof, specifying such failure and stating
that such notice is a "Notice of Default", has been given to the Company
by the Majority Holders;

(iii) any representation, warranty, certification or statement made
or deemed made by the Company or any other Obligor in any Note Document
or that is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with any Note
Document shall prove to have been incorrect in any material respect on or
as of the date made or deemed made;

(iv) the Guarantor, the Company or any of its Subsidiaries shall
fail to make any payment when due in respect of Debt (other than the
Notes) aggregating in excess of $10,000,000 in principal amount
("Material Debt"), whether at stated maturity or otherwise; or any event
or condition shall occur that results in the acceleration of the maturity
of any Material Debt of the Guarantor, the Company or any of its
Subsidiaries;

(v) a judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Guarantor, the Company or any
of its Subsidiaries and such judgment or order shall continue unsatisfied
and unstayed for a period of 60 days;

(vi) the Company, the Guarantor or any of the Company's
Subsidiaries shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law

A-3

<PAGE> 4

now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;

(vii) an involuntary case or other proceeding shall be commenced
against the Company, the Guarantor or any of the Company's Subsidiaries
seeking liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Company, the Guarantor or any of the
Company's Subsidiaries under the federal bankruptcy laws as now or
hereafter in effect; or

(viii) any Security Document shall, at any time, cease to be in
full force and effect or shall be declared null and void, or the validity
or enforceability thereof shall be contested by the Company or the
Guarantor or the Collateral Agent shall not have or shall cease to have a
valid and perfected Lien on the Collateral, subject only to Liens
permitted by Section 6.10 (other than Collateral released as provided in
the Security Documents); or any Lien shall have a priority equal to or
greater than the Liens on the Collateral, except as permitted by Section
6.10; or any Note Document shall not be for any reason, or shall be
asserted by any Obligor not to be, in full force and effect and
enforceable in accordance with its terms;

then, and in every such event and at any time thereafter during the continuance
of such event, the Majority Holders may by notice to the Company declare the
Notes (together with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company; provided that so long as any loans under the Credit Agreement or any
Third

A-4

<PAGE> 5

Priority Notes are outstanding, such declaration shall not, unless an
Event of Default specified in clauses (ii) (with respect to the Company's
failure to comply with Sections 6.4, 6.5, 6.6, 6.8, 6.9, 6.10 or 6.11), (vi),
(vii) or (viii) shall have occurred and be continuing, become effective until
the acceleration of any loans under the Credit Agreement or any Third Priority
Notes; and provided further that in the case of any of the Events of Default
specified in clause (vi) or (vii) above with respect to the Company, without
any notice to the Company or any act by the Holders, all of the Notes (together
with accrued interest thereon) shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company. The Majority Holders may, on behalf of the
Holders of all the Notes, by written notice to the Company, rescind an
acceleration and its consequences if all existing Events of Default have been
cured or waived, except nonpayment of principal or interest that has become due
solely because of the acceleration, and if the rescission would not conflict
with any judgment or decree then in effect; provided that any uncured monetary
defaults existing other than solely because of the acceleration may be waived
only by the Holders of all the Notes.

(b) Remedies Cumulative; No Waiver. No right or remedy herein conferred
upon or reserved to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy. No delay or omission of the Holders to exercise any right or power
accruing upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power or shall be construed to be a waiver of any such
Event of Default or an acquiescence therein; and every power and remedy given
by the Notes or by law may be exercised from time to time, and as often as
shall be deemed expedient, by the Holders.

4. Prepayment of Note.

(a) The Company at its option may, upon ten Business Days' written notice
to the Holders, prepay the Notes in each case in whole at any time, or from
time to time in part in principal amounts aggregating $1,000,000 or any larger
multiple of $100,000, at a redemption price equal to 100% of the principal
amount of the Notes so prepaid,

A-5

<PAGE> 6

together with accrued interest through the date of prepayment and
premium (if any) thereon.

(b) During the Credit Availability Period, the Company shall, within five
days of the Company's receipt of the Net Cash Proceeds of any Reduction Event
and to the extent permitted by the Lender Documents, prepay a principal amount
of the Notes equal to the amount of such Net Cash Proceeds, at a redemption
price equal to 100% of the principal amount of the Notes so prepaid, together
with accrued interest through the date of prepayment.

(c) After the Credit Availability Period, the Company shall, within five
days of the Company's receipt of the Net Cash Proceeds of any Asset Sale by the
Company, the Guarantor or any Subsidiary and to the extent permitted by the
Lender Documents, prepay a principal amount of the Notes equal to 50% of such
Net Cash Proceeds, at a redemption price equal to 100% of the principal amount
of the Notes so prepaid, together with accrued interest through the date of
prepayment.

(d) The Company shall, immediately upon a Change of Control, prepay in
full the outstanding principal amount of the Notes at a redemption price equal
to 100% thereof, together with accrued interest through the date of prepayment.

(e) Any partial prepayment shall be made so that the Notes then held by
each Holder shall be prepaid in a principal amount that shall bear the same
ratio, as nearly as may be, to the total principal amount being prepaid as the
principal amount of such Notes held by such Holder shall bear to the aggregate
principal amount of all Notes then outstanding. In the event of a partial
prepayment, upon presentation of any Note the Company shall execute and deliver
to or on the order of the Holder, at the expense of the Company, a new Note in
principal amount equal to the remaining outstanding portion of such Note.

5. Modification of Notes. The Notes may be modified without prior notice
to any Holder but with the written consent of the Holders of a majority in
principal amount of the Notes then outstanding. However, without the consent
of each Holder affected thereby, an amendment, supplement or waiver may not (1)
reduce the aggregate principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver, (2) reduce the rate or extend the time for
payment of interest on any Note, (3) reduce the principal amount of or extend
the stated maturity

A-6
<PAGE> 7
of any note, or (4) make any Note payable in money or property.

6. Miscellaneous. This Note shall be deemed to be a contract under the
laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of said State. The parties hereto, including all
guarantors or endorsers, hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note, except as specifically provided
herein, and assent to extensions of the time of payment, or forbearance or
other indulgence without notice. The Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City for purposes
of all legal proceedings arising out of or relating to this Note.
The Company irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum. The Company
hereby irrevocably waives any and all right to trial by jury in any legal
proceeding arising out of or relating to this Note.

The Holder of this Note by acceptance of this Note agrees to be bound by
the provisions of this Note and the Agreement that are expressly binding on
such Holder.

The obligations of the Company hereunder and under the Agreement are
unconditionally guaranteed by PSF Holdings L.L.C. and certain Subsidiaries of
the Company.

A-7
<PAGE> 8

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.

Dated:
------------

PREMIUM STANDARD FARMS, INC.

By:
----------------------------

A-8

<PAGE> 1
EXHIBIT 10.3

PARENT GUARANTEE AGREEMENT dated as of
September 17, 1996, between PSF HOLDINGS,
L.L.C., a Delaware limited liability company
(the "Guarantor") and MORGAN STANLEY GROUP
INC., as Initial Purchaser (the "Initial
Purchaser") for its benefit and the benefit
of the other Purchasers and holders of Notes
(as defined in the Note Purchase Agreement
referred to below).

Reference is made to the Note Purchase Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Note Purchase Agreement"), among the Guarantor, Premium Standard
Farms, Inc., a Delaware corporation and a wholly owned subsidiary of the
Guarantor (the "Company"), and the Initial Purchaser. Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Note Purchase Agreement.

The Purchasers have agreed to purchase Notes from the Company
pursuant to, and upon the terms and subject to the conditions specified in, the
Note Purchase Agreement. The Guarantor owns all the Capital Stock of the
Company and will derive substantial benefit from the purchase of the Notes by
the Purchasers. The obligations of the Purchasers to purchase Notes are
conditioned upon, among other things, the execution and delivery by the
Guarantor of a Parent Guarantee Agreement in the form hereof. As consideration
therefor and in order to induce the Purchasers to purchase Notes, the Guarantor
is willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. The Guarantor unconditionally
guarantees, as a primary obligor and not merely as a surety, (a) the full and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Notes issued by the Company pursuant to
the Note Purchase Agreement, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, and (ii)
all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Obligors to the Purchasers and
holders of Notes under the Note Purchase Agreement and the other Note Documents
and (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Obligors under or pursuant to the Note
Purchase Agreement and the other Note Documents (all the monetary and other
obligations referred to in the preceding clauses (a) and (b) being collectively
called the "Obligations"). The Guarantor further agrees that the Obligations
may be extended or renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.
<PAGE> 2
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, the Guarantor waives presentment to, demand of
payment from and protest to the Company of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of the Guarantor hereunder shall not be affected by (a) the failure of any
Purchaser or holder of Notes to assert any claim or demand or to enforce or
exercise any right or remedy against the Company or any other guarantor of the
Obligations under the provisions of the Note Purchase Agreement, any other Note
Document or otherwise, (b) any rescission, waiver, amendment or modification
of, or any release from any of the terms or provisions of this Agreement, any
other Note Document, any Guarantee or any other agreement, including with
respect to any other guarantor of the Obligations, (c) the failure to perfect
any security interest in, or the release of, any of the security held by or on
behalf of any Purchaser or holder of Notes (d) any invalidity or
unenforceability relating to or against the Company for any reason of the Note
Purchase Agreement, any Note Documents or any Note, or any law purporting to
prohibit payment by the Company of the principal of or interest on any Note or
(e) any change in the corporate existence, structure or ownership of the
Company, or any subsequent insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Company or its assets.

SECTION 3. Security. The Guarantor authorizes each of the
Purchasers or holders of Notes to (a) take and hold security for the payment of
this Guarantee and the Obligations and exchange, enforce, waive and release any
such security, (b) apply such security and direct the order or manner of sale
thereof as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other guarantors or other Obligors.

SECTION 4. Guarantee of Payment. The Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection, and waives any right to require that any resort be had by the
Initial Purchaser or any other Purchaser or holder of Notes to any of the
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of the Initial Purchaser or any other Purchaser
or holder of Notes in favor of the Company or any other person.

SECTION 5. No Discharge or Diminishment of Guarantee. The
Obligations of the Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing,
the Obligations of the Guarantor hereunder shall not be discharged or impaired
or otherwise affected by the failure of the Initial Purchaser or any other
Purchaser or holder of Notes to assert any claim or demand or to enforce any
remedy under the Note Purchase Agreement, any other Note Document or any other
agreement, by any waiver or modification of any provision of any thereof, by
any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of the Guarantor or that would otherwise operate as
a discharge of the Guarantor as a matter of law or equity (other than the
payment in full in cash of all the Obligations).

<PAGE> 3
3

SECTION 6. Defenses of Company Waived. To the fullest extent
permitted by applicable law, the Guarantor waives any defense based on or
arising out of any defense of the Company or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Company, other than the final payment in full in cash
of the Obligations. The Initial Purchaser and the other Purchasers and holders
of Notes may, at their election, foreclose on any security held by one or more
of them by one or more judicial or nonjudicial sales, accept an assignment of
any such security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with the Company or any other
guarantor or exercise any other right or remedy available to them against the
Company or any other guarantor, without affecting or impairing in any way the
liability of the Guarantor hereunder except to the extent the Obligations have
been fully and finally paid in cash. To the fullest extent permitted by
applicable law, the Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other
right or remedy of the Guarantor against the Company or any other guarantor, as
the case may be, or any security.

SECTION 7. Agreement to Pay; Subrogation. In furtherance of
the foregoing and not in limitation of any other right that the Initial
Purchaser or any other Purchaser or holder of Notes has at law or in equity
against the Guarantor by virtue hereof, upon the failure of the Company or any
other Obligor to pay any Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
the Guarantor hereby promises to and will forthwith pay, or cause to be paid,
to the Purchasers and holders of Notes, in cash the amount of such unpaid
Obligations. Upon payment by the Guarantor of any sums to any Purchaser or
holder of Notes as provided above, all rights of the Guarantor against the
Company arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior payment in full in cash
of all the Obligations. In addition, any indebtedness of the Company now or
hereafter held by the Guarantor is hereby subordinated in right of payment to
the prior payment in full of the Obligations. If any amount shall erroneously
be paid to the Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of the
Company, such amount shall be held in trust for the benefit of the Purchasers
or holders of Notes and shall forthwith be paid to the Purchasers and holders
of the Notes to be credited against the payment of the Obligations, whether
matured or unmatured, in accordance with the terms of the Note Documents.

SECTION 8. Information. The Guarantor assumes all
responsibility for being and keeping itself informed of the Company's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks
that the Guarantor assumes and incurs hereunder, and agrees that none of the
Purchasers or holders of Notes will have any duty to advise the Guarantor of
information known to it or any of them regarding such circumstances or risks.

SECTION 9. Termination. The Guarantee made hereunder (a)
shall terminate when all the Obligations have been paid in full in cash and the
Purchasers have no further commitment to purchase Notes under the Note Purchase
Agreement, and (b) shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any

<PAGE> 4
4

Obligation is rescinded or must otherwise be restored by any Purchaser or
holder of Notes or the Guarantor upon the bankruptcy or reorganization of the
Company, the Guarantor or otherwise.

SECTION 10. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantor that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
when a counterpart hereof executed on behalf of the Guarantor shall have been
delivered to the Initial Purchaser and a counterpart hereof shall have been
executed on behalf of the Initial Purchaser, and thereafter shall be binding
upon the Guarantor and the Initial Purchaser and their respective successors
and assigns, and shall inure to the benefit of the Guarantor, the Initial
Purchaser and the other Purchasers and holders of Notes, and their respective
successors and assigns, except that the Guarantor shall not have the right to
assign its rights or obligations hereunder or any interest herein (and any such
attempted assignment shall be void).

SECTION 11. Waivers; Amendment. (a) No failure or delay of
any Purchaser or holder of Notes in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
Initial Purchaser hereunder and of the other Purchasers and holders of Notes
under the other Note Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision
of this Agreement or consent to any departure by the Guarantor therefrom shall
in any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on the
Guarantor in any case shall entitle the Guarantor to any other or further
notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantor and the Majority Holders (except as otherwise provided in the
Note Purchase Agreement).

SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section 8.1 of the Note
Purchase Agreement.

<PAGE> 5
5

Notes regardless of any investigation made by the Purchasers and holders of
Notes or on their behalf, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Note or any other fee or
amount payable under this Agreement or any other Note Document is outstanding
and unpaid.

SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective
as provided in Section 10. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.

<PAGE> 6
6

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

PSF HOLDINGS, L.L.C., as Guarantor,

/s/ W.R. Patterson
----------------------------
Name:
Title:

MORGAN STANLEY GROUP INC., as
Initial Purchaser

by
/s/ Philip N. Duff
----------------------------
Name: Philip N. Duff
Title: Chief Financial Officer

<PAGE> 1
EXHIBIT 10.4

SUBSIDIARY GUARANTEE AGREEMENT dated as of September
17, 1996, among each of the subsidiaries listed on Schedule
I hereto (each such subsidiary individually, a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors")
of PREMIUM STANDARD FARMS, INC., a Delaware corporation
(the "Company"), MORGAN STANLEY GROUP INC., a Delaware
corporation, as Initial Purchaser (the "Initial Purchaser")
for its benefit and the benefit of the other Purchasers and
holders of Notes (as defined in the Note Purchase Agreement
referred to below).

Reference is made to the Note Purchase Agreement dated as of September 17,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Note Purchase Agreement"), among PSF Holdings, L.L.C., a Delaware limited
liability company (the "Guarantor"), the Company, and the Initial Purchaser.
Capitalized terms used herein but not defined herein shall have the meanings
assigned to such terms in the Note Purchase Agreement.

The Purchasers have agreed to purchase Notes from the Company pursuant to,
and upon the terms and conditions specified in, the Note Purchase Agreement.
Each Subsidiary Guarantor is a Subsidiary of the Company and acknowledges that
it will derive substantial benefit from the purchases of the Notes by the
Purchasers. The obligations of the Purchasers to purchase Notes are
conditioned on, among other things, the execution and delivery by the
Subsidiary Guarantors of a Subsidiary Guarantee Agreement in the form hereof.
As consideration therefor and in order to induce the Purchasers to purchase
Notes, the Subsidiary Guarantors are willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally
guarantees, as a primary obligor and not merely as a surety, (a) the full and
punctual payment of (i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Notes issued by the Company pursuant to
the Note Purchase Agreement, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise and (ii)
all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Obligors to the Purchasers and
holders of Notes under the Note Purchase Agreement and the other Note Documents
and (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Obligors under or pursuant to the Note
Purchase Agreement and the other Note Documents (all the monetary and other
obligations referred to in the preceding clauses (a) and (b) being collectively
called the "Obligations"). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.

<PAGE> 2

Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Subsidiary Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the greatest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under the Bankruptcy Code or any provisions of applicable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after giving
effect to all other liabilities of such Subsidiary Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Subsidiary Guarantor under any
Guarantee of senior unsecured Debt or Debt subordinated in right of payment to
the Obligations which Guarantee contains a limitation as to maximum amount
similar to that set forth in this paragraph, pursuant to which the liability of
such Subsidiary Guarantor hereunder is included in the liabilities taken into
account in determining such maximum amount) and after giving effect as assets
to the value (as determined under the applicable provisions of the Fraudulent
Transfer Laws) of any rights to subrogation, contribution, reimbursement,
indemnity or similar rights of such Subsidiary Guarantor pursuant to applicable
law.

SECTION 2. Obligations Not Waived; No Discharge or Diminishment of
Guarantee. To the fullest extent permitted by applicable law, each Subsidiary
Guarantor waives presentment to, demand of payment from and protest to the
Company of any of the Obligations, and also waives notice of acceptance of its
guarantee and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the Obligations of each Subsidiary Guarantor
hereunder shall not be subject to any reduction, limitation, impairment or
termination for any reason (other than the payment in full in cash of the
Obligations), including any claim of waiver, release, surrender, alteration or
compromise of any of the Obligations, and shall not be subject to any defense
or setoff, counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Subsidiary Guarantor hereunder shall not be discharged or impaired or otherwise
affected by (a) the failure of any Purchaser or holder of Notes to assert any
claim or demand or to enforce or exercise any right or remedy against the
Company or any other guarantor under the provisions of the Note Purchase
Agreement, any other Note Document or any other agreement, (b) any rescission,
waiver, amendment or modification of, or any release from any of the terms or
provisions of this Agreement, any other Note Document, any Guarantee or any
other agreement, (c) any default, failure or delay, wilful or otherwise, in
the performance of the Obligations, (d) any other act or omission that may or
might in any manner or to any extent vary the risk of any Subsidiary Guarantor
or that would otherwise operate as a discharge of any Subsidiary Guarantor as a
matter of law or equity (other than the payment in full in cash of all the
Obligations), (e) the failure to perfect any security interest in, or the
release of, any of the security held by or on behalf of any Purchaser or holder
of Notes, (f) any invalidity or unenforceability relating to or against the
Company for any reason of the Note Purchase Agreement, any Note Documents or
any Note, or any law purporting to prohibit payment by the Company of the
principal of or interest on any Note or (g) any change in the corporate
existence, structure or ownership of the Company, or any subsequent insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Company or
its assets.

SECTION 3. Security. Each Subsidiary Guarantor authorizes each of the
Purchasers and holders of Notes, to (a) take and hold security for the payment
of this Guarantee

<PAGE> 3
3
and the Obligations and exchange, enforce, waive and release any such
security, (b) apply such security and direct the order or manner of sale
thereof as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other guarantors or other Obligors.

SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection, and waives any right to require that any resort be had by the
Initial Purchaser or any other Purchaser or holder of Notes to any of the
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of the Initial Purchaser or any Purchaser or
holder of Notes in favor of the Company or any other person.

SECTION 5. Defenses of Company Waived. To the fullest extent permitted
by applicable law, each Subsidiary Guarantor waives any defense based on or
arising out of any defense of the Company or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Company, other than the final payment in full in cash
of the Obligations. The Initial Purchaser and the other Purchasers and holders
of Notes may, at their election, foreclose on any security held by it by one or
more judicial or nonjudicial sales, accept an assignment of any such security
in lieu of foreclosure, compromise or adjust any part of the Obligations, make
any other accommodation with the Company or any other guarantor or exercise any
other right or remedy available to it against the Company or any other
guarantor, without affecting or impairing in any way the liability of any
Subsidiary Guarantor hereunder except to the extent the Obligations have been
fully and finally paid in cash. Pursuant to applicable law, each Subsidiary
Guarantor waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of such
Subsidiary Guarantor against the Company or any other Subsidiary Guarantors or
guarantors, as the case may be, or any security.

SECTION 6. Agreement to Pay; Subordination. In furtherance of the
foregoing and not in limitation of any other right that the Initial Purchaser
or any other Purchaser or holder of Notes has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company or any
other Obligor to pay any Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
each Subsidiary Guarantor hereby promises to and will forthwith pay, or cause
to be paid, to the Purchasers and holders of Notes in cash the amount of such
unpaid Obligations. Upon payment by any Subsidiary Guarantor of any sums to
any Purchaser or holder of Notes as provided above, all rights of such
Subsidiary Guarantor against the Company arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
payment in full in cash of all the Obligations. In addition, any indebtedness
of the Company now or hereafter held by any Subsidiary Guarantor is hereby
subordinated in right of payment to the prior payment in full of the
Obligations. If any amount shall erroneously be paid to any Subsidiary
Guarantor on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of the Company, such
amount shall be held in trust for the benefit of the Purchasers and holders of
Notes and shall forthwith be turned over to the Purchasers and holders of the

<PAGE> 4

Notes in the exact form received by such Subsidiary Guarantor to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of the Note Documents.

SECTION 7. Information. Each Subsidiary Guarantor assumes all
responsibility for being and keeping itself informed of the Company's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks
that any Subsidiary Guarantor assumes and incurs hereunder, and agrees that
none of the Purchasers and holders of Notes will have any duty to advise any
Subsidiary Guarantor of information known to it regarding such circumstances or
risks.

SECTION 8. Representations and Warranties. Each Subsidiary Guarantor
represents and warrants that all representations and warranties relating to it
contained in the Note Purchase Agreement are true and correct. Furthermore,
each Subsidiary Guarantor represents and warrants that it is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified to do business in, and is
in good standing under, the laws of every jurisdiction in which it is required
to be so qualified except where the failure so to qualify would not result in a
Material Adverse Effect.

SECTION 9. Termination. The Guarantees made hereunder (a) shall
terminate when all the Obligations have been paid in full in cash and the
Purchasers have no further commitment to purchase Notes under the Note Purchase
Agreement and (b) shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Purchaser or holder
of Notes or each Subsidiary Guarantor upon the bankruptcy or reorganization of
the Company, each Subsidiary Guarantor or otherwise.

SECTION 10. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of each Subsidiary Guarantor
or the Initial Purchaser that are contained in this Agreement shall bind and
inure to the benefit of each party hereto and their respective successors and
assigns. This Agreement shall become effective as to each Subsidiary Guarantor
when a counterpart hereof executed on its behalf shall have been delivered to
the Initial Purchaser, and a counterpart hereof shall have been executed on
behalf of the Initial Purchaser, and thereafter shall be binding upon such
Subsidiary Guarantor and the Initial Purchaser and their respective successors
and assigns, and shall inure to the benefit of such Subsidiary Guarantor, the
Initial Purchaser and the other Purchasers and holders of Notes, and their
respective successors and assigns, except that no Subsidiary Guarantor shall
have the right to assign its rights or obligations hereunder or any interest
herein (and any such attempted assignment shall be void).

<PAGE> 5
5

are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provision of this Agreement
or consent to any departure by any Subsidiary Guarantor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on any
Subsidiary Guarantor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
each Subsidiary Guarantor and the Majority Holders (except as otherwise
provided in the Note Purchase Agreement).

SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 8.1 of the Note Purchase Agreement.
All communications and notices hereunder to each Subsidiary Guarantor shall be
given to it at its address set forth on Schedule I hereto, with a copy to the
Company.

SECTION 14. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made by any Subsidiary Guarantor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Note Document shall
be considered to have been relied upon by the Initial Purchaser and the other
Purchasers and holders of Notes and, except for any terminations, amendments or
modifications thereof in accordance with the terms hereof, shall survive the
purchase by the Purchasers of the Notes regardless of any investigation made by
the Purchasers and holders of Notes or on their behalf, and, except for any
termination, amendments or modifications thereof in accordance with the terms
hereof, shall continue in full force and effect as long as the principal of or
any accrued interest on any Note or any other fee or amount payable under this
Agreement or any other Note Document is outstanding and unpaid and the
Purchasers have no further commitment to purchase Notes under the Note Purchase
Agreement.

(b) In the event any one or more of the provisions contained in this
Agreement or in any other Note Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

<PAGE> 6

SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective
as provided in Section 10 of this Agreement. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.

SECTION 16. Jurisdiction; Consent to Service of Process. (a) Each
Subsidiary Guarantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Note Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
shall affect any right that the Initial Purchaser or any other Purchaser or
holder of Notes may otherwise have to bring any action or proceeding relating
to this Agreement or the other Note Documents against any Subsidiary Guarantor
or its properties in the courts of any jurisdiction.

(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Note Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 13 of this Agreement.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.

SECTION 17. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER NOTE DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER NOTE DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 17.

<PAGE> 7

SECTION 18. Additional Guarantors. Pursuant to Section 6.11(c) of the
Note Purchase Agreement, each Subsidiary (other than an Inactive Subsidiary) of
the Company that was not in existence or not such a Subsidiary on the date of
the Note Purchase Agreement is required to enter into this Agreement as a
Subsidiary Guarantor upon becoming such a Subsidiary (or upon ceasing to be an
Inactive Subsidiary). Upon execution and delivery after the date hereof by the
Initial Purchaser and such a Subsidiary of an instrument in the form of Annex
1, such Subsidiary shall become a Subsidiary Guarantor hereunder with the same
force and effect as if originally named as a Subsidiary Guarantor herein. The
execution and delivery of any instrument adding an additional Subsidiary
Guarantor as a party to this Agreement shall not require the consent of any
other Subsidiary Guarantor hereunder. The rights and obligations of each
Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.

SECTION 19. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Purchaser or holder of Notes 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 Debt at any time owing by such
Purchaser or holder of Notes to or for the credit or the account of any
Subsidiary Guarantor against any or all its obligations now or hereafter
existing under this Agreement and the other Note Documents held by such
Purchaser or holder of Notes, irrespective of whether or not such Purchaser or
holder of Notes shall have made any demand under this Agreement or any other
Note Document and although such obligations may be unmatured. In the event a
Purchaser or holder of Notes shall exercise its right of setoff pursuant to
this Section 19, such Purchaser or holder of Notes shall promptly notify such
Subsidiary Guarantor of such setoff and the application of the proceeds
thereof, provided, that the failure to give such notice shall not affect the
validity of such setoff and the application of the proceeds thereof. The
rights of each Purchaser or holder of Notes under this Section 19 are in
addition to other rights and remedies (including other rights of setoff) which
such Purchaser or holder of Notes may have.

<PAGE> 8

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.

EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO,

By /s/ W.R. Patterson
----------------------------------
Name:
Title:

MORGAN STANLEY GROUP INC., as Initial
Purchaser,

By /s/ Philip N. Duff
----------------------------------
Name: Philip N. Duff
Title: Chief Financial officer

<PAGE> 9

SCHEDULE I TO
THE SUBSIDIARY
GUARANTEE AGREEMENT

Reference is made to the Subsidiary Guarantee Agreement dated as of
September 17, 1996 among each of the subsidiaries listed on this Schedule I
(each such subsidiary individually, a "Subsidiary Guarantor" and collectively,
the "Subsidiary Guarantors") of PREMIUM STANDARD FARMS, INC., a Delaware
corporation (the "Company"), and MORGAN STANLEY GROUP INC., a Delaware
corporation ("MS Group").

This Schedule I dated as of September 17, 1996 (as amended, supplemented
or otherwise modified from time to time) hereby lists the Subsidiary Guarantors
party to the above-referenced Subsidiary Guarantee Agreement:

Princeton Development Corporation, a Missouri corporation

<PAGE> 10

Annex 1 to the
Subsidiary Guarantee Agreement

SUPPLEMENT NO. ______ dated as of _________, to the
Subsidiary Guarantee Agreement dated as of September 17,
1996, among each of the subsidiaries listed on Schedule I
thereto (each such subsidiary individually, a "Subsidiary
Guarantor" and collectively, the "Subsidiary Guarantors")
of PREMIUM STANDARD FARMS, INC., a Delaware corporation
(the "Company"), and MORGAN STANLEY GROUP INC., as Initial
Purchaser (the "Initial Purchaser") for its benefit and the
benefit of the other Purchasers and holders of Notes (as
defined in the Note Purchase Agreement referred to below).

Reference is made to the Note Purchase Agreement dated as of September 17,
1996 (as it may hereafter be amended, supplemented or otherwise modified from
time to time, the "Note Purchase Agreement"), among PSF Holdings, L.L.C., a
Delaware limited liability company (the "Guarantor"), the Company, and the
Initial Purchaser. Capitalized terms used herein but not defined herein shall
have the meanings assigned to such terms in the Note Purchase Agreement or, if
not defined therein, in the Subsidiary Guarantee Agreement.

The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Purchasers to purchase Notes. Pursuant to
Section 6.11(c) of the Note Purchase Agreement, each Subsidiary (other than an
Inactive Subsidiary) of the Company that was not in existence or not such a
Subsidiary on the date of the Note Purchase Agreement is required to enter into
the Subsidiary Guarantee Agreement as a Subsidiary Guarantor upon becoming such
a Subsidiary (or upon ceasing to be an Inactive Subsidiary). Section 18 of the
Subsidiary Guarantee Agreement provides that additional Subsidiaries of the
Company may become Subsidiary Guarantors under the Subsidiary Guarantee
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of the Company (the "New Subsidiary
Guarantor") is executing this Supplement in accordance with the requirements of
the Note Purchase Agreement to become a Subsidiary Guarantor under the
Subsidiary Guarantee Agreement in order to induce the Purchasers to purchase
additional Notes and as consideration for Notes previously purchased.

Accordingly, the Initial Purchaser and the New Subsidiary Guarantor agree
as follows:

SECTION 1. In accordance with Section 18 of the Subsidiary Guarantee
Agreement, the New Subsidiary Guarantor by its signature below becomes a
Subsidiary Guarantor under the Subsidiary Guarantee Agreement with the same
force and effect as if originally named therein as a Subsidiary Guarantor and
the New Subsidiary Guarantor hereby (a) agrees to all the terms and provisions
of the Subsidiary Guarantee Agreement applicable to it as a Subsidiary
Guarantor thereunder and (b) represents and warrants that the representations
and warranties made by it as a Subsidiary Guarantor thereunder are true and
correct on and as of the date hereof. Each reference to a "Subsidiary
Guarantor" in the Subsidiary Guarantee Agreement shall be deemed to include the
New Subsidiary Guarantor. The Subsidiary Guarantee Agreement is hereby
incorporated herein by reference.

<PAGE> 11

SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Initial Purchaser and the Purchasers and holders of Notes that this Supplement
has been duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.

SECTION 3. This Supplement may be executed in counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Initial Purchaser shall have received counterparts of this Supplement that,
when taken together, bear the signatures of the New Subsidiary Guarantor and
the Initial Purchaser. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Subsidiary
Guarantee Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing
and given as provided in Section 13 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it at the address set forth under its signature below, with a copy to
the Company.

<PAGE> 12

IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Initial Purchaser
have duly executed this Supplement to the Subsidiary Guarantee Agreement as of
the day and year first above written.

[Name Of New Subsidiary Guarantor],

By
-----------------------------------
Name:
Title:
Address:
--------------------------

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

MORGAN STANLEY GROUP INC., as
Initial Purchaser,

By
-----------------------------
Name:
Title:

<PAGE> 1
EXHIBIT 10.5

AMENDED AND RESTATED
PSF HOLDINGS, L.L.C.
1996 MANAGEMENT OPTION PLAN

1. DEFINED TERMS

Appendix A, which is incorporated by reference, defines the terms used in
the Plan.

2. PURPOSE

The Plan has been established to advance the interests of the Company by
enabling the Company to grant Options to selected Employees and others.

3. ADMINISTRATION

The Committee has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan, to determine eligibility for and
to grant Options, to determine, modify or waive the terms and conditions of any
Option, to prescribe forms, rules and procedures (which it may modify or
waive), and otherwise to do all things necessary to carry out the purposes of
the Plan. Once an Option has been communicated in writing to a Participant,
the Committee may not, without the Participant's consent, alter the terms of
the Option so as to affect adversely the Participant's rights under the Option,
unless the Committee expressly reserved the right to do so in the Option grant
or the Option Agreement. The Committee may delegate ministerial tasks to any
persons (including Employees) as it deems appropriate.

4. UNITS SUBJECT TO THE PLAN

Subject to adjustment as provided in Section 7, a total of 526,315 Units
may be issued under the Plan including Units remaining under an Option that
terminates without having been exercised in full, and Units subject to an
Option where cash is delivered to the Participant in lieu of such Units. No
fractional Units will be delivered under the Plan.

No Option may be granted under the Plan after September 17, 2006 but
Options previously granted may extend beyond that date.

5. ELIGIBILITY AND PARTICIPATION

Each Employee and each other person and entity providing services to the
Company or its Affiliates who, in the opinion of the Committee is in a position
to make a significant contribution to the success of the Company and its
Affiliates shall be eligible to receive Options. Eligibility for ISOs is
further limited to those persons whose employment status would qualify them for
the tax treatment described in Sections 421 and 422 of the Code.

<PAGE> 2

The Committee in its sole discretion shall select those Employees, persons
and entities to whom it grants options from those who are eligible.

6. TERMS OF OPTIONS

(a) EXERCISE PRICE. Each Option (except as otherwise expressly
provided by the Committee consistent with continued qualification of
the Option as a performance-based Option for purposes of Section
162(m) of the Code, or unless the Committee expressly determines
that such Option is not subject to Section 162(m) of the Code or
that the Option is not intended to qualify for the performance-based
exception under Section 162(m) of the Code) will have an exercise
price equal to the fair market value of the Units subject to the
Option, determined as of the date of grant, except that an ISO
granted to an Employee described in Section 422(b)(6) of the Code
will have an exercise price equal to 110% of such fair market value.

(b) OTHER TERMS. The Committee will determine the medium in
which the exercise price is to be paid, the duration of the Option,
the time or times at which an Option will become exercisable,
provisions for continuation (if any) of option rights following
termination of the Participant's employment with or service to the
Company and its Affiliates, and all other terms of the Option.

(c) ISO TREATMENT. Both ISOs and Options that are not incentive
stock options may be granted under the Plan. No Option granted
under the Plan will be an ISO unless the Committee expressly
provides for ISO treatment.

(d) PERFORMANCE OBJECTIVES. Where rights under an Option depend
in whole or in part on attainment of performance objectives, actions
by the Company that have an effect, however material, on such
performance objectives or on the likelihood that they will be
achieved will not be deemed an amendment or alteration of the Option
unless accomplished by a change in the express terms of the Option
or other action that is without substantial consequence except as it
affects the Option.

(e) ALTERNATIVE SETTLEMENT WITH HOLDER CONSENT. The Company
retains the right at any time, with the consent of the holder of the
Option, to extinguish rights under such Option in exchange for
payment in cash or other property on such terms as the Committee
determines.

(f) TRANSFERABILITY OF OPTIONS. Except as the Committee
otherwise expressly provides, Options may not be transferred other
than by will or by the laws of descent and distribution. During a
Participant's lifetime an Option may be exercised only by the
Participant (or in the event of the Participant's incapacity, the
person or persons legally appointed to act on the Participant's
behalf).

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<PAGE> 3

(g) VESTING, ETC. The Committee shall determine the time or
times at which an Option will vest (i.e., become free of
restrictions) or become exercisable. Unless the Committee otherwise
expressly so provides, Options granted to any person subject to
Section 16 of the Exchange Act shall not vest or become exercisable
prior to the date which follows by six months the date of the
Option.

(h) TERMINATION UPON DEATH. Unless the Committee expressly provides
otherwise, all Options held by a Participant immediately prior to
death, to the extent then exercisable, may be exercised by the
Participant's executor or administrator or the person or persons
to whom the Option is transferred by will or the applicable laws of
descent and distribution, at any time within the lesser of (i) one
year period ending with the first anniversary of the Participant's
death (or such shorter or longer period as the Committee may
determine) or (ii) the latest date on which such Option could have
been exercised without regard to this Section 6(h), and shall
thereupon terminate.

(i) TERMINATION OTHER THAN UPON DEATH. Except as otherwise
determined by the Committee, if a Participant who is an Employee
ceases to be an Employee for any reason other than death, or if
there is a termination (other than by reason of death) of the
consulting, service or similar relationship in respect of which a
non-Employee Participant was granted an Option award hereunder (such
termination of the employment or other relationship being
hereinafter referred to as a "Status Change"), all Options held by
the Participant that were not exercisable immediately prior to the
Status Change shall terminate at the time of the Status Change, and
any Options that were exercisable immediately prior to the Status
Change will continue to be exercisable for the shorter of (i) three
months after the Status Change or (ii) the latest date on which such
Option could have been exercised without regard to this Section
7(i), and shall thereupon terminate, unless the Status Change
results from a discharge for cause as determined by the Committee in
which case such Option shall immediately terminate upon the Status
Change. For purposes of this paragraph, in the case of a
Participant who is an Employee, a Status Change shall not be deemed
to have resulted by reason of (i) a sick leave or other bona fide
leave of absence approved for purposes of the Plan by the Committee,
so long as the Employee's right to reemployment is guaranteed either
by statute or by contract.

(j) TAXES. The Committee will make such provision for the
withholding of taxes as it deems necessary. The Committee may, but
need not, hold back Units from an Option or permit a Participant to
tender previously owned Units in satisfaction of tax withholding
requirements.

(k) RIGHTS LIMITED. Nothing in the Plan shall be construed as
giving any person the right to continued employment or service with
the Company or its Affiliates, nor any rights as a shareholder
except as to Units actually issued under the Plan. The loss of
existing or potential profit in Options will not constitute an
element of

3
<PAGE> 4

damages in the event of termination of employment or
service for any reason, even if the termination is in violation of
an obligation of the Company or Affiliate to the Participant.

(l) TIME AND MANNER OF EXERCISE. Unless the Committee expressly provides
otherwise, (a) an Option will not be deemed to have been exercised
until the Committee receives a written notice of exercise (in form
acceptable to the Committee) signed by the appropriate person and
accompanied by any payment required under the Option; and (b) if the
Option is exercised following the Participant's death by the
Participant's beneficiary (or the executor or Committee of the
Participant's estate), or in the case of incapacity by the
Participant's legally appointed representative or guardian, or by any
person other than the Participant, the Committee may require
satisfactory evidence that the person exercising the Option has the
right to do so.

(m) PAYMENT OF EXERCISE PRICE. Unless the Committee expressly
provides otherwise, all payments of the Option exercise price will
be by cash or check acceptable to the Committee. The Committee may
provide for other forms of payment either at or after the time of
the grant of the Option.

7. EFFECT OF CERTAIN TRANSACTIONS

(a) MERGERS, ETC. In the event of the consummation of a Covered
Transaction (as defined below), any issued and outstanding Options,
to the extent not previously vested, shall immediately vest and be
exercisable; provided, however, that in anticipation of the
consummation of such a Covered Transaction, the Committee may, in
its discretion, immediately accelerate the vesting and
exercisability of any issued and outstanding Options, or provide for
a substitute or replacement Option from the Acquiring Entity (as
defined below), if any, upon the consummation of such a Covered
Transaction.

The occurrence of one or more of the events described in subparts (i)
and (ii) of this subparagraph (a) are herein collectively referred
to as a "Covered Transaction":

(i) a consolidation, merger or similar transaction involving
the Company (other than a transaction covered by subparagraphs (b)
and (c) below) which has one of or more of the following results:

(A) the Company is not the surviving entity;

(B) a single person or entity or a group of persons
and/or entities acting in concert (an "Acquiring Entity")
acquire a majority amount or more of the Company's Units;

4
<PAGE> 5

(D) the Company is dissolved or liquidated.

(ii) a consolidation, merger or similar transaction involving
Premium Standard Farms, Inc., a Delaware corporation ("PSF"), which
has one or more of the following results:

(A) PSF is not the surviving entity;

(B) an Acquiring Entity acquires a majority amount
or more of PSF's common stock, followed
by a change in a majority of the membership of the Board
of Directors of PSF, other than as a result of the death
or voluntary resignation (for reasons unrelated to the
acquisition) of any member or members of the Board,
within six months from the date the Acquiring Entity
acquires a majority amount or more of PSF's common
stock;

(D) PSF is dissolved or liquidated.

It is not the intent of the Company or the Committee to include within
the definition of a Covered Transaction changes in the ownership of the
Company and/or PSF which are occasioned by the transfer or sale of
Company Units and/or PSF common stock to one or more parties who acquire
the Company Units and/or PSF common stock for purposes of a maintaining a
passive investment in the Company and/or PSF. For these reasons, and
notwithstanding anything set forth in this Paragraph 7 to the contrary,
the Committee hereby reserves the authority to determine, in good faith,
and in its sole discretion, whether the occurrence of a particular event
(such as the sale of Company Units and/or PSF common stock to an
affiliate, a current investor, or another third-party passive investor)
falls within the definition of a Covered Transaction for purposes of this
Paragraph 7. Once the Committee makes such a determination, the
Committee's determination shall be binding upon the Company and all
persons holding Options under this Plan.

(b) DIVISION OR COMBINATION OF UNITS OR RECAPITALIZATION. In the
event of a division of the Company's Units, the payment of a
distribution to Members in Units, the combination of Units (e.g.,
the limited liability company equivalents of a stock split, stock
dividend or reverse stock split), or the recapitalization or other
change in the Company's Units or capital structure, the Committee
will make appropriate adjustments to the maximum number of Units
that may be delivered under the Plan, the number of Units subject to
Options then

5
<PAGE> 6

outstanding, the exercise prices of then outstanding Options and any
other provision of then outstanding Options affected by such change.

(c) CHANGE IN FORM, ETC. In the event of a consummation of a
transaction in which the Company is not the surviving entity but
immediately thereafter holders of the Units immediately prior to
such transaction hold all of the equity interests in the surviving
entity, such that the transaction represents merely a change in the
identity, form or place of organization of the Company (such as an
incorporation, however effected), the Committee shall provide for
substitute or replacement Options in the successor entity.

(d) CERTAIN OTHER ADJUSTMENTS. The Committee may also make
adjustments of the type described in paragraph (b) above to take
into account distributions to Members, other than ordinary cash
distributions made pro rata, with respect to all Members' Units,
mergers, consolidations, acquisitions, dispositions or similar
corporate transactions, or any other event, if the Committee
determines that adjustments are appropriate to avoid distortion in
the operation of the Plan and to preserve the value of Options made
hereunder.

8. CONDITIONS ON DELIVERY OF UNITS

The Company will not be obligated to issue any Units pursuant to the Plan
until the Company has approved all legal matters in connection with the
issuance and delivery of such Units; if the outstanding Units are at the time
listed on any stock exchange or national market system, the Units to be
delivered have been listed or authorized to be listed on such exchange or
system upon official notice of notice of issuance; and all conditions of the
Option have been satisfied or waived. If the sale of Units has not been
registered under the Securities Act of 1933, as amended, the Company may
require, as a condition to exercise of the Option, such representations or
agreements as the Company may consider appropriate to avoid violation of such
Act.

9. AMENDMENT AND TERMINATION

Subject to the second sentence of Section 3, the Committee may at any time
or times amend the Plan or any outstanding Option for any purpose which may at
the time be permitted by law, or may at any time terminate the Plan as to any
further grants of Options, provided that (except to the extent expressly
required or permitted by the Plan) no such amendment will, without the approval
of the holders of the Units, effectuate a change for which stockholder approval
is required in order for the Plan to continue to qualify under Rule 16b-3 and
under Sections 422 and 162(m) of the Code.

10. GOVERNING LAW

6
<PAGE> 7

This Plan shall be governed by and construed in accordance with the laws
of the state of Delaware, as applied to contracts made and performed within the
state of Delaware, without regard to principles of conflicts of law. The
Company and the parties each hereby irrevocably submit to the jurisdiction of
any Delaware court or any federal court sitting in the city of New York in
respect of any suit, action or proceeding arising out of or relating to this
Agreement, and each irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Nothing herein shall affect the right of any person to serve process
in any manner permitted by law or to commence legal proceedings or otherwise
proceed against the Company in any other jurisdiction.

7
<PAGE> 8

APPENDIX A

DEFINITION OF TERMS

The following terms, when used in the Plan, shall have the meanings set
forth below:

"AFFILIATE": Any entity owning, directly or indirectly, 50% or more of
the outstanding Units, or in which the Company or any entity owns, directly or
indirectly, 50% of the outstanding capital stock, partnership or membership
interests (determined by aggregate voting rights) or other voting interests.

"CODE": The U.S. Internal Revenue Code of 1986, as from time to time
amended and in effect.

"COMMITTEE": A committee elected by vote of the Members. On and after
registration of the Units under the Exchange Act, all members of the Committee
must be "disinterested persons" within the meaning of Rule 16b-3 and "outside
directors" within the meaning of Section 162(m)(4)(C)(i) of the Code, and the
selection of persons subject to Section 16(b) of the Exchange Act for
participation in the Plan, decisions concerning the timing, pricing and amount
of any Option to such a person, and (to the extent required in order to qualify
for the performance-based remuneration exception under Section 162(m) of the
Code) all other decisions under the Plan shall be made by a vote of at least a
majority of such Committee members.

"COMPANY": PSF Holdings, L.L.C., a Delaware limited liability company.

"COVERED TRANSACTION": has the meaning provided in Section 7(a).

"EMPLOYEE": Any person who is employed by the Company or an Affiliate.

"EXCHANGE ACT": The Securities Exchange Act of 1934, as amended.

"ISO": An Option intended to be an "incentive stock option" within the
meaning of Section 422 of the Code.

"MEMBERS": Holders of membership interests in the Company

"OPTION": Entitles the Participant to acquire Units on exercise thereof
in accordance with the terms thereof.

"PARTICIPANT": An Employee or other person or entity who is granted an
Option under the Plan.

"PLAN": The Amended and Restated PSF Holdings, L.L.C. 1996 Management
Option Plan, as from time to time amended and in effect.

8
<PAGE> 9

"STATUS CHANGE": has the meaning provided in Section 6(i).

"RULE": A Rule promulgated under the Exchange Act.

"UNITS": Interests as Members of the Company, determined in accordance
with the Company's Limited Liability Company Agreement dated as of September
17, 1996, as from time to time in effect.

<PAGE> 1
EXHIBIT 10.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of the 1st day of January, 1997, by and between PREMIUM STANDARD
FARMS, INC., a Delaware corporation (the "Company"), and DENNIS W. HARMS, an
individual (the "Employee").

WHEREAS, the Company desires to retain Employee in its employment in an
executive capacity upon the terms and conditions set forth below; and

WHEREAS, Employee desires to be employed by the Company in an executive
capacity upon the terms and conditions set forth below; and

WHEREAS, the Company and Employee desire to set forth, in writing, the
terms and conditions of their agreements and understandings.

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

1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment with the Company, upon the terms and conditions contained
herein. During the term of Employee's employment hereunder, Employee shall
have the title, status and duties of Vice Chairman and Chief Executive Officer
of the Company. During the term of Employee's employment hereunder, Employee
will serve the Company faithfully and to the best of his ability under the
direction of the Board of Directors of the Company (the "Board") and shall
devote substantially all his working time and attention to the business of the
Company and to the performance of his duties hereunder. Employee will also
serve upon request of the Board, and for no additional compensation, in the
position, or positions, of an officer or director of any subsidiary of the
Company.

2. Term. The term of Employee's employment under this Agreement shall
commence as of the date hereof (the "Effective Date") and shall end December
31, 1999, unless sooner terminated by either party in accordance with the
provisions of this Agreement (the "Initial Employment Term"); provided,
however, this Agreement shall be automatically extended without further action
by either party for additional one-year periods, unless written notice of
either party's intention not to extend the term of Employee's employment
hereunder has been given to the other party at least six months prior to the
expiration of the then effective term.

3. Salary.

3.1 Base Salary. The Company will pay to Employee a minimum annual base
salary ("Base Salary") of Three Hundred Thousand and No/100ths Dollars
($300,000.00),

<PAGE> 2

payable at such intervals consistent with the Company's payroll policies for
other senior executive officers, with such annual increases as are necessary
to reflect changes in the cost of living and as may be provided under the terms
of this Agreement. Once increased, such greater amount shall constitute
Employee's Base Salary.

3.2 Annual Review. Employee's Base Salary shall be reviewed by the
Compensation Committee of the Board on each anniversary of Employee's initial
hire date. Employee's Base Salary may be increased (but not decreased) based
upon Employee's performance. In addition to any increases under this Section
3.2, the Board may, in its sole discretion, increase Employee's Base Salary at
any time.

4. Employee Benefits; Performance Bonus.

4.1 General. Employee will be included, to the extent eligible thereunder
by virtue of his position, tenure, salary, age and other qualifications, in all
employee benefit plans, programs or arrangements (including, without
limitation, any plans, programs or arrangements providing for retirement
benefits, incentive compensation, profit sharing, bonuses, disability benefits,
health and life insurance, or vacation and paid holidays) which shall be
established by the Company for, or made available to, its other senior
executive officers.

4.2 Executive Performance Bonus. Employee will be eligible to participate
in an executive performance bonus (the "Executive Performance Bonus") as
determined by the Board in its sole discretion, in accordance with the
Company's general management bonus policy; provided, however, in no event will
the Executive Performance Bonus paid to Employee be an amount equal to or
greater than sixty percent (60%) of Employee's Base Salary.

4.3 The Membership Interest Unit Option. Pursuant to the terms and
conditions of the PSF Holdings, L.L.C. Management Option Plan (the "Plan") and
the PSF Holdings, L.L.C. Membership Interest Unit Option Agreement, by and
between the Company and Employee (the "Option Agreement"), the Company will
grant Employee an Option to purchase 160,000 Units (as those terms are defined
in the Plan and the Option Agreement).

4.4 Company Automobile. Employee will have the use of a Class 1
automobile, as defined in the Company's automobile policy, owned or leased by
the Company for the performance of Employee's services hereunder. The Company
will reimburse Employee for reasonable expenses incurred in connection with
Employee's use of such automobile in accordance with the Company's expense
reimbursement policy.

4.5 Reimbursement of Expenses. The Company will reimburse Employee for
reasonable travel and other business expenses incurred by him in the
fulfillment of his duties hereunder upon Employee's presentation to the Company
of an itemized account of such expenditures.

<PAGE> 3

5. Termination of Employment

5.1 Termination without Cause; Resignation for Good Reason.

5.1.1 General. Subject to the provisions of Sections 5.1.2 and 5.1.3, if,
prior to the expiration of the Initial Employment Term, Employee's employment
is terminated by the Company without Cause, as defined in Section 5.3, or if
Employee resigns from his employment for Good Reason, as defined in Section
5.4, the Company shall continue to pay Employee his annual Base Salary as of
the date of termination or resignation for a period of one (1) year following
the date of termination or resignation (such period, as applicable, being
referred to hereinafter as the "Severance Period"); provided, however, notice
by either party of its intention not to extend the Initial Employment Term
beyond December 31, 1999 shall not constitute termination without Cause or
resignation for Good Reason. During the Severance Period, Employee shall also
be eligible to participate on the same terms and conditions as in effect
immediately prior to such termination or resignation in all health, medical,
supplemental medical and life insurance plans or programs ("Employee Welfare
Plans") provided to Employee by the Company pursuant to Section 4 above at the
time of such termination or resignation and which are provided by the Company
to its employees following the date of such termination or resignation;
provided, however, that Employee's eligibility to participate in these Employee
Welfare Plans shall end at such time as Employee becomes eligible to receive
coverage under comparable programs of a subsequent employer. If, during the
Severance Period, Employee is precluded from participating in any Employee
Welfare Plan by its terms or applicable law, the Company will provide Employee
with benefits that are reasonably equivalent to those which Employee would have
received under such plan had Employee been eligible to participate therein.
Anything to the contrary herein notwithstanding, the Company shall have no
obligation to continue to maintain any Employee Welfare Plan during the
Severance Period solely as a result of this Agreement.

5.1.2 Employee will not be required to mitigate the amount of any payment
provided for in Section 5.1.1 by seeking other employment, and the amount of
any such payment will not be reduced by any compensation earned by Employee as
the result of his employment by another employer subsequent to termination of
Employee's employment with the Company.

5.1.3 Death During Severance Period. In the event of Employee's death
during the Severance Period, the Severance Period shall immediately cease, the
Company shall not be obligated to make any further payments pursuant to this
Section 5, and the provisions of Section 6.1 shall apply as though Employee's
death had occurred immediately prior to termination of Employee's
employment hereunder.

5.1.4 Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of termination to
Employee. The date of resignation for Good Reason shall be the date specified
in the written notice of resignation from Employee to the Company.

<PAGE> 4

5.2 Termination for Cause; Resignation Without Good Reason.

5.2.1 General. If Employee's employment hereunder is terminated by the
Company for Cause, or if Employee resigns from his employment hereunder other
than for Good Reason, Employee shall be entitled only to payment of his Base
Salary earned through and including the date of termination or resignation.
Employee shall have no further right to receive any other compensation, or to
participate in any other plan, arrangement, or benefit, after such termination
for Cause or resignation of employment other than for Good Reason.

5.2.2 Date of Termination. Subject to Section 5.3, the date of termination
for Cause shall be the date of receipt by Employee of a written Notice of
Termination provided for in Section 5.2.3. The date of resignation without Good
Reason shall be the date specified in the written notice of resignation from
Employee to the Company, or if no date is specified therein, ten (10) business
days after receipt by the Company of written notice or resignation from
Employee.

5.2.3 Notice of Termination. Termination of Employee's employment for
Cause shall be communicated by delivery to Employee of a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Company's Board at a meeting of the Board called and held for
such purpose (after reasonable notice to Employee and reasonable opportunity
for Employee together with Employee's counsel, to be heard before the Board
prior to such vote), finding that in the good faith opinion of the Board an
event constituting Cause for termination in accordance with Section 5.3 has
occurred and specifying the particulars thereof (a "Notice of Termination").
For purposes of this Agreement, no purported termination of Employee's
employment for Cause shall be effective without delivery of such Notice of
Termination.

5.3 Cause. Termination for "Cause" means termination of Employee's
employment because of (i) any willful material violation by Employee of any law
or regulation applicable to the business of the Company or any of its
subsidiaries or Employee's conviction for, or guilty plea to, a felony or a
crime involving moral turpitude, or any willful perpetration by Employee of a
common law fraud, (ii) Employee's commission of an act involving gross
negligence on the part of Employee in the conduct of his duties under this
Agreement or any other employment or consulting agreement with another employer
having a business relationship with the Company, (iii) Employee's commission of
an act of personal dishonesty which involves personal profit in connection with
the Company or any other employer having a business relationship with the
Company, (iv) any material breach by Employee of any provision of this
Agreement or any other employment or consulting agreement with another employer
having a business relationship with the Company including, without limitation,
the continued failure or refusal of Employee to perform the material duties
required of him as an employee of the Company, or (v) any other misconduct by
Employee which is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or any of
its subsidiaries or affiliates; provided, however, that if any such Cause
relates to Employee's obligations under this Agreement and (x) is susceptible
to cure and (y)

<PAGE> 5

does not constitute a repetition of such Cause, the Company shall not terminate
Employee's employment hereunder unless the Company first gives Employee a
Notice of Termination, and Employee has not, within ten (10) business days
following receipt of the notice, cured such Cause, or in the event such Cause
is not susceptible to cure within such ten (10) business day period, Employee
has not taken all reasonable steps within such ten (10) business day period to
cure such Cause as promptly as practicable thereafter.

5.4 Good Reason. For purposes of this Agreement, "Good Reason" means:

5.4.1 A diminution in Employee's position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by Employee; provided, however,
that the creation of additional officer positions shall not be considered a
diminution in Employee's authority so long as Employee continues to hold the
office of Vice Chairman and Chief Executive Officer and performs the duties,
functions and responsibilities within the Company as performed by him prior to
the date hereof;

5.4.2 The Company's failure or refusal to comply with the provisions of
this Agreement; or

5.4.3 The Company (i) files a petition in bankruptcy court or is
adjudicated a bankrupt; (ii) institutes or suffers to be instituted any
procedure in bankruptcy court for reorganization or rearrangement of its
financial affairs; (iii) has a receiver of its assets or property appointed
because of insolvency; or (iv) makes a general assignment for the benefit of
creditors.

6. Death or Permanent Disability.

6.1 Death. If Employee's employment hereunder is terminated by death, the
Company shall, within ninety (90) days of the date of death, make a lump sum
payment to Employee's estate (or other beneficiary designated by him in
writing) equal in amount to Employee's Base Salary as in effect on the date of
death that would have been paid to Employee over a period of twelve months.
Thereafter, the Company shall have no further obligation to Employee under the
Agreement.

5
<PAGE> 6

participation in medical benefits programs then maintained for the
Company's senior executive officers (or shall provide reasonably equivalent
benefits). Employee will use his reasonable best efforts to cooperate with any
physician engaged by the Company to determine whether or not Permanent
Disability exists, and the determination of such physician made in writing to
the Company and Employee shall be final and conclusive for all purposes of this
Agreement. Any payments provided for in this Section 6.2 shall be offset (but
not below zero) by any salary continuation payments received by Employee under
any plan, program or arrangements in which Employee participated pursuant to
Section 4.1 of this Agreement. Except as provided in this Section 6.2, upon
termination of the Employee's employment hereunder by virtue of Employee's
Permanent Disability, the Company shall have no further obligation to Employee
under this Agreement.

7. Change of Control.

7.1 Notwithstanding anything to the contrary contained herein, if the
Company terminates Employee without Cause upon or within six (6) months
following a Change of Control, as defined below, the Company will pay to
Employee an amount equal to the greater of (i) Employee's annual Base Salary as
of the date of the Change of Control, or (ii) if the Change of Control occurs
during the Initial Employment Term, the remaining portion of Employee's Base
Salary for the Initial Employment Term as of the date Employee's employment is
terminated, as severance pay, and the covenant not to compete set forth in
Section 8.3.1 below will not apply to Employee.

7.2 For purposes of this Agreement, "Change of Control" means:

(a) A consolidation, merger or similar transaction involving the
Company which has one or more of the following results: (i) the Company is not
the surviving entity; (ii) a single person or entity or a group of persons
and/or entities acting in concert (an "Acquiring Entity") acquire a majority
amount or more of the Company's Common Stock, followed by a change in a
majority of the membership of the Board, other than as a result of death or
voluntary resignation (for reason unrelated to the transaction) of any member
or members of the Board, within six months from the date the Acquiring Entity
acquires a majority amount or more of the Company's common stock; (iii) there
is a sale or transfer of all or substantially all of the Company's assets; or
(iv) the Company is dissolved or liquidated; or

<PAGE> 7

and/or Company common stock to one or more parties who acquire the
Units and/or Company common stock for purposes of maintaining a passive
investment in the Company and/or Holdings. For these reasons, the parties
agree that the Board reserves the authority to determine, in good faith, and in
its sole discretion, whether the occurrence of a particular event (such as the
sale of Units and/or Company common stock to an affiliate, a current investor,
or another third-party passive investor) falls within the definition of a
"Change of Control" for purposes of this Agreement.

8. Confidentiality.

8.1 Confidentiality. Employee covenants and agrees with the Company
that he will not at any time, except in performance of his obligations to the
Company hereunder or with the prior written consent of the Company, directly or
indirectly, disclose any secret or confidential information that he may learn
or has learned by reason of his association with the Company or any of its
subsidiaries and affiliates. The term "confidential information" includes
information not previously disclosed to the public or to the trade by the
Company's management, or otherwise in the public domain, with respect to the
Company's or any of its affiliates' or subsidiaries' products, facilities,
applications and methods, trade secrets and other intellectual property,
systems, procedures, manuals, confidential reports, product price lists,
customer lists, technical information, financial information (including the
revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.

8.2 Exclusive Property. Employee confirms that all confidential
information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made by Employee relating to the
business of the Company shall be and remain the property of the Company.

8.3 Noncompetition.

<PAGE> 8

renewal period thereafter. Employee hereby further agrees that Employee will
not solicit or endeavor to entice away from the Company, or any of its
affiliates or subsidiaries, any person who is, or was during the then most
recent twelve month period, employed by or associated with the Company, nor
will Employee solicit or endeavor to entice away from the Company, or any of
its affiliates or subsidiaries, any person or entity who is, or was within
the then most recent twelve month period, a customer, client or prospect of the
Company. The period during which the obligations of this Section 8.3 shall
apply to Employee shall be extended by a period of time equal to any period
during which Employee shall be in breach of such obligations.

8.3.2 If the Company gives Employee notice of its intention not to extend
this Agreement for an additional one-year period beyond December 31, 1999 in
accordance with Section 2 above, the Company, in its sole discretion, shall
have the option and right, by giving notice to Employee and paying to Employee
an amount equal to Employee's Base Salary as currently in effect (such amount
to be payable at intervals consistent with the Company's payroll practices for
other senior executives) to prevent Employee from competing with the Company
for a period of one (1) year following the termination of Employee's employment
under this Agreement in the same manner as set forth in Section 8.3.1 above.

8.3.3 If this Agreement is extended for additional one-year periods beyond
December 31, 1999 in accordance with Section 2 above and, thereafter, either
(i) the Company gives Employee notice of its intention not to extend the terms
of this Agreement for additional one-year periods, or (ii) the Company
terminates Employee without Cause, or (iii) Employee resigns for Good Reason,
the Company, in its sole discretion, shall have the option and right, by giving
notice to Employee and paying to Employee an amount equal to Employee's Base
Salary as currently in effect (such amount to be payable at intervals
consistent with the Company's payroll practices for other senior executives) to
prevent Employee from competing with the Company for a period of one (1) year
following the termination of Employee's employment under this Agreement in the
same manner as set forth in Section 8.3.1.

8.3.4 Employee shall not be required to mitigate the amount of any payment
provided in Sections 8.3.2 and 8.3.3 by seeking other employment; provided,
however, if Employee violates or breaches the non-competition provisions set
forth in Sections 8.3.2 and 8.3.3, the amount of any payment provided in
Sections 8.3.2 and 8.3.3 will be discontinued, in addition to all other legal
and equitable remedies available to the Company.

8.3.5 The restrictions set forth in this Section 8 are considered by the
parties to be reasonable. However, if any such restriction is found to be
unenforceable because it extends for too long a period of time or over too
great a range of activities or is too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range of activities
or geographic area as to which it may be enforceable. In the event of a breach
or a threatened breach of this Section 8, the Company shall be entitled to an
injunction restraining Employee from committing or continuing such breach, as
well as to any and all other legal and equitable remedies permitted by law but
only if the Company has fulfilled all its obligations to Employee pursuant to
this Agreement.

<PAGE> 9

9. Miscellaneous.

9.1 Notices. All notices and communications hereunder shall be in writing,
addressed as follows:

To the Company:

Premium Standard Farms, Inc.
423 W. 8th Street, Suite 200
Kansas City, Missouri 64105
Attention: Chairman of the Board

To Employee:

Dennis W. Harms
Premium Standard Farms, Inc.
423 W. 8th Street, Suite 200
Kansas City, Missouri 64105

Any such notice or communication shall be delivered in person, by cable, by
telecopy (with confirmation copy of such telecopied material delivered in
person or by registered or certified mail, return receipt requested) or by
certified or registered mail, return receipt requested, addressed as above (or
to such other address as such party may designate in writing from time to
time), and the actual date of receipt, as shown by the receipt therefor, shall
determine the time at which notice was given.

9.2 Severability. If any provision of this Agreement shall be prohibited
by or invalid under applicable law or otherwise determined to be unenforceable,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of this Agreement.

9.3 Disputes. Any controversy, claim or dispute between the parties
arising out of this Agreement shall be settled by arbitration in Kansas City,
Missouri in accordance with the Expedited Labor Arbitration Rules of the
American Arbitration Association.

9.4 Entire Agreement; Modification. This Agreement constitutes the entire
agreement among the parties hereto and supersedes any and all prior contracts,
arrangements or understandings between the parties. This Agreement may be
amended or modified at any time only by mutual written agreement of the
parties.

9.5 Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.

<PAGE> 10

9.6 Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the state of Missouri without regard to
conflict of law principles.

9.7 Successors. This Agreement shall be binding upon and inure to the
benefit of, and shall be enforceable by Employee and the Company, their
respective heirs, executors, administrators and assigns. In the event the
Company is merged, consolidated, liquidated by a parent corporation, or
otherwise combined into one or more entities, the provisions of this Agreement
shall be binding upon and inure to the benefit of the parent corporation or the
entity resulting from such merger or to which the assets shall be sold or
transferred, which entity from and after the date of such merger,
consolidation, sale or transfer shall be deemed to be the Company for purposes
of this Agreement. In the event of any other assignment of this Agreement by
the Company, by operation of law or otherwise, the Company shall remain
primarily liable for its obligations hereunder. Employee may not assign this
Agreement.

9.8 Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

9.9 Counterparts. This Agreement may be executed by either of the parties
hereto in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.

9.10 Survival. All Sections of this Agreement shall survive beyond the
period during which Employee is employed hereunder, except as otherwise
specifically stated.

<PAGE> 11

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES HERETO

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.

PREMIUM STANDARD FARMS, INC.

By: /s/ H. W. Schroeder
----------------------------------
Title: Chairman of the Board

EMPLOYEE

/s/ Dennis W. Harms
--------------------------------------
Dennis W. Harms

<PAGE> 1
EXHIBIT 10.7

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of this ___ day of October, 1996, by and between PREMIUM STANDARD FARMS, INC.,
a Delaware corporation (the "Company"), and ROBERT W. MANLY, an individual (the
"Employee").

WHEREAS, the Company desires to retain Employee in its employment in an
executive capacity upon the terms and conditions set forth below; and

WHEREAS, Employee desires to be employed by the Company in an executive
capacity upon the terms and conditions set forth below; and

WHEREAS, the Company and Employee desire to set forth, in writing, the
terms and conditions of their agreements and understandings.

1. Employment. The Company hereby employs Employee and Employee hereby
accepts employment with the Company, upon the terms and conditions contained
herein. During the term of Employee's employment hereunder, Employee shall
have the title, status and duties of President and Chief Operating Officer of
the Company. During the term of Employee's employment hereunder, Employee will
serve the Company faithfully and to the best of his ability under the direction
of the Board of Directors of the Company (the "Board") and shall devote
substantially all his working time and attention to the business of the Company
and to the performance of his duties hereunder. Employee will also serve upon
request of the Board, and for no additional compensation, in the position, or
positions, of an officer or director of any subsidiary of the Company.

3. Salary.

3.1 Base Salary. The Company will pay to Employee a minimum annual base
salary ("Base Salary") of Two Hundred Twenty-Five Thousand Dollars ($225,000),
payable at

<PAGE> 2

such intervals consistent with the Company's payroll policies for other senior
executive officers, with such annual increases as are necessary to reflect
changes in the cost of living and as may be provided under the terms of this
Agreement. Once increased, such greater amount shall constitute Employee's
Base Salary.

4. Employee Benefits; Signing Bonus; Performance Bonus.

4.2 Signing Bonus. Upon receipt by the Company of a fully executed copy of
this Agreement, the Company shall pay to Employee a one-time signing bonus of
One Hundred Thousand Dollars ($100,000).

4.3 Executive Performance Bonus. Employee will be eligible to participate
in an executive performance bonus (the "Executive Performance Bonus") as
determined by the Board in its sole discretion, in accordance with the
Company's general management bonus policy; provided, however, in no event will
the Executive Performance Bonus paid to Employee be an amount equal to or
greater than fifty percent (50%) of Employee's Base Salary.

4.4 The Membership Interest Unit Option. Pursuant to the terms and
conditions of the PSF Holdings, L.L.C. Management Option Plan (the "Plan") and
the PSF Holdings, L.L.C. Membership Interest Unit Option Agreement, by and
between the Company and Employee, dated even date herewith (the "Option
Agreement"), the Company will grant Employee an Option to purchase 110,000
Units (as those terms are defined in the Plan and the Option Agreement).

4.5 Company Automobile. Employee will have the use of a Class 1
automobile, as defined in the Company's automobile policy, owned or leased by
the Company for the performance of Employee's services hereunder. The Company
will reimburse Employee for reasonable expenses incurred in connection with
Employee's use of such automobile in accordance with the Company's expense
reimbursement policy.

<PAGE> 3

4. 6 Reimbursement of Expenses. The Company will reimburse Employee for
reasonable travel and other business expenses incurred by him in the
fulfillment of his duties hereunder upon Employee's presentation to the Company
of an itemized account of such expenditures.

4. 7 Relocation Expenses. The Company will reimburse Employee for
reasonable expenses associated with relocating to the Kansas City area
including, but not limited to, realtors' real estate commission(s), moving
company and storage costs, and the costs associated with reasonable
house-hunting trips for Employee and his spouse to the Kansas City area.

5. Termination of Employment

5.1 Termination without Cause; Resignation for Good Reason.

<PAGE> 4

5.2.2 Termination for Cause; Resignation Without Good Reason.

<PAGE> 5

other employment or consulting agreement with another employer having a
business relationship with the Company, (iii) Employee's commission of an act
of personal dishonesty which involves personal profit in connection with the
Company or any other employer having a business relationship with the Company,
(iv) any material breach by Employee of any provision of this Agreement or any
other employment or consulting agreement with another employer having a
business relationship with the Company including, without limitation, the
continued failure or refusal of Employee to perform the material duties
required of him as an employee of the Company, or (v) any other misconduct by
Employee which is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or any of
its subsidiaries or affiliates; provided, however, that if any such Cause
relates to Employee's obligations under this Agreement and (x) is susceptible
to cure and (y) does not constitute a repetition of such Cause, the Company
shall not terminate Employee's employment hereunder unless the Company first
gives Employee a Notice of Termination, and Employee has not, within ten (10)
business days following receipt of the notice, cured such Cause, or in the
event such Cause is not susceptible to cure within such ten (10) business day
period, Employee has not taken all reasonable steps within such ten (10)
business day period to cure such Cause as promptly as practicable thereafter.

5.4 Good Reason. For purposes of this Agreement, "Good Reason" means:

5.4.1 A diminution in Employee's position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by Employee; provided, however,
that the creation of additional officer positions shall not be considered a
diminution in Employee's authority so long as Employee continues to hold the
office of President and Chief Operating Officer and performs the duties,
functions and responsibilities within the Company as performed by him prior to
the date hereof;

5.4.2 The Company's failure or refusal to comply with the provisions of
this Agreement; or

6. Death or Permanent Disability.

5
<PAGE> 6

over a period of twelve months. Thereafter, the Company shall have no
further obligation to Employee under the Agreement.

6.2 Permanent Disability. In the event Employee shall become physically or
mentally disabled while employed by the Company under this Agreement so that
Employee is unable to render the services provided for by this Agreement for a
period of six consecutive months, or for shorter periods aggregating six months
during any twelve-month period, the Company may at any time after the last day
of the six consecutive months of disability or the day on which the shorter
periods of disability equal an aggregate of six months, terminate Employee's
employment hereunder for "Permanent Disability" by written notice to Employee.
The Company shall, following such termination, continue to pay Employee's Base
Salary as then in effect for a period of twelve months, and shall continue
during such period Employee's participation in medical benefits programs then
maintained for the Company's senior executive officers (or shall provide
reasonably equivalent benefits). Employee will use his reasonable best efforts
to cooperate with any physician engaged by the Company to determine whether or
not Permanent Disability exists, and the determination of such physician made
in writing to the Company and Employee shall be final and conclusive for all
purposes of this Agreement. Any payments provided for in this Section 6.2
shall be offset (but not below zero) by any salary continuation payments
received by Employee under any plan, program or arrangements in which Employee
participated pursuant to Section 4.1 of this Agreement. Except as provided in
this Section 6.2, upon termination of the Employee's employment hereunder by
virtue of Employee's Permanent Disability, the Company shall have no further
obligation to Employee under this Agreement.

7. Change of Control.

7.2 For purposes of this Agreement, "Change of Control" means:

<PAGE> 7

amount or more of the Company's Common Stock, followed by a change in a
majority of the membership of the Board, other than as a result of death or
voluntary resignation (for reason unrelated to the transaction) of any member
or members of the Board, within six months from the date the Acquiring Entity
acquires a majority amount or more of the Company's common stock; (iii) there
is a sale or transfer of all or substantially all of the Company's assets; or
(iv) the Company is dissolved or liquidated; or

(b) A consolidation, merger or similar transaction involving PSF
Holdings, L.L.C. ("Holdings") which has one or more of the following results:
(i) Holdings is not the surviving entity; (ii) an Acquiring Entity acquires a
majority amount or more of Holdings' Units, as defined in the Plan, followed by
a change in a majority of the membership of the Board of Directors of Holdings,
other than as a result of death or voluntary resignation (for reason unrelated
to the transaction) of a member or members of the Board of Directors of
Holdings, within six months from the date the Acquiring Entity acquires a
majority amount or more of Holdings' Units; (iii) there is a sale or transfer
of all or substantially all of Holdings' assets; or (iv) Holdings is dissolved
or liquidated.

(c) The provisions of (a) and (b) above notwithstanding, it is not the
intent of the Company to include within the definition of "Change of Control"
changes in the ownership of the Company and/or Holdings which are occasioned by
the transfer or sale of Units and/or Company common stock to one or more
parties who acquire the Units and/or Company common stock for purposes of
maintaining a passive investment in the Company and/or Holdings. For these
reasons, the parties agree that the Board reserves the authority to determine,
in good faith, and in its sole discretion, whether the occurrence of a
particular event (such as the sale of Units and/or Company common stock to an
affiliate, a current investor, or another third-party passive investor) falls
within the definition of a "Change of Control" for purposes of this Agreement.

8. Confidentiality.

<PAGE> 8

8.3 Noncompetition.

8.3.1 If the Company terminates Employee's employment for Cause, as defined
in Section 5.3, or Employee terminates his employment with the Company other
than for Good Reason, as defined in Section 5.4, Employee will not, for the two
(2) year period following the termination of Employee's employment under this
Agreement, without the prior written consent of the Board, be or remain
employed or retained by, or consult with or render any services for any person,
firm, partnership, joint venture, limited liability company, association,
corporation or other business organization, entity or enterprise engaged in any
business, which competes directly or indirectly with the business in which the
Company, or any of its subsidiaries or affiliates, is engaged at any time
during the term of this Agreement; provided, however, (i) nothing contained in
this Section 8.3.1 shall prevent Employee from being employed by a company
whose business activities compete, directly or indirectly, with the Company so
long as Employee is employed in a capacity or a division, unit or separate
portion of that other company which does not compete with the business of the
Company, and (ii) the provisions of this Section 8.3.1 shall not apply if
Employee elects to give notice of non-extension as provided in Section 2 prior
to the end of the Initial Employment Term or any one-year renewal period
thereafter. Employee hereby further agrees that Employee will not solicit or
endeavor to entice away from the Company, or any of its affiliates or
subsidiaries, any person who is, or was during the then most recent twelve
month period, employed by or associated with the Company, nor will Employee
solicit or endeavor to entice away from the Company, or any of its affiliates
or subsidiaries, any person or entity who is, or was within the then most
recent twelve month period, a customer, client or prospect of the Company. The
period during which the obligations of this Section 8.3 shall apply to Employee
shall be extended by a period of time equal to any period during which Employee
shall be in breach of such obligations.

<PAGE> 9

with the Company for a period of one (1) year following the termination
of Employee's employment under this Agreement in the same manner as set forth
in Section 8.3.1.

8.3.4 Employee shall not be required to mitigate the amount
of any payment provided in Sections 8.3.2 and 8.3.3 by seeking other
employment; provided, however, if Employee violates or breaches the
non-competition provisions set forth in Sections 8.3.2 and 8.3.3, the amount of
any payment provided in Sections 8.3.2 and 8.3.3 will be discontinued, in
addition to all other legal and equitable remedies available to the Company.

9. Miscellaneous.

9.1 Notices. All notices and communications hereunder shall be in
writing, addressed as follows:

To the Company:

Premium Standard Farms, Inc.
423 W. 8th Street, Suite 200
Kansas City, Missouri 64105
Attention: Dennis W. Harms

To Employee:

Robert W. Manly
Premium Standard Farms, Inc.
423 W. 8th Street, Suite 200
Kansas City, Missouri 64105

<PAGE> 10

9.2 Severability. If any provision of this Agreement shall be
prohibited by or invalid under applicable law or otherwise determined to be
unenforceable, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of this Agreement.

9.4 Entire Agreement; Modification. This Agreement constitutes the
entire agreement among the parties hereto and supersedes any and all prior
contracts, arrangements or understandings between the parties. This Agreement
may be amended or modified at any time only by mutual written agreement of the
parties.

9.5 Withholding. The Company may withhold from any amounts payable
under this Agreement such federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.

9.6 Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of the state of Missouri without regard to
conflict of law principles.

9.8 Headings. The headings of Sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

9.9 Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

9.10 Survival. All Sections of this Agreement shall survive beyond the
period during which Employee is employed hereunder, except as otherwise
specifically stated.

<PAGE> 1

EXHIBIT 10.8

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of the 27th day of February, 1997, by and between PREMIUM STANDARD
FARMS, INC., a Delaware corporation (the "Company"), and WILLIAM R. PATTERSON,
an individual (the "Employee").

WHEREAS, the Company and the Employee are parties to an Employment
Agreement dated as of October 1, 1996 (the "Old Contract");

WHEREAS, Company and Employee desire to replace the Old Contract with
this Agreement and, further, intend, that this Agreement shall be substituted
for, and supersede, the Old Contract in its entirety;

WHEREAS, the Company desires to employ the Employee and to assure
itself of the continued services of the Employee for the term of employment
provided for in this Agreement, and the Employee desires to be employed by the
Company for such a period, upon the terms and conditions hereinafter set forth;
and

WHEREAS, the Company and Employee desire to set forth, in writing, the
terms and conditions of their agreements and understandings.

1. Employment. The Company hereby employs Employee and Employee
hereby accepts employment with the Company, upon the terms and conditions
contained herein. During the term of Employee's employment hereunder, Employee
shall have the title, status and duties of Executive Vice President and Chief
Financial Officer of the Company. During the term of Employee's employment
hereunder, Employee will serve the Company faithfully and to the best of his
ability under the direction of the Board of Directors of the Company (the
"Board") and shall devote substantially all his working time and attention to
the business of the Company and to the performance of his duties hereunder.
Employee will also serve upon request of the Board, and for no additional
compensation, in the position, or positions, of an officer or director of any
subsidiary of the Company.

2. Term. The term of Employee's employment under this Agreement
shall commence as of the date hereof (the "Effective Date") and shall end
December 31, 1999, unless sooner terminated by either party in accordance with
the provisions of this Agreement (the "Initial Employment Term"); provided,
however, this Agreement shall be automatically extended without further action
by either party for additional one-year periods, unless written notice of

<PAGE> 2

either party's intention not to extend the term of Employee's employment
hereunder has been given to the other party at least six months prior to the
expiration of the then effective term.

3. Salary.

3.1 Base Salary. The Company will pay to Employee a
minimum annual base salary ("Base Salary") of Two Hundred Thousand and
No/100ths Dollars ($200,000.00), payable at such intervals consistent with the
Company's payroll policies for other senior executive officers, with such
annual increases as are necessary to reflect changes in the cost of living and
as may be provided under the terms of this Agreement. Once increased, such
greater amount shall constitute Employee's Base Salary.

3.2 Annual Review. Employee's Base Salary shall be
reviewed by the Compensation Committee of the Board on each anniversary of
Employee's initial hire date. Employee's Base Salary may be increased (but not
decreased) based upon Employee's performance. In addition to any increases
under this Section 3.2, the Board may, in its sole discretion, increase
Employee's Base Salary at any time.

4. Employee Benefits; Performance Bonus.

4.1 General. Employee will be included, to the extent
eligible thereunder by virtue of his position, tenure, salary, age and other
qualifications, in all employee benefit plans, programs or arrangements
(including, without limitation, any plans, programs or arrangements providing
for retirement benefits, incentive compensation, profit sharing, bonuses,
disability benefits, health and life insurance, or vacation and paid holidays)
which shall be established by the Company for, or made available to, its other
senior executive officers. For purposes of the aforesaid benefit plans and
other purposes of this Agreement, the Employee's employment with the Company
shall not be terminated or interrupted by termination of the Old Contract.

4.2 Executive Performance Bonus. Employee will be
eligible to participate in an executive performance bonus (the "Executive
Performance Bonus") as determined by the Board in its sole discretion, in
accordance with the Company's general management bonus policy; provided,
however, in no event will the norm Executive Performance Bonus paid to Employee
be an amount equal to or greater than fifty percent (50%) of Employee's Base
Salary.

4.3 Company Automobile. Employee will have the use of a
Class 1 automobile, as defined in the Company's automobile policy, owned or
leased by the Company for the performance of Employee's services hereunder.
The Company will reimburse Employee for reasonable expenses incurred in
connection with Employee's use of such automobile in accordance with the
Company's expense reimbursement policy.

4.4 Reimbursement of Expenses. The Company will reimburse
Employee for reasonable travel and other business expenses incurred by him in
the fulfillment of his duties

2
<PAGE> 3
hereunder upon Employee's presentation to the Company of an itemized account of
such expenditures.

5. Termination of Employment

5.1 Termination without Cause; Resignation for Good
Reason.

5.1.1 General. Subject to the provisions of
Sections 5.1.2 and 5.1.3, if, prior to the expiration of the Initial Employment
Term, Employee's employment is terminated by the Company without Cause, as
defined in Section 5.3, or if Employee resigns from his employment for Good
Reason, as defined in Section 5.4, the Company shall continue to pay Employee
his annual Base Salary as of the date of termination or resignation for a
period of one (1) year following the date of termination or resignation (such
period, as applicable, being referred to hereinafter as the "Severance
Period"); provided, however, notice by either party of its intention not to
extend the Initial Employment Term beyond December 31, 1999 shall not
constitute termination without Cause or resignation for Good Reason. During
the Severance Period, Employee shall also be eligible to participate on the
same terms and conditions as in effect immediately prior to such termination or
resignation in all health, medical, supplemental medical and life insurance
plans or programs ("Employee Welfare Plans") provided to Employee by the
Company pursuant to Section 4 above at the time of such termination or
resignation and which are provided by the Company to its employees following
the date of such termination or resignation; provided, however, that Employee's
eligibility to participate in these Employee Welfare Plans shall end at such
time as Employee becomes eligible to receive coverage under comparable programs
of a subsequent employer. If, during the Severance Period, Employee is
precluded from participating in any Employee Welfare Plan by its terms or
applicable law, the Company will provide Employee with benefits that are
reasonably equivalent to those which Employee would have received under such
plan had Employee been eligible to participate therein. Anything to the
contrary herein notwithstanding, the Company shall have no obligation to
continue to maintain any Employee Welfare Plan during the Severance Period
solely as a result of this Agreement.

5.1.2 Employee will not be required to mitigate the
amount of any payment provided for in Section 5.1.1 by seeking other
employment, and the amount of any such payment will not be reduced by any
compensation earned by Employee as the result of his employment by another
employer subsequent to termination of Employee's employment with the Company.

5.1.3 Death During Severance Period. In the event
of Employee's death during the Severance Period, the Severance Period shall
immediately cease, the Company shall not be obligated to make any further
payments pursuant to this Section 5, and the provisions of Section 6.1 shall
apply as though Employee's death had occurred immediately prior to termination
of Employee's employment hereunder.

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<PAGE> 4
5.1.4 Date of Termination. The date of termination
of employment without Cause shall be the date specified in a written notice of
termination to Employee. The date of resignation for Good Reason shall be the
date specified in the written notice of resignation from Employee to the
Company.

5.2 Termination for Cause; Resignation Without Good
Reason.

5.2.1 General. If Employee's employment hereunder
is terminated by the Company for Cause, or if Employee resigns from his
employment hereunder other than for Good Reason, Employee shall be entitled
only to payment of his Base Salary earned through and including the date of
termination or resignation. Employee shall have no further right to receive
any other compensation, or to participate in any other plan, arrangement, or
benefit, after such termination for Cause or resignation of employment other
than for Good Reason.

5.2.2 Date of Termination. Subject to Section 5.3,
the date of termination for Cause shall be the date of receipt by Employee of a
written Notice of Termination provided for in Section 5.2.3. The date of
resignation without Good Reason shall be the date specified in the written
notice of resignation from Employee to the Company, or if no date is specified
therein, ten (10) business days after receipt by the Company of written notice
or resignation from Employee.

5.2.3 Notice of Termination. Termination of
Employee's employment for Cause shall be communicated by delivery to Employee
of a copy of a resolution duly adopted by the affirmative vote of not less than
a majority of the entire membership of the Company's Board at a meeting of the
Board called and held for such purpose (after reasonable notice to Employee and
reasonable opportunity for Employee together with Employee's counsel, to be
heard before the Board prior to such vote), finding that in the good faith
opinion of the Board an event constituting Cause for termination in accordance
with Section 5.3 has occurred and specifying the particulars thereof (a "Notice
of Termination"). For purposes of this Agreement, no purported termination of
Employee's employment for Cause shall be effective without delivery of such
Notice of Termination.

5.3 Cause. Termination for "Cause" means termination of
Employee's employment because of (i) any willful material violation by Employee
of any law or regulation applicable to the business of the Company or any of
its subsidiaries or Employee's conviction for, or guilty plea to, a felony or a
crime involving moral turpitude, or any willful perpetration by Employee of a
common law fraud, (ii) Employee's commission of an act involving gross
negligence on the part of Employee in the conduct of his duties under this
Agreement or any other employment or consulting agreement with another employer
having a business relationship with the Company, (iii) Employee's commission of
an act of personal dishonesty which involves personal profit in connection with
the Company or any other employer having a business relationship with the
Company, (iv) any material breach by Employee of any provision of this
Agreement or any other employment or consulting agreement with another employer
having a business relationship with the Company including, without limitation,
the continued failure or

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<PAGE> 5
refusal of Employee to perform the material duties required of him as an
employee of the Company, or (v) any other misconduct by Employee which is
materially injurious to the financial condition or business reputation of, or
is otherwise materially injurious to, the Company or any of its subsidiaries or
affiliates; provided, however, that if any such Cause relates to Employee's
obligations under this Agreement and (x) is susceptible to cure and (y) does
not constitute a repetition of such Cause, the Company shall not terminate
Employee's employment hereunder unless the Company first gives Employee a
Notice of Termination, and Employee has not, within ten (10) business days
following receipt of the notice, cured such Cause, or in the event such Cause
is not susceptible to cure within such ten (10) business day period, Employee
has not taken all reasonable steps within such ten (10) business day period to
cure such Cause as promptly as practicable thereafter.

5.4 Good Reason. For purposes of this Agreement, "Good
Reason" means:

5.4.1 A diminution in Employee's position,
authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which
is remedied by the Company promptly after receipt of
notice thereof given by Employee; provided, however,
that the creation of additional officer positions
shall not be considered a diminution in Employee's
authority so long as Employee continues to hold the
office of Executive Vice President and Chief
Financial Officer and performs the duties, functions
and responsibilities within the Company as performed
by him prior to the date hereof;

5.4.2 The Company's failure or refusal to
comply with the provisions of this Agreement; or

5.4.3 The Company (i) files a petition in
bankruptcy court or is adjudicated a bankrupt; (ii)
institutes or suffers to be instituted any procedure
in bankruptcy court for reorganization or
rearrangement of its financial affairs; (iii) has a
receiver of its assets or property appointed because
of insolvency; or (iv) makes a general assignment for
the benefit of creditors.

6. Death or Permanent Disability.

6.1 Death. If Employee's employment hereunder is
terminated by death, the Company shall, within ninety (90) days of the date of
death, make a lump sum payment to Employee's estate (or other beneficiary
designated by him in writing) equal in amount to Employee's Base Salary as in
effect on the date of death that would have been paid to Employee over a period
of twelve months. Thereafter, the Company shall have no further obligation to
Employee under the Agreement.

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<PAGE> 6
Company may at any time after the last day of the six consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of six months, terminate Employee's employment hereunder for
"Permanent Disability" by written notice to Employee. The Company shall,
following such termination, continue to pay Employee's Base Salary as then in
effect for a period of twelve months, and shall continue during such period
Employee's participation in medical benefits programs then maintained for the
Company's senior executive officers (or shall provide reasonably equivalent
benefits). Employee will use his reasonable best efforts to cooperate with any
physician engaged by the Company to determine whether or not Permanent
Disability exists, and the determination of such physician made in writing to
the Company and Employee shall be final and conclusive for all purposes of this
Agreement. Any payments provided for in this Section 6.2 shall be offset (but
not below zero) by any salary continuation payments received by Employee under
any plan, program or arrangements in which Employee participated pursuant to
Section 4.1 of this Agreement. Except as provided in this Section 6.2, upon
termination of the Employee's employment hereunder by virtue of Employee's
Permanent Disability, the Company shall have no further obligation to Employee
under this Agreement.

7. Change of Control.

7.1 Notwithstanding anything to the contrary contained
herein, if the Company terminates Employee without Cause upon or within six (6)
months following a Change of Control, as defined below, the Company will pay to
Employee an amount equal to the greater of (i) Employee's annual Base Salary as
of the date of the Change of Control, or (ii) if the Change of Control occurs
during the Initial Employment Term, the remaining portion of Employee's Base
Salary for the Initial Employment Term as of the date Employee's employment is
terminated, as severance pay, and the covenant not to compete set forth in
Section 8.3.1 below will not apply to Employee.

7.2 For purposes of this Agreement, "Change of Control"
means:

(a) A consolidation, merger or similar
transaction involving the Company which has one or more of the following
results: (i) the Company is not the surviving entity; (ii) a single person or
entity or a group of persons and/or entities acting in concert (an "Acquiring
Entity") acquire a majority amount or more of the Company's Common Stock,
followed by a change in a majority of the membership of the Board, other than
as a result of death or voluntary resignation (for reason unrelated to the
transaction) of any member or members of the Board, within six months from the
date the Acquiring Entity acquires a majority amount or more of the Company's
common stock; (iii) there is a sale or transfer of all or substantially all of
the Company's assets; or (iv) the Company is dissolved or liquidated; or

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<PAGE> 7
Holdings' Units, as defined in the Plan; (iii) there is a sale or transfer of
all or substantially all of Holdings' assets; or (iv) Holdings is dissolved or
liquidated.

(c) The provisions of (a) and (b) above
notwithstanding, it is not the intent of the Company to include within the
definition of "Change of Control" changes in the ownership of the Company
and/or Holdings which are occasioned by the transfer or sale of Units and/or
Company common stock to one or more parties who acquire the Units and/or
Company common stock for purposes of maintaining a passive investment in the
Company and/or Holdings. For these reasons, the parties agree that the Board
reserves the authority to determine, in good faith, and in its sole discretion,
whether the occurrence of a particular event (such as the sale of Units and/or
Company common stock to an affiliate, a current investor, or another
third-party passive investor) falls within the definition of a "Change of
Control" for purposes of this Agreement.

8. Confidentiality.

8.1 Confidentiality. Employee covenants and
agrees with the Company that he will not at any time, except in performance of
his obligations to the Company hereunder or with the prior written consent of
the Company, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company or any of its subsidiaries and affiliates. The term "confidential
information" includes information not previously disclosed to the public or to
the trade by the Company's management, or otherwise in the public domain, with
respect to the Company's or any of its affiliates' or subsidiaries' products,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product price
lists, customer lists, technical information, financial information (including
the revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.

8.2 Exclusive Property. Employee confirms that
all confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by Employee
relating to the business of the Company shall be and remain the property of the
Company.

8.3 Noncompetition.

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<PAGE> 8
provided, however, (i) nothing contained in this Section 8.3.1 shall prevent
Employee from being employed by a company whose business activities compete,
directly or indirectly, with the Company so long as Employee is employed in a
capacity or a division, unit or separate portion of that other company which
does not compete with the business of the Company, and (ii) the provisions of
this Section 8.3.1 shall not apply if Employee elects to give notice of
non-extension as provided in Section 2 prior to the end of the Initial
Employment Term or any one-year renewal period thereafter. Employee hereby
further agrees that Employee will not solicit or endeavor to entice away from
the Company, or any of its affiliates or subsidiaries, any person who is, or
was during the then most recent twelve month period, employed by or associated
with the Company, nor will Employee solicit or endeavor to entice away from the
Company, or any of its affiliates or subsidiaries, any person or entity who is,
or was within the then most recent twelve month period, a customer, client or
prospect of the Company. The period during which the obligations of this
Section 8.3 shall apply to Employee shall be extended by a period of time equal
to any period during which Employee shall be in breach of such obligations.

8.3.2 If the Company gives Employee notice
of its intention not to extend this Agreement for an additional one-year period
beyond December 31, 1999 in accordance with Section 2 above, the Company, in
its sole discretion, shall have the option and right, by giving notice to
Employee and paying to Employee an amount equal to Employee's Base Salary as
currently in effect (such amount to be payable at intervals consistent with the
Company's payroll practices for other senior executives) to prevent Employee
from competing with the Company for a period of one (1) year following the
termination of Employee's employment under this Agreement in the same manner as
set forth in Section 8.3.1 above.

8.3.3 If this Agreement is extended for
additional one-year periods beyond December 31, 1999 in accordance with Section
2 above and, thereafter, either (i) the Company gives Employee notice of its
intention not to extend the terms of this Agreement for additional one-year
periods, or (ii) the Company terminates Employee without Cause, or (iii)
Employee resigns for Good Reason, the Company, in its sole discretion, shall
have the option and right, by giving notice to Employee and paying to Employee
an amount equal to Employee's Base Salary as currently in effect (such amount
to be payable at intervals consistent with the Company's payroll practices for
other senior executives) to prevent Employee from competing with the Company
for a period of one (1) year following the termination of Employee's employment
under this Agreement in the same manner as set forth in Section 8.3.1.

8.3.4 Employee shall not be required to
mitigate the amount of any payment provided in Sections 8.3.2 and 8.3.3 by
seeking other employment; provided, however, if Employee violates or breaches
the non-competition provisions set forth in Sections 8.3.2 and 8.3.3, the
amount of any payment provided in Sections 8.3.2 and 8.3.3 will be
discontinued, in addition to all other legal and equitable remedies available
to the Company.

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<PAGE> 9
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable. In the event of a breach or a threatened breach of this Section
8, the Company shall be entitled to an injunction restraining Employee from
committing or continuing such breach, as well as to any and all other legal and
equitable remedies permitted by law but only if the Company has fulfilled all
its obligations to Employee pursuant to this Agreement.

9. Miscellaneous.

9.1 Notices. All notices and communications
hereunder shall be in writing, addressed as follows:

To the Company:

Premium Standard Farms, Inc.
423 W. 8th Street, Suite 200
Kansas City, Missouri 64105
Attention: Chief Executive Officer

To Employee:

William R. Patterson
Premium Standard Farms, Inc.
423 W. 8th Street, Suite 200
Kansas City, Missouri 64105

9.2 Severability. If any provision of this
Agreement shall be prohibited by or invalid under applicable law or otherwise
determined to be unenforceable, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of
this Agreement.

9.3 Disputes. Any controversy, claim or dispute
between the parties arising out of this Agreement shall be settled by
arbitration in Kansas City, Missouri in accordance with the Expedited Labor
Arbitration Rules of the American Arbitration Association.

9.4 Entire Agreement; Modification. This
Agreement constitutes the entire agreement among the parties hereto and
supersedes any and all prior contracts, arrangements or understandings between
the parties, including without limitation the Old Contract. This

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<PAGE> 10
Agreement may be amended or modified at any time only by mutual written
agreement of the parties.

9.5 Withholding. The Company may withhold from
any amounts payable under this Agreement such federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.

9.6 Governing Law. This Agreement shall be
construed, interpreted, and governed in accordance with the laws of the state
of Missouri without regard to conflict of law principles.

9.7 Successors. This Agreement shall be binding
upon and inure to the benefit of, and shall be enforceable by Employee and the
Company, their respective heirs, executors, administrators and assigns. In the
event the Company is merged, consolidated, liquidated by a parent corporation,
or otherwise combined into one or more entities, the provisions of this
Agreement shall be binding upon and inure to the benefit of the parent
corporation or the entity resulting from such merger or to which the assets
shall be sold or transferred, which entity from and after the date of such
merger, consolidation, sale or transfer shall be deemed to be the Company for
purposes of this Agreement. In the event of any other assignment of this
Agreement by the Company, by operation of law or otherwise, the Company shall
remain primarily liable for its obligations hereunder. Employee may not assign
this Agreement.

9.8 Headings. The headings of Sections herein
are included solely for convenience of reference and shall not control the
meaning or interpretation of any of the provisions of this Agreement.

9.9 Counterparts. This Agreement may be executed
by either of the parties hereto in counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.

9.10 Survival. All Sections of this Agreement
shall survive beyond the period during which Employee is employed hereunder,
except as otherwise specifically stated.

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THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES HERETO

IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first above written.

PREMIUM STANDARD FARMS, INC.

/s/ Dennis W. Harms
--------------------------------
By: Dennis W. Harms
Title: Chief Executive Officer

EMPLOYEE

/s/ William R. Patterson
--------------------------------
William R. Patterson

<PAGE> 1

EXHIBIT 10.9

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of November
1, 1994 (the "Agreement"), between Premium Standard Farms, Inc., a Missouri
corporation (the "Company"), and Mark Warren (the "Employee").

WHEREAS, the Company and the Employee are parties to an
Employment Agreement dated as of December 1, 1992 (the "Old Contract") which is
terminated as of the date hereof and replaced in its entirety by this
Agreement;

WHEREAS, the Company desires to employ the Employee and to
assure itself of the continued services of the Employee for the term of
employment provided for in this Agreement, and the Employee desires to be
employed by the Company for such period, upon the terms and conditions
hereinafter set forth;

NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, the parties hereto agree as follows:

1. EMPLOYMENT AND DUTIES

1.1. General. The Company hereby employs the Employee,
and the Employee agrees to serve, as Vice President of Operations/Missouri of
the Company upon the terms and conditions herein contained. In such capacities
the Employee agrees to serve the Company faithfully and to the best of his
ability under the direction of the Co-Chairmen and President of the Company or
such other person or persons as any of them may designate. The Employee also
agrees to serve, if elected, at no compensation in addition to that provided
for in this Agreement, in the position of officer or director of any subsidiary
of the Company; provided, however, that such position shall be of no less
status relative to such subsidiary as the position that the Employee holds
pursuant to the first sentence of this Section 1.1 with respect to the Company.

1.2. Term of Employment. The Employee's employment under
this Agreement shall commence on November 1, 1994 (the "Effective Date") and
shall terminate on the earlier of (i) November 1, 1999, or (ii) termination of
the Employee's employment pursuant to this Agreement. This initial term,
however, shall be automatically extended without further action of either party
for additional one-year periods, unless written notice of either party's
intention not to extend has been given to the other party hereto at least three
months prior to the expiration of the then effective term (the period
commencing on the Effective Date and ending on November 1, 1999, or such later
date to which the term of the Employee's employment shall have been extended is
hereinafter referred to as the "Employment Term").

1.3. Duties. For the Employment Term, the Employee agrees
to render full-time service to the Company as Vice President of
Operations/Missouri, and in connection

<PAGE> 2
therewith to perform such duties, not inconsistent with the Employee's position
of Vice President of Operations/Missouri, as the Employee may be reasonably
directed to perform by the Co-Chairmen and President of the Company or such
other person or persons as any of them may designate. For purposes of this
Agreement, "full-time service" means the rendering of employment services
pursuant to the terms of this Agreement at the Company's headquarters location
in Princeton, Missouri each day during the Company's regular hours of business,
exclusive of vacations, paid sick leave, paid holidays, or authorized leaves of
absence, unless otherwise directed by the Co-Chairmen and President of the
Company or such other person or persons as any of them may designate.

2. COMPENSATION

2.1. Base Salary. From the Effective Date, the Employee
shall be entitled to receive a base salary ("Base Salary") at a rate of
$130,000.00 per annum, payable in arrears in equal installments not less
frequently than monthly in accordance with the Company's payroll practices,
with such annual increases as necessary to reflect changes in the cost of
living and with such additional increases as may be provided in accordance with
the terms hereof. Once increased, such higher amount shall constitute the
Employee's annual Base Salary.

2.2. Annual Review. The Employee's Base Salary shall be
reviewed by the Compensation Review Committee of the Company in good faith,
based upon the Employee's performance, not less often than annually, and such
Base Salary may be increased (but not decreased) upon such review during the
remainder of the Employment Term. In addition to any increases under Section
2.2, the Company at any time may in its sole discretion increase the Employee's
Base Salary.

3. EMPLOYEE BENEFITS

3.1. General. The Employee shall be included, to the
extent eligible thereunder by virtue of his position, tenure, salary, age and
other qualifications, in all employee benefit plans, programs or arrangements
(including, without limitation, any plans, programs or arrangements providing
for retirement benefits, incentive compensation, profit sharing, bonuses,
disability benefits, health and life insurance, or vacation and paid holidays)
which shall be established by the Company for, or made available to, its
employees. For purposes of the aforesaid benefit plans and other purposes of
this Agreement, the Employee's employment with the Company shall not be
terminated or interrupted by the termination of the Old Contract.

3.2. Company Car. The Employee shall continue to have the
use of a car owned or leased by the Company to be used by the Employee for the
performance of his services under this Agreement. The value of the car shall
be approximately $25,000. The Employee shall also be reimbursed for expenses
associated with the use of such vehicle in accordance with the Company's
expense reimbursement policy.

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<PAGE> 3
3.3. Reimbursement of Expenses. The Company will
reimburse the Employee for reasonable travel and other business expenses
incurred by him in the fulfillment of his duties hereunder upon presentation by
the Employee of an itemized account of such expenditures, in accordance with
Company practices consistently applied.

4. TERMINATION OF EMPLOYMENT

4.1. Termination without Cause; Resignation for Good
Reason.

4.1.1. General. Subject to the provisions of Section 4.1.2
and 4.1.3, if, prior to the expiration of the Employment Term, the Employee's
employment is terminated by the Company without Cause (as defined in Section
4.3), or if the Employee resigns from his employment hereunder for Good Reason
(as defined in Section 4.4), the Company shall continue to pay the Employee his
Base Salary as of the date of termination or resignation for the lesser of (i)
one year following the date of termination or resignation or (ii) the remainder
of the Employment Term (such period, as applicable, being referred to
hereinafter as the "Severance Period"). During the Severance Period, the
Employee shall also be eligible to participate on the same terms and conditions
as in effect immediately prior to such termination or resignation in all
health, medical, supplemental medical and life insurance plans or programs
("Employee Welfare Plans") provided to the Employee by the Company pursuant to
Section 3 above at the time of such termination or resignation and which are
provided by the Company to its employees following the date of such termination
or resignation; provided, however, that the Employee's eligibility to
participate in these Employee Welfare Plans shall end at such time as the
Employee begins to receive coverage under comparable programs of a subsequent
employer. If, during the Severance Period, the Employee is precluded from
participating in any Employee Welfare Plan by its terms or applicable law, the
Company shall provide the Employee with benefits that are reasonably equivalent
in the aggregate to those which the Employee would have received under such
plan had he been eligible to participate therein. Anything to the contrary
herein notwithstanding, the Company shall have no obligation to continue to
maintain during the Severance Period any Employee Welfare Plan solely as a
result of the provisions of this Agreement.

4.1.2. Conditions Applicable to the Severance Period. If,
during the Severance Period, the Employee materially breaches his obligations
under Section 7 of this Agreement, the Company may, upon written notice to the
Employee, terminate the Severance Period and cease to make any further
payments, or to provide any further benefits, described in Section 4.1.1.

4.1.3. Death During Severance Period. In the event of the
Employee's death during the Severance Period, the Severance Period shall
immediately cease, the Company shall not be obligated to make any further
payments pursuant to this Section 4, and the provisions of Section 5.1 shall
apply as though the Employee's death had occurred immediately prior to
termination of the Employment Term.

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<PAGE> 4
4.1.4. Date of Termination. The date of termination of
employment without Cause shall be the date specified in a written notice of
termination to the Employee. The date of resignation for Good Reason shall be
the date specified in the written notice of resignation from the Employee to
the Company; provided, however, that no such written notice shall be effective
unless the cure period specified in Section 4.4 has expired without the Company
having corrected, to the reasonable satisfaction of the Employee, the event or
events subject to cure. If no date of resignation is specified in the written
notice from the Employee to the Company, the date of termination shall be the
first day following such expiration of such cure period.

4.2. Termination for Cause; Resignation Without Good
Reason.

4.2.1 General. If, prior to the expiration of the
Employment Term, the Employee's employment is terminated by the Company for
Cause, or if the Employee resigns from his employment hereunder other than for
Good Reason, the Employee shall be entitled only to payment of his Base Salary
earned through and including the date of termination or resignation. The
Employee shall have no further right to receive any other compensation, or to
participate in any other plan, arrangement, or benefit, after such termination
or resignation of employment.

4.2.2. Date of Termination. Subject to the proviso to
Section 4.3, the date of termination for Cause shall be the date of receipt by
the Employee of a written Notice of Termination provided for in Section 4.2.3.
The date of resignation without Good Reason shall be the date specified in the
written notice of resignation from the Employee to the Company, or if no date
is specified therein, 10 business days after receipt by the Company of written
notice of resignation from the Employee.

4.2.3. Notice of Termination. Termination of the Employee's
employment for Cause shall be communicated by delivery to the Employee of a
written notice from the Company, stating that in the good faith opinion of the
Company an event constituting Cause for termination in accordance with Section
4.3 has occurred and specifying the particulars thereof (a "Notice of
Termination"). For purposes of this Agreement, no purported termination of the
Employee's employment for Cause shall be effective without delivery of such
Notice of Termination.

4.3. Cause. Termination for "Cause" shall mean
termination of the Employee's employment because of (i) any willful material
violation by the Employee of any law or regulation applicable to the business
of the Company or any of its subsidiaries or the Employee's conviction for, or
guilty plea to, a felony or a crime involving moral turpitude, or any willful
perpetration by the Employee of a common law fraud, (ii) the Employee's
commission of an act involving gross negligence on the part of the Employee in
the conduct of his duties under this Agreement or any other employment or
consulting agreement with another employer having a business relationship with
the Company, (iii) the Employee's commission of an act of personal dishonesty
which involves personal profit in connection with the Company or any other
employer having a business relationship with the Company, (iv) any material
breach by the Employee of

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<PAGE> 5
any provision of this Agreement or any other employment or consulting agreement
with another employer having a business relationship with the Company,
including, without limitation, the continued failure or refusal of the Employee
to perform the material duties required of him as an employee of the Company,
or (v) any other misconduct by the Employee which is materially injurious to
the financial condition or business reputation of, or is otherwise materially
injurious to, the Company or any of its subsidiaries or affiliates; provided,
however, that if any such Cause relates to the Employee's obligations under
this Agreement and (x) is susceptible to cure and (y) does not constitute a
repetition of such Cause, the Company shall not terminate the Employee's
employment hereunder unless the Company first gives the Employee a Notice of
Termination, and the Employee has not, within 10 business days following
receipt of the notice, cured such Cause, or in the event such Cause is not
susceptible to cure within such 10 business day period, the Employee has not
taken all reasonable steps within such 10 business day period to cure such
Cause as promptly as practicable thereafter.

4.4. Good Reason. For purposes of this Agreement, "Good
Reason" shall mean termination of the employment agreement by the Employee for
reason of the Company's material breach of any provision of this Agreement;
provided, however, that if any such material breach relates to the Company's
obligations under this Agreement and (x) is susceptible to cure and (y) does
not constitute a repetition of such material breach, the Employee shall not
terminate his employment hereunder unless the Employee first gives the Company
notice of its intention to terminate and of the grounds for such termination,
and the Company has not, within 10 business days following receipt of the
notice, cured such material breach, or in the event such material breach is not
susceptible to cure within such 10 business day period, the Company has not
taken all reasonable steps within such 10 business day period to cure such
material breach as promptly as practicable thereafter.

5. DEATH OR PERMANENT DISABILITY

5.1. Death. If the Employee's employment hereunder is
terminated by death, the Company shall, within 90 days of the date of death,
make a lump sum payment to the Employee's estate (or other beneficiary
designated by him in writing) equal in amount to the Base Salary as in effect
on the date of death that would have been paid to the Employee over a period of
three months. Thereafter, the Company shall have no further obligation under
this Agreement.

5.2. Permanent Disability. In the event the Employee
shall become physically or mentally disabled so that he is unable to render the
services provided for by this Agreement for a period of six consecutive months,
or for shorter periods aggregating six months during any twelve-month period,
then the Company may at any time after the last day of the six consecutive
months of disability or the day on which the shorter periods of disability
equal an aggregate of six months terminate the Employment Term for "Permanent
Disability" by written notice to the Employee. The Company shall, following
such termination, continue to pay the Employee's Base Salary as then in effect
for a period of six months, and shall continue during such period the
Employee's participation in medical benefits programs then maintained for the
Company's

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<PAGE> 6
employees (or shall provide reasonably equivalent benefits). The Employee will
use his reasonable best efforts to cooperate with any physician engaged by the
Company to determine whether or not Permanent Disability exists, and the
determination of such physician made in writing to the Company and the Employee
shall be final and conclusive for all purposes of this Agreement. Any payments
provided for in this Section 5.2 shall be offset (but not below zero) by any
salary continuation payments received by the Employee under any plan, program
or arrangements in which the Employee participated pursuant to Section 3 of
this Agreement. Except as provided in this Section 5.2, upon termination of
the Employment Term by virtue of the Employee's Permanent Disability, the
Company shall have no further obligation to the Employee under this Agreement.

6. OBLIGATION TO MITIGATE DAMAGES

The Employee shall not be required to mitigate the amount of
any payment provided for in Section 4.1 by seeking other employment, but the
amount of any payment provided for in Section 4.1 shall be reduced (but not
below zero) by any compensation earned by the Employee as the result of his
employment by another employer subsequent to termination or resignation of his
employment with the Company.

7. CONFIDENTIALITY

7.1. Confidentiality. The Employee covenants and agrees
with the Company that he will not at any time, except in performance of his
obligations to the Company hereunder or with the prior written consent of the
Company, directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his association with
the Company or any of its subsidiaries and affiliates. The term "confidential
information" includes information not previously disclosed to the public or to
the trade by the Company's management, or otherwise in the public domain, with
respect to the Company's, or any of its affiliates' or subsidiaries', products,
facilities, applications and methods, trade secrets and other intellectual
property, systems, procedures, manuals, confidential reports, product price
lists, customer lists, technical information, financial information (including
the revenues, costs or profits associated with any of the Company's products),
business plans, prospects or opportunities.

7.2. Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by Employee
relating to the business of the Company shall be and remain the property of the
Company.

7.3. Injunctive Relief. Without intending to limit the
remedies available to the Company, the Employee acknowledges that a breach of
any of the covenants contained in this Section 7 may result in material and
irreparable injury to the Company or its affiliates or subsidiaries for which
there is no adequate remedy at law, that it will not be possible to measure
damages for such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary restraining
order and/or a preliminary or

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<PAGE> 7
permanent injunction restraining the Employee from engaging in activities
prohibited by this Section 7 or such other relief as may be required
specifically to enforce any of the covenants in this Section 7. If for any
reason a final decision of any court determines that the restrictions under
this Section 7 are not reasonable or that consideration therefor is inadequate,
such restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration and scope identified in this Section 7 as will
render such restrictions valid and enforceable.

8. MISCELLANEOUS

8.1. Notices. All notices or communications hereunder
shall be in writing, addressed as follows:

To the Company:

Premium Standard Farms, Inc.
Highway 65 North
Princeton, Missouri 64673

Attention: Dennis W. Harms
Telecopy: (816) 748-4998

To the Employee:

Mark Warren
Highway 65 North
Princeton, Missouri 64673

8.2. Severability. If a court of competent jurisdiction
determines that any term or provision hereof is invalid or unenforceable, (a)
the remaining terms and provisions hereof shall be unimpaired and (b) such
court shall have the authority to replace such invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.

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<PAGE> 8
and conclusive on the parties and judgment upon such decision may be entered in
any court having jurisdiction thereof. Pending resolution of any dispute, any
amounts payable pursuant to the terms of the Agreement shall be set aside by
the Company in an escrow account. Upon resolution of the dispute, such amounts
held in the escrow account shall be paid to the appropriate party.

8.4. Entire Agreement. This Agreement represents the
entire agreement of the parties and shall supersede any and all previous
contracts, arrangements or understandings between the Company and the Employee,
including, without limitation, the Old Contract. The Agreement may be amended
at any time by mutual written agreement of the parties hereto.

8.5. Withholding. The Company shall be entitled to
withhold, or cause to be withheld, from payment any amount of withholding taxes
required by law with respect to payments made to the Employee in connection
with his employment hereunder.

8.6. Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of Missouri without
reference to rules relating to conflict of law.

8.7. Successors. This Agreement shall be binding upon and
inure to the benefit of, and shall be enforceable by the Employee and the
Company, their respective heirs, executors, administrators and assigns. In the
event the Company is merged, consolidated, liquidated by a parent corporation,
or otherwise combined into one or more entities, the provisions of this
Agreement shall be binding upon and inure to the benefit of the parent
corporation or the entity resulting from such merger or to which the assets
shall be sold or transferred, which entity from and after the date of such
merger, consolidation, sale or transfer shall be deemed to be the Company for
purposes of this Agreement. In the event of any other assignment of this
Agreement by the Company, by operation of law or otherwise, the Company shall
remain primarily liable for its obligations hereunder. This Agreement shall
not be assignable by the Employee.

8.8. Headings. The headings of sections herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.

8.9. Counterparts. This Agreement may be executed by
either of the parties hereto in counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.

8.10 Authority. The Company represents and warrants that
the signatory party hereto on behalf of the Company is a duly appointed officer
of the Company acting pursuant to the power and authority granted to such
officer by the Board of Directors of the Company. The Company further
represents that the execution of this Agreement on behalf of the Company by

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<PAGE> 9
a single signatory party with such power and authority shall be deemed binding
upon the Company.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Employee has hereunto set his hand, as of the day and year
first above written.

PREMIUM STANDARD FARMS, INC.

By: /s/ Dennis Harms
------------------------------
Title: President
---------------------------

EMPLOYEE

/s/ Mark Warren
---------------------------------
Mark Warren

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<PAGE> 1
EXHIBIT 10.10

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT dated as of November 1, 1994 (the "Agreement"),
between PSF Finance L.P., a Delaware limited partnership ("LP"), and David
Mitchell (the "Employee").

WHEREAS, LP desires to employ the Employee in its Premium Standard Farms
of Texas Division and to assure itself of the continued services of the
Employee for the term of employment provided for in this Agreement, and the
Employee desires to be employed by LP in its Premium Standard Farms of Texas
Division for such period, upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

1. EMPLOYMENT AND DUTIES

1.1. General. LP hereby employs the Employee, and the Employee agrees
to serve, as Vice President of Operations of the Premiums Standard Farms of
Texas Division of LP, and as Vice President of Operations/Texas of Premium
Standard Farms, Inc. ("Farms"), upon the terms and conditions herein contained.
In such capacities, the Employee agrees to serve the Premium Standard Farms of
Texas Division of LP and Farms faithfully and to the best of his ability under
the direction of Dennis W. Harms, Co-Chairman and Chief Executive Officer of
the Premium Standard Farms of Texas Division of LP ( the "CEO") or such other
person as may be designated by the CEO of the Premium Standard Farms of Texas
Division of LP from time to time. The Employee agrees that he will serve as
Vice President of Operations/Texas of Farms for no compensation. The Employee
also agrees to serve, if elected, at no compensation in addition to that
provided for in this Agreement, in the position of officer or director of any
affiliate of LP; provided, however, that such position shall be of no less
status relative to such affiliate as the position that the Employee holds
pursuant to the first sentence of this Section 1.1 with respect to Farms.

1.2. Term of Employment. The Employee's employment under this
Agreement shall commence on November 1, 1994 (the "Effective Date") and shall
terminate on the earlier of (i) November 1, 1999, or (ii) termination of the
Employee's employment pursuant to this Agreement. This initial term, however,
shall be automatically extended without further action of either party for
additional one-year periods, unless written notice of either party's intention
not to extend has been given to the other party hereto at least three months
prior to the expiration of the then effective term (the period commencing on
the Effective Date and ending on November 1, 1999, or such later date to which
the term of the Employee's employment shall have been extended is hereinafter
referred to as the "Employment Term").

1.3. Duties. For the Employment Term, the Employee agrees to render
full-time service to the Premium Standard Farms of Texas Division of LP as Vice
President of Operations and to Farms as Vice President of Operations/Texas, and
in connection therewith to perform such duties, not inconsistent with the
Employee's positions, as the Employee may be reasonably

<PAGE> 2

directed to perform by the CEO of the Premium Standard Farms of Texas
Division of LP, the CEO of Farms or such other person as may be designated by
the CEO of the Premium Standard Farms of Texas Division of LP from time to
time. For purposes of this Agreement, "full-time service" means the rendering
of employment services pursuant to the terms of this Agreement at the Premium
Standard Farms of Texas Division's and Farms' headquarters locations, or such
other locations as may be directed by the CEO of the Premium Standard Farms of
Texas Division of LP or such other person as may be designated by the CEO of
the Premium Standard Farms of Texas Division of LP from time to time, each day
during the Premium Standard Farms of Texas Division's and Farms' regular hours
of business, exclusive of vacations, paid sick leave, paid holidays, or
authorized leaves of absence, unless otherwise directed by the CEO of the
Premium Standard Farms of Texas Division of LP or such other person as may be
designated by the CEO of the Premium Standard Farms of Texas Division of LP
from time to time.

2. COMPENSATION

2.1. Base Salary. From the Effective Date, the Employee shall be
entitled to receive a base salary ("Base Salary") at a rate of $100,000.00 per
annum, payable in arrears in equal installments not less frequently than
monthly in accordance with the Premium Standard Farms of Texas Division's
payroll practices, with such annual increases as necessary to reflect changes
in the cost of living and with such additional increases as may be provided in
accordance with the terms hereof. Once increased, such higher amount shall
constitute the Employee's annual Base Salary.

2.2. Annual Review. The Employee's Base Salary shall be reviewed by
the Compensation Review Committee of Collings Farm, Inc., a Missouri
corporation and the general partner of LP ("Collings Farm"), from time to time,
in good faith, based upon the Employee's performance, not less often than
annually, and such Base Salary may be increased (but not decreased) upon such
review during the remainder of the Employment Term). In addition to any
increases under Section 2.2, LP at any time may in its sole discretion, subject
to the approval of the Compensation Review Committee of Collings Farm, increase
the Employee's Base Salary.

2.3. Equity Incentives. As of the Effective Date of this Agreement,
the Employee shall be eligible to participate in the PSF Finance L.P. Equity
Incentive Plan (the "Plan") and to receive the grant of an option to purchase
20,000 Units (as such term is defined in the Plan) which grant shall be
conditioned upon the Employee's continuous employment by LP from the Effective
Date of this Agreement through May 1, 1995.

3. EMPLOYEE BENEFITS

3.1. General. The Employee shall be included, to the extent eligible
thereunder by virtue of his position, tenure, salary, age and other
qualifications, in all employee benefit plans, programs or arrangements
(including, without limitation, any plans, programs or arrangements providing
for retirement benefits, incentive compensation, profit sharing, bonuses,
disability benefits, health and life insurance, or vacation and paid holidays)
which shall be established by LP for, or made available to, its Premium
Standard Farms of Texas Division employees.

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<PAGE> 3

3.2. Company Car. The Employee shall have the use of a car owned or
leased by LP or Farms to be used by the Employee for the performance of his
services under this Agreement. The value of the car shall be approximately
$25,000. The Employee shall also be reimbursed for expenses associated with
the use of such vehicle in accordance with the expense reimbursement policy of
the Premium Standard Farms of Texas Division.

3.3. Reimbursement of Expenses. LP will reimburse the Employee for
reasonable travel and other business expenses incurred by him in the
fulfillment of his duties hereunder upon presentation by the Employee of an
itemized account of such expenditures, in accordance with the Premium Standard
Farms of Texas Division's practices.

3.4. Relocation Expenses. As soon as practicable after the Effective
Date, LP shall reimburse the Employee for reasonable expenses incurred in
moving the Employee's household items, including the costs of packing, loading,
transfer and unloading of the Employee's furniture and other personal items. In
addition, LP shall reimburse the Employee for the cost of driving no more than
two personal cars from the Employee's present domicile to Dalhart, Texas. The
reimbursement shall be at the rate of $ .25 per mile. The Employee shall also
be entitled to reimbursement for reasonable meal and travel expenses incurred
in connection with driving such cars from the Employee's present domicile to
Dalhart, Texas.

4. TERMINATION OF EMPLOYMENT

4.1. Termination without Cause; Resignation for Good Reason.

4.1.1. General. Subject to the provisions of Section 4.1.2 and 4.1.3,
if, prior to the expiration of the Employment Term, the Employee's employment
is terminated by LP without Cause (as defined in Section 4.3), or if the
Employee resigns from his employment hereunder for Good Reason (as defined in
Section 4.4), LP shall continue to pay the Employee his Base Salary as of the
date of termination or resignation for the lesser of (i) one year following the
date of termination or resignation or (ii) the remainder of the Employment Term
(such period, as applicable, being referred to hereinafter as the "Severance
Period"). During the Severance Period, the Employee shall also be eligible to
participate on the same terms and conditions as in effect immediately prior to
such termination or resignation in all health, medical, supplemental medical
and life insurance plans or programs ("Employee Welfare Plans") provided to the
Employee by LP pursuant to Section 3 above at the time of such termination or
resignation and which are provided by LP to its Premium Standard Farms of Texas
Division employees following the date of such termination or resignation;
provided, however, that the Employee's eligibility to participate in these
Employee Welfare Plans shall end at such time as the Employee begins to receive
coverage under comparable programs of a subsequent employer. If, during the
Severance Period, the Employee is precluded from participating in any Employee
Welfare Plan by its terms or applicable law, LP shall provide the Employee with
benefits that are reasonably equivalent in the aggregate to those which the
Employee would have received under such plan had he been eligible to
participate therein. Anything to the contrary herein notwithstanding, LP shall
have no obligation to continue to maintain during the Severance Period any
Employee Welfare Plan solely as a result of the provisions of this Agreement.

4.1.2. Conditions Applicable to the Severance Period. If, during the
Severance Period, the Employee materially breaches his obligations under
Section 7 of this Agreement, LP

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<PAGE> 4

may, upon written notice to the Employee,terminate the Severance Period and
cease to make any further payments, or to provide any further benefits,
described in Section 4.1.1.

4.1.3. Death During Severance Period. In the event of the
Employee's death during the Severance Period, the Severance Period shall
immediately cease, LP shall not be obligated to make any further payments
pursuant to this Section 4, and the provisions of Section 5.1 shall apply as
though the Employee's death had occurred immediately prior to termination of the
Employment Term.

4.1.4. Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of termination to
the Employee. The date of resignation for Good Reason shall be the date
specified in the written notice or resignation from the Employee to LP;
provided, however, that no such written notice shall be effective unless the
cure period specified in Section 4.4 has expired without LP having corrected,
to the reasonable satisfaction of the Employee, the event or events subject to
cure. If no date of resignation is specified in the written notice from the
Employee to LP, the date of termination shall be the first day following such
expiration of such cure period.

4.2. Termination for Cause; Resignation Without Good Reason.

4.2.1. General. If, prior to the expiration of the Employment
Term, the Employee's employment is terminated by LP for Cause, or if the
Employee resigns from his employment hereunder other than for Good Reason, the
Employee shall be entitled only to payment of his Base Salary earned through
and including the date of termination or resignation. The Employee shall have
no further right to receive any other compensation, or to participate in any
other plan, arrangement, or benefit, after such termination or resignation of
employment.

4.2.2. Date of Termination. Subject to the proviso to Section 4.3,
the date of termination for Cause shall be the date of receipt by the Employee
of a written Notice of Termination provided for in Section 4.2.3. The date of
resignation without Good Reason shall be the date specified in the written
notice of resignation from the Employee to LP, or if no date is specified
therein, 10 business days after receipt by LP of written notice of resignation
from the Employee.

4.2.3. Notice of Termination. Termination of the Employee's
employment for Cause shall be communicated by delivery to the Employee of a
written notice from LP, stating that in the good faith opinion of LP an event
constituting Cause for termination in accordance with Section 4.3 has occurred
and specifying the particulars thereof (a "Notice of Termination"). For
purposes of this Agreement, no purported termination of the Employee's
employment for Cause shall be effective without delivery of such Notice of
Termination.

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<PAGE> 5

relationship with LP or any of its affiliates, (iii) the Employee's
commission of an act of personal dishonesty which involves personal profit in
connection with LP or any other employer having a business relationship with LP
or any of its affiliates, or (iv) material breach of any provision of this
Agreement or any other employment or consulting agreement with another employer
having a business relationship with LP or any of its affiliates, including,
without limitation, the continued failure or refusal of the Employee to perform
the material duties required of him as an employee of LP, or (v) any other
misconduct by the Employee which is materially injurious to the financial
condition or business reputation of, or is otherwise materially injurious to,
LP or any of its affiliates; provided, however, that if any such Cause relates
to the Employee's obligations under this Agreement and (x) is susceptible to
cure and (y) does not constitute a repetition of such Cause, LP shall not
terminate the Employee's employment hereunder unless LP first gives the
Employee a Notice of Termination, and the Employee has not, within 10 business
days following receipt of the notice, cured such Cause, or in the event such
Cause is not susceptible to cure within such 10 business day period, the
Employee has not taken all reasonable steps within such 10 business day period
to cure such Cause as promptly as practicable thereafter.

4.4. Good Reason. For purposes of this Agreement, "Good Reason"
shall mean termination of the employment agreement by the Employee for reason
of LP's material breach of any provision of this Agreement; provided, however,
that if any such material breach relates to LP's obligations under this
Agreement and (x) is susceptible to cure and (y) does not constitute a
repetition of such material breach, the Employee shall not terminate his
employment hereunder unless the Employee first gives LP notice of its
intention to terminate and of the grounds for such termination, and LP has not,
within 10 business days following receipt of the notice, cured such material
breach, or in the event such material breach is not susceptible to cure within
such 10 business day period, LP has not taken all reasonable steps within such
10 business day period to cure such material breach as promptly as practicable
thereafter.

5. DEATH OR PERMANENT DISABILITY

5.1. Death. If the Employee's employment hereunder is terminated by
death, LP shall, within 90 days of the date of death, make a lump sum payment
to the Employee's estate (or other beneficiary designated by him in writing)
equal in amount to the Base Salary as in effect on the date of death that would
have been paid to the Employee over a period of three months. Thereafter, LP
shall have no further obligation under this Agreement.

5.2. Permanent Disability. In the event the Employee shall become
physically or mentally disabled so that he is unable to render the services
provided for by this Agreement for a period of six consecutive months, or for
shorter periods aggregating six months during any twelve-month period, then LP
may at any time after the last day of the six consecutive months of disability
or the day on which the shorter periods of disability equal an aggregate of six
months terminate the Employment Term for "Permanent Disability" by written
notice to the Employee. LP shall, following such termination, continue to pay
the Employee's Base Salary as then in effect for a period of six months, and
shall continue during such period the Employee's participation in medical
benefits programs then maintained for LP's Premium Standard Farms of Texas
Division employees (or shall provide reasonably equivalent benefits). The
Employee will use his reasonable best efforts to cooperate with any physician
engaged by LP to determine whether or not Permanent Disability exists, and the
determination of such

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<PAGE> 6

physician made in writing to LP and the Employee shall be final and
conclusive for all purposes of this Agreement. Any payments provided for in
this Section 5.2 shall be offset (but not below zero) by any salary
continuation payments received by the Employee under any plan, program or
arrangements in which the Employee participated pursuant to Section 3 of this
Agreement. Except as provided in this Section 5.2, upon termination of the
Employment Term by virtue of the Employee's Permanent Disability, LP shall have
no further obligation to the Employee under this Agreement.

6. OBLIGATION TO MITIGATE DAMAGES

The Employee shall not be required to mitigate the amount of any payment
provided for in Section 4.1 by seeking other employment, but the amount of any
payment provided for in Section 4.1 shall be reduced (but not below zero) by
any compensation earned by the Employee as the result of his employment by
another employer subsequent to termination or resignation of his employment
with LP.

7. NONCOMPETITION AND CONFIDENTIALITY

7.1. Noncompetition. For so long as the Employee renders
employment to LP or Farms and continuing for two years thereafter, the
Employee shall not, without the prior written consent of LP, directly or
indirectly, as a sole proprietor, member of a partnership, stockholder or
investor (other than as a stockholder or investor owning not more than a 5%
interest), officer or director of a corporation, or as an employee, associate,
consultant or agent of any person, partnership, corporation or other business
organization or entity other than LP or Farms: (x) engage in any business
anywhere within the United States of America that is in competition with any
business actively conducted by LP, any division of LP or Farms; (y) solicit or
endeavor to entice away from LP, any division of LP or Farms any person who is,
or was during the then most recent 12-month period, employed by or associated
with LP, any division of LP or Farms; or (z) solicit or endeavor to entice away
from LP, any division of LP or Farms any person or entity who is, or was
within the then most recent 12-month period, a customer, client or prospect of
LP, any division of LP or Farms. The period during which the obligations of
this Section 7.1 shall apply to the Employee shall be extended by a period of
time equal to any period during which the Employee shall be in breach of such
obligations.

7.2. Confidentiality. The Employee covenants and agrees with LP and
Farms that he will not at any time, except in performance of his obligations to
LP and Farms hereunder or with the prior written consent of LP or Farms,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with LP, any division of
LP, Farms or any business associates or affiliates of LP or its divisions. The
term "confidential information" includes information not previously disclosed
to the public or to the trade by LP's, any division of LP's management, Farms'
management or otherwise in the public domain, with respect to LP's, any
division of LP's, any business associate's, Farms' or any affiliate's,
products, facilities, applications and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, technical information, financial
information (including the revenues, costs or profits associated with any of
LP's, any division of LP's, Farms' or any affiliate's products), business
plans, prospects or opportunities.

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<PAGE> 7

7.3. Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of LP or
Farms, as the case may be. All business records, papers and documents kept or
made by Employee relating to the business of LP, any of its divisions or Farms
shall be and remain the property of LP or Farms, as the case may be.

7.4. Injunctive Relief. Without intending to limit the remedies
available to LP and Farms, the Employee acknowledges that a breach of any of
the covenants contained in this Section 7 may result in material and
irreparable injury to LP, Farms or their respective affiliates or business
associates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, LP or Farms shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by this Section
7 or such other relief as may be required specifically to enforce any of the
covenants in this Section 7. If for any reason a final decision of any court
determines that the restrictions under this Section 7 are not reasonable or
that consideration therefor is inadequate, such restrictions shall be
interpreted, modified or rewritten by such court to include as much of the
duration and scope identified in this Section 7 as will render such
restrictions valid and enforceable.

8. MISCELLANEOUS

8.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:

To LP:
PSF Finance L.P.
Highway 65 North
Princeton, MO 64673

Attention: David R. Ramsay
c/o Theodore E. Gordon, Jr.
Telecopy: (816) 748-4998

To the Employee:

David Mitchell
c/o Premium Standard Farms of Texas
HCR No. 3, Box 322
Dalhart, TX 79022
Telecopy: (806) 377-6280

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<PAGE> 8

8.2. Severability. If a court of competent jurisdiction determines
that any term or provision hereof is invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) such court shall have
the authority to replace such invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that come closest to
expressing the intention of the invalid or unenforceable term or provision.

8.3. Disputes. Any disputes between the parties to this Agreement
shall be settled by arbitration in Kansas City, Missouri under the auspices of,
and in accordance with the rules of, the American Arbitration Association. The
decision in such arbitration shall be final and conclusive on the parties and
judgment upon such decision may be entered in any court having jurisdiction
thereof. Pending resolution of any dispute, any amounts payable pursuant to
the terms of the Agreement shall be set aside by LP in an escrow account. Upon
resolution of the dispute, such amounts held in the escrow account shall be
paid to the appropriate party.

8.4. Entire Agreement. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between LP and the Employee. The Agreement may
be amended at any time by mutual written agreement of the parties hereto.

8.5. Withholding. LP shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to the Employee in connection with his employment
hereunder.

8.6. Governing Law. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of Missouri without
reference to rules relating to conflict of law.

8.7. Successors. This Agreement shall be binding upon and inure to
the benefit of, and shall be enforceable by the Employee and LP, their
respective heirs, executors, administrators and, in the case of LP, its
assigns. In the event of a technical dissolution and reformation of LP, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the reformed LP, which LP from and after the date of such formation shall be
deemed to be LP for purposes of this Agreement. In the event LP is merged,
consolidated, liquidated by a parent corporation, or otherwise combined into
one or more entities, the provisions of this Agreement shall be binding upon
and inure to the benefit of the parent corporation or the entity resulting from
such merger or to which the assets shall be sold or transferred, which entity
from and after the date of such merger, consolidation, sale or transfer shall
be deemed to be LP for purposes of this Agreement. In the event of any other
assignment of this Agreement by LP, by operation of law or otherwise, LP shall
remain primarily liable for its obligations hereunder. This Agreement shall
not be assignable by the Employee.

8.8. Headings. The headings of sections herein are included solely
for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.

8.9. Counterparts. This Agreement may be executed by either of the
parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

-8-

<PAGE> 9

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.

IN WITNESS WHEREOF, LP has caused this Agreement to be duly executed and
the Employee has hereunto set his hand, as of the day and year first above
written.

PSF FINANCE L.P.

By Collings Farm, Inc.,
as General Partner

By: /s/ Dennis Harms
--------------------------
Title:
-----------------------

EMPLOYEE

/s/ David Mitchell
-----------------------------
David Mitchell

-9-

<PAGE> 1

EXHIBIT 10.11

CONSULTING AGREEMENT
--------------------

THIS CONSULTING AGREEMENT ("Agreement") is made and entered into effective
this 16th day of March, 1997, by and among Premium Standard Farms, Inc., a
Delaware corporation (the "Company"), Horst W. Schroeder ("Mr. Schroeder") and
HWS & Associates, Inc., a South Carolina corporation ("HWS").

RECITALS:
--------

WHEREAS the Company's management desires that it be able to continue to
call upon the experience and knowledge of Mr. Schroeder, president of HWS, for
consulting services and advice.

WHEREAS HWS is willing to cause Mr. Schroeder to continue to render such
services to the Company on the terms and conditions hereinafter set forth in
this Agreement.

NOW, THEREFORE, based on the Recitals set forth above, which are
incorporated herein by this reference, and based on the premises and mutual
covenants set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

1. Consulting Term. HWS shall be retained by the Company for an initial
term commencing on the effective date hereof ("Commencement Date") and ending on
December 31, 1999 (the "Term"), unless extended or renewed by mutual agreement
in writing of the parties hereto.

2. Position and Responsibilities. HWS agrees to cause Mr. Schroeder to
serve as a consultant to the Company and to render such advice and services to
the Company during the Term as may be reasonably required by the Company in
accordance with this Agreement, including but not limited to the following
areas:

(a) Serve as Chairman of the Board of Premium Standard Farms, Inc.
(the "Board"), Chairman of the Compensation Committee of Premium Standard
Farms, Inc. (the "Compensation Committee"), and the Chairman of the
Executive Committee of the Board (the "Executive Committee"), upon
formation of the Executive Committee.

(b) Assist in developing, implementing and controlling the Company's
business objectives and strategies to further profitable growth,
including but not limited to, optimization of employment of assets and
the formation of strategic alliances;

(c) Assist in developing and implementing operational and marketing
strategies which will support the Company's business growth plan;

<PAGE> 2

(d) Supervise the development and implementation of the Company's
annual business plans and annual budgets;

(e) Assist Company management and shareholders in developing and
establishing the appropriate senior management structure for the Company;
and

(f) Assist in developing a compensation strategy and policy for
senior management that is competitive, equitable and supportive to the
goals and strategies of the Company.

3. Compensation. The Company hereby agrees that it shall retain HWS for
a minimum of twenty (20) days during the remainder of 1997, and a minimum of
thirty (30) days during 1998 and 1999 (the remainder of 1997, and each of 1998
and 1999, are sometimes hereinafter each defined as a separate "Retainer
Period"). For services rendered hereunder, the Company shall pay to HWS a
retainer (the "Retainer") which in the aggregate shall be equal to the daily
rate of $4,000 per day ("Daily Rate") multiplied by the number of days of
service rendered during the then current Retainer Period; provided that,
starting on January 1, 1998, the Daily Rate shall be increased annually at a
rate equal to the higher of (i) the annual rate of increase in the Consumer
Price Index for the United States for the preceding year, or (ii) five percent
(5%), and in either case the Daily Rate shall then be rounded up to the nearest
$25.00 increment.

HWS agrees to send to the Company an invoice each quarter for services
rendered during the previous quarter, which invoice shall set forth: (i) the
number of days consulting services were actually provided during the previous
quarter, and (ii) the product of such number of days and the Daily Rate. The
Company agrees to pay amounts due to HWS for services provided hereunder within
fifteen (15) days after receipt of such invoice. In the event services shall
not have been requested for the full number of days in the Retainer Period, the
Company shall pay to HWS the remaining balance of the Retainer at the end of
such Retainer Period, unless the failure to request such days is due to the
fact that this Agreement is terminated by the Company for Cause pursuant to
Section 7.

During the remainder of 1997, the Company shall have the right to request
up to fifteen (15) additional days of services, and during each of 1998 and
1999 the Company shall have the right to request an additional twenty (20) days
of services from HWS. In the event that HWS is requested to cause Mr.
Schroeder to render additional consulting services in excess of the number of
days required in the then current Retainer Period ("Additional Services"), HWS
shall be entitled to payment in an amount equal to the Daily Rate for each day
such Additional Services are performed.

4. Executive Performance Bonus. Mr. Schroeder will be eligible to
receive an executive performance bonus (the "Executive Performance Bonus") as
determined by the Board in its sole discretion, in accordance with the
Company's general management bonus policy; provided, however, in no event will
the norm Executive Performance Bonus paid to Mr. Schroeder be an amount equal
to or greater than sixty percent (60%) of the total annual

-2-
<PAGE> 3

Retainer, plus any amounts paid for Additional Services, paid to Mr. Schroeder
in any given year. Any norm Executive Performance Bonus payable for Mr.
Schroeder's services shall be paid to HWS at or about the same time bonuses are
paid to the Company's senior management.

5. The Membership Interest Unit Option. Pursuant to the terms and
conditions of the PSF Holdings, L.L.C. 1996 Management Option Plan (the "Plan")
and the PSF Holdings, L.L.C. Membership Interest Unit Option Agreement, by and
between the Company and HWS (the "Option Agreement"), the Company will grant
HWS an Option to purchase 160,000 Units (as those terms are defined in the
Plan and the Option Agreement). In addition to, and notwithstanding anything
set forth in the Option Agreement to the contrary, should the Company wish to
extend this Agreement beyond December 31, 1999, for an additional two years,
and should HWS be either unwilling or unable to so extend this Agreement, the
unvested portion of the Option granted pursuant to the Option Agreement, shall
be forfeited. Should HWS wish to extend this Agreement beyond December 31,
1999, for an additional two years, and should the Company be either unwilling
or unable to so extend this Agreement, the unvested portion of the Option shall
accelerate and become immediately vested.

6. Expense Reimbursement. HWS shall be reimbursed for necessary and
reasonable business expenses incurred in connection with the performance of
duties hereunder. HWS shall provide an invoice to the Company for such
expenses each quarter for the expenses incurred during the previous quarter.
The Company shall, subject to its normal review and approval policies and
procedures, pay such invoice of HWS within fifteen (15) days after the date
such invoice was provided to the Company.

7. Termination. If HWS is prevented from providing the services or
performing the assignments herein contemplated because of Mr. Schroeder's
illness, incapacity or injury for a period of sixty (60) consecutive days or
sixty (60) days in the aggregate in any six (6) month period ("Disability") or
his death, the Company may terminate this Agreement immediately by giving
written notice to such effect to HWS. In the event of a termination due to the
death or Disability of Mr. Schroeder, HWS shall be entitled to receive the
unpaid balance of the Retainer for the Retainer Period.

The Company may also terminate this Agreement for "Cause" by giving
written notice to HWS for any of the following reasons: (i) the willful and
continued failure by HWS or Mr. Schroeder to substantially perform its or his
duties hereunder during the Term (other than as a result of the Disability or
death of Mr. Schroeder); (ii) an act or acts on Mr. Schroeder's part
constituting a felony under the laws of the United States or any state thereof;
(iii) the willful engaging by Mr. Schroeder or HWS in conduct that is
significantly injurious to the Company, monetarily or otherwise, after a
written demand for cessation of such conduct is delivered to such individual by
the Company, which demand specifically identifies the manner the Company
believes that such individual has engaged in such conduct and the injury to the
Company resulting therefrom; or (iv) the breach by HWS or Mr. Schroeder of any
of the covenants of this Agreement. If the Company terminates this Agreement
for Cause, HWS shall be entitled to receive the payment due for consulting
services rendered but unpaid as of the date of termination (determined in
accordance with Section 3).

-3-
<PAGE> 4

HWS may terminate this Agreement for "Cause" by giving written notice to
the Company for any of the following reasons: (i) the Company willfully fails
to pay an amount due under this Agreement after HWS has provided written notice
to the Company of such failure, (ii) Mr. Schroeder is removed from any one or
more of the positions of Chairman of the Board, Chairman of Compensation
Committee, or Chairman of Executive Committee, (iii) there occurs a Change of
Control, as defined below, or (iv) there occurs a significant strategic
disagreement between Mr. Schroeder and a majority of the board of directors of
the Company involving: (A) the CEO, COO, or CFO positions, (B) a strategic
alliance or other fundamental operational direction, or (C) the budget or
compensation plan for fiscal years 1997, 1998 or 1999.

For purposes of this Agreement, "Change of Control" means:

(a) A consolidation, merger or similar transaction involving PSF
which has one or more of the following results: (i) PSF is not the
surviving entity; (ii) a single person or entity or a group of persons
and/or entities acting in concert (an "Acquiring Entity") acquire a
majority amount or more of PSF's common stock, followed by a change in a
majority of the membership of the Board, other than as a result of death
or voluntary resignation (for reason unrelated to the transaction) of any
member or members of the Board, within six months from the date the
Acquiring Entity acquires a majority amount or more of PSF's common
stock; (iii) there is a sale or transfer of all or substantially all of
PSF's assets; or (iv) PSF is dissolved or liquidated; or

(b) A consolidation, merger or similar transaction involving the
Company, which has one or more of the following results: (i) the Company
is not the surviving entity; (ii) an Acquiring Entity acquires a majority
amount or more of the Company's Units, as defined in the Plan; (iii)
there is a sale or transfer of all or substantially all of the Company's
assets; or (iv) the Company is dissolved or liquidated.

(c) The provisions of (a) and (b) above notwithstanding, it is not
the intent of the Company to include within the definition of "Change of
Control" changes in the ownership of PSF or the Company which are
occasioned by the transfer or sale of Units and/or PSF common stock to
one or more parties who acquire the Units and/or PSF common stock for
purposes of maintaining a passive investment in PSF. For these reasons,
the parties agree that the Board reserves the authority to determine, in
good faith, and in its sole discretion, whether the occurrence of a
particular event (such as the sale of Units and/or PSF common stock to an
affiliate, a current investor, or another third-party passive investor)
falls within the definition of a "Change of Control" for purposes of this
Agreement.

If HWS terminates this Agreement for "Cause", pursuant to the foregoing
provisions, HWS shall no longer be obligated to provide any consulting services
to the Company and shall be entitled to receive payment in an amount equal to:
(a) the balance of the Retainer for the remaining Term; and (b) an additional
payment equal to Two Thousand Dollars ($2,000) multiplied by the number of days
remaining in the balance of the Retainer for the remaining Term. Furthermore,
upon termination of this Agreement for "Cause" by HWS, the unvested

-4-
<PAGE> 5

portion of the Option granted pursuant to the Option Agreement shall accelerate
and become immediately vested.

8. Non-Competition. During, and for the two year period following
termination of the Term, each of HWS and Mr. Schroeder shall not, without the
prior written consent of the Company, directly or indirectly be or remain
employed or retained by, or render any services for any person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise engaged in any business, which is
competitive with the business in which the Company or any of its subsidiaries
or affiliates is engaged at any time during the Term, it being expressly
understood and agreed by the Company that to the extent consistent with the
foregoing, HWS and Mr. Schroeder may provide consulting services to other
clients which do not compete, directly or through one or more subsidiaries or
affiliates, in any way with any business in which the Company, any of its
affiliates or subsidiaries is engaged, provided that such services do not
interfere with the services to be provided hereunder.

9. Confidentiality. During and after the Term, neither HWS nor Mr.
Schroeder shall disclose or use for its or his own benefit or purposes or the
benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other business organization, entity or enterprise
other than the Company, any of its subsidiaries or affiliates any trade
secrets, information, data, or other confidential information relating to
customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, farming methods,
manufacturing processes, financing methods, plans, or the business and affairs
of the Company generally, or of any subsidiary or affiliate of the Company;
that, the foregoing shall not apply to information which is not unique to the
Company or which is generally known to the industry or the public other than as
a result of HWS's or Mr. Schroeder's breach of this covenant. Each of HWS and
Mr. Schroeder agrees that upon termination of this Agreement for any reason, it
or he will return to the Company immediately all memoranda, books, manuals,
training materials, records, computer software, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way
relating to the business of the Company, its affiliates except that Mr.
Schroeder may retain personal notes, notebooks and diaries. Each of HWS and
Mr. Schroeder further agrees that it and he will not retain or use for its or
his account at any time any trade names, trademark or other proprietary
business designation used or owned in connection with the business of the
Company, its affiliates.

10. Specific Performance; Other Actions. Each of HWS and Mr. Schroeder
acknowledges and agrees that the Company's remedies at law for a breach or
threatened breach of any of the provisions of Section 8 or Section 9 would be
inadequate and, in recognition of this fact, each of HWS and Mr. Schroeder
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, shall be entitled
to obtain equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available.

11. Indemnity: Fees and Expenses. The Company agrees to hold harmless
HWS and Mr. Schroeder for all acts or decisions made by it or him in good faith
related to its or his

-5-
<PAGE> 6

performance of services hereunder. The Company agrees to pay any and all
reasonable legal fees and related expenses incurred by HWS and Mr. Schroeder in
connection with entering into and performing services under this Agreement.

12. Independent Contractor. The Company agrees that HWS is acting as an
independent contractor and that Mr. Schroeder is not an employee of the
Company. Notwithstanding that fact, the Company shall use its best efforts to
obtain coverage for HWS under any insurance policy now in force or hereinafter
obtained during the term of this Agreement covering the Company against
liability from claims or causes of action which arise as a result of or with
respect to this Agreement. If the Company obtains such insurance coverage and
Mr. Schroeder serves as an executive officer of the Company, Mr. Schroeder will
be included as an insured party in his capacity as such.

13. Withholding. It is expressly understood and agreed between the
parties hereto that HWS shall be solely responsible for the withholding and
payment of any and all taxes and other sums required to be withheld or paid by
an employer pursuant to any and all state, federal or other laws in connection
with the rendering of services by HWS or Mr. Schroeder hereunder.

14. Miscellaneous.

(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri.

(b) Entire Agreement; Amendments. This Agreement supersedes any
and all prior understandings and agreements between the parties with
respect to the subject matter referred to herein and contains the entire
understanding of the parties with respect to the Company's retention of
HWS for the provision of consulting services to the Company. Except as
provided in the Agreement, there are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with
respect to the subject matter herein other than those expressly set forth
herein. This Agreement may not be altered, modified or amended except by
written instrument signed by each of the parties hereto.

(c) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be
considered a waiver of such party's rights or deprive such party of the
right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.

(d) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not be affected
thereby.

(e) Assignment. This Agreement shall not be assignable by HWS
except with respect to its rights to receive payments under Section 3
hereof and shall be assignable

-6-
<PAGE> 7

by the Company only with the consent of HWS; provided that, no such
assignment by the Company shall relieve the Company of any liability
hereunder, whether accrued before or after such assignment.

(f) Arbitration. Any dispute between the parties to this Agreement
arising from or relating to the terms of this Agreement or the retention
of HWS by the Company shall be submitted to arbitration in Missouri under
the auspices of the American Arbitration Association.

(g) Successors; Binding Agreement.

(i) The Company shall use its best efforts to require any
successor, by virtue of a Change in Control to expressly assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place.

(ii) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
representatives, successors and assigns.

(h) Notice. For the purposes of this Agreement, notices and all
other communications (excluding invoices) provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses set
forth on the execution page of this Agreement; provided that all notices
to the Company shall be directed to the attention of the President of the
Company or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.

(i) Headings. The headings used in this Agreement are for
convenience only and shall not affect the meaning of or be used to
interpret any provisions herein.

(j) Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

-7-
<PAGE> 8

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.

Premium Standard Farms, Inc.,
a Delaware corporation

By: /s/ Dennis W. Harms
--------------------------------------

Its: C.E.O.
-------------------------------------

HWS & ASSOCIATES, INC.

By: /s/ H.W. Schroeder
--------------------------------------
Horst W. Schroeder
President

/s/ H.W. Schroeder
-----------------------------------------
HORST W. SCHROEDER

-8-

<PAGE> 1
EXHIBIT 10.12

CONFORMED COPY

CREDIT AGREEMENT dated as of September 17, 1996 among
PSF HOLDINGS, L.L.C., a Delaware limited liability company
(the "Guarantor"), PREMIUM STANDARD FARMS, INC., a
Delaware corporation and a wholly owned subsidiary of the
Guarantor (the "Borrower"), the Lenders (as defined in
Article I), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as issuing bank (in such capacity,
the "Issuing Bank"), and as administrative agent (in such
capacity, the "Administrative Agent") and as collateral
agent (in such capacity, the "Collateral Agent") for the
Lenders.

The Borrower has requested the Lenders to extend credit in the
form of (a) Term Loans (such term and each other capitalized term used but not
defined herein having the meaning given it in Article I) on the Closing Date,
in an aggregate principal amount not in excess of $30,000,000, and (b)
Revolving Loans at any time and from time to time prior to the Revolving Credit
Maturity Date, in an aggregate principal amount at any time outstanding not in
excess of $60,000,000. The Borrower has requested the Issuing Bank to issue
letters of credit, in an aggregate face amount at any time outstanding not in
excess of $5,000,000, to support payment obligations incurred in the ordinary
course of business by the Borrower and its Subsidiaries. The proceeds of the
Term Loans, together with the proceeds of the MSCP Investment and a portion of
the proceeds of the Revolving Loans, are to be used solely to repay all
principal, interest, fees and other amounts outstanding under the 1994 Credit
Agreement and the DIP Credit Agreement. The proceeds of the Revolving Loans,
other than Revolving Loans the proceeds of which are used as described
in the preceding sentence, are to be used solely for general corporate purposes
of the Borrower's business.

The Lenders are willing to extend such credit to the Borrower and
the Issuing Bank is willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

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

"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

"ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.

"ABR Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.

<PAGE> 2
2

"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.

"ABR Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.

"Account" shall mean any right to payment for goods sold or leased
or for services rendered, whether or not earned by performance.

"Account Debtor" shall mean, with respect to any Account, the
obligor with respect to such Account.

"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.

"Administrative Agent Fees" shall have the meaning assigned to
such term in Section 2.05(b).

"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.

"Affiliate" shall mean, when used with respect to a specified
person, another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the person specified.

"Aggregate Revolving Credit Exposure" shall mean the aggregate
amount of the Lenders' Revolving Credit Exposures.

"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate
or both for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance with the
terms of the definition thereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the preceding sentence, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate, respectively. The term "Prime Rate" shall mean
the rate of interest per annum publicly announced from time to time
by the Administrative Agent as its prime

<PAGE> 3
3

rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly announced as
being effective. The term "Base CD Rate" shall mean the sum of (a) the
product of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves
and (b) the Assessment Rate. The term "Federal Funds Effective Rate" shall
mean, for any day, the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

"Applicable Percentage" of any Revolving Credit Lender at any time
shall mean the percentage of the Total Revolving Credit Commitment represented
by such Lender's Revolving Credit Commitment. In the event the Revolving
Credit Commitments shall have expired or been terminated, the Applicable
Percentages shall be determined on the basis of the Revolving Credit
Commitments most recently in effect.

"Assessment Rate" shall mean for any date the annual rate (rounded
upwards, if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then current net annual assessment rate that will
be employed in determining amounts payable by the Administrative Agent to the
Federal Deposit Insurance Corporation (or any successor thereto) for insurance
by such Corporation (or such successor) of time deposits made in dollars at the
Administrative Agent's domestic offices.

"Asset Sale" shall mean, with respect to any person, any sale,
lease, transfer or other disposition (including by way of merger, consolidation
or sale and leaseback transaction, but excluding any sales of assets or
property that (i) are substantially concurrently replaced with the proceeds of
such sale and (ii) are no longer used or useful in the business of such person)
in one transaction or a series of related transactions by such person or any of
its subsidiaries to any person other than the Guarantor, the Borrower or any of
its wholly owned Subsidiaries of (a) any of the Capital Stock of any subsidiary
of such person, (b) all or substantially all of the Real Property, Leaseholds
or Personal Property of such person or any of its subsidiaries or (c) any other
Real Property, Leaseholds or Personal Property of such person or any of its
subsidiaries, except, in the case of clause (c), for (i) sales of inventory,
livestock, processed pork inventories, breeding stock, grain, feedstock or
Hedging Contracts in the ordinary course of business and (ii) any sale, lease,
transfer or other disposition in one transaction or a series of related
transactions of Real Property, Leaseholds or Personal Property with a value not
in excess of $250,000.

"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit B or such other form as shall be
approved by the Administrative Agent.

"Assignment of Contracts" shall mean the Assignment of Contracts
between the Borrower and the Collateral Agent, substantially in the form of
Exhibit O.

<PAGE> 4
4

"Bankruptcy Code" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now or hereafter in effect, or any successor thereto.

"Boar Valuation" shall mean, at the time of any determination
thereof, the market value of the Borrower's boars at such time (based on the
Iowa S. Minnesota Direct Price for boars) assuming each boar has a weight of
415 pounds. Subject to Section 9.08(b)(iv), in the event of a material change
in the Borrower's actual historical boar weight, the Administrative Agent may,
and if directed in writing by the Required Lenders shall (in each case, after
notice to and consultation with the Borrower), adjust the boar weight used in
calculating the Boar Valuation but not to a weight that is lower than the
actual historical weight.

"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States of America.

"Borrowing" shall mean a group of Loans of a single Type made by
the Lenders on a single date and as to which a single Interest Period is in
effect.

"Borrowing Base" shall mean, at the time of any determination, an
amount equal to the sum, without duplication, of (a) 85% of the Borrower's
Eligible Accounts Receivable, (b) 65% of the Sow Valuation, (c) 65% of the Boar
Valuation, (d) 70% of the Commercial Hog Valuation, (e) 70% of the Borrower's
inventory of feed ingredients (valued at the lower of cost or market value) and
(f) (i) 70% of the Borrower's inventory of hog carcasses (valued at the live
price as quoted by the U.S. Department of Agriculture) less an adjustment for
carcass yield (assuming the carcass yield rate set forth on Schedule 1.01(a))
and (ii) 70% of the book value of eligible processed pork products as set forth
on Schedule 1.01(a), it being understood that, for the purposes of the
foregoing, eligible hogs shall include all hogs located at the facilities of
the Borrower in northern Missouri and northwestern Texas and at contract
finishers' facilities in Iowa and Colorado. Notwithstanding the foregoing, (x)
the Borrowing Base shall not at any time include any Personal Property in which
the Collateral Agent does not have a first priority perfected security interest
and (y) in the event of any material adverse change relating to Personal
Property described in clauses (b) through (f) of the immediately preceding
sentence (or any portion of such Personal Property) resulting from the
livestock (or any portion thereof) being diseased, out of condition or
unmerchantable (or being so deemed by the U.S. Department of Agriculture, the
Missouri Department of Agriculture, the Texas Department of Agriculture or any
other government agency, department or division having regulatory authority
over the Borrower, its assets or its activities), the Administrative Agent may,
and if directed in writing by the Required Lenders shall (in each case, after
notice to and consultation with the Borrower), exclude from the Borrowing Base
the Personal Property described in any of clauses (b) through (f) of the
immediately preceding sentence if and to the extent that the Administrative
Agent or the Required Lenders, in its or their reasonable discretion, as the
case may be, determine such Personal Property to be unacceptable as a result of
such material adverse change. The Borrowing Base shall be computed weekly in
accordance with Section 5.04(e). The Borrowing Base at any time shall be
determined by reference to the Borrowing Base Certificate most recently
delivered by the Borrower to the Administrative Agent.

<PAGE> 5
5

"Borrowing Base Certificate" shall have the meaning assigned to
such term in Section 5.04(e).

"Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.

"Business Day" shall mean any day other than a Saturday, Sunday or
day on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

"Business Plan" shall mean the materials prepared by the Borrower
and the Guarantor containing their budget for 1996 and their detailed business
plans for 1997-1998 and presented to the lenders party to the 1994 Credit
Agreement, together with related materials under an undated letter from Dennis
Harms and at a meeting held on March 5, 1996, as updated by revised five-year
projections sent to the Administrative Agent under cover of a memorandum dated
June 1996, from Bill Patterson and Dennis Rippe.

"Capital Expenditures" shall mean, for any period, the sum of all
amounts that would, in conformity with GAAP, be included as additions to
property, plant and equipment and other capital expenditures on a consolidated
statement of cash flows for the Borrower and its subsidiaries during such
period (excluding, however, expenditures for breeding stock and the amount of
assets leased under any Capital Lease).

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

"Capital Lease Obligations" of any person shall mean the
obligations of such person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

"Capital Stock" shall mean, with respect to any person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or nonvoting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in or issued by such
person, that in each case are outstanding or issued on or after the date of
this Agreement, including all Common Stock and Preferred Stock.

A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities Exchange
Act of 1934 as in effect on

<PAGE> 6
6

the date hereof) other than one or more Permitted Holders shall own directly or
indirectly, beneficially or of record, shares representing more than 35% of the
aggregate ordinary voting power represented by the issued and outstanding
membership interests of the Guarantor; (b) a majority of the seats (other than
vacant seats) on the board of directors of the Borrower shall at any time be
occupied by persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated; (c) any change in
control (or similar event, however denominated) with respect to the Borrower or
the Guarantor shall occur under and as defined in any indenture or agreement in
respect of Indebtedness to which the Borrower or the Guarantor is a party; or
(d) the Borrower ceases for any reason to be a wholly owned Subsidiary of the
Guarantor (other than as a result of the merger of the Borrower into the
Guarantor in a transaction permitted by Section 6.08(b)).

"Closing Date" shall mean the date of the first Credit Event.

"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

"Collateral" shall mean all the "Collateral" as defined in any
Security Document and shall also include the Mortgaged Properties and all the
"Trust Premises" as defined in each Mortgage.

"Commercial Hog Valuation" shall mean, at the time of any
determination thereof, the market value of all the Borrower's commercial hogs
(i.e., hogs other than boars and sows) at such time (based on the futures
prices, as published in the Wall Street Journal at such time, for the time
periods in which such hogs are expected to reach the target weight set forth on
Schedule 1.01(a) according to the growth pattern set forth on Schedule
1.01(a)), less (a) an adjustment for mortality, culling and carcass yield of
such hogs (assuming the mortality rates, the culling rates and the carcass
yield rates set forth on Schedule 1.01(a)), (b) the cost to feed such hogs
until each reaches such target weight (based on the then current futures prices
of corn and soybean meal, assuming the growth pattern, feed mix, feed delivery
cost and feed conversion ratio (meaning the pounds of feed required for each
pound of weight gain) set forth on Schedule 1.01(a)), and (c) the cost of labor
and overhead to maintain such hogs (based on the fixed cost set forth on
Schedule 1.01(a)). The Commercial Hog Valuation shall be calculated in a
format consistent with Exhibit D, using the spreadsheet created by the
Administrative Agent and forwarded to the Borrower on or prior to the Closing
Date. Subject to Section 9.08(b)(iv), in the event of a material change in the
Borrower's actual historical mortality rates, culling rates, target weight,
carcass yield, feed mix, feed delivery costs, feed conversion ratio or the cost
of labor and overhead to maintain such hogs (collectively, the "Borrowing Base
Variables"), the Administrative Agent may, and if directed in writing by the
Required Lenders shall (in each case, after notice to and consultation with the
Borrower), adjust the Borrowing Base Variables used in calculating the
Commercial Hog Valuation but not to rates, ratios or costs that are worse than
such actual historical rates, ratios or costs, as the case may be.

<PAGE> 7
7

"Commitment" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.

"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).

"Common Stock" shall mean, with respect to any person, any and all
shares, interests, limited liability membership interests, participations,
units or other equivalents (however designated, whether voting or nonvoting) of
common stock, common partnership interests (whether general or limited) or
equivalent ownership interest in or issued by such person that in each case are
outstanding or issued on or after the date hereof, including all series and
classes of such common stock, common partnership interest or equivalent
ownership interests.

"Consent and Agreement" shall mean the Consent and Agreement of
Pig Improvement Company, Inc., substantially in the form of Exhibit N.

"Control" shall mean 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 ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.

"Court" shall mean the United States Bankruptcy Court for the
District of Delaware.

"Credit Event" shall have the meaning assigned to such term in
Section 4.01.

"Current Assets" as of any date shall mean the total assets that
would properly be classified as current assets of the Guarantor, the Borrower
and their consolidated subsidiaries as of such date in accordance with GAAP,
but excluding an amount equal to all advance payments and deposits theretofore
received by the Guarantor, the Borrower and their consolidated subsidiaries as
to which the related goods have not yet been delivered.

"Current Liabilities" as of any date shall mean the total
liabilities that would properly be classified as current liabilities of the
Guarantor, the Borrower and their consolidated subsidiaries as of such date in
accordance with GAAP, but excluding all such liabilities relating to the
obligations of the Guarantor, the Borrower and their consolidated subsidiaries
to deliver goods as to which advance payments and/or deposits have been
received.

"Debtors" shall mean PSF, Collings Farm, Inc., Premium Standard
Farms, Inc., Premium Holdings Corp. and PSF Finance Holdings, Inc., as debtors
and debtors in possession under the Bankruptcy Code.

"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.

<PAGE> 8
8

"DIP Credit Agreement" shall mean the Credit Agreement dated as of
July 2, 1996, among PSF, Premium Standard Farms, Inc., the financial
institutions party thereto, and Chemical Bank, as administrative agent and
fronting bank.

"DIP Letter of Credit" shall mean each letter of credit that (a)
was issued (or deemed issued) under the DIP Credit Agreement, (b) is
outstanding on the Closing Date and (c) is listed on Schedule 1.01 (b).

"Disclosure Statement" shall mean the Debtors' Amended Joint
Disclosure Statement to the Plan of Reorganization dated July 29, 1996, and
approved by the Court on September [ ], 1996.

"dollars" or "$" shall mean lawful money of the United States of
America.

"EBITDA" shall mean, for any person for any period, (a) the sum of
the amounts for such period of Net Income of such person plus, to the extent
deducted in computing Net Income, (i) Interest Expense of such person, (ii)
provision of such person for Federal, state and local income taxes, (iii)
depreciation expense of such person, (iv) amortization expense of such person
and (v) any non-cash charges or non-cash losses of such person, minus (b) to
the extent included in determining such Net Income, the sum of the amounts for
such period of (i) interest income, (ii) any non-cash gains and (iii) any
extraordinary gains and gains received by such person from sales of assets
(other than sales of inventory, breeding stock, grain, feedstock or Hedging
Contracts in the ordinary course of business).

"Eligible Accounts Receivable" shall mean at the time of any
determination thereof all Accounts (net of all allowances and reserves for
doubtful or uncollectible accounts and sales adjustments) that, based on the
Borrower's accounting practices on the date hereof, met the following criteria
at the time of creation and continue to meet the same at the time of such
determination:

(a) all payments due on such Account are by the terms of such
Account due not later than 30 days after the date of the related invoice;

(b) such Account has been invoiced and not more than 5 days have
elapsed since the original statement due date for such Account;

(d) such Account arose from a completed sale of processed pork
products by the Borrower;

(e) the sale represented by such Account is not on a bill-and-hold,
undelivered sale, guaranteed sale (excluding returns in the normal course of
business), sale or return, consignment or sale-on-approval basis;

<PAGE> 9
9

(f) such account is owned solely by the Borrower and is subject to a
perfected first priority security interest in favor of the Collateral Agent for
the benefit of the Secured Parties;

(g) such Account arose in the ordinary course of business of the
Borrower and no event of death, bankruptcy, insolvency or inability to pay
creditors generally of the
Account Debtor thereunder has occurred (it being understood that if the
Borrower receives notice of any such death, bankruptcy, insolvency or inability
to pay creditors, the Borrower shall give the same notice to the Agent);

(h) with respect to such Account, the Account Debtor (i) is (A) a
person domiciled in the United States or (B) a person outside of the
continental United States that has supplied the Borrower with an irrevocable
letter of credit or other credit insurance in form and substance satisfactory
to the Administrative Agent that (x) was issued by a financial institution
reasonably satisfactory to the Administrative Agent and (y) has been duly
transferred to or the benefits of which are otherwise enforceable by the
Administrative Agent (together with sufficient documentation to permit direct
draws by, or direct payment to, the Administrative Agent, as the case may be),
(ii) is not the United States or a State or any agency or instrumentality
thereof unless the Borrower duly assigns its rights to payment of such Account
to the Administrative Agent pursuant to the Assignment of Claims Act of 1940,
as amended (31 U.S.C. Section 3727 et seq.) or any comparable act or law
applicable in any state, as the case may be, in a manner reasonably
satisfactory to the Administrative Agent and (iii) is not an Affiliate of the
Borrower or any of the Subsidiaries;

(i) such Account complies in all material respects with the
requirements of all applicable laws and regulations, whether Federal, state or
local; and

(j) the Administrative Agent has not, after consultation with the
Borrower, notified the Borrower that the Administrative Agent is not reasonably
satisfied with the credit standing of the Account Debtor in relation to the
amount of credit extended.

Notwithstanding the foregoing clauses (a) through (j), (a) an Account of any
Account Debtor shall not be deemed to constitute an Eligible Account Receivable
(i) to the extent that such Account, when aggregated with all other Accounts of
such Account Debtor and its Affiliates, exceeds 15% of the outstanding balance
of all Accounts of the Borrower then outstanding or (ii) if 10% or more of the
outstanding balance of the Accounts of such Account Debtor is unpaid for more
than five days past the respective original statement due dates of such
Accounts. If an Account of an Account Debtor (including, without duplication, a
supplier of the Borrower) is subject to any right of set-off or charge-back,
the Accounts of such Account Debtor shall constitute Eligible Accounts
Receivable only to the extent of the excess, if any, of the outstanding balance
thereof over the principal amount owing by the Borrower to such Account Debtor.
The aggregate credit balances of the Borrower, determined on an Account by
Account basis of all accounts that have remained unpaid for more than five days
past the original statement due date, shall be subtracted,

<PAGE> 10
10

without duplication of any other Account otherwise excluded from Eligible
Accounts Receivable, from the aggregate value of all otherwise Eligible
Accounts Receivable.

"Emergence Transactions" shall mean the following transactions as
more particularly described in the Plan of Reorganization and the Disclosure
Statement:

(a) the creation of the Guarantor by the existing common equity
holders of PSF;

(b) the merger of PSF into the Guarantor and, in connection
therewith, (i) the discharge of the claims of the holders of the Fixed Rate
Notes and Exchangeable Preferred Units in exchange for the issuance of debt
obligations by the Guarantor in an aggregate original principal amount of
$106,518,182 and approximately 97% of the New Common Equity to such holders,
and (ii) the issuance by the Guarantor of approximately 3% of the New Common
Equity to the existing common equity holders of PSF and the issuance of the
10-Year Warrants to such equity holders;

(c) the creation of the Borrower by the Guarantor and the
contribution of all the assets and liabilities of the Guarantor to the
Borrower in exchange for 100% of the Capital Stock of the Borrower;

(d) the issuance by the Borrower of the PIK Notes in an aggregate
principal amount of $117,500,000 in exchange for the debt obligations issued by
the Guarantor and described in paragraph (b) above;

(e) the receipt by the Borrower of all the assets of Premium
Standard Farms, Inc. in satisfaction of certain secured intercompany
indebtedness and the dissolution of Premium Standard Farms, Inc.;

(f) the making by MSCP of the MSCP Investment in exchange for
$10,682,818 aggregate principal amount of PIK Notes and the cancellation of
certain indebtedness;

(g) the execution by the Borrower and MS Group of the Second
Priority Note Purchase Agreement; and

(h) the implementation by the Borrower of the Management Option
Plan.

"environment" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, the workplace or as otherwise defined in any
Environmental Law.

"Environmental Claim" shall mean any written accusation,
allegation, notice of violation, claim, demand, order, directive, cost recovery
action or other cause of action by, or on behalf of, any Governmental Authority
or any person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or

<PAGE> 11
11

intangible property damage, natural resource damages, nuisance, pollution, any
adverse effect on the environment caused by any Hazardous Material, or for
fines, penalties or restrictions, resulting from or based upon (a) the
existence, or the continuation of the existence, of a Release (including sudden
or non-sudden, accidental or non-accidental Releases), (b) exposure
to any Hazardous Material, (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material or (d) the violation
or alleged violation of any Environmental Law or Environmental Permit.

"Environmental Law" shall mean any and all applicable treaties,
laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
Release or threatened Release of any Hazardous Material or to health and safety
matters, including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section 9601 et seq. (collectively
"CERCLA"), the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. Section 6901 et seq., the Federal Water Pollution Control
Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section 1251 et
seq., the Clean Air Act of 1970, as amended 42 U.S.C. Section 7401 et seq.,
the Toxic Substances Control Act of 1976, 15 U.S.C. Section 2601 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651
et seq., the Emergency Planning and Community Right-to- Know Act of 1986, 42
U.S.C. Section 11001 et seq., the Safe Drinking Water Act of 1974, as amended,
42 U.S.C. Section 300(f) et seq., the Hazardous Materials Transportation Act,
49 U.S.C. Section 5101 et seq., and any similar or implementing state or local
law, and all amendments or regulations promulgated under any of the foregoing.

"Environmental Permit" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Governmental Authority pursuant to any Environmental Law.

"Equity Issuance" shall mean any issuance or sale by the Borrower,
the Guarantor or any Subsidiary of any shares of Capital Stock of the Borrower,
the Guarantor or any Subsidiary, or any obligations convertible into or
exchangeable for, or giving any person a right, option or warrant to acquire
Capital Stock or such convertible or exchangeable obligations, except in each
case for (a) any issuance or sale of New Common Equity on or about the Plan
Effective Date in connection with the Emergence Transactions, (b) any issuance
or sale to the Borrower, the Guarantor or any Subsidiary, (c) any issuance of
directors' qualifying shares, and (d) sales or issuances of Common Stock (i) to
management or key employees of the Borrower, the Guarantor or any Subsidiary
under any employee stock option or stock purchase plan in existence from time
to time or (ii) pursuant to other employee benefit plans in existence from time
to time, provided that the cash proceeds from all sales and issuances described
in subclauses (i) and (ii) of this clause (d) shall not exceed in the aggregate
$1,000,000 in any fiscal year.

<PAGE> 12
12

"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.

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

"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Borrower or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by the Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which the Borrower or any such Subsidiary could otherwise reasonably
be expected to be liable; and (i) any other event or condition with respect to
a Plan or Multiemployer Plan that could reasonably be expected to result in
liability of the Borrower.

"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.

"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Term Loan.

"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.

"Eurodollar Term Borrowing" shall mean a Borrowing comprised of
Eurodollar Term Loans.

"Eurodollar Term Loan" shall mean any Term Loan bearing interest
at a rate determined by reference to the Adjusted LIBO Rate in accordance with
the provisions of Article II.

<PAGE> 13
13

"Event of Default" shall have the meaning assigned to such term in
Article VII.

"Excess Cash Flow" shall mean, for any fiscal year, the excess of
(a) the sum, without duplication, of (i) EBITDA on a consolidated basis of the
Guarantor, the Borrower and their consolidated Subsidiaries during such fiscal
year and (ii) reductions (other than reductions attributable to Asset Sales) to
non-cash working capital of the Guarantor, the Borrower and their consolidated
Subsidiaries for such fiscal year (i.e., the decrease, if positive, in Current
Assets (excluding cash balances) minus Current Liabilities from the beginning
to the end of such fiscal year) over (b) the sum, without duplication, of (i)
the amount of Capital Expenditures (except to the extent financed by Capital
Leases or incurred in connection with the acquisition or construction of New
Finishing Facilities) made by the Guarantor, the Borrower and their
consolidated Subsidiaries during such fiscal year, (ii) increases to non-cash
working capital of the Guarantor, the Borrower and their consolidated
Subsidiaries for such fiscal year (i.e., the increase, if positive, in Current
Assets (excluding cash balances) minus Current Liabilities from the beginning
to the end of such fiscal year), (iii) the aggregate principal amount of all
prepayments or repayments of Term Loans during such fiscal year pursuant to
Section 2.11 or 2.12, (iv) the aggregate amount of all cash interest paid on
the Loans and all cash interest and principal paid on other permitted
Indebtedness (including New Finishing Facility Indebtedness, except to the
extent such interest and principal exceed the amount of Capital Expenditures
relating to such New Finishing Facility and added back to Excess Cash Flow by
operation of clause (b)(i) above) of the Guarantor, the Borrower and their
consolidated Subsidiaries during such fiscal year (to the extent, in the case
of any payment of principal, such principal cannot by the terms of such
Indebtedness be reborrowed), (v) the amount of cash taxes payable by the
Guarantor, the Borrower and their consolidated Subsidiaries in respect of such
fiscal year and (vi) amounts paid to repurchase, redeem or otherwise retire
Capital Stock in accordance with Section 6.04(b)(ii).

"Excess EBITDA" shall mean, for any period of four consecutive
fiscal quarters, the excess, if any, of (a) the consolidated EBITDA of the
Guarantor, the Borrower and the Subsidiaries for such period over (b) the
consolidated EBITDA required to have been achieved for such period pursuant to
Section 6.12.

"Exchangeable Preferred Interests" shall mean the exchangeable
preference units of PSF.

"Fee Letter" shall mean the Fee Letter dated the Closing Date,
between the Borrower and the Administrative Agent.

"Fees" shall mean the Commitment Fees, the Administrative Agent
Fees, the L/C Participation Fees and the Issuing Bank Fees.

"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, Treasurer or Controller of
such corporation.

<PAGE> 14
14

"Fixed Rate Notes" shall mean the 1995 Notes, the 1994 Notes, the
1993 Notes and the 1992 Notes.

"GAAP" shall mean generally accepted accounting principles applied
on a consistent basis.

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

"Guarantee" of or by any person shall mean any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; provided,
however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business.

"Guarantee Agreements" shall mean the Parent Guarantee Agreement
and the Subsidiary Guarantee Agreement.

"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum distillates,
asbestos or asbestos containing materials, polychlorinated biphenyls ("PCBs")
or PCB-containing materials or equipment, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any
Environmental Law.

"Hedging Contracts" shall mean all contracts for, or options, puts
or similar arrangements relating to, the purchase by the Borrower of (a) grain,
soy meal and other feed ingredients or related hedging activities conducted in
accordance with prudent business practice and (b) hogs and related hedging
activities conducted in accordance with prudent business practice, in each case
that are created to protect the Borrower against price fluctuations and not for
speculative purposes.

"Inactive Subsidiary" shall mean, at any time, any Subsidiary of
the Borrower that has no Indebtedness at such time, less than $1,000 in assets
at such time and has not engaged in any business activities within the previous
6 months.

<PAGE> 15
15

"Indebtedness" of any person shall mean, 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 upon which interest charges are customarily paid,
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property or assets purchased by such person,
(e) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business), (f) all Indebtedness
of others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property
owned or acquired by such person, whether or not the obligations secured
thereby have been assumed, (g) all Guarantees by such person of Indebtedness of
others, (h) all Capital Lease Obligations of such person, (i) all obligations
of such person in respect of interest rate protection agreements, foreign
rate hedging arrangements and (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances. The
Indebtedness of any person shall include the Indebtedness of any partnership in
which such person is a general partner.

"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E, as amended, supplemented or otherwise modified from time to time,
among the Borrower, the Subsidiary Guarantors and the Collateral Agent, if
required to be executed and delivered pursuant to Section 5.12.

"Intercreditor Agreement" shall mean the Intercreditor Agreement,
substantially in the form of Exhibit F, among the Borrower, the Guarantor,
MSCP, MS Group, the PIK Note Trustee and the Collateral Agent.

"Interest Expense" shall mean, for any period, the gross interest
expense, on a consolidated basis, of the Guarantor, the Borrower and their
consolidated Subsidiaries for such period determined in accordance with GAAP.

"Interest Payment Date" shall mean, with respect to any Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of
more than one month's duration, each day that would have been an Interest
Payment Date had successive Interest Periods of one month's duration been
applicable to such Borrowing, and, in addition, the date of any prepayment of
such Borrowing or conversion of such Borrowing to a Borrowing of a different
Type.

"Interest Period" shall mean, (a) as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day (or, if there is no numerically corresponding
day, on the last day) in the calendar month that is 1, 2, 3, or 6 months
thereafter, as the Borrower may elect and (b) as to any ABR Borrowing, the
period commencing on the date of such Borrowing and ending on the earliest of
(i) the last day of each calendar month, (ii) the Revolving Credit Maturity
Date or the Term Loan Maturity Date,

<PAGE> 16
16

as applicable, and (iii) the date such Borrowing is converted to a Borrowing of
a different Type in accordance with Section 2.10 or repaid or prepaid in
accordance with Section 2.11 or 2.12; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.

"Investment" shall mean any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of any person or its
subsidiaries) or other extension of credit or capital contribution to (by means
of any transfer of cash or other property to others or any payment for property
or services for the account or use of others), or any purchase or acquisition
of Capital Stock, bonds, notes, debentures or other similar instruments issued
by, any other person.

"Iowa S. Minnesota Direct Price" shall mean, at any time of
determination thereof, the Iowa S. Minnesota Direct Price per pound of boars or
sows, as applicable, as published in "Market News", a weekly publication of the
U.S. Department of Agriculture, or any successor publication, for the week
immediately preceding such time.

"Issuing Bank Fees" shall have the meaning assigned to such term
in Section 2.05(c).

"L/C Commitment" shall mean the commitment of the Issuing Bank to
issue Letters of Credit pursuant to Section 2.22.

"L/C Disbursement" shall mean a payment or disbursement made by
the Issuing Bank pursuant to a Letter of Credit.

"L/C Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate principal amount of all L/C Disbursements that have not yet been
reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at
any time shall mean its Applicable Percentage of the aggregate L/C Exposure at
such time.

"L/C Maturity Date" shall mean the fifth Business Day prior to the
Revolving Credit Maturity Date.

"L/C Participation Fee" shall have the meaning assigned to such
term in Section 2.05(c).

<PAGE> 17
17

"Leaseholds" of any person shall mean all the right, title and
interest of such person as lessee or licensee in, to and under leases or
licenses of Real Property or fixtures annexed or to be annexed thereto.

"Lenders" shall mean (a) the financial institutions listed on
Schedule 2.01 (other than any such financial institution that has ceased to be
a party hereto pursuant to an Assignment and Acceptance) and (b) any financial
institution that has become a party hereto pursuant to an Assignment and
Acceptance.

"Letter of Credit" shall mean any letter of credit issued pursuant
to Section 2.22 and any DIP Letter of Credit.

"Lockbox Agreement" shall mean each Lockbox and Depository
Agreement among the Borrower, the Collateral Agent and a Sub-Agent (as defined
in each Lockbox Agreement), substantially in the form of Annex 1 to the
Security Agreement.

"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing,
the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which
dollar deposits approximately equal in principal amount to the Administrative
Agent's portion of such Eurodollar Borrowing and for a maturity comparable to
such Interest Period are offered to the principal London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.

"Lien" shall mean, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, encumbrance, charge or security interest in or on
such asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to such asset and (c) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities.

"Loan Documents" shall mean this Agreement, the Letters of Credit,
the Guarantee Agreements, the Indemnity, Subrogation and Contribution Agreement
any promissory notes issued pursuant to Section 2.04(e) and the Security
Documents.

"Loan Parties" shall mean the Borrower, the Guarantor and any
Subsidiary Guarantors.

"Loans" shall mean the Revolving Loans and the Term Loans.

"Management Option Plan" shall mean the 1996 Management Option
Plan of PSF L.L.C..

"Margin Stock" shall have the meaning assigned to such term in
Regulation U.

<PAGE> 18
18

"Material Adverse Effect" shall mean (a) a materially adverse
effect on the business, assets, operations, prospects or condition, financial
or otherwise, of the Borrower and the Subsidiaries (taken as a whole), (b)
material impairment of the ability of any Loan Party to perform any of its
obligations under any Loan Document to which it is or will be a party or (c)
material impairment of the rights of or benefits available to the Lenders under
any Loan Document.

"Mineral Rights" shall mean rights and interests held by third
parties in the oil, gas and other minerals estate (including mineral and
royalty interests).

"Mortgaged Properties" shall mean the owned real properties of the
Borrower specified on Schedule 1.01(c), but shall not include any such real
property sold or otherwise disposed of by the Borrower in accordance with the
provisions of this Agreement.

"Mortgages" shall mean the mortgages, deeds of trust, leasehold
mortgages, assignments of leases and rents, modifications and other security
documents delivered pursuant to clause (i) of Section 4.02(i) or pursuant to
Section 5.12, each substantially in the form of Exhibit G and as amended,
supplemented or otherwise modified from time to time.

"MSCP" shall mean Morgan Stanley Capital Partners III, L.P., a
Delaware limited liability partnership.

"MSCP Investment" shall mean the investment in the Borrower by
MSCP or an Affiliate thereof of not less than $20,000,000 in cash in exchange
for (a) $10,000,000 aggregate principal amount of PIK Notes and (b) the
cancellation of certain Indebtedness owed to Collings Farm, Inc.

"MS Group" shall mean Morgan Stanley Group Inc., a Delaware
corporation.

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

"Net Cash Proceeds" shall mean (a) with respect to any Asset
Sale, the proceeds of such Asset Sale in the form of cash or cash equivalents,
including payments in respect of deferred payment obligations (to the extent
corresponding to the principal, but not interest, component thereof) when
received in the form of cash or cash equivalents and proceeds from the
conversion of other Real Property, Leaseholds and Personal Property received
when converted to cash or cash equivalents, net of (i) brokerage commissions
and other reasonable fees and expenses (including fees and expenses of counsel
and investment bankers) related to such Asset Sale; (ii) taxes actually paid or
payable in the year such Asset Sale occurs or in the following year as a result
thereof; (iii) payments required to be made to repay Indebtedness or any other
obligation then outstanding that is secured by a Lien on the property if such
Lien is senior to the Lien thereon of the Collateral Agent for the benefit of
the Secured Parties and is permitted to exist under Section 6.02; and (iv)
appropriate amounts to be provided as a reserve, in accordance

<PAGE> 19
19

with GAAP, against any liabilities associated with such Asset Sale (provided
that to the extent and at such time any such amounts are released, such amounts
shall constitute Net Cash Proceeds); (b) with respect to any Equity Issuance or
issuance or other disposition of Indebtedness, the cash proceeds thereof net of
(i) underwriting or placement fees and expenses directly incurred in connection
therewith (including fees and expenses of counsel) and (ii) taxes actually paid
or payable in the year such Equity Issuance or issuance or other disposition of
Indebtedness occurs or in the following year as a result thereof; and (c) with
respect to any Casualty or Condemnation (in each case, as defined in the
applicable Mortgage), the Insurance Proceeds or Condemnation Proceeds (in each
case, as defined in the applicable Mortgage).

"Net Income" shall mean, for any person for any period, the
aggregate net income (or loss) of such person and its consolidated subsidiaries
for such period computed in accordance with GAAP.

"New Common Equity" shall have the meaning set forth in Section
3.08.

"New Finishing Facility" shall mean a hog finishing facility
acquired or constructed by the Borrower after the Closing Date.

"New Finishing Facility Debt Service" shall mean, with respect to
any New Finishing Facility Indebtedness for any period, the sum of the
scheduled principal and interest payments required to be made with respect to
such New Finishing Facility Indebtedness during such period. For purposes of
interest at a floating rate for any period shall be deemed to bear interest at
a fixed rate for such period equal to the interest rate thereon at the
beginning of such period.

"New Finishing Facility Indebtedness" shall mean Indebtedness of
the Borrower (including Indebtedness of others Guaranteed by the Borrower)
incurred after the Closing Date to finance the construction or acquisition of
New Finishing Facilities, so long as (a) such Indebtedness has a final stated
maturity that is later than the Term Loan Maturity Date and requires no greater
amortization of principal prior to the Term Loan Maturity Date than level
mortgage payments, (b) the holder of such Indebtedness, in the case of an event
of default thereunder, has recourse only to the New Finishing Facility financed
thereby and not to the assets generally of any Loan Party and (c) the
instruments governing such Indebtedness do not contain (i) any financial
covenants or (ii) any other covenants or defaults that are more onerous to the
Borrower than those contained in this Agreement (except for any such covenants
that relate solely to the New Finishing Facility financed thereby).

"1995 Notes" shall mean PSF's Senior Secured Notes due 1997, all
obligations under which will be discharged as part of the Emergence
Transactions.

"1994 Credit Agreement" shall mean the Credit Agreement dated as
of December 23, 1994, as amended, among PSF, Premium Standard Farms, Inc., the
lenders party thereto and Chemical Bank, as issuing bank, as administrative
agent and as fronting bank.

<PAGE> 20
20

"1994 Notes" shall mean PSF's Senior Secured Notes due 2004, all
obligations under which will be discharged as part of the Emergence
Transactions.
"1993 Notes" shall mean PSF's Senior Secured Discount Notes due
2003, all obligations under which will be discharged as part of the Emergence
Transactions.

"1992 Notes" shall mean PSF's Senior Secured Notes due 2000, all
obligations under which will be discharged as part of the Emergence
Transactions.

"Obligations" shall mean all obligations defined as "Obligations"
in the Guarantee Agreements and the Security Documents.

"Order" shall mean the Order entered by the Court approving
confirmation of the Plan of Reorganization, the Emergence Transactions, the
Transaction Documents and all related documentation contemplated herein or
therein.

"Parent Guarantee Agreement" shall mean the Parent Guarantee
Agreement, substantially in the form of Exhibit H-1, as amended, supplemented
or otherwise modified from time to time, made by the Guarantor in favor of the
Collateral Agent for the benefit of the Secured Parties.

"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.

"Perfection Certificate" shall mean the Perfection Certificate
substantially in the form of Annex 2 to the Security Agreement.

"Permitted Holders" shall mean any of Morgan Stanley & Co.,
Incorporated, Putnam Investment Management, GEM Capital Management Inc., The
Prudential Insurance Company of America, Loews Corporation and Hanwa Co.,
Limited, any of their Affiliates or any funds or institutional accounts managed
or advised by any of the foregoing.

"Permitted Investments" shall mean:

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

(b) investments in commercial paper maturing within one year from
the date of acquisition thereof and having, at such date of acquisition, the
highest credit rating obtainable from Standard & Poor's Ratings Service or
from Moody's Investors Service, Inc.;

<PAGE> 21
21

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

(d) other investment instruments approved in writing by the Required
Lenders and offered by financial institutions which have a combined capital and
surplus and undivided profits of not less than $500,000,000; and

(e) investments in money market funds substantially all the assets
of which are invested in one or more of the foregoing obligations and
investments.

"Permitted Texas Construction Materials Sales" shall mean sales of
Texas Construction Materials for aggregate gross cash proceeds not to exceed
$4,800,000 minus the aggregate amount of gross cash proceeds received from
sales of Texas Construction Materials consummated prior to the Closing Date and
set forth on Schedule 1.01(d).

"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.

"Personal Property" of any person shall mean all the right, title
and interest of such person in assets, properties and items, other than Real
Property and Leaseholds.

"PIK Note Documents" shall mean the PIK Notes, the PIK Note
Indenture and all material agreements, documents and instruments related
thereto, in each case as amended, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.

"PIK Note Indenture" shall mean the Indenture, in the form of
Exhibit E to the Plan of Reorganization, between the Borrower and the PIK Note
Trustee, as amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.

"PIK Note Trustee" shall mean Fleet National Bank, as Trustee for
the holders of the PIK Notes, and its successors and assigns in such capacity.

"PIK Notes" shall mean the Borrower's 11% Pay-in-Kind Secured
Notes due 2003.

"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were

<PAGE> 22
22

terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

"Plan Effective Date" shall mean the date the Plan of
Reorganization becomes effective in accordance with its terms.

"Plan of Reorganization" shall mean the Debtors' Amended Joint
Plan of Reorganization, in the form of Exhibit I, dated July 29, 1996, and
confirmed by the Court on September [ ], 1996.

"Pledge Agreement" shall mean the Pledge Agreement, substantially
in the form of Exhibit J, as amended, supplemented or otherwise modified from
time to time, among the Guarantor, the Borrower and the Collateral Agent for
the benefit of the Secured Parties.

"Preferred Stock" shall mean, with respect to any person, any and
all shares, interests, participations, units or other equivalents (however
designated, whether voting or nonvoting) of preferred or preference stock,
partnership interests or equivalent ownership interests in or issued by such
person that in each case are outstanding or issued on or after the date of this
Agreement.

"Principal Contracts" shall mean the contracts listed on Schedule
1.01(e).

"PSF" shall mean PSF Finance, L.P., a Delaware limited
partnership.

"Real Property" of any person shall mean all the fee ownership
right, title and interest of such person in and to land, improvements therein
and fixtures annexed or to be annexed thereto, other than Leaseholds.

"Register" shall have the meaning given such term in Section
9.04(d).

"Regulation G" shall mean Regulation G of the Board as from time
to time in effect and all official rulings and interpretations thereunder or
thereof.

"Regulation U" shall mean Regulation U of the Board as from time
to time in effect and all official rulings and interpretations thereunder or
thereof.

"Regulation X" shall mean Regulation X of the Board as from time
to time in effect and all official rulings and interpretations thereunder or
thereof.

"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the environment.

<PAGE> 23
23

"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions
required by any Governmental Authority or voluntarily undertaken to: (i)
cleanup, remove, treat or abate any Hazardous Material in the environment; (ii)
prevent the Release or threat of Release, or minimize the further Release of
any Hazardous Material so it does not migrate or endanger or threaten to
endanger public health, welfare or the environment; or (iii) perform studies
and investigations in connection with, or as a precondition to, (i) or (ii)
above.

"Repayment Date" shall have the meaning given such term in Section
2.11.

"Required Lenders" shall mean, at any time, Lenders having Loans,
L/C Exposure and unused Revolving Credit and Term Loan Commitments representing
at least 66-2/3% of the sum of all Loans outstanding, L/C Exposure and unused
Revolving Credit and Term Loan Commitments at such time.

"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the obligations
of such corporation in respect of this Agreement.

"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.

"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans hereunder as set
forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which
such Lender assumed its Revolving Credit Commitment, as applicable, as the same
may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04.

"Revolving Credit Exposure" shall mean, with respect to any Lender
at any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of such
Lender's L/C Exposure.

"Revolving Credit Lender" shall mean a Lender with a Revolving
Credit Commitment.

"Revolving Credit Maturity Date" shall mean September 30, 1999.

"Revolving Loans" shall mean the revolving loans made by the
Lenders to the Borrower pursuant to clause (b) of Section 2.01. Each Revolving
Loan shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.

"Second Priority Note Documents" shall mean the Second Priority
Notes, the Second Priority Note Purchase Agreement and all material agreements,
documents and

<PAGE> 24
24

instruments related thereto, in each case as amended, supplemented or modified
from time to time in accordance with the terms hereof and thereof.

"Second Priority Note Purchase Agreement" shall mean the Note
Purchase Agreement, in the form of Exhibit G to the Plan of Reorganization,
between the Borrower and MS Group, as the same may be amended, supplemented or
modified from time to time in accordance with the terms hereof and thereof.

"Second Priority Notes" shall mean the Borrower's 11% Senior
Secured Second Priority Notes issued pursuant to the Second Priority Note
Purchase Agreement.

"Secured Parties" shall have the meaning assigned to such term in
the Security Agreement.

"Security Agreement" shall mean the Security Agreement,
substantially in the form of Exhibit K, as amended, supplemented or otherwise
modified from time to time, between the Borrower and the Collateral Agent for
the benefit of the Secured Parties.

"Security Documents" shall mean the Mortgages, the Pledge
Agreement, the Security Agreement, the Lockbox Agreements, the Assignment of
Contracts, the Intercreditor Agreement and each of the security agreements,
mortgages and other instruments and documents executed and delivered pursuant
to any of the foregoing or pursuant to Section 5.12.

"Sow Valuation" shall mean, at the time of any determination
thereof, the sum of (a) the market value of the Borrower's sows at such time
(based on the Iowa S. Minnesota Direct Price for sows) assuming each sow has a
weight of 380 pounds, and (b) $45 per sow. Subject to Section 9.08(b)(iv), in
the event of a material change in the Borrower's actual historical sow weight,
the Administrative Agent may, and if directed in writing by the Required
Lenders shall (in each case, after notice to and consultation with the
Borrower), adjust the sow weight used in calculating the Sow Valuation but not
to a weight that is lower than the actual historical weight.

"Stated Maturity" shall mean, with respect to any debt security or
other Indebtedness or any installment of interest thereon, the date specified
in such debt security or in the documents evidencing such other Indebtedness as
the fixed date on which any principal of such debt security or other
Indebtedness or any such installment of interest is due and payable.

"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board and any other banking authority, domestic
or foreign, to which the Administrative Agent or any Lender (including any
branch, Affiliate, or other fronting office making or holding a Loan) is
subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal
time deposits in dollars of over $100,000

<PAGE> 25
25

with maturities approximately equal to three months, and (b) with respect to
the Adjusted LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation
D of the Board). Such reserve percentages shall include those imposed pursuant
to such Regulation D. Eurodollar Loans shall be deemed to constitute
Eurocurrency Liabilities and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under such Regulation D. Statutory Reserves
shall be adjusted automatically on and as of the effective date of any change
in any reserve percentage.

"Step-Down Date" shall mean the first day on or after the
six-month anniversary of the Closing Date on which the Borrower shall have paid
or prepaid (other than with the proceeds from the sale of Texas Construction
Materials) Term Loans in an aggregate principal amount of at least $2,500,000.

"subsidiary" shall mean, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, association or
other business entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary
voting power or more than 50% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held, or (b) that
is, at the time any determination is made, otherwise Controlled, by the parent
or one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

"Subsidiary" shall mean any subsidiary of the Borrower.

"Subsidiary Guarantee Agreement" shall mean the Subsidiary
Guarantee Agreement, substantially in the form of Exhibit H-2, as amended,
supplemented or otherwise modified from time to time, among the Subsidiary
Guarantors and the Collateral Agent for the benefit of the Secured Parties.

"Subsidiary Guarantor" shall mean each direct or indirect domestic
Subsidiary (other than an Inactive Subsidiary).

"Supermajority Lenders" shall mean, at any time, Lenders having
Loans, L/C Exposure and unused Revolving Credit and Term Loan Commitments
representing at least 75% of the sum of all Loans outstanding, L/C Exposure and
unused Revolving Credit and Term Loan Commitments at such time.

"10-Year Warrants" shall mean the 10-year warrants to purchase 17%
of the New Common Equity at a price consistent with an equity value of the
Borrower of $450,000,000 issued by the Borrower to the existing equity holders
of the Borrower.

"Term Borrowing" shall mean a Borrowing comprised of Term Loans.

"Term Loan Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Term Loans hereunder as set forth on
Schedule 2.01, or in

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26

the Assignment and Acceptance pursuant to which such Lender assumed its Term
Loan Commitment, as applicable, as the same may be (a) reduced from time to
time pursuant to Section 2.09 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04.

"Term Loan Maturity Date" shall mean September 30, 2001.

"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to Section 2.01. Each Term Loan shall be a Eurodollar Term
Loan or an ABR Term Loan.

"Texas Construction Materials" shall mean the assets listed on
Schedule 1.01(f).

"Texas Vendor Indebtedness" shall mean Indebtedness due and owing
to the Texas Vendors on the Closing Date in an aggregate principal amount not
to exceed $3,700,000.

"Texas Vendors" shall mean the persons set forth on Schedule
1.01(g).

"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the Administrative Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it.

"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such
time.

"Transaction Documents" shall mean the Loan Documents, the PIK
Note Documents and the Second Priority Note Documents.

"Transactions" shall have the meaning assigned to such term in
Section 3.02.

"Type", when used in respect of any Loan or Borrowing, shall refer
to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, the term "Rate"
shall include the Adjusted LIBO Rate and the Alternate Base Rate.

<PAGE> 27
27

"wholly owned Subsidiary" of any person shall mean a subsidiary of
such person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100% of the equity or 100% of the
ordinary voting power or 100% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held by such person
or one or more wholly owned subsidiaries of such person or by such person and
one or more wholly owned subsidiaries of such person.

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

SECTION 1.02. Terms Generally. The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise
expressly provided herein, (a) any reference in this Agreement to any Loan
Document shall mean such document as amended, restated, supplemented or
otherwise modified from time to time and (b) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining compliance
with the covenants contained in Article VI, all accounting terms herein shall
be interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP as in effect on the date of this Agreement and applied on
a basis consistent with the application used in the financial statements
referred to in Section 3.05(b).

ARTICLE II

The Credits

SECTION 2.01. Commitments. Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Lender agrees, severally and not jointly, (a) to make a Term Loan to the
Borrower on the Closing Date in a principal amount not to exceed its Term Loan
Commitment, and (b) to make Revolving Loans to the Borrower, at any time and
from time to time on or after the date hereof, and until the earlier of the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitment of such Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (i) such
Lender's Revolving Credit Exposure exceeding (ii) the lesser of (x) such
Lender's Revolving Credit Commitment and (y) such Lender's Applicable
Percentage of the Borrowing Base in effect at such time. Within the limits set
forth in clause (b) of the preceding sentence and subject to the terms,
conditions and limitations set forth herein, the

<PAGE> 28
28

Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid
or prepaid in respect of Term Loans may not be reborrowed.

SECTION 2.02. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their respective Term Loan Commitments and Revolving Credit Commitments, as the
case may be; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible
for the failure of any other Lender to make any Loan required to be made by
such other Lender). Except for Loans deemed made pursuant to Section 2.02(f),
the Loans comprising any Borrowing shall be in an aggregate principal amount
that is (i) an integral multiple of $1,000,000 and not less than $2,000,000 or
(ii) equal to the remaining available balance of the applicable Commitments.

(b) Subject to Sections 2.08 and 2.15, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
pursuant to Section 2.03. Each Lender may at its option make any Eurodollar
Loan by causing any domestic or foreign branch or Affiliate of such Lender to
make such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement. Borrowings of more than one Type may be outstanding at the
same time; provided, however, that the Borrower shall not be entitled to
request any Borrowing that, if made, would result in more than five Eurodollar
Borrowings outstanding hereunder at any time. For purposes of the foregoing,
Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.

(c) Except with respect to Loans made pursuant to Section
2.02(f), each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such
account in New York City as the Administrative Agent may designate not later
than 11:00 a.m., New York City time, and the Administrative Agent shall by
12:00 (noon), New York City time, credit the amounts so received to an account
in the name of the Borrower, maintained with the Administrative Agent and
designated by the Borrower in the applicable Borrowing Request or, if a
Borrowing shall not occur on such date because any condition precedent herein
specified shall not have been met, return the amounts so received to the
respective Lenders.

(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay to the Administrative Agent forthwith on demand such

<PAGE> 29
29

corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrower, the
interest rate applicable at the time to the Loans comprising such Borrowing and
(ii) in the case of such Lender, a rate determined by the Administrative Agent
to represent its cost of overnight or short-term funds (which determination
shall be conclusive absent manifest error). If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender's Loan as part of such Borrowing for purposes of this Agreement.

(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest Period
requested with respect thereto would end after the Revolving Credit Maturity
Date.

(f) If the Issuing Bank shall not have received from the Borrower
the payment required to be made by Section 2.22(e) within the time specified in
such Section, the Issuing Bank will promptly notify the Administrative Agent of
the L/C Disbursement and the Administrative Agent will promptly notify each
Revolving Credit Lender of such L/C Disbursement and its Applicable Percentage
thereof. Each Revolving Credit Lender shall pay by wire transfer of
immediately available funds to the Administrative Agent not later than 2:00
p.m., New York City time, on such date (or, if such Revolving Credit Lender
shall have received such notice later than 12:00 (noon), New York City time, on
any day, not later than 10:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Applicable Percentage
of such L/C Disbursement (it being understood that such amount shall be deemed
to constitute an ABR Revolving Loan of such Lender and such payment shall be
deemed to have reduced the L/C Exposure), and the Administrative Agent will
promptly pay to the Issuing Bank amounts so received by it from the Revolving
Credit Lenders. The Administrative Agent will promptly pay to the Issuing Bank
any amounts received by it from the Borrower pursuant to Section 2.22(e) prior
to the time that any Revolving Credit Lender makes any payment pursuant to this
paragraph (f); any such amounts received by the Administrative Agent thereafter
will be promptly remitted by the Administrative Agent to the Revolving Credit
Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear. If any Revolving Credit Lender shall not have made its
Applicable Percentage of such L/C Disbursement available to the Administrative
Agent as provided above, such Lender and the Borrower severally agree to pay
interest on such amount, for each day from and including the date such amount
is required to be paid in accordance with this paragraph to but excluding the
date such amount is paid, to the Administrative Agent for the account of the
Issuing Bank at (i) in the case of the Borrower, a rate per annum equal to the
interest rate applicable to Revolving Loans pursuant to Section 2.06(a), and
(ii) in the case of such Lender, for the first such day, the Federal Funds
Effective Rate, and for each day thereafter, the Alternate Base Rate.

SECTION 2.03. Borrowing Procedure. In order to request a
Borrowing (other than a deemed Borrowing pursuant to Section 2.02(f), as to
which this Section 2.03 shall not apply), the Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Borrowing Request (a) in
the case of a Eurodollar Borrowing, not later than 11:00 a.m., New

<PAGE> 30
30

York City time, three Business Days before a proposed Borrowing, and (b) in the
case of an ABR Borrowing, not later than 12:00 noon, New York City time, one
Business Day before a proposed Borrowing. Each Borrowing Request shall be
irrevocable, shall be signed by or on behalf of the Borrower and shall specify
the following information: (i) whether the Borrowing then being requested is
to be a Term Borrowing or a Revolving Credit Borrowing, and whether such
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of
such Borrowing (which shall be a Business Day), (iii) the number and location
of the account to which funds are to be disbursed (which shall be an account
that complies with the requirements of Section 2.02(c)); (iv) the amount of
such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
Interest Period with respect thereto; provided, however, that, notwithstanding
any contrary specification in any Borrowing Request, each requested Borrowing
shall comply with the requirements set forth in Section 2.02. If no election
as to the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Borrowing is specified in any such notice, then the Borrower shall
be deemed to have selected an Interest Period of one month's duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.03 (and the contents thereof), and of each
Lender's portion of the requested Borrowing.

SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the principal amount of each Term Loan of such
Lender as provided in Section 2.11 and the then unpaid principal amount of each
Revolving Loan on the Revolving Credit Maturity Date.

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

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

(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the
Borrower to repay the Loans in accordance with their terms.

(e) Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive a promissory note payable to such
Lender and its registered

<PAGE> 31
31

assigns, the interests represented by such note shall at all times (including
after any assignment of all or part of such interests pursuant to Section 9.04)
be represented by one or more promissory notes payable to the payee named
therein or its registered assigns.

SECTION 2.05. Fees. (a) The Borrower agrees to pay to each
Lender, through the Administrative Agent, on the last day of March, June,
September and December in each year, commencing on December 31, 1996, and on
each date on which any Commitment of such Lender shall expire or be terminated
as provided herein, a commitment fee (a "Commitment Fee") of .50% per annum on
the average daily unused amount of the Commitments of such Lender during the
preceding quarter (or other period commencing with the date hereof or ending
with the Revolving Credit Maturity Date or the date on which the Commitments of
such Lender shall expire or be terminated). All Commitment Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. The Commitment Fee due to each Lender shall commence to accrue on the
date hereof and shall cease to accrue on the date on which the Commitment of
such Lender shall expire or be terminated as provided herein.

(b) The Borrower agrees to pay to the Administrative Agent, for
its own account, the administrative fees set forth in the Fee Letter at the
times and in the amounts specified therein (the "Administrative Agent Fees").

(c) The Borrower agrees to pay (i) to each Revolving Credit
Lender, through the Administrative Agent, on the last day of March, June,
September and December of each year and on the date on which the Revolving
Credit Commitment of such Lender shall be terminated as provided herein, a fee
(an "L/C Participation Fee") equal to 3.00% per annum on such Lender's
Applicable Percentage of the average daily aggregate L/C Exposure (excluding
the portion thereof attributable to unreimbursed L/C Disbursements) during the
preceding quarter (or shorter period commencing with the date hereof or ending
with the Revolving Credit Maturity Date or the date on which all Letters of
Credit have been canceled or have expired and the Revolving Credit Commitments
of all Lenders shall have been terminated) and (ii) to the Issuing Bank with
respect to each Letter of Credit the standard fronting, issuance and drawing
fees specified from time to time by the Issuing Bank (the "Issuing Bank Fees").
All L/C Participation Fees and Issuing Bank Fees shall be computed on the basis
of the actual number of days elapsed in a year of 360 days.

All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders, except that the Issuing Bank Fees shall be paid
directly to the Issuing Bank. Once paid, none of the Fees shall be refundable
under any circumstances.

SECTION 2.06. Interest on Loans. (a) Subject to the provisions
of Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Alternate Base Rate plus 2.50%;
provided, however, that from and after the Step-Down Date and so long as no
Event of Default shall have occurred and be continuing, the spread over the
Alternate Base Rate for all ABR Loans shall decrease to 1.50%.

<PAGE> 32
32

(b) Subject to the provisions of Section 2.07, the Loans
comprising each Eurodollar Borrowing shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at a rate per
annum equal to the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus 3.50%; provided, however, that from and after the Step-Down
Date and so long as no Event of Default shall have occurred and be continuing,
the spread over the Adjusted LIBO Rate for all Eurodollar Loans shall decrease
to 2.50%.

(c) Interest on each Loan shall be payable on the Interest
Payment Dates applicable to such Loan except as otherwise provided in this
Agreement. The applicable Alternate Base Rate or Adjusted LIBO Rate for each
Interest Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

SECTION 2.07. Default Interest. If the Borrower shall default in
the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, by acceleration or otherwise, or under any other Loan
Document, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding the date of
actual payment (after as well as before judgment) (a) in the case of overdue
principal, at the rate otherwise applicable to such Loan pursuant to Section
2.06 plus 2.00% per annum and (b) in all other cases, at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the sum of the Alternate Base Rate plus 2.00%.

SECTION 2.08. Alternate Rate of Interest. In the event, and on
each occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing the Administrative Agent shall
have determined that dollar deposits in the principal amounts of the Loans
comprising such Borrowing are not generally available in the London interbank
market, or that the rates at which such dollar deposits are being offered will
not adequately and fairly reflect the cost to any Lender of making or
maintaining its Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative
Agent shall, as soon as practicable thereafter, give written or telecopy notice
of such determination to the Borrower and the Lenders. In the event of any
such determination, until the Administrative Agent shall have advised the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, any request by the Borrower for a Eurodollar Borrowing pursuant
to Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing.
Each determination by the Administrative Agent hereunder shall be conclusive
absent manifest error.

SECTION 2.09. Termination and Reduction of Commitments. (a) The
Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City
time, on the Closing Date. The Revolving Credit Commitments and the L/C
Commitment shall automatically terminate on the Revolving Credit Maturity Date.

(b) Upon at least two Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or

<PAGE> 33
33

from time to time in part permanently reduce, the Term Loan Commitments or the
Revolving Credit Commitments; provided, however, that (i) each partial
reduction of the Term Loan Commitments or the Revolving Credit Commitments
shall be in an integral multiple of $2,000,000 and (ii) the Total Revolving
Credit Commitment shall not be reduced to an amount that is less than the
Aggregate Revolving Credit Exposure at the time.

(c) Each reduction in the Term Loan Commitments or the Revolving
Credit Commitments hereunder shall be made ratably among the Lenders in
accordance with their respective applicable Commitments. The Borrower shall
pay to the Administrative Agent for the account of the applicable Lenders, on
the date of each termination or reduction, the Commitment Fees on the amount of
the Commitments so terminated or reduced accrued to but excluding the date of
such termination or reduction.

SECTION 2.10. Conversion and Continuation of Borrowings. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Borrowing into an
ABR Borrowing, (b) not later than 10:00 a.m., New York City time, three
Business Days prior to conversion or continuation, to convert any ABR Borrowing
into a Eurodollar Borrowing or to continue any Eurodollar Borrowing as a
Eurodollar Borrowing for an additional Interest Period, and (c) not later than
10:00 a.m., New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Borrowing to another
permissible Interest Period, subject in each case to the following:

(i) each conversion or continuation shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Borrowing;

(ii) if less than all the outstanding principal amount of any
Borrowing shall be converted or continued, then each resulting Borrowing
shall satisfy the limitations specified in Sections 2.02(a) and 2.02(b)
regarding the principal amount and maximum number of Borrowings of the
relevant Type;

(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new
Loan of such Lender resulting from such conversion and reducing the Loan
(or portion thereof) of such Lender being converted by an equivalent
principal amount; accrued interest on any Eurodollar Loan (or portion
thereof) being converted shall be paid by the Borrower at the time of
conversion;

(iv) if any Eurodollar Borrowing is converted at a time other than
the end of the Interest Period applicable thereto, the Borrower shall pay,
upon demand, any amounts due to the Lenders pursuant to Section 2.16;

<PAGE> 34
34

(v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Borrowing;

(vi) any portion of a Eurodollar Borrowing that cannot be converted
into or continued as a Eurodollar Borrowing by reason of the immediately
preceding clause shall be automatically converted at the end of the
Interest Period in effect for such Borrowing into an ABR Borrowing;

(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than a Repayment Date occurring on or after
the first day of such Interest Period if, after giving effect to such
selection, the aggregate outstanding amount of (A) the Eurodollar Term
Borrowings with Interest Periods ending on or prior to such Repayment Date
and (B) the ABR Term Borrowings would not be at least equal to the
principal amount of Term Borrowings to be paid on such Repayment Date; and

(viii) upon notice to the Borrower from the Administrative Agent,
after the occurrence and during the continuance of a Default or Event of
Default, no outstanding Loan may be converted into, or continued as, a
Eurodollar Loan.

Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Borrowing that the Borrower requests be converted or continued, (ii) whether
such Borrowing is to be converted to or continued as a Eurodollar Borrowing or
an ABR Borrowing, (iii) if such notice requests a conversion, the date of such
conversion (which shall be a Business Day) and (iv) if such Borrowing is to be
converted to or continued as a Eurodollar Borrowing, the Interest Period with
respect thereto. If no Interest Period is specified in any such notice with
respect to any conversion to or continuation as a Eurodollar Borrowing, the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. The Administrative Agent shall advise the Lenders of any notice
given pursuant to this Section 2.10 and of each Lender's portion of any
converted or continued Borrowing. If the Borrower shall not have given notice
in accordance with this Section 2.10 to continue any Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such Borrowing
shall, at the end of the Interest Period applicable thereto (unless repaid
pursuant to the terms hereof), automatically be continued into a new Interest
Period as an ABR Borrowing.

SECTION 2.11. Repayment of Term Borrowings. (a) The Borrower
shall pay to the Administrative Agent, for the account of the Lenders holding
Term Loans, on the dates set forth below or, if any such date is not a Business
Day, on the next succeeding Business Day (each, a "Repayment Date"), a
principal amount of the Term Loans equal to the amount set forth below for such
date (subject to adjustment from time to time pursuant to Sections 2.12(b) and
2.13(h):

Repayment Date Amount
-------------- ------

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35

September 30, 1997 $1,500,000
December 31, 1997 $1,500,000
March 31, 1998 $1,500,000
June 30, 1998 $1,500,000
September 30, 1998 $1,500,000
December 31, 1998 $1,500,000
March 31, 1999 $1,500,000
June 30, 1999 $1,500,000
September 30, 1999 $1,500,000
December 31, 1999 $1,500,000
March 31, 2000 $1,500,000
June 30, 2000 $1,500,000
September 30, 2000 $1,500,000
December 31, 2000 $1,500,000
March 31, 2001 $1,500,000
June 30, 2001 $1,500,000
Term Loan Maturity Date $6,000,000

(b) To the extent not previously paid, all Term Borrowings
shall be due and payable on the Term Loan Maturity Date. Each payment of Term
Borrowings pursuant to this Section 2.11 shall be accompanied by accrued
interest on the principal amount paid to but excluding the date of payment.

SECTION 2.12. Optional Prepayment. (a) The Borrower shall
have the right at any time and from time to time to prepay any Borrowing, in
whole or in part, upon written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) to the Administrative Agent before
11:00 a.m., New York City time (i) three Business Days prior to the date of
prepayment of any Eurodollar Loan and (ii) one Business Day prior to the date
of prepayment of any ABR Loan; provided, however, that each partial prepayment
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $2,000,000.

(b) Optional prepayments of Term Loans shall be applied pro
rata against the remaining scheduled installments of principal due in respect
of the Term Loans.

(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to Section 2.16 but
otherwise without premium or penalty. All prepayments under this Section 2.12
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of payment.

SECTION 2.13. Mandatory Prepayments. (a) In the event of any
termination of all the Revolving Credit Commitments, the Borrower shall repay
or prepay all its outstanding Revolving Credit Borrowings on the date of such
termination. In the event of any partial

<PAGE> 36
36

reduction of the Revolving Credit Commitments, then (i) at or prior to the
effective date of such reduction, the Administrative Agent shall notify the
Borrower and the Revolving Credit Lenders of the Aggregate Revolving Credit
Exposure after giving effect thereto and (ii) if the Aggregate Revolving Credit
Exposure would exceed the Total Revolving Credit Commitment after giving effect
to such reduction or termination, then the Borrower shall, on the date of such
reduction or termination, repay or prepay Revolving Credit Borrowings in an
amount sufficient to eliminate such excess.

(b) If on any date the Aggregate Revolving Credit Exposure
shall exceed the Borrowing Base, the Borrower shall on such date apply an
amount equal to such excess first, to prepay the then outstanding Revolving
Loans (if any) and second, to the extent of any remaining excess (after the
prepayment of Revolving Loans), to replace outstanding Letters of Credit and/or
deposit an amount equal to 105% of such excess in cash in a cash collateral
account established with the Collateral Agent for the benefit of the Secured
Parties.

(c) Not later than the third Business Day following the
completion of any Asset Sale, the Borrower shall apply 100% of the Net Cash
Proceeds received with respect thereto to prepay outstanding Term Loans in
accordance with Section 2.13(h), and pending such application, the Borrower
shall deposit all cash proceeds of such Asset Sale in a cash collateral account
established with the Collateral Agent for the benefit of the Secured Parties.
Notwithstanding anything to the contrary stated above, the Borrower shall be
entitled to retain all proceeds received from Permitted Texas Construction
Materials Sales.

(d) In the event and on each occasion that an Equity Issuance
occurs, the Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the occurrence of such
Equity Issuance, apply 100% of the Net Cash Proceeds therefrom to prepay
outstanding Term Loans in accordance with Section 2.13(h).

(e) No later than the earlier of (i) 90 days after the end of
each fiscal year of the Borrower, commencing with the fiscal year ending on
December 31, 1997, and (ii) the date on which the financial statements with
respect to such fiscal year are delivered pursuant to Section 5.04(a), the
Borrower shall prepay outstanding Term Loans in accordance with Section 2.13(h)
in an aggregate principal amount equal to 75% of Excess Cash Flow for the
fiscal year then ended.

(f) In the event that any Loan Party shall receive Net Cash
Proceeds from the issuance or other disposition of Indebtedness for money
borrowed of any Loan Party (other than (i) any cash proceeds from the issuance
of the Second Priority Notes or (ii) Indebtedness for money borrowed permitted
pursuant to Section 6.01), the Borrower shall, substantially simultaneously
with (and in any event not later than the third Business Day next following)
the receipt of such Net Cash Proceeds by such Loan Party or such subsidiary,
apply an amount equal to 100% of such Net Cash Proceeds to prepay outstanding
Term Loans in accordance with Section 2.13(h).

<PAGE> 37
37

(g) In the event that there shall occur any Casualty or
Condemnation (in each case as defined in the applicable Mortgage) and, pursuant
to the applicable Mortgage, the Casualty Insurance or Condemnation Proceeds (in
each case as defined in the applicable Mortgage), as the case may be, are
required to be used to prepay the Term Loans, then the Borrower shall apply an
amount equal to 100% of such Insurance Proceeds or Condemnation Proceeds, as
the case may be, to prepay outstanding Term Loans in accordance with Section
2.13(h).

(h) Mandatory prepayments of outstanding Term Loans under
this Agreement shall be applied pro rata against the remaining scheduled
installments of principal due in respect of the Term Loans under Section 2.11.

(i) The Borrower shall deliver to the Administrative Agent,
at the time of each prepayment required under this Section 2.13, (i) a
certificate signed by a Financial Officer of the Borrower setting forth in
reasonable detail the calculation of the amount of such prepayment and (ii) to
the extent practicable, at least three days prior written notice of such
prepayment. Each notice of prepayment shall specify the prepayment date, the
Type of each Loan being prepaid and the principal amount of each Loan (or
portion thereof) to be prepaid. All prepayments of Borrowings under this
Section 2.13 shall be subject to Section 2.16, but shall otherwise be without
premium or penalty.

SECTION 2.14. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision of this Agreement, if after the date
of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any Lender or
the Issuing Bank of the principal of or interest on any Eurodollar Loan made by
such Lender or any Fees or other amounts payable hereunder (other than changes
in respect of Taxes or Other Taxes (as each such term is defined in Section
2.20(a)) and taxes expressly excluded from the definition of the term "Taxes"
pursuant to clause (i), (ii) or (iii) of Section 2.20(a)), or shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of or credit extended by
any Lender or the Issuing Bank (except any such reserve requirement which is
reflected in the Adjusted LIBO Rate) or shall impose on such Lender or the
Issuing Bank or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein, and the result of any of the foregoing shall be to
increase the cost to such Lender or the Issuing Bank of making or maintaining
any Eurodollar Loan or increase the cost to any Lender of issuing or
maintaining any Letter of Credit or purchasing or maintaining a participation
therein or to reduce the amount of any sum received or receivable by such
Lender or the Issuing Bank hereunder (whether of principal, interest or
otherwise) by an amount deemed by such Lender or the Issuing Bank to be
material, then the Borrower will pay to such Lender or the Issuing Bank, as the
case may be, upon demand such additional amount or amounts as will compensate
such Lender or the Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.

<PAGE> 38
38

(b) If any Lender or the Issuing Bank shall have determined
that the adoption after the date hereof of any law, rule, regulation, agreement
or guideline regarding capital adequacy, or any change after the date hereof in
any such law, rule, regulation, agreement or guideline (whether such law, rule,
regulation, agreement or guideline has been adopted) or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Issuing Bank or any Lender's or the
Issuing Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Governmental Authority
has or would have the effect of reducing the rate of return on such Lender's or
the Issuing Bank's capital or on the capital of such Lender's or the Issuing
Bank's holding company, if any, as a consequence of this Agreement or the Loans
made or participations in Letters of Credit purchased by such Lender pursuant
hereto or the Letters of Credit issued by the Issuing Bank pursuant hereto to a
level below that which such Lender or the Issuing Bank or such Lender's or the
Issuing Bank's holding company could have achieved but for such applicability,
adoption, change or compliance (taking into consideration such Lender's or the
Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Lender or the Issuing Bank to be material, then from time to time the Borrower
shall pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender's or the Issuing Bank's holding company for any such reduction
suffered.

(c) A certificate of a Lender or the Issuing Bank setting
forth the amount or amounts necessary to compensate such Lender or the Issuing
Bank or its holding company, as applicable, as specified in paragraph (a) or
(b) above shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or the Issuing Bank the
amount shown as due on any such certificate delivered by it within 10 days
after its receipt of the same.

(d) Failure or delay on the part of any Lender or the Issuing
Bank to demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital shall not constitute a
waiver of such Lender's or the Issuing Bank's right to demand such
compensation. The protection of this Section shall be available to each Lender
and the Issuing Bank regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, agreement, guideline or other
change or condition that shall have occurred or been imposed.

SECTION 2.15. Change in Legality. (a) Notwithstanding any
other provision of this Agreement, if, after the date hereof, any change in any
law or regulation or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof shall make
it unlawful for any Lender to make or maintain any Eurodollar Loan or to give
effect to its obligations as contemplated hereby with respect to any Eurodollar
Loan, then, by written notice to the Borrower and to the Administrative Agent:

<PAGE> 39
39

(i) such Lender may declare that Eurodollar Loans will not
thereafter (for the duration of such unlawfulness) be made by such Lender
hereunder (or be continued for additional Interest Periods and ABR Loans
will not thereafter (for such duration) be converted into Eurodollar
Loans), whereupon any request for a Eurodollar Borrowing (or to convert an
ABR Borrowing to a Eurodollar Borrowing or to continue a Eurodollar
Borrowing for an additional Interest Period) shall, as to such Lender
only, be deemed a request for an ABR Loan (or a request to continue an ABR
Loan as such for an additional Interest Period or to convert a Eurodollar
Loan into an ABR Loan, as the case may be), unless such declaration shall
be subsequently withdrawn; and

(ii) such Lender may require that all outstanding Eurodollar
Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.

(b) For purposes of this Section 2.15, a notice to the
Borrower by any Lender shall be effective as to each Eurodollar Loan made by
such Lender, if lawful, on the last day of the Interest Period currently
applicable to such Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by the Borrower.

SECTION 2.16. Indemnity. The Borrower shall indemnify each
Lender against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the conversion of
the Interest Period with respect to any Eurodollar Loan, in each case other
than on the last day of the Interest Period in effect therefor, or (iii) any
Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be
made pursuant to a conversion or continuation under Section 2.10) not being
made after notice of such Loan shall have been given by the Borrower hereunder
(any of the events referred to in this clause (a) being called a "Breakage
Event") or (b) any default in the making of any payment or prepayment required
to be made hereunder. In the case of any Breakage Event, such loss shall
include an amount equal to the excess, as reasonably determined by such Lender,
of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject
of such Breakage Event for the period from the date of such Breakage Event to
the last day of the Interest Period in effect (or that would have been in
effect) for such Loan over (ii) the amount of interest likely to be realized by
such Lender in redeploying the funds released or not utilized by reason of such
Breakage Event for such period. A certificate of any Lender setting forth any
amount

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40

or amounts which such Lender is entitled to receive pursuant to this Section
2.16 shall be delivered to the Borrower and shall be conclusive absent manifest
error.

SECTION 2.17. Pro Rata Treatment. Except as required under
Section 2.15, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees, each reduction of the Term Loan Commitments or the Revolving
Credit Commitments and each conversion of any Borrowing to or continuation of
any Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of their outstanding Loans). Each Lender agrees
that in computing such Lender's portion of any Borrowing to be made hereunder,
the Administrative Agent may, in its discretion, round each Lender's percentage
of such Borrowing to the next higher or lower whole dollar amount.

SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower or any other Loan Party, or pursuant to a
secured claim under Section 506 of the Bankruptcy Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loan or Loans or L/C Disbursement as a result of which the
unpaid principal portion of its Term Loans and Revolving Loans and
participations in L/C Disbursements shall be proportionately less than the
unpaid principal portion of the Term Loans and Revolving Loans and
participations in L/C Disbursements of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and
shall promptly pay to such other Lender the purchase price for, a participation
in the Term Loans and Revolving Loans and L/C Exposure, as the case may be of
such other Lender, so that the aggregate unpaid principal amount of the Term
Loans and Revolving Loans and L/C Exposure and participations in Term Loans and
Revolving Loans and L/C Exposure held by each Lender shall be in the same
proportion to the aggregate unpaid principal amount of all Term Loans and
Revolving Loans and L/C Exposure then outstanding as the principal amount of
its Term Loans and Revolving Loans and L/C Exposure prior to such exercise of
banker's lien, setoff or counterclaim or other event was to the principal
amount of all Term Loans and Revolving Loans and L/C Exposure outstanding prior
to such exercise of banker's lien, setoff or counterclaim or other event;
provided, however, that if any such purchase or purchases or adjustments shall
be made pursuant to this Section 2.18 and the payment giving rise thereto shall
thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower and the Guarantor expressly
consent to the foregoing arrangements and agree that any Lender holding a
participation in a Term Loan or Revolving Loan or L/C Disbursement deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrower and
the Guarantor to such Lender by reason thereof as fully as if such Lender had
made a Loan directly to the Borrower in the amount of such participation.

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41

SECTION 2.19. Payments. (a) The Borrower shall make each
payment (including principal of or interest on any Borrowing or any L/C
Disbursement or any Fees or other amounts) hereunder and under any other Loan
Document not later than 12:00 (noon), New York City time, on the date when due
in immediately available dollars, without setoff, defense or counterclaim.
Each such payment (other than Issuing Bank Fees, which shall be paid directly
to the Issuing Bank,) shall be made to the Administrative Agent at its offices
at 270 Park Avenue, New York, New York.

(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder or under any other
Loan Document shall become due, or otherwise would occur, on a day that is not
a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.

SECTION 2.20. Taxes. (a) Any and all payments by or on
behalf of the Borrower or any Loan Party hereunder and under any other Loan
Document shall be made, in accordance with Section 2.19, free and clear of and
without deduction for any and all current or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding (i) income taxes imposed on the net income of the Administrative
Agent, any Lender or the Issuing Bank (or any transferee or assignee thereof,
including a participation holder (any such entity a "Transferee")), (ii)
franchise taxes imposed on the net income or overall gross receipts of the
Administrative Agent, any Lender or the Issuing Bank (or Transferee), in each
case by the jurisdiction under the laws of which the Administrative Agent, such
Lender or the Issuing Bank (or Transferee) is organized, has its principal
office or in which its lending office is located, or any political subdivision
of such jurisdictions and (iii) income taxes and franchise taxes imposed on the
net income or overall gross receipts of the Administrative Agent, any Lender or
the Issuing Bank (or Transferee) imposed by a jurisdiction where such person is
subject to such taxes other than solely by virtue of the activities of such
person pursuant to this Agreement (all such nonexcluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities, collectively or
individually, being called "Taxes"). If the Borrower or any Loan Party shall
be required to deduct any Taxes from or in respect of any sum payable hereunder
or under any other Loan Document to the Administrative Agent, any Lender or the
Issuing Bank (or any Transferee), (i) the sum payable shall be increased by the
amount (an "additional amount") necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.20) the Administrative Agent, such Lender or the Issuing Bank
(or Transferee), as the case may be, shall receive an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower or
such Loan Party shall make such deductions and (iii) the Borrower or such Loan
Party shall pay the full amount deducted to the relevant Governmental Authority
in accordance with applicable law.

(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies (including, without limitation, mortgage recording taxes and
similar fees) that arise from any payment made hereunder or under

<PAGE> 42
42

any other Loan Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document ("Other
Taxes").

(c) The Borrower will indemnify the Administrative Agent,
each Lender and the Issuing Bank (or Transferee) for the full amount of Taxes
and Other Taxes paid by the Administrative Agent, such Lender or the Issuing
Bank (or Transferee), as the case may be, and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses)) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
prepared by the Administrative Agent, a Lender or the Issuing Bank (or
Transferee), or the Administrative Agent on its behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Administrative Agent, any
Lender or the Issuing Bank (or Transferee), as the case may be, makes written
demand therefor. If the Administrative Agent, any Lender or the Issuing Bank
(or Transferee) determines that it has received a refund in respect of any
Taxes or Other Taxes as to which indemnification has been paid by the Borrower
pursuant to this Section 2.20(c), it shall promptly remit such refund
(including any interest) to the Borrower, net of all out-of-pocket expenses of
the Agent, such Lender or the Issuing Bank (or Transferee); provided, however,
that the Borrower, upon the request of the Agent, such Lender or the Issuing
Bank (or Transferee), agrees promptly to return such refund (plus any interest)
to such party in the event such party is required to repay such refund to the
relevant taxing authority. The Agent, such Lender or the Issuing Bank (or
Transferee) shall provide the Borrower with a copy of any notice or assessment
from the relevant taxing authority (deleting any confidential information
contained therein) requiring repayment of such refund.

(d) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Borrower or any other Loan Party to the relevant
Governmental Authority, the Borrower or such other Loan Party will deliver to
the Administrative Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing payment thereof.

(e) Each Lender (or Transferee) that is organized under the
laws of a jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Lender") shall deliver to the Borrower and
the Administrative Agent (x) two copies of either United States Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form
W-8, or any subsequent versions thereof or successors to such forms (and, if
such Non-U.S. Lender delivers a Form W-8, a certificate representing that such
Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the
Code) of the Borrower and is not a controlled foreign corporation related to
the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or reduced rate of, U.S. Federal withholding tax on payments by the
Borrower under this Agreement and the other Loan

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43

Documents and (y) any other related documents reasonably requested by the
Borrower. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement (or, in the case of a Transferee
that is a participation holder, on or before the date such participation holder
becomes a Transferee hereunder) and on or before the date, if any, such
Non-U.S. Lender changes its applicable lending office by designating a
different lending office (a "New Lending Office"). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Notwithstanding any
other provision of this Section 2.20(e), a Non-U.S. Lender shall not be
required to deliver any form pursuant to this Section 2.20(e) that such
Non-U.S. Lender is not legally able to deliver.

(f) The Borrower shall not be required to indemnify any
Non-U.S. Lender or to pay any additional amounts to any Non-U.S. Lender, in
respect of United States Federal withholding tax pursuant to paragraph (a) or
(c) above to the extent that (i) the obligation to withhold amounts with
respect to United States Federal withholding tax existed on the date such
Non-U.S. Lender became a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on the date such participation
holder became a Transferee hereunder) or, with respect to payments to a New
Lending Office, the date such Non-U.S. Lender designated such New Lending
Office with respect to a Loan; provided, however, that this paragraph (f) shall
not apply (x) to any Transferee or New Lending Office that becomes a Transferee
or New Lending Office as a result of an assignment, participation, transfer or
designation made at the request of the Borrower and (y) to the extent the
indemnity payment or additional amounts any Transferee, or any Lender (or
Transferee), acting through a New Lending Office, would be entitled to receive
(without regard to this paragraph (f)) do not exceed the indemnity payment or
additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender (or Transferee) making the designation
of such New Lending Office, would have been entitled to receive in the absence
of such assignment, participation, transfer or designation or (ii) the
obligation to indemnify or to pay such additional amounts would not have arisen
but for a failure by such Non-U.S. Lender to deliver the forms prescribed in
paragraph (e) above (determined without regard to the last sentence thereof).

(g) Nothing contained in this Section 2.20 shall require any
Lender or the Issuing Bank (or any Transferee) or the Administrative Agent to
make available any of its tax returns (or any other information that it deems
to be confidential or proprietary).

SECTION 2.21. Assignment of Commitments Under Certain
Circumstances; Duty to Mitigate. (a) In the event (i) any Lender or the
Issuing Bank delivers a certificate requesting compensation pursuant to Section
2.14, (ii) any Lender or the Issuing Bank delivers a notice described in
Section 2.15 or (iii) the Borrower is required to pay any additional amount to
any Lender or the Issuing Bank or any Governmental Authority on account of any
Lender or the Issuing Bank pursuant to Section 2.20, the Borrower may, at its
sole expense and effort (including with respect to the processing and
recordation fee referred to in Section 9.04(b)), upon notice to such Lender or
the Issuing Bank and the Administrative Agent, require such Lender or the
Issuing Bank to transfer and assign, without recourse (in accordance with and
subject to the

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44

restrictions contained in Section 9.04 and Section 2.20(f)(i)), all of its
interests, rights and obligations under this Agreement to an assignee that
shall assume such assigned obligations (which assignee may be another Lender,
if a Lender accepts such assignment); provided that (x) such assignment shall
not conflict with any law, rule or regulation or order of any court or other
Governmental Authority having jurisdiction, (y) the Borrower shall have
received the prior written consent of the Administrative Agent (and, if a
Revolving Credit Commitment is being assigned, of the Issuing Bank), which
consent shall not unreasonably be withheld, and (z) the Borrower or such
assignee shall have paid to the affected Lender or the Issuing Bank in
immediately available funds an amount equal to the sum of the principal of and
interest accrued to the date of such payment on the outstanding Loans or L/C
Disbursements of such Lender or the Issuing Bank, respectively, plus all Fees
and other amounts accrued for the account of such Lender or the Issuing Bank
hereunder (including any amounts under Section 2.14 and Section 2.16).

(b) If (i) any Lender or the Issuing Bank shall request
compensation under Section 2.14, (ii) any Lender or the Issuing Bank delivers a
notice described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank pursuant to Section
2.20, then such Lender or the Issuing Bank shall use reasonable efforts (which
shall not require such Lender or the Issuing Bank to incur an unreimbursed loss
or unreimbursed cost or expense or otherwise take any action inconsistent with
its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any
certificate or document reasonably requested in writing by the Borrower or (y)
to assign its rights and delegate and transfer its obligations hereunder to
another of its offices, branches or affiliates, if such filing or assignment
would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable
pursuant to Section 2.20, as the case may be, in the future. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender
or the Issuing Bank in connection with any such filing or assignment,
delegation and transfer requested by the Borrower.

SECTION 2.22. Letters of Credit. (a) General. The Borrower
may request the issuance of a Letter of Credit for its own account, in a form
reasonably acceptable to the Administrative Agent and the Issuing Bank, at any
time and from time to time while the Revolving Credit Commitments remain in
effect. This Section shall not be construed to impose an obligation upon the
Issuing Bank to issue any Letter of Credit that is inconsistent with the terms
and conditions of this Agreement.

(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. In order to request the issuance of a Letter of Credit (or
to amend, renew or extend an existing Letter of Credit), the Borrower shall
hand deliver or telecopy to the Issuing Bank and the Administrative Agent
(reasonably in advance of the requested date of issuance, amendment, renewal or
extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, the date
of issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with

<PAGE> 45
45

paragraph (c) below), the amount of such Letter of Credit, the name and address
of the beneficiary thereof and such other information as shall be necessary to
prepare such Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if, and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be deemed to represent and warrant
that, after giving effect to such issuance, amendment, renewal or extension (A)
the L/C Exposure shall not exceed $5,000,000 and (B) the Aggregate Revolving
Credit Exposure shall not exceed the lesser of (x) the Total Revolving Credit
Commitment and (y) the Borrowing Base in effect at such time.

(c) Expiration Date. Each Letter of Credit shall expire at
the close of business on the earlier of the date one year after the date of the
issuance of such Letter of Credit and the L/C Maturity Date, unless such Letter
of Credit expires by its terms on an earlier date; provided, however, that each
Letter of Credit may, upon the request of the Borrower, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less unless the Issuing Bank notifies the
beneficiary thereof not more than 45, nor fewer than 30, days prior to the then
applicable expiry date that such Letter of Credit will not be renewed; provided
further, however, that no Letter of Credit may be extended beyond the L/C
Maturity Date unless the Borrower shall have deposited an amount equal to 105%
of the face amount of such Letter of Credit in cash in a cash collateral
account established with the Collateral Agent for the benefit of the Secured
Parties.

(d) Participations. By the issuance of a Letter of Credit
and without any further action on the part of the Issuing Bank or the Lenders,
the Issuing Bank hereby grants to each Revolving Credit Lender, and each such
Lender hereby acquires from the applicable Issuing Bank, a participation in
such Letter of Credit equal to such Lender's Applicable Percentage of the
aggregate amount available to be drawn under such Letter of Credit, effective
upon the issuance of such Letter of Credit. In addition, the Issuing Bank
hereby grants to each Revolving Credit Lender, and each Revolving Credit Lender
hereby acquires from the Issuing Bank, a participation in each DIP Letter of
Credit equal to such Revolving Credit Lender's Applicable Percentage of the
face amount of such DIP Letter of Credit, effective on the date hereof. In
consideration and in furtherance of the foregoing, each Revolving Credit Lender
hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each L/C Disbursement made by the Issuing Bank and not reimbursed by the
Borrower (or, if applicable, another party pursuant to its obligations under
any other Loan Document) forthwith on the date due as provided in Section
2.02(f). Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the Borrower shall pay to the
Administrative Agent an amount equal to such L/C Disbursement not later than
two hours after the Borrower shall have received notice

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46

from the Issuing Bank that payment of such draft will be made, or, if the
Borrower shall have received such notice later than 2:00 p.m., New York City
time, on any Business Day, not later than 10:00 a.m., New York City time, on
the immediately following Business Day.

(f) Obligations Absolute. The Borrower's obligations to
reimburse L/C Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:

(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;

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

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

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

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

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

Without limiting the generality of the foregoing, it is
expressly understood and agreed that the absolute and unconditional obligation
of the Borrower hereunder to reimburse L/C Disbursements will not be excused by
the gross negligence or wilful misconduct of the Issuing Bank. However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
the Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by the Borrower that are caused by
the Issuing Bank's gross negligence or wilful misconduct in determining whether
drafts and other documents presented under a Letter of Credit

<PAGE> 47
47

comply with the terms thereof; it is understood that the Issuing Bank 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, in making any payment under any Letter of
Credit (i) the Issuing Bank's exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged
or invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall,
in each case, be deemed not to constitute wilful misconduct or gross negligence
of the Issuing Bank.

(g) Disbursement Procedures. The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The Issuing Bank
shall as promptly as possible give telephonic notification, confirmed by
telecopy, to the Administrative Agent and the Borrower of such demand for
payment and whether the Issuing Bank has made or will make an L/C Disbursement
thereunder; provided that any failure to give or delay in giving such notice
shall not relieve the Borrower of its obligation to reimburse the Issuing Bank
and the Revolving Credit Lenders with respect to any such L/C Disbursement.
The Administrative Agent shall promptly give each Revolving Credit Lender
notice thereof.

(h) Interim Interest. If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of
the date of payment by the Borrower or the date on which interest shall
commence to accrue thereon as provided in Section 2.02(f), at the rate per
annum that would apply to such amount if such amount were an ABR Loan.

(i) Resignation or Removal of the Issuing Bank. The Issuing
Bank may resign at any time by giving 30 days' prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as the Issuing Bank hereunder by a Lender that shall agree
to serve as successor Issuing Bank and receipt of the Borrower's written
consent thereto, such successor shall succeed to and become vested with all the
interests, rights and obligations of the retiring Issuing Bank and the retiring
Issuing Bank shall be discharged from its obligations to issue additional
Letters of Credit hereunder. At the time such removal or resignation shall
become effective, the Borrower shall pay all accrued and unpaid fees pursuant
to Section 2.05(c)(ii). The acceptance of any appointment as the Issuing Bank
hereunder by a successor

<PAGE> 48
48

Lender shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to the Borrower and the Administrative Agent, and, from and
after the effective date of such agreement, (i) such successor Lender shall
have all the rights and obligations of the previous Issuing Bank under this
Agreement and the other Loan Documents and (ii) references herein and in the
other Loan Documents to the term "Issuing Bank" shall be deemed to refer to
such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the resignation or
removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a
party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement and the other Loan Documents with respect to
Letters of Credit issued by it prior to such resignation or removal, but shall
not be required to issue additional Letters of Credit.

(j) Cash Collateralization. If any Event of Default shall
occur and be continuing, the Borrower shall, on the Business Day it receives
notice from the Administrative Agent or the Required Lenders (or, if the
maturity of the Loans has been accelerated, Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 66
2/3% of the aggregate undrawn amount of all outstanding Letters of Credit)
thereof and of the amount to be deposited, deposit in an account with the
Collateral Agent, for the benefit of the Revolving Credit Lenders, an amount in
cash equal to 105% of the L/C Exposure as of such date. Such deposit shall be
held by the Collateral Agent as collateral for the payment and performance of
the Obligations. The Collateral Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits in Permitted
Investments, which investments shall be made at the option and sole discretion
of the Collateral Agent, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. Moneys
in such account shall (i) automatically be applied by the Administrative Agent
to reimburse the Issuing Bank for L/C Disbursements for which it has not been
reimbursed, (ii) be held for the satisfaction of the reimbursement obligations
of the Borrower for the L/C Exposure at such time and (iii) if the maturity of
the Loans has been accelerated (but subject to the consent of Revolving Credit
Lenders holding participations in outstanding Letters of Credit representing
greater than 66 2/3% of the aggregate undrawn amount of all outstanding Letters
of Credit), be applied to satisfy the Obligations. If the Borrower is required
to provide an amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower promptly and in any event within three
Business Days after all Events of Default have been cured or waived.

<PAGE> 49
49

ARTICLE III

Representations and Warranties

Each of the Borrower and the Guarantor represents and warrants
to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of
the Lenders that as of the Closing Date (after giving effect to the Emergence
Transactions and the other transactions contemplated in the Plan of
Reorganization to occur on the Plan Effective Date) and thereafter on each date
as required by Section 4.01(b):

SECTION 3.01. Organization, Powers. The Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified to do business in, and is
in good standing under the laws of, the States of Missouri, Texas and every
jurisdiction where such qualification is required except where the failure so
to qualify would not result in a Material Adverse Effect. The Borrower is duly
qualified under the laws of the State of Missouri to engage in farming and to
own agricultural land in the State of Missouri. The Guarantor is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business in, and is in good standing
under the laws of, every jurisdiction where such qualification is required
except where the failure so to qualify would not result in a Material Adverse
Effect. Each of the Borrower, the Guarantor and the Subsidiaries has the
corporate power and authority to execute, deliver and perform its obligations
under each of the Loan Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.

SECTION 3.02. Authorization. (a) The execution, delivery
and performance by each Loan Party of each of the Loan Documents and the
borrowings hereunder and (b) the consummation of the Emergence Transactions and
the other transactions contemplated by the Plan of Reorganization
(collectively, the "Transactions") (x) have been duly authorized by all
requisite corporate and, if required, stockholder action and (y) will not (i)
violate (A) any provision of law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of the Borrower, the Guarantor or any Subsidiary, (B) any order of any
Governmental Authority or (C) any provision of any indenture, agreement or
other instrument to which the Borrower, the Guarantor or any Subsidiary is a
party or by which any of them or any of their property is or may be bound, (ii)
be in conflict with, result in a breach of or constitute (alone or with notice
or lapse of time or both) a default under, or give rise to any right to
accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument or (iii)
result in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by the Borrower, the
Guarantor or any Subsidiary (other than any Lien created hereunder or under the
Security Documents).

SECTION 3.03. Enforceability. This Agreement has been duly
executed and delivered by the Borrower and the Guarantor and constitutes, and
each other Loan Document

<PAGE> 50
50

(other than the Letters of Credit) when executed and delivered by each Loan
Party party thereto will constitute, a legal, valid and binding obligation of
such Loan Party enforceable against such Loan Party in accordance with its
terms, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by equitable principles (regardless of whether
enforcement is sought in equity or at law).

SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or any other action by any
Governmental Authority is or will be required in connection with the
Transactions, except for (a) the filing of Uniform Commercial Code financing
statements and filings with the United States Patent and Trademark Office and
the United States Copyright Office, (b) recordation of the Mortgages and (c)
such as have been made or obtained and are in full force and effect and are not
subject to any appeal or stay.

SECTION 3.05. Financial Statements. (a) Each of PSF and
Premium Standard Farms, Inc. has heretofore furnished to the Lenders its
consolidated balance sheets and statements of income and changes in financial
condition (a) as of and for the fiscal year ended December 31, 1995, audited by
and accompanied by the opinion of Ernst & Young LLP, independent public
accountants, and (b) as of and for the fiscal quarter and the portion of the
fiscal year ended June 30, 1996, certified by its chief financial officer. Such
financial statements present fairly the financial condition and results of
operations and cash flows of the Borrower and the Guarantor and their
respective consolidated subsidiaries as of such dates and for such periods.
Such balance sheets and the notes thereto disclose all material liabilities,
direct or contingent, of the Borrower and the Guarantor and their respective
consolidated subsidiaries as of the dates thereof. Such financial statements
were prepared in accordance with GAAP applied on a consistent basis. (b) Each
of the Borrower and the Guarantor has heretofore delivered to the Lenders its
unaudited pro forma consolidated balance sheet as of June 30, 1996, prepared
giving effect to the Transactions as if they had occurred on such date. Such
pro forma balance sheet has been prepared in good faith by the Borrower
according to "fresh start" reporting principles, based on the assumptions used
to prepare the pro forma financial information contained in the Business Plan
(which assumptions are believed by the Borrower and the Guarantor on the date
hereof to be reasonable), is based on the best information available to the
Borrower and the Guarantor as of the date of delivery thereof, accurately
reflects all adjustments required to be made to give effect to the Transactions
and presents fairly on a pro forma basis the estimated consolidated financial
position of the Borrower and the Guarantor and their respective consolidated
subsidiaries as of June 30, 1996, assuming that the Transactions had actually
occurred on such date.

SECTION 3.06. No Material Adverse Change. Except as
contemplated by the Plan of Reorganization, there has been no material adverse
change in the business, assets, operations, prospects, condition, financial or
otherwise, or material agreements of the Borrower and its Subsidiaries, taken
as a whole, since June 30, 1996, other than those events that

<PAGE> 51
51
customarily occur as a result of events leading up to and following the
commencement of Bankruptcy Code cases.

SECTION 3.07. Title to Properties; Possession Under Leases.
(a) Each Loan Party has good and marketable title to, or valid leasehold
interests in, all its material properties and assets (including all Mortgaged
Property), except for minor defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens, other than Liens
expressly permitted by Section 6.02 and Liens that will be discharged in
accordance with the Plan of Reorganization.

(b) Since the Plan Effective Date, each Loan Party has
complied with all obligations under all material leases to which it is a party
and all such leases are in full force and effect. Each Loan Party enjoys
peaceful and undisturbed possession under all such material leases.

(c) As of the Closing Date, no Loan Party has received any
notice of, nor has any knowledge of, any pending or contemplated condemnation
proceeding affecting the Mortgaged Properties or any sale or disposition
thereof in lieu of condemnation.

(d) As of the Closing Date, no Loan Party is obligated under
any right of first refusal, option or other contractual right to sell, assign
or otherwise dispose of any Mortgaged Property or any interest therein.

SECTION 3.08. Capitalization. On the Closing Date, the
authorized Capital Stock of the Borrower consists of 1,000 shares of common
stock, $.01 par value per share. After giving effect to the Emergence
Transactions, on the Closing Date (i) 10,000,000 membership interests of the
Guarantor (the "New Common Equity") will be issued and outstanding and (ii)
1,000 shares of common stock of the Borrower will be issued and outstanding,
and each will be owned by such persons and to such extent as set forth on
Schedule 3.08(a). The shares of Capital Stock so indicated on Schedule 3.08(a)
have been duly and validly issued, and are fully paid and non-assessable.
Schedule 3.08(b) sets forth as of the Closing Date the name and jurisdiction of
incorporation of each subsidiary of the Guarantor or the Borrower and, as to
each such subsidiary, the percentage of each class of Capital Stock owned by
the Guarantor, the Borrower or any Subsidiary. As of Closing Date, the
Borrower has no Inactive Subsidiaries other than High Plains Ranch, Inc.

SECTION 3.09. Litigation; Compliance with Laws. (a) Except
as set forth on Schedule 3.09, there are not any actions, suits or proceedings
at law or in equity or by or before any Governmental Authority now pending or,
to the knowledge of the Guarantor or the Borrower, threatened against or
affecting any Loan Party or any business, property or rights of any Loan Party
(i) that involve any Loan Document or the Transactions (other than those
arising or threatened after the Closing Date which, if adversely determined,
could not reasonably be expected to result in a Material Adverse Effect) or
(ii) as to which there is a reasonable possi-

<PAGE> 52
52

bility of an adverse determination and that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.

(b) No Loan Party or any of its material properties or
material assets is in violation of, nor will the continued operation of its
material properties and assets as currently conducted violate, any law, rule or
regulation (including any zoning, building, Environmental Law, ordinance, code
or approval or any building permits) or any restrictions of record or
agreements affecting the Mortgaged Property, or is in default with respect to
any judgment, writ, injunction, decree or order of any Governmental Authority,
where such violation or default could reasonably be expected to result in a
Material Adverse Effect.

(c) Certificates of occupancy and permits are in effect for
each Mortgaged Property as currently constructed, and true and complete copies
of such certificates of occupancy are available for review by the Collateral
Agent.

SECTION 3.10. Agreements. (a) No Loan Party is a party to
any agreement or instrument or subject to any corporate restriction that has
resulted or could reasonably be expected to result in a Material Adverse
Effect.

(b) No Loan Party is in default in any manner under any
provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound,
where such default could reasonably be expected to result in a Material Adverse
Effect.

SECTION 3.11. Federal Reserve Regulations. (a) No Loan
Party is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of buying or carrying Margin
Stock.

(b) No part of the proceeds of any Loan or any Letter of
Credit will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a violation of, or
that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.

SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act. No Loan Party is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.

SECTION 3.13. Use of Proceeds. The Borrower will use the
proceeds of the Loans and will request the issuance of Letters of Credit only
for the purposes specified in the preamble to this Agreement.

<PAGE> 53
53

SECTION 3.14. Tax Returns. Each Loan Party has filed or
caused to be filed all Federal, state, and material local and other tax returns
or materials required to have been filed by it and has paid or caused to be
paid all taxes due and payable by it and all assessments received by it, except
taxes that are being contested in good faith by appropriate proceedings and for
which such Loan Party shall have set aside on its books adequate reserves.

SECTION 3.15. No Material Misstatements. No information,
report, financial statement, exhibit or schedule furnished by or on behalf of
the Guarantor or the Borrower to the Administrative Agent or any Lender in
connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto contained, contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not misleading; provided that to
the extent any such information, report, financial statement, exhibit or
schedule was based upon or constitutes a forecast or projection, each of the
Guarantor and the Borrower represents only that it acted in good faith and
utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit or schedule.

SECTION 3.16. Employee Benefit Plans. Each of the Borrower
and its ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the applicable regulations
thereunder. No ERISA Event has occurred or is reasonably expected to occur
that, when taken together with all other such ERISA Events, could reasonably be
expected to result in material liability of the Borrower or any of its ERISA
Affiliates. The present value of all accrued benefit liabilities under each
Plan (based on those assumptions used to fund such Plan) did not, as of the
last annual valuation date applicable thereto, exceed by more than $1,000,000
the fair market value of the assets of such Plan, and the present value of all
accrued benefit liabilities of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed by more than $1,000,000 the fair
market value of the assets of all such underfunded Plans.

SECTION 3.17. Environmental Matters. Except as set forth in
Schedule 3.17:

(a) The properties owned or operated by the Loan
Parties (the "Properties") do not contain any Hazardous
Materials in amounts or concentrations that (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 result in a Material
Adverse Effect;

(b) The Properties and all operations of the Loan
Parties are in compliance with all Environmental Laws and all
necessary Environmental Permits have been obtained and are in
effect, except to the extent that such non-compliance or
failure to obtain any necessary permits, in the aggregate,
could not result in a Material Adverse Effect;

<PAGE> 54
54

(c) There have been no Releases or threatened Releases
at, from, under or proximate to the Properties or otherwise in
connection with the operations of the Loan Parties, which
Releases or threatened Releases, in the aggregate, could
result in a Material Adverse Effect;

(d) No Loan Party has received any notice of an
Environmental Claim in connection with the Properties or the
operations of the Loan Parties or with regard to any person
whose liabilities for environmental matters any Loan Party has
retained or assumed, in whole or in part, contractually, by
operation of law or otherwise, which, in the aggregate, could
result in a Material Adverse Effect, nor does any Loan Party
have reason to believe that any such notice will be received
or is being threatened (unless the Borrower shall have
notified the Administrative Agent thereof); and

(e) Hazardous Materials have not been transported from
the Properties, nor have Hazardous Materials been generated,
treated, stored or disposed of at, on or under any of the
Properties in a manner that could give rise to liability under
any Environmental Law, nor has any Loan Party retained or
assumed any liability, contractually, by operation of law or
otherwise, with respect to the generation, treatment, storage
or disposal of Hazardous Materials, which transportation,
generation, treatment, storage or disposal, or retained or
assumed liabilities, in the aggregate, could result in a
Material Adverse Effect.

SECTION 3.18. Insurance. Schedule 3.18 sets forth a true,
complete and correct description of all insurance maintained by or for the Loan
Parties as of the date hereof and the Closing Date. As of each such date, such
insurance is in full force and effect and all premiums have been duly paid.
The Loan Parties have insurance in such amounts and covering such risks and
liabilities as are in accordance with normal industry practice.

SECTION 3.19. Security Documents. (a) The Security
Agreement is effective to create in favor of the Collateral Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral (as defined in the Security Agreement) and, when
financing statements in appropriate form are filed in the offices specified on
Schedule 6 to the Perfection Certificate, the Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the grantors thereunder in such Collateral (other than
the Intellectual Property, as defined in the Security Agreement), in each case
prior and superior in right to any other person, other than with respect to
Liens expressly permitted by Section 6.02.

(b) When the Security Agreement is filed in the United States
Patent and Trademark Office and the United States Copyright Office, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in the
Intellectual Property (as defined in the Security Agreement), in each case
prior and superior in right to any other person (it being understood that
subsequent recordings in the United States Patent and Trademark Office and the
United States Copyright Office may be

<PAGE> 55

necessary to perfect a lien on registered trademarks, trademark applications
and copyrights acquired by the grantors after the date hereof).

(c) The Mortgages are effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal,
valid and enforceable Lien on all of the Loan Parties' right, title and
interest in and to the Mortgaged Property thereunder and the proceeds thereof,
and when the Mortgages are filed in the offices specified on Schedule 3.19(c),
the Mortgages shall constitute a fully perfected Lien on, and security interest
in, all right, title and interest of the Loan Parties in such Mortgaged
Property and the proceeds thereof, in each case prior and superior in right to
any other person, other than with respect to the rights of persons pursuant to
Liens expressly permitted by Section 6.02.

SECTION 3.20. Location of Real Property and Leased Premises.
Schedule 3.20 lists completely and correctly as of the Closing Date all real
property owned by the Loan Parties and the addresses thereof. As of the
Closing Date, the Loan Parties own in fee all the real property set forth on
Schedule 3.20.

SECTION 3.21. Labor Matters. As of the date hereof and the
Closing Date, there are no strikes, lockouts or slowdowns against any Loan
Party pending or, to the knowledge of the Guarantor or the Borrower,
threatened. The hours worked by and payments made to employees of the Loan
Parties have not been in violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters. All
payments due from the Loan Parties, or for which any claim may be made against
any Loan Party, on account of wages and employee health and welfare insurance
and other benefits, have been paid in the ordinary course of business or in
connection with the consummation of the Plan of Reorganization or accrued as a
liability on the books of such Loan Party. The consummation of the
Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining
agreement to which any Loan Party is bound.

SECTION 3.22. Solvency. (a) Immediately after the
consummation of the Transactions to occur on the Closing Date and immediately
following the making of each Loan made on the Closing Date and after giving
effect to the application of the proceeds of such Loans, (i) the fair value of
the assets of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (ii) the present fair
saleable value of the property of each Loan Party will be greater than the
amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) each Loan Party will be
able to pay its debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured; and (iv) each Loan
Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.

SECTION 3.23 Mortgaged Properties. (a) Each Mortgaged
Property that is a completed building or improvement has adequate water, gas
and electrical supply, storm and

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56

sanitary sewerage facilities and other required public utilities and means of
appropriate access to a public street, road or highway, except in each case
where the failure to have such facilities or access could not reasonably
be expected to result in a Material Adverse Effect.

(b) No condemnation of any part of any Mortgaged
Property, no condemnation or relocation of any roads abutting any Mortgaged
Property and no denial of access to any Mortgaged Property from any point of
access, has commenced or, to the knowledge of the Borrower or the Guarantor, is
contemplated by any Governmental Authority, except for any such proceeding,
relocation or denial that could not reasonably be expected to materially
adversely affect the Borrower's ability to conduct its business.

(c) Each Mortgaged Property complies in all material
respects with all applicable zoning, building and other laws of Governmental
Authorities, building permits and any conditions, covenants and restrictions of
record or any recorded or unrecorded agreement affecting such Mortgaged
Property, except where the failure so to comply could not reasonably be
expected to result in a Material Adverse Effect.

(d) Except as set forth on Schedule 3.23, there are not
any actions or proceedings now pending, or, to the knowledge of the Borrower or
the Guarantor, threatened, to revoke, attack, invalidate, rescind or modify the
zoning of any Mortgaged Property or any part thereof or any building or other
permits heretofore issued with respect thereto except for any such action or
proceeding that could not reasonably be expected to result in a Material
Adverse Effect.

(e) On the date hereof, no building or premises is
located on any Mortgaged Property in a zone designated as a flood plain by any
Governmental Authority unless such Mortgaged Property so designated is insured
in compliance with Section 5.02(c).

ARTICLE IV

Conditions of Lending

The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit hereunder are subject to the
satisfaction of the following conditions:

SECTION 4.01. All Credit Events. On the date of each
Borrowing, including on the date of each issuance of a Letter of Credit (each
such event being called a "Credit Event"):

(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 (or such notice shall have
been deemed given in accordance with Section 2.03) or, in the case of
the issuance of a Letter of Credit, the Issuing Bank and the
Administrative Agent shall have received a notice requesting the
issuance of such Letter of Credit as required by Section 2.22(b).

<PAGE> 57
57

(b) Except in the case of a Borrowing that does not increase
the aggregate principal amount of Loans outstanding of any Lender, the
representations and warranties set forth in Article III hereof shall
be true and correct in all material respects on and as of the date of
such Credit Event with the same effect as though made on and as of
such date, except to the extent such representations and warranties
expressly relate to an earlier date.

Each Credit Event shall be deemed to constitute a representation and warranty
by the Borrower and the Guarantor on the date of such Credit Event as to the
matters specified in paragraphs (b) (except as aforesaid) and (c) of this
Section 4.01.

SECTION 4.02. First Credit Event. On the Closing Date:

(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion
of (i) Weil, Gotshal & Manges LLP, counsel for the Guarantor and the
Borrower, substantially to the effect set forth in Exhibit L-1 and
(ii) Sonnenschein, Nath & Rosenthal, substantially to the effect set
forth in Exhibit L-2, in each case (A) dated the Closing Date, (B)
addressed to the Issuing Bank, the Administrative Agent and the
Lenders, and (C) covering such other matters relating to the Loan
Documents and the Transactions as the Administrative Agent shall
reasonably request, and the Guarantor and the Borrower hereby request
such counsel to deliver such opinions.

(b) All legal matters incident to this Agreement, the
Borrowings and extensions of credit hereunder and the other Loan
Documents shall be satisfactory to the Lenders and the Issuing Bank.

(c) The Administrative Agent shall have received (i) a copy of
the certificate or articles of incorporation, including all amendments
thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate
as to the good standing of each Loan Party as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary or
Assistant Secretary of each Loan Party dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of
the by-laws of such Loan Party as in effect on the Closing Date and at
all times since a date prior to the date of the resolutions described
in clause (B) below, (B) that attached thereto is a true and complete
copy of resolutions duly adopted by the Board of Directors or members
of such Loan Party authorizing the execution, delivery and performance
of the Loan Documents to which such person is a party and, in the case
of the Borrower, the borrowings hereunder, and that such resolutions
have not been modified, rescinded or amended and are in full force and
effect, (C) that the certificate or articles of incorporation of such
Loan Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant

<PAGE> 58

58
to clause (i) above, and (D) as to the incumbency and specimen
signature of each officer executing any Loan Document or any other
document delivered in connection herewith on behalf of such Loan
Party; (iii) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing
the certificate pursuant to (ii) above; and (iv) such other documents
as the Lenders, the Issuing Bank or Cravath, Swaine & Moore, counsel
for the Administrative Agent, may reasonably request.

(d) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by a Financial Officer
of the Borrower, confirming compliance with the conditions precedent
set forth in paragraphs (b) and (c) of Section 4.01.

(e) The Administrative Agent shall have received all Fees and
other amounts due and payable on or prior to the Closing Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder or under any other Loan Document.

(f) The Security Agreement and the Assignment of Contracts
shall have been duly executed by the Borrower and shall have been
delivered to the Collateral Agent and shall be in full force and
effect on such date and each document (including each Uniform
Commercial Code financing statement) required by law or reasonably
requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Collateral Agent for the
benefit of the Secured Parties a valid, legal and perfected
first-priority security interest in and lien on the Collateral
(subject to any Lien expressly permitted to be prior thereto by
Section 6.02) described in the Security Agreement shall have been
delivered to the Collateral Agent.

(g) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code (or equivalent filings) filings
made with respect to the Borrower in the states (or other
jurisdictions) in which the chief executive office of the Borrower is
located, any offices of the Borrower in which records have been kept
relating to Accounts and the other jurisdictions in which Uniform
Commercial Code filings (or equivalent filings) are to be made
pursuant to the preceding paragraph, together with copies of the
financing statements (or similar documents) disclosed by such search,
and accompanied by evidence satisfactory to the Collateral Agent that
the Liens indicated in any such financing statement (or similar
document) would be permitted under Section 6.02 or have been released.

(h) The Collateral Agent shall have received a Perfection
Certificate with respect to each Loan Party dated the Closing Date and
duly executed by a Responsible Officer of such Loan Party.

(i)(i) Each of the Security Documents, in form and substance
satisfactory to the Lenders, relating to each of the Mortgaged
Properties shall have been duly executed by

<PAGE> 59

the parties thereto and delivered to the Collateral Agent and shall
be in full force and effect, (ii) each of such Mortgaged Properties
shall not be subject to any Lien other than those permitted under
Section 6.02, (iii) each of such Security Documents shall have been
filed and recorded in the recording office as specified on Schedule
4.02(i) (or a lender's title insurance policy, in form and substance
acceptable to the Collateral Agent, insuring such Security Document as
a first lien on such Mortgaged Property (subject to any Lien permitted
by Section 6.02) shall have been received by the Collateral Agent)
and, in connection therewith, the Collateral Agent shall have received
evidence satisfactory to it of each such filing and recordation and
(iv) the Collateral Agent shall have received such other documents,
including a policy or policies of title insurance issued by a
nationally recognized title insurance company, together with such
endorsements, coinsurance and reinsurance as may be requested by the
Collateral Agent and the Lenders, insuring the Mortgages as valid
first liens on the Mortgaged Properties, free of Liens other than
those permitted under Section 6.02, together with such surveys,
abstracts, appraisals and legal opinions required to be furnished
pursuant to the terms of the Mortgages or as reasonably requested by
the Collateral Agent or the Lenders.

(j) The Guarantee Agreements, the Indemnity, Subrogation and
Contribution Agreement, the Intercreditor Agreement and the Consent
and Agreement shall have been duly executed by the parties thereto,
shall have been delivered to the Collateral Agent and shall be in full
force and effect.

(k) The Pledge Agreement shall have been duly executed by the
parties thereto and delivered to the Collateral Agent and shall be in
full force and effect, and all the Pledged Securities (as defined in
the Pledge Agreement) shall have been duly and validly pledged
thereunder to the Collateral Agent for the ratable benefit of the
Secured Parties and certificates representing such securities,
accompanied by instruments of transfer and stock powers endorsed in
blank, shall be in the actual possession of the Collateral Agent.

(l) The Administrative Agent shall have received a Borrowing
Base Certificate dated the Closing Date and relating to the week (or,
if the Closing Date shall be a Monday, Tuesday or Wednesday, the
second week) ended immediately prior to the Closing Date and executed
by a financial officer of the Borrower.

(m) The Administrative Agent shall have received a copy of, or
a certificate as to coverage under, the insurance policies required by
Section 5.02 and the applicable provisions of the Security Documents,
each of which shall be endorsed or otherwise amended to include a
"standard" or "New York" lender's loss payable endorsement and to name
the Collateral Agent as additional insured, in form and substance
satisfactory to the Administrative Agent.

(n) The Lenders shall be satisfied as to the amount and nature
of any contingent liabilities of the Loan Parties including, but not
limited to, environmental and employee

<PAGE> 60
60

health and safety exposures to which the Loan Parties may be subject
and the plans of the Loan Parties with respect thereto.

(o) The Borrower shall have made available for review by the
Administrative Agent for each Mortgaged Property the following:

(i) a copy of the original permanent or temporary
certificate of occupancy, if any, issued upon completion of
each Mortgaged Property (or any amendment issued upon
completion of any alteration) by the appropriate Governmental
Authority or appropriate evidence that the use and occupancy of
each Mortgaged Property is authorized; and

(ii) a copy of all applications, licenses, permits and
authorizations which are necessary for the construction and
operation of the Mortgaged Property.

(p) The Court shall have entered on or prior to December 31,
1996, or, if the DIP Credit Agreement shall have been extended in
accordance with its terms, the first anniversary of the commencement
of the Borrower's Chapter 11 case, the Order reasonably satisfactory
in substance to the Lenders. The Order shall not be subject to any
appeal or stay and there shall not have been entered by the Court any
reversal, modification or vacatur, in whole or in part, of the Order.
All other requisite Governmental Authorities shall have approved or
consented to the Transactions to the extent required or deemed
advisable by the Administrative Agent and its counsel (and such
approvals shall be in full force and effect) and there shall be no
action, actual or threatened, before any Governmental Authority or
arbitrator that (i) has a reasonable likelihood of restraining,
preventing or imposing burdensome conditions on the Transactions or
(ii) if adversely determined, could reasonably be expected to result
in a Material Adverse Effect.

(q) The Borrower and the Guarantor shall have emerged from
Chapter 11 proceedings and, concurrently with the first Credit Event,
shall have consummated the Emergence Transactions in accordance with
the Plan of Reorganization.

(r) The Required Lenders and more than one-half in number of
the Lenders shall have voted to approve (i) the Plan of
Reorganization, including all exhibits thereto and agreements
entered into by the Borrower and the Guarantor in connection
therewith, as well as any amendments or modifications to any of the
foregoing, and (ii) the terms of the Emergence Transactions.

(s) The Lenders shall have received a pro forma consolidated
balance sheet of the Borrower as of June 30, 1996, after giving effect
to the consummation of the Emergence Transactions and the other
transactions contemplated thereby, which shall be reasonably
acceptable to the Required Lenders.

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61

(t) After giving effect to the consummation of the Emergence
Transactions and the other transactions contemplated hereby, (i)
neither the Borrower nor the Guarantor shall have outstanding any
liabilities for borrowed money or preferred stock other than (A)
Indebtedness listed on Schedule 6.01, (B) its Obligations hereunder,
(C) the PIK Notes in an initial aggregate principal amount not to
exceed $117,500,000 and (D) other indebtedness or preferred stock
issued under the Plan of Reorganization.

(u) The Lenders shall be satisfied that the consummation of
the Emergence Transactions and the other transactions contemplated
hereby will not breach, terminate or result in the interruption of any
Principal Contract to which the Borrower is a party, except as
described in the Disclosure Statement.

(v) prior to or substantially simultaneously with the first
Credit Event, (a) the principal, interest (excluding default interest
under the 1994 Credit Agreement), fees and other amounts due under the
1994 Credit Agreement and the DIP Credit Agreement shall have been
repaid in full and (b) all commitments to lend under the 1994 Credit
Agreement and the DIP Credit Agreement shall have been permanently
terminated.

(w) the Lenders shall be reasonably satisfied with the
composition of the Borrower's senior management and board of
directors, and with the plans of the Borrower with respect thereto.

(x) the Lenders shall have completed, and shall be reasonably
satisfied with the results of, (i) an examination of the accounts
receivable and inventory of the Borrower and (ii) all asset appraisals
that the Lenders deem necessary to conduct.

(y) each of the conditions set forth in paragraphs (a) through
(w) shall have been satisfied or waived as provided herein by 5:00
p.m., New York City time, on the Maturity Date (as defined in the DIP
Credit Agreement).

ARTICLE V

Affirmative Covenants

Each of the Guarantor and the Borrower covenants and agrees
with each Lender that so long as this Agreement shall remain in effect and
until the Commitments have been terminated and the principal of and interest on
each Loan, all Fees and all other expenses or amounts payable under any Loan
Document shall have been paid in full and all Letters of Credit

<PAGE> 62
62

have been cancelled or have expired and all amounts drawn thereunder have been
reimbursed in full (or cash collateral has been deposited with the
Collateral Agent in an amount equal to 105% of the then outstanding L/C
Exposure), unless the Required Lenders shall otherwise consent in writing, each
of the Guarantor and the Borrower will, and will cause each of the Subsidiaries
to:

SECTION 5.01. Existence; Businesses and Properties. (a) Do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except as otherwise expressly permitted
under Section 6.08.

(b) Except as otherwise expressly permitted hereunder, do or
cause to be done all things necessary to obtain, preserve, renew, extend and
keep in full force and effect the rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names material to the
conduct of its business; comply in all material respects with all applicable
laws, rules, regulations (including any zoning, building, Environmental and
Safety Law, ordinance, code or approval or any building permits or any
restrictions of record or agreements affecting the Mortgaged Properties) and
decrees and orders of any Governmental Authority, whether now in effect or
hereafter enacted; and at all times maintain and preserve all property material
to the conduct of such business and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith
may be properly conducted at all times.

SECTION 5.02. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers;
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same or similar
locations, including public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by it; and
maintain such other insurance as may be required by law.

(b) Cause all such policies to be endorsed or otherwise
amended to include a "standard" or "New York" lender's loss payable
endorsement, in form and substance satisfactory to the Administrative Agent and
the Collateral Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent or the Collateral Agent of the occurrence of an Event
of Default, the insurance carrier shall pay all proceeds otherwise payable to
the Borrower or the Loan Parties under such policies directly to the Collateral
Agent; cause all such policies to provide that neither the Borrower, the
Administrative Agent, the Collateral Agent nor any other party shall be a
coinsurer thereunder and to contain a "Replacement Cost Endorsement", without
any deduction for depreciation, or, in the case of insurance covering the
livestock, the market value from time to time of the livestock and in the case
of automobiles, the "actual cash value" of the automobiles, and such other
provisions as the Administrative Agent or the Collateral Agent may reasonably
require from time to time to protect their interests; deliver original or
certified copies

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63

of all such policies to the Collateral Agent; cause each such policy to
provide that it shall not be canceled, modified or not renewed (i) by reason of
nonpayment of premium upon not less than 10 days' prior written notice thereof
by the insurer to the Administrative Agent and the Collateral Agent (giving the
Administrative Agent and the Collateral Agent the right to cure defaults in the
payment of premiums) or (ii) for any other reason upon not less than 30 days'
prior written notice thereof by the insurer to the Administrative Agent and the
Collateral Agent; deliver to the Administrative Agent and the Collateral Agent,
prior to the cancellation, modification or nonrenewal of any such policy of
insurance, a copy of a renewal or replacement policy (or other evidence of
renewal of a policy previously delivered to the Administrative Agent and the
Collateral Agent) together with evidence satisfactory to the Administrative
Agent and the Collateral Agent of payment of the premium therefor.

(c) If at any time the area in which the Premises (as defined
in the Mortgages) are located is designated (i) a "flood hazard area" in any
Flood Insurance Rate Map published by the Federal Emergency Management Agency
(or any successor agency), obtain flood insurance in such total amount as the
Administrative Agent, the Collateral Agent or the Required Lenders may from
time to time require, and otherwise comply with the National Flood Insurance
Program as set forth in the Flood Disaster Protection Act of 1973, as it may be
amended from time to time, or (ii) a "Zone 1" area, obtain earthquake insurance
in such total amount as the Administrative Agent, the Collateral Agent or the
Required Lenders may from time to time require.

(d) With respect to any Mortgaged Property, carry and
maintain comprehensive general liability insurance including the "broad form
CGL endorsement" and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single limit of less than $27,000,000, naming the Collateral Agent as
an additional insured, on forms satisfactory to the Collateral Agent.

(e) Notify the Administrative Agent and the Collateral Agent
immediately whenever any separate insurance concurrent in form or contributing
in the event of loss with that required to be maintained under this Section
5.02 is taken out by the Borrower; and promptly deliver to the Administrative
Agent and the Collateral Agent a duplicate original copy of such policy or
policies.

(f) In connection with the covenants set forth in this
Section 5.02, it is understood and agreed that:

(i) none of the Administrative Agent, the Collateral Agent, the
Lenders, the Issuing Bank, or their respective agents or employees
shall be liable for any loss or damage insured by the insurance
policies required to be maintained under this Section 5.02, it being
understood that (A) the Borrower and the other Loan Parties shall
look solely to their insurance companies or any other parties other
than the aforesaid parties for the recovery of such loss or damage
and (B) such insurance companies shall

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64

have no rights of subrogation against the Administrative Agent,
the Collateral Agent, the Lenders, the Issuing Bank or their agents
or employees. If, however, the insurance policies do not provide
waiver of subrogation rights against such parties, as required
above, then the Borrower hereby agrees, to the extent permitted by
law, to waive its right of recovery, if any, against the
Administrative Agent, the Collateral Agent, the Lenders, the Issuing
Bank and their agents and employees; and

(ii) the designation of any form, type or amount of insurance
coverage by the Administrative Agent, the Collateral Agent or the
Required Lenders under this Section 5.02 shall in no event be deemed
a representation, warranty or advice by the Administrative Agent,
the Collateral Agent or the Lenders that such insurance is adequate
for the purposes of the business of the Borrower and the
Subsidiaries or the protection of their properties and the
Administrative Agent, the Collateral Agent and the Required Lenders
shall have the right from time to time to require the Borrower and
the other Loan Parties to keep other insurance in such form and
amount as the Administrative Agent, the Collateral Agent or the
Required Lenders may reasonably request, provided that such
insurance shall be obtainable on commercially reasonable terms.

SECTION 5.03. Obligations and Taxes. Pay its Indebtedness
and other obligations promptly and in accordance with their terms and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise that, if unpaid,
might give rise to a Lien upon such properties or any part thereof; provided,
however, that such payment and discharge shall not be required with respect to
any such tax, assessment, charge, levy or claim so long as the validity or
amount thereof shall be contested in good faith by appropriate proceedings and
the Borrower shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture
of such property.

SECTION 5.04. Financial Statements, Reports, etc. Furnish to
the Administrative Agent and each Lender:

(a) within 30 days after the end of each month (other than the
last month of any quarterly accounting period of the Borrower), the
consolidated balance sheets of the Borrower and the Guarantor as at
the end of such month and the related consolidated statements of
income and cash flows for such month, together with management's
discussion and analysis of monthly results and year-to-date results
compared (i) to the same periods in the prior year and (ii) with the
current operating budget, all of which shall be certified by a
Financial Officer of each of the Borrower and the Guarantor, subject
to normal year-end audit adjustments;

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65

(b) within 45 days after the close of each quarterly accounting
period in each fiscal year of the Borrower (other than the last
fiscal quarter of any fiscal year), the consolidated balance sheets
of the Borrower and the Guarantor as at the end of such quarterly
accounting period and the related consolidated statements of income
and cash flows for such quarterly accounting period, together with
management's discussion and analysis of quarterly results and
year-to-date results compared (i) to the same periods in the prior
year and (ii) with the current operating budget, all of which shall
be certified by a Financial Officer of each of the Borrower and the
Guarantor, subject to normal year-end audit adjustments;

(c) within 90 days after the end of each fiscal year of the
Borrower, the consolidated balance sheets of the Borrower and the
Guarantor as at the end of such fiscal year and the related
consolidated statements of income and cash flow for such fiscal
year, audited by independent certified public accountants of
recognized national standing, together with (i) management's
discussion and analysis of yearly results compared (A) to the prior
year and (B) with the current operating budget and (ii) an opinion
of such accountants (which shall not be qualified in any material
respect) to the effect that such financial statements fairly present
the financial condition and results of operations of the Borrower
and the Guarantor on a consolidated basis in accordance with GAAP
consistently applied;

(d) concurrently with any delivery of financial statements
under sub-paragraph (a), (b) or (c) above, a certificate of a
Financial Officer of the Borrower and the Guarantor (and, in the
case of financial statements delivered under sub-paragraph (c)
above, the accounting firm) opining on or certifying such statements
(which certificate, when furnished by an accounting firm, may be
limited to accounting matters and disclaim responsibility for legal
interpretations) (i) certifying (A) that no Default or Event of
Default has occurred or, if such a Default or Event of Default has
occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto
and (B) that none of the Guarantor, the Borrower or any Subsidiary
has created, formed or acquired any Subsidiary since the date of the
immediately preceding certificate delivered in accordance with this
Section 5.04(d) except as permitted by Section 6.14; (ii) in the
case of a certificate delivered with the financial statements
delivered under paragraph (c) above with respect to each fiscal year
ending on or after December 31, 1997, so long as any Term Loans
shall be outstanding on the date of such certificate, setting forth
computations of Excess Cash Flow in detail satisfactory to the
Administrative Agent; and (iii) demonstrating compliance with the
covenants contained in Sections 6.12 and 6.13;

(e) promptly following the end of every week (but in no event
later than the last Business Day of the following week) (i) a
certificate in the form of Exhibit M (a "Borrowing Base
Certificate") showing the Borrowing Base as of the close of business
on the last day of the week most recently ended, each such
Certificate to be certified as complete and correct on behalf of the
Borrower by a Financial Officer of the Borrower,

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66

(ii) such information as is required to be delivered pursuant to
Exhibit M-1, (iii) such other supporting documentation and
additional reports with respect to the Borrowing Base as the
Administrative Agent shall reasonably request and (iv) a report of
the Borrower's hedging activities for the previous week in the form
typically prepared for management's review, including, in any event,
a list of the principal terms and aggregate net exposure (marked to
market) for all Hedging Contracts still in effect at the end of the
previous week;

(f) promptly following the end of every month (but in no event
later than the fifteenth day of the following month) (i) a Borrowing
Base Certificate showing the Borrowing Base as of the close of
business on the last day of the immediately preceding month (which
shall reflect a recalculation of the portion of Inventory and
Accounts Receivable of the Borrower that did not constitute Eligible
Inventory and Eligible Accounts Receivables as of such day), each
such Certificate to be certified as complete and correct on behalf
of the Borrower by a Financial Officer of the Borrower, (ii) such
information as is required to be delivered pursuant to Exhibit M-1,
(iii) such other supporting documentation and additional reports
with respect to the Borrowing Base as the Administrative Agent shall
reasonably request and (iv) a report of the Borrower's hedging
activities for the previous month in the form typically prepared for
management's review, including, in any event, a list of the
principal terms and aggregate net exposure (marked to market) for
all Hedging Contracts still in effect at the end of the previous
month;

(g) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other
materials (other than any stock plans or Registration Statements on
Form S-8) filed by any Loan Party with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all
of the functions of said Commission, or with any national securities
exchange, or distributed to its shareholders, as the case may be;

(h) no later than 30 days after the end of each fiscal year, an
annual operating budget and capital expenditures budget for
such fiscal year, in each case in form and substance reasonably
satisfactory to the Administrative Agent; and

(i) promptly, from time to time, such other information
regarding the operations, business affairs and financial condition
of any Loan Party, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably
request.

SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, the Issuing Bank and each Lender prompt written notice of
the following:

(a) any Event of Default or Default, specifying the nature and
extent thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;

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(b) the filing or commencement of, or any threat or notice of
intention of any person to file or commence, any action, suit or proceeding,
whether at law or in equity or by or before any Governmental Authority, against
any Loan Party that could reasonably be expected to result in a Material
Adverse Effect; and

SECTION 5.06. Employee Benefits. (a) Comply in all material
respects with the applicable provisions of ERISA and the Code and (b) furnish
to the Administrative Agent (i) as soon as possible after, and in any event
within 10 days after any Responsible Officer of the Borrower or any ERISA
Affiliate knows or has reason to know that, any ERISA Event has occurred that,
alone or together with any other ERISA Event could reasonably be expected to
result in liability of the Borrower in an aggregate amount exceeding $3,000,000
or requiring payments exceeding $1,000,000 in any year, a statement of a
Financial Officer of the Borrower setting forth details as to such ERISA Event
and the action, if any, that the Borrower proposes to take with respect
thereto.

SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true and
correct entries in conformity with GAAP and all requirements of law are made of
all dealings and transactions in relation to its business and activities. Each
Loan Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender to visit
and inspect the financial records and the properties of the Loan Parties at
reasonable times and as often as reasonably requested and to make extracts from
and copies of such financial records, and permit any representatives designated
by the Administrative Agent or any Lender to discuss the affairs, finances and
condition of the Loan Parties with the officers thereof and independent
accountants therefor.

SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans
and request the issuance of Letters of Credit only for the purposes set forth
in the preamble to this Agreement.

SECTION 5.09. Compliance with Environmental Laws. Comply,
and cause all lessees and other persons occupying its Properties to comply, in
all material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Properties; obtain and renew all material
Environmental Permits necessary for its operations and Properties; and conduct
any Remedial Action in accordance with Environmental Laws; provided, however,
that no Loan Party shall be required to undertake any Remedial Action to the
extent that its obligation to do so is being contested in good faith and by
proper proceedings and appropriate reserves are being maintained with respect
to such circumstances.

SECTION 5.10. Preparation of Environmental Reports. If (a) a
Default caused by reason of a breach of Section 3.17 or 5.09 shall have
occurred and be continuing or (b) the

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68

Borrower shall be ordered to pay a fine or penalty by the Missouri Department
of Natural Resources, the Texas Natural Resources Conservation Commission or
any similar agency of any state, or shall be ordered to conduct any Remedial
Action by any such department or agency where the cost of such remedial action
could reasonably be expected to exceed $2,000,000, in each case as a result of
any spill of any Hazardous Material, at the request of the Required Lenders
through the Administrative Agent, provide to the Lenders within 45 days after
such request, at the expense of the Borrower, an environmental site assessment
report for the Properties which are the subject of such Default, fine, penalty
or Remedial Action prepared by an environmental consulting firm acceptable to
the Administrative Agent and the Borrower and indicating the presence or
absence of Hazardous Materials and the estimated cost of any compliance or
Remedial Action in connection with such Properties.

SECTION 5.11. Examinations. From time to time upon the
request of the Collateral Agent or the Required Lenders through the
Administrative Agent, permit the Collateral Agent or the Lenders or
professionals (including investment bankers, consultants, accountants, lawyers
and appraisers) retained by the Collateral Agent or the Lenders to conduct
evaluations and appraisals of (a) the Borrower's practices in the computation
of the Borrowing Base and (b) the assets included in the Borrowing Base, and
pay the reasonable fees and expenses of such Collateral Agent, Lenders or
professionals; provided, however, that such persons shall not be entitled to
conduct such evaluations and appraisals of assets more frequently than once per
year unless a Default or an Event of Default has occurred and is continuing.
Notwithstanding the foregoing, any Lender may, upon reasonable notice, at
reasonable times and at its own cost and expense, conduct the evaluations and
appraisals described above.

SECTION 5.12. Further Assurances. Execute any and all
further documents, financing statements, agreements and instruments, and take
all further action (including filing Uniform Commercial Code and other
financing statements, mortgages and deeds of trust) that may be required under
applicable law, or that the Required Lenders, the Administrative Agent or the
Collateral Agent may reasonably request, in order to effectuate the
transactions contemplated by the Loan Documents and in order to grant,
preserve, protect and perfect the validity and first priority of the security
interests created or intended to be created by the Security Documents. The
Borrower will cause each subsequently acquired or organized Subsidiary (other
than any Inactive Subsidiary) and each Subsidiary that ceases to be an Inactive
Subsidiary to execute a supplement to the Subsidiary Guarantee Agreement and,
at such time as there shall be two or more Subsidiary Guarantors, the Borrower
shall, and shall cause each Subsidiary Guarantor to, execute and deliver to the
Collateral Agent the Indemnity, Subrogation and Contribution Agreement and each
other applicable Security Document in favor of the Collateral Agent. In
addition, from time to time, the Loan Parties will, at their cost and expense,
promptly secure the Obligations by pledging or creating, or causing to be
pledged or created, perfected security interests with respect to such of their
assets and properties as the Administrative Agent or the Required Lenders shall
designate (it being understood that it is the intent of the parties that the
Obligations shall be secured by, among other things, substantially all the
assets of the Loan Parties (including real and other properties acquired
subsequent to the Closing Date)). Such security interests and Liens will be
created under the Security Documents and other security

<PAGE> 69
69

agreements, mortgages, deeds of trust and other instruments and documents in
form and substance satisfactory to the Collateral Agent, and the applicable
Loan Party shall deliver or cause to be delivered to the Lenders all such
instruments and documents (including legal opinions, title insurance policies
and lien searches) as the Collateral Agent shall reasonably request to evidence
compliance with this Section. The Borrower and the Guarantor agree to provide
such evidence as the Collateral Agent shall reasonably request as to the
perfection and priority status of each such security interest and Lien.

SECTION 5.13. Concentration and Disbursement Accounts. The
Borrower and the Guarantor shall continue to maintain with the Administrative
Agent the existing account or accounts held with the Administration Agent on
the Closing Date, to be used by the Borrower and the Guarantor as their
principal concentration and disbursement accounts and will not, and will not
permit any Subsidiary to, maintain more than an aggregate of $250,000 for more
than two Business Days in bank accounts with any person who is not a Lender.

ARTICLE VI

Negative Covenants

Each of the Guarantor and the Borrower covenants and agrees
with each Lender that, so long as this Agreement shall remain in effect and
until the Commitments have been terminated and the principal of and interest on
each Loan, all Fees and all other expenses or amounts payable under any Loan
Document have been paid in full and all Letters of Credit have been cancelled
or have expired and all amounts drawn thereunder have been reimbursed in full
(except for amounts with respect to indemnification for which no claim has been
made), unless the Required Lenders shall otherwise consent in writing, neither
the Guarantor nor the Borrower will, nor will they cause or permit any of their
respective subsidiaries to:

SECTION 6.01. Indebtedness. Incur, create, assume or permit
to exist any Indebtedness, except:

(a) Indebtedness arising under or evidenced by (i) the Loan
Documents, (ii) the PIK Note Documents and (iii) the Second Priority Note
Documents;

(b) Indebtedness arising from reimbursement and other
obligations in respect of performance bonds, bankers' acceptances and surety or
appeal bonds provided in the ordinary course of business in an aggregate amount
not to exceed $2,500,000 at any time outstanding;

(c) Indebtedness of the Borrower incurred to finance the
purchase or lease of equipment, buildings and real estate in an aggregate
principal amount not to exceed $5,000,000 at any time outstanding;

<PAGE> 70
70

(d) Indebtedness of the Borrower incurred in the ordinary
course of business arising from Hedging Agreements;

(e) Indebtedness arising from intercompany loans between the
Guarantor and the Borrower;

(f) New Finishing Facility Indebtedness in an aggregate
principal amount not to exceed $15,000,000 at any time outstanding; provided,
however, that the Borrower shall be permitted to incur New Finishing Facility
Indebtedness only to the extent that (i) the New Finishing Facility Debt
Service with respect thereto (and with respect to all other New Finishing
Facility Indebtedness incurred in the same quarter) for the period of four
consecutive fiscal quarters following the incurrence thereof would not exceed
one-third of the Excess EBITDA for the period of four consecutive fiscal
quarters most recently ended (and until the delivery by the Borrower of the
financial statements required by Section 5.04(b) with respect to the fiscal
quarter ending September 30, 1996, the aggregate principal amount of New
Finishing Facility Indebtedness that may be incurred pursuant to this clause
(i) shall be deemed to be an amount not in excess of $2,000,000) and (ii) the
lender or, in the case of any Capital Lease Obligation, the lessor with respect
to any New Finishing Facility shall have entered into an agreement, in form and
substance satisfactory to the Collateral Agent and the Required Lenders,
whereby it shall (A) waive any statutory or common law lien it may have on any
part of the Collateral located at such New Finishing Facility and (B) grant the
Collateral Agent and the Lenders access thereto, whether before or after the
occurrence of an Event of Default; and

(g) in addition to the Indebtedness permitted by clauses (a)
through (f) of this Section 6.01, the Borrower may become and remain liable
with respect to unsecured Indebtedness in an outstanding amount not exceeding
at any time $5,000,000; provided, that after giving effect to the use of the
proceeds thereof, no Term Loans shall be outstanding.

For purposes of determining compliance with this Section 6.01, (I) Guarantees
of, or obligations with respect to letters of credit supporting, an item of
Indebtedness otherwise included in the determination of such particular
Indebtedness shall not (up to the amount of such item) be included in such
determination, (II) in the event that an item of Indebtedness
meets the criteria of more than one of the types of Indebtedness permitted to
be incurred pursuant to clauses (a) through (g) of this Section 6.01, the
Borrower, in its sole discretion, shall classify such item and shall be
required to include the amount and type of such item in only one of such
clauses, and (III) the amount of Indebtedness issued at a price that is less
than the principal amount thereof shall be equal to the amount of the liability
in respect thereof determined in conformity with GAAP.

SECTION 6.02. Liens. Create, incur, assume or suffer to exist any
Lien upon or with respect to any of its property or assets (real or personal,
tangible or intangible), whether now owned or hereafter acquired, or assign any
right to receive income or permit the filing of any financing statement under
the Uniform Commercial Code or any other similar notice of Lien

<PAGE> 71
71

under any similar recording or notice statute, provided that the provisions of
this Section 6.02(a) shall not prevent the creation, incurrence, assumption or
existence of:

(a) subject in each case to the Intercreditor Agreement, Liens
securing Indebtedness permitted pursuant to, and subject to the terms and
conditions set forth in, Sections 6.01(a) and 6.01(c); provided, however, that
no Lien securing Indebtedness permitted pursuant to Section 6.01(c) shall
extend to or cover any Real Property, Leaseholds or Personal Property other
than the equipment being financed with such Indebtedness or other equipment
financed by such lender or lessor or its Affiliates;

(b) Liens in effect on the Real Property, Leaseholds or
Personal Property of the Borrower, the Guarantor or such subsidiary at the time
of purchase thereof by the Borrower, the Guarantor or such subsidiary or at the
time of purchase of such subsidiary by the Borrower or another subsidiary (in
each case whether by merger, consolidation, purchase of assets or otherwise);
provided, however, that (i) such Liens are not incurred, created or assumed in
connection with, or in contemplation of, such purchase, (ii) such Liens do not
extend to or cover any Real Property, Leaseholds or Personal Property of the
Borrower, the Guarantor or any subsidiary other than the Real Property,
Leaseholds or Personal Property that are, or the Real Property, Leaseholds or
Personal Property of the subsidiary that is, the subject of such purchase and
(iii) such Liens do not (A) materially interfere with the use, occupancy and
operation of any Mortgaged Property or (B) materially reduce the fair market
value of such Mortgaged Property but for such Lien;

(c) Liens for taxes not yet due and payable, and Liens for
taxes being contested in good faith in compliance with Section 5.03;

(d) Liens imposed or given by law, which were incurred in the
ordinary course of business, such as carriers', warehousemen's and mechanics'
liens, Liens imposed under the Packers and Stockyards Act of 1921, as amended
from time to time, and other similar Liens arising in the ordinary course of
business and (i) which do not in the aggregate materially detract from the
value of such assets or materially impair the use thereof in the operation of
the business of the Borrower, the Guarantor or any Subsidiary or (ii) which are
being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the assets subject to
any such Lien;

(e) Liens consisting of pledges or deposits in connection with
workers' compensation, unemployment insurance and other social security
legislation;

(f) Liens consisting of deposits made in the ordinary course
of business (including surety bonds and appeal bonds) to secure the performance
of tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations;

(g) Liens, easements, rights-of-way, zoning restrictions,
Mineral Rights and other similar restrictions, charges or encumbrances that do
not interfere with the ordinary conduct of

<PAGE> 72
72

the business of the Borrower and which do not materially detract from
the value of the property to which they attach or materially impair the use
thereof by the Borrower, the Guarantor or any Subsidiary;

(h) Liens upon New Finishing Facilities to secure New
Finishing Facility Indebtedness incurred (i) in accordance with Section 6.01(f)
or (ii) in the form of Capital Lease Obligations in transactions permitted by
Section 6.03;

(i) Liens on any Hedging Contract resulting solely from the
purchase of such Hedging Contract on margin; and

(j) Liens (including Liens consisting of Mineral Rights) in
existence on the Closing Date and identified on Schedule 6.02(i) (all the
foregoing, collectively, "Permitted Liens");

SECTION 6.03. Sale and Lease-Back Transactions. Except with
respect to New Finishing Facilities, enter into any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred.

SECTION 6.04. Limitation on Restricted Payments. (a):

(i) declare or pay dividends (either in cash or
property) or make distributions on, or redeem, repurchase, retire or
otherwise acquire for value, any shares of Capital Stock of the
Borrower, the Guarantor or any Subsidiary (including options,
warrants or other rights to acquire such shares of Capital Stock);

(ii) make any voluntary or optional payments, prepayments or
redemptions of principal or premium or repurchase, acquire or retire
for value prior to the Stated Maturity with respect to any
Indebtedness (other than (A) Indebtedness arising under the Loan
Documents or (B) Texas Vendor Indebtedness);

(iii) make any Investment in any person; or

(iv) while any Term Loans are outstanding, make any payment or
distribution, whether in cash, property, securities or a combination
thereof, with respect to the PIK Notes other than scheduled interest
payments that are payable and paid solely in additional PIK Notes.

(each of the payments or any other actions described in clauses (i) through
(iv) above being a "Restricted Payment").

<PAGE> 73
73

(b) Anything in Section 6.04(a) to the contrary
notwithstanding, the following Restricted Payments will be permitted on the
respective terms and conditions specified below:

(i) any Restricted Payment declared or made between the Guarantor and
the Borrower;

(ii) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the Guarantor (including
options on such shares or related Capital Stock appreciation rights or
similar securities) held by officers or employees, or former officers
or employees (or their estates or beneficiaries thereunder), or by any
Plan, upon death, disability, retirement or termination of employment or
pursuant to the terms of such Plan or any other related agreement, provided
that the aggregate cash consideration paid for such purchase, redemption,
acquisition, cancellation or other retirement after the Closing Date shall
not exceed $1,000,000 in any one year;

(iii) the purchase of shares of Capital Stock of the Guarantor for the
purpose of contributing such Capital Stock to the Plans or permitting the
Plans to make payments to the participants therein in cash rather
than in such shares of Capital Stock;

(iv) a wholly owned Subsidiary of the Borrower may (x) declare and pay
dividends or make distributions to the Borrower or any other wholly owned
Subsidiary of the Borrower and (y) transfer any of its properties or assets
to the Borrower or any other wholly owned Subsidiary of the Borrower;

(v) Permitted Investments; and

(vi) Investments in any wholly owned Subsidiary;

SECTION 6.05. Dividends and Distributions; Liens Affecting
Subsidiaries. Create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the ability of any
Subsidiary to (a) pay dividends or make any other distributions permitted by
applicable law on any Capital Stock of such Subsidiary owned by the Borrower,
the Guarantor or any other Subsidiary, (b) pay any Indebtedness owed to the
Borrower, the Guarantor or any Subsidiary, (c) make loans or advances to the
Borrower, the Guarantor or any Subsidiary or (d) transfer any of its property
or assets to the Borrower, the Guarantor or any Subsidiary; provided, however,
that this Section 6.05 shall not restrict or prohibit any such encumbrances or
restrictions existing:

(i) in this Agreement, or any agreement in effect on the Closing Date
or in any amendments, restatements, refinancings or other modifications of this
Agreement or any

<PAGE> 74
74

such other agreement, provided that the encumbrance or restrictions
contained therein are comparable or no less restrictive than originally
set forth therein;

(ii) under or by reason of applicable law, rule or regulation
(including applicable currency control laws and applicable state corporate
statutes restricting the payment of dividends in certain circumstances);

(iii) with respect to any person or the property or assets of such
person acquired by the Borrower or any Subsidiary and existing at the time
of such acquisition, which encumbrances or restrictions are not applicable
to any person or the property or assets of any person other than such
person, or the property or assets of such person so acquired; or

(iv) in the case of clause (d) of this Section 6.05, that restrict in
a customary manner the subletting, assignment or transfer of any property
or asset that is a lease, license, conveyance or contract or similar
property or asset.

SECTION 6.06. Limitation on Issuance of Capital Stock of
Subsidiaries. Permit, directly or indirectly, any Subsidiary that owns (or has
a Subsidiary that owns) any Collateral or that Guarantees (or has a subsidiary
that Guarantees) any obligation under the Loan Documents to issue or sell any
shares of its Capital Stock, except to the Borrower or a wholly owned
Subsidiary of the Borrower.

SECTION 6.07. Transactions with Affiliates. Enter into, renew
or extend any transaction or series of related transactions (including the
purchase, sale, lease or exchange of property or assets, or the rendering of
any service) with any holder (or any Affiliate of such holder) of 5% or more of
any class of Capital Stock of the Borrower, the Guarantor or any of their
Subsidiaries or with any Affiliate of the Borrower, the Guarantor or any
Subsidiary, unless such transaction is completed in the ordinary course of
business and on fair and reasonable terms no less favorable to the Borrower,
the Guarantor or such Subsidiary, as applicable, than in a similar transaction
completed on an arm's length basis with a person that is not such a holder or
an Affiliate and except for transactions between the Guarantor, the Borrower or
any of its Subsidiaries and MS Group or any of its Affiliates involving the
provision of financial, investment banking, management consulting or
underwriting services by MS Group or any of its Affiliates, provided that the
fees payable to MS Group or any of its Affiliates do not exceed the usual and
customary fees of MS Group or any such Affiliate charged to persons that are
not Affiliates of MS Group or any of its Affiliates (through direct equity
ownership, warrants, contract rights or otherwise).

SECTION 6.08. Mergers, Consolidations and Acquisitions. (a)
Merge into or consolidate with any other person, or permit any other person to
merge into or consolidate with it, or sell, transfer, lease or otherwise
dispose of (in one transaction or in a series of related transactions) all or
substantially all its assets, or purchase, lease or otherwise acquire (in one

<PAGE> 75
75

transaction or a series of related transactions) all or substantially all the
assets of any other person.

(b) Anything in Section 6.08(a) to the contrary
notwithstanding, so long as no Default or Event of Default shall have occurred
and be continuing or shall result therefrom (i) any wholly owned Subsidiary of
the Borrower may consolidate with, merge with or into, or sell, convey,
transfer, lease or otherwise dispose of all or substantially all its property
and assets (in one transaction or a series of related transactions) to the
Borrower, (ii) the Borrower may consolidate with, merge with or into, or sell,
convey, transfer, lease or otherwise dispose of all or substantially all its
property and assets (in one transaction or a series of related transactions) to
the Guarantor and (iii) the Guarantor may incorporate itself as a Delaware
corporation.

SECTION 6.09. Limitation on Asset Sales. Sell, or agree to
sell, any assets (other than Texas Construction Materials) of the Borrower, the
Guarantor or any Subsidiary as part of any Asset Sale to the extent that the
value of such assets sold in any fiscal year would exceed $2,500,000, and
unless (i) such sale is for consideration at least 80% of which is cash and
(ii) such consideration is at least equal to the fair market value (as
determined in good faith by the Board of Directors or the President or the
chief financial officer (or acting chief financial officer) of the Borrower or
the Guarantor, as applicable) of the assets being sold.

SECTION 6.10. Business of the Guarantor, the Borrower and the
Subsidiaries. (a) In the case of the Borrower and the Subsidiaries, engage in
any business or business activity other than the businesses in which they are
engaged on the Closing Date and business activities reasonably complementary or
incidental thereto.

(b) In the case of the Guarantor, engage in any business other
than (i) the ownership of all the outstanding Capital Stock of the Borrower,
together with all activities incidental thereto, (ii) the performance of its
obligations under the Loan Documents and intercompany Indebtedness, (iii)
actions required by law to maintain its status as a limited liability company
or a corporation and (iv) actions incidental to the consummation of the
Transactions.

SECTION 6.11. Other Indebtedness and Agreements. (a) Permit
any waiver, supplement, modification, amendment, termination or release of the
PIK Note Documents, the Second Priority Notes Documents or any indenture,
instrument or agreement pursuant to which any Indebtedness or preferred stock
is outstanding that would increase the principal amount of or rate of interest
on, or shorten the average life or stated final maturity of, or require any
earlier scheduled principal payment date or date for the payment of any cash
interest on, any such Indebtedness.

<PAGE> 76
76

SECTION 6.12. Minimum EBITDA. Permit the consolidated EBITDA
of the Guarantor, the Borrower and the Subsidiaries for any period of four
consecutive fiscal quarters ending on or nearest to any date set forth below to
be less than the sum of (a) the New Finishing Facility Debt Service, if any,
during such period and (b) the amount set forth opposite such date:

<TABLE>
<CAPTION>
Date Amount
----- ------
<S> <C>
September 30, 1996 $18,000,000

December 31, 1996 $18,000,000

March 31, 1997 $18,500,000

June 30, 1997 $19,000,000

September 30, 1997 $19,500,000

December 31, 1997 and thereafter $20,000,000

</TABLE>

SECTION 6.13. Capital Expenditures. Make or permit to be made
any Capital Expenditures in any fiscal year ending after the Closing Date in an
aggregate amount in excess of $7,000,000; provided, however, that the amount of
permitted Capital Expenditures in any fiscal year shall be increased by an
amount equal to the total amount of unused permitted Capital Expenditures for
the immediately preceding year (excluding the amount of any unused Capital
Expenditures carried forward to such preceding year pursuant to this proviso).

SECTION 6.14. Prohibition on Creation of Subsidiaries.
Create, form or acquire, or cause any of the Subsidiaries to create, form or
acquire, any subsidiary that is not in existence on the Closing Date, unless no
Default or Event of Default shall have occurred and be continuing or shall
result therefrom, the Administrative Agent shall have received prior written
notice thereof and the Borrower shall have complied with the applicable
provisions of Section 5.12.

SECTION 6.15. Fiscal Year. Change the end of its fiscal year
from December 31 to any other date.

<PAGE> 77
77
ARTICLE VII

Events of Default

In case of the happening of any of the following events
("Events of Default"):

(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of Letters of
Credit hereunder, or any representation, warranty, statement or information
contained in any report, certificate, financial statement or other instrument
furnished in connection with or pursuant to any Loan Document, shall prove to
have been false or misleading in any material respect when so made, deemed made
or furnished;

(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any L/C Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise;

(c) default shall be made in the payment of any interest on any Loan
or any Fee or L/C Disbursement or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied for a
period of three Business Days;

(d) default shall be made in the due observance or performance by the
Guarantor, the Borrower or any Subsidiary of any covenant, condition or
agreement (i) contained in Section 5.01(a), 5.05 or 5.08 or in Article VI or
(ii) contained in Section 5.04(e), and, in the case of this clause (ii), such
default shall continue unremedied for a period of 3 Business Days;

(e) default shall be made in the due observance or performance by the
Guarantor, the Borrower or any Subsidiary of any covenant, condition or
agreement contained in any Loan Document (other than those specified in (b),
(c) or (d) above) and such default shall continue unremedied for a period of 15
days after notice thereof from the Administrative Agent or any Lender to the
Borrower;

(f) the Borrower, the Guarantor or any Subsidiary shall (i) fail to
pay any principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $5,000,000, when and as the
same shall become due and payable, or (ii) fail to observe or perform any other
term, covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or holders
of such Indebtedness or a trustee on its or their behalf (with or without the
giving of notice, the lapse of time or both) to cause, such Indebtedness to
become due prior to its stated maturity;

<PAGE> 78
78

(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Guarantor, the Borrower or any Subsidiary, or of a
substantial part of the property or assets of the Guarantor, the Borrower or a
Subsidiary, under the Bankruptcy Code or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Guarantor, the Borrower or any Subsidiary or for a substantial part of the
property or assets of the Guarantor, the Borrower or a Subsidiary or (iii) the
winding-up or liquidation of the Guarantor, the Borrower or any Subsidiary; and
such proceeding or petition shall continue undismissed for 60 days or an order
or decree approving or ordering any of the foregoing shall be entered;

(h) the Guarantor, the Borrower or any Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking relief under
the Bankruptcy Code or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or the
filing of any petition described in (g) above, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Guarantor, the Borrower or any Subsidiary or for a
substantial part of the property or assets of the Guarantor, the Borrower or
any Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or (vii) take
any action for the purpose of effecting any of the foregoing;

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

(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other such ERISA Events, could
reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $5,000,000 or requires payments
exceeding $1,000,000 in any year;

(k) any security interest purported to be created by any Security
Document shall cease to be, or shall be asserted by the Borrower or any other
Loan Party not to be, a valid, perfected, first priority (except as otherwise
expressly provided in this Agreement or such Security Document) security
interest in the assets or properties covered thereby, except to the extent that
such loss is covered by a lender's title insurance policy and the related
insurer promptly after such loss shall have acknowledged in writing that such
loss is covered by such title insurance policy;

<PAGE> 79
79

(l) any Loan Document shall not be for any reason, or shall be
asserted by any Loan Party not to be, in full force and effect and
enforceable in accordance with its terms;

(m) there shall have occurred a Change in Control; or

(n) the Order shall be stayed, reversed, modified or vacated in whole
or in part;

then, and in every such event (other than as described below), and at any time
thereafter during the continuance of such event, the Administrative Agent may,
and at the request of the Required Lenders shall, by notice to the Borrower,
take either or both of the following actions, at the same or different times:
(i) terminate forthwith the Commitments and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the Borrower,
anything contained herein or in any other Loan Document to the contrary
notwithstanding; and in any event with respect to the Borrower described in
paragraph (g) or (h) above, or in any event described in paragraph (n) above
that provides the Borrower, the Guarantor or any Subsidiary with relief under
the Bankruptcy Code or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with
accrued interest thereon and any unpaid accrued Fees and all other liabilities
of the Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

ARTICLE VIII

The Administrative Agent and the Collateral Agent

In order to expedite the transactions contemplated by this
Agreement, The Chase Manhattan Bank is hereby appointed to act as
Administrative Agent and Collateral Agent on behalf of the Lenders and the
Issuing Bank (for purposes of this Article VIII, the Administrative Agent and
the Collateral Agent are referred to collectively as the "Agents"). Each of
the Lenders and each assignee of any such Lender, hereby irrevocably authorizes
the Agents to take such actions on behalf of such Lender or assignee or the
Issuing Bank and to exercise such powers as are specifically delegated to the
Agents by the terms and provisions hereof and of the other Loan Documents,
together with such actions and powers as are reasonably incidental thereto.
The Administrative Agent is hereby expressly authorized by the Lenders and the
Issuing Bank, without hereby limiting any implied authority, (a) to receive on
behalf of the Lenders and the

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Issuing Bank all payments of principal of and interest on the Loans, all
payments in respect of L/C Disbursements and all other amounts due to the
Lenders hereunder, and promptly to distribute to each Lender or the Issuing
Bank its proper share of each payment so received; (b) to give notice on behalf
of each of the Lenders to the Borrower of any Event of Default specified in
this Agreement of which the Administrative Agent has actual knowledge acquired
in connection with its agency hereunder; and (c) to distribute to each Lender
copies of all notices, financial statements and other materials delivered by
the Borrower or any other Loan Party pursuant to this Agreement or the other
Loan Documents as received by the Administrative Agent. Without limiting the
generality of the foregoing, the Agents are hereby expressly authorized to
execute any and all documents (including releases) with respect to the
Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and
the Security Documents.

Neither the Agents nor any of their respective directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or be
required to ascertain or to make any inquiry concerning the performance or
observance by the Borrower or any other Loan Party of any of the terms,
conditions, covenants or agreements contained in any Loan Document. The Agents
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or any other Loan
Documents, instruments or agreements. The Agents shall in all cases be fully
protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders. Each Agent shall, in the
absence of knowledge to the contrary, be entitled to rely on any instrument or
document believed by it in good faith to be genuine and correct and to have
been signed or sent by the proper person or persons. Neither the Agents nor
any of their respective directors, officers, employees or agents shall have any
responsibility to the Borrower or any other Loan Party on account of the
failure of or delay in performance or breach by any Lender or the Issuing Bank
of any of its obligations hereunder or to any Lender or the Issuing Bank on
account of the failure of or delay in performance or breach by any other Lender
or the Issuing Bank or the Borrower or any other Loan Party of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.

The Lenders hereby acknowledge that neither Agent shall be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.

Subject to the appointment and acceptance of a successor Agent
as provided below, either Agent may resign at any time by notifying the Lenders
and the Borrower. Upon

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any such resignation, the Required Lenders shall have the right to appoint a
successor. If no successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent gives notice of its resignation, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent which shall be a bank with an
office in New York, New York, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its
duties and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.05 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 Agent.

With respect to the Loans made by it hereunder, each Agent in
its individual capacity and not as Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it were not an Agent,
and the Agents and their Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Guarantor, the Borrower or
any Subsidiary or other Affiliate thereof as if it were not an Agent.

Each Lender agrees (a) to reimburse the Issuing Bank and the
Agents, on demand, in the amount of its pro rata share (based on its
Commitments hereunder) of any expenses incurred for the benefit of the Lenders
by the Issuing Bank and the Agents, including counsel fees and compensation of
agents and employees paid for services rendered on behalf of the Lenders, that
shall not have been reimbursed by the Borrower and (b) to indemnify and hold
harmless each of the Issuing Bank and the Agents and any of its directors,
officers, employees or agents, on demand, in the amount of such pro rata share,
from and against any and all liabilities, taxes, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by or asserted
against it in its capacity as Issuing Bank or Agent or any of them in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by it or any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrower or any other Loan Party, provided that no Lender shall be liable to
the Issuing Bank, an Agent or any such other indemnified person for any portion
of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
gross negligence or wilful misconduct of the Issuing Bank, such Agent or any of
its directors, officers, employees or agents.

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

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ARTICLE IX

Miscellaneous

SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy, as follows:

(a) if to the Borrower, to it at Highway 65 North, Princeton,
Missouri 64673, Attention of Chief Financial Officer and Treasurer (Telecopy
No. 816-748-7100);

(b) if to the Administrative Agent, to The Chase Manhattan Bank Loan
and Agency Services, Grand Central Tower, 140 East 45th Street, New York, New
York 10017, Attention of Andrew Stasiw (Telecopy No. (212) 622-0122), with a
copy to The Chase Manhattan Bank, at 270 Park Avenue, New York, New York 10017,
Attention of Ann Kurinskas (Telecopy No. 212-661-8396); and

(c) if to a Lender, to it at its address (or telecopy number) set
forth on Schedule 2.01 or in the Assignment and Acceptance pursuant to which
such Lender shall have become a party hereto.

All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.

SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower or the
Guarantor herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the
Lenders and the Issuing Bank and shall survive the making by the Lenders of the
Loans and the issuance of Letters of Credit by the Issuing Bank, regardless of
any investigation made by the Lenders or the Issuing Bank or on their behalf,
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount payable under this
Agreement or any other Loan Document is outstanding and unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not been terminated.
The provisions of Sections 2.14, 2.16, 2.20 and 9.05 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or unenforceability of any
term or provision

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83

of this Agreement or any other Loan Document, or any investigation made by or
on behalf of the Administrative Agent, the Collateral Agent, any Lender or
the Issuing Bank.

SECTION 9.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the Guarantor and
the Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.

SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the
Guarantor, the Administrative Agent, the Issuing Bank or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of such Lender, (x) the Administrative Agent (and, in
the case of any assignment of a Revolving Credit Commitment, the Issuing Bank)
must give its prior written consent to such assignment (which consent shall not
be unreasonably withheld) and (y) the amount of the Commitment of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $5,000,000 (or, if less, the
entire remaining amount of such Lender's Commitment), (ii) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement, (iii) the parties to
each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500 and (iv) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) of this Section 9.04, from and after the
effective date specified in each Assignment and Acceptance, which effective
date shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
a Lender under this Agreement and (B) the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease
to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.14, 2.16, 2.20 and 9.05). The assignor, the assignee or the
Administrative Agent shall give the Borrower prompt notice of any assignment.

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84

(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and
that its Term Loan Commitment and Revolving Credit Commitment, and the
outstanding balances of its Term Loans and Revolving Loans, in each case
without giving effect to assignments thereof pursuant to such Assignment and
Acceptance, are as set forth in such Assignment and Acceptance, (ii) except as
set forth in (i) above, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower
or any Subsidiary or the performance or observance by the Borrower or any
Subsidiary of any of its obligations under this Agreement, any other Loan
Document or any other instrument or document furnished pursuant hereto; (iii)
such assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it has
received a copy of this Agreement, together with copies of the most recent
financial statements referred to in Section 3.05(a) or delivered pursuant to
Section 5.04 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Administrative Agent, the Collateral Agent, such assigning
Lender or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (vi) such assignee
appoints and authorizes the Administrative Agent and the Collateral Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent and the Collateral
Agent, respectively, by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

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

(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect

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85

of the assignee (unless the assignee shall already be a Lender hereunder),
the processing and recordation fee referred to in paragraph (b) above and, if
required, the written consent of the Borrower, the Issuing Bank and the
Administrative Agent to such assignment, the Administrative Agent shall (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders and
the Issuing Bank. No assignment shall be effective unless it has been recorded
in the Register as provided in this paragraph (e).

(f) Each Lender may without the consent of the Issuing Bank
or the Administrative Agent sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided, however, that (i) each such participation shall be of a constant, and
not a varying, percentage of such Lender's rights under this Agreement, (ii)
such Lender's obligations under this Agreement shall remain unchanged, (iii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participating banks or other entities
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders and (v)
the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and such Lender shall
retain the sole right to enforce the obligations of the Borrower relating to
the Loans or L/C Disbursements and to approve any amendment, modification or
waiver of any provision of this Agreement (other than amendments, modifications
or waivers decreasing any fees payable hereunder or the amount of principal of
or the rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest on the Loans
or increasing or extending the Commitments or releasing all or substantially
all the Collateral).

(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section 9.04, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided that, prior to any such
disclosure of information designated by the Borrower as confidential, each such
assignee or participant or proposed assignee or participant shall execute an
agreement whereby such assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of such confidential
information on terms no less restrictive than those applicable to the Lenders
pursuant to Section 9.16.

(h) Any Lender may at any time assign all or any portion of
its rights under this Agreement to a Federal Reserve Bank to secure extensions
of credit by such Federal Reserve Bank to such Lender; provided that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, the Borrower shall,
at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to the
Borrower by the assigning Lender hereunder.

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86

(i) Neither the Guarantor nor the Borrower shall assign or
delegate any of its rights or duties hereunder without the prior written
consent of the Administrative Agent, the Issuing Bank and each Lender, and any
attempted assignment without such consent shall be null and void.

(j) In the event that Standard & Poor's Ratings Group,
Moody's Investors Service, Inc., and Thompson's Bank Watch (or Insurance Watch
Ratings Service, in the case of Lenders that are insurance companies (or Best's
Insurance Reports, if such insurance company is not rated by Insurance Watch
Ratings Service)) shall, after the date that any Lender becomes a Revolving
Credit Lender, downgrade the long-term certificate deposit ratings of such
Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in
the case of a Lender that is an insurance company (or B, in the case of an
insurance company not rated by InsuranceWatch Ratings Service)), then the
Issuing Bank shall have the right, but not the obligation, at the Borrower's
expense, upon notice to such Lender and the Administrative Agent, to replace
(or to request the Borrower to use its reasonable efforts to replace) such
Lender with an assignee (in accordance with and subject to the restrictions
contained in paragraph (b) above), and such Lender hereby agrees to transfer
and assign without recourse (in accordance with and subject to the restrictions
contained in paragraph (b) above) all its interests, rights and obligations in
respect of its Revolving Credit Commitment to such assignee; provided, however,
that (i) no such assignment shall conflict with any law, rule and regulation or
order of any Governmental Authority and (ii) the Issuing Bank or such assignee,
as the case may be, shall pay to such Lender in immediately available funds on
the date of such assignment the principal of and interest accrued to the date
of payment on the Loans made by such Lender hereunder and all other amounts
accrued for such Lender's account or owed to it hereunder.

SECTION 9.05. Expenses; Indemnity. (a) The Borrower and the
Guarantor agree, jointly and severally, to pay all out-of-pocket expenses
incurred by the Administrative Agent, the Collateral Agent and the Issuing Bank
in connection with the preparation and administration of this Agreement and the
other Loan Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or incurred by the
Administrative Agent, the Collateral Agent or any Lender in connection with the
enforcement or protection of its rights in connection with this Agreement and
the other Loan Documents or in connection with the Loans made or Letters of
Credit issued hereunder, including consultants', auditors' and appraisers' fees
and expenses and the fees, charges and disbursements of Cravath, Swaine & Moore
and Wachtell, Lipton, Rosen & Katz, counsel for the Administrative Agent and
the Collateral Agent, and Alvarez & Marshal, Inc., financial consultant to the
Lenders, and, in connection with any such enforcement or protection, the
reasonable fees, charges and disbursements of any other counsel, appraisers and
auditors for the Administrative Agent, the Collateral Agent or any Lender.

(b) The Borrower and the Guarantor agree, jointly and
severally, to indemnify the Administrative Agent, the Collateral Agent, each
Lender and the Issuing Bank, each Affiliate of any of the foregoing persons and
each of their respective directors, officers, employees and

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87

agents (each such person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees, charges and
disbursements, incurred by or asserted against any Indemnitee arising out of,
in any way connected with, or as a result of (i) the execution or delivery of
this Agreement or any other Loan Document or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby, (ii) the use of the proceeds of
the Loans or issuance of Letters of Credit, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not
any Indemnitee is a party thereto, or (iv) any actual or alleged presence or
Release of Hazardous Materials on any property owned or operated by the
Borrower or any of the Subsidiaries, or any Environmental Claim related in any
way to the Borrower or the Subsidiaries; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.

(c) The provisions of this Section 9.05 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, the Collateral
Agent, any Lender or the Issuing Bank. All amounts due under this Section 9.05
shall be payable promptly after written demand therefor.

SECTION 9.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, except to the extent prohibited 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 Lender
to or for the credit or the account of the Borrower or the Guarantor against
any of and all the obligations of the Borrower or the Guarantor now or
hereafter existing under this Agreement and other Loan Documents held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or such other Loan Document and although such obligations
may be unmatured. The rights of each Lender under this Section 9.06 are in
addition to other rights and remedies (including other rights of setoff) which
such Lender may have.

SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN
OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH
LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM

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88

CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL
CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO
MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

SECTION 9.08. Waivers; Amendment. (a) No failure or delay
of the Administrative Agent, the Collateral Agent, any Lender or the Issuing
Bank in exercising any power or right hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies
of the Administrative Agent, the Collateral Agent, the Issuing Bank and the
Lenders hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b) below, and
then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No notice or demand on the Borrower or
the Guarantor in any case shall entitle the Borrower or the Guarantor to any
other or further notice or demand in similar or other circumstances.

(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower, the Guarantor and the Required Lenders;
provided, however, that no such agreement shall (i) decrease the principal
amount of, or extend the maturity of or any principal payment date scheduled
pursuant to Section 2.11 or date for the payment of any interest on any Loan or
any date for reimbursement of an L/C Disbursement, or waive or excuse any such
payment or any part thereof, or decrease the rate of interest on any Loan or
L/C Disbursement, without the prior written consent of each Lender affected
thereby, (ii) change or extend the Commitment or decrease or extend the date
for payment of the Commitment Fees of any Lender without the prior written
consent of such Lender, (iii) amend or modify the provisions of Section 2.17 or
9.04(i), the provisions of this Section or the definition of the term "Required
Lenders", waive any mandatory prepayment required by Section 2.13 (or amend or
modify Section 2.13 if the effect thereof would reduce the amount of, or extend
the time for making, any mandatory prepayment required thereby), release the
Guarantor or any Subsidiary Guarantor or all or any substantial part of the
Collateral, or amend or modify the provisions of Section 4.02(d), (e), (f),
(j), (k), (o), (p), (q) or (u) without the prior written consent of each Lender
or (iv) increase the aggregate amount of the Commitments, amend or modify the
definition of the term "Borrowing Base" or any of the defined terms used
therein in a manner that increases the Borrowing Base or amend or modify, or
waive any Default resulting from, paragraph (n) of Article VII, without the
prior written consent of the Supermajority Lenders; provided further no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Collateral Agent or the Issuing Bank hereunder or
under any other Loan Document without the prior written consent of the
Administrative Agent, the Collateral Agent or the Issuing Bank.

<PAGE> 89
89

SECTION 9.09. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan or participation in any L/C Disbursement, together with all fees,
charges and other amounts which are treated as interest on such Loan or
participation in such L/C Disbursement under applicable law (collectively the
"Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may
be contracted for, charged, taken, received or reserved by the Lender holding
such Loan or participation in accordance with applicable law, the rate of
interest payable in respect of such Loan or participation hereunder, together
with all Charges payable in respect thereof, shall be limited to the Maximum
Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan or participation but were not payable as a
result of the operation of this Section 9.09 shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
participations or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received
by such Lender.

SECTION 9.10. Entire Agreement. This Agreement, the Fee
Letter and the other Loan Documents constitute the entire contract between the
parties relative to the subject matter hereof. Any other previous agreement
among the parties with respect to the subject matter hereof is superseded by
this Agreement and the other Loan Documents. Nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended to confer upon any
party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other
Loan Documents.

SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.

SECTION 9.12. Severability. In the event any one or more of
the provisions contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid

<PAGE> 90

provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

SECTION 9.13. Counterparts. This Agreement may be executed
in counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 9.03. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.

SECTION 9.14. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.

SECTION 9.15. Jurisdiction; Consent to Service of Process.
(a) Each of the Guarantor and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
the Collateral Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against the Borrower, the Guarantor or their respective properties in
the courts of any jurisdiction.

(b) Each of the Guarantor and the Borrower hereby irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or the other Loan Documents in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

<PAGE> 91
91

SECTION 9.16. Confidentiality. The Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders agrees to keep
confidential (and to use its best efforts to cause its respective agents and
representatives to keep confidential) the Information (as defined below) and
all copies thereof, extracts therefrom and analyses or other materials based
thereon, except that the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender shall be permitted to disclose Information (a) to
such of its respective officers, directors, employees, agents, affiliates and
representatives as need to know such Information, (b) to the extent requested
by any regulatory authority, (c) to the extent otherwise required by applicable
laws and regulations or by any subpoena or similar legal process, (d) in
connection with any suit, action or proceeding relating to the enforcement of
its rights hereunder or under the other Loan Documents, (e) to the extent such
Information (i) becomes publicly available other than as a result of a breach
of this Section 9.16 or (ii) becomes available to the Administrative Agent, the
Issuing Bank, any Lender or the Collateral Agent on a nonconfidential basis
from a source other than the Borrower or the Guarantor (other than information
that clearly indicates that it is intended to be confidential) or (f) to any
actual or prospective assignee of or participant in any of its rights under
this Agreement, provided that such assignee or participant first executes and
delivers to such party a confidentiality letter containing substantially the
undertakings set forth in this Section 9.16. For the purposes of this Section,
"Information" shall mean all financial statements, certificates, reports,
agreements and information (including all analyses, compilations and studies
prepared by the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender based on any of the foregoing) that are received from the Borrower
or the Guarantor and related to the Borrower or the Guarantor, any shareholder
of the Borrower or the Guarantor or any employee, customer or supplier of the
Borrower or the Guarantor, other than any of the foregoing that were available
to the Administrative Agent, the Collateral Agent, the Issuing Bank or any
Lender on a nonconfidential basis prior to its disclosure thereto by the
Borrower or the Guarantor, and which are in the case of Information provided
after the date hereof, clearly identified at the time of delivery as
confidential. The provisions of this Section 9.16 shall remain operative and
in full force and effect regardless of the expiration and term of this
Agreement.

<PAGE> 92

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

PSF HOLDINGS, L.L.C.,

by
/s/ William R. Patterson
--------------------------------
Name: William R. Patterson
Title: Vice President

PREMIUM STANDARD FARMS, INC.

by
/s/ William R. Patterson
--------------------------------
Name: William R. Patterson
Title: Vice President

THE CHASE MANHATTAN BANK, individually and as
Administrative Agent, Collateral Agent and
Issuing Bank,

by
/s/ Jonathan Insull
--------------------------------
Name: Jonathan Insull
Title: Vice President

AGRIBANK, FCB,

by
/s/ Lee Fuchs
--------------------------------
Name: Lee Fuchs
Title: Senior Lending Officer

<PAGE> 93
93

CAISSE NATIONALE DE CREDIT AGRICOLE,

by
/s/ Dean Balice
--------------------------------
Name: Dean Balice
Title: Senior Vice President
Branch Manager

FIRST BANK NATIONAL ASSOCIATION,

as Authorized Agent for
FBS AG CREDIT INC.,

by
/s/ Conrad A. Keech
--------------------------------
Name: Conrad A. Keech
Title: Vice President

INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION,

by
/s/ Daniel W. Lamprecht
--------------------------------
Name: Daniel W. Lamprecht
Title: Vice President

MERCANTILE BANK OF ST. LOUIS, NATIONAL
ASSOCIATION,

by
/s/ Peter W. Bakker
--------------------------------
Name: Peter W. Bakker
Title: Vice President

SOCIETE GENERALE,

by
/s/ John M. Stack
--------------------------------
Name: John M. Stack
Title: Vice President

<PAGE> 94
94

OCM OPPORTUNITIES FUND, L.P.

by OAKTREE CAPITAL
MANAGEMENT, LLC,
its General Partner

by
/s/ Richard Masson
--------------------------------
Name: Richard Masson
Title: Principal

by
/s/ Kenneth Liang
--------------------------------
Name: Kenneth Liang
Title: Managing Director and
General Counsel

COLUMBIA/HCA MASTER RETIREMENT TRUST

by OAKTREE CAPITAL
MANAGEMENT, LLC,
its Investment Manager

by
/s/ Richard Masson
--------------------------------
Name: Richard Masson
Title: Principal

by
/s/ Kenneth Liang
--------------------------------
Name: Kenneth Liang
Title: Managing Director
and General Counsel

<PAGE> 95
95

CHL HIGH YIELD LOAN PORTFOLIO,

by
/s/ James P. Ferguson
--------------------------------
Name: James P. Ferguson
Title: Managing Director

<PAGE> 1

EXHIBIT 10.13

PARENT GUARANTEE AGREEMENT dated as of September 17, 1996,
between PSF HOLDINGS, L.L.C., a Delaware limited liability
company (the "Guarantor") and THE CHASE MANHATTAN BANK, a New
York banking corporation, as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).

Reference is made to the Credit Agreement dated as of September 17,
1996, (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Guarantor, Premium Standard Farms, Inc., a
Delaware corporation and a wholly owned subsidiary of the Guarantor (the
"Borrower"), the lenders from time to time party thereto (the "Lenders"), The
Chase Manhattan Bank, as administrative agent (in such capacity, the
"Administrative Agent"), as Collateral Agent and as issuing bank (in such
capacity, the "Issuing Bank"). Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

The Lenders have agreed to make Loans to and the Issuing Bank has
agreed to issue Letters of Credit for the account of the Borrower, pursuant to,
and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantor owns all the Capital Stock of the Borrower and will
derive substantial benefit from the making of the Loans by the Lenders and the
issuance of the Letters of Credit by the Issuing Bank. The obligations of the
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit are
conditioned upon, among other things, the execution and delivery by the
Guarantor of a Parent Guarantee Agreement in the form hereof. As consideration
therefor and in order to induce the Lenders to make Loans and the Issuing Bank
to issue Letters of Credit, the Guarantor is willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. The Guarantor unconditionally guarantees, as a
primary obligor and not merely as a surety, (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under the Credit Agreement and the
other Loan Documents and (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Loan Parties under or pursuant
to the Credit
<PAGE> 2
2

Agreement and the other Loan Documents (all the monetary and other obligations
referred to in the preceding clauses (a) and (b) being collectively called the
"Obligations"). The Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice to or further assent
from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Obligation.

SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, the Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of the Guarantor
hereunder shall not be affected by (a) the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against the Borrower or any other guarantor of the
Obligations under the provisions of the Credit Agreement, any other Loan
Document or otherwise, (b) any rescission, waiver, amendment or modification
of, or any release from any of the terms or provisions of this Agreement, any
other Loan Document, any Guarantee or any other agreement, including with
respect to any other guarantor of the Obligations or (c) the failure to perfect
any security interest in, or the release of, any of the security held by or on
behalf of the Collateral Agent or any other Secured Party.

SECTION 3. Security. The Guarantor authorizes the Collateral Agent
and each of the other Secured Parties to (a) take and hold security for the
payment of this Guarantee and the Obligations and exchange, enforce, waive and
release any such security, (b) apply such security and direct the order or
manner of sale thereof as they in their sole discretion may determine and (c)
release or substitute any one or more endorsees, other guarantors or other
obligors.

SECTION 4. Guarantee of Payment. The Guarantor further agrees that
its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other person.

SECTION 5. No Discharge or Diminishment of Guarantee. The obligations
of the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the payment in full in
cash of the Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations
of the Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Collateral Agent or any other Secured Party to
assert any claim or demand or to enforce any remedy under the Credit Agreement,
any other Loan Document or any other agreement, by any waiver or modification
of any provision of any thereof, by any default, failure or delay, wilful or
otherwise, in the

<PAGE> 3

performance of the Obligations, or by any other act or omission that may or
might in any manner or to any extent vary the risk of the Guarantor or that
would otherwise operate as a discharge of the Guarantor as a matter of law or
equity (other than the payment in full in cash of all the Obligations).

SECTION 6. Defenses of Borrower Waived. To the fullest extent
permitted by applicable law, the Guarantor waives any defense based on or
arising out of any defense of the Borrower or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower, other than the final payment in full in cash
of the Obligations. The Collateral Agent and the other Secured Parties may, at
their election, foreclose on any security held by one or more of them by one or
more judicial or nonjudicial sales, accept an assignment of any such security
in lieu of foreclosure, compromise or adjust any part of the Obligations, make
any other accommodation with the Borrower or any other guarantor or exercise
any other right or remedy available to them against the Borrower or any other
guarantor, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Obligations have been fully and
finally paid in cash. To the fullest extent permitted by applicable law, the
Guarantor waives any defense arising out of any such election even though such
election operates, pursuant to applicable law, to impair or to extinguish any
right of reimbursement or subrogation or other right or remedy of the Guarantor
against the Borrower or any other guarantor, as the case may be, or any
security.

SECTION 7. Agreement to Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at law or in equity against the Guarantor by virtue
hereof, upon the failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, the Guarantor hereby
promises to and will forthwith pay, or cause to be paid, to the Collateral
Agent or such other Secured Party as designated thereby in cash the amount of
such unpaid Obligations. Upon payment by the Guarantor of any sums to the
Collateral Agent or any Secured Party as provided above, all rights of the
Guarantor against the Borrower arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by the Guarantor is hereby subordinated in right
of payment to the prior payment in full of the Obligations. If any amount
shall erroneously be paid to the Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of the Borrower, such amount shall be held in trust for the
benefit of the Secured Parties and shall forthwith be paid to the Collateral
Agent to be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.

SECTION 8. Information. The Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Obligations and the nature, scope and extent of the risks that the
Guarantor assumes and incurs hereunder, and agrees that none of the

<PAGE> 4
4

Collateral Agent or the other Secured Parties will have any duty to advise the
Guarantor of information known to it or any of them regarding such
circumstances or risks.

SECTION 9. Termination. The Guarantee made hereunder (a) shall
terminate when all the Obligations have been paid in full in cash and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or the Guarantor upon the bankruptcy or
reorganization of the Borrower, the Guarantor or otherwise.

SECTION 10. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantor that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
when a counterpart hereof executed on behalf of the Guarantor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding
upon the Guarantor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of the Guarantor, the Collateral Agent
and the other Secured Parties, and their respective successors and assigns,
except that the Guarantor shall not have the right to assign its rights or
obligations hereunder or any interest herein (and any such attempted assignment
shall be void).

SECTION 11. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by the Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on the Guarantor in any case shall entitle the
Guarantor to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to a written agreement entered into between
the Guarantor and the Collateral Agent, with the prior written consent of the
Required Lenders (except as otherwise provided in the Credit Agreement).

<PAGE> 5
5

SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Notices. All communications and notices hereunder shall
be in writing and given as provided in Section 9.01 of the Credit Agreement.

SECTION 14. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Guarantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the issuance of the
Letters of Credit by the Issuing Bank regardless of any investigation made by
the Secured Parties or on their behalf, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitment have not been terminated.

SECTION 16. Rules of Interpretation. The rules of interpretation
specified in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement.

<PAGE> 6
6

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

PSF HOLDINGS, L.L.C., as Guarantor,

/s/ W.R. Patterson
------------------------------
Name: William R. Patterson
Title: Vice President

THE CHASE MANHATTAN BANK, as Collateral Agent,

by
/s/ Jonathan Insull
------------------------------
Name: Jonathan Insull
Title: Vice President

<PAGE> 1
EXHIBIT 10.14

SUBSIDIARY GUARANTEE AGREEMENT dated as of
September 17, 1996, among each of the subsidiaries
listed on Schedule I hereto (each such subsidiary
individually, a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors") of PREMIUM
STANDARD FARMS, INC., a Delaware corporation (the
"Borrower"), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).

Reference is made to the Credit Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among PSF Holdings, L.L.C., a Delaware limited
liability company (the "Guarantor"), the Borrower, the Lenders (such term and
each other capitalized term used but not defined herein having the meaning
assigned to such term in the Credit Agreement, and The Chase Manhattan Bank as
issuing bank (in such capacity, the "Issuing Bank"), as administrative agent
(in such capacity, the "Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders.

The Lenders have agreed to make Loans to and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower, pursuant
to, and upon the terms and conditions specified in, the Credit Agreement. Each
Subsidiary Guarantor is a Subsidiary of the Borrower and acknowledges that it
will derive substantial benefit from the making of the Loans by the Lenders,
and the issuance of the Letters of Credit by the Issuing Bank. The obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
are conditioned on, among other things, the execution and delivery by the
Subsidiary Guarantors of a Subsidiary Guarantee Agreement in the form hereof.
As consideration therefor and in order to induce the Lenders to make Loans and
the Issuing Bank to issue Letters of Credit, the Subsidiary Guarantors are
willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Each Subsidiary Guarantor
unconditionally guarantees, as a primary obligor and not merely as a surety,
(a) the due and punctual payment of (i) the principal of and premium, if any,
and interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one or more dates set for prepayment
or otherwise, (ii) each payment required to be made by the Borrower under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Loan Parties to the Secured Parties under
the Credit Agreement and the other Loan Documents and (b) the due and punctual
performance of all
<PAGE> 2
2

covenants, agreements, obligations and liabilities of the Loan Parties under or
pursuant to the Credit Agreement and the other Loan Documents (all the monetary
and other obligations referred to in the preceding clauses (a) and (b) being
collectively called the "Obligations"). Each Subsidiary Guarantor further
agrees that the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will remain bound upon
its guarantee notwithstanding any extension or renewal of any Obligation.

Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Subsidiary Guarantor hereunder shall
be limited to a maximum aggregate amount equal to the greatest amount that
would not render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under the Bankruptcy Code or any provisions of
applicable state law (collectively, the "Fraudulent Transfer Laws"), in each
case after giving effect to all other liabilities of such Subsidiary Guarantor,
contingent or otherwise, that are relevant under the Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of such Subsidiary Guarantor
under any Guarantee of senior unsecured Indebtedness or Indebtedness
subordinated in right of payment to the Obligations which Guarantee contains a
limitation as to maximum amount similar to that set forth in this paragraph,
pursuant to which the liability of such Subsidiary Guarantor hereunder is
included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Subsidiary Guarantor pursuant to applicable law.

SECTION 2. Obligations Not Waived; No Discharge or
Diminishment of Guarantee. To the fullest extent permitted by applicable law,
each Subsidiary Guarantor waives presentment to, demand of payment from and
protest to the Borrower of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of each Subsidiary
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the payment in full in
cash of the Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations
of each Subsidiary Guarantor hereunder shall not be discharged or impaired or
otherwise affected by (a) the failure of the Collateral Agent or any other
Secured Party to assert any claim or demand or to enforce or exercise any right
or remedy against the Borrower or any other guarantor under the provisions of
the Credit Agreement, any other Loan Document or any other agreement, (b) any
rescission, waiver, amendment or modification of, or any release from any of
the terms or provisions of this Agreement, any other Loan Document, any
Guarantee or any other agreement, (c) any default, failure or delay, wilful or
otherwise, in the performance of the Obligations, (d) any other act or omission
that may or might in any manner or to any extent vary the risk of any
Subsidiary Guarantor or that would otherwise operate as a discharge of any
Subsidiary Guarantor as a matter of law or equity (other than the payment in
full in cash of all the Obligations) or (e) the failure to perfect any security

<PAGE> 3

interest in, or the release of, any of the security held by or on behalf of the
Collateral Agent or any other Secured Party.

SECTION 3. Security. Each Subsidiary Guarantor authorizes
the Collateral Agent, for the benefit of the Secured Parties, to (a) take and
hold security for the payment of this Guarantee and the Obligations and
exchange, enforce, waive and release any such security, (b) apply such security
and direct the order or manner of sale thereof as they in their sole discretion
may determine and (c) release or substitute any one or more endorsees, other
guarantors of other obligors.

SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor
further agrees that its guarantee constitutes a guarantee of payment when due
and not of collection, and waives any right to require that any resort be had
by the Collateral Agent or any other Secured Party to any of the security held
for payment of the Obligations or to any balance of any deposit account or
credit on the books of the Collateral Agent or any other Secured Party in favor
of the Borrower or any other person.

SECTION 5. Defenses of Borrower Waived. To the fullest
extent permitted by applicable law, each Subsidiary Guarantor waives any
defense based on or arising out of any defense of the Borrower or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower, other than the final
payment in full in cash of the Obligations. The Collateral Agent may, at its
election, foreclose on any security held by it by one or more judicial or
nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with the Borrower or any other guarantor or exercise any other
right or remedy available to it against the Borrower or any other guarantor,
without affecting or impairing in any way the liability of any Subsidiary
Guarantor hereunder except to the extent the Obligations have been fully and
finally paid in cash. Pursuant to applicable law, each Subsidiary Guarantor
waives any defense arising out of any such election even though such election
operates, pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Subsidiary
Guarantor against the Borrower or any other Subsidiary Guarantors or
guarantors, as the case may be, or any security.

SECTION 6. Agreement to Pay; Subordination. In furtherance
of the foregoing and not in limitation of any other right that the Collateral
Agent or any other Secured Party has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Borrower or any other Loan
Party to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise, each
Subsidiary Guarantor hereby promises to and will forthwith pay, or cause to be
paid, to the Collateral Agent or such other Secured Party as designated thereby
in cash the amount of such unpaid Obligations. Upon payment by any Subsidiary
Guarantor of any sums to the Collateral Agent or any Secured Party as provided
above, all rights of such Subsidiary Guarantor against the Borrower arising as
a result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior payment in full in cash of all the Obligations. In
addition, any indebtedness of the Borrower now or

<PAGE> 4

hereafter held by any Subsidiary Guarantor is hereby subordinated in right of
payment to the prior payment in full of the Obligations. If any amount shall
erroneously be paid to any Subsidiary Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii)
any such indebtedness of the Borrower, such amount shall be held in trust for
the benefit of the Secured Parties and shall forthwith be turned over to the
Collateral Agent in the exact form received by such Subsidiary Guarantor (duly
endorsed by such Subsidiary Guarantor to the Collateral Agent, if required) to
be credited against the payment of the Obligations, whether matured or
unmatured, in accordance with the terms of the Loan Documents.

SECTION 7. Information. Each Subsidiary Guarantor assumes
all responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the
risks that any Subsidiary Guarantor assumes and incurs hereunder, and agrees
that none of the Collateral Agent or the other Secured Parties will have any
duty to advise any Subsidiary Guarantor of information known to it regarding
such circumstances or risks.

SECTION 8. Representations and Warranties. Each Subsidiary
Guarantor represents and warrants that all representations and warranties
relating to it contained in the Credit Agreement are true and correct.

SECTION 9. Termination. The Guarantees made hereunder (a)
shall terminate when all the Obligations have been paid in full in cash and the
Lenders have no further commitment to lend under the Credit Agreement, the L/C
Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Secured Party or each Subsidiary Guarantor upon the
bankruptcy or reorganization of the Borrower, each Subsidiary Guarantor or
otherwise.

SECTION 10. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of each Subsidiary
Guarantor or the Collateral Agent that are contained in this Agreement shall
bind and inure to the benefit of each party hereto and their respective
successors and assigns. This Agreement shall become effective as to each
Subsidiary Guarantor when a counterpart hereof executed on its behalf shall
have been delivered to the Collateral Agent, and a counterpart hereof shall
have been executed on behalf of the Collateral Agent, and thereafter shall be
binding upon such Subsidiary Guarantor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of such
Subsidiary Guarantor, the Collateral Agent and the other Secured Parties, and
their respective successors and assigns, except that no Subsidiary Guarantor
shall have the right to assign its rights or obligations hereunder or any
interest herein (and any such attempted assignment shall be void).

<PAGE> 5

SECTION 11. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Subsidiary Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Subsidiary Guarantor in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between each Subsidiary Guarantor and the Collateral Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the
Credit Agreement).

SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 13. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section 9.01 of the
Credit Agreement. All communications and notices hereunder to each Subsidiary
Guarantor shall be given to it at its address set forth on Schedule I hereto,
with a copy to the Borrower.

SECTION 14. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by any Subsidiary
Guarantor herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon by the Collateral Agent
and the other Secured Parties and, except for any terminations, amendments or
modifications thereof in accordance with the terms hereof, shall survive the
making by the Lenders of the Loans and the issuance of the Letters of Credit by
the Issuing Bank regardless of any investigation made by the Secured Parties or
on their behalf, and, except for any termination, amendments or modifications
thereof in accordance with the terms hereof, shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments and the L/C Commitment have not been terminated.

(b) In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of

<PAGE> 6

a particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 16. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process. (a)
Each Subsidiary Guarantor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York
City, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the extent permitted by law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement
shall affect any right that the Collateral Agent or any other Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Subsidiary Guarantor or its properties in
the courts of any jurisdiction.

(b) Each Subsidiary Guarantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 13. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

SECTION 18. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH

<PAGE> 7

THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

SECTION 19. Additional Guarantors. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary (other than an Inactive Subsidiary) of
the Borrower that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter into this Agreement as a Subsidiary
Guarantor upon becoming such a Subsidiary (or upon ceasing to be an Inactive
Subsidiary). Upon execution and delivery after the date hereof by the
Collateral Agent and such a Subsidiary of an instrument in the form of Annex 1,
such Subsidiary shall become a Subsidiary Guarantor hereunder with the same
force and effect as if originally named as a Subsidiary Guarantor herein. The
execution and delivery of any instrument adding an additional Subsidiary
Guarantor as a party to this Agreement shall not require the consent of any
other Subsidiary Guarantor hereunder. The rights and obligations of each
Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.

SECTION 20. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Secured Party is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply, in a manner consistent with Section 2.18 of the Credit Agreement,
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 Secured Party
to or for the credit or the account of any Subsidiary Guarantor against any or
all its obligations now or hereafter existing under this Agreement and the
other Loan Documents held by such Secured Party, irrespective of whether or not
such Secured Party shall have made any demand under this Agreement or any other
Loan Document and although such obligations may be unmatured. In the event a
Secured Party shall exercise its right of setoff pursuant to this Section 20,
such Secured Party shall promptly notify such Subsidiary Guarantor of such
setoff and the application of the proceeds thereof, provided, that the failure
to give such notice shall not affect the validity

<PAGE> 8

of such setoff and the application of the proceeds thereof. The rights of each
Secured Party under this Section 20 are in addition to other rights and
remedies (including other rights of setoff) which such Secured Party may have.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

PRINCETON DEVELOPMENT CORP.

By: /s/ W.R. Patterson
---------------------------
Name: William R. Patterson
Title: Vice President

THE CHASE MANHATTAN BANK, as
Collateral Agent,

by: /s/ Jonathan Insull
---------------------------
Name: Jonathan Insull
Title: Vice President

<PAGE> 9

Annex 1 to the
Subsidiary Guarantee Agreement

SUPPLEMENT NO. dated as of , to
the Subsidiary Guarantee Agreement dated as of
September 17, 1996, among each of the subsidiaries
listed on Schedule I thereto (each such subsidiary
individually, a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors") of PREMIUM
STANDARD FARMS, INC., a Delaware corporation (the
"Borrower"), and THE CHASE MANHATTAN BANK, a New York
banking corporation, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).

Reference is made to the Credit Agreement dated as of
September 17, 1996 (as it may hereafter be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among PSF Holdings,
L.L.C., a Delaware limited liability company (the "Guarantor"), the Borrower,
the Lenders (such term and each other capitalized term used but not defined
herein having the meaning assigned to it in the Credit Agreement or, if not
defined therein, in the Subsidiary Guarantee Agreement), the Chase Manhattan
Bank, as issuing bank (in such capacity, the "Issuing Bank"), as administrative
agent (in such capacity, the "Administrative Agent") and as Collateral Agent
for the Lenders.

The Subsidiary Guarantors have entered into the Subsidiary
Guarantee Agreement in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit. Pursuant to Section 5.12 of the
Credit Agreement, each Subsidiary (other than an Inactive Subsidiary) of the
Borrower that was not in existence or not such a Subsidiary on the date of the
Credit Agreement is required to enter into the Subsidiary Guarantee Agreement
as a Subsidiary Guarantor upon becoming such a Subsidiary (or upon ceasing to
be an Inactive Subsidiary). Section 19 of the Subsidiary Guarantee Agreement
provides that additional Subsidiaries of the Borrower may become Subsidiary
Guarantors under the Subsidiary Guarantee Agreement by execution and delivery
of an instrument in the form of this Supplement. The undersigned Subsidiary of
the Borrower (the "New Subsidiary Guarantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Subsidiary
Guarantor under the Subsidiary Guarantee Agreement in order to induce the
Lenders to make additional Loans and the Issuing Bank to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.

Accordingly, the Collateral Agent and the New Subsidiary
Guarantor agree as follows:

SECTION 1. In accordance with Section 19 of the Subsidiary
Guarantee Agreement, the New Subsidiary Guarantor by its signature below
becomes a Subsidiary Guarantor under the Subsidiary Guarantee Agreement with
the same force and effect as if originally named therein as a Subsidiary
Guarantor and the New Subsidiary Guarantor hereby (a) agrees to all the terms
and provisions of the Subsidiary Guarantee Agreement applicable to it as a
Subsidiary Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Guarantor thereunder
are true and correct on and as of the date hereof. Each reference to a
"Subsidiary Guarantor" in the Subsidiary Guarantee

<PAGE> 10

Agreement shall be deemed to include the New Subsidiary Guarantor. The
Subsidiary Guarantee Agreement is hereby incorporated herein by reference.

SECTION 2. The New Subsidiary Guarantor represents and
warrants to the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement shall become
effective when the Collateral Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New Subsidiary
Guarantor and the Collateral Agent. Delivery of an executed signature page to
this Supplement by facsimile transmission shall be as effective as delivery of
a manually executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the
Subsidiary Guarantee Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Subsidiary Guarantee Agreement shall not
in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision hereof in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 13 of the Subsidiary Guarantee
Agreement. All communications and

<PAGE> 11

notices hereunder to the New Subsidiary Guarantor shall be given to it at the
address set forth under its signature below, with a copy to the Borrower.

IN WITNESS WHEREOF, the New Subsidiary Guarantor and the
Collateral Agent have duly executed this Supplement to the Subsidiary Guarantee
Agreement as of the day and year first above written.

[Name Of New Subsidiary Guarantor],

by __________________________________________
Name:
Title:
Address: _________________________________
_________________________________
_________________________________

THE CHASE MANHATTAN BANK, as
Collateral Agent,

by __________________________________________
Name:
Title:

<PAGE> 1
EXHIBIT 10.15

INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of September 17, 1996, among
PREMIUM STANDARD FARMS, INC., a Delaware corporation
(the "Borrower"), each Subsidiary of the Borrower
listed on Schedule I hereto (the "Subsidiary
Guarantors") and THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase Manhattan Bank"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).

Reference is made to (a) the Credit Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the PSF Holdings, L.L.C., the Borrower,
the Lenders (such term and each other capitalized term used but not defined
herein having the meaning assigned to it in the Credit Agreement), Chase
Manhattan Bank, as issuing bank (in such capacity, the "Issuing Bank"), as
administrative agent (in such capacity, the "Administrative Agent"), and as
Collateral Agent for the Lenders and (b) the Subsidiary Guarantee Agreement
dated as of September 17, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Subsidiary Guarantee Agreement"), among the Subsidiary
Guarantors and the Collateral Agent.

The Lenders have agreed to make Loans to, and the Issuing Bank
has agreed to issue Letters of Credit for the account of, the Borrower,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement.

The Subsidiary Guarantors have each agreed to guarantee, among
other things, all the obligations of the Borrower under the Credit Agreement.
The obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit are conditioned upon, among other things, the execution and
delivery by the Borrower and the Subsidiary Guarantors of an agreement in the
form hereof.

Accordingly, the Borrower, each Subsidiary Guarantor and the
Collateral Agent agree as follows:

SECTION 1. Indemnity and Subrogation. In addition to all
such rights of indemnity and subrogation as the Subsidiary Guarantors may have
under applicable law (but subject to Section 3), the Borrower agrees that (a)
in the event a payment shall be made by any Subsidiary Guarantor under the
Subsidiary Guarantee Agreement, the Borrower shall indemnify such Subsidiary
Guarantor for the full amount of such payment and such Subsidiary Guarantor
shall be subrogated to the rights of the person to whom such payment shall have
been made to the extent of such payment and (b) in the event any assets of any
Subsidiary Guarantor shall be sold pursuant to any Security Document to satisfy
a claim of any Secured Party, the Borrower shall indemnify such Subsidiary
Guarantor in an amount equal to the greater of the book value or the fair
market value of the assets so sold.
<PAGE> 2
2

SECTION 2. Contribution and Subrogation. Each Subsidiary
Guarantor (a "Contributing Guarantor") agrees (subject to Section 3) that, in
the event a payment shall be made by any other Subsidiary Guarantor under the
Subsidiary Guarantee Agreement or assets of any other Subsidiary Guarantor
shall be sold pursuant to any Security Document to satisfy a claim of any
Secured Party and such other Subsidiary Guarantor (the "Claiming Guarantor")
shall not have been fully indemnified by the Borrower as provided in Section 1,
each Contributing Guarantor shall indemnify the Claiming Guarantor in an amount
equal to the amount of such payment or the greater of the book value or the
fair market value of such assets, as the case may be, in each case multiplied
by a fraction of which the numerator shall be the net worth of such
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate net worth of all the Subsidiary Guarantors on the date hereof (or, in
the case of any Subsidiary Guarantor becoming a party hereto pursuant to
Section 12, the date of the Supplement hereto executed and delivered by such
Subsidiary Guarantor). Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 2 shall be subrogated to the rights
of such Claiming Guarantor under Section 1 to the extent of such payment.

SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or subrogation
under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the
part of the Borrower or any Subsidiary Guarantor to make the payments required
by Sections 1 and 2 (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of any
Subsidiary Guarantor with respect to its obligations hereunder, and each
Subsidiary Guarantor shall remain liable for the full amount of the obligations
of such Subsidiary Guarantor hereunder.

SECTION 4. Termination. This Agreement shall survive and be
in full force and effect so long as any Obligation is outstanding and has not
been paid in full in cash, and so long as the L/C Exposure has not been reduced
to zero or any of the Commitments under the Credit Agreement have not been
terminated, and shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Secured Party or any Subsidiary
Guarantor upon the bankruptcy or reorganization of the Borrower, any Subsidiary
Guarantor or otherwise.

SECTION 5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. No Waiver; Amendment. (a) No failure on the part
of the Collateral Agent or any Subsidiary Guarantor to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Collateral Agent or any Subsidiary Guarantor preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy. All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by
<PAGE> 3

law. None of the Collateral Agent and the Subsidiary Guarantors shall be
deemed to have waived any rights hereunder unless such waiver shall be in
writing and signed by such parties.

(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrower, the Subsidiary Guarantors and the Collateral Agent, with
the prior written consent of the Required Lenders (except as otherwise provided
in the Credit Agreement).

SECTION 7. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Subsidiary Guarantee Agreement
and addressed as specified therein.

SECTION 8. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrower nor any Subsidiary Guarantor may
assign or transfer any of its rights or obligations hereunder (and any such
attempted assignment or transfer shall be void) without the prior written
consent of the Lenders to the extent required by the Credit Agreement for the
release of the Borrower or the applicable Subsidiary Guarantor from its
obligations under the Subsidiary Guarantee Agreement. Notwithstanding the
foregoing, at the time any Subsidiary Guarantor is released from its
obligations under the Subsidiary Guarantee Agreement in accordance with the
Subsidiary Guarantee Agreement and the Credit Agreement, such Subsidiary
Guarantor will cease to have any rights or obligations under this Agreement.

SECTION 9. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrower and each Subsidiary Guarantor
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement or the other Loan Documents shall be considered
to have been relied upon by the Collateral Agent, the other Secured Parties and
each Subsidiary Guarantor and shall survive the making by the Lenders of the
Loans and the issuance of the Letters of Credit by the Issuing Bank, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Loans or any other Fee or amount payable under the Credit
Agreement or this Agreement or under any of the other Loan Documents is
outstanding and unpaid or the L/C Exposure does not equal zero and as long as
the Commitments have not been terminated.

(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be required to comply with such provision for so long as
such provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
<PAGE> 4

SECTION 10. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Subsidiary Guarantor when a counterpart bearing the signature of
such Subsidiary Guarantor shall have been delivered to the Collateral Agent.
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement.

SECTION 11. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.

SECTION 12. Additional Guarantors. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary (other than any Inactive Subsidiary)
of the Borrower that was not in existence or not such a Subsidiary on the date
of the Credit Agreement is required to enter into the Subsidiary Guarantee
Agreement as a Subsidiary Guarantor upon becoming such a Subsidiary (or upon
ceasing to be an Inactive Subsidiary). Upon execution and delivery, after the
date hereof, by the Collateral Agent and such a Subsidiary of an instrument in
the form of Annex 1 hereto, such Subsidiary shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as a Subsidiary
Guarantor hereunder. The execution and delivery of any instrument adding an
additional Subsidiary Guarantor as a party to this Agreement shall not require
the consent of any Subsidiary Guarantor hereunder. The rights and obligations
of each Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
appearing above.

PREMIUM STANDARD FARMS, INC.,

by /s/ W.R. Patterson
-----------------------------
Name:
Title:
<PAGE> 5

PRINCETON DEVELOPMENT CORP., as
a Subsidiary Guarantor,

by /s/ W.R. Patterson
------------------------------
Name:
Title: Authorized Officer

THE CHASE MANHATTAN BANK, as
Collateral Agent,

by
------------------------------
Name:
Title:
<PAGE> 6

Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement

SUPPLEMENT NO. dated as of [ ],
to the Indemnity, Subrogation and Contribution
Agreement dated as of September 17, 1996 (as the same
may be amended, supplemented or otherwise modified
from time to time, the "Indemnity, Subrogation and
Contribution Agreement"), among PREMIUM STANDARD
FARMS, INC., a Delaware corporation (the "Borrower"),
each Subsidiary of the Borrower party thereto (the
"Subsidiary Guarantors"), and THE CHASE MANHATTAN
BANK, a New York banking corporation ("Chase
Manhattan Bank"), as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to below).

Reference is made to (a) the Credit Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among PSF Holdings, L.L.C., a Delaware limited
liability company, the Borrower, the Lenders (such term and each other
capitalized term used but not defined herein having the meaning assigned to it
in the Credit Agreement), Chase Manhattan Bank, as issuing bank (in such
capacity, the "Issuing Bank"), as administrative agent (in such capacity, the
"Administrative Agent") and as Collateral Agent for the Lenders and (b) the
Subsidiary Guarantee Agreement dated as of September 17, 1996 (as amended,
supplemented or modified from time to time, the "Subsidiary Guarantee
Agreement") among the Subsidiary Guarantors and the Collateral Agent.

The Borrower and the Subsidiary Guarantors have entered into
the Indemnity, Subrogation and Contribution Agreement in order to induce the
Lenders to make Loans and the Issuing Bank to issue Letters of Credit.
Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary (other than
any Inactive Subsidiary) of the Borrower that was not in existence or not such
a Subsidiary on the date of the Credit Agreement is required to enter into the
Guarantee Agreement as a Subsidiary Guarantor upon becoming such a Subsidiary
(or upon ceasing to be an Inactive Subsidiary). Section 12 of the Indemnity,
Subrogation and Contribution Agreement provides that additional Subsidiaries of
the Borrower may become Subsidiary Guarantors under the Indemnity, Subrogation
and Contribution Agreement by the execution and delivery of an instrument in
the form of this Supplement. The undersigned Subsidiary of the Borrower (the
"New Subsidiary Guarantor") is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Subsidiary Guarantor under the
Indemnity, Subrogation and Contribution Agreement in order to induce the
Lenders to make additional Loans and the Issuing Bank to issue additional
Letters of Credit and as consideration for Loans previously made and Letters of
Credit previously issued.
<PAGE> 7

Accordingly, the Collateral Agent and the New Subsidiary
Guarantor agree as follows:

SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Subsidiary Guarantor by its
signature below becomes a Subsidiary Guarantor under the Indemnity, Subrogation
and Contribution Agreement with the same force and effect as if originally
named therein as a Subsidiary Guarantor and the New Subsidiary Guarantor hereby
agrees to all the terms and provisions of the Indemnity, Subrogation and
Contribution Agreement applicable to it as a Subsidiary Guarantor thereunder.
Each reference to a " Subsidiary Guarantor" in the Indemnity, Subrogation and
Contribution Agreement shall be deemed to include the New Subsidiary Guarantor.
The Indemnity, Subrogation and Contribution Agreement is hereby incorporated
herein by reference.

SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Subsidiary Guarantor and the
Collateral Agent. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the
Indemnity, Subrogation and Contribution Agreement shall remain in full force
and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Indemnity, Subrogation and Contribution
Agreement shall not in any way be affected or impaired. The parties hereto
shall endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All
<PAGE> 8

communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it at the address set forth under its signature.

IN WITNESS WHEREOF, the New Subsidiary Guarantor and the
Collateral Agent have duly executed this Supplement to the Indemnity,
Subrogation and Contribution Agreement as of the day and year first above
written.

[Name Of New Guarantor],

by
________________________________________
Name:
Title:
Address:

THE CHASE MANHATTAN BANK, as
Collateral Agent,

by
________________________________________
Name:
Title:

<PAGE> 1
EXHIBIT 10.16

INTERCREDITOR AGREEMENT dated as of September 17,
1996, among PSF Holdings, L.L.C., a Delaware limited liability
company (the "Guarantor"), PREMIUM STANDARD FARMS, Inc., a
Delaware corporation and a wholly owned subsidiary of the
Guarantor (the "Borrower"), THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as administrative agent
(in such capacity, the "Administrative Agent") and collateral
agent (in such capacity, the "Collateral Agent") for the
Senior Lenders referred to below and the Secured Parties (as
defined in the Credit Agreement referred to below; such
Secured Parties being referred to herein as the "Senior
Secured Parties"), and FLEET NATIONAL BANK, as collateral
agent (in such capacity, the "Junior Collateral Agent") for
the Junior Secured Parties (as defined below).

Reference is made to (a) the Credit Agreement dated as of September
17, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Guarantor, the Borrower, the financial
institutions from time to time party thereto (the "Senior Lenders") and Chase,
as Administrative Agent, Collateral Agent and issuing bank (in such capacity,
the "Issuing Bank"), (b) the Security Agreement dated as of September 17, 1996
(as amended, supplemented or otherwise modified from time to time, the "Senior
Security Agreement"), among the Guarantor, the Borrower and the Collateral
Agent, (c) the Pledge Agreement dated as of September 17, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Senior Pledge
Agreement"), among the Guarantor, the Borrower and the Collateral Agent, (d)
certain Deeds of Trust, Security Agreements, Assignment of Leases and Rents and
Fixture Filings dated as of September 17, 1996, in favor of the Collateral
Agent for the benefit of the Senior Secured Parties (as amended, supplemented
or otherwise modified from time to time, the "Senior Mortgages"), (e) the
Assignment of Contracts dated as of September 17, 1996, between the Borrower
and the Collateral Agent (the "Senior Assignment of Contracts" and, together
with the Senior Security Agreement, the Senior Pledge Agreement and the Senior
Mortgages, the "Senior Security Documents"), (f) the Note Purchase Agreement
dated as of September 17, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Second Priority Note Purchase Agreement"), among the
Guarantor, the Borrower and Morgan Stanley Group, Inc., a Delaware corporation
("MS Group"), (g) the Indenture dated as of September 17, 1996 (as amended,
supplemented or otherwise modified from time to time, the "PIK Note
Indenture"), among the Guarantor, the Borrower and Fleet National Bank, as
trustee (the "PIK Note Trustee") for the holders of the PIK Notes (as defined
in the Credit Agreement; such holders being referred to herein as the "PIK Note
Holders" and, together with MS Group and any other holders of Second Priority
Notes outstanding under the Second Priority Note Purchase Agreement, the
"Junior Secured Parties"), (h) the Security Agreement dated as of September 17,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Junior Security Agreement"), among the Guarantor, the Borrower and the Junior
Collateral Agent, (i) the Pledge Agreement dated as of September 17, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Junior
Pledge Agreement"), among the Guarantor, the Borrower and the Junior Collateral
Agent, (j) certain Deeds of Trust in favor of the Junior Collateral Agent for
the benefit of the Junior Secured Parties (as amended, supplemented or
otherwise modified from time to time, the "Junior Mortgages") and (k) the
Assignment of
<PAGE> 2
2

Contracts dated as of September 17, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Junior Assignment of Contracts" and, together
with the Junior Security Agreement, the Junior Pledge Agreement and the Junior
Mortgages, the "Junior Security Documents").

The Senior Lenders and the Issuing Bank have extended and agreed to
extend credit to the Borrower pursuant to, and upon the terms and conditions
specified in, the Credit Agreement. Pursuant to the Senior Security Documents,
the Guarantor and the Borrower have granted to the Collateral Agent for the
ratable benefit of the Senior Secured Parties perfected first-priority security
interests (the "First-Priority Security Interest") in the Collateral (as
defined in the Credit Agreement) to secure the payment and performance of their
Obligations (as defined in the Credit Agreement) (such Obligations being
referred to herein as the "Senior Secured Obligations").

MS Group has agreed to purchase from the Borrower $10,000,000
aggregate original principal amount of second priority notes (the
"Second-Priority Notes") pursuant to, and upon the terms and conditions
specified in, the Second Priority Note Purchase Agreement. Pursuant to the
Junior Security Documents, the Guarantor and the Borrower have granted to the
Junior Collateral Agent for the ratable benefit of the holders of the Second
Priority Notes perfected second priority security interests (the "Second
Priority Security Interests") in the Collateral to secure the payment and
performance of all of their obligations in respect of the Second Priority Notes
and under the Second Priority Note Purchase Agreement and the Junior Security
Documents (such obligations being referred to herein as the "Second Priority
Secured Obligations").

Pursuant to the Plan of Reorganization, the PIK Note Holders hold
$117,500,000 aggregate original principal amount of PIK Notes. Pursuant to the
Junior Security Documents, the Guarantor and the Borrower have granted to the
Junior Collateral Agent for the ratable benefit of the holders of the PIK Notes
perfected third priority security interests (the "Third Priority Security
Interests", and together with the Second Priority Security Interests, the
"Junior Security Interests") in the Collateral to secure the payment and
performance of all of their obligations in respect of the PIK Notes and under
the PIK Note Indenture and the Junior Security Documents (the "Third Priority
Secured Obligations"; the Third Priority Secured Obligations and the Second
Priority Secured Obligations being referred to herein as the "Junior Secured
Obligations").

The obligations of the Senior Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Guarantor, the Borrower, the Administrative
Agent, the Collateral Agent and the Junior Collateral Agent of an agreement in
the form hereof.

Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the Guarantor, the Borrower, the
Junior Collateral Agent, on behalf of itself and each Junior Secured Party, and
the Administrative Agent and the Collateral Agent, on behalf of themselves and
each Senior Lender and Senior Secured Party, respectively, hereby agree as
follows:
<PAGE> 3

SECTION 1. Perfection and Priority of Security Interests. (a) Any and
all security interests, mortgages, assignments, pledges and other liens,
charges or encumbrances now existing or hereafter created or arising in favor
of the Junior Collateral Agent for its benefit and the benefit of any holder of
Junior Secured Obligations are expressly junior in priority, operation and
effect to any and all security interests, mortgages, assignments, pledges and
other liens, charges or encumbrances now existing or hereafter created or
arising in favor of the Collateral Agent for the benefit of the Senior Secured
Parties, notwithstanding anything to the contrary contained in any agreement or
filing to which the Guarantor, the Borrower or the Junior Collateral Agent may
now or hereafter be a party, and irrespective of the time, order or method of
attachment or perfection of any mortgages, financing statements or other
security interests, assignments, pledges and other liens, charges or
encumbrances or any defect or deficiency or alleged defect or deficiency in any
of the foregoing. Any assets and properties of the Guarantor or the Borrower
or any of their respective subsidiaries now or from time to time hereafter
given, granted, assigned or pledged to secure both the Senior Secured
Obligations and the Junior Secured Obligations shall be subject to the priority
established by this Section 1.

(b) At all times until the Senior Secured Obligations shall have been
paid and satisfied in full, the Collateral Agent shall be entitled to sell,
transfer or otherwise dispose of or deal with the Collateral as provided in the
Senior Security Documents, in each case without regard to the Junior Security
Interests therein, or any rights to which the Junior Secured Parties would
otherwise be entitled as a result of such Junior Security Interests, the only
obligation of the Collateral Agent to the Junior Secured Parties in respect
thereof being to act in a commercially reasonable manner in making any such
disposition of the Collateral and to deliver to the Junior Collateral Agent
(unless otherwise directed by a court of competent jurisdiction) any proceeds
remaining from the sale of the Collateral after such payment and satisfaction
in full of the Senior Secured Obligations or, if the Collateral Agent shall
still be in possession of all or any part of the Collateral after such payment
and satisfaction in full, the Collateral or such part thereof remaining,
without representation or warranty on the part of the Collateral Agent or the
Senior Secured Parties; provided that, except as aforesaid, nothing contained
in this sentence shall be construed to give rise to, nor shall the Junior
Secured Parties have, any claims whatsoever against any Senior Secured Party on
account of any act or omission to act in connection with the exercise of any
right or remedy of the Senior Secured Parties with respect to the Collateral.
Except as provided in Section 2(b) below, the Junior Collateral Agent shall
not, and shall not attempt to, exercise any rights with respect to the Junior
Security Interests in the Collateral, whether pursuant to the Junior Security
Documents or otherwise, until such payment and satisfaction in full of the
Senior Secured Obligations.

(c) For the sole purpose of perfecting the Junior Security Interests
in items of Collateral in which a security interest can be perfected only by
possession, the Collateral Agent acknowledges that it holds such items of
Collateral for itself and the Senior Secured Parties and as bailee for the
Junior Collateral Agent on behalf of the Junior Secured Parties, subject to the
terms and conditions hereof.

SECTION 2. No Interference; Right to Instruct Collateral Agent. (a)
The Junior Collateral Agent agrees that (i) it will not take or cause to be
taken any action, the purpose or
<PAGE> 4

effect of which is, or could be, to make any Junior Security Interest pari
passu with, or to give any Junior Secured Party any preference or priority
relative to the Senior Security Interest or the Senior Secured Parties with
respect to, the Collateral or the proceeds thereof, (ii) it will not interfere,
hinder or delay in any manner, whether by judicial proceedings or otherwise,
any sale or disposition of the Collateral by the Collateral Agent or any other
Senior Secured Party, (iii) it has no right to direct the Collateral Agent or
any other Senior Secured Party to exercise any right, remedy or power with
respect to the Collateral, (iv) it will not institute suit or assert in any
suit, bankruptcy, insolvency or other proceeding any claim against the
Collateral Agent or any other Senior Secured Party seeking damages from or
other relief by way of specific performance, instructions or otherwise, with
respect to any action taken or omitted by the Collateral Agent or the other
Senior Secured Parties in accordance with this Agreement with respect to the
Collateral, (v) it will not commence judicial or nonjudicial foreclosure
proceedings with respect to, seek to have a trustee, receiver, liquidator or
similar official appointed for or over, attempt any action to take possession
of, exercise any right, remedy or power under the Uniform Commercial Code as in
effect in any jurisdiction or any other applicable law with respect to, or
otherwise take any action to enforce its interest in or realize upon, the
Collateral (other than filing a proof of claim) until all the Senior Secured
Obligations shall have been paid and satisfied in full, (vi) it will not
exercise any right that it may have to require the Collateral Agent or the
Senior Secured Parties to marshall any Collateral or to resort to or apply the
proceeds of any Collateral in any particular order and (vii) it will not
attempt, directly or indirectly, whether by judicial proceedings or otherwise,
to challenge the enforceability of any provision of this Agreement.

(b) Notwithstanding the provisions of paragraph (a) above, if (i)
either (x) the PIK Note Trustee or the PIK Note Holders, following any event of
default under the PIK Note Indenture, shall have accelerated the outstanding
principal amount of the PIK Notes or (y) the holders of the Second Priority
Notes, following any event of default under the Second Priority Note Purchase
Agreement, shall have accelerated the outstanding principal amount of the
Second Priority Notes, (ii) following the occurrence of either event described
in clause (x) or (y) above, the Junior Collateral Agent shall have requested in
a writing to the Collateral Agent the consent of the Senior Secured Parties to
the Junior Collateral Agent's exercising its rights and remedies against the
Collateral under the Junior Security Documents and (iii) the Collateral Agent
either shall have granted such consent in writing or shall have failed to do so
within 180 days after receipt of the notice referred to in clause (ii) above,
then the Junior Collateral Agent may exercise any right, remedy or power it may
have with respect to the Collateral; provided, however, that (x) the proceeds
of any sale or disposition of the Collateral shall be applied first (and prior
to the reimbursement of the costs of such sale or disposition or other expenses
of the Junior Collateral Agent or the Junior Secured Parties in connection
therewith) to the payment in full of any and all Senior Secured Obligations in
accordance with the terms of the Senior Security Documents and (y) should the
Collateral Agent commence the exercise of its rights and remedies against the
Collateral, whether during or after such 180-day period, the Junior Collateral
Agent shall not have the right to exercise the rights and remedies referred to
in this paragraph (b).

SECTION 4. Obligations of Borrower Unimpaired. Nothing in this
Agreement is intended to or shall impair, as between the Borrower and (a) the
Senior Secured Parties and (b) the Junior Secured Parties, the obligations of
the Borrower under the Credit Agreement, the
<PAGE> 5

Second Priority Note Purchase Agreement and the PIK Note Indenture to pay the
principal of, premium, if any, and interest on the Loans, the Second Priority
Notes and the PIK Notes, in each case strictly in accordance with their
respective terms, which obligations are absolute and unconditional.

SECTION 5. Payments Held in Trust. The Junior Collateral Agent agrees
that, until the Senior Secured Obligations shall have been paid and satisfied
in full, all payments or other distributions received by it to which it is not
entitled hereunder, whether paid or payable in cash or otherwise, shall not be
commingled by the Junior Collateral Agent with any of its other funds or
property but shall be held separate and apart therefrom, shall be held in trust
for the benefit of the Collateral Agent and the Senior Secured Parties and
shall be forthwith delivered to the Collateral Agent in the same form as so
received (with any necessary endorsements).

SECTION 6. Note Legends. The Borrower shall cause each note or
instrument issued pursuant to the Second Priority Note Purchase Agreement or
the PIK Note Indenture to contain text or a legend, in form and substance
satisfactory to the Collateral Agent, stating that the liens securing such
Indebtedness are junior in right to the First-Priority Security Interest
pursuant to the terms set forth herein.

SECTION 7. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.

SECTION 8. Notices. All communications and notices hereunder shall be
in writing and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to the Junior Collateral Agent shall be
given to it at its address set forth beneath its signature below.

SECTION 9. Changes, Waiver, etc. Neither this Agreement nor any
provision hereof may be waived, discharged or terminated orally, but only by a
statement or instrument in writing signed by the party or parties against which
enforcement of the waiver, discharge or termination shall be sought.

SECTION 10. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of (a) the parties hereto and their respective
successors and assigns, including any agent appointed to represent a Junior
Secured Party due to the disqualification of the Junior Collateral Agent
resulting from a conflict of interest, and (b) each of the Senior Secured
Parties, each holder of a Second Priority Note and each holder of a PIK Note
and their respective successors and assigns.

SECTION 11. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision
<PAGE> 6

in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

SECTION 12. Counterparts. This Agreement may be executed in more
than one counterpart, each of which shall constitute an original but all of
which when taken together shall constitute but one instrument. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.

SECTION 13. Jurisdiction; Consent to Service of Process. (a) Each
party hereto irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that party hereto may
otherwise have to bring any action or proceeding relating to this Agreement
against any other party or its properties in the courts of any jurisdiction.

(b) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection that
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any New York State
or Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

SECTION 14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND
<PAGE> 7

THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 14.

SECTION 15. Rights Absolute. All rights and obligations of the
parties hereto shall be absolute and unconditional irrespective of any lack of
validity or enforceability of the Credit Agreement or any Senior Security
Document, any agreement with respect to any of the Senior Secured Obligations
or any other agreement or instrument relating to any of the foregoing.

SECTION 16. Headings. The headings of this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.

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

PSF HOLDINGS, L.L.C.,

by /s/ W.R. Patterson
------------------------------
Name: William R. Patterson
Title: Vice President

PREMIUM STANDARD FARMS, INC.,,

by /s/ W.R. Patterson
------------------------------
Name: William R. Patterson
Title: Vice President

THE CHASE MANHATTAN BANK, as
Administrative Agent and
Collateral Agent,

by /s/ Jonathon Insull
------------------------------
Name:
Title:

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FLEET NATIONAL BANK,
as Junior Collateral Agent,

by /s/ Paul D. Allen
------------------------------------------
Name: Paul D. Allen
Title: Vice President
Address: Fleet National Bank
Corporate Trust Department
One Federal Street
Boston, MA 02111

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EXHIBIT 10.17

DEED OF TRUST, SECURITY AGREEMENT
ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING

THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND RENTS AND FIXTURE FILING (the "Deed of Trust"), made as of
the 17th day of September 1996 by PSF FINANCE L.P., a Delaware
limited partnership with a business address at Highway 65 North,
Princeton, Missouri 64673 (the "Trustor"), to [ ],
with a business address in care of Lawyers Title Insurance
Corporation, 700 North Pearl, Suite 200, Lock Box 365, Dallas,
Texas 75201 (together with her successors and substitutes, the
"Trustee"), as trustee for the benefit of CHEMICAL BANK, a New
York banking corporation with a business address at 270 Park
Avenue, New York, New York 10017, as collateral agent (in such
capacity, the "Collateral Agent") for the benefit of the Secured
Parties (defined below) (together with its successors and
assigns, the "Beneficiary").

W I T N E S S E T H :

A. Reference is made to that certain Credit Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") by and among Trustor, Premium Standard Farms,
Inc., a Missouri corporation, as guarantor, the lenders from time to time party
thereto (the "Lenders") and Chemical Bank, as administrative agent for the
Lenders (in such capacity, the "Agent"), as Collateral Agent and as fronting
bank (in such capacity, the "Fronting Bank"). Terms used herein without
definition shall have the meanings ascribed to such terms in the Credit
Agreement. As used herein, the term "Secured Parties" shall mean (i) the
Lenders, (ii) the Agent, (iii) the Collateral Agent, (iv) the Fronting Bank,
(v) each counterparty to a Rate Protection Agreement or a Hedging Contract
entered into with Trustor if such counterparty was a Lender at the time such
Rate Protection Agreement or Hedging Contract was entered into, (vi) the
beneficiaries of each indemnification obligation undertaken by Trustor under
any Loan Document and (vii) the successors and permitted assigns of each of the
foregoing.
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B. Pursuant to the Credit Agreement, (i) the Lenders have loaned or
agreed to make to Trustor on a revolving basis revolving loans at any time and
from time to time in an aggregate principal amount at any time outstanding not
to exceed (together with the LC Exposure at such time) [$99,600,000] and (ii)
the Fronting Bank has issued and has agreed to issue Letters of Credit in an
aggregate face amount at any time outstanding not to exceed [$5,000,000], in
each case on the terms and subject to the conditions of the Credit Agreement.

C. The obligations of the Lenders to make Loans and of the Fronting
Bank to issue Letters of Credit under the Credit Agreement are conditioned
upon, among other things, the execution and delivery by Trustor of this Deed of
Trust, in the form hereof, to secure (a) the due and punctual payment of (i)
the principal of, premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by Trustor under the Credit Agreement in respect of
any Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide
cash collateral, and (iii) all other monetary obligations, including fees,
costs expenses and indemnities whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) of Trustor, now
existing or hereafter incurred under, arising out of or in connection with the
Credit Agreement, this Deed of Trust, the other Loan Documents and any Rate
Protection Agreements or Hedging Contracts, (b) the due and punctual
performance of all other covenants, agreements, obligations and liabilities of
Trustor under or pursuant to the Credit Agreement, this Deed of Trust, the
other Loan Documents and any Rate Protection Agreements or Hedging Contracts,
and (c) any and all additional advances made by the Secured Parties to protect
or preserve the Property (as hereinafter defined) or the security interest or
lien created hereby on the Property, or for taxes, assessments or insurance
premiums or for performance of any of Trustor's obligations hereunder or under
any other Loan Document, or for any other purpose provided herein or in any

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of the other Loan Documents (whether or not the original Trustor remains the
owner of the Property at the time of such advances) (all the monetary
obligations referred to in clauses (a) and (c) of this paragraph, being
referred to as the "Indebtedness"; the obligations referred to in clause (b) of
the paragraph and the Indebtedness are collectively referred to as the "Secured
Obligations").

NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING AND IN ORDER TO
SECURE to Beneficiary (for the ratable benefit of the Secured Parties) the due
and punctual payment and performance of the Secured Obligations, with interest
thereon at the rate of interest specified herein, Trustor is executing and
delivering and taking the actions described in this Deed of Trust.

GRANTING CLAUSE A

Fee Estate

Trustor does, by these presents, GRANT, BARGAIN and SELL, CONVEY and
CONFIRM, TRANSFER, PLEDGE, WARRANT and ASSIGN to Trustee, those certain parcels
of real estate described in Exhibit A-1 (the "National Hog Farms Property"),
Exhibit A-2 (the "High Plains Ranch Property"), Exhibit A- 3 (the "Chisum
Property"), and Exhibit A-4 (the "Headquarters Property") attached hereto and
made a part hereof (each hereinafter referred to as, a "Fee Parcel" and
collectively referred to as, the "Land"), all buildings, structures and
improvements now or hereafter erected on the Land (hereinafter collectively
referred to as the "Improvements") and fixtures and goods which are, or are to
become, fixtures ("Fixtures") on or in the Land and/or Improvements, including,
without limitation, (i) houses, barns, sheds, warehouses, pumphouses,
bunkhouses, hothouses and all other buildings, (ii) grain bins, storage bins,
metal sheds and buildings, water towers, windmills, (iii) all towers, fences,
gates, and posts, (iv) all electric, water and gas lines, wiring, pipe and
equipment together with meters, transformers, switch boxes, fuse panels,
circuit breakers, timing devices, thermostats, and control valves, (v)
irrigation and drainage equipment of all types (other than portable irrigation
motors customarily towed by a motor vehicle) including, without limitation,
pipe, pumps, motors, gearheads, sprinkler systems, control valves, culverts,
and well casings, (vi) air conditioning

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and heating equipment including coils, compressors, ducts and heaters, (vii)
all wall to wall carpet, built-in refrigerators, stoves and other built-in
equipment and (viii) all additions, substitutions and replacements thereof.

The Land, Improvements and Fixtures are hereinafter collectively
referred to as the "Trust Premises". Each Fee Parcel and the Improvements and
Fixtures located thereon are hereinafter referred to as a "Trust Property".

GRANTING CLAUSE B

Further Property Conveyed

Trustor does by these presents further GRANT, BARGAIN and SELL, CONVEY
and CONFIRM, TRANSFER, PLEDGE, WARRANT and ASSIGN to Trustee all right, title
and interest of Trustor, whether now held or hereafter acquired, in and to:

(a) All interests or estates in the Trust Premises, both in
possession and expectancy, including, without limitation, any right of
homestead and dower.

(b) All property and rights, if any, which are by the express
provisions of this Deed of Trust required to be subjected to the lien
hereof and any additional property and rights that may from time
hereafter, by installation or writing of any kind, be subjected to the
lien hereof by Trustor or by anyone in Trustor's behalf.

(c) All rights in and to easements, common areas and access or
use rights over roads or rights-of-way or utility easements on
adjacent properties heretofore granted to Trustor and any
after-acquired title or reversion in and to any ways, roads, streets,
avenues, alleys or other property adjoining the Trust Premises.

(d) All materials ("Materials") intended for the construction,
reconstruction, alteration and repair of all buildings and
improvements now or hereafter erected or constructed on the Trust
Premises, all of which materials shall be deemed to be included as a
part of said Trust Premises immediately upon delivery thereof to said
Trust Premises.

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5

(e) All rents, profits, revenues, royalties, bonuses, rights
and benefits under any and all oil, gas or mineral rights of the Trust
Premises, or the property described in Granting Clause B, or any part
thereof, now existing or hereafter made, with the right to receive and
receipt therefor and apply the same to said Indebtedness after any
Event of Default hereunder, and Trustee or Beneficiary may demand, sue
for and recover any such payments but shall not be required so to do.

(f) All judgments, awards of damages, settlements and other
compensation hereafter made resulting from condemnation proceedings or
the taking of the Trust Premises or the property described in Granting
Clause B or any part thereof under power of eminent domain, whether
permanent or temporary, or for any damage (whether caused by such
taking or otherwise) to said property or the improvements thereon or
any part thereof, or to any rights appurtenant thereto including
severance and consequential damage and any award for change of grade
of streets. Beneficiary is hereby authorized, on behalf and in the
name of Trustor, to execute and deliver valid acquittances for and to
appeal from any such judgments or awards. Beneficiary may apply all
such sums or any part thereof so received, after the payment of all
its expenses (including costs and attorneys' fees) on the Indebtedness
secured hereby in such manner as it elects, notwithstanding the fact
that the amount owing thereon may not then be due and payable or that
the said Indebtedness is otherwise adequately secured, or, at
Beneficiary's sole option, the entire amount or any part thereof so
received may be released to Trustor.

(g) All rights of Trustor to water for irrigation or other
purposes including but not limited to Trustor's riparian rights (if
any), rights to subsurface water, rights now or in the future obtained
in water available through irrigation projects whether public or
private, together with all rights and ownership in any water stock
owned in connection with a right to receive water for use upon or in
connection with the Trust Premises.

(h) All rights to receive, participate in, or otherwise secure
the benefits of any and all government programs, including but not
limited to the Conservation

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6

Reserve Program, set aside programs, payment in kind programs, and
government loans which are available for use in connection with the
Trust Premises.

(i) All rights to drain the Trust Premises including rights in
drainage districts (and the right to vote for and elect
representatives in such drainage districts) together with all rights
of Trustor in agricultural cooperatives for milling, ginning,
grinding, storage and marketing of crops harvested from the Trust
Premises.

All of the property, rights and interest described in the foregoing
Granting Clauses A and B being collectively hereinafter referred to as the
"Property" or the "Collateral".

TO HAVE AND TO HOLD the Property unto Trustee, her successors or
substitutes in this trust and to her or their successors and assigns, IN TRUST,
however, upon the terms, provisions and conditions herein set forth.

Trustor covenants and agrees with Trustee and Beneficiary as follows:

1. Title to the Property. (a) Trustor represents and covenants that
Trustor has good and indefeasible title in fee simple in the case of real
estate, and has the right to encumber the Property in the manner set forth
herein; that as of the date hereof the Property is free from liens and
encumbrances except for those liens and encumbrances which are expressly
permitted by Section 7.02 of the Credit Agreement (the "Permitted
Encumbrances") and will continue to be free from all liens and encumbrances
except for Permitted Encumbrances; and that Trustor does forever warrant and
will defend (subject to Permitted Encumbrances)its title to the Property, the
rights of Beneficiary under this Deed of Trust and the validity and priority of
the lien of this Deed of Trust against all claims of all persons and parties
whomsoever.

(b) Trustor represents and covenants that (i) the National Hog Farms
Property is approximately fourteen thousand (14,000) acres and is the same land
that is described on Exhibit A-1 hereto, (ii) the High Plains Ranch Property is
approximately thirty-one thousand (31,000) acres and is the same land that is
described on Exhibit A-2 hereto, (iii) the Chisum Property is approximately
seven

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thousand and ninety (7,090) acres and is the same land that is described on
Exhibit A-3 hereto, (iv) the Headquarters Property is approximately thirty one
(31) acres and is the same land that is described on Exhibit A-4 hereto and (v)
all the Improvements now or hereafter located on the Trust Premises are or will
be located entirely within the boundaries of the Land and do not or will not
encroach on any easements. The representations, covenants and warranties of
this Section 1 shall survive foreclosure of this Deed of Trust and shall run
with the land.

2. Payment of Indebtedness and Performance of Obligations. Trustor
shall promptly pay when due all amounts which shall become due on the
Indebtedness and shall keep and observe all covenants and agreements under the
Loan Documents and shall perform all obligations under the Loan Documents when
due thereunder, in all events, subject to applicable cure periods, if any.

3. Taxes and Assessments. (a) Except as otherwise provided in the
Credit Agreement, Trustor shall pay, before penalty might attach for
non-payment thereof, all taxes and assessments and all other charges whatsoever
levied upon or assessed or placed against the Property or arising in respect of
the operation, occupancy, use or possession thereof.

(b) In the event of the passage of any state, Federal, municipal or
other governmental law, order, rule or regulation subsequent to the date hereof
(i) deducting from the value of real property for the purpose of taxation any
lien or encumbrance thereof or in any manner changing or modifying the laws now
in force governing the taxation of this Deed of Trust or debts secured by
mortgages (other than laws governing income, franchise and similar taxes
generally) or the manner of collecting taxes thereon and (ii) imposing a tax to
be paid by any of the Secured Parties, either directly or indirectly, on this
Deed of Trust or any of the Loan Documents or to require any amount of taxes to
be withheld or deducted therefrom, Trustor will promptly notify Beneficiary of
such event. In such event Trustor shall (i) agree to enter into such further
instruments as may be reasonably necessary or desirable to obligate Trustor to
make any applicable additional payments, and (ii) Trustor shall make such
additional payments under such instruments. If Trustor is not permitted by law
to do that which is required by the preceding sentence, the Agent shall be
entitled to exercise any or all of its rights and

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8

remedies under the Loan Documents, including the right to accelerate the
Indebtedness.

(c) At any time that an Event of Default shall occur and be continuing
hereunder, or if required by any law applicable to Trustor or to any Secured
Party, Beneficiary shall have the right to direct Trustor to make an initial
deposit on account of real estate taxes and assessments and insurance premiums,
levied against or payable in respect of the Property in advance and thereafter
semi-annually, each such deposit (including the initial deposit) to be equal to
one-half of any such annual charges reasonably estimated by Beneficiary in
order to accumulate with Beneficiary sufficient funds to pay such taxes,
assessments and insurance premiums. Such amounts shall be held by Beneficiary
with interest and applied to the payment of the obligations in respect of which
such amounts were deposited. Nothing herein contained shall be deemed to
affect any right or remedy of Beneficiary under this Deed of Trust, including,
without limitation, its rights under Section 5 hereof.

4. Remedies Upon Sale or Encumbrance. Without limiting the
generality of the provisions of Section 13, if an Event of Default under the
Credit Agreement shall occur as a result of Trustor's failure to keep, observe
or perform any covenant, agreement or undertaking set forth in the Credit
Agreement relating to the sale, conveyance, alienation, encumbrance or leasing
of the Property or any interest therein or relating to the sale, alienation or
encumbrance of any interest in Trustor or any general partner of Trustor or
relating to the merger, consolidation or dissolution of Trustor or any general
partner of Trustor, then, such Event of Default shall also be an Event of
Default under this Deed of Trust.

5. Failure to Make Payments. In the event Trustor fails to pay any
taxes, assessments or other charges or liens or judgments as herein provided or
fails to maintain insurance as herein provided, Beneficiary, at its sole
option, may make such payment(s) or procure such insurance, and the amount paid
therefor shall be payable on demand, shall be secured by this Deed of Trust and
shall bear interest at the rate set forth in Section 2.07 of the Credit
Agreement (the "Default Interest Rate") until paid. Such payment by
Beneficiary shall not in any way restrict Beneficiary's other rights afforded
hereunder or by operation of law. Nothing contained herein shall be

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construed as requiring Beneficiary to make any payment or maintain any
insurance whatsoever pertaining to the subject Property.

6. Insurance. For so long as this Deed of Trust shall be in effect,
Trustor shall keep the Trust Premises insured against such risks, and in the
manner, required by Section 6.02 of the Credit Agreement.

7. Casualty and Condemnation. (a) Notwithstanding any other
provision of this Deed of Trust or the Credit Agreement, Beneficiary is
authorized, at its option (for the benefit of the Secured Parties), to collect
and receive, to the extent payable to any Loan Party, all insurance proceeds,
damages, claims and rights of action under any insurance policies with respect
to any casualty or other insured damage ("Casualty") to any portion of any
Trust Property (collectively, the "Insurance Proceeds"), unless the amount of
the related Insurance Proceeds is less than $250,000 and an Event of Default
shall not have occurred and be continuing. Trustor shall notify Beneficiary,
in writing, promptly after Trustor obtains notice or knowledge of any Casualty,
which notice shall set forth a description of such Casualty and Trustor's good
faith estimate of the amount of related damages. Subject to the foregoing
limitations, Trustor shall endorse and transfer or cause to be endorsed or
transferred any Insurance Proceeds received by it or any other Loan Party to
Beneficiary.

(b) Trustor will notify Beneficiary immediately upon obtaining
knowledge of the institution of any action or proceeding for the taking of any
Trust Property, or any part thereof or interest therein, for public or
quasi-public use under the power of eminent domain, by reason of any public
improvement or condemnation proceeding, or in any other manner (a
"Condemnation"). No settlement or compromise of any claim in connection with
any such action or proceeding shall be made without the consent of Beneficiary,
which consent shall not be unreasonably withheld. Beneficiary is authorized,
at its option (for the benefit of the Secured Parties), to collect and receive
all proceeds of any such Condemnation (in each case, the "Condemnation
Proceeds"). Trustor shall execute or cause to be executed such further
assignments of any Condemnation Proceeds as Beneficiary may reasonably require.

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(c) In the event of a Condemnation of all or substantially all of any
Trust Property (a "substantially all" Condemnation) (which determination shall
be made by Beneficiary in its reasonable discretion), unless Trustor shall have
notified Beneficiary in writing promptly after such Condemnation that it
intends to replace the Trust Property (and no Default or Event of Default shall
have occurred and be continuing at the time of such election), Beneficiary
shall apply the Condemnation Proceeds received as a result of such Condemnation
(less the reasonable costs, if any, incurred by Beneficiary in the recovery of
such Condemnation Proceeds, including reasonable attorneys' fees, other charges
and disbursements) to prepay the obligations under the Credit Agreement, with
any remaining Condemnation Proceeds being returned to Trustor. If Trustor
shall elect to replace the Trust Property as contemplated above, (i) the
replacement property shall be of utility or value comparable to that of the
replaced Trust Property and (ii) the insufficiency of any Condemnation Proceeds
to defray the entire expense of the related location, acquisition and
replacement of such replacement property shall in no way relieve Trustor of its
obligation to complete the construction of any replacement property if Trustor
shall have made such election and shall have acquired the related real
property.

(d) In the event of any Condemnation of any Trust Property, or any
part thereof (other than a Condemnation described in paragraph (c) above
(unless Trustor shall be permitted and shall have elected to replace the Trust
Property, as provided in paragraph (c) above) and subject to the provisions of
paragraph (f) below), Beneficiary shall apply the Condemnation Proceeds first,
in the case of a partial Condemnation, to the repair or restoration of any
integrated structure subject to such Condemnation or, in the case of a
"substantially all" condemnation, to the location of a replacement property,
acquisition of such replacement property and construction of the replacement
structures, and second, shall apply the remainder of such Condemnation Proceeds
(less the reasonable costs, if any, incurred by Beneficiary in the recovery of
such Condemnation Proceeds) to the obligations under the Credit Agreement, with
any remaining Condemnation Proceeds being returned to Trustor.

(e) In the event of any Casualty of less than 50% of the useable
square footage of the Improvements of any Trust Property, Trustor shall,
subject to the conditions contained in paragraph (f), restore the Trust
Property to

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substantially its same condition immediately prior to such Casualty. In the
event of any Casualty of greater than 50% of the useable square footage of the
Improvements of any Trust Property and so long as no Default or Event of
Default has occurred and is continuing, Trustor shall have the option to
either:

(i) restore the Trust Property to a condition substantially
similar to its condition immediately prior to such Casualty and
to invest the balance, if any, of any Insurance Proceeds in
equipment or other assets used in Trustor's principal lines of
business within 180 days after the receipt thereof, provided that
Trustor, pending such reinvestment, promptly deposits such excess
Insurance Proceeds in a cash collateral account established with
Beneficiary for the benefit of the Secured Parties, or

(ii) direct Beneficiary to apply the related Insurance Proceeds
to prepay obligations outstanding under the Credit Agreement,
with any remaining Insurance Proceeds being returned to Trustor.

Trustor agrees that any excess Insurance Proceeds that are not reinvested in
Trustor's principal lines of business as contemplated above will be applied to
prepay the obligations under the Credit Agreement.

If required to do so, Trustor shall make the election contemplated by
the immediately preceding paragraph by notifying Beneficiary promptly after the
earlier to occur of (A) five days after Trustor and its insurance carrier reach
a final determination of the amount of any Insurance Proceeds and (B) 30 days
after the occurrence of the Casualty. If Trustor shall be required or shall
elect to restore the Trust Property, the insufficiency of any Insurance
Proceeds to defray the entire expense of such restoration shall in no way
relieve Trustor of such obligation so to restore. In the event Trustor shall
be required to restore or shall notify Beneficiary of its election to restore,
Trustor shall diligently and continuously prosecute the restoration of the
Trust Property to completion. In the event of a Casualty where Trustor is
required to make the election set forth above and Trustor shall fail to notify
Beneficiary of its election within the period set forth above or shall elect
not to restore the Trust Property, Beneficiary shall (after being reimbursed
for all reasonable costs of recovery of such Insurance

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12

Proceeds) apply such Insurance Proceeds to prepay obligations outstanding under
the Credit Agreement. In addition, upon such prepayment, Trustor shall be
obligated to place the remaining portion, if any, of the Trust Property in a
safe condition that is otherwise in compliance with the requirements of
applicable Governmental Authorities and the provisions of this Deed of Trust
and the Credit Agreement.

(f) Except as otherwise specifically provided in this Section 7, all
Insurance Proceeds and all Condemnation Proceeds recovered by Beneficiary (A)
are to be applied to the restoration or replacement of any applicable Trust
Property (less the reasonable cost, if any, to Beneficiary of such recovery and
of paying out such proceeds, including reasonable attorneys' fees, other
charges and disbursements and costs allocable to inspecting the Work (as
defined below)) and (B) shall be applied by Beneficiary to the payment of the
cost of restoring or replacing the Trust Property so damaged, destroyed or
taken or of the portion or portions of the Trust Property not so taken (the
"Work") and (C) shall be paid out from time to time to Trustor as and to the
extent the Work (or the location and acquisition of any replacement of any
Trust Property) progresses for the payment thereof, but subject to each of the
following conditions:

(i) Trustor must promptly commence the restoration process or
the location, acquisition and replacement process (in the case of
a "substantially all" Condemnation) in connection with the Trust
Property;

(ii) the Work shall be in the charge of an architect or
engineer and before Trustor commences any Work, other than
temporary work to protect property or prevent interference with
business, Beneficiary shall have received the plans and
specifications and the general contract for the Work from
Trustor. The plans and specifications shall provide for such
Work that, upon completion thereof, the improvements shall (A) be
in compliance with all requirements of applicable Governmental
Authorities such that all representations and warranties of
Trustor relating to the compliance of the Trust Property with
applicable laws, rules or regulations in this Deed of Trust and
the Credit Agreement will be correct in all respects and (B) be
at least equal in value and general utility to the

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improvements that were on the Trust Property (or that were on
the Trust Property that has been replaced, if applicable) prior
to the Casualty or Condemnation, and in the case of a
Condemnation, subject to the effect of such Condemnation;

(iii) except as provided in (iv) below, each request for
payment shall be made on seven Business Days' prior notice to
Beneficiary and shall be accompanied by a certificate to be made
by such architect or engineer, stating (A) that all the Work
completed has been done in substantial compliance with the plans
and specifications, (B) that the sum requested is justly required
to reimburse Trustor for payments by Trustor to, or is justly due
to, the contractor, subcontractors, materialmen, laborers,
engineers, architects or other persons rendering services or
materials for the Work (giving a brief description of such
services and materials) and that, when added to all sums
previously paid out by Beneficiary, does not exceed the value of
the Work done to the date of such certificate;

(iv) each request for payment in connection with the
acquisition of replacement Trust Property (in the case of a
"substantially all" Condemnation) shall be made on 30 days' prior
notice to Beneficiary and, in connection therewith, (A) each such
request shall be accompanied by a copy of the sales contract or
other document governing the acquisition of the replacement
property by Trustor and a certificate of Trustor stating that the
sum requested represents the sales price under such contract or
document and the related reasonable transaction fees and expenses
(including brokerage fees) and setting forth in sufficient detail
the various components of such requested sum and (B) Trustor
shall (I) in addition to any other items required to be delivered
under this Section 7, provide Beneficiary with such opinions,
documents, certificates, title insurance policies, surveys and
other insurance policies as it may reasonably request and (II)
take such other actions as Beneficiary may reasonably deem
necessary or appropriate (including actions with respect to the
delivery to Beneficiary of a first priority Mortgage with respect
to such real property for the ratable benefit of the Secured
Parties);

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14

(v) each request shall be accompanied by waivers of lien
satisfactory to Beneficiary covering that part of the Work for
which payment or reimbursement is being requested and, if
required by Beneficiary, by a search prepared by a title company
or licensed abstractor or by other evidence satisfactory to
Beneficiary, that there has not been filed with respect to the
Trust Property any mechanics' or other lien or instrument for the
retention of title in respect of any part of the Work not
discharged of record or bonded to the reasonable satisfaction of
Beneficiary;

(vi) there shall be no Default or Event of Default that has
occurred and is continuing;

(vii) the request for any payment after the Work has been
completed shall be accompanied by a copy of any certificate or
certificates required by law to render occupancy of the
improvements being rebuilt, repaired or restored legal; and

(viii) after commencing the Work, Trustor shall continue to
perform the Work diligently and in good faith to completion in
accordance with the approved plans and specifications.

Upon completion of the Work and payment in full therefor, Beneficiary will
disburse to Trustor the amount of any Insurance Proceeds or Condemnation
Proceeds then or thereafter in the hands of Beneficiary on account of the
Casualty or Condemnation that necessitated such Work to be applied (x) to
prepay obligations outstanding under the Credit Agreement, with any excess
being returned to Trustor or (y) to be reinvested in equipment or other assets
used in Trustor's principal lines of business within 180 days after the receipt
thereof, provided that Trustor, pending such reinvestment, promptly deposits
such amounts in a cash collateral account established with Beneficiary for the
benefit of the Secured Parties.

(g) Notwithstanding any other provisions of this Section 7, if Trustor
shall have elected to replace a Trust Property in connection with a
"substantially all" Condemnation as contemplated in paragraph (c) above, all
Condemnation Proceeds held by Beneficiary in connection therewith shall be
applied to prepay obligations outstanding under this Agreement if (i) Trustor
notifies Beneficiary that it does not intend to replace the Trust Property,

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(ii) a Responsible Officer of Trustor shall not have notified
Trustor in writing that Trustor has acquired or has entered into a binding
contract to acquire land upon which it will construct the replacement
property within six months after the related Condemnation or (iii) Trustor
shall have not notified Beneficiary in writing that it has begun construction
of the replacement structures within one year after the related Condemnation.

(h) Nothing in this Section 7 shall prevent Beneficiary from applying
at any time all or any part of the Insurance Proceeds or Condemnation Proceeds
to (i) the curing of any Default under the Credit Agreement or (ii) the payment
of any of the obligations under the Credit Agreement after the occurrence and
during the continuance of an Event of Default.

8. Preservation of Property. (a) Trustor shall keep the Improvements
now or hereafter erected on the Land in good repair and condition and shall
provide all utility services necessary for the operation and preservation of
the Property. Trustor shall commit or permit no waste and in no event shall
Trustor do any act or thing which would unduly impair or depreciate the value
of the Property. Trustor shall not abandon the Property. Trustor shall comply
with all present and future laws, all ordinances and regulations and
requirements of any governmental body applicable to the Property and to the
occupation and operation thereof and all recorded and unrecorded agreements
affecting the Property. Trustor shall obtain and maintain all licenses
authorizations, permits and/or approvals necessary for the ownership, and
operation of the property and the construction of improvements on the Land.
Trustor shall conform to the standards of good husbandry and shall, at all
times, act so as to minimize erosion and depletion of the soil. Trustor shall
utilize available water in conformance with current agricultural practices so
as to avoid excessive depletion of available water supplies.

(b) Without otherwise limiting Trustor's covenant not to commit or
permit waste, Trustor shall not (a) remove or permit the removal of sand,
gravel, topsoil or timber (other than caliche), (b) engage in borrow pit
operations, (c) use or permit the use of the Trust Premises as a land fill or
dump, (d) request or permit a change in zoning or land use classification or
(e) transfer or permit the transfer of any crop allotment or crop basis as the
same relates to the Trust Premises.

<PAGE> 16
16

9. Right to Inspect. Beneficiary, or its agents, shall have the
right, at all reasonable times, to enter upon the Trust Premises for the
purposes of inspection thereof and of the other Property without thereby
becoming liable to Trustor or any person in possession holding under Trustor;
provided, however, Beneficiary shall give Trustor notice prior to any such
inspection.

10. Protection of Beneficiary's Security. If Trustor fails to perform
any of the covenants and agreements contained in this Deed of Trust or if any
action or proceeding is commenced which does or may adversely affect the
Property or any portion thereof or the interest of Trustor, Trustee or
Beneficiary therein, or the title of Trustor thereto, or if Beneficiary shall
be made a party to any such action or proceeding, including a bankruptcy
proceeding in which Trustor or the then owner of the Property is a debtor, then
the Beneficiary, at its sole option, may perform such covenants and agreements,
defend against and/or investigate such action or proceeding, obtain appraisals
and take such other action as Beneficiary deems necessary to protect
Beneficiary's interest. Beneficiary shall be the sole judge of the legality,
validity and priority of claims, liens, encumbrances, taxes, assessments,
charges and premiums paid by it and of the amount necessary to be paid in
satisfaction thereof. All amounts disbursed or incurred by Beneficiary
pursuant to this Section, including but not limited to reasonable attorney's
fees, disbursements and other charges shall be payable upon demand, shall bear
interest from the date of disbursement or the date incurred at the Default
Interest Rate and shall become an additional amount secured hereunder.
Beneficiary shall, at its option, be subrogated to any encumbrance, lien, claim
or demand, paid or discharged by Beneficiary, and to all the rights and
securities for the payment thereof and any such subrogation rights shall be
additional and cumulative security for this Deed of Trust. Nothing contained
in this Section shall require Beneficiary to incur any expense or do any act
hereunder and Beneficiary shall not be liable to Trustor for any damages or
claims arising out of action taken or not taken by Beneficiary pursuant to this
Section.

11. Forbearance Not a Waiver. Any delay or forbearance by any Secured
Party in exercising any right or remedy hereunder or otherwise afforded by law
or equity shall not be a waiver of or preclude the exercise of any such right
or remedy or any other right or remedy hereunder

<PAGE> 17
17

or at law or equity. The procurement of insurance or the payment of taxes or
other liens or charges by Beneficiary shall not be a waiver of Beneficiary's
rights hereunder. Beneficiary's receipt of any awards, proceeds or damages
under Section 7 hereof shall not operate to cure or waive default by Trustor.

12. Trustor Not Released; Priority Subsequent to Modification.
Extension of time for payment or modification of amortization of sums secured
by this Deed of Trust granted by any Secured Party to any successor in interest
of Trustor shall not operate to release, in any manner, the liability of the
original Trustor and Trustor's successors in interest. Beneficiary shall not
be required to commence proceedings against any such successor and the Agent
and the Lenders may or may not refuse to extend time for payment or otherwise
modify amortization of the sums secured by this Deed of Trust by reason of any
demand made by the original Trustor and Trustor's successors in interest. Any
agreement hereafter made by Trustor and any Secured Party relative and pursuant
to this Deed of Trust shall be superior to the rights of the holder of any
intervening lien or encumbrance.

13. Default. (a) It shall be an Event of Default under this Deed of
Trust if any Event of Default (as therein defined) shall exist pursuant to the
Credit Agreement.

(b) Upon the occurrence and during the continuance of any Event of
Default, the Agent may declare immediately due and payable all Indebtedness and
the liens and security interests evidenced hereby shall be subject to
foreclosure in any manner provided for herein or provided for by law as the
Beneficiary may elect.

14. Waiver; Homestead and Separate Tracts. Trustor acknowledges that
the Property has been offered to Trustee as a single economic unit, and has
been valued as such by the Collateral Agent and the Lenders for the purpose of
appraising the security furnished thereby. Trustor, for itself and for all
others claiming through or under it, hereby irrevocably waives and relinquishes
(to the extent permitted by applicable law) all benefit from, and agrees to

<PAGE> 18
18

never plead or take advantage of, any and all present and future laws,
regulations or decisions, in every jurisdiction, state or federal, relating to:

(a) homestead, dower, curtesy or other similar exemptions;

(b) any requirement that the real estate mortgaged and
encumbered hereby be sold as separate tracts or units in event of
foreclosure hereof and Trustor hereby authorizes and empowers
Trustee, in such event, to sell the Trust Premises in one tract
or otherwise, at its sole option, anything in this Deed or Trust
to the contrary notwithstanding;

(d) any stay, moratorium or extension of the time of any sale
of the Property;

(e) marshalling of assets;

(f) any right or remedy which Trustor may have or be able to
assert by reason of the provisions of Chapter 34 of the Business
and Commerce Code of the State of Texas, as now or hereafter in
effect, and any other laws with respect to the rights and
remedies of sureties; and

(g) redemption of the Property, or any part thereof, after any
sale.

To the extent not prohibited by law, the right of Beneficiary to
foreclose on and sell all or any part of the Property shall not be affected or
impaired by the purported "cure" of any Event of Default.

15. Separate Estates. As an inducement to the Collateral Agent, the
Agent and the Lenders to enter into the Credit Agreement and for other good and
valuable consideration to Trustor, in hand paid, receipt whereof is hereby
acknowledged, Trustor does hereby waive for itself, its heirs, executors,
successors and assigns, in the event of foreclosure of this Deed of Trust or
any other Security Document, any equitable right, otherwise available to
either, in respect to marshalling of assets hereunder or under any other
Security Document so as to require the

<PAGE> 19
19

separate sales of the fee estate and any leasehold estate encumbered hereby or
by any other Security Document or to require Beneficiary to exhaust its
remedies as against either the fee estate or any such leasehold estate,
encumbered hereby or by any other Security Document, before proceeding against
the other and further, in the event of such foreclosure, Trustor does hereby
expressly consent to and authorize, at the option of the Beneficiary, the sale,
either separately or together, of the fee estate and any such leasehold estate,
encumbered hereby or by any other Security Document, or the merger, prior to
sale, of any such leasehold estate into the fee estate in order that the fee
estate may be sold free and clear of any such leasehold estate.

16. Additional Security Documents. This Deed of Trust shall
constitute a security agreement with respect to and Trustor hereby grants the
Beneficiary a security interest in all Fixtures, Materials and other personal
property included in the Property. For this purpose, Trustor is the debtor and
Beneficiary is the secured party. The address of Beneficiary from which
information concerning the security interest granted hereby may be obtained is
the address for Beneficiary set forth on the first page of this Deed of Trust.
The recording of this Deed of Trust shall constitute a "fixture filing" within
the meaning of Sections 9.313 and 9.402 of the Texas Business and Commerce
Code. Trustor, upon request by Beneficiary, will execute, acknowledge and
deliver to Beneficiary a security agreement, financing statement or other
similar security instruments, in form satisfactory to Beneficiary, covering all
Fixtures, Materials and other personal property of any kind whatsoever owned by
Trustor which is necessary or useful to the operation of the Trust Premises and
concerning which there may be any doubt whether the title to same has been
conveyed by or a security interest perfected by this Deed of Trust under the
laws of the State of Texas and Trustor will further execute, acknowledge and
deliver any financing statement, affidavit, continuation statement or
certificate or other document as Beneficiary may request in order to correct or
perfect, preserve, maintain, continue and extend the security interest under
and the priority of such security instrument and/or the encumbrance granted by
this Deed of Trust. Trustor further agrees to pay to Beneficiary, on demand,
all costs and expenses incurred by Beneficiary (including reasonable attorneys'
fees) in connection with the preparation, execution, recording, filing and
refiling of any such document and in connection

<PAGE> 20
20

with the exercise of any right or remedy hereunder. Upon the occurrence and
during the continuance of an Event of Default, Beneficiary may exercise its
rights of enforcement with respect to the Fixtures, Materials and other
personal property included in Property under the Texas Business and Commerce
Code.

17. No Water Sales. Trustor shall not enter into contracts to supply
water to third persons or other properties without the prior written consent of
Beneficiary. No such contract shall subject Trustor or any successor in
interest to regulation and governance by a public body or as a public utility
or water company.

18. Additional Filings. Trustor shall, as may be requested by
Beneficiary from time to time, execute such documents and assist in filing or
recording thereof as may be necessary in the sole judgment of Beneficiary to
perfect the lien granted hereunder upon water rights, water and/or subsidy or
other governmental programs offered in connection with the Trust Premises
and/or Property.

19. Further Assurances. Upon demand by Beneficiary, Trustor will, at
the cost of Trustor and without expense to Beneficiary, do, execute,
acknowledge and deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances as Beneficiary
shall from time to time reasonably require for the better assurance, conveying,
assigning, transferring and confirming unto Beneficiary the property and rights
hereby conveyed or assigned or intended now or hereafter so to be, or which
Trustor may be or may hereafter become bound to convey or assign to
Beneficiary, or for carrying out the intention or facilitating the performance
of the terms of this Deed of Trust or for filing, registering or recording this
Deed of Trust and, on demand, Trustor will also execute and deliver and hereby
appoints Beneficiary as its true and lawful attorney-in-fact and agent, for
Trustor and in its name, place and stead, in any and all capacities, to execute
and file, to the extent it may lawfully do so, one or more financing
statements, chattel mortgages or comparable security instruments reasonably
requested by Beneficiary to evidence more effectively the lien hereof upon the
personal property and to perform each and every act and thing requisite and
necessary to be done to accomplish the same.

<PAGE> 21
21

20. Additions to Property. All right, title and interest of Trustor
in and to all extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Property hereafter
acquired by or released to Trustor or constructed, assembled or placed by
Trustor upon the Trust Premises and all conversions of the security constituted
thereby, immediately upon such acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in each such case without any
further deed, mortgage, conveyance, assignment or other act by Trustor, shall
become subject to the lien and security interest of this Deed of Trust as fully
and completely and with the same effect as though now owned by Trustor and
specifically described in the grant of the Property above, but at any and all
times Trustor will execute and deliver to Beneficiary any and all such further
assurances, deeds, mortgages, conveyances or assignments thereof as Beneficiary
may reasonably require for the purpose of expressly and specifically subjecting
the same to the lien and security interest of this Deed of Trust.

21. Assignment of Leases and Rents. In order to provide a source of
future payment of the Indebtedness, Trustor does hereby absolutely and
unconditionally assign, transfer and set over to the Beneficiary all right,
title and interest of Trustor in, to and under the lease agreements which now
or hereafter cover or affect all or any portion of the Trust Premises, together
with all renewals, extensions, modifications, amendments, subleases and
assignments of such lease agreements (such lease agreements, renewals,
extensions, modifications, amendment, subleases and assignments herein called
the "Leases") (provided that the foregoing assignment shall not impair or
diminish the obligation of Trustor under the provisions of the Leases nor shall
the obligation be imposed upon Trustee or Beneficiary) and all of the rents,
income, receipts, revenues, issues, profits and other sums of money
(hereinafter collectively called the "Rent") that are now or at any time
hereafter become due and payable to Trustor under the terms of any Leases, or
any part thereof, or arising or issuing from or out of the Leases or from or
out of the Trust Premises or any part thereof, including but not limited to
minimum rents, additional rents, percentage rents, deficiency rents and
liquidated damages following default, security deposits, advance rents, all
proceeds payable under any policy of insurance covering loss of rents resulting
from untenantability caused by destruction or damage to the Trust Premises, and
all of Trustor's rights to recover monetary

<PAGE> 22
22

amounts from any lessee in bankruptcy including, without limitation, rights of
recovery for use and occupancy and damage claims arising out of lease defaults,
including rejections, under any applicable bankruptcy law, including
specifically the immediate and continuing right to collect and receive each and
all of the foregoing. Until receipt from the Beneficiary of notice of the
occurrence of an Event of Default (hereinafter called a "Notice of Default"),
each lessee under the Leases may pay Rent directly to Trustor and Trustor shall
have the right to receive such Rent provided that Trustor shall hold such Rent
as a trust fund to be applied as required by the Beneficiary and Trustor hereby
covenants so to apply the Rent, before using any part of the same for any other
purposes. Upon receipt from the Beneficiary of a Notice of Default, each
lessee under the Leases is hereby authorized and directed to pay directly to
the Beneficiary all Rent thereafter accruing and the receipt of Rent by the
Beneficiary shall be a release of such lessee to the extent of all amounts so
paid. The receipt by a lessee under the Leases of a Notice of Default shall be
sufficient authorization for such lessee to make all future payments of Rent
directly to the Beneficiary and each such lessee shall be entitled to rely on
such Notice of Default and shall have no liability to Trustor for any Rent paid
to the Beneficiary after receipt of such Notice of Default. Rent so received
by the Beneficiary for any period prior to foreclosure under this Deed of Trust
or acceptance of a deed in lieu of such foreclosure shall be applied by the
Beneficiary to the payment (in such order as the Beneficiary shall determine)
of: (a) all expenses of managing the Trust Premises, including but not limited
to the salaries, fees and wages of a managing agent and such other employees as
the Beneficiary may deem necessary or desirable; all expenses of operating and
maintaining the Trust Premises, including but not limited to all taxes,
assessments, charges, claims, utility costs and premiums for insurance, and the
cost of all alterations, renovations, repairs or replacements; and all expenses
incident to taking and retaining possession of the Trust Premises and/or
collecting the Rent due and payable under the Leases; and (b) the Indebtedness
secured by this Deed of Trust, principal, interest, attorneys' and collection
fees and other amounts, in such order as Beneficiary in its sole discretion may
determine. In no event will the assignment pursuant to this Section reduce the
Indebtedness evidenced by the Loan Documents or otherwise secured by this Deed
of Trust, except to the extent, if any, that Rent is actually received by the
Beneficiary and applied upon or after said receipt to such

<PAGE> 23
23

indebtedness in accordance with the preceding sentence. Without impairing its
rights hereunder, the Beneficiary may, at its option, at any time and from time
to time, release to Trustor Rent so received by the Beneficiary or any part
thereof. As between Trustor and the Beneficiary, and any person claiming
through or under Trustor, other than any lessee under the Leases who has not
received a Notice of Default pursuant to this Section, the assignment contained
in this Section is intended to be absolute, unconditional and presently
effective and the provisions of this Section for notification of lessees under
the Leases upon the occurrence of an Event of Default are intended solely for
the benefit of each such lessee and shall never inure to the benefit of Trustor
or any person claiming through or under Trustor, other than a lessee who has
not received such notice. It shall never be necessary for the Beneficiary to
institute legal proceedings of any kind whatsoever to enforce the provisions of
this Section. The Beneficiary shall not be deemed to have taken possession of
the Trust Premises except on the exercise of its option to do so, evidenced by
its demand and overt act for such purpose.

22. Miscellaneous Rights of Beneficiary. Any personal property of
Trustor remaining upon the Trust Premises after the Trust Premises have been
possessed or occupied by Beneficiary following foreclosure of this Deed of
Trust or any deed in lieu of foreclosure (whether or not included in the
Property) shall be conclusively presumed to have been abandoned by Trustor.
Beneficiary shall in no way incur any liability or obligation to Trustor by
reason of any action which Beneficiary in its sole discretion chooses to take
with respect to said personal property. In no event shall Beneficiary be
required to take any affirmative action in preserving, protecting or otherwise
overseeing the deployment or storage of said personal property, nor shall
Beneficiary incur any liability to Trustor of said personal property because of
failure to take such affirmative action with respect thereto.

23. Beneficiary's Remedies Cumulative. All remedies of Beneficiary
and the other Secured Parties are distinct and cumulative to any other remedy
and right under this Deed of Trust, any other Loan Document or afforded by law
or equity and may be exercised concurrently or independently and as often as
the occasion therefor arises. If the Secured Obligations are now or hereafter,
in whole or in part, further secured by other deeds of trust, chattel deeds of
trust, pledges, contracts of guaranty, security

<PAGE> 24
24

agreements or otherwise, Beneficiary may, at its sole option, exhaust any one
or more of said securities and the security hereunder, either concurrently or
independently, and in such order as it may determine.

24. Successors and Assigns; Joint and Several Liability; Captions.
The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to, the successors and assigns of the Secured Parties and
Trustee and the permitted successors and assigns of Trustor. Wherever used,
the singular number shall include the plural, the plural the singular, and the
use of any gender shall be applicable to all genders. If Trustor is comprised
of more than one person and/or entity, all covenants and agreements of Trustor
shall be joint and several. The captions and headings of the paragraphs of
this Deed of Trust are for convenience only and are not to be used to interpret
or define the provisions hereof.

25. Appointment of Receiver. Trustor hereby grants to Beneficiary the
right, upon the occurrence and during the continuance of an Event of Default,
to secure and receive a court appointed Receiver (the "Receiver") for the
Property or any part thereof. THE APPOINTMENT OF THE RECEIVER MAY BE UPON EX
PARTE MOTION BY BENEFICIARY WITHOUT NOTICE TO TRUSTOR. Trustor hereby waives
any right to notice for the appointment of a Receiver, but Trustor reserves the
right to contest, at a later date, the existence of Trustor's default. The
Receiver shall have the right to immediately take possession of the Property or
any part thereof, collect rents, engage a farm, ranch or livestock management
company to oversee daily activities, hire attorneys and accountants, expend
funds for the preservation of the Property, sell livestock, crops or other
products produced on the Trust Premises and otherwise control the Property
under direction of the court. All costs and expenses of the Receiver,
including fees and commissions payable to the Receiver and the Receiver's
attorney's and accountant's fees, shall be paid by Trustor, and such repayment
is secured by this Deed of Trust.

26. Litigation, Collection and Bankruptcy Fees and Expenses. (a)
Beneficiary may appear in or defend any action or proceeding at law or in
equity purporting to affect the security hereof, and in such event Beneficiary
shall be allowed and paid and Trustor hereby agrees to pay (to the full extent
permitted by law) all costs, charges and expenses, including costs of evidence
of title and

<PAGE> 25
25

attorney's fees, in a reasonable sum, incurred in any such action or proceeding
in which Beneficiary may appear or defend.

(b) Upon the commencement of any proceedings to collect the
Indebtedness or disbursements secured hereby, or any part thereof, by
foreclosure of this Deed of Trust or otherwise, there shall become due and
Trustor agrees to pay (to the full extent permitted by law) all costs, fees and
expenses of such proceeding, including a reasonable sum as and for attorneys'
fees, as an additional Indebtedness hereunder and it is agreed that this Deed
of Trust shall stand as security therefor. It is also agreed that Trustor will
pay any amount Beneficiary may incur or pay for any abstract or continuation of
abstract of title, certificate of insurance or title or other evidence of
title, subsequent to this date, on any of the Trust Premises and this Deed of
Trust shall secure payment thereof.

27. Continuing Liability of Trustor. Without affecting the liability
of Trustor or any other person for payment of any Indebtedness secured hereby
or for performance of any obligation contained herein, and without affecting
the rights of the Secured Parties with respect to any security not expressly
released in writing, the Secured Parties, as applicable, may at any time and
from time to time, and without notice or consent:

(a) release any person liable for payment of all or any part
of the Indebtedness or for performance of any Secured Obligation;

(b) make any agreement extending the time or otherwise
altering the terms of payment of all or any part of the
Indebtedness, or any other terms of the Loan Documents, or
modifying or waiving any Secured Obligation, or subordinating,
modifying or otherwise dealing with the lien or charge hereof;

(d) accept additional security of any kind;

(e) release or otherwise deal with any property, real or
personal, securing the Secured Obligations, including all or any
part of the Property herein described; and

<PAGE> 26
26

(f) consent to the creation of any easement affecting the
Trust Premises or any covenants restricting the use or occupancy
of the Trust Premises.

28. Inspection of ASCS Records. Trustor hereby grants to Beneficiary,
its officers and employees and Beneficiary's successors and assigns, the right
to inspect and copy any and all records, reports, applications, forms and
correspondence in the office of the United States of America, Department of
Agriculture, Agricultural Stabilization & Conservation Service ("ASCS") which
relate to Trustor or the Trust Premises.

29. Trustee's Sale on Default. (a) Upon the occurrence and during
the continuance of an Event of Default hereunder, Trustee, her successor or
substitute, is authorized and empowered and it shall be her special duty at the
request of the Beneficiary to sell the Trust Premises or any part thereof
situated in the State of Texas at the courthouse of any county in the State of
Texas in which any part of the Trust Premises is situated, at public vendue to
the highest bidder for cash between the hours of 10 o'clock a.m. and 4 o'clock
p.m. on the first Tuesday in any month after having given notice of such sale
in accordance with the statutes of the State of Texas then in force governing
sales of real estate under powers conferred by deed of trust. Any sale made by
Trustee hereunder may be as an entirety or in such parcels as the Beneficiary
may request, and any sale may be adjourned by announcement at the time and
place appointed for such sale without further notice except as may be required
by law. The sale by Trustee of less than the whole of the Trust Premises shall
not exhaust the power of sale herein granted, and Trustee is specifically
empowered to make successive sale or sales under such power until the whole of
the Trust Premises shall be sold; and, if the proceeds of such sale of less
than the whole of the Trust Premises shall be less than the aggregate of the
Indebtedness secured hereby and the expense of executing this trust as provided
herein, this Deed of Trust and the lien hereof shall remain in full force and
effect as to the unsold portion of the Trust Premises just as though no sale
had been made; provided, however, that Trustor shall never have any right to
require the sale of less than the whole of the Trust Premises but the
Beneficiary shall have the right, at its sole election, to request Trustee to
sell less than the whole of the Trust Premises. As among the various counties
in which items of the Trust Premises may be situated, sales in such counties
may be conducted in any

<PAGE> 27
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order that the Trustee may deem expedient; and any one or more of such sales
may be conducted in the same month, or in successive or different months, as
the Trustee may deem expedient. After each sale, Trustee shall make to the
purchaser or purchasers at such sale good and sufficient conveyances in the
name of Trustor, conveying the property so sold to the purchaser or purchasers
in fee simple with special warranty of title, and shall receive the proceeds of
said sale or sales and apply the same as herein provided. Payment of the
purchase price to Trustee shall satisfy the obligation of purchaser at such
sale therefor, and such purchaser shall not be responsible for the application
thereof. The power of sale granted herein shall not be exhausted by any sale
held hereunder by Trustee or her substitute or successor, and such power of
sale may be exercised from time to time and as many times as the Beneficiary
may deem necessary until all of the Trust Premises has been duly sold and all
secured indebtedness has been fully paid. In the event any sale hereunder is
not completed or is defective in the opinion of the Beneficiary, such sale
shall not exhaust the power of sale hereunder and the Beneficiary shall have
the right to cause a subsequent sale or sales to be made hereunder. Any and
all statements of fact or other recitals made in any deed or deeds given by
Trustee or any successor or substitute appointed hereunder as to nonpayment of
the indebtedness secured hereby, or as to the occurrence of any Event of
Default, or as to the Beneficiary having declared all of such indebtedness to
be due and payable, or as to the request to sell, or as to notice of time,
place and terms of sale and of the properties to be sold having been duly
given, or as to the refusal, failure or inability to act of Trustee or any
substitute or successor, or as to the appointment of any substitute or
successor trustee, or as to any other act or thing having been duly done by the
Beneficiary or by such Trustee, substitute or successor, shall be taken as
prima facie evidence of the truth of the facts so stated and recited. Trustee,
her successor or substitute, may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices and the conduct of sale, but in the
name and on behalf of Trustee, her successor or substitute. Any persons,
including any Secured Party, may purchase at the sale.

(b) Upon the occurrence and during the continuance of an Event of
Default hereunder, Beneficiary shall have the right to proceed with foreclosure
of the liens and security

<PAGE> 28
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interests evidenced hereby without declaring the entire Indebtedness due, and
in such event any such foreclosure sale may be made subject to the unmatured
part of the Indebtedness; and any such sale shall not in any manner affect the
unmatured part of the Indebtedness, but as to such unmatured part, this Deed of
Trust shall remain in full force and effect just as though no sale had been
made. The proceeds of any such sale shall be applied as provided in paragraph
(b) of Section 31 except that the amount paid under subparagraph "SECOND"
thereof shall be applied only to the matured portion of the Indebtedness and
any proceeds of such sale in excess of such matured portion shall be applied to
installments of principal of and interest on the Loans in the inverse order of
maturity. Any number of sales may be made hereunder without exhausting the
right of sale for any unmatured part of the Indebtedness.

(c) In the event there is a foreclosure sale hereunder and at the time
of such sale Trustor or Trustor's heirs, devisees, representatives, successors
or assigns or any other persons claiming any interest in the Trust Premises by,
through or under Trustor are occupying or using the Trust Premises, or any part
thereof, each and all shall immediately become tenant from day-to-day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the value of the property occupied, such rental to be due daily
to the purchaser. In the event the tenant fails to surrender possession of
said property upon demand, the purchaser shall be entitled to institute and
maintain an action for forcible entry and detainer of said property in the
Justice of the Peace Court in the Justice Precinct in which such property, or
any part thereof, is situated.

30. Appointment of Substitute Trustee. Without consent of or notice
to Trustor, Beneficiary has the absolute right and power, whether with or
without cause, to remove Trustee and/or appoint one or more substitute Trustees
to act in the place of Trustee or a substitute Trustee without any formality
other than by a document executed by Beneficiary alone, without the joinder or
approval of the Secured Parties or any other Person. Such appointment or
removal need not be filed of record. Following an appointment of a substitute
Trustee by Beneficiary, the substitute Trustee shall have all rights, powers,
benefits, indemnities and authority herein granted to Trustee in this Deed of
Trust.

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31. Option to Foreclose. (a) Upon the occurrence and during the
continuance of any Event of Default hereunder, Beneficiary shall have the
option and reserves the right to foreclose this Deed of Trust in the manner
provided by law for the foreclosure of mortgages on real property.

(b) After any foreclosure sale of all or any of the Trust Premises,
Trustee or Beneficiary shall receive the proceeds of sale, no purchaser shall
be required to see to the application of the proceeds and Trustee or
Beneficiary shall apply the proceeds of the sale and any other sums that then
may be held by Trustee or Beneficiary under this Deed of Trust as follows:

FIRST, to the payment of the costs and expenses of such sale,
including compensation to Trustee or to Beneficiary's attorneys
and agents, and of any judicial proceedings wherein the same may
be made, and of all expenses, liabilities and advances made or
incurred by Beneficiary under this Deed of Trust, together with
interest at the Default Interest Rate on all advances made by
Beneficiary, including all taxes or assessments (except any
taxes, assessments or other charges subject to which the Trust
Premises shall have been sold) and the cost of removing any
Permitted Encumbrance (except any Permitted Encumbrance subject
to which the Trust Premises was sold);

SECOND, to Beneficiary for the distribution to the Secured
Parties for the satisfaction of the Indebtedness owed to the
Secured Parties; and

THIRD, to Trustor, its successors or assigns, or as a court of
competent jurisdiction may otherwise direct.

Beneficiary shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Deed of Trust.

32. Acknowledgement of Trustor. Trustor understands and acknowledges
that (a) this document is a deed of trust and not a mortgage, and (b) the power
of sale provided for in this deed of trust provides different rights and
obligations to Trustor than a mortgage in the event of a default or breach of
obligation.

<PAGE> 30
30

33. Release of Lien. (a) If Trustor shall have paid the Indebtedness
and shall have kept and performed all of its obligations hereunder and under
the Loan Documents and the Lenders' commitment to make Loans under the Credit
Agreement has expired and no Letters of Credit are outstanding and the Issuing
Bank's commitment to issue Letters of Credit has expired, then Beneficiary
shall deliver to Trustor, at Trustor's expense, all such documents, in
recordable form, that shall be reasonably necessary to release this Deed of
Trust; otherwise, it shall remain in full force and effect. The release may be
for the benefit of "the person or persons entitled thereto".

(b) Upon any sale, transfer or other disposition of the Trust Premises
or any part thereof that is permitted under the Credit Agreement, the
Beneficiary shall, at the Trustor's expense, execute and deliver to the Trustor
such documents as the Trustor shall reasonably request to evidence the release
of the Trust Premises or any part thereof from the lien and security interest
granted hereby; provided, however, that at the time of such request and such
release, (i) no Event of Default shall have occurred and be continuing, (ii)
the Trustor shall have delivered to the Beneficiary, at least ten Business Days
prior to the date of the proposed release, a written request for release
(describing the terms of the sale or transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Beneficiary and
a certification by the Trustor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Beneficiary may reasonably request) and (iii) the proceeds of any such sale,
transfer or other disposition are applied in accordance with the Credit
Agreement.

34. Notice. Any notice from Beneficiary or Trustee to Trustor
hereunder shall be deemed to have been given by Beneficiary or Trustee and
received by Trustor when mailed to Trustor by certified mail, personally
delivered to Trustor, deposited with a bonded air courier service for express
delivery to Trustor or telecopied to Trustor at the address stated above, to
the attention of Bill Patterson, (if by telecopy to (816) 748-7100) or at such
other address or telecopier number as Trustor may designate, in writing;
provided that, service of a notice required by Tex. Property Code Section
51.002 shall be considered complete when the requirements of that statute are
met. Any notice from

<PAGE> 31
31

Trustor to Beneficiary or Trustee under this Deed of Trust shall be deemed to
have been given by Trustor and received by Beneficiary or Trustee, as the case
may be, when received by such person at its address stated above (and with
respect to Beneficiary, to the attention of _____________) or at such other
address as such person may have designated to Trustor.

35. Governing Law; Severability; Usury. (a) This Deed of Trust shall
be governed by and construed in accordance with the internal law of the State
of Texas. In the event any provision or clause of this Deed of Trust conflicts
with applicable law, such conflict shall not affect other provisions of this
Deed of Trust which can be given effect without the conflicting provisions and,
to this end, the provisions of the Deed of Trust are declared to be severable.

(b) The Secured Parties intend to contract in strict compliance with
applicable usury law from time to time in effect. All agreements between the
Trustor and the Secured Parties whether now existing or hereafter arising and
whether written or oral, are expressly limited so that in no contingency or
event whatsoever, whether by reason of acceleration of the maturity of the
Indebtedness or otherwise shall the amount paid or agreed to be paid to the
Secured Parties for the use, forbearance or detention of the Indebtedness or
for the performance or payment of any covenant or obligation contained herein
or in any other instrument evidencing, securing or pertaining to the
Indebtedness, exceed the maximum amount that may be lawfully charged under
applicable law from time to time in effect (the "Maximum Rate"). If from any
circumstances whatsoever fulfillment of any provision hereof or of any such
other document, at the time performance of such provision shall be due, shall
involve exceeding the Maximum Rate, then, the terms of Section 11.09 of the
Credit Agreement shall apply.

36. Possession. Upon the occurrence of an Event of Default, the
Beneficiary (either in person or by agent with or without bringing on any
action or proceeding or by a receiver appointed by court and without regard to
the adequacy of its security) is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Trust Premises, or
any part thereof, and to take possession of the Trust Premises and of all
books, records and accounts relating thereto and to exercise without
interference from Trustor any and all rights which Trustor

<PAGE> 32
32

has with respect to the management, possession, operation, protection or
preservation of the Trust Premises, including the right to engage a farm ranch
or livestock management company to oversee daily activities, sell livestock,
crops or other products produced on the Trust Premises, rent the Trust Premises
for the account of Trustor and to deduct from such rents and any other income
from the Trust Premises all costs, expenses and liabilities of every character
incurred by the Beneficiary in collecting such rents and in managing,
operating, maintaining, protecting or preserving the Trust Premises and to
apply the remainder of such rents and any other income from the Trust Premises
on the Indebtedness secured hereby in such manner as the Beneficiary may elect.
All such costs, expenses and liabilities incurred by the Beneficiary in
collecting such rents and in managing, operating, maintaining, protecting or
preserving the Trust Premises, if not paid out of rents as hereinabove
provided, shall constitute a demand obligation owing by Trustor and shall bear
interest from the date of expenditure until paid at the Default Interest Rate,
all of which shall constitute a portion of the Indebtedness. If necessary to
obtain the possession provided for above, the Beneficiary may invoke any and
all legal remedies to dispossess Trustor, including specifically one or more
actions for forcible entry and detainer, trespass to try title and restitution.
In connection with any action taken by the Beneficiary pursuant to this Section
36, the Beneficiary shall not be liable for any loss sustained by Trustor
resulting from any failure to let the Trust Premises, or any part thereof, or
from any other act or omission of the Beneficiary in managing the Trust
Premises unless such loss is caused by the willful misconduct or gross
negligence (BUT NOT THE NEGLIGENCE) of the Beneficiary, nor shall the
Beneficiary be obligated to perform or discharge any obligation, duty or
liability under any lease agreement covering the Trust Premises or any part
thereof or under or by reason of this instrument or the exercise of rights or
remedies hereunder. Trustor shall and does hereby agree to indemnify the
Beneficiary for, and to hold the Beneficiary harmless from, any and all
liability, loss or damage which may or might be incurred by the Beneficiary
under any such lease agreement or under or by reason of this Deed of Trust or
the exercise of rights or remedies hereunder and from any and all claims and
demands whatsoever which may be asserted against the Beneficiary by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants or agreements contained in any such lease agreement.
Should the Beneficiary incur any such liability, the amount

<PAGE> 33
33

thereof, including costs, expenses and reasonable attorney's fees, shall be
secured hereby and Trustor shall reimburse the Beneficiary therefor immediately
upon demand. Nothing in this Section 36 shall impose any duty, obligation or
responsibility upon the Beneficiary for the control, care, management or repair
of the Trust Premises, nor for the carrying out of any of the terms and
conditions of any such lease agreement; nor shall it operate to make the
Beneficiary responsible or liable for any waste committed on the Trust Premises
by the tenants or by any other parties or for any dangerous or defective
condition of the Trust Premises, OR FOR ANY NEGLIGENCE IN THE MANAGEMENT,
UPKEEP, REPAIR OR CONTROL OF THE TRUST PREMISES RESULTING IN LOSS OR INJURY OR
DEATH TO ANY TENANT, LICENSEE, EMPLOYEE OR STRANGER. Trustor hereby assents
to, ratifies and confirms any and all actions of the Beneficiary with respect
to the Trust Premises taken under this Section 36.

37. Liability and Indemnification of Trustee. TRUSTEE SHALL NOT BE
LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY TRUSTEE IN GOOD FAITH, OR BE
OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER
(INCLUDING TRUSTEE'S NEGLIGENCE), EXCEPT FOR TRUSTEE'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. Trustee shall have the right to rely on any instrument,
document or signature authorizing or supporting any action taken or proposed to
be taken by her hereunder, believed by her in good faith to be genuine. All
moneys received by Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, but need not be
segregated in any manner from any other moneys (except to the extent required
by law), and Trustee shall be under no liability for interest on any moneys
received by her hereunder. Trustor will reimburse Trustee for, and indemnify
and save her harmless against, any and all liability and expenses (including
reasonable attorneys' fees) which may be incurred by her in the performance of
her duties hereunder. The foregoing indemnity and other agreements shall not
terminate upon release, foreclosure or other termination of this Deed of Trust.

38. Future Advances. This Deed of Trust is given to secure, among
other things, the Loans and Letters of Credit and shall secure not only
presently existing indebtedness in respect of the Loans and Letters of Credit,
but also any and all other indebtedness which may hereafter be owing by Trustor
in respect of future advances of the Loans and Letters of Credit, whether such
advances are

<PAGE> 34
34

obligatory or to be made at the option of the Lenders or the Fronting Bank, to
the same extent as if such future advances were made on the date of the
execution of this Deed of Trust. The lien of this Deed of Trust with respect
to any future advances, modifications, extensions, and renewals referred to
herein and made from time to time, shall have the same priority to which this
Deed of Trust otherwise would be entitled as of the date this Deed of Trust is
executed and recorded without regard to the fact that any such future advance,
modification, extension, or renewal may occur after the Deed of Trust is
executed.

39. No Partnership. Notwithstanding anything to the contrary
contained herein or otherwise (a) the relationship between the Trustor and the
Beneficiary hereunder and otherwise shall be deemed, construed and treated by
the Trustor and the Beneficiary for all purposes to be solely that of
debtor/creditor; (b) the various consent, approval and other rights afforded to
the Beneficiary under this Deed of Trust have been granted and designed solely
to protect the value of the Trust Premises and to assure the Trustor's payment
of the Indebtedness and all of such rights as are customarily granted lenders
in a secured lending transactions; (c) the Trustor and the Beneficiary hereby
expressly disclaim any sharing of liabilities, losses, costs or expenses with
respect to the ownership or operation of all or any portion of the Trust
Premises, or otherwise; and (d) the terms contained herein are not intended by
the Trustor and the Beneficiary and shall not for any purpose be deemed,
construed or treated by the Trustor and the Beneficiary so as (i) to create a
partnership or joint venture between the Beneficiary and the Trustor or between
the Beneficiary and any other party, or (ii) to cause the Beneficiary to be or
become liable in any way for the debts and obligations of the Trustor
(including, without limitation, any losses attributable to the Trustor's
operation of the Trust Premises) or any other party.

40. Section 26.02 Notice. IN ACCORDANCE WITH SECTION 26.02 OF THE
TEXAS BUSINESS AND COMMERCE CODE, THIS DEED OF TRUST AND THE OTHER DOCUMENTS
EVIDENCING, SECURING OR PERTAINING TO ALL OR ANY PORTION OF THE INDEBTEDNESS
AND OTHER SECURED OBLIGATIONS REPRESENT THE FINAL AGREEMENT BETWEEN THE TRUSTOR
AND THE SECURED PARTIES AS TO THE SUBJECT MATTER THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN SUCH PARTIES.

<PAGE> 35
35

IN TESTIMONY WHEREOF, Trustor has executed this Deed of Trust the day
and year first above written.

PSF FINANCE L.P., a Delaware
limited partnership,

by COLLINGS FARM, INC., a
Missouri corporation,
General Partner,

__________________________

<PAGE> 36

STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )

This instrument was acknowledged before me on , 1996
by of Collings Farms, Inc., a Missouri corporation, on
behalf of said corporation, acting in its capacity as general partner of PSF
Finance L.P., a Delaware limited partnership.

__________________________________
Notary Public, State of New York

__________________________________
(printed name)

My commission expires:

______________________

<PAGE> 1
EXHIBIT 10.18

PLEDGE AGREEMENT dated as of September 17,
1996, among PSF HOLDINGS, L.L.C., a Delaware limited
liability company (the "Guarantor"), PREMIUM
STANDARD FARMS, INC., a Delaware corporation and a
wholly owned subsidiary of the Guarantor (the
"Borrower"), each Subsidiary of the Borrower listed on
Schedule I hereto (each such Subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Guarantor, the Borrower
and the Subsidiary Pledgors are referred to
collectively herein as the "Pledgors"), and THE
CHASE MANHATTAN BANK, a New York banking corporation
("The Chase Manhattan Bank"), as collateral agent (in
such capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement
referred to below).

Reference is made to (a) the Credit Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Guarantor, the Borrower, the Lenders
(such term and each other capitalized term used but not defined herein having
the meaning assigned to it in the Credit Agreement), The Chase Manhattan Bank,
as issuing bank (in such capacity, the "Issuing Bank"), as administrative agent
(in such capacity, the "Administrative Agent"), and as Collateral Agent for the
Lenders, (b) the Parent Guarantee Agreement dated as of September 17, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Parent
Guarantee Agreement"), between the Guarantor and the Collateral Agent and (c)
the Subsidiary Guarantee Agreement dated as of September 17, 1996 (as amended,
supplemented or modified from time to time, the "Subsidiary Guarantee
Agreement") among the Subsidiary Guarantors and the Collateral Agent.

The Guarantor and the Subsidiary Guarantors have each agreed
to guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Pledgors of a Pledge Agreement in the
form hereof to secure (a) the due and punctual payment by the Borrower of (i)
the principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations, including indemnities
and reasonable and invoiced fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the
<PAGE> 2
2

Borrower to the Secured Parties under the Credit Agreement and the other Loan
Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents (c) the due and punctual payment and
performance of all the covenants, agreements, obligations and liabilities of
the Guarantor under or pursuant to the Parent Guarantee Agreement or the other
Loan Documents and (d) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Subsidiary Guarantor
pursuant to the Subsidiary Guarantee Agreement or the other Loan Documents (all
the monetary and other obligations referred to in the preceding clauses (a)
through (d) being referred to collectively as the "Obligations").

Accordingly, the Pledgors and the Collateral Agent, on behalf
of themselves and each Secured Party (and each of their respective successors
or assigns), hereby agree as follows:

SECTION 1. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each Pledgor
hereby transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets
over and delivers unto the Collateral Agent, its successors and assigns, and
hereby grants to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in such Pledgor's
right, title and interest in, to and under (a) the shares of capital stock
owned by it and listed on Schedule II hereto and any shares of capital stock of
or any Subsidiary obtained in the future by the Pledgor and the certificates
representing all such shares (the "Pledged Stock"), provided that Pledged Stock
shall not include (i) more than 65% of the issued and outstanding shares of
stock of any foreign Subsidiary or (ii) to the extent that applicable law
requires that a Subsidiary of a Pledgor issue directors' qualifying shares,
such qualifying shares, (b)(i) the debt securities listed opposite the name of
such Pledgor on Schedule II hereto, (ii) any debt securities in the future
issued to such Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (the "Pledged Debt Securities"); (c) all other
property that may be delivered to and held by the Collateral Agent pursuant to
the terms hereof; (d) subject to Section 5, all payments of principal or
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed, in respect of, in exchange for
or upon the conversion of the securities referred to in clauses (a) and (b)
above; (e) subject to Section 5, all rights and privileges of such Pledgor with
respect to the securities and other property referred to in clauses (a), (b),
(c) and (d) above; and (f) all proceeds of any of the foregoing (the items
referred to in clauses (a) through (f) above being collectively referred to as
the "Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by undated stock
powers duly executed in blank or other instruments of transfer reasonably
satisfactory to the Collateral Agent and by such other instruments and
documents as the Collateral Agent may reasonably request and (b) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such
other instruments or documents as the Collateral Agent may reasonably request.
Each delivery of Pledged Securities shall be accompanied by a schedule
describing the securities theretofore and then being pledged hereunder, which
schedule shall be attached hereto as Schedule II and made a part hereof. Each
schedule so delivered shall supersede any prior schedules so delivered.
<PAGE> 3

TO HAVE AND TO HOLD the Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the terms,
covenants and conditions hereinafter set forth.

SECTION 2. Delivery of the Collateral. (a) Each Pledgor
agrees promptly to deliver or cause to be delivered to the Collateral Agent
from time to time any and all Pledged Securities, and any and all certificates
or other instruments or documents representing the Collateral.

(b) Each Pledgor will cause any Indebtedness for borrowed
money owed to such Pledgor by any person to be evidenced by a duly executed
promissory note that is pledged and delivered to the Collateral Agent pursuant
to the terms hereof.

SECTION 3. Representations, Warranties and Covenants. Each
Pledgor hereby represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent that:

(a) the Pledged Stock represents that percentage as set forth
on Schedule II of the issued and outstanding shares of each class of
the capital stock of the issuer with respect thereto;

(b) except for the security interest granted hereunder, such
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (ii) holds the same free and clear of all Liens, other
than those permitted by Section 6.02 of the Credit Agreement, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to
Section 5, will cause any and all Collateral, whether for value paid
by such Pledgor or otherwise, to be forthwith deposited with the
Collateral Agent and pledged or assigned hereunder;

(c) such Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will
defend its title or interest thereto or therein against any and all
Liens (other than the Lien created by this Agreement and the Liens
permitted by Section 6.02 of the Credit Agreement), however arising,
of all persons whomsoever;

(d) no consent of any other person (including stockholders or
creditors of such Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;

(e) by virtue of the execution and delivery by such Pledgor of
this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement,
<PAGE> 4

the Collateral Agent will obtain a valid and perfected first priority
lien upon and security interest in such Pledged Securities as security
for the payment and performance of the Obligations;

(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;

(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;

(h) all information set forth herein relating to the Pledged
Stock is accurate and complete in all material respects as of the date
hereof; and

(i) the pledge of the Pledged Stock pursuant to this Agreement
does not violate Regulation G, T, U or X of the Federal Reserve Board
or any successor thereto as of the date hereof.

SECTION 4. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in
its sole and absolute discretion) to hold the Pledged Securities in its own
name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the applicable Pledgor, endorsed or assigned in blank or in favor of
the Collateral Agent. Each Pledgor will promptly give to the Collateral Agent
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. The Collateral
Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.

SECTION 5. Voting Rights; Dividends and Interest, etc. (a)
Unless and until an Event of Default shall have occurred and be continuing:

(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner
of the Pledged Securities or any part thereof for any purpose
consistent with the terms of this Agreement, the Credit Agreement and
the other Loan Documents; provided, however, that such Pledgor will
not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of any of the Secured
Parties under this Agreement, the Credit Agreement or any other Loan
Document or the ability of the Secured Parties to exercise the same.

(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such Pledgor
may reasonably request for the purpose of enabling such Pledgor to
exercise the voting and/or consensual rights and powers it is entitled
to
<PAGE> 5

exercise pursuant to subparagraph (i) above and to receive the cash
dividends it is entitled to receive pursuant to subparagraph (iii)
below.

(iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged
Securities to the extent and only to the extent that such cash
dividends, interest and principal are permitted by, and otherwise paid
in accordance with, the terms and conditions of the Credit Agreement,
the other Loan Documents and applicable laws. All noncash dividends,
interest and principal of a type that would otherwise constitute
Collateral hereunder, and all dividends, interest and principal paid
or payable in cash or otherwise in connection with a partial or total
liquidation or dissolution, return of capital, capital surplus or
paid-in surplus, and all other distributions (other than distributions
referred to in the preceding sentence) made on or in respect of the
Pledged Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or reclassification
of the outstanding capital stock of the issuer of any Pledged
Securities or received in exchange for the Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be commingled
by such Pledgor with any of its other funds or property but shall be
held separate and apart therefrom, shall be held in trust for the
benefit of the Collateral Agent and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any
necessary endorsement).

(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to dividends, interest or principal
that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends, interest or principal. All dividends,
interest or principal received by any Pledgor contrary to the provisions of
this Section 5 shall be held in trust for the benefit of the Collateral Agent,
shall be segregated from other property or funds of such Pledgor and shall be
forthwith delivered to the Collateral Agent upon demand in the same form as so
received (with any necessary endorsement). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of
this paragraph (b) shall be retained by the Collateral Agent in an account to
be established by the Collateral Agent upon receipt of such money or other
property and shall be applied in accordance with the provisions of Section 7.
After all Events of Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default have been
cured or waived, repay to each Pledgor all cash dividends, interest or
principal (without interest) that such Pledgor would otherwise be permitted to
retain pursuant to the terms of paragraph (a)(iii) above and which remain in
such account.

(c) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to exercise the voting and
consensual rights and powers it is entitled to exercise pursuant to paragraph
(a)(i) of this Section 5, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall
thereupon become
<PAGE> 6

vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and consensual rights and powers,
provided that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit any Pledgor to exercise such
rights. After all Events of Default have been cured or waived, each Pledgor
shall have the right to exercise the voting and consensual rights and powers
that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.

SECTION 6. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, subject to applicable regulatory
and legal requirements, the Collateral Agent may (to the extent permitted by
law) sell the Collateral, or any part thereof, at public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem appropriate. The Collateral
Agent shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale, the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Pledgor, and, to the extent permitted by applicable law, each Pledgor hereby
waives all rights of redemption, stay, valuation and appraisal that such
Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.

The Collateral Agent shall give each Pledgor 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of such Pledgor's Collateral. Such notice
(i) in the case of a public sale, shall state the time and place for such sale,
(ii) in the case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made and the day
on which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange, and (iii) in the case of a private sale, shall state
the time after which any such sale is to be made. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice of such sale.
At any such sale, the Collateral, or portion thereof to be sold, may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do
so, regardless of the fact that notice of sale of such Collateral shall have
been given. The Collateral Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability in
case any such pur-
<PAGE> 7

chaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by applicable law, private)
sale made pursuant to this Section 6, any Secured Party may bid for or
purchase, free from any right of redemption, stay or appraisal on the part of
any Pledgor (all said rights being also hereby waived and released to the
extent permitted by law), the Collateral or any part thereof offered for sale
and may make payment on account thereof by using any claim then due and payable
to it from such Pledgor as a credit against the purchase price, and it may,
upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to such Pledgor therefor. For purposes
hereof, (a) a written agreement to purchase the Collateral or any portion
thereof shall be treated as a sale thereof, (b) the Collateral Agent shall be
free to carry out such sale pursuant to such agreement and (c) such Pledgor
shall not be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose upon the Collateral and to sell
the Collateral or any portion thereof pursuant to a judgment or decree of a
court or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section
6 shall be deemed to conform to the commercially reasonable standards as
provided in Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions.

SECTION 7. Application of Proceeds of Sale. The proceeds of
any sale of Collateral pursuant to Section 6, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:

FIRST, to the payment of all reasonable and invoiced
out-of-pocket costs and expenses incurred by the Collateral Agent in
connection with such sale or otherwise in connection with this
Agreement, any other Loan Document or any of the Obligations,
including all court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made by the
Collateral Agent hereunder or under any other Loan Document on behalf
of any Pledgor and any other costs or expenses incurred in connection
with the exercise of any right or remedy hereunder or under any other
Loan Document;

SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the
date of any such distribution); and

THIRD, to each Pledgor, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.

or under a judicial proceeding), the receipt of the purchase money by the
Collateral Agent or the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of any part of the
purchase money paid over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.

SECTION 8. Collateral Agent Appointed Attorney-in-Fact. Each
Pledgor hereby appoints the Collateral Agent the attorney-in- fact of such
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent's name or in the name of
such Pledgor, to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to such Pledgor representing any interest or dividend
or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or defend any action, claim or proceeding with respect
thereto, and to sell, assign, endorse, pledge, transfer and to make any
agreement respecting, or otherwise deal with, the same; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.

SECTION 9. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provisions of this Agreement or consent to
any departure by any Pledgor therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Pledgor in any case shall entitle
such Pledgor to any other or further notice or demand in similar or other
circumstances.
<PAGE> 9

(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Collateral Agent and the Pledgors or such Pledgor with respect to
which such waiver, amendment or modification is to apply, subject to any
consent required in accordance with Section 9.08 of the Credit Agreement.

SECTION 10. Securities Act, etc. In view of the position of
any Pledgor in relation to the Pledged Securities, or because of other current
or future circumstances, a question may arise under the Securities Act of 1933,
as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose or effect (such Act and any such similar statute as from
time to time in effect being called the "Federal Securities Laws") with respect
to any disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Pledgor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Securities, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Securities for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion, (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Pledgor acknowledges
and agrees that any such sale might result in prices and other terms less
favorable to the seller than if such sale were a public sale without such
restrictions. In the event of any such sale, the Collateral Agent shall incur
no responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid
or if more than a single purchaser were approached. The provisions of this
Section 10 will apply notwithstanding the existence of a public or private
market upon which the quotations or sales prices may exceed substantially the
price at which the Collateral Agent sells.

SECTION 11. Registration, etc. Each Pledgor agrees that,
upon the occurrence and during the continuance of an Event of Default
hereunder, if for any reason the Collateral Agent desires to sell any of the
Pledged Securities of the Borrower at a public sale, it will, at any time and
from time to time, upon the written request of the Collateral Agent, use its
best efforts to take or to cause the issuer of such Pledged Securities to take
such action and prepare, distribute and/or file such documents, as are required
or advisable in the reasonable opinion of counsel for the Collateral Agent to
permit the public sale of such Pledged Securities. Each Pledgor further agrees
to indemnify, defend and hold harmless the Collateral Agent, each other Secured
Party,
<PAGE> 10

any underwriter and their respective officers, directors, affiliates and
controlling persons from and against all loss, liability, expenses, costs of
counsel (including, without limitation, reasonable fees and expenses to the
Collateral Agent of legal counsel), and claims (including the costs of
investigation) that they may incur insofar as such loss, liability, expense or
claim arises out of or is based upon any alleged untrue statement of a material
fact contained in any prospectus (or any amendment or supplement thereto) or in
any notification or offering circular, or arises out of or is based upon any
alleged omission to state a material fact required to be stated therein or
necessary to make the statements in any thereof not misleading, except insofar
as the same may have been caused by any untrue statement or omission based upon
information furnished in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party expressly for use
therein. Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the
issuer of such Pledged Securities to qualify, file or register, any of the
Pledged Securities under the Blue Sky or other securities laws of such states
as may be requested by the Collateral Agent and keep effective, or cause to be
kept effective, all such qualifications, filings or registrations. Each
Pledgor will bear all costs and expenses of carrying out its obligations under
this Section 11. Each Pledgor acknowledges that there is no adequate remedy at
law for failure by it to comply with the provisions of this Section 11 and that
such failure would not be adequately compensable in damages, and therefore
agrees that its agreements contained in this Section 11 may be specifically
enforced.

SECTION 12. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the Collateral
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
payment in full of all the Obligations).

SECTION 13. Termination or Release. (a) This Agreement and
the security interests granted hereby shall terminate when all the Obligations
have been paid in full in cash and the Lenders have no further commitment to
lend under the Credit Agreement, the L/C Exposure has been reduced to zero and
the Issuing Bank has no further obligation to issue Letters of Credit under the
Credit Agreement.

(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Credit Agreement to any person that is
not a Pledgor, or, upon the effectiveness of any written consent to the release
of the security interest granted hereby in any
<PAGE> 11

Collateral pursuant to Section 9.08(b) of the Credit Agreement, the security
interest in such Collateral shall be automatically released.

(c) In connection with any termination or release pursuant to
paragraph (a) or (b) above, the Collateral Agent shall execute and/or deliver
to any Pledgor, at such Pledgor's expense, all documents that such Pledgor
shall reasonably request to evidence such termination or release. Any
execution and delivery of documents pursuant to this Section 13 shall be
without recourse to or warranty by the Collateral Agent.

SECTION 14. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section 9.01 of the
Credit Agreement. All communications and notices hereunder to any Subsidiary
Pledgor shall be given to it at the address set forth on Schedule I hereto with
a copy to the Borrower.

SECTION 15. Further Assurances. Each Pledgor agrees to do
such further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Collateral Agent
may at any time reasonably request in connection with the administration and
enforcement of this Agreement or with respect to the Collateral or any part
thereof or in order better to assure and confirm unto the Collateral Agent its
rights and remedies hereunder.

SECTION 16. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any Pledgor or
the Collateral Agent that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and assigns. This Agreement
shall become effective as to any Pledgor when a counterpart hereof executed on
behalf of such Pledgor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the Collateral Agent,
and thereafter shall be binding upon such Pledgor and the Collateral Agent and
their respective successors and assigns, and shall inure to the benefit of such
Pledgor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall have the right
to assign its rights hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as expressly contemplated
by this Agreement or the other Loan Documents. This Agreement shall be
construed as a separate agreement with respect to each Pledgor and may be
amended, modified, supplemented, waived or released with respect to any Pledgor
without the approval of any other Pledgor and without affecting the obligations
of any other Pledgor hereunder.

SECTION 17. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and, except for any terminations, amendments or modifications
thereof in accordance with the terms hereof, shall survive the making by the
Lenders of the Loans and the issuance of the Letters of Credit by the Issuing
Bank, regardless of any investigation
<PAGE> 12

made by the Secured Parties or on their behalf, and, except for any
terminations, amendments or modifications thereof in accordance with the terms
hereof, shall continue in full force and effect as long as the principal of or
any accrued interest on any Loan or any other fee or amount payable under this
Agreement or any other Loan Document is outstanding and unpaid or the L/C
Exposure does not equal zero and as long as the Commitments and the L/C
Commitments have not been terminated.

(b) In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.

SECTION 18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 19. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute a single contract, and shall
become effective as provided in Section 16. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 20. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement. Section headings used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting this
Agreement.

SECTION 21. Jurisdiction; Consent to Service of Process. (a)
Each Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that, to the extent permitted by applicable law, all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Collateral Agent or
any other Secured Party may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Pledgor or
its properties in the courts of any jurisdiction.
<PAGE> 13

(b) Each Pledgor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 14. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

SECTION 22. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.

SECTION 23. Additional Pledgors. Pursuant to Section 5.12 of
the Credit Agreement, each Subsidiary (other than any Inactive Subsidiary) of
the Borrower that was not in existence or not such a Subsidiary on the date of
the Credit Agreement is required to enter in this Agreement as a Pledgor upon
becoming such a Subsidiary (or upon ceasing to be an Inactive Subsidiary) if
such Subsidiary owns or possesses property of a type that would be considered
Collateral hereunder. Upon execution and delivery by the Collateral Agent and
such a Subsidiary of an instrument in the form of Annex 1, such Subsidiary
shall become a Pledgor hereunder with the same force and effect as if
originally named as a Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor
<PAGE> 14

hereunder. The rights and obligations of each Pledgor hereunder shall remain
in full force and effect notwithstanding the addition of any new Pledgor as a
party to this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

PSF HOLDINGS, L.L.C.,

by /s/ W.R. Patterson
-----------------------------------
Name: William R. Patterson
Title: Vice President

PREMIUM STANDARD FARMS, INC.,

by /s/ W.R. Patterson
-----------------------------------
Name: William R. Patterson
Title: Vice President

THE CHASE MANHATTAN BANK,
as Collateral Agent,

by /s/ Jonathon Insull
-----------------------------------
Name: Jonathon Insull
Title: Vice President
<PAGE> 15

Schedule I to the
Pledge Agreement

SUBSIDIARY PLEDGORS

<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>

</TABLE>

<PAGE> 16

Schedule II to the
Pledge Agreement
CAPITAL STOCK

<TABLE>
<CAPTION>
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
- ------ ----------- ---------- ------ ---------
<S> <C> <C> <C> <C>

</TABLE>

DEBT SECURITIES

<TABLE>
<CAPTION>
Principal Date of Maturity
Issuer Amount Note Date
- ------ --------- -------- ---------
<S> <C> <C> <C>

</TABLE>

<PAGE> 17

Annex 1 to the
Pledge Agreement

SUPPLEMENT NO. dated as of , to the
PLEDGE AGREEMENT dated as of September 17, 1996,
among PSF HOLDINGS, L.L.C., a Delaware limited
liability company (the "Guarantor"), PREMIUM STANDARD
FARMS, INC., a Delaware corporation and a wholly
owned subsidiary of the Guarantor (the "Borrower")
and each subsidiary of the Borrower listed on
Schedule I thereto (each such subsidiary individually
a "Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; the Guarantor, the Borrower
and Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and THE CHASE MANHATTAN
BANK, a New York banking corporation ("The Chase
Manhattan Bank"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement referred
to below)

Reference is made to (a) the Credit Agreement dated as of
September 17, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Guarantor, the Borrower, the Lenders
(such term and each other capitalized term used but not defined herein having
the meaning assigned to it in the Credit Agreement or, if not defined therein,
in the Pledge Agreement) and The Chase Manhattan Bank, as issuing bank (in such
capacity, the "Issuing Bank"), as administrative agent (in such capacity, the
"Administrative Agent") and as Collateral Agent for the Lenders, (b) the Parent
Guarantee Agreement dated as of September 17, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement") among the
Guarantor and the Collateral Agent and (c) the Subsidiary Guarantee Agreement
dated as of September 17, 1996 (as amended, supplemented or otherwise modified
from time to time, the "Subsidiary Guarantee Agreement") among the Subsidiary
Guarantors and the Collateral Agent.

The Pledgors have entered into the Pledge Agreement in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary
(other than an Inactive Subsidiary) of the Borrower that was not in existence
or not such a Subsidiary on the date of the Credit Agreement is required to
enter into the Pledge Agreement as a Subsidiary Pledgor upon becoming such a
Subsidiary (or upon ceasing to be an Inactive Subsidiary) if such Subsidiary
owns or possesses property of a type that would be considered Collateral under
the Pledge Agreement. Section 23 of the Pledge Agreement provides that such
Subsidiaries may become Subsidiary Pledgors under the Pledge Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Pledgor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Subsidiary
Pledgor under the Pledge Agreement in order to induce the Lenders to make
additional Loans and the Issuing Bank to issue additional Letters of Credit and
as consideration for Loans previously made and Letters of Credit previously
issued.
<PAGE> 18

Accordingly, the Collateral Agent and the New Pledgor agree as
follows:

SECTION 1. In accordance with Section 23 of the Pledge
Agreement, the New Pledgor by its signature below becomes a Pledgor under the
Pledge Agreement with the same force and effect as if originally named therein
as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and
provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and
(b) represents and warrants that the representations and warranties made by it
as a Pledgor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Pledgor, as security for the payment and
performance in full of the Obligations (as defined in the Pledge Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns,
a security interest in and lien on all of the New Pledgor's right, title and
interest in and to the Collateral (as defined in the Pledge Agreement) of the
New Pledgor. Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.

SECTION 2. The New Pledgor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.

SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement shall become
effective when the Collateral Agent shall have received counterparts of this
Supplement that, when taken together, bear the signatures of the New Pledgor
and the Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.

SECTION 4. The New Pledgor hereby represents and warrants
that set forth on Schedule I attached hereto is a true and correct schedule of
all its Pledged Securities.

SECTION 5. Except as expressly supplemented hereby, the
Pledge Agreement shall remain in full force and effect.

SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Pledge Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
<PAGE> 19

SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 14 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it at
its address set forth under its signature below, with a copy to the Borrower.

IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent
have duly executed this Supplement to the Pledge Agreement as of the day and
year first above written.

[Name of New Pledgor],

by
----------------------------------
Name:
Title:
Address:

THE CHASE MANHATTAN BANK, as
Collateral Agent,

by
----------------------------------
Name:
Title:
<PAGE> 20

Schedule I to
Supplement No.
to the Pledge Agreement

Pledged Securities of the New Pledgor

CAPITAL STOCK

<TABLE>
<CAPTION>
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
- ------ ----------- ---------- ------ ---------
<S> <C> <C> <C> <C>

</TABLE>

DEBT SECURITIES

<TABLE>
<CAPTION>
Principal Date of Maturity
Issuer Amount Note Date
- ------ --------- -------- ---------
<S> <C> <C> <C>

</TABLE>

<PAGE> 1

EXHIBIT 10.19

SECURITY AGREEMENT dated as of September 17,
1996, among PSF HOLDINGS, L.L.C, a Delaware limited
liability company (the "Guarantor"), PREMIUM
STANDARD FARMS, INC., a Delaware corporation and a
wholly owned subsidiary of the Guarantor (the
"Borrower"), each subsidiary of the Borrower listed on
Schedule I hereto (each such subsidiary individually
a "Subsidiary Guarantor" and collectively, the
"Subsidiary Guarantors"; the Subsidiary Guarantor,
the Borrower and the Subsidiary Guarantors are
referred to collectively herein as the "Grantors")
and THE CHASE MANHATTAN BANK, a New York banking
corporation ("The Chase Manhattan Bank"), as
collateral agent (in such capacity, the "Collateral
Agent") for the Secured Parties (as defined herein).

The Lenders have agreed to make Loans to and the Issuing Bank
has agreed to issue Letters of Credit for the account of the Borrower pursuant
to, and upon the terms and subject to the conditions specified in, the Credit
Agreement. The Guarantor and each Subsidiary Guarantor has agreed to
guarantee, among other things, all the obligations of the Borrower under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrower of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrower under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrower to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to
the Credit Agreement and the other Loan Documents and (c) the due and
<PAGE> 2

punctual payment and performance of all the covenants, agreements, obligations
and liabilities of each Loan Party under or pursuant to this Agreement and the
other Loan Documents (all the monetary and other obligations described in the
preceding clauses (a) through (c) being collectively called the "Obligations").

Accordingly, the Grantors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Definition of Terms Used Herein. Unless the
context otherwise requires, all capitalized terms used but not defined herein
shall have the meanings set forth in the Credit Agreement.

SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:

"Account Debtor" shall mean any person who is or who may
become obligated to any Grantor under, with respect to or on account of an
Account.

"Accounts" shall mean any and all right, title and interest of
any Grantor to payment for goods and services sold or leased, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.

"Accounts Receivable" shall mean all Accounts and all right,
title and interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens and pledges, whether voluntary or involuntary, in
each case whether now existing or owned or hereafter arising or acquired.

"Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) Proceeds,
(g) Payments, and (h) cash and cash accounts (including the Cash Concentration
Account, the Collection Deposit Accounts and the General Fund Account).

"Collection Deposit Account" shall mean a lockbox account of a
Grantor maintained for the benefit of the Secured Parties with the Collateral
Agent or with a Sub-Agent pursuant to a Lockbox and Depository Agreement.

<PAGE> 3

"Concentration Account" shall mean the cash collateral account
established at the office of The Chase Manhattan Bank located at 270 Park
Avenue, New York, NY 10017, in the name of the Collateral Agent,
Account No.[ ]

"Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in any work
subject to the copyright laws of the United States or any other country,
whether as author, assignee, transferee or otherwise, and (b) all registrations
and applications for registration of any such copyright in the United States or
any other country, including registrations, recordings, supplemental
registrations and pending applications for registration in the United States
Copyright Office, including those listed on Schedule II.

"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.

"Documents" shall mean all instruments, documents of title,
drafts, notes, acceptances and chattel paper, whether now owned or hereafter
acquired, files, records, ledger sheets and documents covering or relating to
any of the Collateral.

"Equipment" shall mean all equipment, furniture and
furnishings, and all tangible personal property similar to any of the
foregoing, including tools, parts and supplies of every kind and description,
and all improvements, accessions or appurtenances thereto, that are now or
hereafter owned by any Grantor. The term Equipment shall include Fixtures.

"Fixtures" shall mean all items of Equipment, whether now
owned or hereafter acquired, of any Grantor that become so related to
particular real estate that an interest in them arises under any real estate
law applicable thereto.

"General Fund Account" shall mean the general fund account
established at the office of The Chase Manhattan Bank located at 270 Park
Avenue, New York, NY 10017, in the name of the Borrower, Account No. [ ].

"General Intangibles" shall mean all choses in action and
causes of action and all other assignable intangible personal property of any
Grantor of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under
leases, whether entered into as lessor or lessee, and other agreements),
Intellectual Property, goodwill, registrations, franchises, tax refund claims
and any letter of credit, guarantee, claim, security

<PAGE> 4

interest or other security held by or granted to any Grantor to secure payment
by an Account Debtor of any of the Accounts Receivable.

"Intellectual Property" shall mean all intellectual and
similar property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection with,
any of the foregoing.

"Inventory" shall mean all goods of any Grantor, whether now
owned or hereafter acquired, held for sale or lease, or furnished or to be
furnished by any Grantor under contracts of service, or consumed in any
Grantor's business, including all farm products and inventories of the
following types: (a) all hogs, pigs and swine ("Stock"), Stock in gestation,
Stock semen and Stock embryos, including all increase thereof, issue thereof
(including conceived but unborn young), and products thereof, including
processed pork, owned or held by the Grantor, now or hereafter existing,
including any of the foregoing that are returned to or repossessed by or on
behalf of any Grantor, and all accessions thereto, products thereof and
documents therefor and (b) all stores and supplies now owned or hereafter
acquired by any Grantor, including feed, seed, fertilizer, chemicals,
pesticides and all other such supplies used in any Grantor's operations.

"License" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any Grantor is a
party, including those listed on Schedule III (other than those license
agreements in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder).

"Lockbox and Depository Agreement" shall mean a Lockbox and
Depository Agreement substantially in the form of Annex 1 hereto among the
Borrower, the Collateral Agent and a Sub-Agent.

"Lockbox System" shall have the meaning assigned to such term
in Section 5.01.

"Obligations" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.

"Patent License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a Patent, now
or hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.

<PAGE> 5

"Patents" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and pending applications in the United
States Patent and Trademark Office or any similar offices in any other country,
including those listed on Schedule IV, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use
and/or sell the inventions disclosed or claimed therein.

"Payments" shall mean all payments under any governmental
subsidy, loan or payment programs, or the like, including all subsidy
deficiency, diversion, disaster and price support payments and each Grantor's
beneficial interest under any trust or letter of credit established for the
benefit of such Grantor (and others, if applicable) under any Federal or state
laws, Agricultural Commodities Act, the United States Warehouse Act and the
like.

"Perfection Certificate" shall mean a certificate
substantially in the form of Annex 2 hereto, completed and supplemented with
the schedules and attachments contemplated thereby, and duly executed by a
Financial Officer and the chief legal officer of the Borrower.

"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition of any asset or property
that constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include (a) all cash and negotiable
instruments received by or held on behalf of the Collateral Agent pursuant to
the Lockbox System, (b) any claim of any Grantor against any third party for
(and the right to sue and recover for and the rights to damages or profits due
or accrued arising out of or in connection with) (i) past, present or future
infringement of any Patent now or hereafter owned by any Grantor, or licensed
under a Patent License, (ii) past, present or future infringement or dilution
of any Trademark now or hereafter owned by any Grantor or licensed under a
Trademark License or injury to the goodwill associated with or symbolized by
any Trademark now or hereafter owned by any Grantor, (iii) past, present or
future breach of any License and (iv) past, present or future infringement of
any Copyright now or hereafter owned by any Grantor or licensed under a
Copyright License and (c) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.

"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) the
beneficiaries of each indemnification obligation undertaken by any Grantor
under any Loan Document and (f) the successors and assigns of each of the
foregoing.

"Security Interest" shall have the meaning assigned to such
term in Section 2.01.

"Sub-Agent" shall mean a financial institution that shall have
delivered to the Collateral Agent an executed Lockbox and Depository Agreement.

<PAGE> 6

"Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.

"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any similar
offices in any other country or any political subdivision thereof, and all
extensions or renewals thereof, including those listed on Schedule V, (b) all
goodwill associated therewith or symbolized thereby and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.

SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Section 1.02 of the Credit Agreement shall be
applicable to this Agreement.

ARTICLE II

Security Interest

SECTION 2.01. Security Interest. As security for the payment
or performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Collateral Agent, its successors and assigns,
for the ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in all of such Grantor's right, title and
interest in, to and under the Collateral (the "Security Interest"). Without
limiting the foregoing, the Collateral Agent is hereby authorized to file one
or more financing statements (including fixture filings), continuation
statements, filings with the United States Patent and Trademark Office or
United States Copyright Office (or any successor office or any similar office
in any other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted
by each Grantor, without the signature of any Grantor, and naming any Grantor
or the Grantors as debtors and the Collateral Agent as secured party.

SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.

<PAGE> 7

ARTICLE III

Representations and Warranties

The Grantors jointly and severally represent and warrant to
the Collateral Agent and the Secured Parties that:

SECTION 3.01. Title and Authority. Each Grantor has good and
valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval which has been obtained.

SECTION 3.02. Filings. (a) The Perfection Certificate has
been duly prepared, completed and executed and the information set forth
therein is correct and complete. Fully executed Uniform Commercial Code
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of
the Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and registrations
(other than filings required to be made in the United States Patent and
Trademark Office and the United States Copyright Office in order to perfect the
Security Interest in Collateral consisting of United States Patents, Trademarks
and Copyrights) that are necessary to publish notice of and protect the
validity of and to establish a legal, valid and perfected security interest in
favor of the Collateral Agent (for the ratable benefit of the Secured Parties)
in respect of all Collateral in which the Security Interest may be perfected by
filing, recording or registration in the United States (or any political
subdivision thereof) and its territories and possessions, and no further or
subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.

(b) Each Grantor shall ensure that fully executed security
agreements in the form hereof and containing a description of all Collateral
consisting of Intellectual Property shall have been received and recorded
within three months after the execution of this Agreement with respect to
United States Patents and United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and within one
month after the execution of this Agreement with respect to United States
registered Copyrights by the United States Patent and Trademark Office and the
United States Copyright Office pursuant to 35 U.S.C. Section 261, 15 U.S.C.
Section 1060 or 17 U.S.C. Section 205 and the regulations thereunder, as
applicable, and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction, to protect the validity of and to establish a legal,
valid and perfected security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all Collateral consisting
of Patents, Trademarks and Copyrights in which a security interest may be
perfected by filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and possessions, or in any
other necessary jurisdiction, and no further or subsequent

<PAGE> 8

filing, refiling, recording, rerecording, registration or reregistration is
necessary (other than such actions as are necessary to perfect the Security
Interest with respect to any Collateral consisting of Patents, Trademarks and
Copyrights (or registration or application for registration thereof) acquired
or developed after the date hereof).

SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
to the filings described in Section 3.02 above, a perfected security interest
in all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law in
such jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, within the three month
period (commencing as of the date hereof) pursuant to 35 U.S.C. Section 261
or 15 U.S.C. Section 1060 or the one month period (commencing as of the date
hereof) pursuant to 17 U.S.C. Section 205 and otherwise as may be required
pursuant to the laws of any other necessary jurisdiction. The Security
Interest is and shall be prior to any other Lien on any of the Collateral,
other than Liens expressly permitted to be prior to the Security Interest
pursuant to Section 6.02 of the Credit Agreement.

SECTION 3.04. Absence of Other Liens. The Collateral is
owned by the Grantors free and clear of any Lien, except for Liens expressly
permitted pursuant to Section 6.02 of the Credit Agreement. The Grantor has
not filed or consented to the filing of (a) any financing statement or
analogous document under the Uniform Commercial Code or any other applicable
laws covering any Collateral, (b) any assignment in which any Grantor assigns
any Collateral or any security agreement or similar instrument covering any
Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 6.02 of the Credit Agreement.

ARTICLE IV

Covenants

SECTION 4.01. Change of Name; Location of Collateral;
Records; Place of Business. (a) Each Grantor agrees promptly to notify the
Collateral Agent in writing of any change (i) in its corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains books
or records relating to Collateral owned by it or any office or facility at
which Collateral owned by it is located

<PAGE> 9

(including the establishment of any such new office or facility), (iii) in its
identity or corporate structure or (iv) in its Federal Taxpayer Identification
Number. Each Grantor agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Collateral
Agent to continue at all times following such change to have a valid, legal and
perfected first priority security interest in all the Collateral. Each Grantor
agrees promptly to notify the Collateral Agent if any material portion of the
Collateral owned or held by such Grantor is damaged or destroyed.

(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral
owned by it as is consistent with its current practices and in accordance with
such prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or schedules in form and detail
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral.

SECTION 4.02. Periodic Certification. Each year, at the time
of delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.04 of the Credit Agreement, the Borrower shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
and the chief legal officer of the Borrower (a) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming that
there has been no change in such information since the date of such certificate
or the date of the most recent certificate delivered pursuant to this Section
4.02 and (b) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less than 18
months after the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period). Each
certificate delivered pursuant to this Section 4.02 shall identify in the
format of Schedule II, III, IV or V, as applicable, all Intellectual Property
of any Grantor in existence on the date thereof and not then listed on such
Schedules or previously so identified to the Collateral Agent.

SECTION 4.03. Protection of Security. Each Grantor shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
not expressly permitted pursuant to Section 6.02 of the Credit Agreement.

SECTION 4.04. Further Assurances. Each Grantor agrees, at
its own expense, to execute, acknowledge, deliver and cause to be duly filed
all such further instruments and documents and take all such actions as the
Collateral Agent may from time to time reasonably

<PAGE> 10

request to better assure, preserve, protect and perfect the Security Interest
and the rights and remedies created hereby, including the payment of any fees
and taxes required in connection with the execution and delivery of this
Agreement, the granting of the Security Interest and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any promissory note
or other instrument, such note or instrument shall be immediately pledged and
delivered to the Collateral Agent, duly endorsed in a manner satisfactory to
the Collateral Agent.

Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III, IV or
V hereto or adding additional schedules hereto to specifically identify any
asset or item that may constitute Copyrights, Licenses, Patents or Trademarks;
provided, however, that any Grantor shall have the right, exercisable within 10
days after it has been notified by the Collateral Agent of the specific
identification of such Collateral, to advise the Collateral Agent in writing of
any inaccuracy of the representations and warranties made by such Grantor
hereunder with respect to such Collateral. Each Grantor agrees that it will
use its best efforts to take such action as shall be necessary in order that
all representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been notified
by the Collateral Agent of the specific identification of such Collateral.

SECTION 4.05. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may reasonably designate shall
have the right, at the Grantors' own cost and expense, to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantors' affairs with the officers of the Grantors and their
independent accountants and to verify under reasonable procedures, in
accordance with Section 5.11 of the Credit Agreement, the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or Collateral in the
possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a
verification. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party (it being understood that any such information shall be deemed to be
"Information" subject to the provisions of Section 9.16 of the Credit
Agreement).

SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and not permitted pursuant to Section 6.02 of the Credit
Agreement, and may pay for the maintenance and preservation of the Collateral
to the extent any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral

<PAGE> 11

Agent or any Secured Party to cure or perform, any covenants or other promises
of any Grantor with respect to taxes, assessments, charges, fees, liens,
security interests or other encumbrances and maintenance as set forth herein or
in the other Loan Documents.

SECTION 4.07. Assignment of Security Interest. If at any
time any Grantor shall take a security interest in any property of an Account
Debtor or any other person to secure payment and performance of an Account,
such Grantor shall promptly assign such security interest to the Collateral
Agent. Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other person granting the security
interest.

SECTION 4.08. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement
or instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Collateral Agent and the Secured Parties from and against
any and all liability for such performance.

SECTION 4.09. Use and Disposition of Collateral. None of the
Grantors shall make or permit to be made an assignment, pledge or hypothecation
of the Collateral or shall grant any other Lien in respect of the Collateral,
except as expressly permitted by Section 6.02 of the Credit Agreement. None of
the Grantors shall make or permit to be made any transfer of the Collateral and
each Grantor shall remain at all times in possession of the Collateral owned by
it, except that (a) Inventory and Hedging Contracts may be sold in the ordinary
course of business and (b) unless and until the Collateral Agent shall notify
the Grantors that an Event of Default shall have occurred and be continuing and
that during the continuance thereof the Grantors shall not sell, convey, lease,
assign, transfer or otherwise dispose of any Collateral (which notice may be
given by telephone if promptly confirmed in writing), the Grantors may use and
dispose of the Collateral in any lawful manner not inconsistent with the
provisions of this Agreement, the Credit Agreement or any other Loan Document.
Without limiting the generality of the foregoing, each Grantor agrees that it
shall not permit any Inventory to be in the possession or control of any
warehouseman, bailee, agent or processor at any time unless such warehouseman,
bailee, agent or processor shall have been notified of the Security Interest
and shall have agreed in writing to hold the Inventory subject to the Security
Interest and the instructions of the Collateral Agent and to waive and release
any Lien held by it with respect to such Inventory, whether arising by
operation of law or otherwise.

SECTION 4.10. Limitation on Modification of Accounts. None
of the Grantors will, without the Collateral Agent's prior written consent,
grant any extension of the time of payment of any of the Accounts Receivable,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged.

<PAGE> 12

SECTION 4.11. Insurance. The Grantors, at their own expense,
shall maintain or cause to be maintained insurance covering physical loss or
damage to the Inventory and Equipment in accordance with Section 5.02 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that any Grantor at any time or times shall fail to obtain or
maintain any of the policies of insurance required hereby or to pay any premium
in whole or part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Grantors hereunder or any Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Collateral Agent deems advisable. All sums disbursed by the Collateral Agent
in connection with this Section 4.11, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be payable,
upon demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.

SECTION 4.12. Legend. Each Grantor shall legend, in form and
manner satisfactory to the Collateral Agent, its Accounts Receivable and its
books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Collateral Agent for the benefit of the Secured Parties and
that the Collateral Agent has a security interest therein.

SECTION 4.13. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent that is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.

(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.

(c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.

<PAGE> 13

(d) Each Grantor shall notify the Collateral Agent
immediately if it knows or has reason to know that any Patent, Trademark or
Copyright material to the conduct of its business may become abandoned, lost or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.

(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United
States or in any other country or any political subdivision thereof, unless it
promptly informs the Collateral Agent, and, upon request of the Collateral
Agent, executes and delivers any and all agreements, instruments, documents and
papers as the Collateral Agent may request to evidence the Collateral Agent's
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Collateral Agent as its attorney-in-fact to execute and
file such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; such power, being coupled with an interest, is
irrevocable.

(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of Trademarks and Copyrights that is material to the conduct of
any Grantor's business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with good business judgment, to initiate opposition,
interference and cancellation proceedings against third parties.

(g) In the event that any Grantor has reason to believe that
any Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.

(h) Upon and during the continuance of an Event of Default,
each Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.

<PAGE> 14

ARTICLE V

Collections

SECTION 5.01. Lockbox System. (a) The Grantors have
established in the name of the Collateral Agent, and subject to the control of
the Collateral Agent pursuant to the Lockbox and Depository Agreements, for the
ratable benefit of the Collateral Agent and the other Secured Parties, a system
of lockboxes and related deposit accounts (the "Lockbox System") into which the
Proceeds of all Accounts Receivable and Inventory shall be deposited and
forwarded to the Collateral Agent in accordance with the Lockbox and Depository
Agreements.

(b) All Proceeds of Inventory and Accounts Receivable that
have been received on any Business Day through the Lockbox System will be
transferred into the Concentration Account on such Business Day to the extent
required by the applicable Lockbox and Depository Agreement. All Proceeds
stemming from the sale of a substantial portion of the Collateral (other than
Proceeds of Accounts) that have been received by a Grantor on any Business Day
will be transferred into the Concentration Account on such Business Day. All
Proceeds received on any Business Day by the Collateral Agent pursuant to
Section 5.02 will be transferred into the Concentration Account on such
Business Day.

(c) The Concentration Account is, and shall remain, under the
sole dominion and control of the Collateral Agent. Each Grantor acknowledges
and agrees that (i) such Grantor has no right of withdrawal from the
Concentration Account, (ii) the funds on deposit in the Concentration Account
shall continue to be collateral security for all of the Obligations and (iii)
upon the occurrence and during the continuance of an Event of Default, at the
Collateral Agent's election, the funds on deposit in the Concentration Account
shall be applied as provided in Section 6.02. So long as no Event of Default
has occurred and is continuing, the Collateral Agent shall promptly remit any
funds on deposit in the Concentration Account to the General Fund Account and
the Borrower shall have the right, at any time and from time to time, to
withdraw such amounts from the General Fund Account as it shall deem to be
necessary or desirable.

(d) Effective upon notice to the Grantors from the Collateral
Agent after the occurrence and during the continuance of an Event of Default
(which notice may be given by telephone if promptly confirmed in writing), the
Concentration Account will, without any further action on the part of any
Grantor, the Collateral Agent or any Sub-Agent, convert into a closed lockbox
account under the exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of the Collateral Agent hereunder.
Each Grantor irrevocably authorizes the Collateral Agent to notify each
Sub-Agent (i) of the occurrence of an Event of Default and (ii) of the matters
referred to in this paragraph (d). Following the occurrence of an Event of
Default, the Collateral Agent may instruct each Sub-Agent to transfer
immediately all funds held in each deposit account to the Concentration
Account.

SECTION 5.02. Collections. (a) Each Grantor agrees (i) to
notify and direct promptly each Account Debtor and every other person obligated
to make payments on Accounts

<PAGE> 15

Receivable or in respect of any Inventory to make all such payments directly to
the Lockbox System established in accordance with Section 5.01, (ii) to use all
reasonable efforts to cause each Account Debtor and every other person
identified in clause (i) above to make all payments with respect to Accounts
Receivable and Inventory directly to such Lockbox System and (iii) promptly to
deposit all payments received by it on account of Accounts Receivable and
Inventory, whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise, in the Lockbox System in precisely the
form in which received (but with any endorsements of such Grantor necessary for
deposit or collection), and until they are so deposited such payments shall be
held in trust by such Grantor for and as the property of the Collateral Agent.

(b) Without the prior written consent of the Collateral
Agent, no Grantor shall, in a manner adverse to the Lenders, change the general
instructions given to Account Debtors in respect of payment on Accounts to be
deposited in the Lockbox System. Until the Collateral Agent shall have advised
the Grantors to the contrary, each Grantor shall, and the Collateral Agent
hereby authorizes each Grantor to, enforce and collect all amounts owing on the
Inventory and Accounts Receivable, for the benefit and on behalf of the
Collateral Agent and the other Secured Parties; provided, however, that such
privilege may at the option of the Collateral Agent be terminated upon the
occurrence and during the continuance of any Event of Default.

SECTION 5.03. Power of Attorney. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all officers,
employees or agents designated by the Collateral Agent) as such Grantor's true
and lawful agent and attorney-in-fact, and in such capacity the Collateral
Agent shall have the right, with power of substitution for each Grantor and in
each Grantor's name or otherwise, for the use and benefit of the Collateral
Agent and the Secured Parties, upon the occurrence and during the continuance
of an Event of Default (a) to receive, endorse, assign and/or deliver any and
all notes, acceptances, checks, drafts, money orders or other evidences of
payment relating to the Collateral or any part thereof; (b) to demand, collect,
receive payment of, give receipt for and give discharges and releases of all or
any of the Collateral; (c) to sign the name of any Grantor on any invoice or
bill of lading relating to any of the Collateral; (d) to send verifications of
Accounts Receivable to any Account Debtor; (e) to commence and prosecute any
and all suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any of the
Collateral or to enforce any rights in respect of any Collateral; (f) to
settle, compromise, compound, adjust or defend any actions, suits or
proceedings relating to all or any of the Collateral; (g) to notify, or to
require any Grantor to notify, Account Debtors to make payment directly to the
Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Collateral Agent or any Secured Party to make any commitment or to make any
inquiry as to the nature or sufficiency of any payment received by the
Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby, and no action taken or omitted to be taken by the Collateral
Agent or any Secured Party with respect to the Collateral or any

<PAGE> 16

part thereof shall give rise to any defense, counterclaim or offset in favor of
any Grantor or to any claim or action against the Collateral Agent or any
Secured Party. It is understood and agreed that the appointment of the
Collateral Agent as the agent and attorney-in-fact of the Grantors for the
purposes set forth above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve any Grantor of any of its
obligations hereunder or under any other Loan Document with respect to the
Collateral or any part thereof or impose any obligation on the Collateral Agent
or any Secured Party to proceed in any particular manner with respect to the
Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right that it may
have on the date of this Agreement or hereafter, whether hereunder, under any
other Loan Document, by law or otherwise.

ARTICLE VI

Remedies

SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed
that the Collateral Agent shall have the right (to the extent permitted by law)
to take any of or all the following actions at the same or different times:
(a) with respect to any Collateral consisting of Intellectual Property, on
demand, to cause the Security Interest to become an assignment, transfer and
conveyance of any of or all such Collateral by the applicable Grantors to the
Collateral Agent, or to license or sublicense, whether general, special or
otherwise, and whether on an exclusive or non-exclusive basis, any such
Collateral throughout the world on such terms and conditions and in such manner
as the Collateral Agent shall determine (other than in violation of any
then-existing licensing arrangements to the extent that waivers cannot be
obtained), and (b) with or without legal process and with or without prior
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may
be located for the purpose of taking possession of or removing the Collateral
and, generally, to exercise any and all rights afforded to a secured party
under the Uniform Commercial Code or other applicable law. Without limiting
the generality of the foregoing, each Grantor agrees that the Collateral Agent
shall have the right, subject to the mandatory requirements of applicable law,
to sell or otherwise dispose of all or any part of the Collateral, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery as the Collateral Agent shall deem
appropriate. The Collateral Agent shall be authorized at any such sale (if it
deems it advisable to do so) to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Collateral Agent shall
have the right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale shall
hold the property sold absolutely, free from any claim or right on the part of
any Grantor, and each Grantor hereby waives (to the extent permitted by law)
all rights of redemption, stay and

<PAGE> 17

appraisal that such Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted.

The Collateral Agent shall give the Grantors 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale
at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice (if any) of such sale. At any such sale, the Collateral,
or a portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Collateral Agent may (in its sole and absolute
discretion) determine. The Collateral Agent shall not be obligated to make any
sale of any Collateral if it shall determine not to do so, regardless of the
fact that notice of sale of such Collateral shall have been given. The
Collateral Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may be sold again
upon like notice. At any public (or, to the extent permitted by law, private)
sale made pursuant to this Section, any Secured Party may bid for or purchase,
free (to the extent permitted by law) from any right of redemption, stay,
valuation or appraisal on the part of any Grantor (all said rights being also
hereby waived and released to the extent permitted by law), the Collateral or
any part thereof offered for sale and may make payment on account thereof by
using any claim then due and payable to such Secured Party from any Grantor as
a credit against the purchase price, and such Secured Party may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For purposes hereof, a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof; the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and no Grantor shall be entitled to the return
of the Collateral or any portion thereof subject thereto, notwithstanding the
fact that after the Collateral Agent shall have entered into such an agreement
all Events of Default shall have been remedied and the Obligations paid in
full. As an alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver.

<PAGE> 18

SECTION 6.02. Application of Proceeds. The Collateral Agent
shall apply the proceeds of any collection or sale of the Collateral, as well
as any Collateral consisting of cash, as follows:

FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the
reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or
under any other Loan Document on behalf of any Grantor and any other
costs or expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document;

THIRD, to the Grantors, their respective successors or assigns,
or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

SECTION 6.03. Grant of License to Use Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Article at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent an irrevocable, non-exclusive license
(exercisable without payment of royalty or other compensation to the Grantors)
to use, license or sub-license any of the Collateral consisting of Intellectual
Property now owned or hereafter acquired by such Grantor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof. The use of
such license by the Collateral Agent shall be exercised, at the option of the
Collateral Agent, upon the occurrence and during the continuation of an Event
of Default; provided that any license, sub-license or other transaction entered
into by the Collateral Agent in accordance herewith shall be binding upon the
Grantors notwithstanding any subsequent cure of an Event of Default.

<PAGE> 19

ARTICLE VII

Miscellaneous

SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement.

SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument relating to the foregoing, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (d) any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
Grantor in respect of the Obligations or this Agreement.

SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by any Grantor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the Secured Parties and shall survive the making by the Lenders of the Loans,
and the execution and delivery to the Lenders of any notes evidencing such
Loans, regardless of any investigation made by the Lenders or on their behalf,
and shall continue in full force and effect until this Agreement shall
terminate in accordance with Section 7.14.

SECTION 7.04. Binding Effect; Several Agreement. This
Agreement shall become effective as to any Grantor when a counterpart hereof
executed on behalf of such Grantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Grantor and the
Collateral Agent and their respective successors and assigns, and shall inure
to the benefit of such Grantor, the Collateral Agent and the other Secured
Parties and their respective successors and assigns, except that no Grantor
shall have the right to assign or transfer its rights or obligations hereunder
or any interest herein or in the Collateral (and any such assignment or
transfer shall be void) except as expressly contemplated by this Agreement or
the Credit Agreement. This Agreement shall be construed as a separate
agreement with respect to each Grantor and may be amended, modified,
supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.

SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and

<PAGE> 20

assigns of such party; and all covenants, promises and agreements by or on
behalf of any Grantor or the Collateral Agent that are contained in this
Agreement shall bind and inure to the benefit of their respective successors
and assigns.

SECTION 7.06. Collateral Agent's Fees and Expenses;
Indemnification. (a) Each Grantor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, that the Collateral Agent may incur in connection
with (i) the administration of this Agreement (including the customary fees and
charges of the Collateral Agent for any audits conducted by it or on its behalf
with respect to the Accounts Receivable or Inventory), (ii) the custody or
preservation of, or the sale of, collection from or other realization upon any
of the Collateral, (iii) the exercise, enforcement or protection of any of the
rights of the Collateral Agent hereunder or (iv) the failure of any Grantor to
perform or observe any of the provisions hereof.

(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Indemnitees against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
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.

(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby. The provisions of this Section 7.06
shall remain operative and in full force and effect regardless of the
termination of this Agreement or any other Loan Document, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document, or any investigation made by or on behalf of the
Collateral Agent or any Lender. All amounts due under this Section 7.06 shall
be payable on written demand therefor.

SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION 7.08. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the Collateral Agent, the Issuing Bank, the
Administrative Agent and the Lenders under

<PAGE> 21

the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Loan Document or consent to any departure by any Grantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on any Grantor in any case shall entitle such Grantor or any other
Grantor to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Grantor or Grantors with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.08 of the Credit Agreement.

SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.

SECTION 7.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 7.11 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract, and shall become
effective as provided in Section 7.04. Delivery of an executed signature page
to this Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.

SECTION 7.12. Headings. Article and Section headings used
herein are for the purpose of reference only, are not part of this Agreement
and are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

<PAGE> 22

SECTION 7.13. Jurisdiction; Consent to Service of Process.
(a) Each Grantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect
any right that the Collateral Agent, the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any Grantor or its
properties in the courts of any jurisdiction.

(b) Each Grantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

SECTION 7.14. Termination. This Agreement and the Security
Interest shall terminate when all the Obligations have been paid in full in
cash, the Lenders have no further commitment to lend, the L/C Exposure has been
reduced to zero and the Issuing Bank has no further commitment to issue Letters
of Credit under the Credit Agreement.

(b) Upon any sale or other transfer by any Grantor of any
Collateral that is permitted under the Credit Agreement, or upon the
effectiveness of any written consent to the release of the Security Interest in
any Collateral pursuant to Section 9.08(b) of the Credit Agreement, the
Security Interest in such Collateral shall be automatically released.

(c) In connection with any termination or release pursuant to
paragraphs (a) and (b) above, the Collateral Agent shall execute and deliver to
the Grantors, at the Grantors' expense, all Uniform Commercial Code termination
statements and similar documents that the Grantors shall reasonably request to
evidence such termination. Any execution and delivery of termination
statements or documents pursuant to this Section 7.14 shall be without recourse
to or warranty by the Collateral Agent.

SECTION 7.15. Additional Grantors. Pursuant to Section 5.12
of the Credit Agreement, each Subsidiary (other than any Inactive Subsidiary)
of the Borrower that was not

<PAGE> 23

in existence or not such a Subsidiary on the date of the Credit Agreement is
required to enter into the Security Agreement upon becoming such a Subsidiary
(or upon ceasing to be an Inactive Subsidiary). Upon execution and delivery by
the Collateral Agent and a Subsidiary of an instrument in the form of Annex 3
hereto, such Subsidiary shall become a Subsidiary Guarantor hereunder with the
same force and effect as if originally named as a Subsidiary Guarantor herein.
The execution and delivery of any such instrument shall not require the consent
of any Subsidiary Guarantor hereunder. The rights and obligations of each
Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

PSF HOLDINGS, L.L.C.,

by /s/ W.R. Patterson
-----------------------------------
Name: William R. Patterson
Title: Vice President

PREMIUM STANDARD FARMS, INC.,

by /s/ W.R. Patterson
-----------------------------------
Name: William R. Patterson
Title: Vice President

THE CHASE MANHATTAN BANK, as Collateral
Agent,

by /s/ Jonathan Insull
-----------------------------------
Name: Jonathan Insull
Title: Vice President

PRINCETON DEVELOPMENT CORP.

by /s/ W.R. Patterson
------------------------------------
Name: William R. Patterson
Title: Vice President

<PAGE> 1
EXHIBIT 10.20

BASIC SALE AND PURCHASE AGREEMENT

THIS AGREEMENT made and entered into on January 1, 1997 by and between Premium
Standard Farms, Inc., with its principal office at 423 West 8th Street, Suite
200, Kansas City, Missouri 64105 (hereinafter called the "PRODUCER") and
Marubeni America Corporation, with its branch office at the Amoco Building,
Suite 4838, 200 East Randolph Drive, Chicago, Illinois 60601 (hereinafter called
the "EXPORTER").

WITNESSETH

WHEREAS, the PRODUCER is engaged in, among other things, the business of
producing and selling chilled pork products from its Milan, Missouri processing
facility.

WHEREAS, the EXPORTER is engaged in, among other things, the business of
exporting various goods into the TERRITORY (as hereinafter defined) and desires
to export the PRODUCTS into the TERRITORY.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants (as hereinafter defined) and desires to export the PRODUCTS into the
TERRITORY.

ARTICLE 1. DEFINITIONS
1.1 When used in the AGREEMENT, the following terms shall have the following
respective meanings:
(a) "PRODUCTS" shall mean chilled and frozen pork (except pork offals)
produced by PRODUCER at its Milan, Missouri processing facility.
(b) "TERRITORY" shall mean Japan.

ARTICLE 2. APPOINTMENT
2.1 The PRODUCER hereby appoints the EXPORTER as its sole exporter to export
the PRODUCTS into the TERRITORY during the term of the AGREEMENT, and
the EXPORTER hereby accepts such appointment, all on terms and
conditions hereinafter set forth.
2.2 The PRODUCER agrees, that during the term of the AGREEMENT, it will
neither export or import into or sell the PRODUCTS in the TERRITORY
itself nor sell the PRODUCTS to any other party whom it knows or should
reasonably know intends to export or import into or sell the PRODUCTS in
the TERRITORY as chilled pork. The PRODUCER further agrees that, during
the term of the AGREEMENT, it will not take itself nor cause any third
party to take any action which may tend to damage, limit or circumscribe
the exclusive rights of the EXPORTER.

<PAGE> 2
ARTICLE 3. RELATIONSHIP

3.1 The relationship between the PRODUCER and the EXPORTER created hereby is
that of vendor and vendee only, and nothing contained in the AGREEMENT
shall be deemed or construed as constituting any party as an agent or
legal representative of any other party for purpose whatsoever, or as
conferring upon any party any right or authority to assume or create any
obligation or responsibility, expressed or implied, orally or in
writing, on behalf of or the name of any other party or to bind any
other party in any manner whatsoever.

ARTICLE 4. PRICES

4.1 The prices to the EXPORTER for the PRODUCTS shall, unless otherwise
agreed upon, be quoted in U.S. Dollars.
4.2 All duties and taxes applicable to or levied on the PRODUCTS sold to the
EXPORTER hereunder by the State of Missouri to the United States shall
be paid by PRODUCER and all other duties, tax, fees, tariff, assessments
and impositions of any kind imposed, levied or assessed by any person or
entity shall be paid by "EXPORTER".
4.3 The prices of the PRODUCTS shall be mutually agreed upon at the same
time of each sale and purchase transaction under ARTICLE 8 hereof.

ARTICLE 5. PAYMENT TERMS

5.1 Payment for the PRODUCTS by the EXPORTER to the PRODUCER shall be made
within fourteen days after the EXPORTER's receipt of original invoice,
original health certificate and original bill of lading of the PRODUCTS
destined for the TERRITORY.

ARTICLE 6. SHIPMENTS

6.1 The terms of shipment shall be FOB PRODUCER's Milan, Missouri plant,
unless otherwise agreed upon.

ARTICLE 7. MINIMUM VOLUMES

7.1 PRODUCER shall sell to EXPORTER and EXPORTER shall purchase from
PRODUCER the following volume of the PRODUCTS:
1997 4 loads per week
1998 8 loads per week
1999 12 loads per week
7.2 PRODUCTS purchased from PRODUCER by EXPLORER do not have to be shipped
to Japan, but will be included in the total weekly order weight.
<PAGE> 3
ARTICLE 8. INDIVIDUAL CONTRACTS
8.1 The detailed terms and conditions of each individual purchase of the
PRODUCTS hereunder by the EXPORTER from the PRODUCER shall be mutually
agreed upon at the time of such purchase and confirmed by such parties
in a "Confirmation of Purchase Contract" (the form of which is attached
hereto as EXHIBIT I and made an integral part hereof) to be issued by
the EXPORTER to the PRODUCER and countersigned and returned by the
PRODUCER.
8.2 Each such individual purchase contract between the PRODUCER and the
EXPORTER shall be deemed to incorporate all of the terms and conditions
hereof to the extent that they may be applicable and are not
inconsistent with the terms and conditions of said individual purchase
contract: provided, however, that the terms and conditions of the
AGREEMENT shall, in the event of a conflict, have precedence over those
on the reverse side of the "Confirmation of Purchase Contract".

ARTICLE 9. INSPECTION
9.1 At all times during the term of the AGREEMENT, the EXPORTER shall have
the right to dispatch its designated person(s) to inspect the quality of
the PRODUCTS and the PRODUCER shall accept and cooperate with such
inspector.
9.2 All products shall pass USDA inspection and approved procedures.
At the EXPORTER's request any time during the terms of this
AGREEMENT, the PRODUCER shall provide the EXPORTER with information in
respect of its examination system.

ARTICLE 10. TERM
10.1 This AGREEMENT shall, unless earlier terminated as provided herein,
expire on December 31, 1999 unless the parties shall, at least sixty
(60) days prior to the expiration date, mutually agree in writing to
extend the term.

ARTICLE 11. TERMINATION
11.1 Any party may forthwith terminate this AGREEMENT by notice to such
effect to the other parties if any other party commits a breach of term
and condition contained in this AGREEMENT and fails to remedy the same
within thirty (30) days after notice from the party(ies) not in breach
setting out the nature of such breach and demanding that the same be
remedied, provided however, any breach which may be cured by the payment
of money must be cured within ten (10) days after such notice from the
other party.
11.2 Any party may forthwith terminate this AGREEMENT by notice to such
effect to the other parties if bankruptcy, insolvency, or reorganization
proceedings, or any other proceedings analogous in nature or effect, are
instituted by or against any other party and is not dismissed within
ninety (90) days or if either party is dissolved or liquidated, whether
voluntarily or involuntarily, a receiver or trustee is appointed for all
or a substantial part of the assets of any other party or any other
party make an assignment for the benefit of creditors.

<PAGE> 4
ARTICLE 12. FORCE MAJEURE
12.1 No party shall be liable in any manner for failure to perform or delay
in performing all or any part of this AGREEMENT or of any individual
purchase contract entered into pursuant hereto which is directly or
indirectly due to any cause or circumstance beyond the control of such
party including, without limitation, acts of god, fire, flood storms,
earthquake, typhoon, tidal wave, plague or other epidemics, governmental
laws, orders, regulations, sanctions or restrictions, war (whether
declared or not), armed conflict or the serious threat of same,
hostilities, mobilization, blockade, embargo, detention, revolution,
riot, looting, lockout, strike or other labor dispute, unavailability of
transportation, unavailability or interruption of supplies of hog
packing materials or other supplies used by PRODUCER.

ARTICLE 13. GOVERNING LAW
13.1 This AGREMENT shall be governed by and construed in accordance with the
laws of the State of Missouri.

ARTICLE 14. ARBITRATION
14.1 All disputes, controversies or differences which may arise between the
parties hereto, out of, in relation to in connection with this AGREEMENT
or any individual sales contract entered into pursuant hereto, or for
the breach hereof of thereof, which cannot be resolved amicably by the
parties shall be finally settled by arbitration in Kansas City,
Missouri, pursuant to the commercial Arbitration Association or its
successor, by three (3) arbitrators to be selected in accordance with
said rules:
14.2 The award rendered therein shall be final and binding upon all the
parties.

ARTICLE 15. ENTIRE AGREEMENT
15.1 This AGREEMENT and any Confirmation of Purchase Contract entered into
pursuant hereto constitutes the entire agreement between the parties
hereto and wholly cancels, terminates and supersedes all previous
negotiations, agreements and commitments, whether formal or informal,
oral or written, with respect to the subject matter hereof.

ARTICLE 16. AMENDMENTS
16.1 This AGREEMENT shall not be amended, changed or modified in any manner
except by an instrument in writing signed by duly authorized
representative of each of the parties hereto.

<PAGE> 5
ARTICLE 17. ASSIGNMENT
17.1 This AGREEMENT shall be binding upon and shall insure to the benefit of
PRODUCER and EXPORTER and their respective successors and permitted
assigns.
17.2 No party shall assign, transfer or otherwise dispose of any its rights
or obligations under the AGREEMENT, in whole or in part, without the
prior written consent of the other parties.

ARTICLE 18. NO WAIVER
18.1 No failure to exercise or delaying exercising any right or remedy under
this AGREEMENT by any party shall operate as a waiver thereof or of any
other right or remedy which such party may have hereunder.
18.2 The rights and remedies provided herein are cumulative and not exclusive
of any rights and remedies provided by law, in equity or otherwise.

ARTICLE 19. SEVERABILITY
19.1 In the event that any provision or any portion of any provision of the
AGREEMENT is adjudged, by a court of competent jurisdiction, to be
invalid, illegal or unenforceable under the laws of the state of
Missouri, such provision or portion thereof shall be deemed to be
deleted from the AGREEMENT and the validity of the remainder of the
AGREEMENT shall remain unaffected thereby.

ARTICLE 20. NOTICES
20.1 All notices, requests or other communication required or permitted to be
given hereunder shall be writing in English language and shall be sent
by registered airmail letter, postage prepaid, or by telex or telefax
(with confirmation by registered airmail letter, postage prepaid) to the
other parties at their respective addresses set forth below or to such
other address as may from time to time be notified by any part to the
other parties in accordance with article 20.1:

If to the PRODUCER:
Premium Standard Farms, Inc.
423 West 8th Street, Suite 200
Kansas City, Missouri 64105

If to the EXPORTER:
Marubeni America Corporation
Amoco Building, Suite 4838
200 East Randolph Drive
Chicago, Illinois 60601

20.2 All notices shall be deemed to have been received when duly transmitted
by telefax, two (2) days after deposit if sent by U.S. airmail.

<PAGE> 6

ARTICLES 21. HEADINGS
21.1 The headings of the AGREEMENT are inserted for the convenience of
reference only and shall not affect the construction interpretation
hereof.

ARTICLE 22. COUNTERPARTS
22.1 This AGREEMENT may be executed in one or more counterparts each of which
shall be deemed as original, but all of which together shall constitute
one and the same instrument. IN WITNESS WHEREOF, the parties hereto
have caused this AGREEMENT to be executed by their respective, duly
authorized representatives as of the day and year first above written.

Premium Standard Farms, Inc.

By /s/ Robert W. Manley
-----------------------------------
Its President
-----------------------------------

Marubeni America Corporation

By /s/ Not Legible
-----------------------------------
Its Vice President and General Manager
-----------------------------------
<PAGE> 7
PRICE AGREEMENT

March 1, 1997, by and between Premium Standard Farms, Inc. and Marubeni America
Corporation, the parties hereto agree as follows:

PERIOD:
Beginning on March 1, 1997, and ending on December 31, 1997.

WEEKLY MINIMUM ORDER:
The EXPORTER agrees to purchase the following form the PRODUCER on a weekly
basis:
- 1 load of fresh boneless loin product priced on the formula basis
- 1 load of fresh boneless loin product priced on a negotiated basis
- 1 load of fresh or frozen boneless loin product priced on a negotiated
basis
- 1 load of fresh or frozen mixed product on a negotiated basis
- Beginning April 1, 1997 1 load of single ribbed bellies priced on a
negotiated basis
- Beginning June 16, 1997 one of the price negotiated loin product loads
will covert to formula priced load

PRICING:
All pricing is FOB Milan, Missouri, USA.

<TABLE>
<CAPTION>
Yields %
Item Adjustment CC Loin MM Loin JS Loin
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Loins Regular Fresh 14-18lbs. Plus $.19/lb. 100.0 100.0 100.0
<Credits>
Trimming 42% Fresh ________ 4.6 7.45 0.0
Trimming 72% Fresh ________ 17.8 17.8 16.56
Loin Backrib (combo) 1.75lbs-dn ________ 7.5 7.5 7.16
Tenderloin Plus $.20/lb. 4.2 4.3 4.0
Fat(1) ________ 1.65 3.3 1.56
Boneless Sirloin Fixed Price $1.25/lb. 5.5 5.5 5.5
Riblets Fixed Price $.30/lb. 1.5 1.5 1.5
Bones Fixed Price $.025/lb. 20.55 20.55 20.55
Cut Loss $.00/lb, .5 .5 .5

Total 63.8 68.3 57.35
Yield of Loin 36.2 31.7 42.65

</TABLE>

(1) Choice White Grease X .70 yield less .01/lb energy charge

Value = (Base Prices + Adjustments) X Yields

Processing Charge (Labor, Overhead, Packaging, etc.) - $.45/lb.
The Processing Charge may be adjusted annually to reflect increases or
decreases in labor or packaging.

Formula Price = (Value of Loin - Value of Credits Total)/Yield of Loin +
Processing Charge

Tenderloin Price = Weekly Average of the USDA Topside Close + $.20/lb.

Base price (except riblets, boneless sirloin, and bones) shall be the weekly
average of the USDA Top Side announced by the Department of Agriculture of the
United States in the preceding week of shipment of the PRODUCTS by the
PRODUCER.
<PAGE> 8
CEILING AND FLOOR PRICE:

The floor and ceiling price will be set on the USDA topside close week's prior
average on Loins Regular Fresh 14-18 lbs. as used in the above formula as the
input price. The ceiling price will be set at 1.30/lb and the floor will be set
at 1.10/lb. If the input price exceeds the ceiling price, the formula input
price will be calculated as the average of the higher price and the ceiling
price. If the input price is less than the floor price, the formula input price
will be calculated as the average of the lower price and the floor price. For
example, if the input price is 1.37/lb., the formula price will be 1.3350/lb.,
or if the input price is .945/lb., the formula price will be 1.0225/lb. If the
PRODUCER and EXPORTER agree, this may be adjusted on 4/20/97 and 8/29/97.

ORDER FOR PRODUCTION:
EXPORTER shall place order for production quantities to PRODUCER no later than
two Thursdays before the production week to be confirmed via facsimile.
Negotiated prices shall be confirmed with the Order for Production.

THE GUARANTEE OF QUANTITY FOR TENDERLOIN:

PRODUCER shall guarantee to ship a minimum of one boneless tenderloin for
every one boneless loin shipped to the EXPORTER.

March 1, 1997
Premium Standard Farms, Inc.

By /s/ Robert W. Manley
--------------------------
President and COO

Marubeni America Corporation

By /s/ Not Legible
--------------------------

<PAGE> 1
EXHIBIT 10.21

PREMIUM STANDARD FARMS, INC.
DIRECTOR EQUITY PLAN
FOR NON-EMPLOYEE DIRECTORS

1. ESTABLISHMENT; PURPOSES; EFFECTIVE DATE

(a) Establishment. Pursuant to the authorization previously granted by
the members of PSF Holdings, L.L.C., a Delaware limited liability company
("Holdings"), the Board of Directors of Premium Standard Farms, Inc., a
Delaware corporation ("Company"), a wholly-owned subsidiary of Holdings, hereby
establishes the Premium Standard Farms, Inc. Director Equity Plan for
Non-Employee Directors, for those directors of the Company who are neither
officers nor employees of the Company.

(b) Purposes. The purposes of the Plan are to enable the Company to
attract, retain and motivate the best-qualified directors and to enhance a
long-term mutuality of interest between the directors and the members of
Holdings.

2. DEFINITIONS

Unless the context requires otherwise, the following words as used in
the Plan shall have the meanings specified below:

(a) "Agreement" means the Limited Liability Company Agreement
of Holdings, as amended from time to time.

(b) "Annual Meeting" means an annual meeting of the Company.

(c) "Annual Retainer" means the aggregate amount of any annual retainer
fees that are payable from time to time by the Company to a Participant in cash
or as an Award (valued as provided in Section 6(a)) for any services to be
performed by the Participant as a member of the Board or any committee thereof,
but excludes any meeting fees for attending meetings of the Board or a Board
committee.

(d) "Award" means a grant of Units to a Participant pursuant to the Plan.

(e) "Board" means the Board of Directors of the Company.

(f) "Cash Fees" means the amount of any Annual Retainer that would, absent
an election pursuant to the terms of the Plan, be payable by the Company in
cash to a Participant for any services to be performed by the Participant as a
director.

April 28, 1997

<PAGE> 2

(g) "Change of Control" means such term as defined in Section 5(c).

(h) "Code" means the Internal Revenue Code of 1986, as amended.

(i) "Company" means Premium Standard Farms, Inc., a Delaware corporation.

(j) "Disability" means a mental or physical condition which, in the
judgment of the Board, renders a Participant unable to carry out his or her
responsibilities as a director of the Company, and which condition is expected
to be permanent or for an indefinite duration exceeding one year.

(k) "Fair Market Value" means "Fair Value" as that term is defined in the
Agreement.

(l) "Holdings" means PSF Holdings, L.L.C., a Delaware limited liability
company.

(m) "including" means including without limitation.

(n) "Participant" means a person who on the Effective Date is director of
the Company, but is not an employee of the Company.

(o) "Plan" means the Premium Standard Farms, Inc. Director Equity Plan for
Non-Employee Directors, as set forth herein and as may be amended from time to
time.

(p) "Unit" means a Class A Unit of Holdings.

3. ADMINISTRATION

(a) Rules; Interpretation; Determinations. The Plan is intended not to
require discretionary action with regard to any transaction under the Plan.
Subject to the provisions of the Plan, the Board has full authority to
interpret and administer the Plan, to establish, amend and rescind rules for
carrying out the Plan, to construe Awards, and to make all other determinations
and to take all other actions that it deems necessary or desirable for
administering the Plan; provided, however, that no such interpretation, rule or
determination shall change criteria for the determination of Participants in
the Plan, the amount or frequency of any Award that may be granted under the
Plan or the terms upon which the restrictions applicable to an Award may lapse.
Each determination, interpretation or other action made or taken by the Board
shall be final and binding for all purposes and upon all persons. The Board may
delegate any or all of its powers and functions under the Plan (other than the
power to amend the Plan pursuant to Section 9(b)) to a committee of the Board.

(b) Agents; Expenses. The Board may appoint agents (who may be employees
of the Company) to assist in the administration of the Plan, and may authorize
such persons to execute

2 April 28, 1997

<PAGE> 3

agreements or other documents on its behalf. All expenses incurred in the
administration of the Plan shall be paid by the Company.

4. UNITS; ADJUSTMENT UPON CERTAIN EVENTS

(a) Units. The aggregate number of Units that may be issued under the
Plan shall not exceed 50,000. Any Units that are subject to an Award and which
are forfeited shall not be available for use under the Plan.

(b) Certain Adjustments. In the event of a division of Holding's Units, the
payment of a distribution to members of Holdings in Units, the combination
of Units (e.g., the limited liability company equivalents of a stock split,
stock dividend or reverse stock split), or the recapitalization or other change
in Holding's Units or capital structure, the Board will appropriately adjust
the aggregate number of Units available for Awards under Section 4(a). No
fractional Units shall be issued in connection with any such adjustment.
Whenever a fractional Unit would otherwise be required to be issued, an amount
in lieu thereof shall be paid in cash based upon the Fair Market Value of such
fractional Unit. The Board's determination shall be conclusive.

5. TERMS OF AWARDS

(a) Automatic Grants. Each Participant shall be granted 1667 unrestricted
Units on the Effective Date.

(b) Grants to Electing Participants. Each Participant who elects, as set
forth in Article 6, to forego a portion of his Annual Retainer for a period of
years shall automatically be granted an Award of 2500 restricted Units
immediately following the 1997 Annual Meeting, provided that he consents to be
bound by the terms of the Agreement.

(c) Restrictions. Except as otherwise provided in the Plan, restricted
Units received pursuant to an Award may not be sold, assigned, pledged, or
otherwise transferred until such Units have become vested pursuant to Section
5(c). Unrestricted Units and restricted Units that have become vested and
unrestricted shall nevertheless remain subject to the terms of the Agreement.

(d) Vesting.

(i) Vesting over time. An additional 833 of the restricted Units shall
vest and become unrestricted Units immediately following each of the Company's
1998 and 1999 Annual Meetings, provided that the Participant is elected a
director of the Company at each such Annual Meeting. The final 834 restricted
Units shall vest and become unrestricted immediately following the Company's
2000 Annual Meeting, provided the Participant is elected a director of the
Company at such Annual Meeting.

3 April 28, 1997

<PAGE> 4

(ii) Accelerated vesting. Notwithstanding Section 5(d)(i), all restricted
Units shall vest and become unrestricted upon the earliest of (i) the
Participant's death or Disability, or (ii) a Change of Control. For purposes
of this provision, a "Change of Control" shall mean:

(A) A consolidation, merger or similar transaction involving the
Company which has one or more of the following results: (i) the Company is not
the surviving entity; (ii) there is a sale or transfer of all or substantially
all of the Company's assets; or (iii) the Company is dissolved or liquidated;
or

(B) A consolidation, merger or similar transaction involving Holdings
which has one or more of the following results: (i) Holdings is not the
surviving entity; (ii) an Acquiring Entity acquires a majority amount or more
of Holdings' Units, as defined in the Plan; (iii) there is a sale or transfer
of all or substantially all of Holdings' assets; or (iv) Holdings is dissolved
or liquidated.

(C) The provisions of (A) and (B) above notwithstanding, it is not
the intent of the Company to include within the definition of "Change of
Control" changes in the ownership of the Company and/or Holdings which are
occasioned by the transfer or sale of Units and/or Company common stock to one
or more parties who acquire the Units and/or Company common stock for purposes
of maintaining a passive investment in the Company and/or Holdings. For these
reasons, the parties agree that the Board reserves the authority to determine,
in good faith, and in its sole discretion, whether the occurrence of a
particular event (such as the sale of Units and/or Company common stock to an
affiliate, a current investor, or another third-party passive investor) falls
within the definition of a "Change of Control" for purposes of this Agreement;
provided that any such determination shall be consistent with any similar
determination under the employment agreement of any employee of the Company.

(e) Termination as a director. If, for any reason other than the
Participant's death or Disability or as part of a Change of Control as
described in part (A)(ii) of the Change of Control, a Participant's service as
a director terminates at any time before the restrictions applicable to an
Award have lapsed pursuant to Section 5(d), then the unvested portion of such
Award shall be forfeited.

(f) Rights as a Member. Subject to the provisions of the Plan, an Award
shall entitle the grantee thereof to all of the voting, dividend, liquidation
and other rights of a holder of Units with respect to the Units subject to such
Award.

(g) Certificate Legend. If the Units shall be certificated, there shall
be placed a legend on the certificates for the Units issued pursuant to each
Award referring to the restrictions imposed in the Plan.

4 April 28, 1997

<PAGE> 5

6. ELECTION OF RESTRICTED UNITS

(a) Election. No later than the Effective Date, a Participant may elect
to forego receipt of the lesser of $10,000 of the Cash Fees or 50% of the Cash
Fees payable in respect of each of the annual terms following the 1998, 1999
and 2000 Annual Meetings.

(b) Form of election. An election under Section 6(a) shall be made by
written notice filed with the Secretary of the Company. Such election shall be
irrevocable.

7. NONTRANSFERABILITY OF AWARDS

No Award shall be transferable by the Participant otherwise than by will,
under the applicable laws of descent and distribution, or to a beneficiary
designated by the Participant in a written notice delivered to the Company. In
addition, no Award shall be assigned, negotiated, or pledged in any way
(whether by operation of law or otherwise), and no Award shall be subject to
execution, attachment or similar process.

8. TERMINATION AND AMENDMENT

(a) The Plan shall terminate immediately following the 2000 Annual
Meeting, unless sooner terminated pursuant to paragraph (b) below. No Award
shall be granted under the Plan after the Plan is terminated, provided that any
Awards then outstanding shall remain subject to Section 5.

(b) The Board at any time or from time to time may amend or terminate the
Plan without the approval of the members of Holdings; provided that no
termination, amendment or modification of the Plan may, without the consent of
a Participant, impair the rights and obligations of such Participant arising
under any then-outstanding Award.

9. GENERAL PROVISIONS

(a) No Right to Remain as a Director. The existence of Plan shall not
obligate the Company to retain any Participant as a director nor shall it
obligate any Participant to remain as a director of the Company; provided that,
by accepting any Award, a Participant shall represent to the Company that it is
the Participant's good faith intention to continue to serve as a director of
the Company until the next Annual Meeting.

(b) Investment Representation; Registration. If the Board determines that
the law so requires, the holder of an Award shall, upon the grant of the Award,
execute and deliver to Holdings a written statement, in form satisfactory to
Holdings, representing and warranting that he or she is purchasing or accepting
the Units then acquired for his or her own account and not with a view to the
resale or distribution thereof, that any subsequent offer for sale or sale of
any such Units shall be made either pursuant to (i) an effective registration
statement under the Securities Act of 1933, as amended, or (ii) an exemption
from the registration requirements of

5 April 28, 1997

<PAGE> 6

such Act, as provided in a favorable written opinion from counsel approved by
Holdings as to the availability of such exemption.

(c) No Right to Specific Assets. Nothing contained in the Plan and no
action taken pursuant to the Plan (including the grant of any Award) shall
create a trust of any kind or any fiduciary relationship between the Company or
Holdings and any Participant, the executor, administrator or other personal
representative or designated beneficiary of such Participant, or any other
persons.

(d) Non-Exclusivity. The adoption of the Plan shall not limit the power
of the Board to adopt any other incentive arrangements it may deem desirable
otherwise than under the Plan.

(e) Legends. Any certificates for Units issued pursuant to the Plan shall
bear such legend or legends as Holdings, in its discretion, determines to be
necessary or appropriate to prevent a violation of, or to perfect an exemption
from, the registration requirements of the Securities Act of 1933, as amended.

(f) Necessary Approvals. If at any time the Board shall determine in its
discretion that the listing, registration or qualification of the Units covered
by the Plan upon any national securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the sale of
Units under the Plan, no Units will be delivered unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided for, free of any conditions not acceptable to
the Board.

(g) Withholding Taxes. The Company and Holdings shall have the right to
make such provisions as it deems necessary or appropriate to satisfy any
obligations it may have to withhold federal, state or local income or other
taxes in connection with the grant of, or lapse of restrictions applicable to,
any Award. In lieu thereof, the Company and Holdings shall have the right to
withhold the amount of such taxes from any other sums due or to become due from
the Company or Holdings to the Participant upon such terms and conditions as
the Board may prescribe. In the event a Participant makes an election under
Section 83(b) of the Code within 30 days of the grant of an Award, such
Participant shall simultaneously with the making of such election, notify the
Company and Holdings of having made such election.

(h) Severability. If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or
part of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.

(i) Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.

6 April 28, 1997

<PAGE> 7

(j) Controlling Law. The Plan shall be construed and enforced according to
the laws of the State of Delaware, excluding the conflict of laws principles
thereof.

7 April 28, 1997

<PAGE> 1

EXHIBIT 11.1

COMPUTATION OF PER UNIT EARNINGS

Predecessor The Company
------------------------------------------------------------------- ------------------------------
Period from Period from Pro Forma
January 1, 1996 September 17, 1996 Year Ended
Year Ended December 31, to September 16, to December 31, December 31,
-------------------------------------------------
1992 1993 1994 1995 1996 1996 1996
------------------------------------------------------------------- ------------------------------
(Dollars in thousands, except per unit amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Primary and Fully Diluted:
Weighted average number
of common units
outstanding
during period 5,714,286 5,714,286 6,507,734 10,229,878 10,405,037 10,000,000 10,000,000
Incremental units for
effect of dilutive
options and warrants -(1) -(1) -(1) -(1) -(1) -(2) -(2)
----------------------------------------------------------------------- ---------------------------
Weighted average common
units outstanding 5,714,286 5,714,286 6,507,734 10,229,878 10,405,037 10,000,000 10,000,000
======================================================================= ===========================

Income (loss) before
extraordinary items,
adjusted for accretion
of preferred limited
partnership interests
for periods prior to
September 16, 1996 $(6,245) $(20,841) $(58,933) $(110,159) $(211,610) $10,456 $21,424
======================================================================= ===========================

Net income (loss)
attributable to
common members or
partners $(6,245) $(20,841) $(58,933) $(119,812) $ 38,857 $10,456 $21,424
======================================================================= ===========================

Per common unit:
Net income (loss) before
extraordinary items $ (1.09) $ (3.65) $ (9.06) $ (10.77) $ (20.34) $ 1.05 $ 2.14
Net income (loss) $ (1.09) $ (3.65) $ (9.06) $ (11.71) $ 3.73 $ 1.05 $ 2.14

</TABLE>

(1) No incremental units since antidilutive for all loss periods or, in the
case of net income for the period ended September 16, 1996, no dilution
since options were canceled in connection with 1996 Reorganizations.

(2) No active trading market exists for the Company's membership units; however,
based on management's estimated fair market value of the units, dilution
would be less than 3%.

<PAGE> 1
EXHIBIT 12.1

COMPUTATION OF RATIO OR DEFICIENCY OF EARNINGS TO FIXED CHARGES

<S> <C> <C> <C> <C> <C>
Predecessor
----------------------------------------------------------
Period from
January 1, 1996
------------------------------------------- to September 16,
1992 1993 1994 1995 1996
-----------------------------------------------------------
(Dollars in thousands)
Earnings (loss) before fixed charges:
Income (loss) before reorganization
items, income taxes and extraordinary
items $(5,645) $(15,262) $(51,655) $(101,517) $(16,234)
Add:
Interest Expense 1,487 13,200 36,051 61,676 32,252
Estimated portion of rental expense
attributable to interest 13 71 218 445 241
-----------------------------------------------------------
(4,145) (1,991) (15,386) (39,396) 16,259

Fixed Charges:
Interest, including portion capitalized 1,880 15,024 41,951 62,928 32,252
Accretion of redeemable preferred
limited partnership interests 430 5,030 5,853 6,117 4,545
Rental expense attributable to interest 13 70 218 445 241
-----------------------------------------------------------
Total Fixed Charges 2,323 20,124 48,022 69,490 37,038
-----------------------------------------------------------
Excess (deficiency) of earnings to fixed
charges $(6,468) $(22,115) $(63,408) $(108,886) $(20,779)
===========================================================
Ratio of earnings to fixed charges N/A N/A N/A N/A N/A
===========================================================
</TABLE>

<S> <C> <C>
The Company
-------------------------------------------------------------
Peroid from Pro Forma
September 17,1996 Year Ended
to December 31, December 31,
1996 1996
--------------------------------------------------------------
Earnings (loss) before fixed charges:
Income (loss) before reorganization
items, income taxes and extraordinary
items $17,421 $35,708
Add:
Interest Expense 4,628 18,113
Estimated portion of rental expense
attributable to interest 78 318
-----------------------------------------------------------
22,127 54,139
Fixed charges:
Interest, including portion capitalized 4,628 18,113
Accretion of redeemable preferred
limited partnership interests - -
Rental expense attributable to interest 78 318
-----------------------------------------------------------
Total Fixed Charges 4,706 18,431
-----------------------------------------------------------
Excess (deficiency) of earnings to fixed
charges $17,421 $35,708
===========================================================
Ratio of earnings to fixed charges 4.70 2.94
===========================================================

</TABLE>

<PAGE> 1
EXHIBIT 21.1

SUBSIDIARIES OF THE COMPANY
---------------------------

Subsidiaries of PSF Holdings, L.L.C.
- ------------------------------------
Premium Standard Farms, Inc.

Subsidiaries of Premium Standard Farms, Inc.
- --------------------------------------------
Princeton Development Corp.
High Plains Ranch, Inc.

Subsidiaries of Princeton Development Corp.
- -------------------------------------------
None

<PAGE> 1
EXHIBIT 23.1

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 14, 1997, in the Registration Statement (Form
S-1) and related Prospectus of PSF Holdings, L.L.C., Premium Standard Farms,
Inc., and Princeton Development Corp. for the registration of LLC Units,
Warrants to Purchase LLC Units, and 11% Senior Secured Notes.

ERNST & YOUNG LLP

Des Moines, Iowa
April 24, 1997

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN THE S-1 REGISTRATION STATEMENT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001037967
<NAME> 2#cedhjb
<MULTIPLIER> 1

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> SEP-17-1996
<PERIOD-END> DEC-28-1996
<CASH> 18,116,777
<SECURITIES> 0
<RECEIVABLES> 11,599,398
<ALLOWANCES> 252,000
<INVENTORY> 68,802,041
<CURRENT-ASSETS> 101,736,787
<PP&E> 188,669,088
<DEPRECIATION> 3,057,837
<TOTAL-ASSETS> 305,498,731
<CURRENT-LIABILITIES> 20,550,102
<BONDS> 149,419,345
0
0
<COMMON> 125,073,000
<OTHER-SE> 10,456,283
<TOTAL-LIABILITY-AND-EQUITY> 305,498,731
<SALES> 91,233,170
<TOTAL-REVENUES> 91,233,170
<CGS> 65,314,947
<TOTAL-COSTS> 69,432,003
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,982
<INTEREST-EXPENSE> 4,627,824
<INCOME-PRETAX> 17,421,283
<INCOME-TAX> 6,965,000
<INCOME-CONTINUING> 10,456,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,456,283
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-START> SEP-17-1996
<PERIOD-END> DEC-28-1996
<CASH> 18,116,777
<SECURITIES> 0
<RECEIVABLES> 11,599,398
<ALLOWANCES> 252,000
<INVENTORY> 68,802,041
<CURRENT-ASSETS> 101,736,787
<PP&E> 188,889,088
<DEPRECIATION> 3,057,837
<TOTAL-ASSETS> 305,498,731
<CURRENT-LIABILITIES> 20,550,102
<BONDS> 149,419,345
0
0
<COMMON> 125,073,000
<OTHER-SE> 10,458,283
<TOTAL-LIABILITY-AND-EQUITY> 305,498,731
<SALES> 91,233,170
<TOTAL-REVENUES> 91,233,170
<CGS> 65,314,947
<TOTAL-COSTS> 69,432,003
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,982
<INTEREST-EXPENSE> 4,627,824
<INCOME-PRETAX> 17,421,283
<INCOME-TAX> 6,965,000
<INCOME-CONTINUING> 10,456,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,456,283
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 0

</TABLE>