GRIST MILL CO, SC 13D, 1998-04-02

GRIST MILL CO
SC 13D, 1998-04-02
SUGAR & CONFECTIONERY PRODUCTS

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<PAGE> 1

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934

GRIST MILL CO.
(Name of Issuer)

COMMON STOCK, $0.10 PAR VALUE
(Title of Class of Securities)

398629204
(CUSIP Number)

M. KELLEY MAGGS
INTERNATIONAL HOME FOODS, INC.
1633 LITTLETON ROAD
PARSIPPANY, NEW JERSEY 07054
(973) 359-9920

(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)

Copy to:

A. WINSTON OXLEY
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201
(214) 220-7891

MARCH 10, 1998
(Date of Event which Requires Filing of this Statement on Schedule 13D)

================================================================================
<PAGE> 2
CUSIP NO. 398629204 Schedule 13D Page 2 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IHF/GM Acquisition Corporation
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2
(b) [ ]

- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 BK and AF
- -------------------------------------------------------------------------

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
5 [ ]
- -------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 State of Delaware
- -------------------------------------------------------------------------

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 CO
- -------------------------------------------------------------------------
</TABLE>

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 3
CUSIP NO. 398629204 Schedule 13D Page 3 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
IHF/GM Holding Corporation
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2
(b) [ ]

11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 CO
- -------------------------------------------------------------------------
</TABLE>

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 4
CUSIP NO. 398629204 Schedules 13D Page 4 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
International Home Foods, Inc.
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2
(b) [ ]

- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 BK
- -------------------------------------------------------------------------

Number of Shares 7 SOLE VOTING POWER
648,899
Beneficially Owned -----------------------------------------------------
8 SHARED VOTING POWER
by Each Reporting 0
-----------------------------------------------------
Person With 9 SOLE DISPOSITIVE POWER
648,899
-----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
-----------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 CO
- -------------------------------------------------------------------------
</TABLE>

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 5
CUSIP NO. 398629204 Schedules 13D Page 5 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hicks, Muse, Tate & Furst Equity Fund III, L.P.
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2 (b) [ ]
- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 AF
- -------------------------------------------------------------------------

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 PN
- -------------------------------------------------------------------------
</TABLE>

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 6
CUSIP NO. 398629204 Schedules 13D Page 6 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
HM3/GP Partners, L.P.
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2 (b) [ ]
- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 AF
- -------------------------------------------------------------------------

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
5 [ ]
- -------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 State of Texas
- -------------------------------------------------------------------------

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 PN
- -------------------------------------------------------------------------
</TABLE>

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 7
CUSIP NO. 398629204 Schedules 13D Page 7 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hicks, Muse GP Partners III, L.P.
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2 (b) [ ]
- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 AF
- -------------------------------------------------------------------------

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
5 [ ]
- -------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 State of Texas
- -------------------------------------------------------------------------

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 PN
- -------------------------------------------------------------------------
</TABLE>

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 8
CUSIP NO. 398629204 Schedules 13D Page 8 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Hicks, Muse Fund III, Incorporated
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2 (b) [ ]
- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 AF
- -------------------------------------------------------------------------

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
5 [ ]
- -------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 State of Texas
- -------------------------------------------------------------------------

* On March 10, 1998, IHF/GM Holding Corporation, a Delaware corporation
("Parent"), and IHF/GM Acquisition Corporation, a Delaware corporation
("Purchaser"), a direct wholly owned subsidiary of Parent and an indirect
wholly owned subsidiary of International Home Foods, Inc., a Delaware
corporation ("IHF"), entered into a Stockholder Agreement (the "Stockholder
Agreement") with Grist Mill Co., a Delaware corporation (the "Company"), and
Glen S. Bolander (the "Selling Stockholder"), pursuant to which the Selling
Stockholder (i) agreed to tender into the Offer (as defined herein) an
aggregate of 403,899 shares of the Company's common stock ("Common Stock"),
par value $0.10 per share, including the associated stock purchase rights (the
"Rights," and together with the shares of Common Stock, the "Shares"), (ii)
granted to Purchaser an option (exercisable under certain circumstances as
provided in the Stockholder Agreement) to purchase up to an aggregate of
245,000 shares of Common Stock, consisting of certain shares of Common Stock
to be beneficially owned by the Selling Stockholder as a result of such
individual's exercise of certain options to purchase shares of Common Stock,
and (iii) granted to Parent an irrevocable proxy to vote such shares of Common
Stock, in each event prior to any termination of the Merger Agreement (as
defined herein). In addition, pursuant to the Agreement and Plan of Merger
(the "Merger Agreement"), dated as of March 10, 1998, among Purchaser, Parent,
IHF and the Company, the Company granted to Purchaser an irrevocable option
(exercisable under certain circumstances as provided in the Merger Agreement)
to purchase an indeterminate number of shares of Common Stock equal to the
Applicable Common Share Amount (as defined in the Merger Agreement). Each of
the Stockholder Agreement and the Merger Agreement is attached as an exhibit
hereto.
<PAGE> 9
CUSIP NO. 398629204 Schedules 13D Page 9 of 16 Pages

<TABLE>
<C> <S>
- -------------------------------------------------------------------------

NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Thomas O. Hicks
- -------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
2 (b) [ ]
- -------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------
SOURCE OF FUNDS
4 AF
- -------------------------------------------------------------------------

CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
5 [ ]
- -------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6 United States of America
- -------------------------------------------------------------------------

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
11 PERSON
648,899*
- -------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
12 [ ]
- -------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13 9.1%
- -------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14 IN
- -------------------------------------------------------------------------
</TABLE>

PRELIMINARY NOTE

This Schedule 13D contains information previously filed with the United
States Securities and Exchange Commission (the "Commission") on March 17, 1998
in a joint Schedule 13D/14D-1 filing. At the request of the staff of the
Commission, the Schedule 13D is being refiled on a stand alone basis.

ITEM 1. SECURITY AND ISSUER.

The class of equity securities to which this statement on Schedule 13D
relates is the common stock, par value $0.10 per share (the "Common Stock"), of
Grist Mill Co., a Delaware corporation (the "Company"). The address of the
Company's principal executive offices is 21340 Hayes Avenue, Lakeville,
Minnesota 55044-0430.

ITEM 2. IDENTITY AND BACKGROUND.

(a) through (l)

This Schedule 13D is being filed by IHF/GM Acquisition Corporation, a
Delaware corporation ("Purchaser"), IHF/GM Holding Corporation, a Delaware
corporation ("Parent"), International Home Foods, Inc., a Delaware corporation
("IHF"), Hicks, Muse, Tate & Furst Equity Fund III, L.P., a Delaware limited
partnership ("Fund III"), HM3/GP Partners, L.P., a Texas limited partnership
("HM3/GP Partners"), Hicks, Muse GP Partners III, L.P., a Texas limited
partnership ("Hicks, Muse GP Partners III"), Hicks, Muse Fund III,
Incorporated, a Texas corporation ("Fund III Inc."), and Thomas O. Hicks, a
United States citizen. Purchaser, Parent, IHF, Fund III, HM3/GP Partners,
Hicks, Muse GP Partners III, Fund III Inc. and Mr. Hicks are collectively
referred to herein as the "Reporting Persons".

Purchaser is a wholly-owned subsidiary of Parent. Parent is a
wholly-owned subsidiary of IHF. The principal business address of each of
Purchaser, Parent and IHF is 1633 Littleton Road, Parsippany, New Jersey, 07054.
Purchaser and Parent are corporations newly formed by IHF to implement the
acquisition of the Company (see Item 4). IHF's principal business is the
manufacturing and marketing of shelf stable food products.

Fund III holds a majority of the outstanding shares of common stock of
IHF. HM3/GP Partners is the general partner of Fund III. Hicks, Muse GP
Partners III is the general partner of HM3/GP Partners. Fund III Inc. is the
general partner of Hicks, Muse GP Partner III. Mr. Hicks is a controlling
person, the Chairman of the Board and Chief Executive Officer of Fund III Inc.
Mr. Hicks is the Chairman and Chief Executive Officer of Hicks, Muse, Tate &
Furst Incorporated ("HMT&F"), a private investment firm specializing in
acquisitions, recapitalizations and other principal investing activities. Fund
III, HM3/GP Partner, Hicks, Muse GP Partners III and Fund III Inc. are entities
utilized by HMT&F in connection with its investing activities. The principal

<PAGE> 11
Page 11 of 16 Pages

business address of each of Fund III, HM3/GP Partners, Hicks, Muse GP Partner
III, Fund III Inc., and Mr. Hicks is 200 Crescent Court, Suite 1600, Dallas,
Texas 75201.

None of Purchaser, Parent, IHF, Fund III, HM3/GP Partners, Hicks, Muse GP
Partners III, Fund III Inc. or Mr. Hicks 01, to their knowledge, any of the
persons listed on Schedule I hereto, during the last five years, has (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been party to a civil proceeding as a result of which such
person was or is subject to a judgement, decree of final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.

The information included on Schedule 1 hereto is incorporated herein by
reference.

ITEM 3. SOURCES AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

The securities to which this initial Schedule 13D relates were not
acquired by purchase. In connection with the Acquisition (as defined in Item
4), on March 10, 1998, Purchaser, Parent, the Company and Glen Bolander (the
"Selling Stockholder") entered into a Stockholder Agreement (the "Stockholder
Agreement") pursuant to which the Selling Stockholder (i) agreed to tender into
the Offer (as defined in Item 4) an aggregate of 403,899 Shares (as defined in
Item 4), (ii) granted to Purchaser an option (exercisable in certain
circumstances) to purchase up to an aggregate of 245,000 Shares, consisting of
Shares to be beneficially owned by the Selling Stockholder as a result of his
exercise of certain options to purchase Shares and (iii) granted to Parent an
irrevocable proxy to vote such Shares (the matters set forth in the preceding
clauses (i), (ii) and (iii) are referred to herein as the "Selling Stockholder
Arrangements"). In addition, pursuant to the terms of the Merger Agreement (as
defined in Item 4) , the Company granted Purchaser an irrevocable option
(exercisable under certain circumstances) to purchase an indeterminate number of
shares of Common Stock (the "Company Option").

The total amount of funds required by Purchaser to finance the Acquisition,
together fees, expenses and related matters, is estimated to be approximately
$109 million. Purchaser intends to obtain all such funds required to consummate
the Acquisition through capital contributions provided by IHF from borrowings
under the Credit Agreement, dated as of November 1, 1996, as amended and
restated as of November 21, 1997, among IHF, the several banks and other
financial institutions or entities from time to time parties thereto, Morgan
Stanley Senior Fundings, Inc., as documentation agent, Bankers Trust Company,
as syndication agent, and The Chase Manhattan Bank, as administrative agent
(the "Financing Facility"). It is a condition to the obligations of Purchaser
to consummate the Acquisition that Parent, through IHF, shall have received the
debt financing necessary therefor. As of the date of the Merger Agreement, (i)
there is sufficient capacity under the Financing Facility to fund consummation
of the Acquisition and (ii) none of Purchaser, Parent or IHF is aware of any
facts or circumstances that form a reasonable basis for Purchaser, Parent to IHF
to believe that IHF will not be able to obtain the funds needed to consummate
the Acquisition under the Financing Facility.

ITEM 4. PURPOSE OF THE TRANSACTION.

(a) and (b)

On March 10, 1998, Purchaser, Parent, IHF and the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which IHF
(through Parent), Parent (through Purchaser) and Purchaser are to acquire (the
"Acquisition") all of the outstanding shares of Common Stock, including the
associated rights (the "Rights") to purchase shares of Common Stock issued
pursuant to the Rights Agreement dated May 22, 1996, by and between the Company
and Norwest Bank Minnesota, N.A. as rights agent, as amended (the Rights,
together with the shares of Common Stock, the "Shares"), at a price of $14.50
per Share, net to the seller in cash, upon the terms and conditions set forth
in the Merger Agreement. The Merger Agreement contemplates a tender offer (the
"Offer") by Purchaser for all of the outstanding Shares followed by the merger
(the "Merger") of Purchaser with and into the Company. Concurrently with the
execution of the Merger Agreement, Purchaser, Parent, the Company and the
Selling Stockholder entered into the Selling Stockholder Arrangements.

(d) The Merger Agreement provides that, following consummation of the
Offer, the Company, Purchaser, Parent and IHF shall cause the board of
directors of the Company to be comprised of such number of persons designated by
Purchaser as may be necessary to reflect Purchaser's then ownership of shares
of Common Stock. As result after the Consummation of the Offer persons
designated by Purchaser will comprise at least a majority of the Company's
board of directors.

(e) The Merger Agreement provides that during the period ending upon the
designees of Purchaser being appointed to the Company's Board of Directors, the
Company shall not declare or pay any dividends on its shares of Common Stock.

(f) None.

(g) The Merger Agreement provides that, before the closing of the Offer,
the Company will amend its bylaws to allow for stockholder action by written
consent if a consent or consents to such action are signed by holders of
outstanding shares of Common Stock having not less than the minimum number of
votes that would be necessary to authorize such action at a meeting at which all
shares entitled to vote thereon were present and voted.

(h) and (i)

The Shares are listed on the Nasdaq National Market (the "Nasdaq").
Depending upon the number of Shares purchased pursuant to the Offer, the shares
of Common Stock may no longer meet the requirements of the Nasdaq for continued
listing and may be delisted from the Nasdaq. According to Nasdaq's published
guidelines, Nasdaq would consider delisting the shares of Common Stock if,
among other things, the number of record holders of at least 100 shares of
Common Stock should fall below 400, the number of publicly held shares of
Common Stock (exclusive of holdings of officers, director or any other person
who is the beneficial owner of more than 10% of the total shares of common
Stock outstanding ("Nasdaq Excluded Holdings")) should fall below 750,000 or
the aggregate market value of publicly held shares of Common Stock (exclusive
of Nasdaq Excluded Holdings) should fall below $5,000,000. The Company has
advised Purchaser that, as of March 10, 1998, there were 6,860,692 Shares
outstanding, held by approximately 1,300 holders of record. If, as a result of
the purchase of Shares pursuant to the Offer or otherwise, the shares of Common
Stock no longer meet the requirements of Nasdaq for continued listing and
the listing of the shares of Common Stock is discontinued, the market for
the shares of Common Stock could be adversely affected.

If Nasdaq were to delist the shares of Common Stock, it is possible that
the shares of Common Stock would continue to trade in the over-the-counter
market and that price or other quotations would be reported by other sources.
The extent of the public market therefor and the availability of such
quotations would depend, however, upon such factors as the number of
stockholders and/or the aggregate market value of such securities remaining at
such time, the interest in maintaining a market in the shares of Common Stock
on the part of securities firms, the possible termination of registration under
the Exchange Act as described below and other factors. Purchaser cannot predict
whether the reduction in the number of shares of Common Stock that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the shares of Common Stock or whether it
would cause future market prices to be greater or less than the Merger
Consideration.

The Shares are currently registered under the Securities Exchange Act of
1934 (the "Exchange Act"). Such registration may be terminated upon
application by the Company to the Commission if the shares of Common Stock are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the shares of Common Stock under
the Exchange Act would substantially reduce the information required to be
furnished by the Company to the stockholders and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b) of the Exchange Act, the requirement of
furnishing a proxy or information statement pursuant to Section 14(a) or (c) of
the Exchange Act in connection with stockholders' meetings and the related
requirement of furnishing an annual report to stockholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions, no longer applicable to the Company. In addition, "affiliates" of
the Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of such securities pursuant to Rule 144 or
Rule 144A promulgated under the Securities Act of 1933. If registration of the
shares of Common Stock under the Exchange Act were terminated, the shares of
Common Stock would no longer be "margin securities" or be eligible for Nasdaq
reporting.

Purchaser intends to seek to cause the Company to apply for delisting of
the shares of Common Stock from Nasdaq and terminate the registration of the
shares of Common Stock under the Exchange Act as soon after the completion of
the Offer as the requirements for such delisting and termination are met. If
registration of the shares of Common Stock is not terminated prior to the
Merger, the registration of the shares of Common Stock under the Exchange Act
will be terminated following consummation of the Merger.

(j) None.

ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.

(a) and (b)

Pursuant to the Selling Stockholder Arrangements, each of Purchaser, Parent
and IHF are beneficial owners of 648,899 shares of Common Stock, or 9.1% of the
oustanding shares of Common Stock. In addition, pursuant to the Company Option
Purchaser has an irrevocable option (exercisable under certain circumstances)
to purchase an indeterminate number of shares of Common Stock. Purchaser,
Parent and IHF would be the beneficial owners of any shares of Common Stock
acquired pursuant to the Company Option. Fund III holds a majority of the
oustanding shares of common stock of IHF. HM3/GP Partners is the general
partner of Fund III. Hicks, Muse GP Partners III is the general partner of
HM3/GP Partners. Fund III Inc. is the general partner of Hicks, Muse GP
Partner III. Mr. Hicks is a controlling person, the Chairman of the Board and
Chief Executive Officer of Fund III Inc. Each of Fund III, HM3/GP Partners,
Hicks, Muse GP Partners III, Fund III, Inc. and Mr. Hicks may be deemed
beneficial owners of the shares of Common Stock beneficially owned by
Purchaser, Parent and IHF. However each of Fund III, HM3/GP Partners, Hicks,
Muse GP Partners III, Fund III Inc. and Mr. Hicks disclaims beneficial
ownership of the shares beneficially owned by Purchaser, Parent and IHF.

Each Reporting Person has the sole power to vote, or direct the vote of,
such beneficially owned shares of Common Stock. Upon exercise of the Company
Option, exercise of the option included in the Selling Stockholder Arrangements
and purchaser of shares tendered in the Offer pursuant to the Selling
Stockholder Arrangements, each Reporting Person will have the sole power to
dispose of, or direct the disposition of, such beneficially owned shares.

(c) Other than the Selling Stockholder Arrangements, Company Option, the
Offer and Merger Agreement as described in Items 3 and 4, no transactions have
been affected by any of the Reporting Persons within the past sixty days or
since the most recent filing on Schedule 13D.

(d) None.

(e) Not applicable.

<PAGE> 12
Page 12 of 16 Pages

ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.

On March 10, 1998, Purchaser, Parent, IHF and the Company entered into
the Merger Agreement pursuant to which IHF (through Parent), Parent (through
Purchaser) and Purchaser are to acquire all of the outstanding Shares at a price
of $14.50 per Share, net to the seller in cash, upon the terms and conditions
set forth in the Merger Agreement. The Merger Agreement contemplates that the
Purchaser will commence an Offer for all of the outstanding Shares followed by
the Merger of Purchaser with and into the Company. Concurrently with the
execution of the Merger Agreement, Purchaser, Parent, the Company and the
Selling Stockholder entered into the Stockholder Agreement pursuant to which the
Selling Stockholder (i) agreed to tender into the Offer an aggregate of 403,899
Shares, (ii) granted to Purchaser an option (exercisable in certain
circumstance) to purchase up to an aggregate of 245,000 Shares, consisting of
Shares to be beneficially owned by the Selling Stockholder as a result of his
exercise of certain options to purchase Shares and (iii) granted to Parent an
irrevocable proxy to vote such Shares. In addition, pursuant to the terms of the
Merger Agreement, the Company granted Purchaser an irrevocable option
(exercisable under certain circumstances) to purchase an indeterminate number of
Shares.

ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.

<PAGE> 13
Page 13 of 16 Pages
<TABLE>
<C> <S>
10.1 -- Credit Agreement, dated as of November 1, 1996, as
amended and restated as of November 21, 1997, among IHF,
the several banks and other financial institutions or
entities from time to time parties thereto, Morgan
Stanley Senior Funding, Inc., as documentation agent,
Bankers Trust Company, as syndication agent, and The
Chase Manhattan Bank, as administrative agent, for the
lenders thereunder.
10.2 -- Agreement and Plan of Merger, dated March 10, 1998, among
Purchaser, Parent, IHF and the Company.
10.3 -- Stockholder Agreement, dated March 10, 1998, among
Purchaser, Parent, the Company and the Selling
Stockholder.
24 -- Power of Attorney for Thomas O. Hicks.
99 -- Joint Filing Agreement, dated March 16, 1998, among
Purchaser, Parent, IHF, the Fund III, HM3/GP Partners, Hicks,
Muse GP Partners III, the Fund Inc., and Thomas O. Hicks.
</TABLE>
<PAGE> 14
Page 14 of 16 Pages

SIGNATURES

After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.

Dated: April 1, 1998 IHF/GM ACQUISITION CORPORATION

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President

IHF/GM HOLDING CORPORATION

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President

INTERNATIONAL HOME FOODS, INC.

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President

HICKS, MUSE, TATE & FURST EQUITY
FUND III, L.P.

By: HM3/GP Partners, L.P.

By: Hicks, Muse GP Partners III,
L.P.

By: Hicks, Muse Fund III,
Incorporated

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President

HM3/GP PARTNERS L.P.

By: Hicks, Muse GP Partners III,
L.P.

By: Hicks, Muse Fund III,
Incorporated

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President
<PAGE> 15
Page 15 of 16 Pages

HICKS, MUSE GP PARTNERS III, L.P.

By: Hicks, Muse Fund III,
Incorporated

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President

HICKS, MUSE FUND III, INCORPORATED

By: /s/ ANDREW S. ROSEN

----------------------------------
Name: Andrew S. Rosen
Title: Vice President

THOMAS O. HICKS

/s/ THOMAS O. HICKS

------------------------------------
By: David W. Knickel
Attorney-in-Fact
<PAGE> 16
Page 16 of 16 Pages

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
-------
<C> <S>
10.1 -- Credit Agreement, dated as of November 1, 1996, as
amended and restated as of November 21, 1997, among IHF,
the several banks and other financial institutions or
entities from time to time parties thereto, Morgan
Stanley Senior Funding, Inc., as documentation agent,
Bankers Trust Company, as syndication agent, and The
Chase Manhattan Bank, as administrative agent, for the
lenders thereunder.
10.2 -- Agreement and Plan of Merger, dated March 10, 1998, among
Purchaser, Parent, IHF and the Company.
10.3 -- Stockholder Agreement, dated March 10, 1998, among
Purchaser, Parent, the Company and the Selling
Stockholder.
24 -- Power of Attorney for Thomas O. Hicks.
99 -- Joint Filing Agreement, dated March 16, 1998, among
Purchaser, Parent, IHF, the Fund III, HM3/GP Partners, Hicks,
Muse GP Partners III, the Fund Inc., and Thomas O. Hicks.
</TABLE>

<PAGE> 1
EXHIBIT 10.1

$770,000,000

CREDIT AGREEMENT

among

INTERNATIONAL HOME FOODS, INC.,
as Borrower,

The Several Lenders
from Time to Time Parties Hereto,

MORGAN STANLEY SENIOR FUNDING, INC.,
as Documentation Agent,

BANKERS TRUST COMPANY,
as Syndication Agent,

and

THE CHASE MANHATTAN BANK,
as Administrative Agent

Dated as of November 1, 1996,
as Amended and Restated as of November 21, 1997
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.3 Certain Pro Forma Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

SECTION 2. AMOUNT AND TERMS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.2 Procedure for Term Loan Reborrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.3 Repayment of Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.4 Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.5 Procedure for Revolving Credit Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.6 Swing Line Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans . . . . . . . . . . . . . . . . 26
2.8 Commitment Fees, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.9 Termination or Reduction of Revolving Credit Commitments . . . . . . . . . . . . . . . . . . . . 28
2.10 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.11 Mandatory Prepayments and Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.12 Conversion and Continuation Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.13 Minimum Amounts and Maximum Number of Eurodollar Tranches . . . . . . . . . . . . . . . . . . . . 30
2.14 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.15 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.16 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.17 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.18 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.20 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.21 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.22 Replacement of Lenders under Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . 36

SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.2 Procedure for Issuance of Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Commissions, Fees and Other Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4 L/C Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.5 Reimbursement Obligation of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.7 Letter of Credit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.8 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.3 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
4.4 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . 41
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.6 No Material Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.11 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.15 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.16 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.18 Accuracy of Information, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.19 Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.20 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.21 Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.22 Regulation H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.1 Conditions to Initial Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2 Conditions to Each Extension of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.3 Conditions to Amendment/Restatement Closing Date . . . . . . . . . . . . . . . . . . . . . . . . 50

SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.4 Conduct of Business and Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . 53
6.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.6 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . . 53
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.9 Interest Rate Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.10 Additional Collateral, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.1 Financial Condition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.2 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.3 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.5 Limitation on Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.6 Limitation on Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.7 Limitation on Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
</TABLE>

- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
7.8 Limitation on Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.9 Limitation on Optional Payments and Modifications of Debt Instruments, etc. . . . . . . . . . . 64
7.10 Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.11 Limitation on Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.12 Limitation on Changes in Fiscal Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.13 Limitation on Negative Pledge Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.14 Limitation on Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.15 Limitation on Amendments to Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . 65

SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

SECTION 9. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.6 Non-Reliance on Agents and Other Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.8 Agent in Its Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.10 Authorization to Release Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.11 Documentation Agent and Syndication Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.6 Successors and Assigns; Participations and Assignments . . . . . . . . . . . . . . . . . . . . . 74
10.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.13 Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>

- iii -
<PAGE> 5
<TABLE>
<S> <C>
SCHEDULES:

1.1A Revolving Credit Commitments and Term Loans as of Amendment/Restatement
Closing Date
1.1B Mortgaged Property
1.1C Additional Mortgaged Property
1.1D Permitted Investments
4.4 Consents, Authorizations, Filings and Notices
4.15 Subsidiaries on Closing Date
4.15-A Subsidiaries on Amendment/Restatement Closing Date
4.19(a) UCC Filing Jurisdictions
4.19(a)-A UCC Filing Jurisdictions--Bumble Bee
4.19(a)-B UCC Filing Jurisdictions--DM US Holding, Corp. and Creative Products, Inc.
4.19(b) Mortgage Filing Jurisdictions
4.19(b)-A Mortgage Filing Jurisdictions--Bumble Bee
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
7.8(g) Existing Investments
7.10 Certain Fees

EXHIBITS:

A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D-1 Form of Mortgage -- Borrower
D-2 Form of Mortgage -- Subsidiary Guarantor
E Form of Assignment and Acceptance
F Form of Legal Opinion of Vinson & Elkins
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
</TABLE>

- iv -
<PAGE> 6

CREDIT AGREEMENT, dated as of November 1, 1996, as
amended and restated as of November 21, 1997, among INTERNATIONAL HOME FOODS,
INC., a Delaware corporation (the "Borrower"), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), MORGAN STANLEY SENIOR FUNDING, INC., as documentation agent
(in such capacity, the "Documentation Agent"), BANKERS TRUST COMPANY, as
syndication agent (in such capacity, the "Syndication Agent"), and THE CHASE
MANHATTAN BANK, as administrative agent for the Lenders hereunder.

W I T N E S S E T H :

WHEREAS, the Borrower entered into the Credit
Agreement, dated as of November 1, 1996, as amended and restated as of July 1,
1997 (the "July 1997 Amendment/Restatement"), as amended pursuant to the First
Amendment with respect thereto dated as of September 19, 1997 (as so amended
and restated and further amended, the "Existing Credit Agreement"), with Morgan
Stanley Senior Funding, Inc., as documentation agent, Bankers Trust Company, as
syndication agent, The Chase Manhattan Bank, as administrative agent, and the
several banks and other financial institutions or entities parties thereto;

WHEREAS, the parties hereto have agreed to amend and
restate the Existing Credit Agreement as provided in this Agreement, which
Agreement shall become effective upon the satisfaction of certain conditions
precedent set forth in Section 5.3 hereof; and

WHEREAS, it is the intent of the parties hereto that
this Agreement not constitute a novation of the obligations and liabilities
existing under the Existing Credit Agreement or evidence repayment of any of
such obligations and liabilities and that this Agreement amend and restate in
its entirety the Existing Credit Agreement and re-evidence the obligations of
the Borrower outstanding thereunder;

NOW, THEREFORE, in consideration of the above premises,
the parties hereto hereby agree that on the Amendment/Restatement Closing Date
(as defined below) the Existing Credit Agreement shall be amended and restated
in its entirety as follows:

SECTION 1. DEFINITIONS

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

"ABR": 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%.
For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by
Chase as its prime rate in effect at its principal office
in New York City (the Prime Rate not being intended to be
the lowest rate of interest charged by Chase in connection
with extensions of credit to debtors); "Base CD Rate" shall
mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of
which is one and the denominator of which is one minus
<PAGE> 7
the C/D Reserve Percentage and (b) the C/D Assessment Rate;
"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; and "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
which is a Business Day, the average of the quotations for
the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized
standing selected by it. Any change in the ABR due to a
change in the Prime Rate, the Base CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening
of business on the effective day of such change in the
Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate, respectively.

"ABR Loans": Loans the rate of interest applicable to
which is based upon the ABR.

"Acquisition Agreement": the Agreement of Sale and
Plan of Merger, dated as of September 5, 1996, among the
Sellers, AH Food Co., the Buyer and the Merger Sub.

"Acquisitions": the collective reference to the AHP
Acquisition and the Heritage Acquisition.

"Adjustment Date": as defined in the Pricing Grid.

"Administrative Agent": Chase, together with its
affiliates, as the arranger of the Facilities and as the
administrative agent for the Lenders under this Agreement
and the other Loan Documents, together with any of its
successors.

"Affiliate": as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes
of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 51% or more of
the securities having ordinary voting power for the
election of directors (or persons performing similar
functions) of such

- 2 -
<PAGE> 8
Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract
or otherwise.

"Agents": the collective reference to the
Administrative Agent, the Syndication Agent and the
Documentation Agent.

"Agreement": this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.

"AH Food Co.": American Home Food Products, Inc., a
Delaware corporation.

"AHP": American Home Products Corporation, a Delaware
corporation.

"AHP Acquisition": as defined in Section 5.1(b).

"AHP Food Business": as defined in Section 5.1(b).

"AHP Holding": AHP Subsidiary Holding Corporation, a
Delaware corporation.

"Amendment/Restatement Closing Date": November 21,
1997.

"Applicable Margin": for each Type of Loan, the rate
per annum set forth under the relevant column heading
below:

<TABLE>
<CAPTION>
ABR Loans Eurodollar Loans
--------- ----------------
<S> <C> <C>
Tranche A Term Loans
Revolving Credit Loans and
Swing Line Loans 0.50% 1.50%

Tranche B Term Loans 0.75% 1.75%
</TABLE>

; provided, that on and after the first Adjustment Date occurring
after December 31, 1997, the Applicable Margin will be determined
pursuant to the Pricing Grid.

"Application": an application, in such form (reasonably
acceptable to the Borrower) as the relevant Issuing Lender may specify
from time to time, requesting such Issuing Lender to open a Letter of
Credit.

"Asset Sale": any Disposition of Property other than (a) any
Disposition of Property permitted by any of clauses (a) through (h) of
Section 7.5 and (b) any Disposition of Property which, together with
any related Disposition of Property, yields gross proceeds to the
Borrower or any of its Subsidiaries (valued at the initial principal
amount thereof in the case of non-cash proceeds consisting of notes or
other debt securities and valued at fair market value in the case of
other non-cash proceeds) of less than $2,000,000, provided, that the
aggregate gross

- 3 -
<PAGE> 9
proceeds of Dispositions of Property excluded from the definition of
"Asset Sale" pursuant to this clause (b) shall not exceed $5,000,000
in any fiscal year of the Borrower.

"Asset Swap": any substantially concurrent purchase and sale,
or exchange, of Property used or usable in the business of the
Borrower and its Subsidiaries.

"Assignee": as defined in Section 10.6(c).

"Assignor": as defined in Section 10.6(c).

"Available Revolving Credit Commitment": as to any Lender at
any time, an amount equal to (a) such Lender's Revolving Credit
Commitment minus (b) such Lender's Revolving Extensions of Credit;
provided, that in calculating any Lender's Revolving Extensions of
Credit for the purpose of determining such Lender's Available
Revolving Credit Commitment pursuant to Section 2.8(a), the aggregate
principal amount of Swing Line Loans then outstanding shall be deemed
to be zero.

"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).

"Borrowing Date": any Business Day specified by the Borrower
as a date on which the Borrower requests the Lenders to make Loans
hereunder.

"Bumble Bee": Bumble Bee Seafoods, Inc., a Delaware
corporation.

"Bumble Bee Acquisition": the acquisition described in the
Bumble Bee Purchase Agreement.

"Bumble Bee Confidential Information Memorandum": the
Confidential Information Memorandum dated June 1997 and furnished to
the Lenders in connection with the July 1997 Amendment/Restatement.

"Bumble Bee Pro Forma Financial Statements": as defined in
Section 4.1(a)(ii).

"Bumble Bee Purchase Agreement": the Asset Purchase and Sale
Agreement, dated as of May 1, 1997, among Bumble Bee, Bumble Bee
International, Inc., Commerce Distributing Company and Santa Fe
Springs Holding Company, as sellers, the Borrower and Bumble Bee
Acquisition Corporation, as buyer.

"Business": as defined in Section 4.17.

"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close.

"Buyer": AHFP Holding Corporation, a Delaware corporation.

- 4 -
<PAGE> 10
"Canadian Subsidiary": any Subsidiary of the Borrower
organized under the laws of Canada (or any jurisdiction therein).

"Capital Expenditures": for any period, with respect to any
Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period)
which should be capitalized under GAAP on a consolidated balance sheet
of such Person and its Subsidiaries.

"Capital Lease Obligations": as to any Person, 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, for the purposes of this
Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with
GAAP.

"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests in
a Person (other than a corporation) and any and all warrants, rights
or options to purchase any of the foregoing.

"Cash Equivalents": (a) marketable direct obligations issued
by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit
of the United States, in each case maturing within one year from the
date of acquisition; (b) certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities
of six months or less from the date of acquisition issued by any
Lender or by any commercial bank organized under the laws of the
United States of America or any state thereof having combined capital
and surplus of not less than $250,000,000; (c) commercial paper of an
issuer rated at least A-2 by Standard & Poor's Ratings Services or P-2
by Moody's Investors Service, Inc., or carrying an equivalent rating
by a nationally recognized rating agency, if both of the two named
rating agencies cease publishing ratings of commercial paper issuers
generally, and maturing within six months from the date of
acquisition; (d) money market accounts or funds with or issued by
Qualified Issuers; and (e) repurchase obligations with a term of not
more than 90 days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
specified in clause (b) above.

"C/D Assessment Rate": for any day as applied to any ABR
Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation (the "FDIC") classified as
well-capitalized and within supervisory subgroup "B" (or a comparable
successor assessment risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the FDIC (or any
successor) for the FDIC's (or such successor's) insuring time deposits
at offices of such institution in the United States.

"C/D Reserve Percentage": for any day as applied to any ABR
Loan, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board, for

- 5 -
<PAGE> 11
determining the maximum reserve requirement for a Depositary
Institution (as defined in Regulation D of the Board as in effect from
time to time) in respect of new non-personal time deposits in Dollars
having a maturity of 30 days or more.

"Chase": The Chase Manhattan Bank.

"Closing Date": November 1, 1996.

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

"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by
any Security Document.

"Commitment Fee Rate": 3/8 of 1% per annum; provided, that on
and after the first Adjustment Date occurring after December 31, 1997,
the Commitment Fee Rate will be determined pursuant to the Pricing
Grid.

"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.

"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.

"Confidential Information Memorandum": the Confidential
Information Memorandum dated October 1996 and furnished to the
Lenders.

"Consolidated Current Assets": at a particular date, all
amounts (other than cash and Cash Equivalents) which would, in
conformity with GAAP, be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date.

"Consolidated Current Liabilities": at a particular date, all
amounts which would, in conformity with GAAP, be set forth opposite
the caption "total current liabilities" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at
such date, but excluding (a) the current portion of any Funded Debt of
the Borrower and its Subsidiaries, (b) without duplication of clause
(a) above, all Indebtedness consisting of Revolving Credit Loans or
Swing Line Loans to the extent otherwise included therein, (c) accrued
interest expense and (d) accrued income tax expense.

"Consolidated EBITDA": for any period, Consolidated Net
Income for such period plus, without duplication and to the extent
reflected as a charge in the statement of such Consolidated Net Income
for such period, the sum of (a) total income tax expense, (b) interest
expense, amortization or writeoff of debt discount and debt issuance
costs and commissions, discounts and other fees and charges associated
with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but
not

- 6 -
<PAGE> 12
limited to, goodwill) and organization costs, (e) any extraordinary
expenses or losses (including, whether or not otherwise includable as
a separate item in the statement of such Consolidated Net Income for
such period, losses on sales of assets other than inventory sold in
the ordinary course of business) and (f) any other non- cash charges,
and minus, to the extent included in the statement of such
Consolidated Net Income for such period, the sum of (a) interest
income, (b) any extraordinary income or gains (including, whether or
not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, gains on the sales of assets
other than inventory sold in the ordinary course of business) and (c)
any other non-cash income, all as determined on a consolidated basis.

"Consolidated Fixed Charge Coverage Ratio": for any period,
the ratio of (a) (i) Consolidated EBITDA for such period less (ii) the
lesser of (x) the aggregate amount actually paid by the Borrower and
its Subsidiaries in cash during such period on account of Capital
Expenditures (excluding (1) the principal amount of Indebtedness
(other than Loans) incurred in connection with such expenditures and
(2) Capital Expenditures made pursuant to Section 7.7(b) or (c)) and
(y) if applicable, the Scheduled Capital Expenditure Amount for such
period to (b) Consolidated Fixed Charges for such period.

"Consolidated Fixed Charges": for any period, the sum
(without duplication) of (a) Consolidated Interest Expense for such
period, (b) Consolidated Tax Expense for such period and (c) scheduled
payments made during such period on account of principal of
Indebtedness of the Borrower or any of its Subsidiaries (including the
Term Loans).

"Consolidated Interest Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period to (b) Consolidated
Interest Expense for such period.

"Consolidated Interest Expense": for any period, total cash
interest expense (including that attributable to Capital Lease
Obligations), net of interest income, of the Borrower and its
Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries (including, without
limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Protection Agreements to the extent
such net costs are allocable to such period in accordance with GAAP).

"Consolidated Leverage Ratio": as at the last day of any
period, the ratio of (a) Consolidated Total Debt on such day to (b)
Consolidated EBITDA for such period.

"Consolidated Net Income": for any period, the consolidated
net income (or loss) of the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP; provided that there
shall be excluded therefrom the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary of the Borrower or
is merged into or consolidated with the Borrower or any of its
Subsidiaries.

"Consolidated Senior Leverage Ratio": as at the last day of
any period, the ratio of (a) Consolidated Total Debt (excluding
Indebtedness attributable to the Senior Subordinated Notes and other
Indebtedness of the Borrower subordinated on terms at least as
favorable to the

- 7 -
<PAGE> 13
Lenders as those applicable to the Senior Subordinated Notes) on such
day to (b) Consolidated EBITDA for such period.

"Consolidated Tax Expense": for any period, provision for
cash income taxes made by the Borrower or any of its Subsidiaries for
such period on a consolidated basis.

"Consolidated Total Debt": at any date, the aggregate
principal amount of all Indebtedness (excluding (a) Indebtedness of
the type described in clause (d), (h) or (i) of the definition thereof
to the extent such Indebtedness would not appear on a consolidated
balance sheet of the Borrower and its Subsidiaries in accordance with
GAAP, (b) Indebtedness of the type described in clause (f) of the
definition thereof to the extent such Indebtedness consists of undrawn
amounts in respect of letter of credit facilities and (c) Trade
Acceptances that have payment terms of not more than 90 days from the
date of acceptance), net of cash and Cash Equivalents, of the Borrower
and its Subsidiaries at such date, determined on a consolidated basis
in accordance with GAAP.

"Consolidated Working Capital": the excess of Consolidated
Current Assets over Consolidated Current Liabilities.

"Continuing Directors": the directors of the Borrower on the
Closing Date, after giving effect to the Acquisitions and the other
transactions contemplated hereby, and each other director, if, in each
case, such other director's nomination for election to the board of
directors of the Borrower is recommended by a majority of the then
Continuing Directors or such other director receives the vote of the
Permitted Investors in his or her election by the shareholders of the
Borrower.

"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.

"Contributed Equity": (a) the proceeds of any capital
contribution made to the Borrower (or to a Parent and in turn
contributed to the Borrower) by any member of the Existing Investor
Group and (b) the proceeds of any private placement of Capital Stock
of the Borrower (or of a Parent and in turn contributed to the
Borrower) consummated after the Closing Date, provided, that the
aggregate amount of proceeds of sales of Capital Stock to Persons
other than members of the Existing Investor Group that may be included
in "Contributed Equity" pursuant to this clause (b) shall not exceed
$25,000,000 during the period from the Closing Date to the first
anniversary thereof and shall not exceed $50,000,000 during the term
of this Agreement. As used in this definition, (i) "Existing Investor
Group" refers to any Permitted Investor (other than any Parent), AHP
or any of its Affiliates or any Person that owns Capital Stock of the
Buyer on the Closing Date or that acquires Capital Stock of the Buyer
within 60 days after the Closing Date and (ii) "Parent" refers to the
Buyer or any other direct or indirect holding company parent of the
Borrower.

"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.

- 8 -
<PAGE> 14
"Disposition": with respect to any Property, any sale, lease,
sale and leaseback, assignment, conveyance, transfer or other
disposition thereof; and the terms "Dispose" and "Disposed of" shall
have correlative meanings.

"Dollars" and "$": lawful currency of the United States of
America.

"Domestic Subsidiary": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States
of America.

"ECF Percentage": the percentage set forth below opposite the
Consolidated Leverage Ratio as of the last day of the most recent
fiscal year ending prior to the relevant Excess Cash Flow Application
Date:

<TABLE>
<CAPTION>
Consolidated Leverage Ratio ECF Percentage
--------------------------- --------------
<S> <C>
Greater than 4.50 to 1.0 75%
Less than or equal to 4.50 to 1.0 and greater than 3.50 to 1.0 50%
Less than or equal to 3.50 to 1.0 and greater than 3.00 to 1.0 25%
Less than or equal to 3.00 to 1.0 0%
</TABLE>

"Environmental Laws": any and all foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment, as now or may at any
time hereafter be in effect.

"Equity Financing Proceeds": any Contributed Equity used to
finance any Capital Expenditure made pursuant to Section 7.7(b) or any
investment made pursuant to Section 7.8(i).

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

"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as "Eurocurrency Liabilities" in Regulation D
of the Board) maintained by a member bank of the Federal Reserve
System.

"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days

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<PAGE> 15
comprised therein and in an amount comparable to the amount of its
Eurodollar Loans to be outstanding during such Interest Period.

"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements

"Eurodollar Tranche": the collective reference to Eurodollar
Loans the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).

"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, has been satisfied.

"Excess Cash Flow": for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i)
Consolidated EBITDA for such fiscal year, (ii) decreases in
Consolidated Working Capital for such fiscal year, (iii) the amount of
any refund received by the Borrower and its Subsidiaries during such
fiscal year on taxes paid by the Borrower and its Subsidiaries, (iv)
cash dividends, cash interest and other similar cash payments received
by the Borrower during such fiscal year in respect of investments to
the extent not included in Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year, (v) any purchase price
adjustments paid to the Borrower or any of its Subsidiaries during
such fiscal year pursuant to the Acquisition Agreement or the Bumble
Bee Purchase Agreement, and (vi) extraordinary cash gains to the
extent subtracted or otherwise not included in Consolidated Net Income
to determine Consolidated EBITDA for such fiscal year over (b) the
sum, without duplication, of (i) the aggregate amount actually paid by
the Borrower and its Subsidiaries in cash during such fiscal year on
account of Capital Expenditures or repurchases of the Senior
Subordinated Notes pursuant to Section 7.9 (excluding (x) the
principal amount of Indebtedness incurred in connection with such
expenditures and (y) any such expenditures made pursuant to Section
7.7(b) except, in the case of this clause (y), to the extent that the
amounts used to make such expenditures were included in determining
Consolidated EBITDA for such fiscal year), (ii) the aggregate amount
of all prepayments of Revolving Credit Loans and Swing Line Loans
during such fiscal year to the extent accompanying permanent optional
reductions of the Revolving Credit Commitments and all optional
prepayments of the Term Loans during such fiscal year, (iii) the
aggregate amount of all regularly scheduled principal payments of
Funded Debt (including, without limitation, the Term Loans) of the
Borrower and its Subsidiaries made during such fiscal year (other than
in respect of any revolving credit facility to the extent there is not
an equivalent permanent reduction in commitments thereunder), (iv)
increases in Consolidated Working Capital for such fiscal year, (v)
cash interest expense of the Borrower and its Subsidiaries for such
fiscal year, (vi) cash taxes actually paid in such fiscal year or to
be paid in the subsequent fiscal year on account of such fiscal year
to the extent added to

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<PAGE> 16
Consolidated Net Income to determine Consolidated EBITDA for such
fiscal year, (vii) the amount of all loans and advances made in such
fiscal year pursuant to Section 7.8(d) (net of any repayments of such
loans and advances made during such fiscal year), (viii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash
during such fiscal year on account of investments made pursuant to
Section 7.8(n), (p) or (q) (excluding the principal amount of
Indebtedness incurred in connection with such investments), (ix) the
amount of all deposits required to be made by the Borrower or any of
its Subsidiaries during such fiscal year in connection with
investments made pursuant to Section 7.8(l) (net of any amounts
returned in respect of such deposits during such fiscal year), (x)
dividends paid by the Borrower during such fiscal year in accordance
with Section 7.6 to the extent not subtracted in the determination of
Consolidated Net Income of the Borrower for such fiscal year, (xi)
previously expensed royalty payments made during such fiscal year to
the extent not subtracted in the determination of Consolidated Net
Income of the Borrower for such fiscal year, (xii) any purchase price
adjustments paid by the Borrower or any of its Subsidiaries during
such fiscal year pursuant to the Acquisition Agreement or the Bumble
Bee Purchase Agreement, and (xiii) extraordinary cash losses to the
extent added to Consolidated Net Income to determine Consolidated
EBITDA for such fiscal year.

"Excess Cash Flow Application Date": as defined in Section
2.11(c).

"Excluded Foreign Subsidiaries": any Foreign Subsidiary the
pledge of all of whose Capital Stock as Collateral would, in the good
faith judgment of the Borrower, result in adverse tax consequences to
the Borrower.

"Existing Credit Agreement": as defined in the recitals
hereto.

"Facility": each of (a) the extensions of credit made
hereunder in the form of Tranche A Term Loans (the "Tranche A Term
Loan Facility"), (b) the extensions of credit made hereunder in the
form of Tranche B Term Loans (the "Tranche B Term Loan Facility") and
(c) the Revolving Credit Commitments and the extensions of credit made
thereunder (the "Revolving Credit Facility").

"Federal Funds Effective Rate": as defined in the definition
of "ABR".

"Foreign Subsidiary": any Subsidiary of the Borrower that is
not a Domestic Subsidiary.

"Funded Debt": as to any Person, all Indebtedness of such
Person that matures more than one year from the date of its creation
or matures within one year from such date but is renewable or
extendible, at the option of such Person, to a date more than one year
from such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year from such date, including, without limitation,
all current maturities and current sinking fund payments in respect of
such Indebtedness whether or not required to be paid within one year
from the date of its creation and, in the case of the Borrower,
Indebtedness in respect of the Loans.

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<PAGE> 17
"GAAP": generally accepted accounting principles in the
United States of America as in effect from time to time set forth in
the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards
Board and the rules and regulations of the Securities and Exchange
Commission, or in such other statements by such other entity as may be
in general use by significant segments of the accounting profession,
which are applicable to the circumstances of the Borrower as of the
date of determination, except that for purposes of Section 7.1, GAAP
shall be determined on the basis of such principles in effect on the
Amendment/Restatement Closing Date and consistent with those used in
the preparation of the audited financial statements of the AHP Food
Business or Heritage, as the case may be, in respect of the fiscal
year ended December 31, 1995 delivered pursuant to Section 4.1(b) (or,
to the extent applicable to Bumble Bee and its Subsidiaries, on the
basis of such principles in effect on the Amendment/Restatement
Closing Date and consistent with those used in the preparation of the
audited financial statements of Bumble Bee in respect of the fiscal
year ended December 31, 1996 delivered pursuant to Section 4.1(b)).
In the event that any "Accounting Change" (as defined below) shall
occur and such change results in a change in the method of calculation
of financial covenants, standards or terms in this Agreement, then the
Borrower and the Administrative Agent agree to enter into negotiations
in order to amend such provisions of this Agreement so as to equitably
reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be
the same after such Accounting Changes as if such Accounting Changes
had not been made. Until such time as such an amendment shall have
been executed and delivered by the Borrower, the Administrative Agent
and the Required Lenders, all financial covenants, standards and terms
in this Agreement shall continue to be calculated or construed as if
such Accounting Changes had not occurred. "Accounting Changes" refers
to changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified
Public Accountants or, if applicable, the Securities and Exchange
Commission (or successors thereto or agencies with similar functions).

"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement to be executed and delivered by the Borrower and
each Subsidiary Guarantor, substantially in the form of Exhibit A, as
the same may be amended, supplemented or otherwise modified from time
to time.

"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or

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<PAGE> 18
payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that
the term Guarantee Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of
the instrument embodying such Guarantee Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case the
amount of such Guarantee Obligation shall be such guaranteeing
person's maximum reasonably anticipated liability in respect thereof
as determined by the Borrower in good faith.

"Heritage": Heritage Brands Holdings, Inc., a Delaware
corporation.

"Heritage Acquisition": as defined in Section 5.1(b).

"Hicks Muse": Hicks, Muse, Tate & Furst Incorporated.

"HM Equity": as defined in Section 5.1(b).

"Incur": as defined in Section 7.2; and the term "Incurrence"
shall have a correlative meaning.

"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price of
property or services (other than current trade payables and accrued
expenses incurred in the ordinary course of such Person's business),
(c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created
or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale
of such property), (e) all Capital Lease Obligations of such Person,
(f) all obligations of such Person, contingent or otherwise, as an
account party under acceptance, letter of credit or similar
facilities, (g) indebtedness incurred in connection with any
Receivables Facility, (h) all Guarantee Obligations of such Person in
respect of obligations of the kind referred to in clauses (a) through
(g) above and (i) all obligations of the kind referred to in clauses
(a) through (h) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such
obligation.

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<PAGE> 19
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.

"Insolvent": pertaining to a condition of Insolvency.

"Initial Public Offering": an underwritten public offering by
the Borrower of Capital Stock of the Borrower pursuant to a
registration statement filed with the Securities and Exchange
Commission in accordance with the Securities Act of 1933, as amended.

"Intellectual Property": as defined in Section 4.9.

"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December to occur while such Loan
is outstanding, (b) as to any Eurodollar Loan having an Interest
Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than
three months, each day which is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day
of such Interest Period and (d) as to any Loan, the date of repayment
thereof at final stated maturity.

"Interest Period": as to any Eurodollar Loan, (a) initially,
the period commencing on the borrowing or conversion date, as the case
may be, with respect to such Eurodollar Loan and ending one, two,
three, six or (if available to all Lenders under the relevant
Facility) nine or twelve months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, as the
case may be, given with respect thereto; and (b) thereafter, each
period commencing on the last day of the next preceding Interest
Period applicable to such Eurodollar Loan and ending one, two, three,
six or (if available to all Lenders under the relevant Facility) nine
or twelve months thereafter, as selected by the Borrower by
irrevocable notice to the Administrative Agent not less than three
Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a
day that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;

(ii) any Interest Period that would otherwise extend
beyond the Revolving Credit Termination Date or beyond the
date final payment is due on the Tranche A Term Loans or the
Tranche B Term Loans, as the case may be, shall end on the
Revolving Credit Termination Date or such due date, as
applicable;

(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month; and

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<PAGE> 20
(iv) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of any Eurodollar Loan
during an Interest Period for such Loan.

"Interest Rate Protection Agreement": any interest rate
protection agreement, interest rate futures contract, interest rate
option, interest rate cap or other interest rate hedge arrangement, to
or under which the Borrower or any of its Subsidiaries is a party or a
beneficiary on the Closing Date or becomes a party or a beneficiary
after the Closing Date.

"IPO Confidential Information Memorandum": the Confidential
Information Memorandum dated November 1997 and furnished to the
Lenders in connection with the amendment and restatement of the
Existing Credit Agreement.

"IPO Pro Forma Financial Statements": as defined in Section
4.1(a)(iii).

"Issuing Lender": Chase or any of its affiliates or, with the
approval of the Administrative Agent, any of the other Revolving
Credit Lenders which chooses to be an Issuing Lender, in its capacity
as issuer of any Letter of Credit.

"July 1997 Amendment/Restatement Closing Date": July 1, 1997.

"L/C Commitment": $30,000,000.

"L/C Fee Payment Date": the last day of each March, June,
September and December and the last day of the Revolving Credit
Commitment Period.

"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of drawings
under Letters of Credit which have not then been reimbursed pursuant
to Section 3.5.

"L/C Participants": with respect to any Letter of Credit, the
collective reference to all the Revolving Credit Lenders other than
the Issuing Lender that issued such Letter of Credit.

"Letters of Credit": as defined in Section 3.1(a).

"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or
other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).

"Loan": any loan made by any Lender pursuant to this
Agreement.

"Loan Documents": this Agreement, the Security Documents and
the Notes.

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<PAGE> 21
"Loan Parties": the Borrower and each Subsidiary of the
Borrower which is a party to a Loan Document.

"Majority Facility Lenders": with respect to any Facility,
the holders of not less than 51% of the aggregate unpaid principal
amount of the Term Loans or the Total Revolving Extensions of Credit,
as the case may be, outstanding under such Facility (or, in the case
of the Revolving Credit Facility, prior to any termination of the
Revolving Credit Commitments, the holders of not less than 51% of the
aggregate Revolving Credit Commitments).

"Majority Revolving Credit Facility Lenders": the Majority
Facility Lenders in respect of the Revolving Credit Facility.

"Material Acquisition": any acquisition of Property or series
of related acquisitions of Property (including by way of merger) which
(a) constitutes assets comprising all or substantially all of a brand
or an operating unit of a business or constitutes all or substantially
all of the common stock of a Person and (b) involves the payment of
consideration by the Borrower and its Subsidiaries (valued at the
initial principal amount thereof in the case of non-cash consideration
consisting of notes or other debt securities and valued at fair market
value in the case of other non-cash consideration) in excess of
$5,000,000.

"Material Adverse Effect": a material adverse effect on (a)
the business, assets, property, condition (financial or otherwise) or
prospects of the Borrower and its Subsidiaries taken as a whole or (b)
the validity or enforceability of this Agreement or any of the other
Loan Documents or the rights or remedies of the Administrative Agent
or the Lenders hereunder or thereunder.

"Material Disposition": any Disposition of Property or series
of related Dispositions of Property which (a) constitutes assets
comprising all or substantially all of a brand or an operating unit of
a business or constitutes all or substantially all of the common stock
of a Person and (b) yields gross proceeds to the Borrower or any of
its Subsidiaries (valued at the initial principal amount thereof in
the case of non-cash proceeds consisting of notes or other debt
securities and valued at fair market value in the case of other non-
cash proceeds) in excess of $5,000,000.

"Materials of Environmental Concern": any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.

"Merger": as defined in Section 5.1(b).

"Merger Sub": AHFP Acquisition Corporation, a Delaware
corporation.

"Mexican Subsidiary": any Subsidiary of the Borrower
organized under the laws of Mexico (or any jurisdiction therein).

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<PAGE> 22
"Mortgaged Properties": the real properties listed on
Schedule 1.1B or Schedule 1.1C, as to which the Administrative Agent
for the benefit of the Lenders shall be granted a Lien pursuant to the
Mortgages.

"Mortgages": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Administrative
Agent for the benefit of the Lenders, substantially in the form of
Exhibit D-1 or D-2, as the case may be (with such changes thereto as
shall be advisable under the law of the jurisdiction in which such
mortgage or deed of trust is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time.

"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.

"Net Cash Proceeds": (a) in connection with any Asset Sale or
any Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and
when received) of such Asset Sale or Recovery Event, net of attorneys'
fees, accountants' fees, investment banking fees, survey costs, title
insurance premiums, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any
asset which is the subject of such Asset Sale or Recovery Event (other
than any Lien pursuant to a Security Document) and other customary
fees and expenses actually incurred in connection therewith, net of
taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and
any tax sharing arrangements) and net of purchase price adjustments
reasonably expected to be payable in connection therewith and (b) in
connection with any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the cash
proceeds received from such issuance or incurrence, net of attorneys'
fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses
actually incurred in connection therewith, provided that, with respect
to any issuance or sale of debt securities or instruments as described
in this clause (b), to the extent that such cash proceeds are used to
refinance any Indebtedness permitted by this Agreement, then such cash
proceeds shall not constitute "Net Cash Proceeds" for the purpose of
this Agreement.

"Non-Excluded Taxes": as defined in Section 2.19(a).

"Non-U.S. Lender": as defined in Section 2.19(b).

"Notes": the collective reference to the Tranche A Term
Notes, the Tranche B Term Notes, the Revolving Credit Notes and the
Swing Line Note.

"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and Reimbursement Obligations and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the
Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations

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<PAGE> 23
and liabilities of the Borrower to the Administrative Agent or to any
Lender (or, in the case of Interest Rate Protection Agreements, any
affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any
Interest Rate Protection Agreement entered into with any Lender or any
affiliate of any Lender or any other document made, delivered or given
in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender
that are required to be paid by the Borrower pursuant hereto) or
otherwise.

"Participant": as defined in Section 10.6(b).

"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).

"Permitted Investments": any of the investments identified on
Schedule 1.1D.

"Permitted Investors": the collective reference to Hicks Muse
and its Affiliates and principals.

"Permitted Issuance": (a) the issuance by the Borrower of
shares of Capital Stock as dividends on issued and outstanding Capital
Stock of the same class of the Borrower or pursuant to any dividend
reinvestment plan, (b) the issuance by the Borrower of options or
other equity securities of the Borrower to outside directors, members
of management or employees of the Borrower or any Subsidiary of the
Borrower, (c) the issuance of securities as interest or dividends on
pay-in-kind debt or preferred equity securities permitted hereunder
and under the Security Documents, (d) the issuance to the Borrower or
any Subsidiary (or any director, with respect to directors' qualifying
shares) by any Subsidiary of the Borrower of any of its Capital Stock,
in each case with respect to this clause (d) to the extent such
Capital Stock is pledged to the Administrative Agent for the benefit
of the Lenders pursuant to the Guarantee and Collateral Agreement
(provided, that only 65% of the Capital Stock of an Excluded Foreign
Subsidiary is required to be so pledged) and (e) the issuance of
Contributed Equity.

"Person": an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.

"Plan": at a particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

"Pricing Grid": the pricing grid attached hereto as Annex A.

"Prime Rate": as defined in the definition of "ABR".

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<PAGE> 24
"Pro Forma Balance Sheet": as defined in Section 4.1(a)(i).

"Projections": as defined in Section 6.2(c).

"Properties": as defined in Section 4.17.

"Property": any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible
or intangible, including, without limitation, Capital Stock.

"Qualified Issuer": any commercial bank (a) which has capital
and surplus in excess of $250,000,000 and (b) the outstanding
long-term debt securities of which are rated at least A-2 by Standard
& Poor's Ratings Services or at least P-2 by Moody's Investors
Service, Inc., or carry an equivalent rating by a nationally
recognized rating agency if both of the two named rating agencies
cease publishing ratings of investments.

"Reborrowed Term Loans": as defined in Section 2.1.

"Receivables Facility": one or more non-recourse receivables
facilities providing for the sale, encumbrance or other Disposition,
at any time or from time to time, of all or a portion of the accounts
receivable of the Borrower or any of its Subsidiaries.

"Receivables Facility Assets": accounts receivable and
related ancillary rights, including, without limitation, any security
interests or guarantees securing the payment of such receivables, of
the Borrower or any of its Subsidiaries, that are sold, encumbered or
otherwise Disposed of at any time or from time to time in connection
with a Receivables Facility.

"Receivables SPV": a special purpose company established by
the Borrower or any of its Subsidiaries and so existing solely for
purposes of a Receivables Facility.

"Recovery Event": any settlement of or payment in respect of
any property insurance or casualty insurance claim or any condemnation
proceeding relating to any Property of the Borrower or any of its
Subsidiaries, excluding any such settlement or payment which, together
with any related settlement or payment, yields gross proceeds to the
Borrower or any of its Subsidiaries of less than $1,000,000.

"Refunded Swing Line Loans": as defined in Section 2.7.

"Refunding Date": as defined in Section 2.7.

"Register": as defined in Section 10.6(d).

"Reimbursement Obligation": the obligation of the Borrower to
reimburse each Issuing Lender pursuant to Section 3.5 for amounts
drawn under Letters of Credit.

"Reinvestment Deferred Amount": with respect to any
Reinvestment Event, the aggregate Net Cash Proceeds received by the
Borrower or any of its Subsidiaries in connection

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<PAGE> 25
therewith which are not applied to prepay the Term Loans or reduce the
Revolving Credit Commitments pursuant to Section 2.11(b) as a result
of the delivery of a Reinvestment Notice.

"Reinvestment Event": any Asset Sale or Recovery Event in
respect of which the Borrower has delivered a Reinvestment Notice.

"Reinvestment Notice": a written notice executed by a
Responsible Officer stating that no Event of Default has occurred and
is continuing and that the Borrower (directly or indirectly through a
Subsidiary) intends and expects to use all or a specified portion of
the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire
assets useful in its business.

"Reinvestment Prepayment Amount": with respect to any
Reinvestment Event, the Reinvestment Deferred Amount relating thereto
less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire assets useful in the Borrower's business.

"Reinvestment Prepayment Date": with respect to any
Reinvestment Event, the earlier of (a) the date occurring six months
after such Reinvestment Event and (b) the date on which the Borrower
shall have determined not to, or shall have otherwise ceased to,
acquire assets useful in the Borrower's business with all or any
portion of the relevant Reinvestment Deferred Amount.

"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.

"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under the regulations issued pursuant to
Section 4043(b) of ERISA.

"Required Lenders": the holders of not less than 51% of the
sum of (a) the aggregate unpaid principal amount of the Term Loans and
(b) the aggregate Revolving Credit Commitments or, if the Revolving
Credit Commitments have been terminated, the Total Revolving
Extensions of Credit.

"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation
(including, without limitation, Environmental Laws) or determination
of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.

"Responsible Officer": the chief executive officer, the
president, any senior vice president, the chief financial officer or
the treasurer of the Borrower (including, in any event, any person who
is an officer of the Borrower and is named on the closing certificate
delivered by the Borrower on the Closing Date pursuant to Section
5.1(g) whether or not such person holds any of the foregoing
positions).

"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender, if any, to make Revolving Credit Loans and
participate in Swing Line Loans and Letters of

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<PAGE> 26
Credit, in an aggregate principal and/or face amount not to exceed the
amount set forth under the heading "Revolving Credit Commitment"
opposite such Lender's name on Schedule 1.1A, as the same may be
changed from time to time pursuant to the terms hereof. The original
aggregate amount of the Revolving Credit Commitments, as of the
Amendment/Restatement Closing Date, is $200,000,000.

"Revolving Credit Commitment Period": the period from and
including the Closing Date to the Revolving Credit Termination Date.

"Revolving Credit Facility": as defined in the definition of
"Facility".

"Revolving Credit Lender": each Lender which has a Revolving
Credit Commitment or which has made Revolving Credit Loans.

"Revolving Credit Loans": as defined in Section 2.4.

"Revolving Credit Note": any promissory note of the Borrower
evidencing Revolving Credit Loans.

"Revolving Credit Percentage": as to any Revolving Credit
Lender at any time, the percentage which such Lender's Revolving
Credit Commitment then constitutes of the aggregate Revolving Credit
Commitments (or, at any time after the Revolving Credit Commitments
shall have expired or terminated, the percentage which the aggregate
principal amount of such Lender's Revolving Credit Loans then
outstanding constitutes of the aggregate principal amount of the
Revolving Credit Loans then outstanding).

"Revolving Credit Termination Date": the earlier of (a) the
Scheduled Revolving Credit Termination Date and (b) the date on which
the Tranche A Term Loans shall be paid in full.

"Revolving Extensions of Credit": as to any Revolving Credit
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Revolving Credit Loans made by such Lender
then outstanding, (b) such Lender's Revolving Credit Percentage of the
L/C Obligations then outstanding and (c) such Lender's Revolving
Credit Percentage of the aggregate principal amount of Swing Line
Loans then outstanding.

"Scheduled Capital Expenditure Amount": in connection with
the calculation of the Consolidated Fixed Charge Coverage Ratio as at
the end of any period of four consecutive fiscal quarters of the
Borrower ending on the last day of any fiscal quarter set forth below,
the amount set forth opposite such fiscal quarter:

<TABLE>
<CAPTION>
Fiscal Quarter Ending Amount
--------------------- ------
<S> <C>
December 31, 1997 to December 31, 1998 $38,000,000
March 31, 1999 $39,250,000
June 30, 1999 $40,500,000
September 30, 1999 $41,750,000
December 31, 1999 and thereafter $43,000,000
</TABLE>

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<PAGE> 27
"Scheduled Revolving Credit Termination Date": May 31, 2004.

"Security Documents": the collective reference to the
Guarantee and Collateral Agreement, the Mortgages and all other
security documents hereafter delivered to the Administrative Agent
granting a Lien on any Property of any Person to secure the
obligations and liabilities of any Loan Party under any Loan Document.

"Sellers": the collective reference to AHP and AHP Holding.

"Senior Subordinated Note Indenture": the Indenture entered
into by the Borrower and certain of its Subsidiaries in connection
with the issuance of the Senior Subordinated Notes, together with all
instruments and other agreements entered into by the Borrower or such
Subsidiaries in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance
with Section 7.9.

"Senior Subordinated Notes": the subordinated notes of the
Borrower issued on the Closing Date pursuant to the Senior
Subordinated Note Indenture.

"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.

"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the fair value of the property of
such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (d) such Person is not
engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital.

"Specified Change of Control": a "Change of Control" as
defined in the Senior Subordinated Note Indenture.

"Subsequent Purchase": as defined in Section 5.1(b).

"Subsidiary": as to any Person, a corporation, partnership,
limited liability company or other entity of which shares of stock or
other ownership interests having ordinary voting power (other than
stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership
or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

"Subsidiary Guarantor": each Subsidiary of the Borrower other
than any Excluded Foreign Subsidiary and any Receivables SPV.

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<PAGE> 28
"Swing Line Commitment": the obligation of the Swing Line
Lender to make Swing Line Loans pursuant to Section 2.6 in an
aggregate principal amount at any one time outstanding not to exceed
$10,000,000.

"Swing Line Lender": as defined in Section 2.6.

"Swing Line Loans": as defined in Section 2.6.

"Swing Line Note": any promissory note of the Borrower
evidencing Swing Line Loans.

"Swing Line Participation Amount": as defined in Section 2.7.

"Term Loan Facilities": the collective reference to the
Tranche A Term Loan Facility and the Tranche B Term Loan Facility.

"Term Loan Lenders": the collective reference to the Tranche
A Term Loan Lenders and the Tranche B Term Loan Lenders.

"Term Loans": the collective reference to the Tranche A Term
Loans and the Tranche B Term Loans.

"Test Period": any period of four consecutive fiscal quarters
of the Borrower.

"Total Revolving Extensions of Credit": at any time, the
aggregate amount of the Revolving Extensions of Credit of the
Revolving Credit Lenders at such time.

"Trade Acceptances": any trade acceptance accepted by the
Borrower or any of its Subsidiaries in connection with purchases from
suppliers made in the ordinary course of business.

"Tranche A Term Loan": as defined in Section 2.1.

"Tranche A Term Loan Facility": as defined in the definition
of "Facility".

"Tranche A Term Loan Lender": each Lender which has made a
Tranche A Term Loan.

"Tranche A Term Loan Percentage": as to any Tranche A Term
Loan Lender, the percentage which the principal amount of such
Lender's Tranche A Term Loan then outstanding constitutes of the
aggregate principal amount of the Tranche A Term Loans then
outstanding.

"Tranche A Term Note": any promissory note of the Borrower
evidencing Tranche A Term Loans.

"Tranche B Term Loan": as defined in Section 2.1.

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<PAGE> 29
"Tranche B Term Loan Facility": as defined in the definition
of "Facility".

"Tranche B Term Loan Lender": each Lender which has made a
Tranche B Term Loan.

"Tranche B Term Loan Percentage": as to any Lender at any
time, the percentage which the principal amount of such Lender's
Tranche B Term Loan then outstanding constitutes of the aggregate
principal amount of the Tranche B Term Loans then outstanding.

"Tranche B Term Note": any promissory note of the Borrower
evidencing Tranche B Term Loans.

"Transferee": as defined in Section 10.6(g).

"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.

"Unapplied Excess Cash Flow": any Excess Cash Flow that is
not required to be applied toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments pursuant to Section
2.11(c), as determined on each Excess Cash Flow Application Date in
respect of the immediately preceding fiscal year of the Borrower.

"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be revised from time to time.

"Wholly Owned Subsidiary": as to any Person, any other Person
all of the Capital Stock of which (other than directors' qualifying
shares required by law) is owned by such Person directly and/or
through other Wholly Owned Subsidiaries.

"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor
that is a Wholly Owned Subsidiary of the Borrower.

1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the defined
meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP;
provided that, if the Borrower notifies the Administrative Agent that the
Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the Closing Date in GAAP or in the application
thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such change in GAAP or in the application thereof, then
such provision shall be interpreted on the basis of GAAP as in effect and

- 24 -
<PAGE> 30
applied immediately before such change shall have become effective until such
notice shall have been withdrawn or such provision amended in accordance
herewith.

(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

(d) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

1.3 Certain Pro Forma Calculations. (a) For the purposes of
calculating Consolidated EBITDA for any Test Period pursuant to any
determination of the Consolidated Leverage Ratio, (i) if at any time during
such Test Period the Borrower or any Subsidiary shall have made any Material
Disposition, the Consolidated EBITDA for such Test Period shall be reduced by
an amount equal to the Consolidated EBITDA (if positive) attributable to the
Property which is the subject of such Material Disposition for such Test Period
or increased by an amount equal to the Consolidated EBITDA (if negative)
attributable thereto for such Test Period; (ii) if during such Test Period the
Borrower or any Subsidiary shall have made a Material Acquisition, Consolidated
EBITDA for such Test Period shall be calculated after giving pro forma effect
thereto as if such Material Acquisition occurred on the first day of such Test
Period; and (iii) if during such Test Period any Person that subsequently
became a Subsidiary or was merged with or into the Borrower or any Subsidiary
since the beginning of such Test Period shall have entered into any disposition
or acquisition transaction that would have required an adjustment pursuant to
clause (i) or (ii) above if made by the Borrower or a Subsidiary during such
Test Period, Consolidated EBITDA for such Test Period shall be calculated after
giving pro forma effect thereto as if such transaction occurred on the first
day of such Test Period.

(b) Pro forma calculations of Consolidated EBITDA, whether
pursuant to this Section 1.3 or otherwise, shall not give effect to anticipated
cost savings.

SECTION 2. AMOUNT AND TERMS OF LOANS

2.1 Term Loans. Subject to the terms and conditions hereof,
(a) each Tranche A Term Loan Lender severally agrees, on the
Amendment/Restatement Closing Date, to make and/or maintain outstanding, a term
loan (a "Tranche A Term Loan") to the Borrower and (b) each Tranche B Term Loan
Lender severally agrees, on the Amendment/Restatement Closing Date, to make
and/or maintain outstanding a term loan (a "Tranche B Term Loan") to the
Borrower, in each case in the respective amounts specified on Schedule 1.1A.
Term Loans made to the Borrower (rather than maintained) on the
Amendment/Restatement Closing Date, which Term Loans represent a portion of the
amounts repaid to certain lenders under the Existing Credit Agreement and
reborrowed from certain Lenders hereunder, are referred to herein as
"Reborrowed Term Loans". The aggregate outstanding principal amount of the
Tranche A Term Loans and the Tranche B Term Loans on the Amendment/Restatement
Closing Date, after giving effect to the making of the Reborrowed Term Loans,
shall be $420,000,000 and $150,000,000, respectively. The Term Loans may from
time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower
and notified to the Administrative Agent in accordance with Sections 2.2 and
2.12.

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<PAGE> 31
2.2 Procedure for Term Loan Reborrowing. The Borrower shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 12:00 Noon, New York City time, three
Business Days prior to the anticipated Amendment/Restatement Closing Date)
requesting that the Term Loan Lenders make the Reborrowed Term Loans on the
Amendment/Restatement Closing Date and specifying the amount to be borrowed.
Upon receipt of such notice the Administrative Agent shall promptly notify each
Term Loan Lender thereof. Not later than 12:00 Noon, New York City time, on
the Amendment/Restatement Closing Date each Term Loan Lender shall make
available to the Administrative Agent at its office specified in Section 10.2
an amount in immediately available funds equal to the Reborrowed Term Loan or
Reborrowed Term Loans to be made by such Lender. The Administrative Agent
shall credit the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.

2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of
each Tranche A Lender shall mature in 13 consecutive semi-annual installments,
commencing on March 31, 1998, each of which shall be in an amount equal to such
Lender's Tranche A Term Loan Percentage multiplied by the amount set forth
below opposite such installment:

<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 1998 $13,500,000
September 30, 1998 13,500,000
March 31, 1999 20,000,000
September 30, 1999 20,000,000
March 31, 2000 28,500,000
September 30, 2000 28,500,000
March 31, 2001 36,500,000
September 30, 2001 36,500,000
March 31, 2002 41,000,000
September 30, 2002 41,000,000
March 31, 2003 45,500,000
September 30, 2003 45,500,000
May 31, 2004 50,000,000
</TABLE>

(b) The Tranche B Term Loan of each Tranche B Lender shall
mature in 16 consecutive semi-annual installments, commencing on March 31,
1998, each of which shall be in an amount equal to such Lender's Tranche B Term
Loan Percentage multiplied by the amount set forth below opposite such
installment:

<TABLE>
<CAPTION>
Installment Principal Amount
----------- ----------------
<S> <C>
March 31, 1998 $ 200,000
September 30, 1998 200,000
March 31, 1999 200,000
September 30, 1999 200,000
March 31, 2000 200,000
</TABLE>

- 26 -
<PAGE> 32
<TABLE>
<S> <C>
September 30, 2000 200,000
March 31, 2001 200,000
September 30, 2001 200,000
March 31, 2002 200,000
September 30, 2002 200,000
March 31, 2003 200,000
September 30, 2003 200,000
March 31, 2004 200,000
September 30, 2004 20,000,000
March 31, 2005 63,700,000
October 31, 2005 63,700,000
</TABLE>

2.4 Revolving Credit Commitments. (a) Subject to
the terms and conditions hereof, each Revolving Credit Lender severally agrees
to make revolving credit loans ("Revolving Credit Loans") to the Borrower from
time to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding which, when added to such Lender's
Revolving Credit Percentage of the sum of (i) the L/C Obligations then
outstanding and (ii) the aggregate principal amount of the Swing Line Loans
then outstanding, does not exceed the amount of such Lender's Revolving Credit
Commitment. During the Revolving Credit Commitment Period the Borrower may use
the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms
and conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.5 and 2.12, provided
that no Revolving Credit Loan shall be made as a Eurodollar Loan after the day
that is one month prior to the Scheduled Revolving Credit Termination Date.

(b) The Borrower shall repay all outstanding Revolving Credit
Loans on the Revolving Credit Termination Date.

2.5 Procedure for Revolving Credit Borrowing. The Borrower
may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of ABR Loans), specifying (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case
of Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Each borrowing
under the Revolving Credit Commitments shall be in an amount equal to (x) in
the case of ABR Loans, $1,000,000 or a whole multiple of $500,000 in excess
thereof (or, if the then aggregate Available Revolving Credit Commitments are
less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof;
provided, that the Swing Line Lender may request, on behalf of the Borrower,
borrowings under the Revolving Credit Commitments which are ABR Loans in other
amounts pursuant to Section 2.7. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving Credit
Lender thereof. Each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent

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<PAGE> 33
specified in Section 10.2 prior to 12:00 Noon, New York City time, on the
Borrowing Date requested by the Borrower in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Revolving Credit Lenders and in like funds as
received by the Administrative Agent.

2.6 Swing Line Commitment. (a) Subject to the terms and
conditions hereof, Chase (in such capacity, the "Swing Line Lender") agrees to
make a portion of the credit otherwise available to the Borrower under the
Revolving Credit Commitments from time to time during the Revolving Credit
Commitment Period by making swing line loans ("Swing Line Loans") to the
Borrower; provided that (i) the aggregate principal amount of Swing Line Loans
outstanding at any time shall not exceed the Swing Line Commitment then in
effect (notwithstanding that the Swing Line Loans outstanding at any time, when
aggregated with the Swing Line Lender's other outstanding Revolving Credit
Loans hereunder, may exceed the Swing Line Commitment then in effect) and (ii)
the Borrower shall not request, and the Swing Line Lender shall not make, any
Swing Line Loan if, after giving effect to the making of such Swing Line Loan,
the aggregate amount of the Available Revolving Credit Commitments would be
less than zero. During the Revolving Credit Commitment Period, the Borrower
may use the Swing Line Commitment by borrowing, repaying and reborrowing, all
in accordance with the terms and conditions hereof. Swing Line Loans shall be
ABR Loans only.

(b) The Borrower shall repay all outstanding Swing Line Loans
on the Revolving Credit Termination Date.

2.7 Procedure for Swing Line Borrowing; Refunding of Swing
Line Loans. (a) Whenever the Borrower desires that the Swing Line Lender make
Swing Line Loans it shall give the Swing Line Lender irrevocable telephonic
notice confirmed promptly in writing (which telephonic notice must be received
by the Swing Line Lender not later than 1:00 P.M., New York City time, on the
proposed Borrowing Date), specifying (i) the amount to be borrowed and (ii) the
requested Borrowing Date (which shall be a Business Day during the Revolving
Credit Commitment Period). Each borrowing under the Swing Line Commitment
shall be in an amount equal to $250,000 or a whole multiple of $100,000 in
excess thereof. Not later than 3:00 P.M., New York City time, on the Borrowing
Date specified in a notice in respect of Swing Line Loans, the Swing Line
Lender shall make available to the Administrative Agent at its office specified
in Section 10.2 an amount in immediately available funds equal to the amount of
the Swing Line Loan to be made by the Swing Line Lender. The Administrative
Agent shall make the proceeds of such Swing Line Loan available to the Borrower
on such Borrowing Date by depositing such proceeds in the account of the
Borrower with the Administrative Agent on such Borrowing Date in immediately
available funds.

(b) The Swing Line Lender, at any time and from time to time
in its sole and absolute discretion may, on behalf of the Borrower (which
hereby irrevocably directs the Swing Line Lender to act on its behalf), on one
Business Day's notice given by the Swing Line Lender no later than 12:00 Noon,
New York City time, request each Revolving Credit Lender to make, and each
Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan, in an
amount equal to such Revolving Credit Lender's Revolving Credit Percentage of
the aggregate amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date of such notice, to repay the Swing Line Lender. Each
Revolving Credit Lender shall make the amount of such Revolving Credit Loan
available to the Administrative Agent at its office set forth in Section 10.2
in immediately available funds, not later than

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<PAGE> 34
10:00 A.M., New York City time, one Business Day after the date of such notice.
The proceeds of such Revolving Credit Loans shall be immediately applied by the
Swing Line Lender to repay the Refunded Swing Line Loans. The Borrower
irrevocably authorizes the Swing Line Lender to charge the Borrower's accounts
with the Administrative Agent (up to the amount available in each such account)
in order to immediately pay the amount of such Refunded Swing Line Loans to the
extent amounts received from the Revolving Credit Lenders are not sufficient to
repay in full such Refunded Swing Line Loans.

(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrower
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest
in an amount equal to (i) its Revolving Credit Percentage times (ii) the
aggregate principal amount of Swing Line Loans then outstanding which were to
have been repaid with such Revolving Credit Loans (the "Swing Line
Participation Amount").

(d) Whenever, at any time after the Swing Line Lender has
received from any Revolving Credit Lender such Lender's Swing Line
Participation Amount, the Swing Line Lender receives any payment on account of
the Swing Line Loans, the Swing Line Lender will distribute to such Lender its
Swing Line Participation Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participating interest was outstanding and funded and, in the case of principal
and interest payments, to reflect such Lender's pro rata portion of such
payment if such payment is not sufficient to pay the principal of and interest
on all Swing Line Loans then due); provided, however, that in the event that
such payment received by the Swing Line Lender is required to be returned, such
Revolving Credit Lender will return to the Swing Line Lender any portion
thereof previously distributed to it by the Swing Line Lender.

(e) Each Revolving Credit Lender's obligation to make the
Loans referred to in Section 2.7(b) and to purchase participating interests
pursuant to Section 2.7(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Revolving Credit Lender; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.

2.8 Commitment Fees, etc. (a) The Borrower agrees to pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment
of such Lender during the period for which payment is made, payable quarterly
in arrears on the last day of each March, June, September and December and on
the Revolving Credit Termination Date, commencing on the first of such dates to
occur after the Closing Date.

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<PAGE> 35
(b) The Borrower agrees to pay to the Administrative Agent
the fees in the amounts and on the dates previously agreed to in writing by the
Borrower and the Administrative Agent.

2.9 Termination or Reduction of Revolving Credit Commitments.
The Borrower shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction of Revolving Credit
Commitments shall be permitted if, after giving effect thereto and to any
prepayments of the Revolving Credit Loans and Swing Line Loans made on the
effective date thereof, the Total Revolving Extensions of Credit would exceed
the Revolving Credit Commitments then in effect. Any such reduction shall be
in an amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect. Upon receipt of
any notice pursuant to this Section 2.9, the Administrative Agent shall
promptly notify each Revolving Credit Lender of the contents thereof.

2.10 Optional Prepayments. The Borrower may at any time and
from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto in the case of Eurodollar Loans and at least
one Business Day prior thereto in the case of ABR Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section
2.20. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein. Amounts prepaid on account of the Term Loans may not be reborrowed.
Partial prepayments of Eurodollar Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof. Partial prepayments of ABR
Loans (other than Swing Line Loans) shall be in an aggregate principal amount
of $500,000 or a whole multiple thereof. Partial prepayments of Swing Line
Loans shall be in an aggregate principal amount of $100,000 or a whole multiple
thereof.

2.11 Mandatory Prepayments and Commitment Reductions. (a)
If any Capital Stock shall be issued by the Borrower or any of its Subsidiaries
(excluding any Permitted Issuance and any Capital Stock issued to finance
acquisitions pursuant to Section 7.8(p)), an amount equal to 50% of the Net
Cash Proceeds thereof (excluding any Equity Financing Proceeds) shall be
applied on the date of such issuance toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.11(e); provided that no such Net Cash Proceeds shall be required to be so
applied if the Consolidated Leverage Ratio is less than or equal to 3.50 to 1.0
as of the last day of the most recent period of four consecutive fiscal
quarters ending prior to the receipt of such Net Cash Proceeds for which the
relevant financial information is available.

(b) If any Indebtedness shall be Incurred by the Borrower or
any of its Subsidiaries (excluding any Incurrence of Indebtedness in accordance
with Section 7.2 (other than Section 7.2(i)) as in effect on the
Amendment/Restatement Closing Date), an amount equal to 100% of the Net Cash
Proceeds thereof shall be applied on the date of such Incurrence toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.11(e).

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(c) If on any date the Borrower or any of its Subsidiaries
shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then,
unless a Reinvestment Notice shall be delivered in respect thereof, such Net
Cash Proceeds shall be applied, within five Business Days after such date,
toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in Section 2.11(e); provided, that,
notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset
Sales that may be excluded from the foregoing requirement in any fiscal year of
the Borrower pursuant to a Reinvestment Notice, when added to the aggregate
fair market value of Property Disposed of in connection with Asset Swaps during
such fiscal year, shall not exceed $45,000,000 and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.11(e).

(d) If, for any fiscal year of the Borrower commencing with
the fiscal year ending December 31, 1998, there shall be Excess Cash Flow, the
Borrower shall, on the relevant Excess Cash Flow Application Date, apply the
ECF Percentage of such Excess Cash Flow toward the prepayment of the Term Loans
and the reduction of the Revolving Credit Commitments as set forth in Section
2.11(e). Each such prepayment and commitment reduction shall be made on a date
(an "Excess Cash Flow Application Date") no later than five days after the
earlier of (i) the date on which the financial statements of the Borrower
referred to in Section 6.1(a), for the fiscal year with respect to which such
prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.

(e) Amounts to be applied in connection with prepayments and
Revolving Credit Commitment reductions made pursuant to this Section 2.11 shall
be applied, first, to the prepayment of the Term Loans and, second, to reduce
permanently the Revolving Credit Commitments. Any such reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of the
Revolving Credit Loans and/or Swing Line Loans to the extent, if any, that the
Total Revolving Extensions of Credit exceed the amount of the aggregate
Revolving Credit Commitments as so reduced, provided that if the aggregate
principal amount of Revolving Credit Loans and Swing Line Loans then
outstanding is less than the amount of such excess (because L/C Obligations
constitute a portion thereof), the Borrower shall, to the extent of the balance
of such excess, replace outstanding Letters of Credit and/or deposit an amount
in cash in a cash collateral account established with the Administrative Agent
for the benefit of the Lenders on terms and conditions satisfactory to the
Administrative Agent. The application of any prepayment pursuant to this
Section 2.11 shall be made first to ABR Loans and second to Eurodollar Loans.
Amounts prepaid on account of the Term Loans may not be reborrowed.

2.12 Conversion and Continuation Options. (a) The Borrower
may elect from time to time to convert Eurodollar Loans to ABR Loans by giving
the Administrative Agent at least one Business Day's prior irrevocable notice
of such election, provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert ABR Loans to Eurodollar Loans
by giving the Administrative Agent at least three Business Days' prior
irrevocable notice of such election (which notice shall specify the length of
the initial Interest Period therefor), provided that no ABR Loan under a
particular Facility may be converted into a Eurodollar Loan (i) when any Event
of Default has occurred and is continuing and the Administrative Agent or the
Majority Facility Lenders in respect of such Facility have determined in its or
their sole discretion not to permit such conversions or (ii) after

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<PAGE> 37
the date that is one month prior to the final scheduled termination or maturity
date of such Facility. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.

(b) Any Eurodollar Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurodollar Loan under a particular Facility may be
continued as such (i) when any Event of Default has occurred and is continuing
and the Administrative Agent has or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit
such continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to ABR Loans on
the last day of such then expiring Interest Period. Upon receipt of any such
notice the Administrative Agent shall promptly notify each relevant Lender
thereof.

2.13 Minimum Amounts and Maximum Number of Eurodollar
Tranches. Notwithstanding anything to the contrary in this Agreement, all
borrowings, conversions, continuations and optional prepayments of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, after giving
effect thereto, (a) the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof, (b) no more than six Eurodollar
Tranches under a particular Facility shall be outstanding at any one time and
(c) no more than sixteen Eurodollar Tranches in the aggregate shall be
outstanding at any one time.

2.14 Interest Rates and Payment Dates. (a) Each Eurodollar
Loan shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such
day plus the Applicable Margin.

(b) Each ABR Loan shall bear interest at a rate per annum
equal to the ABR plus the Applicable Margin.

(c) (i) If all or a portion of the principal amount of any
Loan or Reimbursement Obligation shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), all outstanding Loans and
Reimbursement Obligations (whether or not overdue) shall bear interest at a
rate per annum which is equal to (x) in the case of the Loans, the rate that
would otherwise be applicable thereto pursuant to the foregoing provisions of
this Section 2.14 plus 2% or (y) in the case of Reimbursement Obligations, the
rate applicable to ABR Loans under the Revolving Credit Facility plus 2%, and
(ii) if all or a portion of any interest payable on any Loan or Reimbursement
Obligation or any commitment fee or other amount payable hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
applicable to ABR Loans under the relevant Facility plus 2% (or, in the case of
any such other amounts that do not relate to a particular Facility, the rate
applicable to ABR Loans under the Revolving Credit Facility plus 2%), in each
case, with respect to clauses (i) and (ii) above, from the date of such
non-payment until such amount is paid in full (as well after as before
judgment).

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<PAGE> 38
(d) Interest shall be payable in arrears on each Interest
Payment Date, provided that interest accruing pursuant to paragraph (c) of this
Section 2.14 shall be payable from time to time on demand.

2.15 Computation of Interest and Fees. (a) Interest, fees
and commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to ABR
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on
a Loan resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the
Administrative Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower and the Lenders in the absence of
manifest error. The Administrative Agent shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used by
the Administrative Agent in determining any interest rate applicable to any
Eurodollar Loan.

2.16 Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:

(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or

(b) the Administrative Agent shall have received notice from
the Majority Facility Lenders in respect of the relevant Facility that
the Eurodollar Rate determined or to be determined for such Interest
Period will not adequately and fairly reflect the cost to such Lenders
(as conclusively certified by such Lenders) of making or maintaining
their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to
the Borrower and the relevant Lenders as soon as practicable thereafter. If
such notice is given (x) any Eurodollar Loans under the relevant Facility
requested to be made on the first day of such Interest Period shall be made as
ABR Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as ABR Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted to ABR Loans on the last day of the
Interest Period applicable thereto. Until such notice has been withdrawn by
the Administrative Agent, no further Eurodollar Loans under the relevant
Facility shall be made or continued as such, nor shall the Borrower have the
right to convert Loans under the relevant Facility to Eurodollar Loans.

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<PAGE> 39
2.17 Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower from the Lenders hereunder, each payment by the Borrower on
account of any commitment fee and any reduction of the Revolving Credit
Commitments shall be made, with regard to the applicable Facility, pro rata
according to the respective Tranche A Term Loan Percentages, Tranche B Term
Loan Percentages or Revolving Credit Percentages, as the case may be, of the
relevant Lenders.

(b) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Term Loans shall be made pro
rata according to the respective outstanding principal amounts of the Term
Loans then held by the Term Loan Lenders (or, in the case of scheduled
repayments, the Term Loan Lenders under the relevant Facility). The amount of
each principal payment of the Term Loans (other than scheduled repayments of
installments of principal) shall be applied to reduce the then remaining
installments of the Tranche A Term Loans and the Tranche B Term Loans, pro rata
based upon the then remaining number of installments thereof, after giving
effect to all prior reductions thereto (i.e., each then remaining installment
of the Tranche A Term Loans or Tranche B Term Loans, as the case may be, shall
be reduced by an amount equal to the aggregate amount to be applied to the
Tranche A Term Loans or Tranche B Term Loans, as the case may be, divided by
the number of the then remaining installments for such Tranche A Term Loans or
Tranche B Term Loans); provided, that if the amount to be so applied to any
installment would exceed the then remaining amount of such installment, then an
amount equal to such excess shall be applied to the next succeeding installment
after giving effect to all prior reductions thereto (including the amount of
prepayments theretofore allocated pursuant to the preceding portion of this
sentence). Notwithstanding the foregoing, the first $40,000,000 of optional
prepayments of the Term Loans shall be applied to such installments of the Term
Loans as the Borrower shall elect (other than scheduled installments of the
Tranche B Term Loans prior to September 30, 2004).

(c) Each payment (including each prepayment) by the Borrower
on account of principal of and interest on the Revolving Credit Loans shall be
made pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.

(d) All payments (including prepayments) to be made by the
Borrower hereunder, whether on account of principal, interest, fees or
otherwise, shall be made without setoff or counterclaim and shall be made prior
to 12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders, at the Administrative
Agent's office specified in Section 10.2, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to
the Lenders promptly upon receipt in like funds as received. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day (except, in the
case of Eurodollar Loans, as otherwise provided in clause (i) of the definition
of "Interest Period"). In the case of any extension of any payment of
principal pursuant to the preceding sentence, interest thereon shall be payable
at the then applicable rate during such extension.

(e) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If

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<PAGE> 40
such amount is not made available to the Administrative Agent by the required
time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the daily average Federal Funds Effective Rate for the period until
such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.17(e) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans under the relevant Facility, on demand, from the Borrower.

2.18 Requirements of Law. (a) If the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof or compliance by any Lender with any request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority made subsequent to the Closing Date:

(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Letter of Credit, any
Application or any Eurodollar Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 2.19, the establishment of a tax
based on the overall net income of such Lender and changes in the rate
of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If any Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.18, it
shall promptly (and in any event no later than 90 days after such Lender
becomes entitled to make such claim) notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so
entitled. If the Borrower notifies the Administrative Agent within five
Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this Section 2.18(a), the Borrower may
convert all Eurodollar Loans of such Lender then outstanding into ABR Loans in
accordance with Section 2.12 and shall, additionally, reimburse such Lender for
any cost in accordance with Section 2.20.

(b) If any Lender shall have determined that the adoption of
or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or

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<PAGE> 41
compliance by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any Governmental Authority made subsequent to the Closing
Date shall have the effect of reducing the rate of return on such Lender's or
such corporation's capital as a consequence of its obligations hereunder or
under or in respect of any Letter of Credit to a level below that which such
Lender or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Administrative Agent) of a written request
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such corporation for such reduction;
provided that the Borrower shall not be required to compensate a Lender
pursuant to this paragraph for any amounts incurred more than six months prior
to the date that such Lender notifies the Borrower of such Lender's intention
to claim compensation therefor; and provided further that, if the circumstances
giving rise to such claim have a retroactive effect, then such six-month period
shall be extended to include the period of such retroactive effect.

(c) A certificate as to any additional amounts payable
pursuant to this Section 2.18, showing in reasonable detail the calculation
thereof and certifying that it is generally charging such costs to other
similarly situated borrowers under similar credit facilities, submitted by any
Lender to the Borrower (with a copy to the Administrative Agent), shall be
conclusive in the absence of manifest error, provided that the determination of
such amounts shall be made in good faith in a manner generally consistent with
such Lender's standard practices. The obligations of the Borrower pursuant to
this Section 2.18 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder for a period of
nine months thereafter.

2.19 Taxes. (a) All payments made by the Borrower under
this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely from the Administrative Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Loan Document). If any
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the
amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof to the extent such
Lender's compliance with the requirements of Section 2.19(b) at the time such
Lender becomes a party to this Agreement fails to establish a complete
exemption from such withholding. Whenever any Non-Excluded Taxes are payable
by the Borrower, as promptly as possible thereafter the Borrower shall send to
the Administrative Agent for its own account or for the account of such Lender,
as the case

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may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Administrative Agent and
the Lenders for any incremental taxes, interest or penalties that may become
payable by the Administrative Agent or any Lender as a result of any such
failure. The agreements in this Section 2.19 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder for a period of nine months thereafter.

(b) Each Lender (or Transferee) that is not (i) a citizen or
resident of the United States of America, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States of
America (or any jurisdiction thereof), or (iii) an estate or trust that is
subject to federal income taxation regardless of the source of its income
(each, a "Non-U.S. Lender") shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from
which the related participation shall have been purchased) two copies of either
U.S. 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 thereto
(and, if such Non-U.S. Lender delivers a Form W-8, an annual certificate
representing, under penalty of perjury, 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 a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement and the other Loan Documents. 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 any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms on or before the expiration or obsolescence and
promptly upon the invalidity of any form previously delivered by such Non-U.S.
Lender and after the occurrence of any event requiring a change in the most
recently provided form and, if necessary, obtain any extensions of time
reasonably requested by the Borrower of the Administrative Agent for filing and
completing such forms. Each Non-U.S. Lender agrees, to the extent legally
entitled to do so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Administrative Agent) such
other forms as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with respect to
payments of interest under this Agreement or the other Loan Documents, provided
that in determining the reasonableness of such a request, such Lender shall be
entitled to consider the cost of complying with such request (to the extent
unreimbursed by the Borrower) that would be imposed on such Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the
U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this Section 2.19(b), a Non-U.S. Lender shall not be required to deliver any
form pursuant to this Section 2.19(b) that such Non-U.S. Lender is not legally
able to deliver.

2.20 Indemnity. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss (excluding loss of profit) or
expense which such Lender may sustain or incur as a consequence of (a) default
by the Borrower in making a borrowing of, conversion into or

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continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day
of an Interest Period with respect thereto. Such indemnification may include
an amount equal to the excess, if any, of (i) the amount of interest which
would have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market. A
certificate as to any amounts payable pursuant to this Section 2.20, showing in
reasonable detail the calculation thereof, submitted to the Borrower by any
Lender shall be conclusive in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder for a period of nine months thereafter.

2.21 Change of Lending Office. Each Lender agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.18 or
2.19(a) with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or
regulatory disadvantage, and provided, further, that nothing in this Section
2.21 shall affect or postpone any of the obligations of any Borrower or the
rights of any Lender pursuant to Section 2.18 or 2.19(a).

2.22 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 2.18 or 2.19 or (b)
defaults in its obligation to make Loans hereunder, with a replacement
financial institution; provided that (i) such replacement does not conflict
with any Requirement of Law, (ii) no Event of Default shall have occurred and
be continuing at the time of such replacement, (iii) prior to any such
replacement, such Lender shall have taken no action under Section 2.21 so as to
eliminate the continued need for payment of amounts owing pursuant to Section
2.18 or 2.19, (iv) the Borrower shall repay (or the replacement financial
institution shall purchase, at par) all Loans and other amounts (including
accrued interest and fees) owing to such replaced Lender on or prior to the
date of replacement, (v) the Borrower shall be liable to such replaced Lender
under Section 2.20 if any Eurodollar Loan owing to such replaced Lender shall
be prepaid (or purchased) other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of Section 10.6, (viii) until such time as such replacement
shall be consummated, the Borrower shall pay all additional amounts (if any)
required pursuant to Section 2.18 or 2.19, as the case may be, and (ix) any
such replacement shall not be deemed to be a waiver of any rights which the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.

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SECTION 3. LETTERS OF CREDIT

3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof, each Issuing Lender, in reliance on the agreements of the other
Revolving Credit Lenders set forth in Section 3.4(a), agrees to issue letters
of credit ("Letters of Credit") for the account of the Borrower on any Business
Day during the Revolving Credit Commitment Period in such form as may be
approved from time to time by such Issuing Lender; provided that no Issuing
Lender shall have any obligation to issue any Letter of Credit if, after giving
effect to such issuance, (i) the L/C Obligations would exceed the L/C
Commitment or (ii) the aggregate amount of the Available Revolving Credit
Commitments would be less than zero. Each Letter of Credit shall (i) be
denominated in Dollars and (ii) expire no later than the earlier of (x) the
first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Scheduled Revolving Credit Termination Date,
provided that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).

(b) Each Letter of Credit shall be subject to the Uniform
Customs and, to the extent not inconsistent therewith, the laws of the State of
New York.

(c) No Issuing Lender shall at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
such Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.

3.2 Procedure for Issuance of Letter of Credit. The Borrower
may from time to time request that an Issuing Lender issue a Letter of Credit
by delivering to such Issuing Lender at its address for notices specified
herein an Application therefor, completed to the satisfaction of such Issuing
Lender, and such other certificates, documents and other papers and information
as such Issuing Lender may reasonably request. Upon receipt of any
Application, the relevant Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
any Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the relevant Issuing Lender and the Borrower.
The relevant Issuing Lender shall furnish a copy of such Letter of Credit to
the Borrower promptly following the issuance thereof. The relevant Issuing
Lender shall promptly furnish to the Administrative Agent notice of the
issuance of each Letter of Credit (including the amount thereof). The
Administrative Agent will furnish to the Revolving Credit Lenders (a) prompt
notice of the issuance of each standby Letter of Credit and (b) a monthly
report setting forth for the relevant month the total aggregate daily amount
available to be drawn under commercial Letters of Credit that were outstanding
during such month.

3.3 Commissions, Fees and Other Charges. (a) The Borrower
will pay to the Administrative Agent, for the account of each Revolving Credit
Lender, a commission on all outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with respect to Eurodollar Loans
under the Revolving Credit Facility minus the fronting fee referred to below,
shared ratably among the Revolving Credit Lenders and payable quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower shall pay to each Issuing

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Lender for its own account a fronting fee of 1/4 of 1% per annum in respect of
each Letter of Credit issued by such Issuing Lender, payable quarterly in
arrears on each L/C Fee Payment Date after the Issuance Date.

(b) In addition to the foregoing fees and commissions, the
Borrower shall pay or reimburse the relevant Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by such Issuing Lender
in issuing, negotiating, effecting payment under, amending or otherwise
administering any Letter of Credit.

3.4 L/C Participations. (a) Each Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce each
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases from
the relevant Issuing Lender, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk an undivided interest equal to
such L/C Participant's Revolving Credit Percentage in such Issuing Lender's
obligations and rights under each Letter of Credit issued by such Issuing
Lender and the amount of each draft paid by such Issuing Lender thereunder.
Each L/C Participant unconditionally and irrevocably agrees with each Issuing
Lender that, if a draft is paid under any Letter of Credit issued by such
Issuing Lender for which such Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to such Issuing Lender upon demand an amount equal to such L/C
Participant's Revolving Credit Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed.

(b) If any amount required to be paid by any L/C Participant
to any Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed
portion of any payment made by such Issuing Lender under any Letter of Credit
is paid to such Issuing Lender within three Business Days after the date such
payment is due, such L/C Participant shall pay to such Issuing Lender on demand
an amount equal to the product of (i) such amount, times (ii) the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to such Issuing Lender, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
Section 3.4(a) is not made available to such Issuing Lender by such L/C
Participant within three Business Days after the date such payment is due, such
Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to ABR Loans under the Revolving Credit Facility. A
certificate of the relevant Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.

(c) Whenever, at any time after an Issuing Lender has made
payment under any Letter of Credit and has received from any L/C Participant
its pro rata share of such payment in accordance with Section 3.4(a), such
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by such Issuing Lender), or any payment of interest on account
thereof, such Issuing Lender will distribute to such L/C Participant its pro
rata share thereof; provided, however, that in the event that any such payment
received by such Issuing Lender shall be required to be returned by such
Issuing Lender, such

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<PAGE> 46
L/C Participant shall return to such Issuing Lender the portion thereof
previously distributed by such Issuing Lender to it.

3.5 Reimbursement Obligation of the Borrower. The Borrower
agrees to reimburse each Issuing Lender on each date on which such Issuing
Lender notifies the Borrower of the date and amount of a draft presented under
any Letter of Credit and paid by such Issuing Lender for the amount of (a) such
draft so paid and (b) any taxes, fees, charges or other costs or expenses
incurred by such Issuing Lender in connection with such payment. Each such
payment shall be made to such Issuing Lender in lawful money of the United
States of America and in immediately available funds. Interest shall be
payable on any and all amounts remaining unpaid by the Borrower under this
Section from the date such amounts become payable (whether at stated maturity,
by acceleration or otherwise) until payment in full at the rate set forth in
Section 2.14(c). Each drawing under any Letter of Credit shall (unless an
event of the type described in clause (i) or (ii) of Section 8(f) shall have
occurred and be continuing with respect to the Borrower, in which case the
procedures specified in Section 3.4 for funding by L/C Participants shall
apply) constitute a request by the Borrower to the Administrative Agent for a
borrowing pursuant to Section 2.5 of ABR Loans (or, at the option of the
Administrative Agent and the Swing Line Lender in their sole discretion, a
borrowing pursuant to Section 2.7 of Swing Line Loans) in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date
of payment of the relevant draft.

3.6 Obligations Absolute. The Borrower's obligations under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against any Issuing Lender
(except to the extent resulting from the gross negligence or willful misconduct
of such Issuing Lender), any beneficiary of a Letter of Credit or any other
Person. The Borrower also agrees with each Issuing Lender that, subject to the
last sentence of this Section 3.6, no Issuing Lender shall be responsible for,
and the Borrower's Reimbursement Obligations under Section 3.5 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. No Issuing
Lender shall be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors,
omissions or delays in transmission found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Issuing Lender that issued such Letter of Credit.
The Borrower agrees that any action taken or omitted by any Issuing Lender
under or in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful misconduct and
in accordance with the standards or care specified in the Uniform Commercial
Code of the State of New York, shall be binding on the Borrower and shall not
result in any liability of any Issuing Lender to the Borrower.

3.7 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the relevant Issuing Lender
shall promptly notify the Borrower of the date and amount thereof. The
responsibility of each Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit issued by it shall, in
addition to any payment obligation expressly provided for in such Letter of
Credit, be limited to determining that the documents

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<PAGE> 47
(including each draft) delivered under such Letter of Credit in connection with
such presentment are substantially in conformity with such Letter of Credit.

3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter
into this Agreement and to make the Loans and issue or participate in the
Letters of Credit, the Borrower hereby represents and warrants to the
Administrative Agent and each Lender that:

4.1 Financial Condition. (a) (i) The unaudited pro forma
consolidated balance sheet of the Borrower and its consolidated Subsidiaries as
at September 30, 1996 (including the notes thereto) (the "Pro Forma Balance
Sheet"), copies of which have heretofore been furnished to each Lender, has
been prepared giving effect (as if such events had occurred on such date) to
(i) the consummation of the Acquisitions, (ii) the Loans to be made and the
Senior Subordinated Notes to be issued on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet presents fairly on a pro forma
basis the financial position of the Borrower and its consolidated Subsidiaries
as at September 30, 1996 and is based upon good faith estimates and assumptions
believed by management of the Borrower to be reasonable at the time made,
assuming that the events specified in the preceding sentence had actually
occurred at such date.

(ii) The unaudited pro forma consolidated balance sheet and
statement of EBITDA of the Borrower and its consolidated Subsidiaries as at, or
for the fiscal year ended, December 31, 1996 (including the notes thereto) (the
"Bumble Bee Pro Forma Financial Statements"), copies of which have heretofore
been furnished to each Lender, have been prepared giving effect to (i) the
consummation of the Bumble Bee Acquisition (including the results of the
bankruptcy proceeding to which Bumble Bee shall have been subject), (ii) the
Loans to be made on the July 1997 Amendment/Restatement Closing Date and the
use of proceeds thereof and (iii) the payment of fees and expenses in
connection with the foregoing. The Bumble Bee Pro Forma Financial Statements
present fairly on a pro forma basis the financial position of the Borrower and
its consolidated Subsidiaries as at December 31, 1996 and are based upon good
faith estimates and assumptions believed by management of the Borrower to be
reasonable at the time made.

(iii) The unaudited estimated pro forma consolidated balance
sheet and statement of EBITDA of the Borrower and its consolidated Subsidiaries
as at, or for the period of four consecutive fiscal quarters ended, December
31, 1997 (including the notes thereto) (the "IPO Pro Forma Financial
Statements"), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect to (i) the consummation of the Initial Public
Offering, (ii) the loans under the Existing Credit Agreement to be repaid on
the Amendment/Restatement Closing Date and (iii) the payment of fees and
expenses in connection with the foregoing. The IPO Pro Forma Financial
Statements present fairly on a pro forma basis the estimated financial position
of the Borrower and its consolidated Subsidiaries as at December 31, 1997 and
are based upon good faith estimates and assumptions believed by management of
the Borrower to be reasonable at the time made.

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<PAGE> 48
(b) (i) The audited consolidated balance sheets of the AHP
Food Business as at December 31, 1994 and December 31, 1995, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Arthur Andersen LLP, present fairly the consolidated financial condition of the
AHP Food Business as at such date, and the consolidated results of its
operations and its consolidated cash flows for the respective fiscal years then
ended. The audited consolidated balance sheet of Heritage and its consolidated
Subsidiaries as at December 31, 1995, and the related consolidated statements
of income and of cash flows for the fiscal years ended on such dates, reported
on by and accompanied by an unqualified report from Coopers & Lybrand L.L.P.,
present fairly the consolidated financial condition of Heritage and its
consolidated Subsidiaries as at such date, and the consolidated results of
their operations and their consolidated cash flows for the fiscal year then
ended. The unaudited consolidated balance sheet of the AHP Food Business as at
September 30, 1996, and the related unaudited consolidated statements of income
and cash flows for the nine-month period ended on such date, present fairly the
consolidated financial condition of the AHP Food Business as at such date, and
the consolidated results of its operations and its consolidated cash flows for
the nine-month period then ended (subject to normal year-end audit
adjustments). The unaudited consolidated balance sheets of Heritage and its
consolidated Subsidiaries as at September 30, 1996, and the related unaudited
consolidated statements of income and cash flows for the nine-month period
ended on such date, present fairly the consolidated financial condition of
Heritage and its consolidated Subsidiaries as at such date, and the
consolidated results of their operations and their consolidated cash flows for
the nine-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
relevant firm of accountants and disclosed therein). The most recent balance
sheets referred to above reflect, as required by GAAP, with respect to the AHP
Food Business or Heritage, as the case may be, any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, and any
long-term leases and unusual forward or long-term commitments, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction or other obligation in respect of derivatives, in each case as of
the date of such balance sheets. During the period from September 30, 1996 to
and including the Closing Date there has been no sale, transfer or other
disposition by the AHP Food Business or Heritage of any material part of its
business or Property (other than in connection with the Acquisitions).

(ii) The audited consolidated balance sheets of Bumble Bee as
at December 31, 1995 and December 31, 1996, and the related consolidated
statements of income and of cash flows for the fiscal years ended on such
dates, reported on by and accompanied by a report from Peat Marwick LLP,
present fairly the consolidated financial condition of Bumble Bee as at such
dates, and the consolidated results of its operations and its consolidated cash
flows for the respective fiscal years then ended. The unaudited consolidated
balance sheet of Bumble Bee as at March 31, 1997, and the related unaudited
consolidated statements of income and cash flows for the three-month period
ended on such date, present fairly the consolidated financial condition of
Bumble Bee as at such date, and the consolidated results of its operations and
its consolidated cash flows for the three-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP applied consistently throughout the periods involved (except as approved
by the relevant firm of accountants and disclosed therein). During the period
from December 31, 1996 to and including the July 1997 Amendment/Restatement
Closing Date there has been no sale, transfer or other disposition by Bumble
Bee or any of its

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Subsidiaries of any material part of its business or Property (other than in
connection with the Bumble Bee Acquisition).

4.2 No Change. Since December 31, 1996 there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect (it being understood that the reference to the Borrower
and its Subsidiaries in the definition of "Material Adverse Effect" includes
the Property acquired pursuant to the Bumble Bee Acquisition).

4.3 Corporate Existence; Compliance with Law. Each of the
Borrower and each of its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(b) has the corporate power and authority, and the legal right, to own and
operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its
business requires such qualification and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

4.4 Corporate Power; Authorization; Enforceable Obligations.
Each Loan Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Loan Documents to which it is a party and, in the
case of the Borrower, to borrow and obtain other extensions of credit
hereunder. Each Loan Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party and, in the case of the Borrower, to authorize the
borrowings and other extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Acquisitions, the Bumble Bee Acquisition and the
borrowings and other extensions of credit hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement or any of
the other Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect, (ii)
consents under immaterial Contractual Obligations relating to limitations on
the assignability thereof and (iii) the filings referred to in Section 4.19.
Each Loan Document has been duly executed and delivered on behalf of each Loan
Party thereto. This Agreement constitutes, and each other Loan Document upon
execution will constitute, a legal, valid and binding obligation of each Loan
Party thereto, enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

4.5 No Legal Bar. The execution, delivery and performance of
this Agreement and the other Loan Documents, the issuance of Letters of Credit,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or any material Contractual Obligation of the Borrower
or any of its Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents). No Requirement of Law or
Contractual Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.

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4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower, threatened by or against the Borrower or any
of its Subsidiaries or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (b) which could reasonably be expected to
have a Material Adverse Effect.

4.7 No Default. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

4.8 Ownership of Property; Liens. Each of the Borrower and
each of its Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to
any Lien except as permitted by Section 7.3.

4.9 Intellectual Property. Each of the Borrower and each of
its Subsidiaries owns (subject only to the recording of conveyance and
assignment documentation in the U.S. Patent and Trademark Office and other
applicable jurisdictions, which recording shall be completed promptly after the
Closing Date), or is licensed to use, all trademarks, tradenames, service
marks, copyrights, technology, know-how and processes ("Intellectual Property")
necessary for the conduct of its business as currently conducted. Except as,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, (a) no claim has been asserted and is pending by any Person challenging
or questioning the use of any Intellectual Property or the validity of any
Intellectual Property (nor does the Borrower know of any valid basis for any
such claim) and (b) the use of Intellectual Property by the Borrower and its
Subsidiaries does not infringe on the rights of, and no Intellectual Property
of the Borrower or any of its Subsidiaries is being infringed upon by, any
Person.

4.10 Taxes. Each of the Borrower and each of its
Subsidiaries has filed or caused to be filed all Federal and all material state
and other material tax returns which are required to be filed and has paid all
taxes shown to be due and payable on said returns or on any assessments made
against it or any of its property and all other taxes, fees or other charges
imposed on it or any of its property by any Governmental Authority (other than
any taxes, fees or other charges the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Borrower or its Subsidiaries, as the case may be); and no tax Lien has been
filed, and, to the knowledge of the Borrower, no material claim is being
asserted, with respect to any such tax, fee or other charge.

4.11 Federal Regulations. No Letters of Credit and no part
of the proceeds of any Loans will be used for "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted terms under
Regulation G or Regulation U of the Board as now and from time to time
hereafter in effect or for any purpose which violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR
Form G-3 or FR Form U-1 referred to in said Regulation G or Regulation U, as
the case may be.

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4.12 Labor Matters. There are no strikes or other labor
disputes against the Borrower or any of its Subsidiaries pending or, to the
knowledge of the Borrower, threatened that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect. Hours worked
by and payment made to employees of the Borrower and its Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Requirement of Law dealing with such matters that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect. All
payments due from the Borrower or any of its Subsidiaries on account of
employee health and welfare insurance that (individually or in the aggregate)
could reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of the Borrower or the
relevant Subsidiary.

4.13 ERISA. Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan, and
each Plan has complied in all material respects with the applicable provisions
of ERISA and the Code. No termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year
period. The present value of all accrued benefits under each Single Employer
Plan (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by a material amount. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan that could reasonably be expected to have a Material Adverse
Effect, and neither the Borrower nor any Commonly Controlled Entity would
become subject to any liability under ERISA that could reasonably be expected
to have a Material Adverse Effect if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
Reorganization or Insolvent.

4.14 Investment Company Act; Other Regulations. No Loan
Party is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Loan Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.

4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
constitute all the Subsidiaries of the Borrower at the Closing Date. The
Subsidiaries listed on Schedule 4.15-A constitute all the Subsidiaries of the
Borrower at the Amendment/Restatement Closing Date.

4.16 Use of Proceeds. The proceeds of the Term Loans when
initially made were used to finance a portion of the Acquisitions and the
Bumble Bee Acquisition and to pay related fees and expenses. The proceeds of
the Revolving Credit Loans and the Swing Line Loans shall be used for general
corporate purposes. The Letters of Credit shall be used for general corporate
purposes.

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4.17 Environmental Matters. Except as, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect:

(a) the facilities and properties owned, leased or operated
by the Borrower or any of its Subsidiaries (the "Properties") do not
contain, and have not previously contained, any Materials of
Environmental Concern in amounts or concentrations or under
circumstances which (i) constitute or constituted a violation of, or
(ii) could give rise to liability under, any Environmental Law;

(b) the Properties and all operations at the Properties are
in compliance, and have in the last five years been in compliance,
with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental
Law with respect to the Properties or the business operated by the
Borrower or any of its Subsidiaries (the "Business");

(c) neither the Borrower nor any of its Subsidiaries has
assumed any liability of any other Person under Environmental Laws;

(d) neither the Borrower nor any of its Subsidiaries has
received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does the Borrower
have knowledge or reason to believe that any such notice will be
received or is being threatened;

(e) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in
a manner or to a location which could give rise to liability under,
any Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Law;

(f) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened,
under any Environmental Law to which the Borrower or any Subsidiary is
or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with
respect to the Properties or the Business; and

(g) there has been no release or threat of release of
Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.

4.18 Accuracy of Information, etc. No statement or
information contained in this Agreement, any other Loan Document, the
Confidential Information Memorandum, the Bumble Bee Confidential Information
Memorandum, the IPO Confidential Information Memorandum or any other document,
certificate or statement furnished to the Administrative Agent or the Lenders,
or any of

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them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished (or (a) in the case of the Confidential Information
Memorandum, as of the Closing Date, (b) in the case of the Bumble Bee
Confidential Information Memorandum, as of the July 1997 Amendment/Restatement
Closing Date or (c) in the case of the IPO Confidential Information Memorandum,
as of the Amendment/Restatement Closing Date), any untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements contained herein or therein not misleading. The projections and
pro forma financial information and other estimates and opinions contained in
the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Borrower to be reasonable at the time
made, it being recognized by the Lenders that such financial information as it
relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. As of the
Closing Date, the representations and warranties of the Buyer and the Merger
Sub and, to the best knowledge of the Borrower, the Sellers and AH Food Co. in
the Acquisition Agreement are true and correct in all material respects. As of
the July 1997 Amendment/Restatement Closing Date, the representations and
warranties of the Buyer (as defined in the Bumble Bee Purchase Agreement) and,
to the best knowledge of the Borrower, the Sellers (as defined in the Bumble
Bee Purchase Agreement) in the Bumble Bee Purchase Agreement are true and
correct in all material respects. There is no fact known to any Loan Party
that could reasonably be expected to have a Material Adverse Effect that has
not been expressly disclosed herein, in the other Loan Documents, in the
Confidential Information Memorandum, in the Bumble Bee Confidential Information
Memorandum, in the IPO Confidential Information Memorandum or in any other
documents, certificates and statements furnished to the Administrative Agent
and the Lenders for use in connection with the transactions contemplated hereby
and by the other Loan Documents.

4.19 Security Documents. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, a legal, valid and enforceable security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in the Guarantee and Collateral Agreement, when stock
certificates representing such Pledged Stock are delivered to the
Administrative Agent, and in the case of the other Collateral described in the
Guarantee and Collateral Agreement, when financing statements in appropriate
form are filed in the offices specified on Schedule 4.19(a) (or, in the case of
Collateral granted by Bumble Bee and its Subsidiaries, Schedule 4.19(a)-A and,
in the case of Collateral granted by DM US Holding, Corp. or Creative Products,
Inc. of Rossville, Schedule 4.19(a)-B), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof, as security for the Obligations (as defined in the Guarantee
and Collateral Agreement), in each case prior and superior in right to any
other Person subject, except in the case of such Pledged Stock, to Liens
permitted by paragraphs (a) through (f) of Section 7.3.

(b) Each of the Mortgages is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b) (or, in the case of Mortgages granted by Bumble Bee and its
Subsidiaries, Schedule 4.19(b)-A), each Mortgage shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the Loan Parties in the Mortgaged Properties and the proceeds thereof, as
security

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for the Obligations (as defined in the relevant Mortgage), in each case prior
and superior in right to any other Person, subject to Liens permitted by
paragraphs (a) through (f) of Section 7.3.

4.20 Solvency. On the Closing Date, each Loan Party is, and
after giving effect to the Acquisitions and the incurrence of all Indebtedness
and obligations being incurred in connection herewith and therewith will be,
Solvent. On the July 1997 Amendment/Restatement Closing Date, each Loan Party
is, and after giving effect to the Bumble Bee Acquisition and the incurrence of
all Indebtedness and obligations being incurred in connection herewith and
therewith will be, Solvent. On the Amendment/Restatement Closing Date, each
Loan Party is, and after giving effect to the Initial Public Offering and the
application of the proceeds thereof will be, Solvent.

4.21 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrower under and as defined in the Senior Subordinated
Note Indenture. The obligations of each Subsidiary Guarantor under the
Guarantee and Collateral Agreement constitute "Guarantor Senior Indebtedness"
of such Subsidiary Guarantor under and as defined in the Senior Subordinated
Note Indenture.

4.22 Regulation H. No Mortgage encumbers improved real
property which is located in an area that has been identified by the Secretary
of Housing and Urban Development as an area having special flood hazards and in
which flood insurance has been made available under the National Flood
Insurance Act of 1968.

SECTION 5. CONDITIONS PRECEDENT

5.1 Conditions to Initial Extension of Credit. The agreement
of each Lender to make the initial extension of credit requested to be made by
it is subject to the satisfaction, prior to or concurrently with the making of
such extension of credit on the Closing Date, of the following conditions
precedent:

(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, (ii) the Guarantee and Collateral
Agreement, executed and delivered by a duly authorized officer of the
Borrower and each Subsidiary Guarantor, (iii) each of the Mortgages,
executed and delivered by a duly authorized officer of each party
thereto, and (iv) for the account of each relevant Lender, Notes
conforming to the requirements hereof and executed and delivered by a
duly authorized officer of the Borrower.

(b) Acquisitions, HM Equity, Senior Subordinated Notes, etc.
The following transactions shall have been consummated, in each case
on terms and conditions reasonably satisfactory to the Lenders:

(i) Merger Sub shall have merged (the "Merger") with
and into AH Food Co. (with AH Food Co. being the surviving
corporation); AH Food Co. shall have changed its name to
International Home Foods, Inc.; at the time of the Merger and
after giving effect to certain related transactions referred
to below, the Borrower and its Subsidiaries shall conduct a
business (the "AHP Food Business") that manufactures, markets
and sells specialty foods products and, immediately prior to
such transactions,

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<PAGE> 55
was conducted by AH Food Co., the Sellers and their affiliates;
certain Subsidiaries and other assets of the Sellers and their
affiliates included in the AHP Food Business shall either have
been transferred to AH Food Co. immediately prior to the Merger
or purchased by the Borrower (any such purchase, a "Subsequent
Purchase") immediately after the Merger, as contemplated by the
Acquisition Agreement; in conjunction with the Merger, the
Buyer shall have paid consideration to the Sellers, the
Borrower shall have redeemed shares of common stock of the
Borrower held by the Sellers and the Borrower shall have paid
to the Sellers the purchase price for any Subsequent Purchase,
with the aggregate amount expended (the "AHP Purchase Price")
by the Buyer and the Borrower in connection with such
transactions, together with the value of the shares of common
stock of the Borrower held by the Sellers after giving effect
to the Merger (valued on the same basis as the HM Equity) being
equal to not more than $1,275,000,000, subject to adjustment as
provided in the Acquisition Agreement; and after giving effect
to the foregoing transactions, 80% of the common stock of the
Borrower shall be owned by the Buyer and 20% of the common
stock of the Borrower shall be owned by the Sellers (all of the
foregoing transactions, collectively, the "AHP Acquisition");

(ii) the Borrower shall have acquired (the "Heritage
Acquisition") at least 75% of the capital stock of Heritage
for a purchase price (the "Heritage Purchase Price")
(including repayment of assumed Indebtedness of Heritage) of
not more than $70,000,000 and all Indebtedness of Heritage
outstanding immediately prior to the Heritage Acquisition
shall have been paid in full;

(iii) (x) the Buyer shall have received at least
$264,000,000 from the proceeds of equity (the "HM Equity")
issued by the Buyer to funds managed by Hicks Muse and other
investors satisfactory to the Lenders, and such proceeds shall
have been applied to finance a portion of the AHP Purchase
Price and the Heritage Purchase Price; and (y) the value of
the shares of common stock of the Borrower held by the Sellers
after giving effect to the AHP Acquisition (valued at a price
per share by reference to the HM Equity) shall be at least
$66,000,000; provided, that a portion of the amount referred
to in clause (x) above may be funded with the proceeds of
unsecured loans to the Buyer; and

(iv) the Borrower shall have received at least
$400,000,000 in gross cash proceeds from the issuance of the
Senior Subordinated Notes.

(c) Pro Forma Balance Sheet; Financial Statements. The
Lenders shall have received (i) the Pro Forma Balance Sheet, (ii)
audited consolidated financial statements of the AHP Food Business for
the 1994 and 1995 fiscal years and audited financial statements of
Heritage for the 1995 fiscal year and (iii) unaudited interim
consolidated financial statements of the AHP Food Business and
Heritage for each fiscal month and quarterly period ended subsequent
to the date of the latest applicable financial statements delivered
pursuant to clause (ii) of this paragraph as to which such financial
statements are available, and such financial statements shall not, in
the reasonable judgment of the Lenders, reflect any material adverse
change in the consolidated financial condition of the AHP Food
Business or Heritage, as the case may be, as reflected in the
financial statements or projections contained in the Confidential
Information Memorandum

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<PAGE> 56
(d) Lien Searches. The Administrative Agent shall have
received the results of a recent lien search in each of the
jurisdictions where assets of the Loan Parties are located, and such
search shall reveal no liens on any of the assets of the Borrower or
its Subsidiaries except for liens permitted by Section 7.3.

(e) Environmental Audit. The Administrative Agent shall have
received an environmental audit with respect to the real properties of
the Borrower and its Subsidiaries specified by the Administrative
Agent.

(f) Expenses. The Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred in
connection with the Acquisitions and the financing thereof shall not
exceed $55,000,000.

(g) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each
Loan Party, dated the Closing Date, substantially in the form of
Exhibit C, with appropriate insertions and attachments.

(h) Legal Opinions. The Administrative Agent shall have
received the following executed legal opinions:

(i) the legal opinion of Vinson & Elkins,
counsel to the Borrower and its Subsidiaries, substantially in
the form of Exhibit F; and

(ii) the legal opinion of local counsel in
each of California, Pennsylvania and Ontario.

Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.

(i) Pledged Stock; Stock Powers. The Administrative Agent
shall have received the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral
Agreement, together with an undated stock power for each such
certificate executed in blank by a duly authorized officer of the
pledgor thereof.

(j) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code financing
statement) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien
on the Collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly permitted
by Section 7.3), shall be in proper form for filing, registration or
recordation.

(k) Mortgages, etc. (i) The Administrative Agent shall have
received a Mortgage with respect to each Mortgaged Property, executed
and delivered by a duly authorized officer of each party thereto.

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<PAGE> 57
(ii) If reasonably requested by the Administrative Agent, the
Administrative Agent shall have received, and the title insurance
company issuing the policy referred to in Section 5.1(k)(iii) (the
"Title Insurance Company") shall have received, maps or plats of an
as-built survey of the sites of the Mortgaged Properties certified to
the Administrative Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date satisfactory to the Administrative
Agent and the Title Insurance Company by an independent professional
licensed land surveyor reasonably satisfactory to the Administrative
Agent and the Title Insurance Company, which maps or plats and the
surveys on which they are based shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping in 1992, and, without
limiting the generality of the foregoing, there shall be surveyed and
shown on such maps, plats or surveys the following: (A) the locations
on such sites of all the buildings, structures and other improvements
and the established building setback lines; (B) the lines of streets
abutting the sites and width thereof; (C) all access and other
easements appurtenant to the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent
from a physical inspection of the sites or otherwise known to the
surveyor; (E) any encroachments on any adjoining property by the
building structures and improvements on the sites; (F) if the site is
described as being on a filed map, a legend relating the survey to
said map; and (G) the flood zone designations, if any, in which the
Mortgaged Properties are located; provided, that any of the foregoing
items so requested by the Administrative Agent may be delivered after
the Closing Date subject to compliance with Section 6.10(e).

(iii) The Administrative Agent shall have received in respect
of each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each
such policy shall (A) be in an amount reasonably satisfactory to the
Administrative Agent; (B) be issued at ordinary rates; (C) insure that
the Mortgage insured thereby creates a valid first Lien on such
Mortgaged Property free and clear of all defects and encumbrances,
except as disclosed therein; (D) name the Administrative Agent for the
benefit of the Lenders as the insured thereunder; (E) be in the form
of ALTA Loan Policy - 1970 (Amended 10/17/70 and 10/17/84) (or
equivalent policies) to the extent available in the applicable
jurisdictions; (F) contain such endorsements and affirmative coverage
as the Administrative Agent may reasonably request to the extent
available in the applicable jurisdictions; and (G) be issued by title
companies satisfactory to the Administrative Agent (including any such
title companies acting as co-insurers or reinsurers, at the option of
the Administrative Agent). The Administrative Agent shall have
received evidence satisfactory to it that all premiums in respect of
each such policy, all charges for mortgage recording tax, and all
related expenses, if any, have been paid.

(iv) If reasonably requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood
insurance which (1) covers any parcel of improved real property which
is encumbered by any Mortgage, (2) is written in an amount not less
than the outstanding principal amount of the indebtedness secured by
such Mortgage which is reasonably allocable to such real property or
the maximum limit of coverage made available with respect to the
particular type of property under the National Flood Insurance Act of
1968, whichever is less, and (3) has a term ending not later than the
maturity of the Indebtedness

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secured by such Mortgage and (B) confirmation that the Borrower has
received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board; provided, that any of the foregoing items
so requested by the Administrative Agent may be delivered after the
Closing Date subject to compliance with Section 6.10(e).

(v) The Administrative Agent shall have received a copy of
all recorded documents referred to, or listed as exceptions to title,
in the title policy or policies referred to in Section 5.1(k)(iii) and
a copy of all other material documents affecting the Mortgaged
Properties.

(l) Solvency Opinion. The Administrative Agent shall have
received a solvency opinion from Corporate Valuation Advisors, Inc.

(m) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of the Guarantee
and Collateral Agreement and the Mortgages.

5.2 Conditions to Each Extension of Credit. The agreement of
each Lender to make any extension of credit requested to be made by it on any
date (including, without limitation, its initial extension of credit) is
subject to the satisfaction of the following conditions precedent:

(a) Representations and Warranties. Each of the
representations and warranties made by any Loan Party in or pursuant
to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.

(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
extensions of credit requested to be made on such date.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.

5.3 Conditions to Amendment/Restatement Closing Date. The
effectiveness of the amendment and restatement of the Existing Credit Agreement
pursuant to this Agreement, and the agreement of each Lender to make any
extension of credit requested to be made by it on the Amendment/Restatement
Closing Date, is subject to the satisfaction, prior to or concurrently with the
making of any such extension of credit on the Amendment/Restatement Closing
Date, of the following conditions precedent:

(a) Loan Documents. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, (ii) a confirmation of the
Guarantee and Collateral Agreement, executed and delivered by a duly
authorized officer of the Borrower and each Subsidiary Guarantor, in
form and substance satisfactory to the Administrative Agent, (iii) for
the account of each relevant Lender, to the extent necessary, Notes
conforming to the requirements hereof and executed and delivered by a
duly authorized officer of the Borrower and (iv) an Addendum executed
and delivered by each Lender listed on Schedule 1.1A.

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(b) Initial Public Offering Proceeds. The Borrower shall
have received at least $200,000,000 of gross cash proceeds from the
Initial Public Offering and the net cash proceeds thereof shall have
been applied to repay loans outstanding under the Existing Credit
Agreement.

(d) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Amendment/Restatement Closing Date, substantially
in the form of Exhibit C, with appropriate insertions and attachments.

(e) Legal Opinion. The Administrative Agent shall have
received the executed legal opinion of Vinson & Elkins, counsel to the
Borrower and its Subsidiaries, substantially in the form of Exhibit F.
Such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative
Agent may reasonably require.

SECTION 6. AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Revolving
Credit Commitments remain in effect, any Letter of Credit remains outstanding
or any Loan or other amount is owing to any Lender or the Administrative Agent
hereunder, the Borrower shall and shall cause each of its Subsidiaries to:

6.1 Financial Statements. Furnish to the Administrative
Agent (with sufficient copies for each Lender, which shall in turn be promptly
distributed by the Administrative Agent to the Lenders):

(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower, a copy of the
audited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such year and the related
audited consolidated statements of income and of cash flows for such
year, setting forth in each case in comparative form the figures for
the previous year, reported on without a "going concern" or like
qualification or exception, or qualification arising out of the scope
of the audit, by independent certified public accountants of
nationally recognized standing;

(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower and its consolidated Subsidiaries as at the end
of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and

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(c) as soon as available, but in any event not later than 30
days after the end of each month occurring during each fiscal year of
the Borrower (other than the third, sixth, ninth and twelfth such
month), the unaudited consolidated balance sheet of the Borrower and
its Subsidiaries as at the end of such month and the related unaudited
consolidated statements of income and of cash flows for such month and
the portion of the fiscal year through the end of such month, setting
forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments).

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein); provided, that financial statements delivered pursuant
to paragraphs (b) and (c) above shall not be required to contain footnote
disclosure.

6.2 Certificates; Other Information. Furnish to the
Administrative Agent (with sufficient copies for each Lender, which shall in
turn be promptly distributed by the Administrative Agent to the Lenders) or, in
the case of clause (f), to the relevant Lender:

(a) concurrently with the delivery of the financial
statements referred to in Section 6.1(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate;

(b) concurrently with the delivery of any financial
statements pursuant to Section 6.1, (i) a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's
knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and (ii) in the case of quarterly or annual financial
statements, (x) a Compliance Certificate containing all information
necessary for determining compliance by the Borrower and its
Subsidiaries with the provisions of this Agreement referred to therein
as of the last day of the relevant fiscal quarter or fiscal year and
(y) to the extent not previously disclosed to the Administrative
Agent, a listing of any state or province within the United States or
Canada where any Loan Party keeps inventory or equipment and of any
Intellectual Property arising under the laws of the United States or
Canada (or any jurisdiction therein) acquired by any Loan Party since
the date of the most recent list delivered pursuant to this clause (y)
(or, in the case of the first such list so delivered, since the
Closing Date);

(c) as soon as available, and in any event no later than 45
days after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the following fiscal year (including a
projected consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of the following fiscal year, and the
related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as
available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by
a

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certificate of a Responsible Officer stating that such Projections are
based upon good faith estimates and assumptions believed by management
of the Borrower to be reasonable at the time made, it being recognized
by the Lenders that such financial information as it relates to future
events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount;

(d) within 45 days after the end of each fiscal quarter of
the Borrower, a narrative discussion and analysis of the financial
condition and results of operations of the Borrower and its
Subsidiaries for such fiscal quarter and for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter, as compared to the portion of the Projections covering such
periods and to the comparable periods of the previous year;

(e) within five days after the same are sent, copies of all
financial statements and reports which the Borrower sends to the
holders of any class of its debt securities or public equity
securities and within five days after the same are filed, copies of
all financial statements and reports which the Borrower may make to,
or file with, the Securities and Exchange Commission or any successor
or analogous Governmental Authority; and

(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.

6.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its material obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of the Borrower or its Subsidiaries, as the case may be.

6.4 Conduct of Business and Maintenance of Existence, etc.
(a) (i) Continue to engage in business of the same general type as now
conducted by it, (ii) preserve, renew and keep in full force and effect its
corporate existence and (iii) take all reasonable action to maintain all
rights, privileges and franchises necessary or desirable in the normal conduct
of its business, except, in each case, as otherwise permitted by Section 7.4
and except, in the case of clause (iii) above, to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect; and (b)
comply with all Contractual Obligations and Requirements of Law except to the
extent that failure to comply therewith could not, in the aggregate, reasonably
be expected to have a Material Adverse Effect.

6.5 Maintenance of Property; Insurance. (a) Keep all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business.

6.6 Inspection of Property; Books and Records; Discussions.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all

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Requirements of Law shall be made of all dealings and transactions in
relation to its business and activities and (b) upon reasonable prior
notice and at any reasonable time, permit representatives of the
Administrative Agent or any Lender to visit and inspect any of its
properties and examine and, if reasonably requested, make copies of
its contracts, books and records and to discuss the business,
operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the
Borrower and its Subsidiaries and with its independent certified
public accountants; provided that the Administrative Agent or such
Lender shall notify the Borrower prior to any contact with such
accountants and give the Borrower the opportunity to participate in
such discussions.

6.7 Notices. Promptly give notice to the Administrative
Agent and each Lender of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii)
litigation, investigation or proceeding which may exist at any time
between the Borrower or any of its Subsidiaries and any Governmental
Authority and which has a reasonable likelihood of being adversely
determined, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;

(c) any litigation or proceeding affecting the Borrower or
any of its Subsidiaries in which the amount involved is $10,000,000 or
more and not covered by insurance or in which injunctive or similar
relief is sought;

(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of,
any Plan; and

(e) any development or event which has had or could
reasonably be expected to have a Material Adverse Effect.

Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Borrower or the relevant Subsidiary
proposes to take with respect thereto.

6.8 Environmental Laws. (a) Except as could not reasonably
be expected to have a Material Adverse Effect, comply with, and ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Laws, and obtain and comply with and maintain, and ensure that
all tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.

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<PAGE> 63
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws.

6.9 Interest Rate Protection. In the case of the Borrower,
(a) within 90 days after the Closing Date, enter into Interest Rate Protection
Agreements to the extent necessary to provide that at least 50% of the
aggregate principal amount of the Senior Subordinated Notes and the Term Loans
outstanding on the Closing Date is subject to either a fixed interest rate or
interest rate protection for a period of not less than one year and (b) within
90 days after the Amendment/Restatement Closing Date, enter into additional
Interest Rate Protection Agreements to the extent necessary to provide that at
least 50% of the aggregate principal amount of the Senior Subordinated Notes
and the Term Loans outstanding on the Amendment/Restatement Closing Date is
subject to either a fixed interest rate or interest rate protection, with any
additional Interest Rate Protection Agreements required by this clause (b)
having a term of not less than one year (provided, that, in each case, in the
event that the term thereof shall be less than two years, such Interest Rate
Protection Agreements shall be extended or replaced no later than the
expiration of such term, with the term of such extended or replacement Interest
Rate Protection Agreements ending no earlier than the second anniversary of the
date on which the original Interest Rate Protection Agreements were entered
into), which Interest Rate Protection Agreements shall in each case have terms
and conditions reasonably satisfactory to the Administrative Agent.

6.10 Additional Collateral, etc. (a) With respect to any
Property acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than (x) any Property described in paragraph (b), (c) or
(d) below, (y) any Property subject to a Lien expressly permitted by Section
7.3(g) and (z) Receivables Facility Assets) as to which the Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such Property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such Property, including without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Guarantee and Collateral Agreement or by law or as may
be reasonably requested by the Administrative Agent.

(b) With respect to any fee interest in any real estate
which, together with any related parcel of real estate not yet subject to a
Mortgage, has a value (determined inclusive of any improvements thereof) of at
least $5,000,000 acquired after the Closing Date by the Borrower or any of its
Subsidiaries (other than any such real estate subject to a Lien expressly
permitted by Section 7.3(g)), promptly (i) execute and deliver a first priority
mortgage or deed of trust (subject only to Liens permitted by Section 7.3) in
favor of the Administrative Agent, for the benefit of the Lenders, covering
such real estate, in form and substance reasonably satisfactory to the
Administrative Agent, (ii) if reasonably requested by the Administrative Agent,
provide the Lenders with (x) title and extended coverage insurance covering
such real estate in an amount at least equal to the purchase price of such real
estate (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with

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<PAGE> 64
such mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

(c) With respect to any new Subsidiary (other than an
Excluded Foreign Subsidiary or any Receivables SPV) created or acquired after
the Closing Date (which, for the purposes of this paragraph (c), shall include
any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary) by
the Borrower or any of its Subsidiaries, promptly (i) execute and deliver to
the Administrative Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent deems necessary or advisable in order to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Subsidiary
which is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Borrower or such Subsidiary, as the case may be,
(iii) cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement and (B) to take such actions necessary or advisable to
grant to the Administrative Agent for the benefit of the Lenders a perfected
first priority security interest in the Collateral described in the Guarantee
and Collateral Agreement with respect to such new Subsidiary, including,
without limitation, the filing of Uniform Commercial Code financing statements
in such jurisdictions as may be required by the Guarantee and Collateral
Agreement or by law or as may be reasonably requested by the Administrative
Agent, and (iv) if reasonably requested by the Administrative Agent, deliver to
the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.

(d) With respect to any new Excluded Foreign Subsidiary
created or acquired after the Closing Date by the Borrower or any of its
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary which is owned by the
Borrower or any of its Subsidiaries (provided that in no event shall more than
65% of the total outstanding Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be and (iii) if reasonably
requested by the Administrative Agent, deliver to the Administrative Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.

(e) Within 60 days after the Closing Date, deliver any items
requested by the Administrative Agent pursuant to Sections 5.1(k)(ii) and
5.1(k)(iv) and not delivered on the Closing Date, together with, in the case of
surveys, such endorsements to the title insurance policies referred to in
Section 5.1(k)(iii) relating to the matters disclosed in such surveys as may be
reasonably requested by the Administrative Agent. In the case of the Borrower,
within 30 days after the Closing Date, acquire that portion of the capital
stock of Heritage not acquired by the Borrower on the Closing Date.

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<PAGE> 65
SECTION 7. NEGATIVE COVENANTS

7.1 Financial Condition Covenants.

(a) Consolidated Leverage Ratio. Permit the Consolidated
Leverage Ratio as at the last day of any Test Period ending with any fiscal
quarter set forth below to exceed the ratio set forth below opposite such
fiscal quarter:

<TABLE>
<CAPTION>
Fiscal Quarter Ending Consolidated Leverage Ratio
--------------------- ---------------------------
<S> <C>
12/31/97-3/31/99 5.50 to 1.0
6/30/99-9/30/99 5.25 to 1.0
12/31/99-3/31/00 5.00 to 1.0
6/30/00-9/30/00 4.75 to 1.0
12/31/00-3/31/01 4.50 to 1.0
6/30/01-9/30/01 4.25 to 1.0
12/31/01-3/31/02 4.00 to 1.0
6/30/02-9/30/02 3.75 to 1.0
12/31/02-3/31/03 3.50 to 1.0
6/30/03-9/30/03 3.25 to 1.0
12/31/03-3/31/04 3.00 to 1.0
6/30/04-9/30/04 2.75 to 1.0
12/31/04-3/31/05 2.50 to 1.0
6/30/05-9/30/05 2.25 to 1.0
12/31/05 and thereafter 2.00 to 1.0
</TABLE>

(b) Consolidated Interest Coverage Ratio. Permit the
Consolidated Interest Coverage Ratio for any Test Period ending with any fiscal
quarter set forth below to be less than the ratio set forth below opposite such
fiscal quarter:

<TABLE>
<CAPTION>
Fiscal Quarter Consolidated Interest
Ending Coverage Ratio
-------------- ---------------------
<S> <C>
12/31/97-3/31/99 2.00 to 1.0
6/30/99-9/30/99 2.10 to 1.0
12/31/99-9/30/00 2.15 to 1.0
12/31/00-9/30/01 2.20 to 1.0
12/31/01-9/30/02 2.25 to 1.0
12/31/02-9/30/03 2.50 to 1.0
12/31/03-9/30/04 3.00 to 1.0
12/31/04-9/30/05 3.50 to 1.0
12/31/05 and 4.00 to 1.0
thereafter
</TABLE>

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<PAGE> 66
(c) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any Test Period ending with any
fiscal quarter set forth below to be less than the ratio set forth below
opposite such fiscal quarter:

<TABLE>
<CAPTION>
Fiscal Quarter Consolidated Fixed
Ending Charge Coverage Ratio
-------------- ---------------------
<S> <C>
12/31/97-3/31/01 1.00 to 1.0
6/30/01-3/31/04 1.05 to 1.0
6/30/04 and thereafter 1.10 to 1.0
</TABLE>

Notwithstanding anything to the contrary herein, for the purposes of
determining the Consolidated Interest Coverage Ratio and the Consolidated Fixed
Charge Coverage Ratio pursuant to this Section 7.1 for the Test Periods ending
December 31, 1997, March 31, 1998, June 30, 1998 and September 30, 1998, (i)
interest expense in the definition of Consolidated EBITDA and Consolidated
Interest Expense in each such ratio shall be determined on a pro forma basis as
if the Initial Public Offering and the application of the proceeds thereof
occurred at the beginning of the Test Period and (ii) each such ratio shall be
calculated as if the Bumble Bee Acquisition and the Permitted Investments
occurred at the beginning of the Test Period.

7.2 Limitation on Indebtedness. Create, incur, assume or
suffer to exist (in each case, to "Incur") any Indebtedness, except:

(a) Indebtedness of any Loan Party pursuant to any Loan
Document;

(b) Indebtedness of the Borrower to any Subsidiary and of any
Wholly Owned Subsidiary Guarantor to the Borrower or any other
Subsidiary;

(c) purchase money Indebtedness and Indebtedness secured by
Liens permitted by Section 7.3(g), provided, that the aggregate amount
of Indebtedness incurred pursuant to this Section 7.2(c) shall not
exceed $35,000,000 at any one time outstanding;

(d) Capital Lease Obligations, provided, that the aggregate
principal amount of Capital Lease Obligations incurred pursuant to
this Section 7.2(d) in any fiscal year of the Borrower, when added to
the aggregate amount of other Capital Expenditures made during such
fiscal year pursuant to Section 7.7(a), shall not exceed the amount
permitted to be expended during such fiscal year pursuant to Section
7.7(a);

(e) Indebtedness outstanding on the Closing Date and listed
on Schedule 7.2(e) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount
thereof);

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<PAGE> 67
(f) guarantees made in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary Guarantor;

(g) (i) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$400,000,000 and (ii) subordinated Guarantee Obligations of any
Subsidiary Guarantor in respect of such Indebtedness;

(h) Indebtedness of any Canadian Subsidiary or Mexican
Subsidiary incurred for working capital purposes in the ordinary
course of business, provided that the U.S.$ equivalent (determined in
good faith by the Borrower) of the aggregate outstanding principal
amount thereof shall not exceed $20,000,000 at any one time;

(i) Indebtedness of any Receivables SPV pursuant to a
Receivables Facility on terms and conditions reasonably satisfactory
to the Required Lenders;

(j) Trade Acceptances in an aggregate face amount not to
exceed $10,000,000 at any one time outstanding;

(k) at any time after the Revolving Credit Commitments shall
have been terminated (other than pursuant to Section 8), Indebtedness
in respect of unsecured revolving lines of credit in an aggregate
outstanding principal amount not exceeding $100,000,000 at any one
time;

(l) up to $4,500,000 of Indebtedness constituting deferred
purchase price obligations relating to the Permitted Investment
described in paragraph 2 of Schedule 1.1D;

(m) Indebtedness assumed in connection with any acquisition
of the Capital Stock of another Person or of assets constituting a
business unit of another Person; provided, that (i) such Indebtedness
exists at the time of such acquisition and is not created in
contemplation of or in connection with such acquisition, and (ii) the
aggregate principal amount of Indebtedness permitted by this clause
(m) shall not exceed $20,000,000 at any one time outstanding; and

(n) additional Indebtedness of the Borrower or any of its
Subsidiaries in an aggregate principal amount (for the Borrower and
all Subsidiaries) not to exceed $30,000,000 at any one time
outstanding.

7.3 Limitation on Liens. Create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except for:

(a) Liens for taxes not yet due 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
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Foreign Subsidiaries, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);

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<PAGE> 68
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 30 days or
which are being contested in good faith by appropriate proceedings;

(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;

(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, insurance contracts, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;

(e) easements, rights-of-way, restrictions, covenants, minor
exceptions to title and other similar encumbrances (i) incurred in the
ordinary course of business which, in the aggregate, are not
substantial in amount and which do not in any case materially detract
from the value of the property subject thereto or materially interfere
with the ordinary conduct of the business of the Borrower or any of
its Subsidiaries or (ii) which are set forth in the "marked up"
commitments for title insurance delivered to the Administrative Agent
on the Closing Date;

(f) Liens in existence on the Amendment/Restatement Closing
Date listed on Schedule 7.3(f), securing Indebtedness permitted by
Section 7.2(e), provided that no such Lien is spread to cover any
additional property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;

(g) (i) Liens securing Indebtedness of the Borrower or any of
its Subsidiaries incurred to finance the acquisition of fixed or
capital assets (provided that (x) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or
capital assets, (y) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (z)
the amount of Indebtedness secured thereby is not increased) and (ii)
Liens existing on any property or asset at the time of acquisition
thereof by the Borrower or any Subsidiary or existing on any property
or asset of any Person that becomes a Subsidiary after the Closing
Date at the time such Person becomes a Subsidiary (provided that (x)
such Lien is not created in contemplation of or in connection with
such acquisition or such Person becoming a Subsidiary, as the case may
be, (y) such Lien shall not apply to any other property or assets of
the Borrower or any of its Subsidiaries and (z) such Lien shall secure
only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case
may be);

(h) Liens created pursuant to the Security Documents;

(i) any interest or title of a lessor under any lease entered
into by the Borrower or any of its Subsidiaries in the ordinary course
of its business and covering only the assets so leased;

(j) any obligations or duties affecting any of the Property
of the Borrower or its Subsidiaries to any municipality or public
authority with respect to any franchise, grant, license or permit
which do not materially impair the use of such Property for the
purposes for which it is held;

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<PAGE> 69
(k) with respect to Property located in Canada, reservations,
limitations, provisos and conditions in any original grant from the
Crown or any freehold lessor of any Property of the Borrower or any of
its Subsidiaries;

(l) Liens encumbering inventory and accounts receivable of a
Canadian Subsidiary or Mexican Subsidiary securing Indebtedness of
such Canadian Subsidiary or Mexican Subsidiary incurred pursuant to
Section 7.2(h);

(m) Liens imposed by operation of law with respect to any
judgments or orders not constituting an Event of Default;

(n) Liens on any Receivables Facility Assets to secure the
repayment of any Indebtedness incurred under any Receivables Facility
permitted by Section 7.2(i); and

(o) any Lien existing on any fixed asset prior to the
acquisition thereof by the Borrower or any Subsidiary, provided that
(i) such Lien is not created in contemplation of or in connection with
such acquisition, (ii) such Lien shall not apply to any other Property
of the Borrower or any Subsidiary, (iii) such Lien shall secure only
those obligations which it secures on the date of such acquisition and
(iv) the aggregate amount of obligations so secured shall not exceed
$20,000,000 at any one time outstanding;

(p) Liens not otherwise permitted by this Section 7.3 so long
as neither (i) the aggregate outstanding principal amount of the
obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date such Lien is incurred) of the assets
subject thereto exceeds (as to the Borrower and all Subsidiaries)
$5,000,000 at any one time.

7.4 Limitation on Fundamental Changes. Enter into any
merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or Dispose of all or substantially
all of its property, business or assets, or make any material change in its
present method of conducting business, except:

(a) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower
shall be the continuing or surviving corporation) or with or into any
Wholly Owned Subsidiary Guarantor (provided that the Wholly Owned
Subsidiary Guarantor shall be the continuing or surviving
corporation); and

(b) any Subsidiary of the Borrower may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or any Wholly Owned
Subsidiary Guarantor.

7.5 Limitation on Sale of Assets. Dispose of any of its
property, business or assets (including, without limitation, receivables and
leasehold interests), whether now owned or hereafter acquired, or, in the case
of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock
to any Person, except:

(a) the Disposition of obsolete or worn out property in the
ordinary course of business;

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<PAGE> 70
(b) the Disposition of inventory in the ordinary course of
business;

(d) the sale or issuance of any Subsidiary's Capital Stock to
the Borrower or any Wholly Owned Subsidiary Guarantor;

(e) transfers resulting from any casualty or condemnation of
property or assets;

(f) licenses or sublicenses of intellectual property and
general intangibles and licenses, leases or subleases of other
property in the ordinary course of business and which do not
materially interfere with the business of the Borrower and its
Subsidiaries;

(g) any consignment arrangements or similar arrangements for
the sale of assets in the ordinary course of business;

(h) (i) the sale or discount of overdue accounts receivable
arising in the ordinary course of business, but only in connection
with the compromise or collection thereof and (ii) the Disposition at
any time or from time to time for fair market value of Receivables
Facility Assets; and

(i) the Disposition of other assets having a fair market
value not to exceed $45,000,000 in the aggregate for any fiscal year
of the Borrower, provided, that (i) except in the case of an Asset
Swap, at least 75% of the consideration received by the Borrower and
its Subsidiaries in connection with each such Disposition shall be in
the form of cash or Cash Equivalents and (ii) the aggregate fair
market value of Property Disposed of in connection with Asset Swaps
during any fiscal year of the Borrower, when added to the aggregate
Net Cash Proceeds of Asset Sales excluded from the requirements of
Section 2.11(b) during such fiscal year pursuant to a Reinvestment
Notice, shall not exceed $45,000,000.

7.6 Limitation on Dividends. Declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
the Borrower or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower or any Subsidiary (collectively,
"Restricted Payments"), except that:

(a) any Subsidiary may make Restricted Payments to the
Borrower or any Wholly Owned Subsidiary Guarantor;

(b) Permitted Issuances may be made;

(c) so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower may (i) purchase the
Borrower's common stock or common stock options from present or former
officers or employees of the Borrower or any Subsidiary upon the
death,

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<PAGE> 71
disability or termination of employment of such officer or employee,
provided, that the aggregate amount of payments under this clause (i)
during the term of this Agreement shall not exceed $15,000,000 net of
any proceeds received by the Borrower in connection with resales of
any common stock or common stock options so purchased and (ii) pay
management fees to Hicks Muse and its Affiliates expressly permitted
by Section 7.10; and

(d) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the Borrower may
pay dividends to the holders of its common stock, provided that (i) at
the time any such dividend is made, either (x) the Consolidated Senior
Leverage Ratio as at the end of the most recent period of four
consecutive fiscal quarters for which the relevant financial
information is available is less than or equal to 2.00 to 1.0,
determined on a pro forma basis after giving effect to the making of
such dividend and any financing thereof as if such events occurred on
the first day of such period or (y) the Borrower has a long-term
senior secured debt rating of at least BBB- from Standard & Poor's
Ratings Services and at least Baa3 from Moody's Investors Service, Inc
and (ii) the aggregate amount of dividends made pursuant to this
paragraph (d) shall not, at any time, exceed an amount equal to 50% of
cumulative Consolidated Net Income during the period (taken as a
single accounting period) from the first full fiscal quarter
commencing after the Amendment/Restatement Closing Date through the
most recent full fiscal quarter for which the relevant financial
information is available.

7.7 Limitation on Capital Expenditures. Make or commit to
make (by way of the acquisition of securities of a Person or otherwise) any
Capital Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business not exceeding $45,000,000 in
any fiscal year of the Borrower; provided, that (i) up to 50% of any such
amount referred to above, if not so expended in the fiscal year for which it is
permitted, may be carried over for expenditure in the next succeeding fiscal
year and (ii) Capital Expenditures made pursuant to this clause (a) during any
fiscal year shall be deemed made, first, in respect of amounts carried over
from the prior fiscal year pursuant to subclause (i) above and, second, in
respect of amounts permitted for such fiscal year as provided above; (b)
Capital Expenditures made pursuant to an Asset Swap or with the proceeds of any
Reinvestment Deferred Amount, any Unapplied Excess Cash Flow or any Contributed
Equity; and (c) Permitted Investments and investments made pursuant to Section
7.8(p) to the extent constituting Capital Expenditures.

7.8 Limitation on Investments, Loans and Advances. Make any
advance, loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in, any Person, except:

(a) extensions of trade credit in the ordinary course of
business;

(b) investments in Cash Equivalents;

(d) loans and advances to employees of the Borrower or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation

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<PAGE> 72
expenses) in an aggregate amount for the Borrower and its Subsidiaries
not to exceed $5,000,000 at any one time outstanding;

(e) the Acquisitions and the Bumble Bee Acquisition;

(f) investments by the Borrower or any of its Subsidiaries in
the Borrower or any Wholly Owned Subsidiary Guarantor;

(g) loans, advances or investments in existence on the
Closing Date and listed on Schedule 7.8(g), and extensions, renewals,
modifications or restatements or replacements thereof, provided that
no such extension, renewal, modification or restatement shall (i)
increase the amount of the original loan, advance or investment, or
(ii) adversely affect the interests of the Lenders with respect to
such original loan, advance or investment or the interests of the
Lenders under this Agreement or any other Loan Document in any
respect;

(h) investments made by the Borrower or any of its
Subsidiaries with the proceeds of any Reinvestment Deferred Amount or
any Unapplied Excess Cash Flow;

(i) investments made by the Borrower or any of its
Subsidiaries pursuant to an Asset Swap or with the proceeds of any
Contributed Equity, so long as, after giving pro forma effect thereto
(as certified to the Administrative Agent by a Responsible Officer
prior to consummation of such investment), no Default or Event of
Default shall have occurred and be continuing (including, without
limitation, pursuant to Section 7.1);

(j) Investments constituting Capital Expenditures permitted
by Section 7.7;

(k) promissory notes and other similar non-cash consideration
received by the Borrower and its Subsidiaries in connection with the
Dispositions permitted by Section 7.5;

(l) Investments consisting of Interest Rate Protection
Agreements and commodity and currency hedging arrangements entered
into in the ordinary course of business of the Borrower or any of its
Subsidiaries and not for purposes of speculation;

(m) Investments (including debt obligations and Capital
Stock) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business;

(n) Investments on customary terms required to create and
capitalize a Receivables SPV;

(o) Permitted Investments, so long as, after giving pro forma
effect thereto (as certified to the Administrative Agent by a
Responsible Officer prior to consummation of such investment), no
Default or Event of Default shall have occurred and be continuing
(including, without limitation, pursuant to Section 7.1);

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(p) any acquisition of 80% or more of the Capital Stock of
another Person or of assets constituting a business unit of another
Person, so long as (i) after giving effect pro forma thereto (as
certified to the Administrative Agent by a Responsible Officer prior
to consummation of such acquisition), no Default or Event of Default
shall have occurred and be continuing or would result therefrom
(including, without limitation, pursuant to Section 7.1), (ii) after
giving effect thereto and to the financing thereof, (x) the
Consolidated Senior Leverage Ratio as at the end of the most recent
period of four consecutive fiscal quarters for which the relevant
financial information is available shall not exceed 3.75 to 1.0 and
(y) the aggregate Available Revolving Credit Commitments shall equal
at least $40,000,000, (iii) such acquisition shall have been approved
by the Board of Directors of the Person being acquired or the relevant
seller, as the case may be, and (iv) such acquisition shall involve
businesses of the type in which the Borrower is already engaged in
accordance with Section 7.14; and

(q) in addition to investments otherwise expressly permitted
by this Section 7.8, investments by the Borrower or any of its
Subsidiaries in an aggregate amount (valued at cost) not to exceed
$40,000,000 at any one time outstanding, so long as, after giving pro
forma effect thereto (as certified to the Administrative Agent by a
Responsible Officer prior to consummation of such investment, in the
case of any single investment in excess of $15,000,000), no Default or
Event of Default shall have occurred and be continuing (including,
without limitation, pursuant to Section 7.1).

7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any optional payment, prepayment,
repurchase or redemption of or otherwise defease or segregate funds with
respect to the Senior Subordinated Notes, provided, that the Borrower may
repurchase its Senior Subordinated Notes, so long as (i) after giving pro forma
effect thereto (as certified to the Administrative Agent by a Responsible
Officer prior to consummation of such acquisition), no Default or Event of
Default shall have occurred and be continuing or would result therefrom
(including, without limitation, pursuant to Section 7.1), (ii) after giving
effect thereto and to the financing thereof, (x) the Consolidated Senior
Leverage Ratio as at the end of the most recent period of four consecutive
fiscal quarters for which the relevant financial information is available shall
not exceed 3.75 to 1.0 and (y) the aggregate Available Revolving Credit
Commitments shall equal at least $40,000,000 and (iii) no more than $75,000,000
may expended in connection therewith during the term of this Agreement, (b)
amend, modify, waive or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Senior
Subordinated Notes or the Senior Subordinated Note Indenture (other than any
such amendment, modification, waiver or other change which (i) would extend the
maturity or reduce the amount of any payment of principal thereof or which
would reduce the rate or extend the date for payment of interest thereon and
(ii) does not involve the payment of a consent fee) or (c) designate any
Indebtedness as "Designated Senior Indebtedness" for the purposes of the Senior
Subordinated Note Indenture.

7.10 Limitation on Transactions with Affiliates. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of Property or the rendering of any service, with any Affiliate (other
than the Borrower or any Wholly Owned Subsidiary Guarantor) unless such
transaction is (a) otherwise permitted under this Agreement, (b) in the
ordinary course of business of the Borrower or such Subsidiary, as the case may
be, and (c) upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate. Notwithstanding
the foregoing, (i) the

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Borrower and its Subsidiaries may pay to Hicks Muse and its Affiliates fees and
expenses, as set forth on Schedule 7.10, pursuant to a monitoring and oversight
agreement and a financial advisory agreement, in each case approved by the
board of directors of the Borrower, and (ii) the Permitted Investment described
in paragraph 3 of Schedule 1.1D may be consummated.

7.11 Limitation on Sales and Leasebacks. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary.

7.12 Limitation on Changes in Fiscal Periods. Permit the
fiscal year of the Borrower to end on a day other than December 31 or change
the Borrower's method of determining fiscal quarters.

7.13 Limitation on Negative Pledge Clauses. Enter into with
any Person, or suffer to exist, any agreement, other than (a) this Agreement
and the other Loan Documents, (b) the Senior Subordinated Note Indenture and
(c) in the case of clause (i) below only, any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby), which prohibits or limits the ability of the Borrower or any
of its Subsidiaries to (i) create, incur, assume or suffer to exist any Lien
upon any of its Property or revenues, whether now owned or hereafter acquired,
or (ii) pay dividends or make other distributions, or pay any Indebtedness
owed, to the Borrower or any of its Subsidiaries.

7.14 Limitation on Lines of Business. Enter into any
business, either directly or through any Subsidiary, except for those
businesses in which the Borrower and its Subsidiaries are engaged on the
Amendment/Restatement Closing Date or which are reasonably related thereto.

7.15 Limitation on Amendments to Acquisition Documents. (a)
Amend, supplement or otherwise modify (pursuant to a waiver or otherwise) the
terms and conditions of the indemnities furnished to the Borrower or any of its
Subsidiaries pursuant to the Acquisition Agreement, the Bumble Bee Purchase
Agreement or any other document delivered by the relevant sellers or any of
their affiliates in connection therewith such that after giving effect thereto
such indemnities shall be materially less favorable to the interests of the
Loan Parties or the Lenders with respect thereto or (b) otherwise amend,
supplement or otherwise modify the terms and conditions of the Acquisition
Agreement, the Bumble Bee Purchase Agreement or any such other documents except
to the extent that any such amendment, supplement or modification could not
reasonably be expected to have a Material Adverse Effect.

SECTION 8. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a) The Borrower shall fail to pay any principal of any Loan
or Reimbursement Obligation when due in accordance with the terms
hereof; or the Borrower shall fail to pay any interest on any Loan or
Reimbursement Obligation, or any other amount payable hereunder or

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under any other Loan Document, within five days after any such
interest or other amount becomes due in accordance with the terms
hereof; or

(b) Any representation or warranty made or deemed made by any
Loan Party herein or in any other Loan Document or which is contained
in any certificate, document or financial or other statement furnished
by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been inaccurate in any
material respect on or as of the date made or deemed made; or

(c) (i) any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of
Section 6.4(a) (with respect to the Borrower only), Section 6.7(a) or
Section 7 of this Agreement or Section 5.5 or 5.7(b) of the Guarantee
and Collateral Agreement or (ii) an "Event of Default" under and as
defined in any Mortgage shall have occurred and be continuing; or

(d) any Loan Party shall default in the observance or
performance of any other agreement contained in this Agreement or any
other Loan Document (other than as provided in paragraphs (a) through
(c) of this Section), and such default shall continue unremedied for a
period of 30 days after notice from the Administrative Agent or the
Required Lenders; or

(e) The Borrower or any of its Subsidiaries shall (i) default
in making any payment of any principal of or interest on any
Indebtedness (including, without limitation, any Guarantee Obligation,
but excluding the Loans, Reimbursement Obligations and Guarantee
Obligations pursuant to the Guarantee and Collateral Agreement) beyond
the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created; or (ii) default in the
observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of
such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; provided, that a default, event or condition described
in clause (i) or (ii) of this paragraph (e) shall not at any time
constitute an Event of Default under this Agreement unless, at such
time, one or more defaults, events or conditions (without duplication
as to the same item of Indebtedness) of the type described in clauses
(i) and (ii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal
amount of which exceeds in the aggregate $10,000,000; or

(f) (i) The Borrower or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Borrower or any
of its Subsidiaries shall make a general assignment for the benefit of
its

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creditors; or (ii) there shall be commenced against the Borrower or
any of its Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Borrower or any of its
Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Borrower or any of its
Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any
of its Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or

(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor of
the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed
(or a trustee shall be appointed) to administer, or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Lenders, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) the Borrower or
any Commonly Controlled Entity shall, or in the reasonable opinion of
the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could reasonably be expected to have a
Material Adverse Effect; or

(h) One or more judgments or decrees shall be entered against
the Borrower or any of its Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance as to which the
relevant insurance company has acknowledged coverage) of $10,000,000
or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or

(i) Any Loan Document shall, at any time, cease to be in full
force and effect (unless released by the Administrative Agent at the
direction of the Required Lenders or all Lenders (to the extent
required by Section 10.1) or as otherwise permitted under this
Agreement or the other Loan Documents) or shall be declared null and
void (and, if such invalidity is such so as to be amenable to cure
without materially disadvantaging the position of the Administrative
Agent and the Lenders thereunder, the relevant Loan Party shall have
failed to cure such invalidity within 30 days after notice from the
Administrative Agent or such shorter time period as is specified by
the Administrative Agent in such notice and is reasonable in the
circumstances), or the validity or enforceability thereof shall be
contested by any Loan Party, or any of the Liens intended to be
created by any Security Document shall cease to be or shall

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not be a valid and perfected Lien having the priority contemplated
thereby (and, if such invalidity is such so as to be amenable to cure
without materially disadvantaging the position of the Administrative
Agent and the Lenders as secured parties thereunder, the relevant Loan
Party shall have failed to cure such invalidity within 30 days after
notice from the Administrative Agent or such shorter time period as
specified by the Administrative Agent in such notice and is reasonable
in the circumstances); or

(j) (i) The Permitted Investors shall cease to have the
power, directly or indirectly, to vote or direct the voting of
securities having a majority of the ordinary voting power for the
election of directors of the Borrower, provided that the occurrence of
the foregoing event shall not be deemed an Event of Default if (A) at
any time prior to the consummation of an Initial Public Offering, (1)
the Permitted Investors otherwise have the right to designate (and do
so designate) a majority of the board of directors of the Borrower or
(2) the Permitted Investors and their employees, directors and
officers (the "HM Group") own of record and beneficially an amount of
common stock of the Borrower equal to at least 50% of the amount of
common stock of the Borrower (adjusted for stock splits, stock
dividends and other similar events on an equitable basis) owned by the
HM Group of record and beneficially as of the Closing Date and such
ownership by the HM Group represents the largest single block of
voting securities of the Borrower held by any "person" or "group" for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or (B) at any time after the
consummation of an Initial Public Offering, (1) no "person" or "group"
(as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), excluding the Permitted Investors, shall become the "beneficial
owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
Act), directly or indirectly, of more than the greater of (x) 15% of
the then outstanding voting stock of the Borrower and (y) the
percentage of the then outstanding voting stock of the Borrower owned
by the Permitted Investors and (2) the board of directors of the
Borrower shall consist of a majority of Continuing Directors; or (ii)
a Specified Change of Control shall occur; or

(k) The Senior Subordinated Notes or the guarantees thereof
shall cease, for any reason, to be validly subordinated to the
Obligations or the obligations of the Subsidiary Guarantors under the
Guarantee and Collateral Agreement, as the case may be, as provided in
the Senior Subordinated Note Indenture, or any Loan Party, any
Affiliate of any Loan Party, the trustee in respect of the Senior
Subordinated Notes or the holders of at least 25% in aggregate
principal amount of the Senior Subordinated Notes shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Revolving Credit Commitments shall immediately terminate and
the Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions
may be taken: (i) with the consent of the Majority Revolving Credit Facility
Lenders, the Administrative Agent may, or upon the request of the Majority
Revolving Credit Facility Lenders, the Administrative Agent shall, by notice to
the Borrower declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the

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consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) to be due and payable forthwith, whereupon
the same shall immediately become due and payable. With respect to all Letters
of Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Borrower shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrower hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrower hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Borrower (or such other Person as may be
lawfully entitled thereto). Except as otherwise expressly provided above in
this Section 8, the Borrower waives presentment, demand, protest or other notice
of any kind.

SECTION 9. THE AGENTS

9.1 Appointment. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.

9.2 Delegation of Duties. The Administrative Agent may
execute any of its duties under this Agreement and the other Loan Documents by
or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents
or attorneys in-fact selected by it with reasonable care.

9.3 Exculpatory Provisions. Neither any Agent nor any of
their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof

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contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party a party thereto to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.

9.4 Reliance by Administrative Agent. The Administrative
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any instrument, writing, resolution, notice, consent, certificate, affidavit,
letter, telecopy, telex or teletype message, statement, order or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense (other than any liability
described in the proviso to the first sentence of Section 9.7) which may be
incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Loans.

9.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders (or, if so specified by this
Agreement, all Lenders); provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.

9.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Agents nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates have
made any representations or warranties to it and that no act by any Agent
hereafter taken, including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any representation or
warranty by any Agent to any Lender. Each Lender represents to the Agents that
it has, independently and without reliance upon any Agent or any

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other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon any Agent 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 analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by the Administrative Agent hereunder, the Administrative Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any Loan Party or any affiliate
of a Loan Party which may come into the possession of the Administrative Agent
or any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.

9.7 Indemnification. The Lenders agree to indemnify each
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Revolving Credit Percentages, Tranche A Term Loan Percentages
and Tranche B Term Loan Percentages in effect on the date on which
indemnification is sought under this Section 9.7 (or, if indemnification is
sought after the date upon which the Revolving Credit Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Loans, the Revolving Credit Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection
with any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements which
are found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from such Agent's gross negligence or willful
misconduct. The agreements in this Section 9.7 shall survive the payment of
the Loans and all other amounts payable hereunder.

9.8 Agent in Its Individual Capacity. Each Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with any Loan Party as though such Agent were not an Agent.
With respect to its Loans made or renewed by it and with respect to any Letter
of Credit issued or participated in by it, each Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.

9.9 Successor Administrative Agent. The Administrative Agent
may resign as Administrative Agent upon 30 days' notice to the Lenders. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders

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<PAGE> 81
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Borrower (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Administrative Agent under this Agreement and the
other Loan Documents.

9.10 Authorization to Release Liens. The Administrative
Agent is hereby irrevocably authorized by each of the Lenders to release any
Lien covering any Property of the Borrower or any of its Subsidiaries that is
the subject of a Disposition which is permitted by this Agreement or which has
been consented to in accordance with Section 10.1.

9.11 Documentation Agent and Syndication Agent. Neither the
Documentation Agent nor the Syndication Agent shall have any duties or
responsibilities hereunder in its capacity as such.

SECTION 10. MISCELLANEOUS

10.1 Amendments and Waivers. Neither this Agreement, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party to the relevant Loan
Documents may, or, with the written consent of the Required Lenders, the
Administrative Agent and each Loan Party to the relevant Loan Document may,
from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any
of the requirements of this Agreement or the other Loan Documents or any
Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount or extend the final scheduled date of maturity of any
Loan, extend the scheduled date of any amortization payment in respect of any
Term Loan, reduce the stated rate of any interest, fee or letter of credit
commission payable hereunder or extend the scheduled date of any payment
thereof, or increase the amount or extend the expiration date of any Lender's
Revolving Credit Commitment, in each case without the written consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 10.1 or reduce any percentage specified in the definition of
Required Lenders, consent to the assignment or transfer by the Borrower of any
of its rights and obligations under this Agreement and the other Loan
Documents, release all or substantially all of the Collateral or release all or
substantially all of the Subsidiary Guarantors from their obligations under the
Guarantee and Collateral Agreement, in each case without the written consent of
all Lenders; (iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Credit Facility set forth in Section
5.2 without the written consent of the Majority Revolving Credit Facility
Lenders; (iv) change the allocation of payments among the Term Loan Facilities
specified in Section 2.17(b) or the allocation of payments between the Term
Loan Facilities and the Revolving Credit Facility pursuant to Section

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<PAGE> 82
2.11(d), in each case without the written consent of the Majority Facility
Lenders in respect of each Facility adversely affected thereby; (v) reduce the
percentage specified in the definition of Majority Facility Lenders without the
written consent of all Lenders under each affected Facility; (vi) amend, modify
or waive any provision of Section 9 without the written consent of the
Administrative Agent; (vii) amend, modify or waive any provision of Section 2.6
or 2.7 without the written consent of the Swing Line Lender; or (viii) amend,
modify or waive any provision of Section 3 without the written consent of each
affected Issuing Lender. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon the Loan Parties, the Lenders, the Administrative Agent and all future
holders of the Loans. In the case of any waiver, the Loan Parties, the Lenders
and the Administrative Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any Default or Event
of Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

10.2 Notices. All notices, requests and demands to or upon
the respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice,
when received, addressed as follows in the case of the Borrower and the
Administrative Agent, and as set forth in an administrative questionnaire
delivered to the Administrative Agent in the case of the Lenders, or to such
other address as may be hereafter notified by the respective parties hereto:

The Borrower: International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey 07054
Attention: Lynn Misericordia
Telecopy: 201-254-5460

with copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: 214-740-7313

Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas, 25th Floor
New York, New York 10019
Attention: Alan B. Menkes
Andrew S. Rosen
Telecopy: 212-424-1450

The Administrative Agent: The Chase Manhattan Bank Loan
and Agency Services Group
One Chase Manhattan Plaza
New York, New York 10081
Attention: Sandra Miklave
Telecopy: 212-552-5658

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<PAGE> 83
with a copy to: The Chase Manhattan Bank
270 Park Avenue
New York, New York 10017
Attention: Karen Sharf
Telecopy: 212-270-5659

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.

10.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power
or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the making of the Loans hereunder.

10.5 Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Administrative Agent for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Administrative Agent, (c) to pay, indemnify, and hold harmless
each Lender and the Administrative Agent from and against any and all recording
and filing fees and any and all liabilities with respect to, or resulting from
any delay in paying, stamp, excise and other taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Loan Documents and
any such other documents, and (d) to pay, indemnify and hold harmless each
Lender and the Administrative Agent and their respective officers, directors,
trustees, professional advisors, employees, affiliates, agents and controlling
persons (each, an "indemnitee") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of,

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<PAGE> 84
noncompliance with or liability under, any Environmental Law applicable to the
operations of the Borrower any of its Subsidiaries or any of the Properties
(all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that the Borrower shall have no obligation hereunder
to any indemnitee with respect to indemnified liabilities to the extent such
indemnified liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such indemnitee. The agreements in this Section 10.5
shall survive repayment of the Loans and all other amounts payable hereunder.

10.6 Successors and Assigns; Participations and Assignments.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Administrative Agent, all future holders of the
Loans and their respective successors and assigns, except that the Borrower may
not assign or transfer any of its rights or obligations under this Agreement
without the prior written consent of each Lender.

(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks,
financial institutions or other entities (each, a "Participant") participating
interests in any Loan owing to such Lender, any Revolving Credit Commitment of
such Lender or any other interest of such Lender hereunder and under the other
Loan Documents. In the event of any such sale by a Lender of a participating
interest to a Participant, such Lender's obligations under this Agreement to
the other parties to this Agreement shall remain unchanged, such Lender shall
remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Loan for all purposes under this Agreement and the other
Loan Documents, and the Borrower and the Administrative Agent shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and the other Loan Documents. In
no event shall any Participant under any such participation have any right to
approve any amendment or waiver of any provision of any Loan Document, or any
consent to any departure by any Loan Party therefrom, except to the extent that
such amendment, waiver or consent would reduce the principal of, or interest
on, the Loans or any fees payable hereunder, or postpone the date of the final
maturity of the Loans, in each case to the extent subject to such
participation. The Borrower agrees that if amounts outstanding under this
Agreement and the Loans are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.18, 2.19 and 2.20 with respect to its participation
in the Revolving Credit Commitments and the Loans outstanding from time to time
as if it were a Lender; provided that, in the case of Section 2.19, such
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred
by such transferor Lender to such Participant had no such transfer occurred.

(c) Any Lender (an "Assignor") may, in accordance with
applicable law, at any time and from time to time assign to any Lender or any
affiliate thereof or, with the consent of the Borrower

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<PAGE> 85
and the Administrative Agent (which, in each case, shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or other
entity (an "Assignee") all or any part of its rights and obligations under this
Agreement pursuant to an Assignment and Acceptance, substantially in the form
of Exhibit E, executed by such Assignee and such Assignor (and, in the case of
an Assignee that is not then a Lender or an affiliate thereof, by the Borrower
and the Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided that no such assignment to
an Assignee (other than any Lender or any affiliate thereof) shall be in an
aggregate principal amount of less than $5,000,000 (other than in the case of
an assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrower and the Administrative Agent. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder with a Revolving Credit Commitment and/or Loans as set forth therein,
and (y) the Assignor thereunder shall, to the extent provided in such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto). Notwithstanding any provision of this
Section 10.6, the consent of the Borrower shall not be required, and, unless
requested by the Assignee and/or the Assignor, new Notes shall not be required
to be executed and delivered by the Borrower, for any assignment which occurs
at any time when any of the events described in Section 8(f) shall have
occurred and be continuing.

(d) The Administrative Agent shall maintain at its address
referred to in Section 10.2 a copy of each Assignment and Acceptance delivered
to it and a register (the "Register") for the recordation of the names and
addresses of the Lenders and the Revolving Credit Commitments of, and the
principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, each other Loan Party, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register as the
owner of the Loan recorded therein for all purposes of this Agreement. Any
assignment of any Loan or other obligation hereunder (whether or not evidenced
by a Note) shall be effective only upon appropriate entries with respect
thereto being made in the Register.

(e) Upon its receipt of an Assignment and Acceptance executed
by an Assignor and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Borrower and the Administrative
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $4,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) record the information contained
therein in the Register on the effective date determined pursuant thereto.

(f) The Loans made by each Lender shall be evidenced by a
Note issued by the Borrower, substantially in the form of Exhibit G-1, G-2 or
G-3, as the case may be, payable to the order of such Lender. Each Lender is
hereby authorized to record, on the schedule annexed to and constituting a part
of the relevant Note, information regarding the relevant Loans made by such
Lender, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded, provided that the failure to make any
such recordation or any error in such recordation shall not affect the
Borrower's obligations hereunder or under any Note. On or prior to the
effective date of an Assignment and Acceptance, the Borrower, at its own
expense, shall execute and

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<PAGE> 86
deliver to the Administrative Agent, in exchange for the relevant Notes, new
Notes to the order of the Assignee and, if applicable, the Assignor. Such new
Notes shall be dated the Closing Date and shall otherwise be in the form of the
Notes replaced thereby.

(g) The Borrower authorizes each Lender to disclose to any
Participant or Assignee (each, a "Transferee") and any prospective Transferee
any and all financial information concerning the Loan Parties and their
respective affiliates which has been delivered to such Lender by or on behalf
of any Loan Party pursuant to this Agreement or any other Loan Document or
which has been delivered to such Lender by or on behalf any Loan Party in
connection with such Lender's credit evaluation of the Loan Parties and their
respective affiliates, under the condition that such Transferee or prospective
Transferee shall previously have agreed to be bound by the provisions of
Section 10.15.

(h) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.

10.7 Adjustments; Set-off. (a) Except to the extent that
this Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement
Obligations owing to it, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 8(f), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other Lender, if any, in respect of such other Lender's Loans or the
Reimbursement Obligations owing to such other Lender, or interest thereon, such
Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loans and/or
of the Reimbursement Obligations owing to each such other Lender, or shall
provide such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to
share the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after any
such setoff and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such setoff and application.

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<PAGE> 87
10.8 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. A set of the copies of this
Agreement signed by all the parties shall be lodged with the Borrower and the
Administrative Agent.

10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

10.10 Integration. This Agreement and the other Loan
Documents represent the entire agreement of the Borrower, the Administrative
Agent and the Lenders with respect to the subject matter hereof and thereof,
and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof or thereof
not expressly set forth or referred to herein or in the other Loan Documents.

10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

10.12 Submission To Jurisdiction; Waivers. The Borrower
hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan Documents
to which it is a party, or for recognition and enforcement of any
judgment in respect thereof, to the non-exclusive general jurisdiction
of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate
courts from any thereof;

(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Borrower at its address set forth in Section 10.2 or
at such other address of which the Administrative Agent shall have
been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and

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<PAGE> 88
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 10.12 any special, exemplary,
punitive or consequential damages.

10.13 Acknowledgments. The Borrower hereby acknowledges
that:

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

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

(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower and the
Lenders.

10.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

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<PAGE> 89
10.15 Confidentiality. Each Lender agrees to keep
information obtained by it pursuant hereto and the other Loan Documents
identified as confidential in writing at the time of delivery confidential in
accordance with such Lender's customary practices and agrees that it will only
use such information in connection with the transactions contemplated by this
Agreement and not disclose any of such information other than (a) to such
Lender's employees, representatives, directors, attorneys, auditors, agents,
professional advisors, trustees or affiliates who are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes available to such Lender on a
non-confidential basis from any source or such information that is in the
public domain at the time of disclosure, (c) to the extent disclosure is
required by law (including applicable securities laws), regulation, subpoena or
judicial order or process (provided that notice of such requirement or order
shall be promptly furnished to the Borrower unless such notice is legally
prohibited) or requested or required by bank, securities, insurance or
investment company regulations or auditors or any administrative body or
commission to whose jurisdiction such Lender may be subject, (d) to any rating
agency to the extent required in connection with any rating to be assigned to
such Lender, (e) to Transferees or prospective Transferees or to any direct or
indirect contractual counterparties in swap agreements or to the professional
advisors of such swap counterparties who agree to be bound by the provisions of
this Section 10.15, (f) to the extent required in connection with any
litigation between any Loan Party and any Lender with respect to the Loans or
this Agreement and the other Loan Documents or (g) with the Borrower's prior
written consent. The agreements in this Section 10.15 shall survive repayment
of the Loans and all other amounts payable hereunder.

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

INTERNATIONAL HOME FOODS, INC.

By: /s/ ANDREW S. ROSEN
-------------------------------------
Name:
Title:

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<PAGE> 90
Annex A

PRICING GRID

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Applicable Margin for Applicable Margin
Eurodollar Loans for ABR Loans
--------------------- -----------------
Commitment
Consolidated Leverage Ratio A/RC B A/RC B Fee Rate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Greater than or equal to 5.00 to 1.0 1.75% 2.00% 0.75% 1.00% 0.500%
- ---------------------------------------------------------------------------------------------------------------
Greater than or equal to 4.25 to 1.0 1.50% 1.75% 0.50% 0.75% 0.375%
and less than 5.00 to 1.0
- ---------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.75 to 1.0 1.25% 1.50% 0.25% 0.50% 0.375%
and less than 4.25 to 1.0
- ---------------------------------------------------------------------------------------------------------------
Greater than or equal to 3.25 to 1.0 1.00% 1.50% 0% 0.50% 0.300%
and less than 3.75 to 1.0
- ---------------------------------------------------------------------------------------------------------------
Less than 3.25 to 1.0 0.875% 1.50% 0% 0.50% 0.300%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

As used above, "A/RC" refers to Tranche A Term Loans, Revolving Credit Loans
and Swing Line Loans and "B" refers to Tranche B Term Loans.

Changes in the Applicable Margin or the Commitment Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the date
(the "Adjustment Date") on which financial statements are delivered to the
Lenders pursuant to Section 6.1 (but in any event not later than the 45th day
after the end of each of the first three quarterly periods of each fiscal year
or the 95th day after the end of each fiscal year, as the case may be) and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial statements
are delivered, the Consolidated Leverage Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 5.00 to 1. Each determination of the
Consolidated Leverage Ratio pursuant to this paragraph shall be made with
respect to the Test Period ending at the end of the period covered by the
relevant financial statements and, to the extent applicable, in accordance with
the last paragraph of Section 7.1.

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<PAGE> 1
================================================================================

EXHIBIT 10.2

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

INTERNATIONAL HOME FOODS, INC.

IHF/GM HOLDING CORPORATION,

IHF/GM ACQUISITION CORPORATION

AND

GRIST MILL CO.

DATED AS OF MARCH 10, 1998

================================================================================
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1

THE OFFER; APPROVALS OF THE BOARD OF DIRECTORS
AND STOCKHOLDERS

1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.4 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Sub Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 2

THE MERGER

2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

ARTICLE 3

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES

3.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Representations and Warranties of Parent and Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

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<TABLE>
<S> <C> <C>
ARTICLE 5

COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1 Affirmative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Negative Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ARTICLE 6

ADDITIONAL AGREEMENTS

6.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.4 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.5 Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . . . . . . . . . . . . 43
6.6 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
6.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.8 Withholding Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.9 HSR and Other Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.10 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.11 Continuation of Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.12 Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.13 Withdrawal Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.14 Preparation of the Proxy Statement; Company Stockholders Meeting; Merger without a Company
Stockholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.15 Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.16 Termination of Affiliate Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.17 Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.18 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

ARTICLE 7

CONDITIONS PRECEDENT

7.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE 8

TERMINATION AND AMENDMENT

8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>

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<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 9

GENERAL PROVISIONS

9.1 Nonsurvival of Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.2 Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.6 Entire Agreement; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.9 Director and Officer Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.10 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.11 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

ARTICLE 10

GUARANTEE

10.1 Limited Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>

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<PAGE> 5
SCHEDULES
Schedule 1.4 -- By-law Amendments
Schedule 3.5(a) -- Cancellation of Stock Options
Schedule 4.1(a) -- Subsidiaries
Schedule 4.1(b) -- Capital Structure
Schedule 4.1(c) -- Violations (Transaction Documents)
Schedule 4.1(d) -- Disclosure Documents
Schedule 4.1(f) -- Violations (General)
Schedule 4.1(h) -- Litigation
Schedule 4.1(i) -- Taxes
Schedule 4.1(j) -- Employment Agreements
Schedule 4.1(k) -- Benefit Plans and Employee Arrangements
Schedule 4.1(l) -- Absence of Certain Changes or Events
Schedule 4.1(m) -- Material Liabilities
Schedule 4.1(n) -- Agreements with Financial Advisor
Schedule 4.1(p) -- Labor Matters
Schedule 4.1(q) -- Intellectual Property
Schedule 4.1(r) -- Environmental Matters
Schedule 4.1(s) -- Real Property
Schedule 4.1(t) -- Tangible Property
Schedule 4.1(v) -- Material Contracts
Schedule 4.1(w) -- Related Party Transactions
Schedule 4.1(x) -- Inventory
Schedule 4.1(y) -- Discounts and Trade Promotions
Schedule 4.1(z) -- Product Recalls and Withdrawls
Schedule 4.1(aa) -- Insurance
Schedule 4.1(bb) -- Customers and Suppliers
Schedule 4.1(cc) -- Interested Parties
Schedule 4.2(e) -- Financing Commitments
Schedule 5.2(k) -- Capital Expenditures
Schedule 6.5(a) -- Brokers or Finders
Schedule 6.11 -- Severance Plan

Exhibits
Exhibit A -- Stockholder Agreement
Exhibit B -- Option Surrender Agreement, Release and Waiver
Exhibit C -- Offer Conditions

iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of March 10, 1998 (this
"Agreement"), is made and entered into by and among IHF/GM HOLDING CORPORATION,
a Delaware corporation ("Parent"), IHF/GM ACQUISITION CORPORATION, a Delaware
corporation and a wholly owned Subsidiary (as defined in Section 3.1(b)) of
Parent ("Sub"), and Grist Mill Co., a Delaware corporation (the "Company"). In
addition to the above parties, International Home Foods, Inc., a Delaware
corporation and the sole stockholder of Parent ("IHF"), hereby joins in the
execution and delivery of this Agreement for purposes of Section 3.5(c),
Section 4.2(b), Section 4.2(e), Section 6.1(c), Section 6.5(b), Section 6.5(c),
Section 6.6(b), Section 6.19, Section 8.1(j), Article 9 and Article 10.

RECITALS

WHEREAS, the respective Boards of Directors of IHF, Parent, Sub and
the Company have unanimously approved this Agreement pursuant to which Parent
will acquire the Company by means of the Offer (as defined below) and the
merger (the "Merger") of Sub with and into the Company, upon the terms and
subject to the conditions set forth in this Agreement;

WHEREAS, to effectuate the Merger, Parent and the Company each desire
that Sub commence a cash tender offer to purchase (the "Offer") all of the
outstanding shares of common stock, par value $0.10 per share, of the Company
("Company Common Stock"), including the associated Company Common Stock
purchase rights (the "Rights") issued pursuant to that certain Rights Agreement
(the "Rights Agreement") by and between the Company and Norwest Bank Minnesota,
N.A., as agent, dated May 22, 1996, as amended, upon the terms and subject to
the conditions set forth in this Agreement and the Offer Documents (as defined
in Section 1.2), and the Board of Directors of the Company has approved the
Offer and agreed, subject to the terms and conditions hereof, to recommend to
the stockholders of the Company that they accept the Offer and tender their
Shares pursuant thereto. Shares of Company Common Stock together with the
associated Rights are herein referred to as the "Shares;"

WHEREAS, IHF, Parent and Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless,
contemporaneously with the execution and delivery hereof, the Company and
certain beneficial and record holders of the Shares and Options (as defined in
Section 3.5) enter into a Stockholder Agreement substantially in the form of
Exhibit A hereto (the "Stockholder Agreement") and, in order to induce Parent
and Sub to enter into this Agreement, the Company and such holders are
executing and delivering concurrently herewith the Stockholder Agreement;

WHEREAS, IHF, Parent and Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless certain
beneficial and record holders of Options enter into an Option Surrender
Agreement, Release and Waiver substantially in the form of Exhibit B hereto (an
"Option Release Agreement"); and

1
<PAGE> 7
WHEREAS, IHF, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the
consummation thereof;

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1

THE OFFER; APPROVALS OF THE BOARD OF DIRECTORS
AND STOCKHOLDERS

1.1 THE OFFER.

(a) Provided that none of the events set forth in Exhibit
C hereto shall have occurred and be continuing, as promptly as practicable (but
in any event not later than five business days after the public announcement of
the execution and delivery of this Agreement), Sub shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) the Offer for all outstanding Shares at a cash price of
$14.50 per Share, net to the holder (the "Offer Consideration"). The
obligation of Parent and Sub to commence the Offer, consummate the Offer,
accept for payment and pay for Shares tendered in the Offer and not withdrawn
shall be subject only to those conditions set forth in Exhibit C hereto.

(b) Parent and Sub expressly reserve the right to amend
or modify the terms of the Offer at any time prior to acceptance of Shares for
payment pursuant to the Offer, except that, without the prior written consent
of the Company (which consent may be withheld in the Company's sole
discretion), Sub shall not (and Parent shall cause Sub not to):

(i) decrease the Offer Consideration, change the
form of the Offer Consideration or decrease the number of Shares
sought pursuant to the Offer,

(ii) amend or waive the condition (the "Minimum
Condition") that there shall be validly tendered and not withdrawn
prior to the time the Offer expires a number of Shares which
constitutes a majority of the Shares outstanding on a fully-diluted
basis on the date of purchase ("on a fully-diluted basis" meaning, as
of any date, the number of Shares outstanding, together with the
shares of Company Common Stock, if any, which the Company may be
required to issue, now or in the future, including, without
limitation, shares of Company Common Stock issuable pursuant to
options (including, without limitation, the Options), warrants or
other rights (excluding the Rights until the earlier of the
occurrence, if at all, of a Flip-In-Event or a Stock Acquisition Date
(in each case as defined in the Rights Agreement) or obligations
outstanding at that date), or

2
<PAGE> 8
(iii) extend the expiration date of the Offer,
which shall initially be not less than 20 business days after the date
the Offer is commenced; provided, however, that Sub may extend the
expiration date of the Offer:

(A) as required by any rule, regulation
or interpretation of the United States Securities and Exchange
Commission (the "SEC");

(B) in the event that any condition to
the Offer is not satisfied as of the scheduled expiration date
thereof, for such periods for up to five (5) business days at
a time (or such longer period as shall be approved by the
Company) as Sub may reasonably deem necessary, but, except as
provided in clause (C) below, in no event may the Offer be
extended to a date later than the date (the "Offer Termination
Date") that is 150 days from the date of this Agreement
(provided that, in the event that any condition to the Offer
is not satisfied as of the scheduled expiration date thereof,
Sub shall extend the expiration date of the Offer at the
request of the Company for up to five (5) business days at a
time (or such longer period as shall be mutually agreed) until
the earlier of the acceptance for payment of any Shares
pursuant to the Offer or 60 calendar days after the
commencement of the Offer; provided that such extension shall
not be required if in the reasonable judgment of Sub, any such
condition is incapable of being satisfied prior to the
expiration of such 60 calendar day period);

(C) notwithstanding the foregoing,
beyond the Offer Termination Date (1) in connection with an
increase in the consideration to be paid pursuant to the Offer
so as to comply with the applicable rules and regulations of
the SEC, and (2) for up to a period not to exceed the period
which ends on the 15th business day after the date that either
(w) the Company shall have publicly announced the receipt of
an Acquisition Proposal (as defined in Section 6.2) in the
event such announcement is made less than ten business days
prior to the Offer Termination Date, (x) the Company publicly
announces its reaffirmation of its approval or recommendation
of the Offer following the public announcement of the receipt
of any Acquisition Proposal in the event that such
reaffirmation or announcement is made less than ten business
days prior to the Offer Termination Date, (y) the Board of
Directors of the Company shall have withdrawn or adversely
modified, or taken a public position materially inconsistent
with, its approval or recommendation of the Offer, the Merger
or this Agreement at any time within ten business days prior
to the Offer Termination Date or (z) any notice is given by
the Company in accordance with clause (i) of Section 8.1(i) if
such notice is made less than 15 business days prior to the
Offer Termination Date;

(iv) amend the terms of the Offer in any manner
that is adverse to the holders of Shares; or

(v) impose any condition to the Offer in addition
to those set forth in Exhibit C.

3
<PAGE> 9
Except as set forth above, Sub may waive any other condition to the
Offer in its sole discretion. Assuming the prior satisfaction or waiver of the
conditions to the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all Shares validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration
date thereof. The Company will not, nor will it permit any of its Subsidiaries
to, tender into the Offer any Shares beneficially owned by it.

1.2 OFFER DOCUMENTS. As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to be filed with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase, related letter
of transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made (collectively with any supplements or amendments
thereto, the "Offer Documents"). The Offer Documents (a) shall contain (or
shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange Act and the
rules and regulations thereunder and any other applicable law and (b) shall
conform in all material respects with the requirements of the Exchange Act and
any other applicable law. Notwithstanding the foregoing, no agreement or
representation hereby is made or shall be made by Parent or Sub with respect to
information supplied by the Company expressly for inclusion in, or with respect
to Company information derived from the Company's public SEC filings that is
included or incorporated by reference in, the Offer Documents. Each of Parent,
Sub and the Company shall promptly correct any information provided by it for
use in the Offer Documents if and to the extent that it shall have become false
or misleading in any material respect, and Parent and Sub shall take all lawful
action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Company Common
Stock, in each case as and to the extent required by applicable law. In
conducting the Offer, Parent and Sub shall comply in all material respects with
the Exchange Act and any other applicable law. The Company and its counsel
shall be given reasonable opportunity to review and comment on the Offer
Documents and any amendments or supplements thereto prior to the filing thereof
with the SEC. Parent and Sub shall provide the Company and its counsel any
comments Parent, Sub or their counsel may receive from the SEC or its staff
with respect to the Offer Documents promptly after receipt of such comments.
To the extent practicable, the Company and its counsel shall also be given
reasonable opportunity to review and comment on correspondence with the SEC
concerning the Offer Documents prior to the delivery thereof to the SEC.

1.3 COMPANY ACTIONS. The Company hereby represents that (a) its
Board of Directors (at a meeting duly called and held) has unanimously (i)
determined that this Agreement, the Stockholder Agreement and the Option
Release Agreements (collectively, the "Transaction Documents") and the
transactions contemplated hereby or thereby, including the Offer and the Merger
provided for by this Agreement, are fair to and in the best interests of the
Company and the holders of Company Common Stock, (ii) approved the execution,
delivery and performance of the Transaction Documents by the Company and the
consummation of the transactions contemplated thereby, including the Offer and
the Merger provided for by this Agreement, such approval constituting approval
of the foregoing for purposes of Section 203 of the Delaware General
Corporation Law, as amended (the "DGCL"), thereby making the proscription
contained in Section 203(a) of the DGCL inapplicable to such transactions, and
(iii) resolved, subject to Section 6.2

4
<PAGE> 10
hereof, to recommend (A) acceptance of the Offer and (B) adoption of this
Agreement by the holders of Company Common Stock, if such adoption is required
by law; and (b) ABN AMRO Incorporated (the "Financial Advisor") has delivered
to the Board of Directors of the Company its opinion that, as of the date of
such opinion and based upon and subject to the matters set forth therein, the
Offer Consideration to be received by the holders of Company Common Stock in
the Offer and the Merger Consideration (as defined in Section 3.2) to be
received by the holders of the Company Common Stock in the Merger are fair,
from a financial point of view, to such holders. The Company hereby consents
to the inclusion in the Offer Documents of the recommendation referred to in
this Section 1.3. Subject to Section 6.2 hereof, the Company hereby agrees to
file with the SEC, simultaneously with the filing by Parent and Sub of Schedule
14D-1 (or promptly after such filing), a Solicitation/Recommendation Statement
on Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing such recommendations of the Board of Directors of
the Company in favor of the Offer and the Merger and otherwise complying with
Rule 14d-9 under the Exchange Act and to cause the Schedule 14D-9 to be mailed
to the stockholders of the Company at the same time the Offer Documents are
first mailed to the stockholders of the Company. The Schedule 14D-9 shall
comply in all material respects with the Exchange Act and any other applicable
law and shall contain (or shall be amended in a timely manner to contain) all
information that is required to be included therein in accordance with the
Exchange Act and the rules and regulations promulgated thereunder and any other
applicable law. Notwithstanding the foregoing, no agreement or representation
hereby is made or shall be made by the Company with respect to information
provided by Parent, Sub or their affiliates. Each of the Company, Parent and
Sub shall promptly correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company shall take all lawful action
necessary to cause the Schedule 14D-9 as so corrected to be promptly filed with
the SEC and disseminated to the holders of Company Common Stock, in each case
as and to the extent required by applicable law. Parent, Sub and their counsel
shall be given an opportunity to review and comment on the Schedule 14D-9 and
any amendments thereto prior to the filing thereof with the SEC. The Company
will provide Parent and Sub and their counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule
14D-9 promptly after receipt of such comments. To the extent practicable,
Parent, Sub and their counsel shall also be given reasonable opportunity to
review and comment on correspondence with the SEC concerning the Schedule 14D-9
prior to the delivery thereof to the SEC. In connection with the Offer, the
Company, at the sole expense of Sub, shall promptly furnish, or cause its
transfer agent to furnish, Sub with mailing labels, security position listings
and all available listings or computer files containing the names and addresses
of the record holders of the Company Common Stock as of the latest practicable
date and shall furnish, or cause its transfer agent to furnish, Sub with such
information and assistance (including updated lists of stockholders, mailing
labels and lists of security positions) as Sub or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of
Company Common Stock. Subject to the requirements of applicable law and stock
exchange rules, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer and
the Merger, Parent, Sub and their affiliates shall hold in confidence the
information contained in such labels and lists, shall use such information only
in connection with the Offer and the Merger provided for by this Agreement,
and, if this Agreement is terminated for any reason, shall deliver promptly to
the Company all copies of such information then in their possession or control.

5
<PAGE> 11
1.4 DIRECTORS.

(a) Before the closing of the Offer, the Company shall
amend, or cause to be amended, its by-laws to provide for each of the matters
set forth on Schedule 1.4.

(b) Upon the purchase by Sub pursuant to the Offer of
such number of Shares which represents a majority of the outstanding shares of
Company Common Stock (on a fully diluted basis), and from time to time
thereafter, the parties hereto agree to cause to be elected to the Board of
Directors of the Company such number of directors designated by Sub, rounded up
to the next whole number (but in no event more than two less than the total
number of directors on the Board of Directors of the Company, as such number
may be increased as provided herein), as will give Sub, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of
Directors of the Company equal to the product of (i) the number of directors on
the Board of Directors of the Company (giving effect to any increase in the
number of directors pursuant to this Section 1.4) and (ii) the percentage (the
"Board Percentage") that such number of Shares so purchased bears to the
aggregate number of Shares outstanding and the Company shall, upon request by
Sub and subject to applicable law, promptly satisfy the Board Percentage by (A)
increasing the size of the Board of Directors of the Company or (B) using its
reasonable efforts to secure the resignations of such number of directors as is
necessary to enable Sub's designees to be elected to the Board of Directors of
the Company and shall cause Sub's designees promptly to be so elected, provided
that no such action shall be taken which would result in there being, prior to
the consummation of the Merger, less than two directors of the Company who are
Continuing Directors (as defined below), except to the extent that all
Continuing Directors have resigned. The Company shall promptly amend, or cause
to be amended, its By-Laws, if necessary, to increase the size of the Board of
Directors of the Company if such increase is required to satisfy the Board
Percentage pursuant to this Section l.4. At the request of Sub, the Company
shall take, at the Company's expense, any lawful action necessary to effect any
such election, including, without limitation, mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder (provided that Sub has provided the information
described in the following sentence), unless such information has previously
been provided to the Company's stockholders in the Schedule 14D-9. Sub will
supply to the Company in writing and be solely responsible for any information
with respect to itself and its nominees, directors and affiliates required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The term
"Continuing Director" shall mean (1) each member of the Board of Directors
immediately prior to the acceptance for payment of Shares tendered pursuant to
the Offer or (2) any director elected or appointed to fill any vacancy or newly
created directorship after the date hereof who is (x) recommended or elected,
as the case may be, by a majority of the Continuing Directors then on the Board
of Directors and (y) not affiliated with, and not a designee or nominee of,
Parent or Sub.

(c) Following the election or appointment of Sub's
designees pursuant to this Section 1.4 and prior to the Effective Time (as
defined in Section 2.3) of the Merger, the approval of a majority of the
Continuing Directors shall be required to authorize any termination of this
Agreement by the Company, any consent or agreement by the Company to such
termination, any amendment of this Agreement requiring action of the Board of
Directors of the Company, any extension of time for the performance of any of
the obligations or other acts of IHF, Parent or Sub

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<PAGE> 12
under this Agreement, any waiver of compliance with any of the agreements or
conditions under this Agreement for the benefit of the Company or the holders
of Company Common Stock, and any action to seek to enforce any obligation of
IHF, Parent or Sub under this Agreement. In connection therewith, the
Continuing Directors shall be authorized, on behalf of and at the expense of
the Company, to retain financial and legal advisors.

1.5 SUB STOCKHOLDER APPROVAL. Parent, in its capacity as the sole
stockholder of Sub, by its execution hereof, approves and adopts this Agreement
and the transactions contemplated hereby.

ARTICLE 2

THE MERGER

2.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time (as defined in Section 2.3).
At the Effective Time, the separate corporate existence of Sub shall cease, and
the Company shall continue as the surviving corporation and a direct wholly
owned Subsidiary of Parent (Sub and the Company are sometimes hereinafter
referred to as the "Constituent Corporations" and, as the context requires, the
Company is sometimes hereinafter referred to as the "Surviving Corporation")
and shall continue under the name "Grist Mill Co."

2.2 CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article 7, the closing of the Merger (the "Closing") shall take place
at 10:00 a.m., Central Standard time, as promptly as practical (but in no event
later than the second business day) after satisfaction and/or waiver of all of
the conditions set forth in Section 7.1 (the "Closing Date"), at the offices of
Vinson & Elkins, L.L.P., 2001 Ross Avenue, Dallas, Texas 75201, unless another
date, time or place is agreed to in writing by the parties hereto.

2.3 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable after the Closing. The Merger shall become effective upon such
filing or at such time thereafter as is provided in the Certificate of Merger
as the Company and Sub shall agree (the "Effective Time").

2.4 EFFECTS OF THE MERGER.

(a) The Merger shall have the effects as set forth in the
applicable provisions of the DGCL.

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<PAGE> 13
(b) The directors and officers of Sub immediately prior
to the Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.

(c) At the Effective Time, Article Fourth of the
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be amended to increase the number of authorized
shares of Company Common Stock to an aggregate amount of Thirty Five Million
(35,000,000) as of the Effective Time, by operation of this Agreement and by
virtue of the Merger without any further action by the stockholders or
directors of the Surviving Corporation and, as so amended, such Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.

(d) The by-laws of the Company shall be the by-laws (the
"By-laws") of the Surviving Corporation until thereafter amended as provided by
applicable law, the Certificate of Incorporation or the By-laws.

ARTICLE 3

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF THE CERTIFICATES

3.1 EFFECT ON CAPITAL STOCK. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of shares of
Company Common Stock or any holder of shares of capital stock of Sub:

(a) Capital Stock of Sub. Each share of the capital
stock of Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and become a number of fully paid and nonassessable
shares of common stock, par value $0.10 per share, of the Surviving Corporation
equal to the quotient realized by dividing (i) the sum of (A) the aggregate
number of shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time, (B) the aggregate number of shares of Company
Common Stock that are owned by and held in the treasury of the Company
immediately prior to the Effective Time and (C) the aggregate number of shares
of Company Common Stock issuable, immediately prior to the Effective Time, in
respect of all then outstanding Options, by (ii) the aggregate number of shares
of capital stock of Sub issued and outstanding immediately prior to the
Effective Time.

(b) Cancellation of Treasury Stock. Each share of
Company Common Stock and all other shares of capital stock of the Company that
are owned, directly or indirectly, by the Company or any wholly owned
Subsidiary of the Company, or by IHF, Parent or Sub or any other wholly owned
Subsidiary of Parent or IHF shall be canceled and retired and shall cease to
exist, and no consideration shall be delivered or deliverable in exchange
therefor. As used in this Agreement, the word "Subsidiary", with respect to
any party, means any corporation, partnership, joint venture

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<PAGE> 14
or other organization, whether incorporated or unincorporated, of which: (i)
such party or any other Subsidiary of such party is a general partner; (ii)
voting power to elect a majority of the Board of Directors or others performing
similar functions with respect to such corporation, partnership, joint venture
or other organization is held by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries; or
(iii) at least 50% of the equity, other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and any one or more of its Subsidiaries.

3.2 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of Sub, the Company or the holders of
the Company Common Stock:

(a) Subject to the other provisions of this Section 3.2,
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (excluding shares of Company Common Stock canceled pursuant
to Section 3.1(b) and Dissenting Shares (as defined in Section 3.6)) shall be
converted into the right to receive an amount in cash equal to the Offer
Consideration, or such higher price, if any, as is paid in the Offer (the
"Merger Consideration"), payable to the holder thereof in cash, without any
interest thereon, less any required withholding taxes, upon surrender and
exchange of the Certificate (as defined in Section 3.3) representing such share
of Company Common Stock pursuant to the terms hereof.

(b) All such shares of Company Common Stock, when
converted as provided in Section 3.2(a), no longer shall be outstanding and
shall automatically be canceled and shall cease to exist, and each Certificate
(as defined below) previously evidencing such shares of Company Common Stock
shall thereafter represent only the right to receive the Merger Consideration.
The holders of Certificates previously evidencing shares of Company Common
Stock outstanding immediately prior to the Effective Time shall cease to have
any rights with respect to such shares except as otherwise provided herein or
by law and, upon the surrender of Certificates in accordance with the
provisions of Section 3.3, shall only have the right to receive for such shares
the Merger Consideration, less any required withholding taxes, without any
interest thereon. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of Company Common Stock
shall have been changed into a different number of shares or a different class
by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Merger
Consideration shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, with the aggregate Merger Consideration payable to each stockholder
in such case being rounded to the nearest penny.

3.3 PAYMENT FOR SHARES.

(a) Paying Agent. Prior to the Effective Time, Parent
shall appoint a United States bank or trust company reasonably acceptable to
the Company to act as paying agent (the "Paying Agent") for the payment of
funds in amounts and at times necessary for the payment of the Merger
Consideration, and immediately following the Effective Time Parent shall
contribute the funds in amounts and at times necessary for the payment of the
Merger Consideration to the Surviving Corporation and shall cause the Surviving
Corporation to deposit funds in amounts and

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<PAGE> 15
at times necessary for the payment of the Merger Consideration so contributed
with the Paying Agent in a separate fund (the "Payment Fund") established for
the benefit of the holders of Certificates, for payment in accordance with this
Article 3, through the Paying Agent, and such contribution by Parent and
payment by the Surviving Corporation shall be in immediately available funds in
amounts necessary to make the payments pursuant to Section 3.2 and this Section
3.3. The Paying Agent shall, pursuant to irrevocable instructions, pay the
Merger Consideration out of the Payment Fund.

If for any reason the Payment Fund is inadequate to pay the amounts to
which holders of shares of Company Common Stock shall be entitled under this
Section 3.3, Parent shall take all steps necessary to enable or cause the
Surviving Corporation promptly to deposit in trust additional cash with the
Paying Agent sufficient to make all payments required under this Agreement, and
Parent and the Surviving Corporation shall in any event be liable for payment
thereof. The Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement.

(b) Payment Procedures. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation shall instruct
the Paying Agent to mail to each holder of record of a certificate or
certificates which, immediately prior to the Effective Time, evidenced
outstanding shares of Company Common Stock (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent, and shall be in such form and
have such other provisions as the Surviving Corporation reasonably may specify)
and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent together with such letter of
transmittal, duly executed, or an "agents message" in the case of a book entry
transfer, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in respect thereof cash in an amount equal to the product of (A) the number of
shares of Company Common Stock formerly represented by such Certificate and (B)
the Merger Consideration, less any required withholding taxes, and the
Certificate so surrendered shall forthwith be canceled. No interest shall be
paid or accrued on the Merger Consideration payable upon the surrender of any
Certificate. If any holder of a Certificate shall be unable to surrender such
holder's Certificates because such Certificates have been lost, mutilated or
destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond in form and substance and with surety reasonably satisfactory to the
Surviving Corporation. If payment is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
surrendered Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 3.3(b), each
Certificate converted into the right to receive cash pursuant to Section 3.2(a)
hereof shall be deemed at any time after the Effective Time to represent for
all purposes only the right to receive the Merger Consideration.

(c) Termination of Payment Fund; Interest. Any portion
of the Payment Fund which remains undistributed to the holders of Company
Common Stock for 180 days after the Effective Time shall be delivered to the
Surviving Corporation, upon demand, and any holders of

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<PAGE> 16
Company Common Stock who have not theretofore complied with this Article 3 and
the instructions set forth in the letter of transmittal mailed to such holder
after the Effective Time shall thereafter look only to the Surviving
Corporation for payment of the Merger Consideration to which they are entitled.
All interest accrued in respect of the Payment Fund shall inure to the benefit
of and be paid to the Surviving Corporation.

(d) No Liability. None of Parent, the Company or the
Surviving Corporation shall be liable to any holder of shares of Company Common
Stock for any cash from the Payment Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.

3.4 STOCK TRANSFER BOOKS. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company. On or after the Effective Time, any Certificates
presented to the Paying Agent or Parent for any reason, except notation thereon
that a stockholder has elected to exercise his rights to appraisal pursuant to
the DGCL, shall be converted into the right to receive cash pursuant to Section
3.2(a) hereof.

3.5 STOCK OPTION PLANS.

(a) Cancellation of Options. At the Effective Time, each
then outstanding option (the "Options") to purchase or acquire shares of
Company Common Stock under the Grist Mill Co. 1986 Non-Qualified Stock Option
Plan, as amended (the "Stock Option Plan"), whether or not then exercisable or
vested, shall be canceled and shall represent the right to receive the
following consideration in settlement thereof: for each share of Company
Common Stock subject to such Option, including any additional shares subject
thereto by reason of their terms upon consummation of the "change of control"
resulting from the Merger, an amount (subject to any applicable withholding
tax) in cash equal to the difference between the Merger Consideration and the
per share exercise price of such Option to the extent such difference is a
positive number (such amount in cash as described above being hereinafter
referred to as the "Option Consideration"); provided, however, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
Option Consideration shall not be payable until the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act,
but shall be paid as soon as practicable thereafter. Upon the Funding Date (as
defined below), all Options shall immediately vest and be exercisable. As used
herein, the term "Funding Date" shall mean the date that funds necessary to pay
for the Shares accepted for payment pursuant to the Offer have been tendered to
the Paying Agent as provided for in this Agreement.

(b) Termination of Rights. The surrender of an Option to
the Company in exchange for the Option Consideration shall be deemed a release
of any and all rights the holder had or may have had in respect of such Option.
Prior to the expiration of the Offer, the Company shall use its best efforts to
take all action necessary (including causing the Board of Directors of the
Company (or any committees thereof) to take such actions as are allowed by the
Stock Option Plan) to ensure that, following the Effective Time, no participant
in the Stock Option Plan or any other plans, programs or arrangements shall
have any right thereunder to acquire equity securities of the Company, the
Surviving Corporation or any Subsidiary thereof.

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<PAGE> 17
(c) Payment Procedures. Upon the later of the Effective
Time or the delivery of a duly executed Option Release Agreement by a holder of
Options, IHF shall, or shall cause the Surviving Corporation to, pay to each
holder of an Option the Option Consideration in respect thereof. No interest
shall be paid or accrued on the cash portion of the Option Consideration.
Until settled in accordance with the provisions of this Section 3.5(c), each
Option shall be deemed at any time after the Effective Time to represent for
all purposes only the right to receive the Option Consideration.

(d) Option Release Agreements. The Company shall use its
reasonable efforts to obtain, within 15 days from the date of this Agreement,
from each beneficial and record holder of an Option, an Option Release
Agreement duly executed and delivered by such holder.

3.6 DISSENTING SHARES. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who properly shall have demanded appraisal for such
shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders instead shall be entitled
to receive payment of the appraised value of such shares of Company Common
Stock held by them in accordance with the provisions of such Section 262 of the
DGCL, except that all Dissenting Shares held by stockholders who shall have
failed to perfect or who effectively shall have withdrawn or otherwise lost
their rights to appraisal of such shares of Company Common Stock under such
Section 262 of the DGCL shall thereupon be deemed to have been converted into
and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, less any required withholding taxes, the
Merger Consideration upon surrender in the manner provided in Section 3.3 of
the Certificate or Certificates that, immediately prior to the Effective Time,
evidenced such shares of Company Common Stock.

3.7 STOCKHOLDER AGREEMENT. Notwithstanding any provision
contained herein to the contrary, the provisions of Sections 1.1, 3.2 and 3.5
(including, without limitation, provisions related to the Offer Consideration,
the Merger Consideration and Option Consideration payable to holders of Shares
and Options, respectively) insofar as they relate to amounts payable to the
holder that is party to the Stockholder Agreement, shall be subject to Section
4(b) of the Stockholder Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Company. The Company
represents and warrants to Parent and Sub as follows:

(a) Organization, Standing and Power. Each of the
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation, has all requisite power and authority to own, lease and operate
its

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<PAGE> 18
properties and to carry on its business as now being conducted, and is duly
qualified to do business as a foreign corporation and in good standing to
conduct business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify would not (i) have a Material Adverse Effect (as defined below) with
respect to the Company or (ii) materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement. The Company has
heretofore made available to Parent complete and correct copies of the
certificates of incorporation and by-laws of the Company and its Subsidiaries.
All Subsidiaries of the Company, their respective jurisdictions of
incorporation, and their respective jurisdictions of qualification to do
business are identified on Schedule 4.1(a). As used in this Agreement, a
"Material Adverse Effect" shall mean, with respect to any party, any events,
changes or effects which, individually or in the aggregate, would have a
material adverse effect on the business, operations, prospects, assets,
condition (financial or otherwise) or results of operations of such party and
its Subsidiaries, taken as a whole.

(b) Capital Structure.

(i) The Company. The authorized capital stock
of the Company consists of 15,000,000 shares of common stock, par
value $0.10 per share. As of the date of this Agreement, 6,860,692
shares of Company Common Stock (plus such additional shares of Company
Common Stock, if any, issued since March 9, 1998 upon the exercise of
an Option that is set forth on Annex 4.1(b)-1 to Schedule 4.1(b) in
accordance with their terms) are issued, all of which are outstanding.
Except as set forth on Schedule 4.1(b), no bonds, debentures, notes or
other instruments or evidence of indebtedness of the Company ("Company
Debt") are issued or outstanding. Other than the Options and Rights,
(A) there are no outstanding securities convertible into, or
exchangeable or exercisable for, shares of capital stock or other
securities of the Company and (B) there are no calls, rights
(including, without limitation, preemptive rights), commitments or
agreements (including, without limitation, employment, termination and
similar agreements) to which the Company or any of its Subsidiaries is
a party or by which it is bound, in any case obligating the Company or
any of its Subsidiaries to issue, deliver, sell, purchase, redeem or
acquire, or cause to be issued, delivered, sold, purchased, redeemed
or acquired, any securities of the Company, including, without
limitation, shares of capital stock, or obligating the Company or any
of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement (other than the Rights
Agreement). Set forth on Schedule 4.1(b) is a list of all of the
Options outstanding on the date hereof and the number of shares of
Company Common Stock and exercise prices relating thereto. No Shares
are held by the Company or any of its Subsidiaries. All outstanding
Shares are validly issued, fully paid and nonassessable and are not
subject to, and have not been issued in violation of, preemptive or
other similar rights.

(ii) Voting of Shares. Except as set forth in the
Transaction Documents, there are not as of the date hereof and there
will not be at the Effective Time any stockholder agreements, voting
trusts or other agreements or understandings to which the Company is a
party or by which it is bound relating to the voting of any shares of
the capital stock of the

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<PAGE> 19
Company which will limit in any way the solicitation of proxies by or
on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to this Agreement.

(iii) Subsidiaries. The authorized, issued and
outstanding shares of capital stock of each of the Company's
Subsidiaries are set forth on Schedule 4.1(b). All outstanding shares
of capital stock of the Subsidiaries of the Company are owned by the
Company or a direct or indirect Subsidiary of the Company, free and
clear of all mortgages, pledges, liens, claims, charges, security
interests, restrictions, tenancies, other possessory interests,
conditional sales obligations or other encumbrances of any kind
(collectively, "Liens"). All such issued and outstanding shares of
capital stock are validly issued, fully paid and nonassessable and no
such shares have been issued in violation of any preemptive or similar
rights. No shares of capital stock of any Subsidiary of the Company
are reserved for issuance. Except as set forth on Schedule 4.1(b), no
bonds, debentures, notes or other instruments or evidence of
indebtedness of any Subsidiary of the Company ("Subsidiary Debt") are
issued or outstanding. There are no outstanding securities convertible
into, or exchangeable or exercisable for, shares of capital stock of
any Subsidiary of the Company. There are no calls, rights (including,
without limitation, preemptive rights), commitments or agreements
(including, without limitation, employment, termination and similar
agreements) to which the Company or any of its Subsidiaries is a party
or by which it is bound, in any case obligating the Company or any of
its Subsidiaries to issue, deliver, sell, purchase, redeem or acquire,
or cause to be issued, delivered, sold, purchased, redeemed or
acquired, any securities of any Subsidiary of the Company, including,
without limitation, shares of capital stock and Subsidiary Debt, or
obligating the Company or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, right, commitment or
agreement. There are no restrictions on the Company to vote the stock
of any of its Subsidiaries.

(i) The Company has all requisite corporate power
and authority to enter into the Transaction Documents and, subject to,
if required by applicable law with respect to the consummation of the
Merger, the Company Stockholder Approval (as defined in Section
4.1(c)(iii)), to consummate the transactions contemplated by the
Transaction Documents. The execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
the part of the Company, subject, if required by applicable law with
respect to the consummation of the Merger, to the Company Stockholder
Approval. The Transaction Documents have been duly executed and
delivered by the Company and, subject, if required by applicable law
with respect to the consummation of the Merger, to the Company
Stockholder Approval, and assuming that each of the Transaction
Documents to which Parent or Sub is a party constitutes the valid and
binding agreement of Parent or Sub, constitute valid and binding
obligations of the Company enforceable in accordance with their
respective terms and conditions except that the enforcement thereof
may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights
generally and

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<PAGE> 20
(B) general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).

(ii) Except as set forth on Schedule 4.1(c), the
execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by the Company
will not (A) conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration (including
pursuant to any put right) of any material obligation or the loss of a
material benefit under, or the creation of a Lien, pledge, security
interest or other encumbrance on assets or property, or right of first
refusal with respect to any asset or property (any such conflict,
violation, default, right of termination, cancellation or
acceleration, loss, creation or right of first refusal, a
"Violation"), pursuant to any provision of the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries or
(B) except as to which requisite waivers or consents have been
obtained, assuming the consents, approvals, authorizations or permits
and filings or notifications referred to in paragraph (iii) of this
Section 4.1(c) are duly and timely obtained or made, and assuming, if
required by applicable law with respect to the consummation of the
Merger, the Company Stockholder Approval has been obtained, result in
any Violation of (1) any loan or credit agreement, note, mortgage,
deed of trust, indenture, lease, Benefit Plan (as defined in Section
4.1(k)), Company Permit (as defined in Section 4.1(g)), or any other
agreement, obligation, instrument, concession, franchise or license or
(2) any judgment, order, decree, statute, law, ordinance, rule,
regulation, writ or injunction (collectively, "Laws") applicable to
the Company or any of its Subsidiaries or their respective properties
or assets, except in the case of clauses (1) and (2) for any
Violations that, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, materially impair the ability
of the Company to perform its obligations under any of the Transaction
Documents or prevent the consummation of any of the transactions
contemplated thereby. The Board of Directors of the Company has taken
all actions necessary under the DGCL, including approving the
transactions contemplated by the Transaction Documents, to ensure that
the restrictions on Business Combinations (as defined in Section 203
of the DGCL) do not, and will not, apply to the transactions
contemplated hereby if consummated in accordance with the terms
hereof.

(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit
from any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to the Company
or any of its Subsidiaries in connection with the execution and
delivery of any of the Transaction Documents by the Company or the
consummation by the Company of the transactions contemplated thereby,
except for (A) the filing of a pre-merger notification and report form
by the Company under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the expiration or termination
of the applicable waiting period thereunder; (B) the filing with the
SEC of (1) if required by applicable law with respect to consummation
of the Merger, a proxy statement or information statement in
definitive form for distribution to the stockholders of the Company in
advance of the meeting, if any, of the holders of Company Common Stock
to adopt this Agreement in accordance with Regulation

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<PAGE> 21
14A or Regulation l4C promulgated under the Exchange Act (such proxy
statement or information statement as amended or supplemented from
time to time being hereinafter referred to as the "Proxy Statement"),
(2) the Schedule 14D-9 in connection with the Offer, and (3) such
reports under and such other compliance with the Exchange Act and the
rules and regulations thereunder as may be required in connection with
this Agreement and the transactions contemplated hereby; (C) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant
authorities of other states in which the Company does business; (D)
such filings and approvals as may be required by any applicable state
takeover (as described on Schedule 4.1(c)(iii)), securities or "blue
sky" laws; (E) such filings in connection with any state or local tax
which is attributable to the beneficial ownership of the Company's or
its Subsidiaries' real property, if any (collectively, the "Gains and
Transfer Taxes"); (F) such other filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
necessitated by the Merger or the transactions contemplated by this
Agreement; (G) if required by applicable law with respect to
consummation of the Merger, the adoption of this Agreement by the
holders of a majority of the outstanding Shares ("Company Stockholder
Approval"); and (H) such other consents, approvals, orders,
authorizations, registrations, declarations, filings, notices or
permits the failure of which to be obtained or made would not have a
Material Adverse Effect on the Company, materially impair the ability
of the Company to perform its obligations under any of the Transaction
Documents or prevent the consummation of any of the transactions
contemplated thereby.

(d) Disclosure Documents. Set forth on Schedule 4.1(d)
is a list of each report, schedule, registration statement and definitive proxy
statement filed by the Company with the SEC since January 1, 1995 and prior to
the date of this Agreement (the "Company SEC Documents"), which are all the
documents (other than preliminary material) that the Company was required to
file with the SEC since such date, true and complete copies of which the
Company has made available to Parent. As of their respective dates, the
Company SEC Documents complied in all material respects with the requirements
of the Securities Act of 1933 (the "Securities Act"), or the Securities
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder, and none of the Company SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X of the SEC) and fairly present, in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to year-end audit adjustments, as permitted by Rule 10-01, and any
other adjustments described therein), the consolidated financial position of
the Company and its consolidated Subsidiaries as of their respective dates and
the consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.
The monthly financial statements of the Company for each month since June 1996

16
<PAGE> 22
(copies of which have been provided to Parent) were prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly present, in accordance with
applicable requirements of GAAP (subject to year-end audit adjustments, as
would be permitted by Rule 10-01, and any other adjustments described therein),
the consolidated financial position of the Company and its consolidated
Subsidiaries as of their respective dates and the consolidated results of
operations of the Company and its consolidated Subsidiaries for the periods
presented therein.

(e) Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) any of the Offer Documents will, at the time
the Offer Documents are first published, sent or given to holders of Company
Common Stock, and at any time they are amended or supplemented, 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 light of
the circumstances under which they are made, not misleading, and (ii) the Proxy
Statement, if any, will contain, on the date it is first mailed to the holders
of the Company Common Stock or at the date of the related stockholders' meeting
(the "Meeting Date"), any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the expiration or termination of
the Offer, the acceptance for payment of Shares pursuant to the Offer or the
Meeting Date (if applicable), any event with respect to the Company, or with
respect to information supplied by the Company specifically for inclusion in
the Offer Documents or the Proxy Statement, as applicable, shall occur which is
required to be described in an amendment of, or supplement to, such document,
such event shall be so described by the Company and furnished to Parent. All
documents that the Company is responsible for filing with the SEC in connection
with the transactions contemplated herein, insofar as it relates to the Company
or its Subsidiaries or other information supplied by the Company specifically
for inclusion therein, will comply as to form, in all material respects, with
the provisions of the Securities Act, the Exchange Act or the rules and
regulations thereunder, and each such document required to be filed with any
Governmental Entity other than the SEC will comply in all material respects
with the provisions of applicable law as to the information required to be
contained therein. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to the information supplied or to be
supplied by Parent or Sub for inclusion in the Offer Documents or the Proxy
Statement.

(f) No Default. Except (i) as may result from the
execution and delivery of the Transaction Documents and the consummation of the
transactions contemplated thereby (which is subject to Section 4.1(c)(ii)) or
(ii) as set forth on Schedule 4.1(f), no Violation exists (and no event has
occurred which, with notice or the lapse of time or both, would constitute a
Violation) of any term, condition or provision of (i) the certificate of
incorporation or by-laws of the Company or any of its Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license to which the
Company or any of its Subsidiaries is now a party or by which the Company or
any of its Subsidiaries or any of their respective properties or assets is
bound or (iii) any Law applicable to the Company or any of its Subsidiaries,
except in the case of (ii) and (iii) for Violations which, in the aggregate,
would not have a Material Adverse Effect on the Company, materially impair the
ability of the Company to perform

17
<PAGE> 23
its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby.

(g) Compliance with Applicable Laws. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits") and are in
compliance with the terms thereof, except where the failure to hold any such
Company Permits would not, individually or in the aggregate, have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby. As of the date
of this Agreement, no investigation or review by any Governmental Entity with
respect to the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, has been threatened which would have a Material
Adverse Effect on the Company, materially impair the ability of the Company to
perform its obligations under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated thereby.

(h) Litigation. Except as set forth on Schedule 4.1(h),
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary of the Company
("Company Litigation") the loss of which would have a Material Adverse Effect
on the Company, nor is there any material judgment, decree, unfunded
settlement, conciliation agreement, letter of deficiency, award, temporary
restraining order, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any Subsidiary of the Company
("Company Order") that would have a Material Adverse Effect on the Company. In
addition, except as expressly set forth on Schedule 4.1(h) as having such
effect, none of the claims and judgments pending or, to the knowledge of the
Company, threatened pursuant to all Company Litigation and Company Orders,
would, individually or in the aggregate, have a Material Adverse Effect on the
Company, materially impair the ability of the Company to perform its
obligations under any of the Transaction Documents or prevent the consummation
of any of the transactions contemplated thereby.

(i) Taxes. Except as set forth on Schedule 4.1(i)
hereto:

(i) All material Tax Returns required to be filed
by or with respect to the Company, each of its Subsidiaries, and any
affiliated, consolidated, combined, unitary or similar group of which
the Company or any of its Subsidiaries is or was a member, have been
duly and timely filed (taking into account all valid extensions of
filing dates), and all such Tax Returns are true, correct and complete
in all material respects. The Company, each of its Subsidiaries, and
any affiliated, consolidated, combined, unitary or similar group of
which the Company or any of its Subsidiaries is or was a member, has
duly and timely paid (or there has been paid on its behalf) all
material Taxes that are due, except for Taxes being contested in good
faith by appropriate proceedings and for which adequate reserves have
been established in the Company's unaudited financial statements for
the quarter ended November 30, 1997 in accordance with GAAP. With
respect to any period for which Taxes are not yet due with respect to
the Company, any Subsidiary, and any affiliated, consolidated,
combined, unitary or similar group of which the Company or any of its
Subsidiaries is or was

18
<PAGE> 24
a member, the Company and each of its Subsidiaries has made due and
sufficient current accruals for such Taxes in accordance with GAAP in
the most recent financial statements contained in the Company SEC
Documents. The Company and each of its Subsidiaries has withheld and
paid all material Taxes required by all applicable laws to be withheld
or paid in connection with any amounts paid or owing to any employee,
creditor, independent contractor, stockholder or other third party.

(ii) Correct and complete copies of all federal,
state, local and foreign income Tax Returns filed by either the
Company or any of its Subsidiaries since December 31, 1995 have been
delivered to Parent.

(iii) There are no outstanding agreements, waivers,
or arrangements extending the statutory period of limitation
applicable to any claim for, or the period for the collection or
assessment of, material Taxes due from or with respect to the Company,
any of its Subsidiaries, or any affiliated, consolidated, combined,
unitary or similar group of which the Company or any of its
Subsidiaries is or was a member, for any taxable period. No audit or
other proceeding by any court, governmental or regulatory authority,
or similar person is pending in regard to any material Taxes due from
or with respect to the Company or any of its Subsidiaries or any
material Tax Return filed by or with respect to the Company, any
Subsidiary, or any affiliated, consolidated, combined, unitary or
similar group of which the Company or any of its Subsidiaries is or
was a member, other than normal and routine audits by nonfederal
governmental authorities. All material deficiencies of Taxes assessed
by any applicable taxing authority have been paid, fully settled or
adequately provided for in the financial statements contained in the
Company SEC Documents. No taxing authority has asserted or threatened
to assert any deficiency or assessment, or proposed (formally or
informally) any adjustment, for any Taxes against the Company or any
of its Subsidiaries, and the officers and directors (and employees
responsible for Tax matters) of the Company do not know of any audit
or investigation by any taxing authority with respect to any Tax
liability of the Company.

(iv) No consent to the application of Section
341(f)(2) of the Code (or any predecessor provision) has been made or
filed by or with respect to the Company or any of its Subsidiaries or
any of their assets. None of the Company or any of its Subsidiaries
has agreed to make any material adjustment pursuant to Section 481(a)
of the Code (or any predecessor provision) by reason of any change in
any accounting method, and there is no application pending with any
taxing authority requesting permission for any changes in any
accounting method of the Company or any of its Subsidiaries which, in
each respective case, will or would reasonably cause the Company or
any of its Subsidiaries to include any material adjustment in taxable
income for any taxable period (or portion thereof) ending after the
Closing Date.

(v) Neither the Company nor any of its
Subsidiaries is a party to, is bound by, or has any obligation under,
any Tax sharing agreement, Tax allocation agreement or similar
contract, agreement or arrangement. Neither the Company nor any of
its Subsidiaries

19
<PAGE> 25
is subject to any joint venture, partnership or other arrangement or
contract which is treated as a partnership for federal income Tax
purposes.

(vi) Neither the Company nor any of its
Subsidiaries has made any payments, is obligated to make any payments
or is a party to any agreement that under certain circumstances could
obligate it to make any payments that will not be deductible under
Section 280G or Section 162(m) of the Code.

(vii) Neither the Company nor any of its
Subsidiaries is or has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii).

(viii) There are no requests for rulings from any
taxing authority for information with respect to Taxes of the Company
or any of its Subsidiaries and, to the knowledge of the Company, no
material reassessments (for property or ad valorem Tax purposes) of
any assets or any property owned or leased by the Company or any of
its Subsidiaries have been proposed.

(ix) Neither the Company nor any of its
Subsidiaries has executed or entered into with the Internal Revenue
Service ( "IRS" ), or any taxing authority, a closing agreement
pursuant to Section 7121 of the Code or any similar provision of
state, local, foreign or other income tax law, which will require any
increase in taxable income or alternative minimum taxable income, or
any reduction in tax credits for, the Company or any of its
Subsidiaries for any taxable period ending after the Closing Date.

(x) There are no requests for rulings from any
taxing authority for information with respect to Taxes of the Company
or any of its Subsidiaries and, to the knowledge of the Company, no
material reassessments (for property or ad valorem Tax purposes) of
any assets or any property owned or leased by the Company or any of
its Subsidiaries have been proposed in written form.

(xi) None of the property of the Company or any
Subsidiary is subject to a safe-harbor lease (pursuant to Section
168(f)(8) of the Internal Revenue Code of 1954 as in effect after the
Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of Section
168(h) of the Code) or "tax-exempt bond financed property" (within the
meaning of Section 168(g)(5) of the Code).

(xii) The term "Code" shall mean the Internal
Revenue Code of 1986, as amended. The term "Tax" (and, with
correlative meaning, "Taxes") shall mean (A) any net income,
alternative or add-on minimum, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, franchise, profits, license,
withholding on amounts paid by the Company or any of its Subsidiaries,
payroll, employment, excise, production, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge of
any kind whatsoever,

20
<PAGE> 26
together with any interest and/or any penalty, addition to tax or
additional amount imposed by any taxing authority, (B) any liability
of the Company or any of its Subsidiaries for the payment of any
amounts of the type described in (A) as a result of being a member of
an affiliated or consolidated group or arrangement whereby liability
of the Company or any of its Subsidiaries for the payment of such
amounts was determined or taken into account with reference to the
liability of any other person for any period, and (C) liability of the
Company or any of its Subsidiaries with respect to the payment of any
amounts of the type described in (A) or (B) as a result of any express
or implied obligation to indemnify any other Person. The term "Tax
Return" shall mean all returns, declarations, reports, estimates,
information returns and statements required to be filed by or with
respect to the Company or any of its Subsidiaries in respect of any
Taxes, including, without limitation, (x) any consolidated federal
income Tax return in which the Company or any of its Subsidiaries is
included and (y) any state, local or foreign income Tax returns filed
on a consolidated, combined or unitary basis (for purposes of
determining tax liability) in which the Company or any of its
Subsidiaries is included.

(xiii) There are no excess loss accounts or deferred
intercompany transactions between the Company and/or any of its
Subsidiaries within the meaning of Treas. Reg. Sections 1.1502-13 or
1.1502-19, respectively.

(j) Employment Agreements. Schedule 4.1(j) contains a
complete list of each management, employment, consulting or other agreement,
contract or commitment, whether oral or in writing, to which the Company or any
of its Subsidiaries is a party that provides for (i) the employment of any
person or providing for retention of management, executive or consulting
services, or (ii) the payment or accrual of any compensation or severance upon
(A) a change in control of the Company or any of its Subsidiaries or (B) any
termination of such management, employment, consulting or other relationship.
All compensation earned pursuant to the foregoing, including deferred
compensation, has been fully and accurately accrued for and reflected in the
financial statements included in the Company's quarterly report on Form 10-Q
for the quarter ended November 30, 1997.

(k) Pension and Benefit Plans; ERISA.

(i) Schedule 4.1(k) sets forth a complete and
correct list of:

(A) all "employee benefit plans", as
defined in Section 3(3) of ERISA, maintained by the Company or
any trade or business (whether or not incorporated) which is
under common control, or which is treated as a single
employer, with the Company under Section 414(b), (c), (m) or
(o) of the Code ("ERISA Affiliate"), or to which the Company
or any of its ERISA Affiliates has any obligation or
liability, contingent or otherwise, other than any
multiemployer plan as defined in either Section 3(37) or
Section 4001(a)(3) of ERISA ("Benefit Plans"); and

21
<PAGE> 27
(B) all stock award, stock option or
stock purchase benefit policies or arrangements and all
material bonus or other incentive compensation, deferred
compensation, salary continuation, disability, or other
material employee benefit policies or arrangements which the
Company or any of its ERISA Affiliates maintains or to which
the Company or any of its ERISA Affiliates has any material
obligation or liability (contingent or otherwise) (together
with the agreements disclosed on Schedule 4.1(j), the
"Employee Arrangements").

(ii) With respect to each Benefit Plan for which a
Form 5500 is required to be filed, the Company or one of its
Subsidiaries has timely filed such form with the IRS for the last
three years.

(iii) Except as disclosed on Schedule 4.1(k), the
Benefit Plans and their related trusts intended to qualify under
Sections 401(a) and 501(a) of the Code, respectively, have received
favorable determination letters from the IRS regarding the Tax Reform
Act of 1986 with respect to such qualified status and nothing, to the
best knowledge of the Company or any of its Subsidiaries, has occurred
that could reasonably be expected to cause any such qualified status
to change, which change would be material.

(iv) All material contributions or other material
payments required to have been made by the Company or any of its ERISA
Affiliates to or under any Benefit Plan or Employee Arrangement by
applicable law or the terms of such Benefit Plan or Employee
Arrangement (or any agreement relating thereto) have been timely and
properly made or are properly accrued on the Company's unaudited
financial statements in accordance with generally accepted accounting
principles.

(v) The Benefit Plans and Employee Arrangements
have been maintained and administered in all material respects in
accordance with their terms and applicable laws, and all filings of
applicable reports, documents and notices, the non-filing of which
would have a Material Adverse Effect, have been timely made with the
appropriate governmental agencies and plan participants and
beneficiaries. There is no promise, agreement or other
understanding to in any way change or amend any of the Benefit Plans
or Employee Arrangements.

(vi) Except as disclosed on Schedule 4.1(k), there
are no pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened actions, claims or proceedings against or
relating to any Benefit Plan or Employee Arrangement (other than
routine benefit claims by persons entitled to benefits thereunder)
that would have a Material Adverse Effect.

(vii) Except for the Employee Arrangements and as
disclosed on Schedule 4.1(k), the Company and its ERISA Affiliates do
not maintain or have an obligation to contribute to retiree life or
retiree health plans which provide for continuing benefits or
coverage, for 18 months or more, for current or former officers,
directors, nonemployees or employees of the Company or any of its
ERISA Affiliates except (A) as

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<PAGE> 28
may be required under Part 6 of Title I of ERISA and at the sole
expense of the participant or the participant's beneficiary or (B) a
medical expense reimbursement account plan pursuant to Section 125 of
the Code.

(viii) Except as disclosed on Schedule 4.1(k) or
specifically provided for herein, neither the execution and delivery
of this Agreement nor the consummation of the transactions
contemplated hereby will (A) result in any material payment becoming
due to any employee or group of employees of the Company or any of its
Subsidiaries; (B) increase materially any benefits otherwise payable
under any Benefit Plan or Employee Arrangement; or (C) result in the
acceleration of the time of payment or vesting of any such material
benefits.

(ix) Except as disclosed on Schedule 4.1(k), no
stock or other security issued by the Company or any ERISA Affiliate
forms a part of the assets of any Benefit Plan.

(x) The Company and its Subsidiaries have
maintained workers' compensation coverage as required by applicable
state law through purchase of insurance and not by self-insurance or
otherwise, except as disclosed on Schedule 4.1(k).

(xi) As to each Benefit Plan subject to Title IV
of ERISA, since January 1, 1990, to the best knowledge of the Company
and each of its Subsidiaries, no notice of intent to terminate has
been given under Section 4041 of ERISA and no proceeding has been
instituted under Section 4042 of ERISA to terminate, such that would
result in a material liability to the Company or any ERISA Affiliates;
no material unsatisfied liability to the Pension Benefit Guaranty
Corporation ("PBGC") has been incurred; no material unsatisfied
accumulated funding deficiency, whether or not waived, within the
meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred; and the most recent financial statements and actuarial
valuations including information regarding the assets and liabilities
of each such Benefit Plan have been supplied to Parent.

(xii) The provisions of this Section 4.1(k)(xii)
shall only apply to Benefit Plans subject to Title IV of ERISA and
Benefit Plans subject to Section 412 of the Code; concerning each
Benefit Plan that is or has been subject to the funding requirements
of Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such plan is, and at all times has been, acceptable
under ERISA, the actuarial assumptions employed in connection with
determining the funding of each such plan are, and at all times have
been, reasonable and satisfy the requirements of Section 412(c)(3) of
the Code and Section 302(c)(3) of ERISA; Schedule 4.1(k) sets forth as
of December 31, 1997, any premiums due to the PBGC for the most
recently completed year; Schedule 4.1(k) sets forth a reasonable good
faith estimate of material changes between December 31, 1996 and the
date hereof in the actuarially determined present value of all benefit
liabilities within the meaning of Section 4001(a)(16) of ERISA
(determined on the basis of the assumptions used for funding purposes
in the most recent actuarial reports for such Benefit Plans) ("Benefit
Liabilities") or plan assets with respect to such Benefit Plans; the
sum of the amount of unfunded Benefit Liabilities under all Benefit
Plans (excluding each such plan with an

23
<PAGE> 29
amount of unfunded Benefit Liabilities of zero or less) is not more
than $100,000, with respect to any such Benefit Plan, no such plan has
been terminated or subject to a "spin-off" or "spin-off termination"
or partial termination and no assets of any such plan have been used
or employed in a manner so as to subject them to a material excise tax
imposed under Section 4980 of the Code; each such Benefit Plan permits
termination thereof, and any assets in excess of those required to pay
Benefit Liabilities may be distributed to or for the benefit of the
Company or its ERISA Affiliates, and Section 4044(d) of ERISA would
not prevent such reversion; and with respect to any such Benefit Plan,
any significant reduction in the rate of future benefit accrual was
preceded by an adequate and appropriate notice to the parties
described in and as required by Section 204(h) of ERISA.

(xiii) Neither the Company nor any of its ERISA
Affiliates has, or will have, incurred by reason of the transactions
contemplated by this Agreement any material liability under Section
4062(e) of ERISA. Except as disclosed on Schedule 4.1(k), neither the
Company nor any of its ERISA Affiliates is a participant in any plan
to which Sections 4063 or 4064 of ERISA apply.

(xiv) Neither the Company nor any of its ERISA
Affiliates has engaged in any transaction described under Section 4069
of ERISA nor has any Lien been imposed with respect to a material
amount on any of the Company, any ERISA Affiliate or any of their
respective assets under Section 4068 of ERISA.

(xv) The Company and its ERISA Affiliates have
complied in all material respects with all requirements for premium
payments, including any interest and penalty charges for late payment,
due the PBGC with respect to each Benefit Plan and each separate plan
year for which any premiums are required. Except as set forth in
Schedule 4.1(k), and except for transactions required by this
Agreement, since January 1, 1990, there has been no "reportable event"
(within the meaning of Section 4043(b) or (c) of ERISA and regulations
promulgated by the PBGC thereunder) with respect to any Benefit Plan
subject to Title IV of ERISA for which notice to the PBGC has not, by
rule or regulations, been waived which would have a Material Adverse
Effect. Concerning both the Company and any ERISA Affiliate (A) since
January 1, 1990, there has been no cessation of operations at a
facility so as to become subject to the provisions of Section 4062(e)
of ERISA which would have a Material Adverse Effect, (B) since January
1, 1990, there has been no withdrawal of a substantial employer from
any Benefit Plan so as to become subject to the provisions of Section
4063 of ERISA which would have a Material Adverse Effect, (C) since
January 1, 1990, there has been no cessation of contributions to any
Benefit Plan subject to Section 4064(a) of ERISA which would have a
Material Adverse Effect, (D) there is not now any material liability
under Section 4064 of ERISA to any of Parent, Sub or any affiliates of
Parent or Sub or the Company by reason of the termination of any
Benefit Plan, (E) since January 1, 1990, there has been no amendment
to any Benefit Plan that would require the furnishing of security
under Section 401(a)(29) of the Code, and (F) there has been no event
or circumstance, and, to the best knowledge of the Company or any of
its Subsidiaries, there exists no event or circumstance which could
reasonably be expected to result in any material liability being
asserted by any Benefit Plan, the PBGC or any other person or entity
under

24
<PAGE> 30
Title IV of ERISA against the Company or any ERISA Affiliate. With
respect to any Benefit Plan, no Lien has been imposed under Section
412(n) of the Code or Section 302(f) of ERISA with respect to a
material amount nor is there any material liability for excise taxes
imposed under Section 4971 of the Code; any notices to the PBGC
delivered since January 1, 1990, under Section 412(n) of the Code or
Section 302(f) of ERISA have heretofore been delivered to Parent; and
copies of any notices required to be given to participants since
January 1, 1990, under either Section 101(d) or Section 4011 of ERISA
have previously been delivered to Parent. Except as described in
Schedule 4.1(k), the PBGC has not communicated with the Company, its
ERISA Affiliates or any of its agents or representatives concerning
the transactions contemplated by the Agreement, nor any other
transactions implemented by the Company or any of its ERISA Affiliates
within the preceding five calendar years.

(xvi) Since January 1, 1990, neither the Company
nor any of its Subsidiaries has taken any action to vest participants
in any overfunding in any Benefit Plans subject to Title IV of ERISA.

(xvii) No act, omission or transaction has occurred
which would result in imposition on the Company or an ERISA Affiliate
of (A) material liability under Section 409 of ERISA for breach of
fiduciary duty, (B) a material civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA or (C) a material
tax imposed pursuant to Chapter 43 of Subtitle D of the Code.

(xviii) (A) Except as disclosed on Schedule 4.1(k),
neither the Company nor any ERISA Affiliate contributes to, or has an
obligation to contribute to, and has not within the preceding five
years contributed to, or had an obligation to contribute to, a
multiemployer plan subject to Title IV of ERISA as defined in Section
4001(a)(3) of ERISA (each such disclosed plan, a "Multiemployer
Plan"), (B) all material contributions or other material payments
required to have been made by the Company or any of its ERISA
Affiliates to or under any Multiemployer Plan by applicable law or the
terms of such Multiemployer Plan (or any agreement relating thereto)
have been timely and properly made or are properly accrued on the
Company's unaudited financial statements in accordance with GAAP, (C)
there has been no complete or partial withdrawal from a Multiemployer
Plan by the Company or any ERISA Affiliate so as to incur any material
withdrawal liability as defined in Section 4201 of ERISA (without
regard to any subsequent reduction or waiver of such liability under
Section 4207 or 4208 of ERISA), (D) if prior to the Effective Time any
Multiemployer Plan were in "reorganization" (as defined in Section
4241 of ERISA) or "insolvent" as defined in Section 4245 of ERISA, the
estimated present value of the aggregate increase in contributions to
such Multiemployer Plan by the Company and its ERISA Affiliates over
the estimated present value of contributions to such Multiemployer
Plan by the Company and its ERISA Affiliates without regard to such
reorganization or insolvency would not exceed $100,000 and would not
have a Material Adverse Effect, (E) Schedule 4.1(k) sets forth the
dollar amount of contributions made by the Company and its ERISA
Affiliates with respect to each Multiemployer Plan for the current
year and preceding five years, and (F) the aggregate dollar amount of
withdrawal liability as defined

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<PAGE> 31
in Section 4201 of ERISA (without regard to any subsequent reduction
or waiver of such liability under Section 4207 or 4208 of ERISA) which
would be owed by the Company and its ERISA Affiliates to all
Multiemployer Plans if the Company and its ERISA Affiliates ceased
contributing to all such Multiemployer Plans immediately before the
consummation of the transactions contemplated by this Agreement would
not exceed $100,000. With respect to each multiemployer plan as
defined in Section 3(37) of ERISA that is not a "Multiemployer Plan"
as defined above, all material contributions or other material
payments, required to have been made by the Company or any of the
ERISA Affiliates to or under any such multiemployer plan by applicable
law or the terms of such multiemployer plan (or any agreement relating
thereto) have been, to the best knowledge of the Company of any of its
Subsidiaries, timely and properly made or are properly accrued on the
Company's unaudited financial statements in accordance with GAAP.

(l) Absence of Certain Changes or Events. Since November
30, 1997, except as disclosed in Schedule 4.1(l), (i) each of the Company and
the Subsidiaries have conducted their business, in all material respects, only
in the ordinary course and in a manner consistent with past practice (except in
connection with the negotiation and execution and delivery of this Agreement
and the other Transaction Documents), (ii) no event has occurred that would
have been prohibited by the terms of Section 5.2 had the terms of such Section
been in effect as of and at all times since November 30, 1997, and (iii) other
than any event relating to (A) the economy or securities markets in general or
(B) the industries or markets in which the Company operates and not relating
specifically to the Company, there has not been any event or events (whether or
not covered by insurance), individually or in the aggregate, having, or that
would be reasonably expected to have, a Material Adverse Effect on the Company.

(m) No Undisclosed Material Liabilities. Except as set
forth on Schedule 4.1(m), there are no liabilities of the Company or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, that are material to the Company and its
Subsidiaries considered as a whole, other than (i) liabilities reflected on the
Company's financial statements (together with the related notes thereto) filed
with the Company's quarterly report on Form 10-Q for the quarter ended November
30, 1997 (as filed with the SEC), (ii) liabilities under this Agreement or for
professional fees and expenses in connection with the transactions contemplated
hereby and (iii) liabilities that have occurred in the ordinary course of
business since November 30, 1997.

(n) Opinion of Financial Advisor. The Company has
received the opinion of the Financial Advisor to the effect that, as of the
date thereof, the Offer Consideration to be received by the holders of Company
Common Stock in the Offer and the Merger Consideration to be received by the
holders of Company Common Stock in the Merger are fair from a financial point
of view to such holders, and such opinion has not been withdrawn or modified.
True and complete copies of all agreements and understandings between the
Company or any of its affiliates and the Financial Advisor relating to the
transactions contemplated by this Agreement have been provided by the Company
to Parent.

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<PAGE> 32
(o) Vote Required. Subject to the applicability of
Section 253 of the DGCL, the affirmative vote or written consent of the holders
of a majority of the outstanding shares of Company Common Stock is the only
vote or consent of the holders of any class or series of the Company's capital
stock necessary (under applicable law or otherwise) to adopt this Agreement.

(p) Labor Matters. Except as set forth on Schedule
4.1(p) or in the Company SEC Documents:

(i) Neither the Company nor any of its
Subsidiaries is a party to any labor or collective bargaining
agreement, and no employees of the Company or any of its Subsidiaries
are represented by any labor organization. Within the preceding three
years, there have been no representation or certification proceedings,
or petitions seeking a representation proceeding, pending or, to the
knowledge of the Company, threatened to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal
or authority. Within the preceding three years, to the best knowledge
of the Company, there have been no organizing activities involving the
Company or any of its Subsidiaries with respect to any group of
employees of the Company or any of its Subsidiaries.

(ii) There are no, and within the preceding three
years have not been any, strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor
disputes pending or, to the knowledge of the Company, threatened
against or involving the Company or any of its Subsidiaries. There
are no, and within the last three years have not been any, unfair
labor practice charges or complaints pending or, to the best knowledge
of the Company, threatened by or on behalf of any person (including,
without limitation, any employee or applicant for employment of the
Company or any of its Subsidiaries), group or labor organization.

(iii) There are no, and within the last three years
have not been any, complaints, charges or claims against the Company
or any of its Subsidiaries pending or, to the best knowledge of the
Company, threatened to be brought or filed, with any Governmental
Entity or arbitrator(s) based on, arising out of, in connection with,
or otherwise relating to the employment or termination of employment
of any individual (including, without limitation, any employee or
applicant for employment of the Company or any of its Subsidiaries) by
the Company or any of its Subsidiaries.

(iv) To the best knowledge of the Company, each of
the Company and its Subsidiaries is in compliance in all material
respects with all laws, regulations and orders relating to employment
and labor, including but not limited to all such laws, regulations and
orders relating to wages and hours, collective bargaining, equal
employment opportunity, affirmative action, discrimination, civil
rights, employee benefits, plant closing and mass layoff, immigration,
medical and family leave, safety and health, workers' compensation and
the collection and payment of withholding and/or social security taxes
and any similar tax.

(v) As of the date hereof, there is no
proceeding, claim, suit, action or governmental investigation pending
or, to the best knowledge of the Company or any of its

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<PAGE> 33
Subsidiaries, threatened, with respect to which any current or former
director, officer, employee or agent of the Company or any of its
Subsidiaries is entitled, or has asserted he is entitled, to claim
indemnification from the Company or any of its Subsidiaries pursuant
to the certificate of incorporation or by-laws of the Company or any
of its Subsidiaries, as provided in any indemnification agreement to
which the Company or any Subsidiary of the Company is a party or
pursuant to applicable law, that has a Material Adverse Effect on the
Company, materially impairs the ability of the Company to perform its
obligations under any of the Transaction Documents or prevents the
consummation of any of the transactions contemplated thereby.

(q) Intellectual Property. Except as set forth on
Schedule 4.1(q), each of the Company and its Subsidiaries owns or has a right
to use each trademark, trade name, patent, service mark, brand mark, brand
name, computer program, database, industrial design and copyright required,
owned or used in connection with the operation of its businesses, including any
registrations thereof and pending applications therefor, and each license or
other contract relating thereto that is material to the conduct of its business
(collectively, the "Company Intellectual Property"), free and clear of any and
all Liens, other than Permitted Encumbrances (as defined below), except where
the failure to own or have a right to use such property or such Lien, claim or
encumbrance would not have a Material Adverse Effect on the Company. All
material Company Intellectual Property is set forth on Schedule 4.1(q). Except
as set forth on Schedule 4.1(q), the use of the Company Intellectual Property
by the Company or its Subsidiaries does not conflict with, infringe upon,
violate or interfere with or constitute an appropriation of any right, title,
interest or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, patent, service mark, brand mark, brand name,
computer program, database, industrial design, copyright or any pending
application therefor of any other person. Except as set forth on Schedule
4.1(q), the use of all Company Intellectual Property will not be adversely
affected by the transactions contemplated in this Agreement. As used herein
the term "Permitted Encumbrances" includes, only to the extent that they do not
impair in any material respect the business activities of the Company as
currently conducted, (i) Liens for Taxes, assessments or governmental charges
or levies not yet due or delinquent and being diligently contested in good
faith, (ii) statutory Liens of carriers, warehousemen, mechanics, materialmen
and the like arising in the ordinary course of business and for obligations not
yet due and payable, (iii) easements, restrictive covenants, rights of way and
other similar imperfections of title, and (iv) zoning, building and other
similar restrictions.

(r) Environmental Matters.

(i) For purposes of this Agreement:

(A) "Environmental Costs and
Liabilities" means any and all losses, liabilities,
obligations, damages, fines, penalties, judgments, actions,
claims, costs and expenses (including, without limitation,
fees, disbursements and expenses of legal counsel, experts,
engineers and consultants and the reasonable costs of
investigation and feasibility studies and the reasonable costs
to clean up, remove, treat, or in any other way address any
Hazardous Materials) arising with respect to any violation of
or liability arising pursuant to or under any Environmental
Law or

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<PAGE> 34
as the result of any exposure or alleged exposure of any
person or property to any Hazardous Material.

(B) "Environmental Law" means any
applicable law regulating or prohibiting Releases of Hazardous
Materials into any part of the natural environment, or
pertaining to the protection of natural resources, the
environment and public and employee health and safety from
Hazardous Materials including, without limitation, the
Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") (42 U.S.C. Section 9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. Section 6901 et seq.), the Clean Water Act (33 U.S.C.
Section 1251 et seq.), the Clean Air Act (33 U.S.C. Section
7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
Section 7401 et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C. Section 136 et seq.), and the
Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) ("OSHA") and the regulations promulgated pursuant
thereto, and any such applicable state or local statutes, as
such laws have been and may be amended or supplemented through
the Closing Date;

(C) "Hazardous Material" means any
substance, material or waste which is regulated with respect
to its toxic or otherwise hazardous character or the potential
deleterious effects arising from its improper management by
any public or governmental authority in the jurisdictions in
which the applicable party or its Subsidiaries conducts
business, or the United States, including, without limitation,
any material or substance which is defined as a "hazardous
waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste,"
"contaminant," "solid waste," "toxic waste" or "toxic
substance" under any provision of Environmental Law and shall
also include, without limitation, petroleum, petroleum
products, asbestos, polychlorinated biphenyls and radioactive
materials;

(D) "Release" means any release, spill,
effluent, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration into
the environment; and

(E) "Remedial Action" means all actions,
including, without limitation, any capital expenditures,
required by a governmental entity or required under any
Environmental Law, or voluntarily undertaken to (1) clean up,
remove, treat, or in any other way ameliorate or address any
Hazardous Materials or other substance in the environment; (2)
prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material so it does not
endanger or threaten to endanger the public health or welfare
or the environment; (3) perform preremedial studies and
investigations or post-remedial monitoring and care pertaining
or relating to a Release; or (4) bring the applicable party
into compliance with any Environmental Law.

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<PAGE> 35
(ii) Except as set forth on Schedule 4.1(r)
hereto:

(A) The operations of the Company and
its Subsidiaries have been and, as of the Closing Date, will
be, in compliance in all respects with all Environmental Laws
except for any such noncompliance which would not materially
impair the ability of the Company and its Subsidiaries to
continue operations and which would not have a Material
Adverse Affect on the Company;

(B) The Company and its Subsidiaries
have obtained and will, as of the Closing Date, maintain all
permits required under applicable Environmental Laws for the
continued operations of their respective businesses, except
such permits the lack of which would not materially impair the
ability of the Company and its Subsidiaries to continue
operations and which would not have a Material Adverse Affect
on the Company;

(C) The Company and its Subsidiaries are
not subject to any outstanding written orders from, or written
agreements with, any Governmental Entity respecting (1)
violations or liability pursuant to Environmental Laws, (2)
Remedial Action or (3) any Release or threatened Release of a
Hazardous Material;

(D) The Company and its Subsidiaries
have not received any written communication alleging, with
respect to any such party, the violation of or liability under
any Environmental Law, which violation or liability is
outstanding, except for any such violation or liability which
would not result in a Material Adverse Effect on the Company;

(E) Neither the Company nor any of its
Subsidiaries has any contingent liability in connection with
the Release of any Hazardous Material into the environment
(whether on-site or off- site) which would result in the
Company and its Subsidiaries incurring Environmental Costs and
Liabilities which would result in a Material Adverse Effect on
the Company;

(F) The Company or its Subsidiaries do
not engage in the transportation, treatment, storage or
disposal of hazardous waste, as defined and regulated under
permit requirements set forth in 40 C.F.R. Parts 260-270 (in
effect as of the date of this Agreement) or any state
equivalent;

(G) There is not now nor has there been
in the past, on or in any property of the Company or its
Subsidiaries any (1) underground storage tanks or surface
impoundments containing Hazardous Materials, (2)
asbestos-containing materials, or (3) polychlorinated
biphenyls in regulated quantities, except as would not have a
Material Adverse Affect on the Company. To the knowledge of
the Company, there is not now nor has there been in the past,
on or in any property of the Company or its Subsidiaries any
of the items set forth in (1), (2) or (3) above; and

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<PAGE> 36
(H) No judicial or administrative
proceedings or governmental investigations are pending or, to
the knowledge of the Company, threatened against the Company
or any of its Subsidiaries alleging the violation of or
seeking to impose liability pursuant to any Environmental Law
or as the result of the Release or alleged Release of a
Hazardous Material, except for any such proceedings or
investigations that would not result in a Material Adverse
Effect on the Company.

(s) Real Property.

(i) Schedule 4.1(s) sets forth a list of all of
the real property owned in fee by the Company or any of its
Subsidiaries. Each of the Company and its Subsidiaries has good and
marketable title to each parcel of real property owned by it free and
clear of all Liens, except Permitted Encumbrances and those Liens
listed on Schedule 4.1(s).

(ii) Schedule 4.1(s) sets forth each lease,
sublease or other agreement (collectively, the "Real Property Leases")
under which the Company or any of its Subsidiaries uses or occupies or
has the right to use or occupy, now or in the future, any real
property material to the conduct of the businesses of the Company and
its Subsidiaries, taken as a whole. Except to the extent that it
would not have a Material Adverse Effect on the Company, each Real
Property Lease is valid, binding and in full force and effect, all
rent and other sums and charges payable by the Company and its
Subsidiaries as tenants thereunder are current, no termination event
or condition or uncured default on the part of the Company or any
Subsidiary of the Company exists under any Real Property Lease. Each
of the Company and its Subsidiaries has a good and valid leasehold
interest in each parcel of real property leased by it free and clear
of all Liens, except Permitted Encumbrances and those Liens listed on
Schedule 4.1(s).

(t) Tangible Property. Except as set forth on Schedule
4.1(t), with respect to the tangible properties and assets of the Company and
its Subsidiaries (excluding real property) that are material to the conduct of
the businesses of the Company and its Subsidiaries, the Company and its
Subsidiaries have good title to, or hold pursuant to valid and enforceable
leases, all such properties and assets, with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company. All of the assets of the Company and its Subsidiaries have been
maintained and repaired for their continued operation and are in good operating
condition, reasonable wear and tear excepted, and usable in the ordinary course
of business, except where the failure to be in such repair or condition or so
usable would not individually or in the aggregate have a Material Adverse
Effect on the Company.

(u) Board Recommendation. As of the date hereof, the
Board of Directors of the Company, at a meeting duly called and held, has by
the unanimous vote of those directors present (i) determined that the
Transaction Documents and the transactions contemplated thereby, including the
Offer and the Merger provided for by this Agreement, taken together, are fair
to and in the best interests of the stockholders of the Company and has
approved the same and (ii) resolved to recommend, subject to Section 6.2
hereof, the Offer and that the holders of the shares of Company

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<PAGE> 37
Common Stock adopt this Agreement, if such adoption is required by applicable
law, and tender their shares of Company Common Stock pursuant to the Offer.

(v) Material Contracts. The Company has made available
to Parent (i) true and complete copies of all written contracts, agreements,
commitments, arrangements, leases (including with respect to personal
property), policies and other instruments to which it or any of its
Subsidiaries is a party or by which it or any such Subsidiary is bound which
(A) require payments to be made in excess of $100,000 per year for goods and/or
services, (B) require payments to be made in excess of $100,000 with respect to
any licenses granted to the Company or any of its Subsidiaries, or (C) require
payments to be made in excess of $100,000 per year for goods and/or services
and which, in the case of each of (A), (B) and (C), do not by their terms
expire and are not subject to termination (without penalty or payment) within
60 days from the date of the execution and delivery thereof (collectively,
"Material Contracts"), and (ii) a written description of each Material Contract
of which the Company is aware that has not been reduced to writing; provided,
however, that blanket purchase orders or similar arrangements shall not be
considered Material Contracts for purposes of this Agreement. Each of the
Material Contracts is listed on Schedule 4.1(v). Neither the Company nor any
of its Subsidiaries is, or has received any written notice that any other party
is, in default in any respect under any such Material Contract, except as
listed on Schedule 4.1(v) and except for those defaults which would not, either
individually or in the aggregate, have a Material Adverse Effect with respect
to the Company; and, to the Company's knowledge, there has not occurred any
event or events that with the lapse of time or the giving of notice or both
would constitute such a material default, except as listed on Schedule 4.1(v)
and except for those defaults which would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company.

(w) Related Party Transactions. Except as set forth on
Schedule 4.1(w) and except for the Transaction Documents, the Employee
Arrangements or the Benefit Plans or as otherwise disclosed hereunder, no
director, officer, "affiliate" or "associate" (as such terms are defined in
Rule 12b-2 under the Exchange Act) of the Company or any of its Subsidiaries
(i) has borrowed any monies from or has outstanding any indebtedness or other
similar obligations to the Company or any of its Subsidiaries or (ii) is
otherwise a party to any contract, arrangement or understanding with the
Company or any of its Subsidiaries.

(x) Inventory. Except (i) for Inventory (as defined
below) which has been adequately reserved for in the Company's balance sheet
dated as of November 30, 1997 included in the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended November 30, 1997 and (ii) as set forth
on Schedule 4.1(x), the Inventory of the Company and its Subsidiaries is usable
and salable in the ordinary course of business, is of consistent and
merchantable quality and quantity, is fit for its intended purposes and not
subject to any write down or write off and has been produced in accordance with
all applicable Laws including the U.S. Federal Food, Drug and Cosmetics Act and
does not constitute "adulterated or misbranded goods" within the meaning of
such Act. All packaging inventory complies with all applicable Federal and
state labeling requirements. As used in this Agreement, the term "Inventory"
shall mean all finished products, samples, work-in-process, raw materials,
labels and packaging materials that are used in, or held for use in, the
operations of the business of the Company or its Subsidiaries.

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<PAGE> 38
(y) Accounts Receivable. The Accounts Receivable (as
defined below) of each of the Company and its Subsidiaries are valid and
genuine, have arisen solely out of bona fide sales and deliveries of goods,
performance of services or other business transactions in the ordinary course
of business consistent with past practice, and are not subject to valid
defenses, set-offs or counterclaims. The allowances for collection losses
associated with such Accounts Receivable reflected in the financial statements
included in the Company SEC Documents have been determined in accordance with
GAAP consistent with past practice. Other than as set forth on Schedule
4.1(y), there are no discounts, trade promotions or similar marketing
arrangements that affect the collectibility or value of any such Accounts
Receivable. As used in this Agreement, the term "Accounts Receivable" shall
mean all of the trade notes or accounts receivable arising out of Inventory
sold or shipped or services performed by the Company or its Subsidiaries in the
ordinary course of business.

(z) Product Recalls and Withdrawals. Except as set forth
on Schedule 4.1(z), since January 1, 1993, there have been no recalls or
withdrawals of Inventory produced or sold by the Company or any of its
Subsidiaries or other similar federal, state or private actions with respect to
such Inventory and, to the knowledge of the Company, no facts or circumstances
exist that could reasonably be expected to result in such actions.

(aa) Insurance. Each of the Company and its Subsidiaries
has insurance policies in full force and effect for such amounts as are
sufficient for material compliance with all requirements of law and of all
agreements to which a Seller is a party or by which it is bound. Set forth on
Schedule 4.1(aa) is a list of all fire, liability and other forms of insurance
and all fidelity bonds held by or applicable to the Company or its
Subsidiaries, setting forth, in respect of each such policy, the policy name,
policy number, carrier, term, type of coverage and annual premium. No event
has occurred which can reasonably be expected to result in a retroactive upward
adjustment in premiums under any such insurance policies or which is likely to
result in a prospective upward adjustment in such premiums. Excluding
insurance policies that have expired and been replaced in the ordinary course
of business, no insurance policy has been canceled within the last two years
and, to the Company's knowledge, no threat has been made to cancel any
insurance policy of the Company or its Subsidiaries during such period. All
such insurance will remain in full force and effect with respect to periods
before the Closing. No event has occurred, including, without limitation, the
failure to give any notice or information or the giving of any inaccurate or
erroneous notice or information, which limits or impairs the rights of the
Company or its Subsidiaries under any such insurance policies.

(ab) Customers and Suppliers. Schedule 4.1(bb) sets forth
a list of (i) the 20 largest customers of the Company and its Subsidiaries
based on sales during the calendar year 1997, showing the approximate total
sales to each such customer during such periods and (ii) the ten largest
suppliers of the Company and its Subsidiaries based on purchases during the
calendar year 1997, showing the approximate total purchases by the Company and
its Subsidiaries from each such supplier during such periods. There has not
been any material adverse change in the business relationship among the Company
and its Subsidiaries with any customer or supplier named on Schedule 4.1(bb),
and the Company has no reason to believe that there will be any such material

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<PAGE> 39
adverse change in the future as a result of the consummation of the
transactions contemplated by this Agreement or otherwise.

(ac) Certain Business Practices and Regulations; Potential
Conflicts of Interest.

(i) Neither the Company, its Subsidiaries nor any
directors, officers, agents or employees of either, in their capacity
as directors, officers, agents or employees on behalf of the Company
or any of its Subsidiaries, has (A) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity or (B) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate
funds or violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended.

(ii) Except as set forth on Schedule 4.1(cc), none
of the officers or directors of the Company or any of its
Subsidiaries, or any entity controlled by any of the foregoing, (A)
owns, directly or indirectly, any significant interest in, or is a
director, officer, employee, consultant or agent of, any person which
is a competitor, lessor, lessee or customer of, or supplier of goods
or services to, the Company or its Subsidiaries, (B) owns, directly or
indirectly, in whole or in part, any real property, leasehold
interests or other property with a fair market value of at least
$25,000 in the aggregate the use of which is necessary for the
activities of the Company or its Subsidiaries, (C) has any cause of
action or other suit, action or claim whatsoever against, or owes any
amount to the Company or its Subsidiaries, other than claims in the
ordinary course of business, or (D) has sold to, or purchased from,
the Company or any of its Subsidiaries any assets or property for
aggregate consideration in excess of $60,000 since January 1, 1994.

(ad) Rights Agreement. The Company has taken all action
that may be necessary (including, without limitation, amending the Rights
Agreement) so that:

(i) neither the execution and delivery of the
Transaction Documents, nor any amendments thereto approved by the
Board of Directors of the Company prior to the termination of this
Agreement, nor the commencement or consummation of the transactions
contemplated thereby, including the Offer and the Merger, shall cause
(A) Parent, Sub or any of their affiliates to become an Acquiring
Person (as defined in the Rights Agreement), (B) the occurrence of a
Distribution Date (as defined in the Rights Agreement), (C) the
occurrence of a Flip-In Event (as defined in the Rights Agreement) or
(D) the occurrence of a Stock Acquisition Date (as defined in the
Rights Agreement), irrespective of the number of Shares acquired
pursuant to the Offer or the Stockholder Agreement; and

(ii) the Rights shall expire upon the Funding
Date.

The Company has furnished to Parent true and complete copies of all
amendments to the Rights Agreement that fulfill the requirements of this
Section 4.1(dd) and such amendments are in full force and effect.

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<PAGE> 40
4.2 REPRESENTATIONS AND WARRANTIES OF IHF, PARENT AND SUB. Parent
and Sub each represent and warrant to the Company, and with respect to the
representations and warranties set forth in Section 4.2(b) and Section 4.2(e)
IHF represents and warrants to the Company, as follows:

(a) Organization, Standing and Power. Each of IHF,
Parent and Sub is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly qualified to do
business as a foreign corporation and in good standing to conduct business in
each jurisdiction in which the business it is conducting, or the operation,
ownership or leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify would not
materially impair the ability of IHF, Parent or Sub to consummate the
transactions contemplated by this Agreement. All of the issued and outstanding
capital stock of Sub is owned directly by Parent free and clear of any Lien,
other than Permitted Encumbrances. Parent and Sub have heretofore made
available to the Company complete and correct copies of their respective
certificates of incorporation and by-laws.

(b) Authority; No Violations; Consents and Approvals.

(i) Each of IHF, Parent and Sub has all requisite
corporate power and authority to enter into each of the Transaction
Documents to which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery of each of the
Transaction Documents to which IHF, Parent or Sub is a party and the
consummation of the transactions contemplated thereby have been
respectively duly authorized by all necessary corporate action on the
part of IHF, Parent and Sub. Each of the Transaction Documents to
which IHF, Parent or Sub is a party have been respectively duly
executed and delivered by each of IHF, Parent and Sub and, assuming
that such constitute the valid and binding agreements of the other
parties thereto respectively constitute valid and binding obligations
of IHF, Parent and Sub enforceable in accordance with their terms and
conditions except that the enforcement hereof or thereof may be
limited by (A) applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).

(ii) The execution and delivery of each of the
Transaction Documents to which IHF, Parent or Sub is a party and the
consummation of the transactions contemplated thereby by each of IHF,
Parent and Sub will not (A) result in any Violation pursuant to any
provision of the respective Certificates of Incorporation or Bylaws of
IHF, Parent or Sub or (B) except as to which requisite waivers or
consents have been obtained and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
paragraph (iii) of this Section 4.2(b) are duly and timely obtained or
made and, if required, the Company Stockholder Approval has been
obtained, result in any Violation of (1) any loan or credit agreement,
note, mortgage, indenture, lease, or other agreement, obligation,
instrument, concession, franchise or license or (2) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable
to IHF, Parent or Sub or their respective properties

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or assets, except in the case of clauses (1) and (2), for any
Violations that, individually or in the aggregate, would not have a
Material Adverse Effect on IHF or Parent, materially impair the
ability of any of IHF, Parent or Sub to perform its obligations
hereunder or under any of the Transaction Documents or prevent the
consummation of any of the transactions contemplated hereby or
thereby.

(iii) No consent, approval, order or authorization
of, or registration, declaration or filing with, notice to, or permit
from any Governmental Entity is required by or with respect to any of
IHF, Parent or Sub in connection with their respective execution and
delivery of each of the Transaction Documents to which it is a party
or the consummation by each of IHF, Parent and Sub of the transactions
contemplated thereby, except for: (A) filings under the HSR Act; (B)
the filing with the SEC of (1) the Schedule 14D-1 in connection with
the commencement and consummation of the Offer and (2) such reports
under and such other compliance with the Exchange Act and the rules
and regulations thereunder as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware; (D) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws; (E) such
filings in connection with any Gains and Transfer Taxes; and (F) such
filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification,
disclosure or required approval necessitated by the Merger or the
transactions contemplated by this Agreement.

(c) Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in (i) the Schedule 14D-9 will, at the time the
Schedule 14D-9 is filed with the SEC, and at any time it is amended or
supplemented, 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 light of the circumstances under which they are made,
not misleading, and (ii) the Proxy Statement, if any, will contain, on the date
it is first mailed to the holders of Company Common Stock or at the Meeting
Date, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the expiration or termination of the
Offer, the acceptance for payment of Shares pursuant to the Offer or the
Meeting Date (if applicable), any event with respect to Parent or Sub, or with
respect to information supplied by Parent or Sub specifically for inclusion in
the Offer Documents or the Proxy Statement, as applicable, shall occur which is
required to be described in an amendment of, or supplement to, such document,
such event shall be so described by Parent and Sub and provided to the Company.
All documents that Parent or Sub is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form, in
all material respects, with the provisions of the Securities Act, the Exchange
Act or the rules and regulations thereunder, and each such document required to
be filed with any Governmental Entity other than the SEC will comply in all
material respects with the provisions of applicable law as to the information
required to be contained therein. Notwithstanding the foregoing, Parent and
Sub make no representation or warranty with respect to the information supplied
or to be supplied by the Company for inclusion in the Offer Documents or the
Proxy Statement.

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(d) Board Recommendation. As of the date hereof, the
respective Boards of Directors of Parent and Sub have determined by unanimous
written consent that each of the Transaction Documents to which it is a party
and the transactions contemplated thereby, including the Offer and the Merger,
taken together, are fair to and in the respective best interests of Parent and
Sub and have approved the same. No vote of the holders of any class of
securities of IHF is necessary to approve the Offer or this Agreement or the
transactions contemplated hereby.

(e) Financing. IHF has obtained from The Chase Manhattan
Bank a senior lending facility (the "Financing Facility") under which Parent
contemplates receiving, through IHF, the debt financing necessary for
consummation of the transactions contemplated by this Agreement, including the
Offer and the Merger. As of the date of this Agreement, there is sufficient
capacity under the Financing Facility to fund the Offer Consideration and the
Merger Consideration. As of the date of this Agreement, IHF, Parent and Sub
are not aware of any facts or circumstances that form a reasonable basis for
IHF, Parent and Sub to believe that IHF will not be able to obtain the funds
needed to consummate the transactions contemplated hereby under the Financing
Facility. A true and complete copy of the Financing Facility (and all
amendments to date) has been made available to the Company.

(f) Fraudulent Conveyance. Assuming the accuracy of the
representations and warranties of the Company set forth in this Agreement,
Parent has no reason to believe that the financing to be provided to Parent to
effectuate the Offer and the Merger will cause (i) the fair salable value of
the Surviving Corporation's assets to be less than the total amount that will
be required to pay its existing liabilities (including known contingent
liabilities), (ii) the Surviving Corporation not to be able to pay its existing
liabilities (including known contingent liabilities) as they mature, or (iii)
the Surviving Corporation to have an unreasonably small amount of capital with
which to engage its business activities, in each case after giving effect to
the primary and contribution obligations of the Surviving Corporation's
affiliates with respect thereto.

ARTICLE 5

COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1 AFFIRMATIVE COVENANTS OF THE COMPANY. During the period from
the date of this Agreement and continuing until the designees of Sub have been
appointed to the Board of Directors of the Company pursuant to Section 1.4,
except as expressly contemplated or permitted by the Transaction Documents or
to the extent that Parent shall otherwise consent in writing, (i) the Company
shall, and shall cause each of its Subsidiaries to, carry on its businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted, and (ii) the Company shall, and shall cause each of its
Subsidiaries to, use all reasonable efforts to:

(a) preserve intact its present business organization and
goodwill, maintain its rights and franchises, and retain the services of its
current officers and key employees and preserve its relationships with
customers, suppliers and others having business dealings with it;

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(b) maintain and keep its properties and assets in as
good repair and condition as at present, ordinary wear and tear excepted, and
maintain supplies and inventories in quantities consistent with its customary
business practice;

(c) keep in full force and effect insurance and bonds
comparable in amount and scope of coverage to that currently maintained; and

(d) maintain in effect all existing Company Permits, and
timely apply for and obtain any additional Company Permits that are or will be
required for current or currently planned operations.

5.2 NEGATIVE COVENANTS OF THE COMPANY. During the period from the
date of this Agreement and continuing until the designees of Sub have been
appointed to the Board of Directors of the Company pursuant to Section 1.4,
except as expressly contemplated by the Transaction Documents or to the extent
that Parent shall otherwise consent in writing:

(a) the Company shall not, and shall not permit any of
its Subsidiaries to, (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock (except for cash dividends
paid to the Company by its wholly-owned Subsidiaries with regard to its capital
stock), or set aside funds therefor, (ii) split, combine or reclassify any of
its capital stock, or issue, authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock; or (iii) repurchase or otherwise acquire any shares of its
capital stock, except as required by the terms of its securities outstanding or
any Benefit Plan in effect on the date hereof, or set aside funds therefor;

(b) other than in accordance with the Rights Agreement,
the Company shall not, and shall not permit any of its Subsidiaries to, (i)
grant any options, warrants or other rights to purchase shares of capital
stock, (ii) amend the terms of or reprice any Option outstanding on the date of
this Agreement or amend the terms of the Stock Option Plan, or (iii) except for
Shares issuable pursuant to Options outstanding on the date of this Agreement
and except for issuances of capital stock of the Company's Subsidiaries to the
Company or to a wholly-owned Subsidiary of the Company, issue, deliver or sell,
or authorize or propose to issue, deliver or sell, any shares of its capital
stock, any Company Debt or any Subsidiary Debt, or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, Company
Debt or Subsidiary Debt;

(c) the Company shall not, and shall not permit any of
its Subsidiaries to, amend or propose to amend its certificate of incorporation
or by-laws;

(d) the Company shall not, and shall not permit any of
its Subsidiaries to, (i) merge or consolidate with, or acquire any equity
interest in, any corporation, partnership, association or other business
organization, or enter into an agreement with respect thereto, (ii) acquire or
agree to acquire any material assets, except for the purchase of Inventory and
supplies in the ordinary course of business and except for capital expenditures
otherwise permitted by Section 5.2(k), or (iii) make any loan or advance to, or
otherwise make any investment in, any person in

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excess of $25,000, other than loans or advances to, or investments in, a
wholly-owned Subsidiary of the Company existing on the date of this Agreement;

(e) the Company shall not, and shall not permit any of
its Subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to
sell, lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of, any of its material assets (including, without
limitation, any capital stock or other ownership interest of any Subsidiary of
the Company), other than sales of Inventory or sales or returns of obsolete or
surplus equipment in the ordinary course of business consistent with past
practice;

(f) the Company shall not, and shall not permit any of
its Subsidiaries to, authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution;

(g) the Company shall not, and shall not permit any of
its Subsidiaries to, except as may be required by Law or pursuant to any of the
Benefit Plans or Employee Arrangements existing on the date of this Agreement,
(i) grant any increases in the compensation (including, without limitation,
salary, bonus and other benefits) of any of its directors, officers, management
employees or key employees; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit to any director, officer, management
employee or key employee, whether past or present; (iii) enter into any new, or
materially amend any existing, employment or severance or termination agreement
with any person; (iv) except as may be required to comply with applicable Law,
become obligated under any new Benefit Plan or Employee Arrangement, which was
not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder; (v) grant any general increase in
compensation (including, without limitation, salary, bonus and other benefits)
to employees, except for increases occurring in the ordinary course of business
consistent with past practice, or (vi) extend any loans or advances to any of
its directors, officers, management employees or key employees, except for
ordinary course of business advances for business related expenses;

(h) the Company shall not, and shall not permit any of
its Subsidiaries to, (i) assume or incur any indebtedness for borrowed money
(except for drawdowns by the Company under its existing revolving credit
facility made in the ordinary course of business consistent with past
practice), (ii) guarantee any such indebtedness, (iii) issue or sell any debt
securities or warrants or rights to acquire any debt securities, (iv) guarantee
any debt obligations of any other person (except obligations of wholly-owned
Subsidiaries of the Company), (v) enter into any lease (whether such lease is
an operating or capital lease), (vi) create any Lien (other than Permitted
Encumbrances) on the property of the Company or any of its Subsidiaries, or
(vii) enter into any "keep well" or other agreement or arrangement to maintain
the financial condition of any other person except wholly-owned Subsidiaries of
the Company;

(i) the Company shall not, and shall not permit any of
its Subsidiaries to, (A) enter into any contracts involving aggregate annual
payments in excess of $100,000 or (B) modify, rescind, terminate, waive,
release or otherwise amend in any material respect any of the terms or
provisions of any Material Contract;

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(j) the Company shall not, and shall not permit any of
its Subsidiaries to, other than as required by the SEC, Law or GAAP, make any
changes with respect to accounting policies, procedures and practices;

(k) the Company shall not, and shall not permit any of
its Subsidiaries to, other than as set forth on Schedule 5.2(k), incur capital
expenditures in excess of (i) $45,000 individually and (ii) $400,000 in the
aggregate;

(l) the Company shall not, and shall not permit any of
its Subsidiaries to, engage in or permit any transaction or act which, if it
had been engaged in or permitted prior to the date of this Agreement, would
have rendered untrue in any material respect any of the representations and
warranties of the Company contained in this Agreement;

(m) the Company shall not, and shall not permit any of
its Subsidiaries to, deposit or otherwise invest any cash on hand into
accounts, securities or other instruments having a maturity of more than 30
days or that will impose payment or penalty upon liquidation within 30 days of
such deposit or investment; and

(n) the Company shall not, and shall not permit any of
its Subsidiaries to, agree to or make any commitment to, whether orally or in
writing, take any actions prohibited by this Agreement.

ARTICLE 6

ADDITIONAL AGREEMENTS

6.1 ACCESS TO INFORMATION.

(a) Upon reasonable notice, the Company shall, and shall
cause each of its Subsidiaries to, afford access to the officers, employees,
accountants, counsel and other representatives of Parent and Sub (including
financing sources and their employees, accountants, counsel and other
representatives), during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and
records. If Parent and Sub, or their financing sources, require environmental
site assessments of any parcels of real property owned or leased by the Company
or any of its Subsidiaries, the Company shall, and shall cause each of its
Subsidiaries to, allow such assessments to be performed.

(b) During the period prior to the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, promptly furnish to
Parent and Sub (i) a copy of each report, schedule, registration statement and
other document filed by it with the SEC, or received by it from the SEC, during
such period, and (ii) all other information concerning its business, properties
and personnel as Parent and Sub may reasonably request.

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(c) Subject to Section 9.2, that certain Confidentiality
Agreement dated as of February 2, 1998, by and between the Company and IHF (the
"Confidentiality Agreement") shall apply with respect to information furnished
pursuant to this Section 6.1.

6.2 NO SOLICITATION. From and after the date hereof until the
termination of this Agreement, the Company will not, and will cause its
Representatives (as defined below), Subsidiaries and the Representatives of its
Subsidiaries not to, directly or indirectly, (i) initiate, solicit or knowingly
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal (as defined below), (ii) enter into any agreement contemplating an
Acquisition Proposal, (iii) maintain or continue discussions or negotiations
with any person or entity in furtherance of such inquiries or for the purpose
of obtaining an Acquisition Proposal, (iv) agree to or endorse any Acquisition
Proposal, (v) without the prior written consent of Parent, amend the Rights
Agreement or (vi) release any third party from any standstill or
confidentiality agreement, or waive or amend any provision thereof, to which it
is a party. The Company shall notify Parent orally (within one business day)
and in writing (as promptly as practicable) of all of the relevant details
relating to, and all material aspects of (including the identity of the person
or entity making such inquiry or proposal), all inquiries and proposals which
it or any of its Subsidiaries or any of their respective Representatives may
receive relating to any of such matters and, if such inquiry or proposal is in
writing, the Company shall deliver to Parent a copy of such inquiry or proposal
as promptly as practicable. Notwithstanding the foregoing, prior to the
acceptance of Shares for payment pursuant to the Offer, nothing contained in
this Section 6.2 shall prohibit the Board of Directors of the Company from:

(i) following the receipt of an unsolicited
written bona fide Acquisition Proposal from any person or entity,

(A) furnishing information to, or entering
into discussions or negotiations with, the person or entity
that makes such Acquisition Proposal, or

(B) (1) withdrawing, modifying or not making
its recommendations referred to in Section 1.3 or (2)
terminating this Agreement pursuant to Section 8.1(i) and
contemporaneously entering into an agreement relating to such
Acquisition Proposal (provided that, in the case of this
clause (B), the Board of Directors of the Company has in good
faith determined that (y) such person or entity has, or is
reasonably likely to have, the necessary funds or shall have
obtained, or is reasonably likely to obtain, customary
commitments to provide the funds to consummate such
Acquisition Proposal and (z) such Acquisition Proposal is more
favorable to the Company and its stockholders than the
transactions contemplated by this Agreement)

if, and only to the extent that, (1) in the case of either clause (A)
or (B) above, the Board of Directors of the Company, after
consultation with its legal counsel (who may be the Company's
regularly engaged legal counsel), determines in good faith that such
action is advisable for the Board of Directors of the Company to act
in the best interest of the Company and its stockholders under
applicable law, and (2) prior to taking such action, the

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Company (x) in the case of either clause (A) or (B) above, provides
reasonable prior notice to Parent to the effect that it is taking such
action, which notice shall (to the extent consistent with the
fiduciary duties of the Board of Directors to stockholders under
applicable law) include the identity of the person or entity engaging
in such discussions or negotiations, requesting such information or
making such Acquisition Proposal, and the material terms and
conditions of any Acquisition Proposal, (y) in the case of clause (A)
above, receives from such person or entity making such Acquisition
Proposal an executed confidentiality and standstill agreement having
terms no more favorable to such person or entity than those terms
included in the Confidentiality Agreement and the standstill agreement
in existence between the Company and IHF and its affiliates, and (z)
in the case of clause (A) above, the Company shall, to the extent
consistent with the fiduciary duties of the Board of Directors to
stockholders under applicable law, promptly and continuously advise
Parent as to all of the relevant details relating to, and all material
aspects of, any such discussions or negotiations; or

(ii) taking and disclosing to the stockholders of
the Company a position contemplated by Rule 14e-2 under the Exchange
Act if, after the receipt of an unsolicited written bona fide
Acquisition Proposal, the Board of Directors of the Company, after
consultation with its legal counsel (who may be the Company's
regularly engaged counsel), determines in good faith that such action
is advisable for the Board of Directors of the Company to act in the
best interest of the Company and its stockholders.

Except for the confidentiality and standstill agreement referred to in
clause (i) above and the agreement relating to an Acquisition Proposal entered
into contemporaneously with terminating this Agreement as contemplated in
clause (i) above, and subject to Section 8.1(i), nothing in this Section 6.2
shall permit the Company to enter into any agreement with respect to any
Acquisition Proposal during the term of this Agreement. The Company shall
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted heretofore by the Company or any Representatives with respect to any
Acquisition Proposal existing on the date hereof.

For purposes of this Agreement, "Acquisition Proposal" shall mean any
agreement, or offer (other than the transactions among the Company, Parent and
Sub contemplated hereunder) involving the Company or any of its Subsidiaries
for: (A) any merger, consolidation, share exchange, recapitalization,
reorganization, business combination, or other similar transaction; (B) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of a
material portion of the assets of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; or (C) any tender
offer or exchange offer for all or any portion of the outstanding shares of
capital stock of the Company or any of its Subsidiaries or the filing of a
registration statement under the Securities Act in connection therewith.

For purposes of this Agreement, "Representative" of a person shall
mean that person's employees, officers, directors, representatives (including,
without limitation, any investment banker, attorney or accountant), agents or
affiliates.

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6.3 FEES AND EXPENSES.

(a) Except as otherwise provided in this Section 6.3 and
except with respect to claims for damages incurred as a result of a material
breach of this Agreement, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense.

(b) In the event of the termination of this Agreement
under Section 8.1(h) or Section 8.1(i), then the Company shall pay to Parent or
Parent's designee, contemporaneously with the termination of this Agreement,
the following amounts in immediately available funds:

(A) a fee in the amount of $3,362,711, and

(B) such amount, not to exceed $250,000, as may
be required to reimburse IHF, Parent and Sub for all reasonable
out-of-pocket fees, costs and expenses incurred by IHF, Parent or Sub
in connection with their due diligence efforts or the transactions
contemplated in the Transaction Documents, including, without
limitation, (1) fees, costs and expenses of accountants, escrow
agents, legal counsel, financial advisors and other similar advisors,
(2) fees paid to any Governmental Entity, and (3) fees, costs and
expenses paid or payable to financing sources.

(c) Any amounts due under this Section 6.3 that are not
paid when due shall bear interest at the prime rate of interest as announced
from time to time by The Chase Manhattan Bank plus 1% from the date due through
and including the date paid.

(d) The fee and other amounts payable pursuant to this
Section 6.3 shall be paid by the Company without reservation of rights or
protests and the Company, upon making such payment, shall be deemed to have
released and waived any and all rights that it may have to recover such
amounts.

6.4 BROKERS OR FINDERS.

(a) The Company represents, as to itself, its
Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finders fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except the
Financial Advisor, whose fees and expenses will be paid by the Company in
accordance with the Company's agreements with such firm (copies of which have
been delivered by the Company to Parent prior to the date of this Agreement).

(b) Each of Parent and Sub represents, as to itself, its
Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person engaged by any of them is or will be
entitled to receive from the Company any broker's or finders fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement.

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6.5 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.

(a) Until six years from the Effective Time, unless
otherwise required by Law, the certificate of incorporation and by-laws of the
Surviving Corporation shall contain provisions no less favorable with respect
to the elimination of liability of directors and the indemnification of (and
advancement of expenses to) directors, officers, employees and agents that are
set forth in the certificate of incorporation and by-laws of the Company, as in
effect on the date hereof.

(b) From and after the Effective Time, IHF and the
Surviving Corporation shall, jointly and severally, indemnify, defend and hold
harmless each person who is now, or has been at any time prior to the date of
this Agreement or who becomes prior to the Effective Time, an officer,
director, employee or agent of the Company or any of its Subsidiaries
(collectively, the "Indemnified Parties") against all losses, reasonable
expenses (including reasonable attorneys' fees), claims, damages, liabilities
or amounts that are paid in settlement of, or otherwise in connection with, any
threatened or actual claim, action, suit, proceeding or investigation (a
"Claim"), based in whole or in part on or arising in whole or in part out of
the fact that the Indemnified Party (or the person controlled by the
Indemnified Party) is or was a director, officer, employee or agent of the
Company or any of its Subsidiaries and pertaining to any matter existing or
arising out of actions or omissions occurring at or prior to the Effective Time
(including, without limitation, any Claim arising out of this Agreement or any
of the transactions contemplated hereby), whether asserted or claimed prior to,
at or after the Effective Time, in each case to the fullest extent permitted
under Delaware law, and shall pay any expenses, as incurred, in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the fullest extent permitted under Delaware law. Without limiting the
foregoing, in the event any such Claim is brought against any of the
Indemnified Parties, (i) such Indemnified Parties may retain counsel (including
local counsel) satisfactory to them and which shall be reasonably satisfactory
to Parent and the Surviving Corporation and IHF and the Surviving Corporation
shall pay, jointly and severally, all reasonable fees and expenses of such
counsel for such Indemnified Parties; and (ii) IHF and the Surviving
Corporation shall use all reasonable efforts to assist in the defense of any
such Claim, provided that IHF and the Surviving Corporation shall not be liable
for any settlement effected without their written consent, which consent,
however, shall not be unreasonably withheld. Notwithstanding the foregoing,
nothing contained in this Section 6.5 shall be deemed to grant any right to any
Indemnified Party which is not permitted to be granted to an officer, director,
employee or agent of the Company under Delaware law, assuming for such purposes
that the Company's certificate of incorporation and by-laws provide for the
maximum indemnification permitted by law.

(c) IHF and Parent will cause to be maintained for a
period of not less than six years from the Effective Time the Company's current
directors' and officers' insurance and indemnification policy to the extent
that it provides coverage for events occurring prior to the Effective Time
("D&O Insurance") for all persons who are directors and officers of the Company
on the date of this Agreement and for all former directors and officers of the
Company, so long as the annual premium therefor would not be in excess of 150%
of the last annual premium therefor paid prior to the date of this Agreement
(the "Maximum Premium"); provided, however, that Parent may, in lieu of
maintaining such existing D&O Insurance as provided above, cause coverage to be
provided under any policy maintained for the benefit of Parent or any of its
affiliates, so long as the

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terms thereof are no less advantageous to the intended beneficiaries thereof
than the existing D&O Insurance. If the existing D&O Insurance expires, is
terminated or canceled during such six-year period, IHF and Parent will use all
reasonable efforts to cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized premium not in
excess of the Maximum Premium, on terms and conditions no less advantageous to
the covered persons than the existing D&O Insurance. The Company represents to
Parent that the Maximum Premium is $35,000.

6.6 REASONABLE EFFORTS.

(a) Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable, under applicable Laws or otherwise, to
consummate and make effective the transactions contemplated by the Transaction
Documents, subject, if applicable, to the Company Stockholder Approval,
including cooperating fully with the other party. The Company will use all
reasonable efforts to obtain any consent from third parties necessary to allow
the Company to continue operating its business as presently conducted as a
result of the consummation of the transactions contemplated hereby (including,
without limitation, those consents set forth on Schedule 4.1(c)).

(b) In case at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the parties to this Agreement shall direct their
respective officers and directors to take all such necessary action.

6.7 PUBLICITY. The parties will consult with each other and will
mutually agree upon any press release or public announcement pertaining to the
Offer or the Merger and shall not issue any such press release or make any such
public announcement prior to such consultation and agreement, except as may be
required by applicable Law (or stock exchange rules), in which case the party
proposing to issue such press release or make such public announcement shall
use reasonable efforts to consult in good faith with the other party before
issuing any such press release or making any such public announcement.

6.8 WITHHOLDING RIGHTS. Parent and Sub, as applicable, shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement or the Offer to any holder of shares of Company
Common Stock or Options such amounts as Parent or Sub, as applicable, is
required to deduct and withhold with respect to the making of such payment
under the Code or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent or Sub, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock or Options in respect of which
such deduction and withholding was made by Parent or Sub.

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6.9 HSR AND OTHER GOVERNMENTAL APPROVALS.

(a) Each party hereto shall file or cause to be filed
with the Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division") any notification required to
be filed by their respective "ultimate parent" companies under the HSR Act and
the rules and regulations promulgated thereunder with respect to the
transactions contemplated in the Transaction Documents. Such parties will use
all reasonable efforts to make such filings promptly and to respond on a timely
basis to any requests for additional information made by either of such
agencies. Each of the parties hereto agrees to furnish the other with copies
of all correspondence, filings and communications (and memoranda setting forth
the substance thereof) between it and its affiliates and their respective
representatives, on the one hand, and the FTC, the Antitrust Division or any
other Governmental Entity or members or their respective staffs, on the other
hand, with respect to the Transaction Documents transactions contemplated
thereby, other than personal financial information filed therewith.

(b) Each party hereto shall cooperate and use its
reasonable efforts to promptly prepare and file all necessary documentation to
effect all necessary applications, notices, petitions, filings and other
documents, and use all reasonable efforts to obtain (and will cooperate with
each other in obtaining) any consent, acquiescence, authorization, order or
approval of, or any exemption or nonopposition by, any Governmental Entity
required to be obtained or made by Parent or the Company or any of their
respective affiliates in connection with the Offer and the Merger or the taking
of any other action contemplated by the Transaction Documents; provided,
however, that Parent, Sub and their respective affiliates shall not be required
to divest of any assets in connection therewith.

(c) Each party hereto agrees to furnish the others with
such necessary information and reasonable assistance as such other parties and
their respective affiliates may reasonably request in connection with their
preparation of necessary filings, registrations or submissions of information
to any Governmental Entities, including without limitation any filings
necessary under the provisions of the HSR Act.

(d) Without limiting the foregoing, the Company and its
Board of Directors shall (i) take all action necessary or otherwise reasonably
requested by Parent to exempt the Offer and the Merger from the provisions of
any applicable takeover, business combination, control share acquisition or
similar statute and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to the Offer, the Merger or any of the
Transaction Documents or the transactions contemplated thereby, take all action
necessary to ensure that the Offer, the Merger and the other transactions
contemplated by any of the Transaction Documents may be consummated as promptly
as practicable on the terms contemplated by the Transaction Documents and
otherwise to minimize the effect of such statute or regulation on the Offer,
the Merger and the other transactions contemplated by any of the Transaction
Documents.

6.10 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
written notice to the other of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of such party contained in this

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Agreement to be untrue or inaccurate at any time from the date hereof to the
Closing Date, (b) the failure of such party to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it hereunder and (c) in the case of the Company, the occurrence of
any threat by any executive officer or senior management employee of the
Company or any of its Subsidiaries to resign or otherwise terminate their
employment relationship with the Company or any of its Subsidiaries.

6.11 Continuation of Employee Benefits.

(a) On and after the Effective Time, officers and
employees of the Company and the officers and employees of its Subsidiaries
shall be provided employee benefits, plans and programs (including but not
limited to incentive compensation, deferred compensation, pension, life
insurance, medical (which eligibility shall not be subject to any exclusions
for any pre-existing conditions if such individual has met the participation
requirements of such benefits, plans or programs of the Company or its
Subsidiaries), profit sharing (including 401(k)), severance, salary
continuation and fringe benefits) which are substantially similar in the
aggregate to those generally made available by the Company or its Subsidiaries
to its officers and employees as of the date hereof. For purposes of
eligibility to participate and vesting in all benefits provided to officers and
employees, the officers and employees of the Company and the officers and
employees of its Subsidiaries will be credited with their years of service with
the Company and its Subsidiaries and prior employers to the extent service with
the Company and its Subsidiaries and prior employers is taken into account
under plans of the Company and its Subsidiaries. With respect to determining
employee bonuses under the Grist Mill Co. Annual Incentive Program for Fiscal
Year June 1, 1997 - May 31, 1998 (listed on Schedule 4.1(k)), the revenues and
financial results of the Company for its fiscal year 1998 shall be calculated
without regard to the effects of the Offer, the Merger, this Agreement and the
other transactions contemplated hereby, including, without limitation, the
payment by the Company of investment banker, legal, accounting and other
professional fees related to this Agreement and the transactions contemplated
hereby. At the Effective Time, the Surviving Corporation shall adopt a
severance plan in the form attached hereto as Schedule 6.11 and shall keep such
plan in effect for a period of not less than one year. Upon termination of any
medical plan of the Company or any of its Subsidiaries, individuals who were
officers or employees of the Company or its Subsidiaries at the Effective Time
shall become eligible to participate in the medical plan of IHF. Amounts paid
before the Effective Time by officers and employees of the Company and officers
and employees of its Subsidiaries under any medical plans of the Company or its
Subsidiaries shall after the Effective Time be taken into account in applying
deductible and out-of-pocket limits applicable under the medical plan of IHF
provided as of the Effective Time to the same extent as if such amounts had
been paid under such medical plan of IHF.

(b) Nothing contained in this Section 6.11 shall create
any third party beneficiary rights in any officer or employee or former officer
or employee (including any beneficiary or dependent thereof) of the Company,
any of its Subsidiaries or the Surviving Corporation in respect of continued
employment for any specified period of any nature or kind whatsoever.

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6.12 Trustees. The Company will use its reasonable efforts to
obtain from each officer or director of the Company or any of its Subsidiaries
who is serving as a trustee of any Benefit Plan a duly executed resignation
letter resigning from such position effective as of the Effective Time.

6.13 Withdrawal Liability. The Company will cooperate with Parent
and use its best efforts to obtain from each Multiemployer Plan as soon as
possible following the execution of this Agreement (a) a copy of each
Multiemployer Plan and all amendments thereto and (b) an estimate of the
withdrawal liability as defined in Section 4201 of ERISA (without regard to any
subsequent reduction or waiver of such liability under Section 4207 or 4208 of
ERISA) which would be owed by the Company or its ERISA Affiliates to such
Multiemployer Plan if the Company or its ERISA Affiliates ceased contributing
to such Multiemployer Plan immediately before the consummation of the
transactions contemplated by this Agreement (the "Withdrawal Liability"); the
Company will cooperate with Parent and use reasonable efforts to obtain (and
provide to Parent) from each Multiemployer Plan as soon as possible following
the execution of this Agreement all information necessary for the Company to
compute the Withdrawal Liability; and the Company will provide all such
documents, information and estimates to Parent upon receipt.

6.14 PREPARATION OF THE PROXY STATEMENT; COMPANY STOCKHOLDERS
MEETING; MERGER WITHOUT A COMPANY STOCKHOLDERS MEETING.

(a) The Company and Parent will, as soon as practicable
following the acceptance for payment of and payment for shares of the Company
Common Stock by Sub in the Offer, prepare and file the Proxy Statement in
preliminary form with the SEC. The Company will use all reasonable efforts to
respond to all SEC comments with respect to the Proxy Statement and to cause
the Proxy Statement to be mailed to the Company's stockholders at the earliest
practicable date.

(b) If adoption of this Agreement is required by
applicable law, the Company will, as soon as practicable following the
acceptance for payment of and payment for shares of the Company Common Stock by
Sub in the Offer, duly call, give notice of, convene and hold a meeting of the
Company's stockholders for the purpose of adopting this Agreement or, in lieu
of such meeting, Parent and Sub, as soon as practicable following the Funding
Date, shall cause this Agreement to adopted by written consent of stockholders.
At such stockholders meeting (or in connection with any consent in lieu
thereof), Parent shall cause all of the shares of Company Common Stock then
owned by Parent or Sub to be voted in favor, or consented to, the adoption of
this Agreement.

(c) Notwithstanding the foregoing clauses (a) and (b), in
the event that Parent and Sub shall acquire in the aggregate at least 90% of
the outstanding shares of Company Common Stock in the Offer, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to
become effective, as soon as practicable after the expiration of the Offer,
without a meeting of stockholders of the Company, in accordance with Section
253 of the DGCL.

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6.15 STOCK OPTION

(a) Grant of Common Share Option. The Company hereby
grants to Sub an irrevocable option (the "Common Share Option") to purchase for
a per share price equal to the per share Merger Consideration (the "Per Common
Share Price") in cash a number of shares of Company Common Stock (the "Optioned
Common Shares") equal to the Applicable Common Share Amount. The "Applicable
Common Share Amount" shall be the lesser of (i) the number of shares of Company
Common Stock which, when added to the number of shares of Company Common Stock
owned by Sub immediately prior to the exercise of the Common Share Option,
would result in Sub owning immediately after the exercise of the Common Share
Option 90% of the then outstanding shares of Company Common Stock and (ii) the
number of shares of Company Common Stock represented by (x) the total
authorized number of shares of Company Common Stock under the Company's
certificate of incorporation less (y) the sum of the number of shares of
Company Common Stock outstanding plus the number of shares of Company Common
Stock reserved for issuance, subscribed for or otherwise committed for
issuance. Sub may exercise the Common Share Option only if (a) the Funding
Date shall have occurred, (b) upon such exercise, it shall own at least 90% of
the then outstanding shares of Company Common Stock and (c) such exercise would
not violate applicable law. The Common Share Option shall expire if not
exercised prior to the earlier of the Effective Time and 12:00 midnight,
Eastern time, on the date 15 business days after the Funding Date.

(b) Exercise of Options. Provided that the conditions to
exercise the Common Share Option set forth in Section 6.15(a) are satisfied,
Sub may exercise the Common Share Option only in whole at any time prior to the
expiration of such option. In the event that Sub wishes to exercise the Common
Share Option, Sub shall give written notice (the date of such notice being
herein called the "Notice Date") to the Company specifying the number of
Optioned Common Shares it will purchase pursuant to such exercise and a place
and date (not later than ten business days from the Notice Date) for the
closing of such purchase.

(c) Payment of Purchase Price and Delivery of
Certificates for Optioned Shares. At any closing of the Common Share Option,
(i) Sub will make payment to the Company of the full purchase price for the
Optioned Common Shares in New York Clearing House funds by certified or
official bank check payable to the order of the Company, in an amount equal to
the product of the Per Common Share Price multiplied by the number of Optioned
Common Shares being purchased at such closing and (ii) the Company will deliver
to Sub a duly executed certificate or certificates representing the number of
Optioned Common Shares so purchased, registered in the name of Sub or its
nominee in the denomination designated by Sub in its notice of exercise.

(d) Securities Act. Sub represents that any Optioned
Common Shares purchased by Sub will be acquired for investment only and not
with a view to any public distribution thereof and Sub will not offer to sell
or otherwise dispose of any Optioned Common Shares so acquired by it in
violation of the registration requirements of the Securities Act.

(e) Adjustment upon Changes in Capitalization. In the
event of any change in the number of outstanding Company Common Shares by
reason of any stock dividend, stock split,

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recapitalization, combination, exchange of shares, merger, consolidation,
reorganization or the like or any other change in the corporate or capital
structure of the Company that would have the effect of diluting Sub's rights
under the Common Share Option, the number of Optioned Common Shares and the Per
Common Shares Price shall be adjusted appropriately so as to restore Sub to its
rights hereunder with respect to the Common Share Option; provided, however,
that nothing in this Section 6.15 shall be construed as permitting the Company
to take any action or enter into any transaction otherwise prohibited by this
Agreement.

6.16 TERMINATION OF AFFILIATE AGREEMENTS. Effective as of the
closing of the Offer, the Company shall cause each of the agreements described
on Schedule 4.1(w) (except as otherwise agreed to in writing by Parent) to be
terminated without any liability to the Company or any of its Subsidiaries.

6.17 OTHER ACTIONS. Except as expressly permitted by the terms of
this Agreement, the Company will not knowingly or intentionally take or agree
or commit to take, nor will it permit any of its Subsidiaries to take or agree
or commit to take, any action that is reasonably likely to result in any of the
Company's representations or warranties hereunder being untrue in any material
respect.

6.18 APPRAISAL RIGHTS. The Company shall not settle or compromise
any claim for appraisal rights in respect of the Merger without the prior
consent of Parent, which consent shall not be unreasonably withheld.

6.19 FUNDING. IHF shall use reasonable efforts to obtain the
funding contemplated by Section 4.2(e) in accordance with the terms and
conditions of the Financing Facility and to contribute such funds to Parent.

ARTICLE 7

CONDITIONS PRECEDENT

7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction prior to the Closing Date of the following conditions:

(a) Stockholder Approval. This Agreement shall have been
adopted by the affirmative vote of the holders of a majority of the outstanding
Shares entitled to vote thereon if such vote is required by applicable law;
provided that the Parent and Sub shall vote all shares of Company Common Stock
purchased pursuant to the Offer or the Stockholder Agreement in favor of the
adoption of this Agreement.

(b) HSR Act. The waiting period (and any extension
thereof) applicable to the Merger under the HSR Act shall have been terminated
or shall have expired, and no restrictive order or other requirements shall
have been placed on the Company, Parent, Sub or the Surviving Corporation in
connection therewith.

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(c) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, each party shall use
all commercially reasonable efforts to have any such Injunction vacated.

(d) Statutes. No Law shall have been enacted,
promulgated or otherwise issued by any Governmental Entity which prohibits the
consummation of the Merger.

(e) Payment for Shares. Sub shall have accepted for
payment and paid for the Shares tendered in the Offer; provided that this
condition shall be deemed to have been satisfied if Sub, in violation of the
terms and conditions of the Offer, fails to accept for payment and pay for
Shares tendered pursuant to the Offer.

ARTICLE 8

TERMINATION AND AMENDMENT

8.1 TERMINATION. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after adoption of this Agreement by the stockholders of the Company or by
Parent:

(a) by mutual written consent of the Company and Parent;

(b) by either the Company or Parent if any permanent
injunction or other order of a court or other competent authority preventing
the consummation of the Offer or Merger shall have become final and
non-appealable;

(c) by Parent, prior to the acceptance of Shares for
payment pursuant to the Offer, if (i) any person has become an Acquiring Person
(as defined in the Rights Agreement), (ii) a Stock Acquisition Date (as defined
in the Rights Agreement) has occurred, or (iii) a Flip-In Event (as defined in
the Rights Agreement) has occurred;

(d) by Parent prior to the acceptance of Shares for
payment pursuant to the Offer, so long as none of IHF, Parent or Sub is then in
material breach of its obligations hereunder, if (i) there has been a breach of
any representation or warranty (when made on or at the time of termination as
if made on such date of termination, except to the extent it relates to a
particular date) on the part of the Company (provided that any representation
or warranty of the Company contained herein that is subject to a "materiality,"
"Material Adverse Effect" or similar qualification shall not be so qualified
for purposes of determining the existence of any breach thereof on the part of
the Company), and which breach has not been cured within five calendar days
following receipt by the Company of notice of such breach and is existing at
the time of the termination of this Agreement, except for such breaches that
would not, individually or in the aggregate with any other breaches on

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the part of the Company, have a Material Adverse Effect on the Company or
materially and adversely affect the ability of the parties hereto to consummate
the transactions contemplated hereby or (ii) there has been a breach of any
representation or warranty (when made on or at the time of termination as if
made on such date of termination, except to the extent it relates to a
particular date) contained in Section 4.1(b) on the part of the Company;

(e) by Parent prior to the acceptance of Shares for
payment pursuant to the Offer, so long as none of IHF, Parent or Sub is then in
material breach of its obligations hereunder, if there has been a breach of
Section 3.5(d), Section 5.2(b) or Section 6.2 or a material breach of any other
covenant or agreement on the part of the Company set forth in this Agreement
(provided that any covenant or agreement of the Company contained herein the
performance of which is subject to a "materiality," "Material Adverse Effect"
or similar qualification shall not be so qualified for purposes of determining
the existence of any nonperformance thereof on the part of the Company), and
which breach (other than a breach of any covenant or agreement set forth in
Section 3.5(d), Section 5.2(b) or Section 6.2) has not been cured within five
calendar days following receipt by the Company of notice of such breach and is
existing at the time of the termination of this Agreement;

(f) by the Company prior to the acceptance of Shares for
payment pursuant to the Offer, so long as the Company is not then in material
breach of its obligations hereunder, if there has been a breach of any
representation or warranty (when made on or at the time of termination as if
made on such date of termination, except to the extent it relates to a
particular date) on the part of IHF, Parent or Sub (provided that any
representation or warranty of IHF, Parent or Sub contained herein that is
subject to a "materiality," "Material Adverse Effect" or similar qualification
shall not be so qualified for purposes of determining the existence of any
breach thereof on the part of IHF, Parent or Sub), and which breach has not
been cured within five calendar days following receipt by IHF, Parent or Sub of
notice of such breach and is existing at the time of the termination of this
Agreement, except for such breaches that, individually or in the aggregate with
any other breaches on the part of IHF, Parent or Sub, would not materially and
adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby;

(g) by the Company prior to the acceptance of Shares for
payment pursuant to the Offer, so long as the Company is not then in material
breach of its obligations hereunder, if there has been a material breach of any
covenant or agreement on the part of IHF, Parent or Sub set forth in this
Agreement (provided that any covenant or agreement of IHF, Parent or Sub
contained herein the performance of which is subject to a "materiality,"
"Material Adverse Effect" or similar qualification shall not be so qualified
for purposes of determining the existence of any nonperformance thereof on the
part of IHF, Parent or Sub), and which breach has not been cured within five
calendar days following receipt by IHF, Parent or Sub of notice of such breach
and is existing at the time of the termination of this Agreement;

(h) by Parent prior to the acceptance of Shares for
payment pursuant to the Offer if (i) the Board of Directors of the Company
(whether or not under circumstances permitted by this Agreement) shall have
failed to make the recommendation contemplated by Section 1.3 in the Offer
Documents and the Proxy Statement or shall have withdrawn or modified, in any
manner which is adverse to Parent, its recommendation or approval of the Offer,
the Merger or this Agreement and

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the transactions contemplated hereby, or shall have resolved to do so, it being
understood that a communication by the Board of Directors of the Company to the
stockholders of the Company pursuant to Rule 14d-9(e)(3) of the Exchange Act
(or any similar communication to the stockholders of the Company in connection
with the amendment of a tender or exchange offer) shall not be deemed to
constitute such a withdrawal or modification, (ii) the Board of Directors of
the Company shall have recommended to the stockholders of the Company any
Acquisition Proposal, or shall have resolved to do so, (iii) a tender offer or
exchange offer for 50% or more of the outstanding shares of capital stock of
the Company is commenced (other than by the Sub or its affiliates) and the
Board of Directors of the Company fails to recommend, within the time period
required by Rule 14e-2 of the Exchange Act, against the stockholders of the
Company tendering their shares into such tender offer or exchange offer or (iv)
an Acquisition Proposal has been publicly announced by the Company and the
Company shall fail to publicly reaffirm its approval or recommendation of the
Offer, the Merger and this Agreement on or before the tenth business day
following the date on which such Acquisition Proposal shall have been
announced; provided that Parent may condition the effectiveness of such
termination pursuant to this Section 8.1(h) upon receipt by Parent or its
designee of the amounts that are payable to Parent or its designee under
Section 6.3;

(i) by the Company prior to the acceptance of Shares for
payment pursuant to the Offer, pursuant to the termination right permitted by
clause (i)(B) of Section 6.2; provided that the Company may not effect such
termination pursuant to this Section 8.1(i) unless and until (i) Parent
receives at least five days prior written notice (which notice shall include
the identity of the person or entity making the relevant Acquisition Proposal,
the material terms and conditions of such Acquisition Proposal and the material
terms and conditions of any agreements or arrangements to be entered into in
connection with such Acquisition Proposal with any party to the Stockholder
Agreement with respect to his then existing agreements and arrangements with
the Company, to the extent known to the Company) from the Company of its
intention to effect such termination pursuant to this Section 8.1(i), and (ii)
if during such five- day period Parent shall have revised the terms and
conditions of the Offer or the Merger, the Board of Directors of the Company,
after receiving advice from the Company's financial and legal advisors, shall
have determined in good faith that the terms and conditions of the Acquisition
Proposal giving rise to this termination right are superior to those of the
Offer and the Merger as so revised; provided that the Company may not effect
such termination pursuant to this Section 8.1(i) unless the Company has
contemporaneously with such termination tendered payment to Parent or Parent's
designee of the amounts that are due Parent or Parent's designee under Section
6.3;

(j) by Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any condition set
forth in Exhibit C hereto; provided, however, that the Parent may not so
terminate if the termination, withdrawal, abandonment or expiration of the
Offer arises from a breach of this Agreement by IHF, Parent or Sub; and
provided further that if the condition set forth in item 3 of Exhibit C has not
been satisfied, IHF, Parent and Sub shall, jointly and severally, pay to the
Company contemporaneously with such termination a fee in the amount of
$3,362,711, plus such amount, not to exceed $250,000, necessary to reimburse
the Company for out-of-pocket fees, costs and expenses incurred by the Company
in connection with the transactions contemplated in the Transaction Documents,
including, without limitation, (1) fees, costs and

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expenses of accountants, escrow agents, legal counsel, financial advisors and
other similar advisors and (2) fees paid to any Governmental Entity;

(k) by the Company, if the Offer shall have expired or
shall have been withdrawn, abandoned or terminated without any shares of
Company Common Stock being purchased by Sub thereunder; or

(l) by the Company, if the Funding Date does not occur
when required under the Exchange Act (but which in no event shall be more than
four business days following the acceptance by Sub of Shares tendered pursuant
to the Offer).

8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation hereunder on the part of Parent, Sub or the Company or their
respective affiliates, officers, directors or shareholders, except (a) Section
6.1(c), Section 6.3, Section 8.2 and Article 9 shall survive such termination,
and (b) no such termination shall relieve any party from liability for a breach
of any term or provision hereof.

8.3 AMENDMENT. Subject to the provisions of Section 1.4(c), this
Agreement may be amended, modified or supplemented, before or after the Company
Stockholder Approval, only by written agreement of Parent, Sub and the Company
at any time prior to the Effective Time with respect to any of the terms
contained herein; provided, however, that, after the Company Stockholder
Approval, no term or condition contained in this Agreement shall be amended or
modified in any manner that by law requires further approval by the
stockholders of the Company without so obtaining such further stockholder
approval.

8.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time
prior to the Effective Time, the parties hereto, by action taken or authorized
by their respective Boards of Directors, may, to the extent legally allowed (a)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the agreements or conditions contained herein.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on behalf of
such party. The failure of any party hereto to assert any of its rights
hereunder shall not constitute a waiver of such rights.

ARTICLE 9

GENERAL PROVISIONS

9.1 NONSURVIVAL OF COVENANTS AND AGREEMENTS. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the covenants and agreements contained

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in Article 3, Section 6.3, Section 6.5, Section 6.8, Section 6.11 and any other
covenant or agreement that contemplates performance after the Effective Time.

9.2 CONFIDENTIALITY AGREEMENT. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement or any termination
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder;
provided, however, that the terms and provisions of the Confidentiality
Agreement are hereby waived, amended or modified to the extent necessary to
permit the consummation of the transactions contemplated by the Transaction
Documents. Upon the Funding Date, the terms and provisions of the
Confidentiality Agreement shall terminate in full.

9.3 NOTICES. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address
or addresses as such person may subsequently designate by notice given
hereunder:

(a) if to IHF, Parent or Sub, to:
International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey 07054
Attn: General Counsel
Telecopy: 973-254-5460

with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Telecopy: 214-740-7313

Vinson & Elkins, L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attn: A. Winston Oxley
Telecopy: 212-999-7891

(b) if to the Company, to:
Grist Mill Co.
21340 Hayes Avenue
Lakeville, Minnesota 55044-0430
Attn: Glen S. Bolander
Telecopy: 612-469-5550

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with a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attn: Charles H. Perlman, Esq.
Telecopy: 312-984-3150

9.4 INTERPRETATION. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents, list of defined
terms and headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the word "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."

9.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

9.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (together with the Confidentiality Agreement (as amended by Section
9.2), the other Transaction Documents, and any other documents and instruments
referred to herein) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any other right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 6.11 (to the extent stated
therein) and Section 6.5, each of which is intended to be for the benefit of
the persons covered thereby and may be enforced by such persons; it being
understood and agreed that if any such person shall institute and prevail in
any proceeding against Parent, Sub or the Surviving Corporation in respect of a
breach by Parent, Sub or the Surviving Corporation of its covenants and
agreement contained in Section 6.11 or Section 6.5, Parent, Sub and the
Surviving Corporation shall, jointly and severally, pay the reasonable expenses
of such person (including attorney's fees) incurred in connection with such
proceedings to the fullest extent authorized by applicable law.

9.7 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.

9.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder (a)
to any newly-formed direct wholly-owned Subsidiary of Parent or Sub or (b) in
the form of a collateral assignment to any institutional lender who provides
funds to Parent or its affiliates for the consummation of the

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transactions contemplated hereby. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

9.9 DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of Parent and its affiliates shall not have any personal liability
or obligation arising under the Transaction Documents (including any claims
that the Company may assert) other than as an assignee of a Transaction
Document. Except to the extent that a person is a party signatory thereto, the
directors, officers, and stockholders of the Company and its affiliates shall
not have any personal liability or obligation arising under the Transaction
Documents (including any claims that Parent or Sub may assert) other than as an
assignee of a Transaction Document.

9.10 SPECIFIC PERFORMANCE. The parties recognize that in the event
the Company should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Parent and Sub shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement specifically, the Company
hereby waives the defense that there is an adequate remedy at law.

9.11 EFFECTIVENESS. This Agreement shall not become effective
until such time as this Agreement and all other Transaction Documents (or
counterparts thereof) have been executed and delivered by each of the parties
thereto.

9.12 PUBLICITY. The initial press release announcing this
Agreement will be a joint press release and thereafter the parties hereto will
consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby.

ARTICLE 10

GUARANTEE

10.1 LIMITED GUARANTEE. IHF hereby guarantees the full and
complete performance of each of the covenants and agreements made in this
Agreement by either Parent or Sub and the respective obligations of Parent and
Sub arising under this Agreement; provided, however, that the above guarantee
by IHF is hereby expressly limited in that in no event shall IHF's liabilities
or obligations under such guarantee exceed $3,612,711.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be signed by their respective officers thereunto duly
authorized as of March 10, 1998.

PARENT:

IHF/GM HOLDING CORPORATION

By: /s/ ANDREW S. ROSEN
------------------------------------
Andrew S. Rosen
Vice President

SUB:

IHF/GM ACQUISITION CORPORATION

By: /s/ ANDREW S. ROSEN
------------------------------------
Andrew S. Rosen
Vice President

IHF:

INTERNATIONAL HOME FOODS, INC.

By: /s/ ANDREW S. ROSEN
------------------------------------
Andrew S. Rosen
Vice President

COMPANY:

GRIST MILL CO.

By: /s/ GLEN S. BOLANDER
------------------------------------
Glen S. Bolander
President and Chief Executive Officer

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EXHIBIT A

STOCKHOLDER AGREEMENT

THIS STOCKHOLDER AGREEMENT, dated as of March 10, 1998 (this
"Agreement"), is made and entered into by and among IHF/GM Holding Corporation,
a Delaware corporation ("Parent"), IHF/GM Acquisition Corporation, a Delaware
corporation and a direct wholly-owned subsidiary of Parent ("Sub"), Glen S.
Bolander (the "Stockholder"), and solely for purposes of Sections 5(c), 6 and
10(b) of this Agreement, Grist Mill Co., a Delaware corporation (the
"Company").

WITNESSETH

WHEREAS, concurrently herewith, International Home Foods, Inc., a
Delaware corporation, Parent, Sub and the Company are entering into an
Agreement and Plan of Merger (as such agreement may hereafter be amended from
time to time, the "Merger Agreement"), pursuant to which Sub will be merged
with and into the Company (the "Merger"); capitalized terms used and not
defined herein have the respective meanings ascribed to them in the Merger
Agreement; and

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Stockholder agree, and Stockholder has
agreed, to enter into this Agreement;

NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein and the
benefits to be received by the parties under the terms of the Merger Agreement,
the parties hereto, intending to be legally bound, hereby agree as follows:

1. Definitions. For purposes of this Agreement:

(a) "Acquisition Proposal" shall mean any agreement,
letter of intent, or offer (other than the transactions contemplated in the
Merger Agreement) involving the Company or any of its Subsidiaries for: (i) any
merger, consolidation, share exchange, recapitalization, reorganization,
business combination, or other similar transaction, (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a material portion
of the assets of the Company and its Subsidiaries, taken as a whole, in a
single transaction or series of transactions, or (iii) any tender offer or
exchange offer for all or any portion of the outstanding shares of capital
stock of the Company or any of its Subsidiaries or the filing of a registration
statement under the Securities Act of 1933 in connection therewith, but shall
not include the Second Transaction (as defined herein).

(b) "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.

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(d) "Alternative Transaction Consideration" shall mean
all cash, securities, settlement or termination amounts, notes or other debt
instruments, and other consideration received or to be received, directly or
indirectly, by Stockholder and his Affiliates in connection with or as a result
of an Alternative Disposition or any agreements or arrangements (including,
without limitation, any employment agreement, consulting agreement, non-
competition agreement, confidentiality agreement, settlement agreement or
release agreement) entered into, directly or indirectly, by Stockholder or his
Affiliates (excluding officers and directors of the Company) as a part of or in
connection with the Alternative Disposition or associated Acquisition Proposal.

(e) "Beneficially Own" or "Beneficial Ownership" with
respect to any securities shall mean bearing "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include (i) securities Beneficially Owned
by all other Persons (who are Affiliates of such Person excluding officers and
directors of the Company) who together with such Person would constitute a
"group" within the meaning of Section 13(d)(3) of the Exchange Act and (ii)
securities Beneficially Owned by that Person's spouse and children.

(f) "Current Transaction Consideration" shall mean the
sum of all amounts to be received, directly or indirectly, by Stockholder and
his Affiliates pursuant to all of the Transaction Documents as in effect on the
date hereof and pursuant to that certain Employment and Non-Competition
Agreement by and between Stockholder and International Home Foods, Inc. dated
as of the date hereof.

(g) "Person" shall mean an individual, corporation,
limited liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.

(h) "Second Transaction" shall have the meaning ascribed
to such term in Section 4(b).

(i) "Second Transaction Consideration" shall mean the
sum of all amounts to be received, directly or indirectly, by Stockholder and
his Affiliates (excluding officers and directors of the Company) in connection
with or as a result of a Second Transaction or any agreements or arrangements
entered into, directly or indirectly, by Stockholder or his Affiliates as a
part of or in connection with the Second Transaction.

(j) "Shares" shall mean, with respect to Stockholder, all
shares of Company Common Stock held of record or Beneficially Owned by
Stockholder, whether currently issued or hereinafter acquired, and for the
purposes of Section 4 of this Agreement shall also include, without
duplication, any securities convertible into, or exercisable or exchangeable
for, shares of Company Common Stock, including without limitation any stock
options held of record or Beneficially Owned by Stockholder.

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(k) "Termination Date" shall mean the date that the
Merger Agreement has been terminated.

(l) "Underlying Shares" shall mean the shares of Company
Common Stock issuable to Stockholder upon the exercise by Stockholder of the
Options Beneficially Owned by him.

2. Voting Matters.

(a) From and after the date of this Agreement and ending
as of the first to occur of the Effective Time or the Termination Date, at any
meeting of the holders of Company Common Stock, however called, or in any other
circumstance upon which the vote, consent or other approval of holders of the
Company Common Stock is sought, Stockholder shall vote (or cause to be voted)
his issued and outstanding Shares:

(i) against any action or agreement that would
result in a breach in any material respect of any covenant, representation or
warranty or any other material obligation or agreement of the Company under the
Merger Agreement or this Agreement; and

(ii) against the following actions (other than the
Merger and the transactions contemplated by the Merger Agreement):

(A) any Acquisition Proposal other than
an Acquisition Proposal with Parent or any Affiliate thereof, and

(B) to the extent that such (1) are
intended to, or could reasonably be expected to, impede, interfere with, delay,
postpone, or materially adversely affect the Offer, the Merger or the
transactions contemplated by the Merger Agreement or this Agreement or (2) are
intended to, or could reasonably be expected to, implement or lead to any
Acquisition Proposal (other than an Acquisition Proposal with Parent or any
Affiliate thereof): (x) any change in a majority of the persons who constitute
the board of directors of the Company; (y) any change in the present
capitalization of the Company or any amendment of the Company's certificate of
incorporation or by-laws (other than as expressly contemplated by the Merger
Agreement); or (z) any other material change in the Company's corporate
structure or business.

(b) Stockholder hereby grants to, and appoints, Parent
and any nominee thereof, its proxy and attorney-in-fact (with full power of
substitution), from and after the date of this Agreement and ending as of the
first to occur of the Effective Time or the Termination Date, to vote his
Shares, or to grant a consent or approval in respect of his Shares.
Stockholder intends such proxy to be irrevocable and coupled with an interest
and will take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy and hereby revokes any proxy
previously granted by Stockholder with respect to his Shares.

(c) From and after the date of this Agreement and ending
as of the first to occur of the Effective Time or the Termination Date,
Stockholder shall not enter into any agreement or

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understanding with any Person or entity the effect of which would be
inconsistent with or violate the provisions and agreements contained in this
Section 2.

(d) Nothing herein shall in any way restrict or limit
Stockholder from taking any action in his capacity as a director or officer of
the Company or otherwise fulfilling his fiduciary obligations as a director and
officer of the Company.

3. Tender Agreement and Purchase Option.

(a) Stockholder hereby agrees that he shall (i) tender
all of his Shares into the Offer promptly, and in any event no later than the
third business day following the commencement of the Offer, and (ii) not
withdraw any Shares so tendered prior to the occurrence of the Termination
Date.

(b) In the event that (i) the Minimum Condition is not
satisfied, (ii) Sub notifies Stockholder that Sub is prepared to close the
tender but for the fact that the Minimum Condition is not satisfied, and (iii)
the tender by Stockholder of the Underlying Shares would cause the Minimum
Condition to be satisfied, then Stockholder hereby agrees that, at any time
prior to the Termination Date, immediately upon the request of Sub, he shall
exercise all of the Options Beneficially Owned by him and immediately tender
the Underlying Shares received upon such exercise into the Offer (and not
withdraw such Underlying Shares so tendered). Sub shall advance to Stockholder
the funds necessary to pay the exercise price of such Options, and Stockholder
shall repay Sub the amount of such advance, without interest, immediately upon
receipt of the Offer Consideration by him for his Underlying Shares.

(c) In the event that (i) the Offer has been consummated,
(ii) the Stockholder has not exercised his Options pursuant to Section 3(b),
(iii) Sub has acquired pursuant to the Offer a number of shares of Company
Common Stock which constitutes, on a fully diluted basis (as defined in Section
1.1 of the Merger Agreement), less than 90% of the outstanding shares of
Company Common Stock, and (iv) the shares of Company Common Stock acquired by
Sub pursuant to the Offer or otherwise, together with the Underlying Shares,
aggregate at least 90% of the outstanding shares of Company Common Stock, then
Stockholder hereby agrees that, immediately upon the request of Sub, he shall
(y) exercise all of the Options Beneficially Owned by him and (z) immediately
sell to Sub each Underlying Share received upon such exercise, free and clear
of all Liens, in consideration of an amount equal to the Offer Consideration as
in effect on the date of this Agreement (subject to adjustment as provided in
Section 4(b) below).

(d) Except as may be required by Section 3(b) or Section
3(c), Stockholder hereby agrees that he shall not exercise any Options that he
Beneficially Owns.

4. Capture.

10.2 In the event that the Shares of Stockholder are sold,
transferred, exchanged, canceled or disposed of in connection with or as a
result of any Acquisition Proposal that is in existence on, or that has been
otherwise made prior to the first anniversary of, the Termination Date

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(an "Alternative Disposition") then, within five business days after the
closing of such Alternative Disposition, Stockholder shall tender and pay to,
or shall cause to be tendered and paid to, the Parent (or its designee), in
immediately available funds, the Profit realized from such Alternative
Disposition, less any withholdings. As used in this Section 4(a), "Profit"
shall mean an amount equal to the excess, if any, of the Alternative
Transaction Consideration over the Current Transaction Consideration.

10.3 If, following the date of this Agreement, the amount
of the Offer Consideration, the Merger Consideration or the consideration
payable in respect of the Options as currently provided for in the Merger
Agreement should be increased (a "Second Transaction"), then (i) if the Options
Beneficially Owned by Stockholder have not been exercised, at the option of Sub
in its sole discretion, (y) Stockholder shall tender and pay, or cause to be
tendered and paid, to Parent, or its designee, in immediately available funds,
the Profit realized by Stockholder, less any withholdings, from the Second
Transaction or (z) the amount Stockholder shall receive in respect of his
Options as provided in the Merger Agreement shall be reduced by the Profit
realized by Stockholder from the Second Transaction or (ii) if the Options
Beneficially Owned by Stockholder have been exercised as contemplated in
Section 3(c), the amount Stockholder shall receive in respect of his Underlying
Shares as provided in Section 3(c) shall be reduced by the Profit realized by
Stockholder from the Second Transaction. As used in this Section 4(b),
"Profit" shall mean an amount equal to the excess, if any, of the Second
Transaction Consideration over the Current Transaction Consideration.

10.4 For purposes of determining Profit under this Section
4, (i) all non-cash items shall be valued based upon the fair market value
thereof as determined by an independent expert selected by Parent and who is
reasonably acceptable to Stockholder, (ii) all deferred payments or
consideration shall be discounted to reflect a market rate of net present value
thereof as determined by the above-referenced independent expert, (iii) all
contingent payments will be assumed to have been paid and (iv) if less than all
of Stockholder's Shares are subject to the Alternative Disposition or Second
Transaction then the Current Transaction Consideration shall be deemed to be an
amount equal to the Current Transaction Consideration multiplied by a fraction,
the numerator of which is the number of Stockholder's Shares sold, transferred,
exchanged, canceled or disposed of in such Alternative Disposition or Second
Transaction and the denominator of which is the total number of Stockholder's
Shares. In the event any contingent payments included in the determination of
Profit ultimately are not paid pursuant to an Alternative Disposition, then
Parent shall promptly reimburse Stockholder for any amounts paid to Parent
hereunder in respect of such uncollected contingent payments promptly after
receipt of written notice of such non-payment.

5. Covenants. Representations and Warranties of Stockholder.

(a) Stockholder hereby represents, warrants and covenants
to Parent and Sub as follows:

(a) Ownership. Stockholder is either (A) the
record and Beneficial Owner of, or (B) the Beneficial Owner but not
the record holder of, the number of issued and outstanding shares of
Company Common Stock set forth on Part I of Schedule A hereto and

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the Options set forth on Part II of Schedule A hereto. As of the date
of this Agreement, the shares of Company Common Stock set forth on
Part I of Schedule A hereto constitute all of the issued and
outstanding Shares owned of record or Beneficially Owned by
Stockholder. Except as otherwise set forth in Part I to Schedule A
hereto, Stockholder has sole power of disposition, sole power of
conversion, sole power to demand appraisal rights and sole power to
agree to all of the matters set forth in this Agreement, in each case
with respect to all of the Shares set forth on Part I of Schedule A
hereto, with no material limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of
this Agreement.

(b) Power; Binding Agreement. Stockholder has
the legal capacity, power and authority to enter into and perform all
of that Stockholder's obligations under this Agreement. This Agreement
has been duly and validly executed and delivered by Stockholder and
constitutes a valid and binding agreement of Stockholder, enforceable
against Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest
of any trust of which Stockholder is trustee whose consent is required
for the execution and delivery of this Agreement or the consummation
by Stockholder of the transactions contemplated hereby. If
Stockholder is married and Stockholder's Shares constitute community
property, this Agreement has been duly authorized, executed and
delivered by, and constitutes a valid and binding agreement of,
Stockholder's spouse, enforceable against such person in accordance
with its terms.

(c) No Conflicts. Except for the filing of an
amendment to Stockholder's Schedule 13D or 13G, if any, no filing
with, and no permit, authorization, consent or approval of, any state
or federal public body or authority is necessary for the execution of
this Agreement by Stockholder and the consummation by Stockholder of
the transactions contemplated hereby, except where the failure to
obtain such consent, permit, authorization, approval or filing would
not interfere with Stockholder's ability to perform his obligations
hereunder, and none of the execution and delivery of this Agreement by
Stockholder, the consummation by Stockholder of the transactions
contemplated hereby or compliance by Stockholder with any of the
provisions hereof shall (A) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which Stockholder is
a party or by which Stockholder or any of his properties or assets may
be bound, or (B) violate any order, writ, injunction, decree,
judgment, order, statute, rule or regulation applicable to Stockholder
or any of his properties or assets, in each such case except to the
extent that any conflict, breach, default or violation would not
interfere with the ability of Stockholder to perform the obligations
hereunder.

(d) No Encumbrances. Except (A) as required
herein, (B) for pledges or encumbrances created in compliance with
Section 5(a)(vi), and (C) items listed in Part I to Schedule A which
shall be released or modified to comply with Section 5(a)(vi) not
later than 10 business days after the date hereof, at all times
thereafter during the term hereof, all

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of Stockholder's Shares as set forth on Part A of Schedule I hereto
will be held by Stockholder, an Affiliate of Stockholder, or by a
nominee or custodian for the benefit of Stockholder, free and clear of
all liens, claims, security interests, proxies, voting trusts or
agreements, understandings or arrangements or any other encumbrances
whatsoever, except for any liens, claims, understandings or
arrangements that do not limit or impair Stockholder's ability to
perform his obligations under this Agreement.

(e) No Solicitation. Stockholder shall comply
with the terms of Section 6.2 of the Merger Agreement.

(f) Restriction on Transfer, Proxies and
Non-Interference. Except as expressly contemplated hereby, from and
after the date of this Agreement and ending as of the first to occur
of the Effective Time or the first anniversary of the Termination
Date, Stockholder shall not, and shall cause each of his Affiliates
who Beneficially Own any of Stockholder's Shares not to, directly or
indirectly, without the consent of Parent: (A) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any
or all of his Shares, or any interest therein, (B) grant any proxies
or powers of attorney, deposit any or all of his Shares into a voting
trust or enter into a voting agreement with respect to his Shares, (C)
enter into any agreement or arrangement providing for any of the
actions described in clause (A) or (B) above, or (D) take any action
that could reasonably be expected to have the effect of preventing or
disabling Stockholder from performing his obligations under this
Agreement; provided, however, that after the occurrence of the
Termination Date, Stockholder may, in accordance with Section 4, sell
or tender any or all of his Shares, or take any of the other actions
described above, in connection with an Acquisition Proposal.

(g) Further Assurances. From time to time, at
Parent's request and without further consideration, Stockholder shall
execute and deliver such additional documents as may be necessary or
desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.

(b) Parent and Sub hereby represent, warrant and covenant
to Stockholder as follows:

(i) Organization. Standing and Corporate Power.
Each of Parent and Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
with adequate corporate power and authority to own its properties and
carry on its business as presently conducted. Each of Parent and Sub
has the corporate power and authority to enter into and perform all of
its obligations under this Agreement and to consummate the
transactions contemplated hereby.

(ii) No Conflicts. No filing with, and no permit,
authorization, consent or approval of, any state or federal public
body or authority is necessary for the execution of

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this Agreement by either Parent or Sub and the consummation by Parent
and Sub of the transactions contemplated hereby, except where the
failure to obtain such consent, permit, authorization, approval or
filing would not interfere with its ability to perform its obligations
hereunder, and none of the execution and delivery of this Agreement by
Parent or Sub, the consummation by Parent or Sub of the transactions
contemplated hereby or compliance by Parent and Sub with any of the
provisions hereof shall (A) conflict with or result in any breach of
any applicable organizational documents applicable to Parent or Sub,
(B) in a violation or breach of, or constitute (with or without notice
or lapse of time or both) a default (or give rise to any third party
right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, commitment,
arrangement, understanding, agreement or other instrument or
obligation of any kind to which Parent or Sub is a party or by which
Parent or Sub or any of Parent's or Sub's properties or assets may be
bound, or (C) violate any order, writ, injunction, decree, judgment,
order, statute, rule or regulation applicable to Parent or Sub or any
of Parent's or Sub's properties or assets, in each such case except to
the extent that any conflict, breach, default or violation would not
interfere with the ability of Parent or Sub to perform its obligations
hereunder.

(iii) Execution. Delivery and Performance by Parent
and Sub. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been
duly authorized by the Boards of Directors of Parent and Sub, and each
of Parent and Sub has taken all other actions required by law, its
certificate of incorporation and its by-laws to consummate the
transactions contemplated by this Agreement. This Agreement
constitutes the valid and binding obligations of Parent and Sub and is
enforceable in accordance with its terms, except as enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally.

(c) The Company hereby represents and warrants to Parent
and Sub that the Board of Directors of the Company has approved the terms of
this Agreement and the transactions contemplated herein and such approval is
sufficient to render inapplicable to this Agreement and the transactions
contemplated herein the provisions of Section 203 of the Delaware General
Corporation Law.

6. Stop Transfer. From and after the date of this Agreement and
ending as of the first to occur of the Effective Time or the first anniversary
of the Termination Date, Stockholder will not request that the Company register
(and the Company agrees not to register) the transfer (book-entry or otherwise)
of any certificate or uncertificated interest representing any of Stockholder's
Shares, except as otherwise contemplated hereby, including, without limitation,
the proviso contained in Section 5(a)(vi).

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any shares into which or for which any or all of the Shares may be changed or
exchanged as may be appropriate to reflect such event.

8. Stockholder Capacity. Except as set forth 5(a)(v),
Stockholder does not make any agreement or understanding herein in his capacity
as a director or officer of the Company and nothing herein shall limit or
affect any action taken by Stockholder in such capacity.

9. Merger Agreement and Options. Stockholder hereby consents and
agrees to the treatment of Options Beneficially Owned by Stockholder or his
Affiliates as set forth in the Merger Agreement.

10. Miscellaneous.

(a) Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.

(b) Amendments. Waivers. Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto; provided that all of the provisions of this Agreement other
than Section 5(c), Section 6 and this Section 10(b) may be amended without the
consent of the Company.

(c) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly received if so given) by hand delivery,
telegram, telex or telecopy, or by mail (registered or certified mail, postage
prepaid, return receipt requested) or by any courier service, such as Federal
Express, providing proof of delivery. All communications hereunder shall be
delivered to the respective parties at the following addresses:

(i) if to Parent or Sub, to:
c/o International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey 07054
Attn: General Counsel
Telecopy: 973-254-5460

with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Telecopy: 214-740-7313

Vinson & Elkins, L.L.P.

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2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attn: A. Winston Oxley
Telecopy: 212-999-7891

(ii) if to the Company, to:
Grist Mill Co.
21340 Hayes Avenue
Lakeville, Minnesota 55044-0430
Attn: Glen S. Bolander
Telecopy: 612-469-5550

with a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attn: Charles H. Perlman, Esq.
Telecopy: 312-984-3150

(iii) if to Stockholder, to:
Glen S. Bolander
Grist Mill Co.
21340 Hayes Avenue
Lakeville, Minnesota 55044-0430
Telecopy: 612-469-5550

with a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attn: Charles H. Perlman, Esq.
Telecopy: 312-984-3150

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

(d) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law but if any provision or
portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.

A-10
<PAGE> 74
(e) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by a Stockholder of any covenants or
agreements contained in this Agreement will cause the Parent and Sub to sustain
damages for which they would not have an adequate remedy at law for money
damages, and therefore each of the parties hereto agrees that in the event of
any such breach the Parent or Sub shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which they may be entitled, at law or
in equity.

(f) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law
or in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

(g) No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance
by any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.

(h) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto; provided that, in the event of
Stockholder's death, the benefits and obligations of Stockholder hereunder
shall inure to his successors and heirs.

(i) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

(j) Jurisdiction. Each party hereby irrevocably submits
to the exclusive jurisdiction of the Court of Chancery in the State of Delaware
in any action, suit or proceeding arising in connection with this Agreement,
and agrees that any such action, suit or proceeding shall be brought only in
such court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph and shall
not be deemed to be a general submission to the jurisdiction of said Court or
in the State of Delaware other than for such purposes. Each party hereto
hereby waives any right to a trial by jury in connection with any such action,
suit or proceeding.

(k) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.

(l) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and

A-11
<PAGE> 75
the same Agreement. This Agreement shall not be effective as to any party
hereto until such time as this Agreement or a counterpart thereof has been
executed and delivered by each party hereto.

(m) Trust Funds. In the event that any party hereto should
receive any funds that are to be paid to another party pursuant to the terms of
this Agreement, then the receiving party shall hold such funds in trust for the
benefit of the party entitled to receive such funds and shall promptly pay such
funds to the party entitled to receive such funds in accordance with this
Agreement.

11. Termination. This Agreement shall terminate without any
further action on the part of any party hereto upon the occurrence of a
termination of the Merger Agreement pursuant to Section 8.1(a), Section 8.1(f),
Section 8.1(g), Section 8.1(b), Section 8.1(l) or, if at the time of the
termination of the Merger Agreement there has been no public statement related
to an Acquisition Proposal, Section 8.1(j) or Section 8.1(k). Upon such
termination, this Agreement shall forthwith become void and of no further force
or effect.

A-12
<PAGE> 76
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on this 10th day of March, 1998.

PARENT: IHF/GM HOLDING CORPORATION

By:
-----------------------------
Andrew S. Rosen
Vice President

SUB: IHF/GM ACQUISITION CORPORATION

By:
-----------------------------
Andrew S. Rosen
Vice President

COMPANY: GRIST MILL CO.

By:
-----------------------------
Glen S. Bolander
President and Chief Executive
Officer

STOCKHOLDER:
-----------------------------

A-13
<PAGE> 77
ACKNOWLEDGMENT AND CONSENT OF SPOUSE

Diana Bolander, the spouse of Stockholder, hereby joins in the
execution of this Agreement for the purpose of acknowledging that any ownership
interest she may have in the Shares and Options Beneficially Owned by
Stockholder is subject to the terms of this Agreement to the same extent as if
she were a "Stockholder" hereunder, and hereby consents to the forgoing.

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

A-14
<PAGE> 78
EXHIBIT B

OPTION SURRENDER AGREEMENT,
RELEASE AND WAIVER

NOTE: SIGNATURE MUST BE PROVIDED BELOW AND ON
THE SCHEDULE OF OWNERSHIP.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

To Grist Mill Co., a Delaware corporation (the "Company"):

The undersigned acknowledges that pursuant to Section 3.5 of the
Agreement and Plan of Merger by and among IHF/GM Holding Corporation, IHF/GM
Acquisition Corporation ("Acquiror"), the Company and, for limited purposes,
International Home Foods, Inc., dated as of March 10, 1998 (the "Merger
Agreement"), the Company will be canceling Options (as defined below) in return
for cash consideration effective at the time the proposed merger of Acquiror
with and into the Company (the "Merger") becomes effective (the "Effective
Time"). Receipt of such consideration by the undersigned will be subject to
the receipt by the Company of this Option Surrender Agreement, Release and
Waiver (the "Surrender Agreement") surrendering Options for such cancellation.

Subject to, and effective upon, acceptance of the surrender of the
Options surrendered herewith, the undersigned hereby surrenders for
cancellation to the Company all of his rights, title and interest in and to all
options (whether vested or unvested) to purchase shares of common stock, par
value $0.10 per share (the "Shares"), of the Company pursuant to the Company's
1986 Non-Qualified Stock Option Plan or otherwise (such options, the "Options"
and such plan, the "Option Plan"), listed on the attached Schedule of Ownership
(the "Ownership Schedule"), for a per Share amount equal to the Merger
Consideration (as defined in the Merger Agreement), minus the exercise price
per Share, multiplied by the number of Shares subject to such Options, upon the
terms and subject to the conditions set forth in this Surrender Agreement.

The undersigned hereby represents and warrants that the undersigned
holds the Options surrendered hereby free and clear of all claims, liens,
restrictions, charges, encumbrances, security interests, voting agreements and
commitments of any kind and has full power and authority to surrender for
cancellation such Options, subject to other agreements involving the Merger
being executed simultaneously herewith.

This surrender is irrevocable by the undersigned but will not be
effective if the merger is not consummated if the Merger Agreement is
terminated.

The undersigned, on behalf of himself or herself, and on behalf of all
spouses, heirs, predecessors, successors, assigns, representatives or agents of
the undersigned (including without limitation any trust of which the
undersigned is the trustee or which is for the benefit of the undersigned or a
member of his or her family), to the greatest extent permitted by law, hereby

B-1
<PAGE> 79
acknowledges that the payments made pursuant to the Surrender Agreement are in
full satisfaction of any and all rights the undersigned may have under the
Option Plans with respect to Options being surrendered hereby.

The undersigned hereby acknowledges that the Ownership Schedule
enclosed herewith correctly and completely sets forth the Options held by the
undersigned being surrendered hereunder, and that except as set forth therein
the undersigned does not have the right to acquire any stock in the Company or
any options, warrants or other rights to acquire shares of capital stock of or
equity interests in the Company, or similar securities or contractual
obligations the value of which is derived from the value of an equity interest
in the Company, or securities convertible into or exchangeable for capital
stock of or equity interests in, or similar securities or contractual
obligations of, the Company.

The undersigned also acknowledges that all payments to be made
pursuant to the Surrender Agreement are expected to be paid by check at the
Effective Time. The undersigned also acknowledges that the Company is not
required to make any payments to the undersigned pursuant to the Surrender
Agreement unless his or her Options are outstanding at the Effective Time.

The undersigned also acknowledges that all payments to be made
pursuant to the Surrender Agreement may be subject to applicable withholding
taxes and other similar charges.

The undersigned, upon request, will execute and deliver any additional
documents deemed by the Company to be reasonably necessary or desirable to
complete the surrender of the Options surrendered hereby.

The undersigned agrees that he will not exercise any of the Options
during the five day period beginning upon the acceptance for payment of Shares
pursuant to the tender offer contemplated by the Merger Agreement.

The undersigned recognizes that the Merger is subject to various
conditions and the Company may not be required to accept the surrender of any
of the Options surrendered hereby.

It is understood that the Surrender Agreement only shall apply to
Options that are outstanding at the Effective Time.

INSTRUCTIONS

11 EXECUTION OF THE SURRENDER AGREEMENT AND THE OWNERSHIP
SCHEDULE. This Surrender Agreement is to be completed by the optionholder. In
order to validly surrender such Options, an optionholder must complete and sign
this Surrender Agreement and the Ownership Schedule in accordance with the
instructions herein and mail or deliver them in the enclosed envelope to the
Company prior to the Effective Time. Please return executed Surrender
Agreements and Ownership Schedules prior to March 25, 1998.

B-2
<PAGE> 80
THE OWNERSHIP SCHEDULE MUST BE SIGNED BY THE OPTIONHOLDER AS EVIDENCE
OF SUCH ACKNOWLEDGMENT AND RETURNED TOGETHER WITH THIS SURRENDER AGREEMENT. A
second copy of the Ownership Schedule for the optionholder's records has also
been included herewith.

12 DELIVERY. This Surrender Agreement and the enclosed Ownership
Schedule, when executed, should be mailed or delivered to:

Grist Mill Co.
21340 Hayes Avenue
Lakeville, Minnesota 55044-0430
Attn: Glen S. Bolander

The method of delivery of the Surrender Agreement and the Ownership
Schedule is at the option and risk of the surrendering optionholder. Delivery
by hand, expedited mail, courier or other similar service is recommended. In
all cases, sufficient time should be allowed to ensure timely delivery.
Optionholders are also advised to retain a copy of all documents delivered.

13 SIGNATURE ON THE SURRENDER AGREEMENT. The signature on this
Surrender Agreement must correspond exactly with the optionholder's name in the
records of the Company.

14 REQUESTS FOR ASSISTANCE. If you have questions or need
assistance please call _________ at ____________.

B-3
<PAGE> 81
- --------------------------------------------------------------------------------
IMPORTANT:

OPTIONHOLDER: (1) SIGN HERE; AND (2) CONFIRM AND SIGN THE
ENCLOSED OWNERSHIP SCHEDULE.

------------------------------------------------------------------------------
(Signature of Optionholder)

Dated:
-----------------

Name:
-----------------------------------------------------------------------

------------------------------------------------------------------------------
(Please Type or Print)

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

------------------------------------------------------------------------------
(Include Zip Code)

Area Code and Telephone Number:
----------------------------------------------
(Home)

----------------------------------------------
(Business)

Taxpayer Identification or Social Security No.:
------------------------------

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

March 10, 1998

B-4
<PAGE> 82
SCHEDULE OF OWNERSHIP

B-5
<PAGE> 83
EXHIBIT C

CONDITIONS TO THE OFFER

The capitalized terms used in this Exhibit C shall have the meaning
ascribed thereto in the Agreement and Plan of Merger, to which this Exhibit C
is attached, by and among International Home Foods, Inc., IHF/GM Holding
Corporation, IHF/GM Acquisition Corporation and Grist Mill Co.

Conditions

Notwithstanding any other provision of the Offer, Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, the payment for any Shares tendered, and, to the extent
permitted by the Agreement, may amend or terminate the Offer, if:

1. the Minimum Condition has not been satisfied;

2. any applicable waiting periods under the HSR Act shall not
have expired or been terminated prior to the expiration of the Offer;

3. the financing for the Offer contemplated in Section 4.2(e) of
the Agreement shall not have been received by Parent (subject to the obligation
to pay the amounts provided in Section 8.1(j)); or

4. at any time on or after the date of the Agreement and before
acceptance for payment of, or payment for, such Shares pursuant to the Offer
any of the following events shall have occurred and be continuing:

(a) there shall be pending as of the expiration of the
Offer or at any time thereafter, any Injunction, proceeding, action, suit or
litigation by any Governmental Entity that seeks to (i) challenge the
acquisition by Parent, Sub or any of their respective affiliates of Shares
pursuant to the Offer, (ii) restrain, prohibit or delay the making or
consummation of the Offer or the Merger, (iii) make the purchase of or payment
for some or all of the Shares pursuant to the Offer or the Merger illegal, (iv)
impose material limitations on the ability of Parent, Sub, the Company or any
of their respective affiliates to acquire or hold, or to require Parent, Sub,
the Company or any of their respective affiliates to dispose of or hold
separate, any material portion of their assets or business, (v) impose material
limitations on the ability of Parent, Sub, the Company or any of their
respective affiliates to continue to conduct, own or operate, as heretofore
conducted, owned or operated, all or any material portion of their businesses
or assets, (vi) impose or result in material limitations on the

C-1
<PAGE> 84
ability of Parent, Sub or any of their respective affiliates to exercise full
rights of ownership of the Shares purchased by them, including, without
limitation, the right to vote the Shares purchased by them on any or all
matters properly presented to the stockholders of the Company, or (vii)
prohibit or restrict in a material manner the financing of any of the
transactions contemplated by the Transaction Documents;

(b) there shall have been promulgated, enacted, entered,
enforced or deemed applicable, any Law (other than the application of the
waiting period provision of the HSR Act), or there shall have been issued any
Injunction that results in any of the consequences referred to in subsection
(a) above;

(c) other than any event relating to (i) the economy or
securities markets in general or (ii) the industries or markets in which the
Company operates and not relating specifically to the Company, there shall have
occurred any event or events (whether or not covered by insurance) that,
individually or in the aggregate, have had, or would be reasonably expected to
have, a Material Adverse Effect on the Company;

(d) there shall have occurred and be continuing (i) any
general suspension of trading in, or general limitation on prices for,
securities on any national securities exchange or in the over-the-counter
market in the United States for a period in excess of 48 hours, (ii) the
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (iii) the commencement of a war, armed hostilities
or other international or national calamity involving the United States having
a significant adverse effect on the functioning of the financial markets in the
United States, (iv) any material limitations (whether or not mandatory) imposed
by any Governmental Entity on the nature or extension of credit or further
extension of credit by banks or other lending institutions, or (v) in the case
of clauses (iii) and (iv) of this paragraph (d), if existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof;

(e) any of the representations and warranties of the
Company contained in the Agreement shall not be true and correct in all
respects (provided that any representation or warranty of the Company contained
in the Merger Agreement that is subject to materiality, Material Adverse Effect
or similar qualification shall not be so qualified for purposes of determining
the existence of any breach thereof on the part of the Company) as of the date
of the Agreement and (except to the extent that such representations and
warranties speak as of an earlier date) as of the date of the acceptance of
Shares for payment pursuant to the Offer as though made on and as of such date,
except for such breaches that, individually or in the aggregate with any other
breaches on the part of the Company, would not (A) have a Material Adverse
Effect on the Company or (B) materially and adversely affect the ability of the
parties to the Agreement to consummate the transactions contemplated thereby;

(f) the Company shall have not performed in all material
respects (provided that any obligation the performance of which is subject to
materiality, Material Adverse Effect or similar qualification shall not be so
qualified for purposes of determining the existence of any nonperformance
thereof) all obligations required to be performed by it under the Agreement at
or prior to the acceptance of Shares for payment pursuant to the Offer;

C-2
<PAGE> 85
(g) the Agreement shall have been terminated in
accordance with its terms;

(h) (i) the Board of Directors of the Company shall have
failed to make or shall have withdrawn or modified or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Sub its recommendation
of the Offer, the Agreement or the Merger, or shall have approved or
recommended any Acquisition Proposal or any other acquisition of the shares of
Company Common Stock other than the Offer and the Merger, or (ii) any person or
other entity or group shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to any Acquisition
Proposal;

(i) the Company shall have failed to comply with its
obligations under Section 1.4(a) of the Agreement;

(j) each of the representations and warranties contained
in the Stockholder Agreement of the stockholders who are parties thereto shall
not be true and correct in all material respects as of the date of the
acceptance of Shares for payment pursuant to the Offer as though made on and as
of such date;

(k) the Company or any of the stockholders who are
parties to the Stockholder Agreement shall have not performed in all material
respects, or shall have otherwise materially breached or given notice of any
intention to materially breach, any obligations required to be performed by the
Company or such stockholder under the Stockholder Agreement at or prior to the
acceptance of Shares for payment pursuant to the Offer;

(l) (i) any person has become an Acquiring Person (as
defined in the Rights Agreement), (ii) a Stock Acquisition Date (as defined in
the Rights Agreement) has occurred, or (iii) a Flip-In Event (as defined in the
Rights Agreement) has occurred; or

(m) the beneficial and record holders of Options relating
to not less than 90% of the shares of Company Common Stock that may be issued
upon the exercise of all Options (whether or not vested) shall have not
executed and delivered to the Company an Option Release Agreement.

The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances
(including, without limitation, any action or inaction by Sub or any of its
affiliates, but except for a breach by Sub or any of its affiliates of the
Agreement) giving rise to any such condition or may be waived by Sub, in whole
or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time.

C-3

<PAGE> 1
EXHIBIT 10.3

STOCKHOLDER AGREEMENT

WITNESSETH

WHEREAS, concurrently herewith, International Home Foods, Inc., a
Delaware corporation, Parent, Sub and the Company are entering into an Agreement
and Plan of Merger (as such agreement may hereafter be amended from time to
time, the "Merger Agreement"), pursuant to which Sub will be merged with and
into the Company (the "Merger"); capitalized terms used and not defined herein
have the respective meanings ascribed to them in the Merger Agreement; and

WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Stockholder agree, and Stockholder has
agreed, to enter into this Agreement;

1. Definitions. For purposes of this Agreement:

(a) "Acquisition Proposal" shall mean any agreement,
letter of intent, or offer (other than the transactions contemplated in the
Merger Agreement) involving the Company or any of its Subsidiaries for: (i) any
merger, consolidation, share exchange, recapitalization, reorganization,
business combination, or other similar transaction, (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of a material portion
of the assets of the Company and its Subsidiaries, taken as a whole, in a single
transaction or series of transactions, or (iii) any tender offer or exchange
offer for all or any portion of the outstanding shares of capital stock of the
Company or any of its Subsidiaries or the filing of a registration statement
under the Securities Act of 1933 in connection therewith, but shall not include
the Second Transaction (as defined herein).

(b) "Affiliate" of any Person means another Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.

<PAGE> 2

(d) "Alternative Transaction Consideration" shall mean
all cash, securities, settlement or termination amounts, notes or other debt
instruments, and other consideration received or to be received, directly or
indirectly, by Stockholder and his Affiliates in connection with or as a result
of an Alternative Disposition or any agreements or arrangements (including,
without limitation, any employment agreement, consulting agreement,
non-competition agreement, confidentiality agreement, settlement agreement or
release agreement) entered into, directly or indirectly, by Stockholder or his
Affiliates (excluding officers and directors of the Company) as a part of or in
connection with the Alternative Disposition or associated Acquisition Proposal.

(f) "Current Transaction Consideration" shall mean the
sum of all amounts to be received, directly or indirectly, by Stockholder and
his Affiliates pursuant to all of the Transaction Documents as in effect on the
date hereof and pursuant to that certain Employment and Non- Competition
Agreement by and between Stockholder and International Home Foods, Inc. dated as
of the date hereof.

(g) "Person" shall mean an individual, corporation,
limited liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.

(h) "Second Transaction" shall have the meaning ascribed
to such term in Section 4(b).

(i) "Second Transaction Consideration" shall mean the sum
of all amounts to be received, directly or indirectly, by Stockholder and his
Affiliates (excluding officers and directors of the Company) in connection with
or as a result of a Second Transaction or any agreements or arrangements entered
into, directly or indirectly, by Stockholder or his Affiliates as a part of or
in connection with the Second Transaction.

(j) "Shares" shall mean, with respect to Stockholder, all
shares of Company Common Stock held of record or Beneficially Owned by
Stockholder, whether currently issued or hereinafter acquired, and for the
purposes of Section 4 of this Agreement shall also include, without duplication,
any securities convertible into, or exercisable or exchangeable for, shares of
Company Common Stock, including without limitation any stock options held of
record or Beneficially Owned by Stockholder.

<PAGE> 3

(k) "Termination Date" shall mean the date that the
Merger Agreement has been terminated.

(l) "Underlying Shares" shall mean the shares of Company
Common Stock issuable to Stockholder upon the exercise by Stockholder of the
Options Beneficially Owned by him.

2. Voting Matters.

(ii) against the following actions (other than
the Merger and the transactions contemplated by the Merger Agreement):

(A) any Acquisition Proposal other than
an Acquisition Proposal with Parent or any Affiliate thereof, and

(B) to the extent that such (1) are intended
to, or could reasonably be expected to, impede, interfere with, delay, postpone,
or materially adversely affect the Offer, the Merger or the transactions
contemplated by the Merger Agreement or this Agreement or (2) are intended to,
or could reasonably be expected to, implement or lead to any Acquisition
Proposal (other than an Acquisition Proposal with Parent or any Affiliate
thereof): (x) any change in a majority of the persons who constitute the board
of directors of the Company; (y) any change in the present capitalization of the
Company or any amendment of the Company's certificate of incorporation or
by-laws (other than as expressly contemplated by the Merger Agreement); or (z)
any other material change in the Company's corporate structure or business.

(b) Stockholder hereby grants to, and appoints, Parent
and any nominee thereof, its proxy and attorney-in-fact (with full power of
substitution), from and after the date of this Agreement and ending as of the
first to occur of the Effective Time or the Termination Date, to vote his
Shares, or to grant a consent or approval in respect of his Shares. Stockholder
intends such proxy to be irrevocable and coupled with an interest and will take
such further action or execute such other instruments as may be necessary to
effectuate the intent of this proxy and hereby revokes any proxy previously
granted by Stockholder with respect to his Shares.

3
<PAGE> 4

(c) From and after the date of this Agreement and ending
as of the first to occur of the Effective Time or the Termination Date,
Stockholder shall not enter into any agreement or understanding with any Person
or entity the effect of which would be inconsistent with or violate the
provisions and agreements contained in this Section 2.

3. Tender Agreement and Purchase Option.

(b) In the event that (i) the Minimum Condition is not
satisfied, (ii) Sub notifies Stockholder that Sub is prepared to close the
tender but for the fact that the Minimum Condition is not satisfied, and (iii)
the tender by Stockholder of the Underlying Shares would cause the Minimum
Condition to be satisfied, then Stockholder hereby agrees that, at any time
prior to the Termination Date, immediately upon the request of Sub, he shall
exercise all of the Options Beneficially Owned by him and immediately tender the
Underlying Shares received upon such exercise into the Offer (and not withdraw
such Underlying Shares so tendered). Sub shall advance to Stockholder the funds
necessary to pay the exercise price of such Options, and Stockholder shall repay
Sub the amount of such advance, without interest, immediately upon receipt of
the Offer Consideration by him for his Underlying Shares.

(c) In the event that (i) the Offer has been consummated,
(ii) the Stockholder has not exercised his Options pursuant to Section 3(b),
(iii) Sub has acquired pursuant to the Offer a number of shares of Company
Common Stock which constitutes, on a fully diluted basis (as defined in Section
1.1 of the Merger Agreement), less than 90% of the outstanding shares of Company
Common Stock, and (iv) the shares of Company Common Stock acquired by Sub
pursuant to the Offer or otherwise, together with the Underlying Shares,
aggregate at least 90% of the outstanding shares of Company Common Stock, then
Stockholder hereby agrees that, immediately upon the request of Sub, he shall
(y) exercise all of the Options Beneficially Owned by him and (z) immediately
sell to Sub each Underlying Share received upon such exercise, free and clear of
all Liens, in consideration of an amount equal to the Offer Consideration as in
effect on the date of this Agreement (subject to adjustment as provided in
Section 4(b) below).

(d) Except as may be required by Section 3(b) or Section
3(c), Stockholder hereby agrees that he shall not exercise any Options that he
Beneficially Owns.

<PAGE> 5

4. Capture.

(a) In the event that the Shares of Stockholder are sold,
transferred, exchanged, canceled or disposed of in connection with or as a
result of any Acquisition Proposal that is in existence on, or that has been
otherwise made prior to the first anniversary of, the Termination Date (an
"Alternative Disposition") then, within five business days after the closing of
such Alternative Disposition, Stockholder shall tender and pay to, or shall
cause to be tendered and paid to, the Parent (or its designee), in immediately
available funds, the Profit realized from such Alternative Disposition, less any
withholdings. As used in this Section 4(a), "Profit" shall mean an amount equal
to the excess, if any, of the Alternative Transaction Consideration over the
Current Transaction Consideration.

(b) If, following the date of this Agreement, the amount
of the Offer Consideration, the Merger Consideration or the consideration
payable in respect of the Options as currently provided for in the Merger
Agreement should be increased (a "Second Transaction"), then (i) if the Options
Beneficially Owned by Stockholder have not been exercised, at the option of Sub
in its sole discretion, (y) Stockholder shall tender and pay, or cause to be
tendered and paid, to Parent, or its designee, in immediately available funds,
the Profit realized by Stockholder, less any withholdings, from the Second
Transaction or (z) the amount Stockholder shall receive in respect of his
Options as provided in the Merger Agreement shall be reduced by the Profit
realized by Stockholder from the Second Transaction or (ii) if the Options
Beneficially Owned by Stockholder have been exercised as contemplated in Section
3(c), the amount Stockholder shall receive in respect of his Underlying Shares
as provided in Section 3(c) shall be reduced by the Profit realized by
Stockholder from the Second Transaction. As used in this Section 4(b), "Profit"
shall mean an amount equal to the excess, if any, of the Second Transaction
Consideration over the Current Transaction Consideration.

(c) For purposes of determining Profit under this Section
4, (i) all non-cash items shall be valued based upon the fair market value
thereof as determined by an independent expert selected by Parent and who is
reasonably acceptable to Stockholder, (ii) all deferred payments or
consideration shall be discounted to reflect a market rate of net present value
thereof as determined by the above-referenced independent expert, (iii) all
contingent payments will be assumed to have been paid and (iv) if less than all
of Stockholder's Shares are subject to the Alternative Disposition or Second
Transaction then the Current Transaction Consideration shall be deemed to be an
amount equal to the Current Transaction Consideration multiplied by a fraction,
the numerator of which is the number of Stockholder's Shares sold, transferred,
exchanged, canceled or disposed of in such Alternative Disposition or Second
Transaction and the denominator of which is the total number of Stockholder's
Shares. In the event any contingent payments included in the determination of
Profit ultimately are not paid pursuant to an Alternative Disposition, then
Parent shall promptly reimburse Stockholder for any amounts paid to Parent
hereunder in respect of such uncollected contingent payments promptly after
receipt of written notice of such non-payment.

5
<PAGE> 6

5. Covenants. Representations and Warranties of Stockholder.

(a) Stockholder hereby represents, warrants and covenants
to Parent and Sub as follows:

(i) Ownership. Stockholder is either (A) the
record and Beneficial Owner of, or (B) the Beneficial Owner but not
the record holder of, the number of issued and outstanding shares of
Company Common Stock set forth on Part I of Schedule A hereto and the
Options set forth on Part II of Schedule A hereto. As of the date of
this Agreement, the shares of Company Common Stock set forth on Part I
of Schedule A hereto constitute all of the issued and outstanding
Shares owned of record or Beneficially Owned by Stockholder. Except as
otherwise set forth in Part I to Schedule A hereto, Stockholder has
sole power of disposition, sole power of conversion, sole power to
demand appraisal rights and sole power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of the
Shares set forth on Part I of Schedule A hereto, with no material
limitations, qualifications or restrictions on such rights, subject to
applicable securities laws and the terms of this Agreement.

(ii) Power; Binding Agreement. Stockholder has
the legal capacity, power and authority to enter into and perform all
of that Stockholder's obligations under this Agreement. This Agreement
has been duly and validly executed and delivered by Stockholder and
constitutes a valid and binding agreement of Stockholder, enforceable
against Stockholder in accordance with its terms. There is no
beneficiary or holder of a voting trust certificate or other interest
of any trust of which Stockholder is trustee whose consent is required
for the execution and delivery of this Agreement or the consummation
by Stockholder of the transactions contemplated hereby. If Stockholder
is married and Stockholder's Shares constitute community property,
this Agreement has been duly authorized, executed and delivered by,
and constitutes a valid and binding agreement of, Stockholder's
spouse, enforceable against such person in accordance with its terms.

(iii) No Conflicts. Except for the filing of an
amendment to Stockholder's Schedule 13D or 13G, if any, no filing with,
and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by Stockholder and the consummation by Stockholder of the
transactions contemplated hereby, except where the failure to obtain
such consent, permit, authorization, approval or filing would not
interfere with Stockholder's ability to perform his obligations
hereunder, and none of the execution and delivery of this Agreement by
Stockholder, the consummation by Stockholder of the transactions
contemplated hereby or compliance by Stockholder with any of the
provisions hereof shall (A) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default
(or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or
other instrument or obligation of

6
<PAGE> 7

any kind to which Stockholder is a party or by which Stockholder or any
of his properties or assets may be bound, or (B) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to Stockholder or any of his properties or assets, in each
such case except to the extent that any conflict, breach, default or
violation would not interfere with the ability of Stockholder to
perform the obligations hereunder.

(iv) No Encumbrances. Except (A) as required
herein, (B) for pledges or encumbrances created in compliance with
Section 5(a)(vi), and (C) items listed in Part I to Schedule A which
shall be released or modified to comply with Section 5(a)(vi) not
later than 10 business days after the date hereof, at all times
thereafter during the term hereof, all of Stockholder's Shares as set
forth on Part A of Schedule I hereto will be held by Stockholder, an
Affiliate of Stockholder, or by a nominee or custodian for the benefit
of Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever, except for any
liens, claims, understandings or arrangements that do not limit or
impair Stockholder's ability to perform his obligations under this
Agreement.

(v) No Solicitation. Stockholder shall comply
with the terms of Section 6.2 of the Merger Agreement.

(vi) Restriction on Transfer, Proxies and
Non-Interference. Except as expressly contemplated hereby, from and
after the date of this Agreement and ending as of the first to occur of
the Effective Time or the first anniversary of the Termination Date,
Stockholder shall not, and shall cause each of his Affiliates who
Beneficially Own any of Stockholder's Shares not to, directly or
indirectly, without the consent of Parent: (A) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer,
tender, pledge, encumbrance, assignment or other disposition of, any or
all of his Shares, or any interest therein, (B) grant any proxies or
powers of attorney, deposit any or all of his Shares into a voting
trust or enter into a voting agreement with respect to his Shares, (C)
enter into any agreement or arrangement providing for any of the
actions described in clause (A) or (B) above, or (D) take any action
that could reasonably be expected to have the effect of preventing or
disabling Stockholder from performing his obligations under this
Agreement; provided, however, that after the occurrence of the
Termination Date, Stockholder may, in accordance with Section 4, sell
or tender any or all of his Shares, or take any of the other actions
described above, in connection with an Acquisition Proposal.

(vii) Further Assurances. From time to time, at
Parent's request and without further consideration, Stockholder shall
execute and deliver such additional documents as may be necessary or
desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.

7
<PAGE> 8

(b) Parent and Sub hereby represent, warrant and covenant
to Stockholder as follows:

(ii) No Conflicts. No filing with, and no permit,
authorization, consent or approval of, any state or federal public body
or authority is necessary for the execution of this Agreement by either
Parent or Sub and the consummation by Parent and Sub of the
transactions contemplated hereby, except where the failure to obtain
such consent, permit, authorization, approval or filing would not
interfere with its ability to perform its obligations hereunder, and
none of the execution and delivery of this Agreement by Parent or Sub,
the consummation by Parent or Sub of the transactions contemplated
hereby or compliance by Parent and Sub with any of the provisions
hereof shall (A) conflict with or result in any breach of any
applicable organizational documents applicable to Parent or Sub, (B) in
a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right
of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind
to which Parent or Sub is a party or by which Parent or Sub or any of
Parent's or Sub's properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to Parent or Sub or any of Parent's or Sub's
properties or assets, in each such case except to the extent that any
conflict, breach, default or violation would not interfere with the
ability of Parent or Sub to perform its obligations hereunder.

(iii) Execution. Delivery and Performance by
Parent and Sub. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by the Boards of Directors of Parent and
Sub, and each of Parent and Sub has taken all other actions required
by law, its certificate of incorporation and its by-laws to consummate
the transactions contemplated by this Agreement. This Agreement
constitutes the valid and binding obligations of Parent and Sub and is
enforceable in accordance with its terms, except as enforceability may
be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights
generally.

8
<PAGE> 9

transactions contemplated herein the provisions of Section 203 of the Delaware
General Corporation Law.

7. Recapitalization. In the event of a stock dividend or
distribution, or any change in the Shares by reason of any split-up,
recapitalization, combination, exchange of shares or the like, the term "Shares"
shall include, without limitation, all such stock dividends and distributions
and any shares into which or for which any or all of the Shares may be changed
or exchanged as may be appropriate to reflect such event.

8. Stockholder Capacity. Except as set forth 5(a)(v), Stockholder
does not make any agreement or understanding herein in his capacity as a
director or officer of the Company and nothing herein shall limit or affect any
action taken by Stockholder in such capacity.

9. Merger Agreement and Options. Stockholder hereby consents and
agrees to the treatment of Options Beneficially Owned by Stockholder or his
Affiliates as set forth in the Merger Agreement.

10. Miscellaneous.

(b) Amendments. Waivers. Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto; provided that all of the provisions of this Agreement other than
Section 5(c), Section 6 and this Section 10(b) may be amended without the
consent of the Company.

(c) Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered to
the respective parties at the following addresses:

9
<PAGE> 10

(i) if to Parent or Sub, to:
c/o International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey 07054
Attn: General Counsel
Telecopy: 973-254-5460

with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Telecopy: 214-740-7313

Vinson & Elkins, L.L.P.
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Attn: A. Winston Oxley
Telecopy: 212-999-7891

(ii) if to the Company, to:
Grist Mill Co.
21340 Hayes Avenue
Lakeville, Minnesota 55044-0430
Attn: Glen S. Bolander
Telecopy: 612-469-5550

with a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attn: Charles H. Perlman, Esq.
Telecopy: 312-984-3150

(iii) if to Stockholder, to:
Glen S. Bolander
Grist Mill Co.
21340 Hayes Avenue
Lakeville, Minnesota 55044-0430
Telecopy: 612-469-5550

10
<PAGE> 11

with a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attn: Charles H. Perlman, Esq.
Telecopy: 312-984-3150

or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.

(d) Severability. Whenever possible, each provision or
portion of any provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.

(e) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by a Stockholder of any covenants or
agreements contained in this Agreement will cause the Parent and Sub to sustain
damages for which they would not have an adequate remedy at law for money
damages, and therefore each of the parties hereto agrees that in the event of
any such breach the Parent or Sub shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which they may be entitled, at law or
in equity.

(f) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.

(g) No Waiver. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance by
any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not constitute
a waiver by such party of its right to exercise any such or other right, power
or remedy or to demand such compliance.

11
<PAGE> 12

(i) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

(j) Jurisdiction. Each party hereby irrevocably submits
to the exclusive jurisdiction of the Court of Chancery in the State of Delaware
in any action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph and shall
not be deemed to be a general submission to the jurisdiction of said Court or in
the State of Delaware other than for such purposes. Each party hereto hereby
waives any right to a trial by jury in connection with any such action, suit or
proceeding.

(k) Descriptive Headings. The descriptive headings used
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.

(1) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement. This Agreement
shall not be effective as to any party hereto until such time as this Agreement
or a counterpart thereof has been executed and delivered by each party hereto.

(m) Trust Funds. In the event that any party hereto
should receive any funds that are to be paid to another party pursuant to the
terms of this Agreement, then the receiving party shall hold such funds in trust
for the benefit of the party entitled to receive such funds and shall promptly
pay such funds to the party entitled to receive such funds in accordance with
this Agreement.

12
<PAGE> 13

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on this 10th day of March, 1998.

PARENT: IHF/GM HOLDING CORPORATION

By: /s/ ANDREW S. ROSEN
--------------------------------------
Andrew S. Rosen
Vice President

SUB: IHF/GM ACQUISITION CORPORATION

By: /s/ ANDREW S. ROSEN
--------------------------------------
Andrew S. Rosen
Vice President

COMPANY: GRIST MILL CO.

By: /s/ GLEN S. BOLANDER
--------------------------------------
Glen S. Bolander
President and Chief Executive Officer

STOCKHOLDER:

/s/ GLEN S. BOLANDER
-----------------------------------------
Glen S. Bolander

13
<PAGE> 14

ACKNOWLEDGMENT AND CONSENT OF SPOUSE

/s/ DIANA BOLANDER
-----------------------------------------

14
<PAGE> 15

SCHEDULE A

Part I

403,899 Shares

* 45,000 of such Shares are owned by Stockholder as a tenant in
common and as a result Stockholder's spouse and Stockholder
share voting and investment control over such shares.

* Excludes 24,645 Shares owned by the Grist Mill Co. Employee
Retirement Savings Plan and Trust for the benefit of
Stockholder.

Part II

245,000 Options as follows:

(i) 50,000 Options with an exercise price of $7.875 per share,
having an expiration date of July 1, 1998;

(ii) 75,000 Options with an exercise price of $8.625 per share,
having an expiration date of May 26, 2000;

(iii) 50,000 Options with an exercise price of $6.563 per share,
having an expiration date of May 22, 2001;

(iv) 70,000 Options with an exercise price of $6.000 per share,
having an expiration date of October 28, 2002.

A-1

<PAGE> 1
EXHIBIT 24

POWER OF ATTORNEY

FOR EXECUTING FORMS 3, 4 AND 5 AND SCHEDULES 13D AND 13G

Know all by these presents, that the undersigned hereby constitutes and
appoints each of Lawrence D. Stuart, Jr., Michael D. Salim, and David W.
Knickel, signing singly, the undersigned's true and lawful attorney-in-fact to:

(1) execute for and on behalf of the undersigned (a) Forms 3, 4 and 5
(including amendments thereto) in accordance with Section 16(a) of the
Securities Exchange Act of 1934 and the rules thereunder and (b)Schedules
13D and 13G (including amendments thereto) in accordance with Sections
13(d) and 13(g) of the Securities Exchange Act of 1934 and the rules
thereunder:

(2) do and perform any and all acts for and on behalf of the undersigned that
may be necessary or desirable to complete and execute any such Form 3, 4
or 5 or Schedule 13D or 13G (including amendments thereto) and file that
Form or Schedule with the Securities and Exchange Commission and any
stock exchange, self-regulatory association or any other authority; and

(3) take any other action of any type whatsoever in connection with the
foregoing that, in the opinion of the attorney-in-fact, may be of benefit
to, in the best interest of, or legally required of the undersigned, it
being understood that the documents executed by the attorney-in-fact on
behalf of the undersigned pursuant to this Power of Attorney shall be in
such form and shall contain such terms and conditions as the attorney-in-
fact may approve in the attorney-in-fact's discretion.

The undersigned hereby grants to each attorney-in-fact full power and
authority to do and perform all and every act and thing whatsoever requisite,
necessary or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or
could do if personally present, with full power of substitution or revocation,
hereby ratifying and confirming all that each attorney-in-fact, or the
attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be
done by virtue of this Power of Attorney and the rights and powers herein
granted. The undersigned acknowledges that the foregoing attorneys-in-fact and
their substitutes, in serving in such capacity at the request of the
undersigned, are not assuming any of the undersigned's responsibilities to
comply with Section 13 or Section 16 of the Securities Exchange Act of 1934.

The undersigned agrees that each attorney-in-fact may rely entirely on
information furnished orally or in writing by the undersigned to the
attorney-in-fact.

This Power of Attorney shall remain in full force and effect until the
undersigned is no longer required to file Forms 3,4 and 5 and Schedules 13D and
13G (including amendments thereto) with respect to the undersigned's holdings of
and transactions in securities, unless earlier revoked by the undersigned in a
signed writing delivered to the foregoing attorneys-in-fact. This Power of
Attorney does not revoke any other power of attorney that the undersigned has
previously granted.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed effective as of the date written below.

/s/ THOMAS O. HICKS
----------------------------
Signature

THOMAS O. HICKS
----------------------------
Type or Print Name

12-5-97
----------------------------
Date

<PAGE> 1
EXHIBIT 99

Each of the undersigned agree that (i) the Statement on Schedule 13D, as
amended, relating to the common stock, par value $.10 per share, of Grist Mill
Co. has been adopted and filed on behalf of each of them, (ii) all future
amendments to such Statement on Schedule 13D will, unless written notice to the
contrary is delivered as described below, be jointly filed on behalf of each of
them and (iii) the provisions of Rule 13d-1(f)(1) under the Securities Exchange
Act of 1934 apply to each of them. This Agreement may be terminated with
respect to the obligations to jointly file future amendments to such Statement
on Schedule 13D as to any of the undersigned upon such person giving written
notice thereof to each of the other persons signatory hereto, at the principal
office thereof.

IHF/GM ACQUISITION CORPORATION

/s/ ANDREW S. ROSEN Date: March 16, 1998
- ------------------------------------------------
By: Andrew S. Rosen, Vice President

IHF/GM HOLDING CORPORATION

/s/ ANDREW S. ROSEN Date: March 16, 1998
- ------------------------------------------------
By: Andrew S. Rosen, Vice President

INTERNATIONAL HOME FOODS, INC.

/s/ ANDREW S. ROSEN Date: March 16, 1998
- ------------------------------------------------
By: Andrew S. Rosen, Vice President

HICKS, MUSE, TATE & FURST EQUITY FUND III, L.P.,
By: HM3/GP Partners, L.P.
By: Hicks, Muse GP Partners III, L.P.
By: Hicks, Muse Fund III, Incorporated

/s/ ANDREW S. ROSEN Date: March 16, 1998
- ------------------------------------------------
By: Andrew S. Rosen, Vice President

HM3/GP PARTNERS, L.P.
By: Hicks, Muse GP Partners III, L.P.
By: Hicks, Muse Fund III, Incorporated

/s/ ANDREW S. ROSEN Date: March 16, 1998
- ------------------------------------------------
By: Andrew S. Rosen, Vice President

HICKS, MUSE GP PARTNERS III, L.P.
By: Hicks, Muse Fund III, Incorporated

/s/ ANDREW S. ROSEN Date: March 16, 1998
- -----------------------------------------------
By: Andrew S. Rosen, Vice President
<PAGE> 2
HICKS, MUSE FUND III, INCORPORATED

/s/ ANDREW S. ROSEN Date: March 16, 1998
- -----------------------------------------------------
By: Andrew S. Rosen, Vice President

THOMAS O. HICKS

Date: March 16, 1998
/s/ THOMAS O. HICKS
- -----------------------------------------------------
By: David W. Knickel, Attorney in Fact