RYMER FOODS INC, DEFS14A, 1996-07-23

RYMER FOODS INC
DEFS14A, 1996-07-23
SAUSAGES & OTHER PREPARED MEAT PRODUCTS

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SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

RYMER FOODS INC.
(Name of Registrant as Specified in Its Charter)

Board of Directors
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:
Common Stock, par value $1.00 per share
2) Aggregate number of securities to which transaction applies:
10,980,177 shares of Common Stock, par value $1.00 per share
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)

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4) Proposed maximum aggregate value of transaction:
$2,483,000
5) Total fee paid:

[X] Fee paid previously with preliminary materials.
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

Confidential, For Use of the Commission Only

<PAGE>

RYMER FOODS INC.
4600 South Packers Avenue
Suite 400
Chicago, Illinois 60609

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Notice of Special Meeting of Stockholders
to be held on Wednesday, August 21, 1996

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

TO THE HOLDERS OF COMMON STOCK OF RYMER FOODS INC.:

A Special Meeting of Stockholders of Rymer Foods Inc. ("Rymer Foods") will
be held at 11:00 a.m., local time, on Wednesday, August 21, 1996, at The Midland
Hotel, 172 West Adams Street, Chicago, Illinois, for the following purposes:

(1) for the stockholders to consider and act upon a resolution
authorizing the sale of substantially all of the assets of Rymer
International Seafood, Inc. ("Rymer Seafood"), a subsidiary of Rymer Foods
(the "Sale"), to BGL I, Inc. ("Buyer"), pursuant to an Asset Purchase
Agreement, dated as of February 26, 1996, among Rymer Foods, Rymer Seafood
and Buyer (the "Asset Purchase Agreement"); and

(2) for the stockholders to transact such other business as may
properly come before the meeting or any adjournments thereof.

Only holders of record of Common Stock at the close of business on June 25,
1996 (the "Record Date"), will be entitled to notice of and to vote at the
meeting or any adjournments thereof.

Stockholders are cordially invited to attend the meeting in person. EVEN IF
YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE INDICATE YOUR VOTE ON THE MATTERS
TO BE VOTED UPON, SIGN AND DATE THE ENCLOSED PROXY, AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. THE PROXY IS REVOCABLE AT ANY TIME BY A WRITTEN
INSTRUMENT SIGNED IN THE SAME MANNER AS THE PROXY AND RECEIVED BY THE SECRETARY
OF RYMER FOODS AT OR BEFORE THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY, IF
YOU WISH, REVOKE YOUR PROXY BY VOTING IN PERSON.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS ADOPT THE PROPOSED
RESOLUTION AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF RYMER
INTERNATIONAL SEAFOOD, INC.

By Order of the Board of Directors

Barbara McNicholas, Secretary

July 23, 1996

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RYMER FOODS INC.
4600 South Packers Avenue
Suite 400
Chicago, Illinois 60609

-----------

PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS--AUGUST 21, 1996

-----------

This Proxy Statement (the "Proxy Statement") is furnished in connection
with the SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS of Rymer Foods Inc.
("Rymer Foods") from the holders of shares of its common stock, $1.00 par value
("Common Stock"), to be voted at a Special Meeting of Stockholders, which will
be held on August 21, 1996, at 11:00 a.m., local time, at The Midland Hotel, 172
West Adams Street, Chicago, Illinois, and at any adjournments thereof (the
"Special Meeting").

The purpose of the Special Meeting is to consider and act upon a resolution
authorizing the sale (the "Sale") of substantially all of the assets of Rymer
International Seafood, Inc. ("Rymer Seafood") pursuant to the Asset Purchase
Agreement, dated as of February 26, 1996, among Rymer Foods, Rymer Seafood and
BGL I, Inc. ("Buyer"). Authorization by the stockholders of the Sale is required
by the Amended and Restated Certificate of Incorporation of Rymer Foods (the
"Certificate") and, to the extent that the Sale constitutes a sale of all or
substantially all of the assets of Rymer Foods, by applicable Delaware corporate
law. The Certificate requires the affirmative vote of the holders of not less
than 66 2/3% of the outstanding shares of Common Stock to dispose of all or
substantially all of the assets of any subsidiary of Rymer Foods with a book
value of 10% or more of the aggregate book value of the assets of Rymer Foods.
In addition, Section 271 of the Delaware General Corporation Law ("DGCL")
requires that the holders of the Common Stock adopt a resolution authorizing the
sale of all or substantially all of the assets of a Delaware corporation, such
as Rymer Foods. This Proxy Statement and a form of proxy are first being mailed
by Rymer Foods to its stockholders on or about July 23, 1996.

The purchase price for the Sale consists of $1.5 million in cash, $1.5
million in the form of a secured subordinated promissory note from Buyer and the
assumption by Buyer of certain liabilities (which liabilities approximated $6.5
million at April 27, 1996).

Consummation of the Sale is conditioned upon the Company obtaining certain
waivers of restrictions contained in the Indenture pursuant to which the
Company's 11% Senior Notes due 2000 were issued and certain waivers from its
bank lender. See "Stockholder Approval; Senior Note Waivers; Bank Consent."

The solicitation of proxies herewith is being made by Rymer Foods. The cost
of such solicitation will be borne by Rymer Foods. The solicitation of proxies
generally will be by mail. Such solicitation may also be made in person or by
telephone, facsimile, or other means by directors, officers, agents, and
employees of Rymer Foods. Arrangements have been made with brokers and other
custodians, nominees, and fiduciaries to send proxies and proxy solicitation
materials, as well as copies of this Proxy Statement, to their principals, and
Rymer Foods will reimburse them for reasonable out-of-pocket and clerical
expenses in so doing.

Any proxy given by a stockholder pursuant to this solicitation may be
revoked by the stockholder by written notice delivered to the Secretary of Rymer
Foods at any time prior to exercise of the proxy. All valid proxies on file with
the Secretary of Rymer Foods, unless revoked, will be voted in accordance with
the instructions of the stockholder, or, in the absence of such instructions, in
accordance with the recommendations of the Board of Directors of Rymer Foods
(the "Board of Directors" or the "Board").

The Board of Directors has fixed the close of business on June 25, 1996 as
the record date (the "Record Date") for the Special Meeting.

At the close of business on the Record Date, 10,754,000 shares of Common
Stock were entitled to vote at the Special Meeting. Each share of Common Stock
is entitled to one vote. Because the Sale must be approved by the affirmative
vote of at least 662/3% of all outstanding shares, an abstention or a failure to
cast a vote in favor of the Sale will have the same effect as a vote against the
Sale.
<PAGE>

TABLE OF CONTENTS

SUMMARY .................................................................. 1
Rymer Foods ......................................................... 1
Summary of the Sale ................................................. 1
Advantages and Disadvantages of the Sale ............................ 2
Stockholder Approval; Senior Note Waivers; Bank Consent ............. 2
Potential Conflicts of Interest ..................................... 3

BUSINESS ................................................................. 4
General ............................................................. 4
Present Conditions and Background ................................... 4
Products, Markets and Distribution .................................. 6
Raw Materials ....................................................... 6
Customers ........................................................... 6
Trademarks, Patents and Research Activities ......................... 7
Competitive Conditions .............................................. 7
Environmental Matters ............................................... 7
Employees ........................................................... 7
Seasonality ......................................................... 8
Properties .......................................................... 8
Legal Proceedings ................................................... 8
Dividends ........................................................... 8

DESCRIPTION OF THE SALE .................................................. 9
Background of the Sale .............................................. 9
Summary of the Asset Purchase Agreement ............................. 10
Purchase Price ...................................................... 10
Closing Date ........................................................ 11
Conditions to Closing ............................................... 11
Representations, Warranties and Covenants 11
Conduct of Business Pending the Closing ............................. 11
Amendment of Asset Purchase Agreement ............................... 12
Expenses ............................................................ 12
Summary of the Non-Competition Agreements ........................... 12
Tax Consequences of the Asset Purchase Agreement .................... 13
Accounting Treatment ................................................ 13
Advantages and Disadvantages of the Sale ............................ 13

STOCKHOLDER APPROVAL OF THE ASSET PURCHASE AGREEMENT;
APPRAISAL RIGHTS; SENIOR NOTE WAIVERS .................................... 15
Stockholder Approval ................................................ 15
No Appraisal Rights ................................................. 15
Senior Note Waivers ................................................. 15
Bank Waivers ........................................................ 15

USE OF PROCEEDS .......................................................... 16

RECOMMENDATION OF RYMER FOODS'
BOARD OF DIRECTORS; FAIRNESS TO STOCKHOLDERS ............................. 16
Board of Director's Recommendation .................................. 16
Fairness Opinion .................................................... 16

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MANAGEMENT ............................................................... 19

PRINCIPAL STOCKHOLDERS ................................................... 20

SELECTED FINANCIAL INFORMATION ........................................... 22

PRO FORMA FINANCIAL INFORMATION .......................................... 23

RYMER FOODS INC.
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET ........................... 24

RYMER FOODS INC.
PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ................ 25

NOTES TO PRO FORMA UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS ........................................ 26

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ......................... 27
Cautionary Statement ................................................ 27
General ............................................................. 27
Going Concern ....................................................... 27
First Half of 1996 versus First Half of 1995 ........................ 27
Interest Expense .................................................... 28
Other Income ........................................................ 28
Income Taxes ........................................................ 29
Fiscal 1995 Compared with Fiscal 1994 ............................... 29
Restructuring Charge ................................................ 30
Interest Expense .................................................... 30
Other Income ........................................................ 31
Restructuring Expense Resulting from Goodwill Writedown ............. 31
Discontinued Operations and Proposed Sale of Rymer Seafood .......... 31
Income Taxes ........................................................ 31
Fiscal 1994 Compared With Fiscal 1993 ............................... 32
Restructuring Expense Resulting From Goodwill Writedown ............. 33
Interest Expense .................................................... 33
Other Income ........................................................ 33
Discontinued Operations ............................................. 33
Other Discontinued Operations ....................................... 33
Income Taxes ........................................................ 34
Extraordinary Item - Restructuring of Debentures .................... 34
Liquidity and Capital Resources ..................................... 34
Seasonality ......................................................... 37
Impact of Inflation ................................................. 37
Fourth Quarter Adjustments .......................................... 37
New Accounting Pronouncements ....................................... 37

MARKET PRICES AND DIVIDENDS .............................................. 38
Market Prices ....................................................... 38
Dividends ........................................................... 38

INDEPENDENT PUBLIC ACCOUNTANTS ........................................... 38

<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ............................... 39

REPORT OF INDEPENDENT ACCOUNTANTS ........................................ 40

CONSOLIDATED STATEMENTS OF OPERATIONS .................................... 41

CONSOLIDATED BALANCE SHEETS .............................................. 42

CONSOLIDATED STATEMENTS OF CASH FLOWS .................................... 43

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) ................ 44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ............................... 45

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED OCTOBER 28, 1995,
OCTOBER 29, 1994 AND OCTOBER 30, 1993 .................................... 62

RYMER FOODS INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE YEARS ENDED OCTOBER 28, 1995,
OCTOBER 29, 1994 AND OCTOBER 30, 1993 .................................... 63

RYMER FOODS INC.
COMPUTATION OF EARNINGS PER SHARE
FOR THE TWENTY-SIX WEEKS ENDED
APRIL 27, 1996 AND APRIL 29, 1995 ........................................ 64

RYMER FOODS INC.
SUBSIDIARIES OF THE COMPANY
OCTOBER 28, 1995 ......................................................... 65

CERTAIN FEDERAL INCOME TAX CONSEQUENCES .................................. 66

SOLICITATION AGENT ....................................................... 66

EXPENSES ................................................................. 66

STOCKHOLDER PROPOSALS .................................................... 66

OTHER MATTERS ............................................................ 66

AVAILABLE INFORMATION .................................................... 66

ANNEX I
FORM OF ASSET PURCHASE AGREEMENT

ANNEX II
RYMER FOODS INC.
(the "Corporation") Resolution of the Stockholders Pursuant
to Section 271 of the Delaware General Corporation Law

ANNEX III
OPINION OF CHANIN CAPITAL PARTNERS

iii
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SUMMARY

References in this Proxy Statement to the "Company" shall mean Rymer Foods
together with its subsidiaries unless the context indicates otherwise.
References herein to Rymer Foods are to the holding company only.

Cautionary Statement

The statements in this Summary that are forward looking are based upon
current expectations and actual results may vary. See "Cautionary Statement"
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations" below.

Rymer Foods

Rymer Foods Inc. ("Rymer Foods" or the "Company"), through its subsidiary,
Rymer Meat Inc. ("Rymer Meat") is principally engaged in the development and
production of frozen, pre-seasoned, portion-controlled meat entrees for
restaurants, food service distributors, food processors and retail customers.
The Company's subsidiary, Rymer International Seafood Inc. ("Rymer Seafood") is
principally engaged in the import and distribution of various seafood products
to such types of customers. During the fiscal year ended October 28, 1995, Rymer
Foods reported a net loss of $29.3 million on net sales of $150.3 million. Rymer
Foods was incorporated under the laws of Delaware in 1969 and is the outgrowth
of a company organized in 1893. The principal offices of the Company are located
at 4600 South Packers Avenue, Suite 400, Chicago, Illinois 60609 (telephone no.
(312) 927-7777). For additional information concerning the Company and its
business, financial position and operations, see "Business," "Selected Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Company's Consolidated Financial Statements and related
notes (the "Consolidated Financial Statements").

As discussed elsewhere herein, there is substantial doubt about the
Company's ability to continue as a going concern. Even if the Sale is
consummated, substantial doubt about the Company's ability to continue as a
going concern will likely persist, unless and until the Company completes a
restructuring of its Senior Notes and otherwise improve its operating results
and/or reduces its costs. In the meantime, the Company's ability to continue to
operate is dependent upon the continued availability of funds under its working
capital facility. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The proceeds from the sale of Rymer
Seafood will be used to repay bank indebtedness. See "Use of Proceeds."
Management intends to seek to negotiate a restructuring of its Senior Notes.
This restructuring could involve the conversion of some or all of the Company's
outstanding Senior Notes into equity. There can be no assurances, however, that
such a restructuring will occur.

Summary of the Sale

The Asset Purchase Agreement provides for the sale by Rymer Foods of
substantially all of Rymer Seafood's assets except for corporate records and
minute books, rights under the Asset Purchase Agreement, non-assignable permits,
employee benefit plans and certain other minor assets described in the Asset
Purchase Agreement. The Asset Purchase Agreement also provides for the
assumption by Buyer of substantially all of Rymer Seafood's obligations and
known liabilities, other than liabilities in respect of taxes and the Company's
employee benefit plans.

In addition to the assumption of such obligations and liabilities, the
purchase price provided under the Asset Purchase Agreement is the sum of the
following (such sum being referred to herein as the "Purchase Price"): $1.5
million in cash ($100,000 of which shall be in respect of a Non-Competition
Agreement) and $1.5 million in the form of an 8% Subordinated Secured Note of
Buyer due in quarterly installments of $37,500 commencing on March 31, 1999 with
the balance of $487,500 payable in full on December 31, 2005 (the "Purchase
Note"). The Company anticipates that it would realize a net loss of
approximately $1.5 million as a result of the Sale. The amount of the loss is
subject to certain adjustments. The terms of the Sale, including the Purchase
Price, were determined by negotiation of the parties, as conducted by members of
their respective managements. Mark Bailin, the principal stockholder of BGL, is
an officer of Rymer Seafood and is the son of Samuel Bailin, a Director of Rymer
Foods Inc. Mr. Samuel Bailin did not participate in deliberations of the Board
of Directors of Rymer Foods or negotiations regarding the Sale.

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Buyer had advised the Company that its source of funds to pay the cash
portion of the Purchase Price will be cash on hand.

The Asset Purchase Agreement also provides for the parties to enter into a
non-competition agreement (hereinafter called the "Non-Competition Agreement").

Pursuant to a Non-Competition Agreement, Rymer Foods will agree not to
compete against Buyer in the purchase and sale, and/or brokering of the purchase
and sale, of seafood products for three years following the Closing Date. In
another Non-Competition Agreement, Buyer will agree not to compete against the
Company in the red meat processing and distribution business for three years
following the Closing Date.

If the Sale is consummated, Rymer Foods will no longer be engaged in the
sale of seafood products. If the Sale is not approved by Rymer Foods'
stockholders or otherwise consummated, the Company will evaluate its
alternatives relating to such business, including the future for its sale or
liquidation.

There can be no assurances that the cash proceeds of the Sale, if
consummated, will be available to the Company for any specific purpose other
than to reduce bank debt. See "Description of the Sale" and "Recommendation of
Rymer Foods' Board of Directors; Fairness to Stockholders" and "Use of
Proceeds".

Advantages and Disadvantages of the Sale

In the view of Rymer Foods' management, the primary advantages to the
Company of the Asset Purchase Agreement and the transactions contemplated
thereby are the following: (i) the Company will receive approximately $1.5
million in cash proceeds and $1.5 million in the form of the Purchase Note; (ii)
such cash proceeds will be used by the Company to reduce its total debt owed to
banks and annual interest expense; (iii) the Company's management will be able
to focus its efforts on its core business of red meat processing.

In the view of the Company's management, the primary disadvantage to the
Company of the Sale is the loss of potential cash payments from Rymer Seafood.
Rymer Seafood provided approximately $348,000, $130,000 and $130,000,
respectively, of cash payments to the Company for the fiscal years of 1993, 1994
and 1995. Management believes that the lower interest costs due to reduced debt
outstanding after the Sale along with the interest income anticipated to be
earned on the Purchase Note will more than offset the loss of cash payments from
Rymer Seafood. The Non-Competition Agreement in which Rymer Foods will agree not
to compete against Buyer in the sale of seafood products does not constitute, in
the view of the Company's management, a material disadvantage to the Company
resulting from the Asset Purchase Agreement. This view is based on management's
belief that regardless of the Non-Competition Agreement the Company would not be
likely to re-enter the seafood products business.

Rymer Meat will be the Company's sole operating entity after the disposal
of Rymer Seafood. Management believes that the sale would be viewed positively
by Rymer Meat's customers to the extent that it strengthens the Company's
balance sheet (see pro forma unaudited consolidated balance sheet) and is
perceived as a return to the core business on which the Company was founded.

The Board of Directors of Rymer Foods has determined that the terms and
conditions of the proposed Sale are expedient and in the best interests of the
corporation. The Board of Directors has received an opinion of Chanin Capital
Partners, Inc., an independent financial advisor, to the effect that the Sale is
fair from a financial point of view to the stockholders of Rymer Foods.

The Company did not solicit other offers for the purchase of Rymer Seafood
or its assets and did not retain a broker to solicit offers. Furthermore, the
Company has not received any unsolicited offers for such assets. See
"Description of Sale--Background of the Sale."

Stockholder Approval; Senior Note Waivers; Bank Consent

Rymer Foods is required by the Certificate to obtain authorization from the
holders of 662/3% of the outstanding shares of its Common Stock to effect any
transfer, conveyance, lease or other disposition to any third party of all or
substantially all of the assets or the stock of any Subsidiary having a book
value equal to or in excess of 10% of the aggregate book value of the assets of
Rymer Foods and its Subsidiaries on a consolidated basis (referred to below as a
"Material Asset Disposition") or a sale of all or substantially all of its

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2
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assets. In addition, the DGCL requires that the holders of a majority of the
outstanding shares of the Common Stock adopt a resolution authorizing the sale
of all or substantially all of the assets of a Delaware corporation, such as
Rymer Foods. The Sale constitutes a Material Asset Disposition and may
constitute a sale of all or substantially all of the assets of Rymer Foods for
purposes of the Certificate and the DGCL.

Concurrent with seeking such authorization from the stockholders, the
Company is also seeking a waiver of certain restrictions contained in the
Indenture pursuant to which its 11% Senior Notes Due 2000 (the "Senior Notes")
were issued. See "Stockholder Approval of the Sale; Appraisal Rights; Senior
Note Waivers." If the Senior Note Waivers are not obtained, the Sale will not be
consummated regardless of whether or not the stockholders authorize the Sale.
The Sale also requires that the Company obtain certain waivers from its bank
lender.

Potential Conflicts of Interest

The principal owner and Chief Executive Officer of Buyer is Mark Bailin,
who is currently an employee of the Company and who is also the son of Samuel
Bailin, a member of the Company's Board of Directors. A potential conflict of
interest could be deemed to exist by reason of the family affiliation of Samuel
Bailin and Mark Bailin, and by reason of Mark Bailin being a current employee of
the Company. To reduce the impact for such potential conflicts of interest,
Samuel Bailin has excluded himself from deliberation on, and voting with respect
to, the Sale. In addition, Mr. Samuel Bailin is considered to be an "interested
director" within the meaning of the Delaware General Corporation Law and,
consequently, his vote has not and will not be counted (other than for quorum
purposes) on any matters pertaining to the Sale. Mark Bailin, who continues to
operate the business of Rymer Seafood pending the Sale, has not participated in
discussions on behalf of the Company concerning the Sale. The Buyer and the
Company are each represented by separate counsel with respect to the Sale. The
Company believes that negotiations concerning the sale were conducted on the
equivalent of an arm's-length basis.

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3
<PAGE>

BUSINESS

Cautionary Statement

The statements in the following section, "Business", that are forward
looking are based upon current expectations and actual results may vary. See
"Cautionary Statement" under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" below.

General

Rymer Foods, through its subsidiaries, Rymer Meat and Rymer Seafood is
primarily engaged in the development and production of frozen, pre-seasoned,
portion controlled meat entrees and the importing and distributing of various
seafood products. The Company is engaged in the production of such products for
restaurants and other foodservice customers and retail sales. Rymer Foods was
incorporated under the laws of Delaware in 1969 and is the outgrowth of a
company organized in 1893.

Rymer Foods, then known as Kroehler Mfg. Co., acquired Rymer Meat in 1983.
The Company subsequently changed its name to Rymer Foods Inc. Rymer Meat, which
was formed in 1979, is a producer of seasoned steaks and other beef products
developed for restaurant chains, foodservice distributors and retail sales.
Rymer Meat sales comprised 53%, 65% and 67% of consolidated sales from
continuing operations in 1995, 1994 and 1993, respectively.

Rymer Seafood, which was formed in 1987, is primarily a seafood importer
and distributor serving major foodservice distributors, restaurant chains,
processors and retail customers. Sales of Rymer Seafood comprised 47%, 35%, and
33% of consolidated sales from continuing operations in 1995, 1994 and 1993,
respectively. On January 5, 1996, the Company announced that it had signed an
agreement in principle to sell the assets of Rymer Seafood to an entity to be
formed by the current President of Rymer Seafood. The agreement specifies that
the sales price for the assets, based on balances as of April 27, 1996, would be
approximately $9.5 million, consisting of $1.5 million in cash, $1.5 million in
a ten year subordinated note of the buyer and the assumption by the buyer of
approximately $5.1 million in bank debt and $1.4 million of other current
liabilities.

In 1992, Rymer Foods began marketing a new line of retail products under
the brand names "Menu Maker" and "Guest Ready". These brands consist of
specialty seasoned steaks and chicken breasts in high quality, flexible
laminated plastic packaging. Rymer Foods marketed these products to retail
chains and warehouse clubs. Sales of these retail products comprised
approximately 6.1%, 6.2% and 7.6% of Rymer Meat's revenues from continuing
operations in fiscal 1995, 1994 and 1993, respectively. Included within meat
sales from continuing operations are chicken retail sales which comprised
approximately 2% of Rymer Meat's sales for all years. These sales were made by
the Company's discontinued Rymer Chicken operation until December 10, 1993. They
are classified as sales from continuing operations because under the terms of
the supply agreement with Simmons Poultry Inc. ("Simmons"), the Company
continued to sell these retail chicken products. Effective in December 1995, the
Company ceased marketing "Menu Maker" and "Guest Ready" products. Simmons now
sells both chicken and meat retail products directly to Rymer Meat's former
retail customers. Rymer Meat expects to be the sole supplier of beef products to
Simmons. In exchange for Simmons assuming certain liabilities, Simmons owns the
trademarks "Menu Maker" and "Guest Ready".

Present Conditions and Background

Recent Losses. In the first half of 1996, the Company reported a loss of
$4.7 million and a decrease in net sales of 25%, as compared to the first half
of 1995, principally due to the loss of certain major customers. In 1995, the
Company reported a loss of $29.3 million, of which $20.4 million resulted from a
required writedown of goodwill. This writedown eliminates all remaining goodwill
of the Company. The asset of goodwill was determined to have been impaired
because of the current financial condition of the Company and the Company's
inability to generate future operating income without substantial sales volume
increases which are uncertain. Moreover, anticipated future cash flows of the
Company indicate that the recoverability of the asset is not reasonably assured.

Recent Covenant Defaults and Waivers. In addition, as explained more fully
in Note 6 to the Consolidated Financial Statements, the Company was not in
compliance at January 27, 1996, October 28, 1995 and July 29, 1995 with certain
financial covenants contained in the loan agreement between the Company and
LaSalle National Bank ("LaSalle"). LaSalle agreed to waive these covenant
violations for the third quarter of 1995. On January 5, 1996, LaSalle and the

4
<PAGE>

Company entered into the Forbearance Agreement and Amendment (the "Forbearance
Agreement"). Under this agreement, LaSalle agrees to temporarily forbear from
exercising its remedies under the Loan and Security Agreement. On February 7,
1996, LaSalle and the Company entered into an Amendment to the Forbearance
Agreement (the "Letter Agreement"). In the Letter Agreement, LaSalle agreed to
waive certain financial covenant violations and the resulting events of default
as of October 28, 1995. In addition, LaSalle agreed to amend the loan agreement
in order to revise the next test date for the financial covenants to be as of
February 24, 1996. On March 12, 1996, the Company and LaSalle entered into an
Amendment to Loan Agreement that modified certain provisions of the Loan and
Security Agreement between the Company and LaSalle, including covenants relating
to financial amounts and ratios. The Company was in compliance with such
financial covenants, as so modified, as of February 24, 1996. However, there is
no assurance that the Company will remain in compliance with the covenants, as
modified. In particular, the Company is in violation of a covenant that limits
the Company's cumulative loss through May 30, 1996 of the current fiscal year.
To date, LaSalle has not taken any action with regard to this violation;
however, there can be no assurance that LaSalle will not take action in the
future. Also, effective on June 30, 1996 the Company and LaSalle signed an
Amendment to the Loan Agreement that modified certain provisions including an
increase in the interest rate applied on the loan. LaSalle has the right, upon
the occurrence of an event of default, to terminate the credit facility and
declare all loans due and payable on demand.

In January 1996, the Company did not make required payments of $255,000
under notes payable due to former executives ("Affiliate Debt"). The Affiliate
Debt is related to certain amended employment and consulting agreements between
the Company and the former executives (See Note 11 to the Consolidated Financial
Statements). The Company has deferred payment of this debt in order to conserve
cash for use in operation of its business. The Company continues to accrue
interest on the debt at 9.5%. The non-payment of the Affiliate Debt caused
cross-defaults under the Loan and Security Agreement with LaSalle and under the
Senior Note Indenture. While LaSalle has not waived this default, no action was
taken by LaSalle as a result of the default. The Company has negotiated revised
payment terms whereby the remaining affiliate debt will be paid in installments.
The Company's bank indebtedness and indebtedness under the Senior Notes have
been classified as current liabilities at both April 27, 1996 and October 28,
1995. If LaSalle Bank were to stop providing working capital to the Company,
there could be no assurance that the Company would be able to obtain financing
from another source. In such event, the Company would have to consider its
restructuring alternatives.

In March, 1996, the Company entered into Supplement No. 1 to the Indenture
(the "Supplemental Indenture") with Continental Stock Transfer and Trust Company
as Trustee for the Senior Notes. The Supplemental Indenture, which required the
approval of a majority of the Senior Note holders, amended the Indenture to
exclude the non-payment of the Affiliate Debt, and the resulting cross-default
under any other debt that arises by reason of non-payment of the Affiliate Debt,
from the definition of events of default. If another event of default occurs and
continues under the Company's bank agreement with LaSalle, however, it would
constitute an event of default under the Indenture, enabling the Trust or the
holders of 25% in aggregate principal amount of the Notes to declare the Notes
to be immediately due and payable.

As discussed in Note 2 to the Consolidated Financial Statements, there is
substantial doubt about the Company's ability to continue as a going concern.

Recent and Proposed Restructuring Efforts. Significant expense and
personnel reductions implemented during the fourth quarter of 1995, including an
approximate 20% reduction of the Company's work force, are expected to reduce
wage, salary and other related expenses by approximately $4.0 million in 1996.
In November 1995, the Company hired P. E. (Ed) Schenk as its President and Chief
Executive Officer, replacing the former Chairman and President. Mr. Schenk has
over twenty-two years of experience in meat processing businesses.

Management believes that the Company's future success is dependent upon
reversing the sales decline experienced in 1995 and the first half of 1996 and
on the continued reduction of operating costs and on the success of negotiations
with its major lenders. The Company is pursuing new sales opportunities while
continuing to streamline its production process and to reduce other costs. In
addition, negotiations with the Company's lenders are continuing. However, there
can be no assurance of the success of these efforts.

On April 7, 1995, the Company replaced its credit facility of $20 million
provided by BA Business Credit, Inc. ("BABC") for Rymer Meat and $12.5 million
provided by LaSalle for Rymer Seafood with a $25 million credit facility
provided by LaSalle, consisting of a $12.5 million credit line for Rymer Meat
and a $12.5 million credit line for Rymer Seafood. The credit facility, with an
initial term of two years, has lower interest rates and reduced lending

5
<PAGE>

restrictions as compared to the former facilities. The LaSalle credit facility
has an annual interest rate of 1/2% over Prime as compared to an annual rate of
2% over Prime on the former BABC facility and 1% over Prime on the former
LaSalle facility. Management also intends to take other steps to improve the
Company balance sheet. The proposed Sale and resulting debt reduction is part of
that effort.

Management may attempt to negotiate a restructuring of its Senior Notes.
This restructuring could involve the conversion of some or all of the Company's
outstanding Senior Notes into equity. There can be no assurances, however, that
such a restructuring will occur.

In November, 1995, Rymer received a proposal from Mark Bailin, the
President of Rymer Seafood, to acquire substantially all of the assets of Rymer
Seafood. On November 17, 1995, the Board of Directors of Rymer authorized the
Sale, subject to the terms and conditions described herein.

Products, Markets and Distribution

Rymer Meat's principal products are frozen, pre-seasoned,
portion-controlled beef entrees. Major beef products include commercial and
choice cut steaks. Rymer Meat also produces other meat products such as
specialty ground and breaded products and certain cooked products (e.g., pot
roast). Rymer Meat engages in the development and production of proprietary
"signature" recipes for chain restaurant customers. Rymer Meat also offers its
customers services such as menu planning, new product development and other
marketing services, such as handling and cooking procedures. These programs,
products and services are custom-designed for each chain restaurant customer.

The primary product of Rymer Seafood consists of shrimp which is purchased
in bulk quantities and sold to specifically targeted customers. Rymer Seafood
also supplies processed seafood products to chain restaurants, foodservice
distributors and retail outlets. In some cases, Rymer Seafood arranges for
seafood processing to be performed by third parties offshore where it can be
done more promptly and more cost effectively than in the United States.

The markets served by the Company include family-style restaurant chains
and distributors. Products are primarily sold through the Company's own
marketing staff, as well as through independent brokers and distributors.

Backlogs are not material.

Raw Materials

The Company's primary raw materials are beef and seafood which are
available in adequate supply. The Company is not dependent upon any one source
for its primary raw material.

The Company has agreements with certain of its suppliers to purchase raw
materials. These agreements extend for up to one year and specify the price and
quantity of materials to be purchased. The aggregate commitment for future
purchases as of April 27, 1996 and October 28, 1995 was approximately $1.6 and
$2.9 million, respectively.

Customers

The Company's customers consist primarily of family-style restaurants,
restaurant chains and foodservice distributors. In the first quarter of 1996,
Rymer Meat was informed that its supply contracts with restaurants owned by
Darden Restaurants (formerly, General Mills) would not be renewed. Sales to
these restaurant chains comprised approximately 10.3% and 15.7% of net sales
from its meat processing segment in the first half of 1996 and 1995,
respectively.

Sales to one of the Company's retail customers, Country Fed Meat Company,
Inc. (CFM), accounted for approximately 8% and 10% of the Company's revenues
from continuing operations in fiscal 1994 and 1993, respectively. At the end of
the first quarter of 1995, certain issues between the Company and CFM resulted
in certain lawsuits being filed. On June 28, 1995, the Company announced that it
had reached a settlement with CFM of the litigation pending between the two
companies. As a result of the settlement, all lawsuits between the companies
were dismissed and no further actions will be taken by either company on these
matters. The allowance for doubtful accounts established prior to and during the
Company's 1995 second quarter contained sufficient reserves to resolve the
matters in dispute. All terms of the settlement are confidential. The Company
does not expect to have a supply relationship in the future with CFM.

6
<PAGE>

Sales to two groups of the Company's other customers, Bonanza and
Ponderosa, together accounted for approximately 12%, 11% and 14% of the
Company's revenues from continuing operations in fiscal 1995, 1994 and 1993,
respectively. Franchise rights for both Bonanza and Ponderosa restaurants are
owned by Metromedia, Inc. The Bonanza and certain of the Ponderosa restaurants
are independently owned and operated. The loss of any of the Company's major
customers, or a substantial portion of these accounts, could have a material
adverse effect on the Company. The Company is pursuing new sales opportunities.
However, there can be no assurance of the success of these sales efforts. The
Company believes that it has satisfactory ongoing relationships with its
remaining customers.

The Company has agreements with certain of its customers to sell products
over the next year for specified prices. The Company's aggregate commitment
under sales agreements was approximately $3.6 million and $4.1 million at April
27, 1996 and October 28, 1995, respectively.

Trademarks, Patents and Research Activities

The Company has several trademarks or trade names such as "Rymer", "Ocean
Prize", "Imperial Sampan", "Imperial Gardens", "Guest Ready" and "Menu Maker"
which the Company considers important in marketing its food products. Two trade
names, "Sportsman's Ice" and "Chick'n Easy", were conveyed to Simmons as part of
the sale of Rymer Chicken. "Ocean Prize", "Imperial Sampan" and "Imperial
Gardens" will be sold as part of the Sale of Rymer Seafood. "Guest Ready" and
"Menu Maker" were sold to Simmons during the first quarter of 1996.

Research and development expenses are charged to operations as incurred.
Expenditures for the first half of 1996 and the three fiscal years ending
October 28, 1995 were not material.

Competitive Conditions

The Company's business is highly competitive, with a substantial number of
competitors. A large number of companies process and sell meat products to
restaurants. Every year new companies are formed and enter the meat industry,
some becoming sizeable competitors in a short period of time. Steakhouse sales,
which now comprise approximately 25% of Rymer Meat sales, continued to decline
during fiscal 1995 and the first half of 1996 due to the ongoing consolidation
within that segment of the restaurant market along with increasing competitive
pressures. The segment of retail sales which represents home delivery sales
declined significantly in 1995 to 15% of total sales versus 25% in 1994, due
primarily to the loss of a large customer. See "Customers" above.

Some of the competitors in the Company's markets are larger than the
Company and have greater resources. A number of companies compete directly with
the Company. The Company believes that in the markets it serves it provides its
customers with a broader line of quality products and services than many of its
competitors. Competition in the markets served by the Company is based primarily
on quality, service and price. Management believes that the Company's primary
bases for competing are its reputation for quality, service, its broad menu of
products, its willingness to develop proprietary recipes for specific customers
and competitive pricing.

Environmental Matters

The Company believes that it is substantially in compliance with all
applicable federal, state and local provisions regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment. No significant costs were incurred by the Company to comply with
environmental regulations during the first half of fiscal 1996 and the three
fiscal years ended October 28, 1995. The Company has not received notice of, and
is not aware of, any claims of a material nature arising under any federal or
state environmental laws.

Employees

At October 28, 1995, Rymer Foods and its subsidiaries had approximately 349
employees, of whom approximately 268 were covered by union contracts. In January
1995, the Company and its union reached agreement on a new four year labor
contract effective retroactively to December 1, 1994.

Fourteen of the non-union employees are employed by Rymer International
Seafood, which the Company expects to sell during the fourth quarter of 1996.

The Company has not received notice of, and is not aware of, any claims of
a material nature arising under any federal or state labor laws.

7
<PAGE>

Seasonality

The quarterly results of the Company are affected by seasonal factors.
Sales are usually lower in the fall and winter.

Properties

At April 27, 1996 and October 28, 1995, the principal physical properties
of Rymer Foods and its subsidiaries consisted of the following:

<TABLE>
<CAPTION>
Footage Ownership Expiration Facility Use
------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Chicago, Illinois ............ 2,600 Leased April 1997 Offices
Chicago, Illinois ............ 130,500 Leased July 1996 Offices/Production
(meat processing)/
Warehouse

Plant City, Florida .......... 42,000 Owned Not Held for sale or lease
Applicable
</TABLE>

The above facilities are considered adequate to meet the needs of the
Company. The owned facility is used as collateral for the Company's bank credit
agreements. The lease for the Chicago meat processing facility, which expires in
July 1996, includes a provision for an extension under certain conditions. The
Company is currently negotiating the terms of a new lease for its existing
facility. The Company is actively considering relocating its meat processing
operation to another facility to attempt to reduce operating costs. See Note 7
to the Consolidated Financial Statements for a summary of the Company's rental
expense for leased facilities and for production and office equipment.

Legal Proceedings

See Note 14 to the Consolidated Financial Statements.

Dividends

No dividends have been paid on the Common Stock since prior to 1983. The
ability of Rymer Foods to pay dividends on the Common Stock is substantially
limited by its bank credit agreements. The Indenture also prohibits the payment
of dividends on the Common Stock at any time that any of the Senior Notes remain
outstanding. Rymer Foods does not anticipate that it will be able to pay any
dividend on the Common Stock in the foreseeable future.

8
<PAGE>

DESCRIPTION OF THE SALE

Cautionary Statement

The statements in the following section, "Description of the Sale", that
are forward looking are based upon current expectations and actual results may
vary. See "Cautionary Statement" under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below.

Background of the Sale

During 1995, it became apparent to management that it would be necessary to
institute certain cost saving measures in an attempt to resume profitable
operations. In October, 1995, the Company retained the firm of Kirkland Messina,
Inc. to furnish financial advisory services to the Company. On October 9, 1995,
the Company announced that it had begun a reorganization plan of its operations
and personnel. In connection therewith, the Company announced the promotion of
certain officers. The Company accepted the resignations of Jeffrey Rymer,
formerly President and Chief Operating Officer, Ludwig A. Streck, formerly
Senior Vice President and Chief Financial Officer, and John Blyther, formerly
Vice President of Operations.

The Company also effected a reduction of approximately 24% in its hourly
work force at the end of the first quarter of 1996 as compared with the first
quarter of 1995. The Company expects to realize wage and salary expense savings
in the remainder of fiscal 1996 from such measures. Management is continuing to
evaluate other means of reducing its costs and improving operations. As part of
the Company's restructuring program, management intends to take steps to improve
the Company's balance sheet. The proposed Sale and resulting debt reduction is
part of that effort. In addition, Management intends to attempt to negotiate a
restructuring of its Senior Notes. This restructuring could involve the
conversion of some or all of the Company's outstanding Senior Notes into equity
securities. There can be no assurances, however, that such a restructuring will
occur or as to the terms of any such restructuring or its impact on the
Company's stockholders. Furthermore, there can be no assurances that the
Company's working capital lender will continue to finance the Company's
operations indefinitely. See "Business -- Present Conditions and Background."

On November 8, 1995, Rymer announced that it had hired P.E. (Ed) Schenk as
President and Chief Executive Officer of Rymer. Mr. Schenk was also named to the
Board of Directors of Rymer. Mr. Schenk has over 22 years of experience in the
meat processing industry. See "Management."

In November, 1995, the Company received a proposal from Mark Bailin, the
President of Rymer Seafood, to acquire substantially all of the assets of Rymer
Seafood. On November 17, 1995, the Board of Directors of Rymer authorized the
Sale, subject to the terms and conditions described herein.

As a result of discussions between members of senior management of Rymer
Foods and Buyer, a non-binding Letter of Intent was signed on November 10, 1995
by Rymer Foods and Buyer setting forth the principal terms of the transaction.
Those terms are generally reflected in the Asset Purchase Agreement.

Mark Bailin, the principal owner of Buyer, is currently the President of
Rymer Seafood. Mark Bailin is the son of Samuel I. Bailin, who is a director of
Rymer Foods. Samuel Bailin did not participate in deliberations of the Board of
Directors of Rymer Foods regarding the Sale, or in negotiations regarding the
Sale. Sam Bailin has advised the Company that he does not have any direct or
indirect interest in Buyer. A potential conflict of interest could be deemed to
exist by reason of the family affiliation of Samuel Bailin and Mark Bailin, and
by reason of Mark Bailin being a current employee of the Company. To reduce the
impact for such potential conflicts of interest, Samuel Bailin has excluded
himself from deliberation on, and voting with respect to, the Sale. In addition,
Mr. Samuel Bailin is considered to be an "interested director" within the
meaning of the Delaware General Corporation Law and, consequently, his vote has
not and will not be counted (other than for quorum purposes) on any matters
pertaining to the Sale. Mark Bailin, who continues to operate the business of
Rymer Seafood pending the Sale, has not participated in discussions on behalf of
the Company concerning the Sale. The Buyer and the Company are each represented
by separate counsel with respect to the Sale. The Company believes that
negotiations concerning the sale were conducted on the equivalent of an
arm's-length basis.

9
<PAGE>

commodity based business and, accordingly, that its value to a potential buyer
is largely a function of the current and potential market price of the seafood
commodities it sells. The Board of Directors believes that the offer made by
Buyer was fair and reasonable in light of then prevailing seafood commodity
prices. Furthermore, the Board of Directors believed that Mark Bailin, who has
operated the Rymer Seafood business since 1986, was a motivated buyer that was
intimately familiar with the business of Rymer Seafood and, therefore, would not
engage in extensive due diligence. Since the Company was, and is continuing to
be, confronted by liquidity difficulties, the Board of Directors determined
that, under the circumstances, the Sale was expedient and in the best interests
of the Company notwithstanding the lack of other offers.

Other than as above, none of the Company's other directors, officers or
associates of such directors and officers has any substantial interest, direct
or indirect, in the consummation of the Sale, apart from an interest arising
solely from the ownership of shares of the Common Stock of Rymer Foods.

Summary of the Asset Purchase Agreement

The following summary is qualified in its entirety by the terms of the
Asset Purchase Agreement which is attached as Annex I to this Proxy Statement.
Pursuant to the Asset Purchase Agreement, on the Closing Date Rymer Seafood will
convey to Buyer substantially all of Rymer Seafood's assets, including real and
personal property, receivables, inventory, equipment, books and records,
tradenames, trademarks (including the use of Rymer solely in connection with the
sale of seafood) and assets sold under tradename, as well as any other tangible
or intangible property (collectively, the "Assets"), but excluding certain
corporate records, non-assignable permits and all employee benefit plans of
Rymer Seafood (collectively, with certain other immaterial assets, the "Excluded
Assets"). Buyer will assume substantially all of Rymer Seafood's known
obligations and liabilities (i) which arose prior to the Closing Date and
represent trade payables or accruals incurred by Seller and the approximate
amount of which, as of April 27, 1995 was $1.4 million, (ii) first resulting
from, caused by or arising out of the conduct of the business or ownership or
lease of any of the assets by Buyer from or after October 28, 1995 (other than
under any contract or permit), (iii) first arising from and after October 28,
1995 under any contract or permit assumed by Buyer; (iv) commitments and
contingencies existing on or after October 28, 1995 in respect of certain
purchase and sale commitments; (v) in the event the amounts owing under that
certain Credit Agreement between Rymer Foods and LaSalle National Bank, dated as
of April 7, 1995 (the "Credit Agreement"), including reimbursement obligations
in respect of letters of credit which liabilities and obligations (including
such reimbursement obligations) as of April 27, 1995, were approximately $5.1
million of bank debt and $2.4 million in outstanding letters of credit (the
"Bank Debt"), are not paid in full as of the Closing Date, relating to the Bank
Debt, and (vi) certain outstanding intercompany payables existing as of the
closing date (collectively, the "Assumed Liabilities"), but excluding
liabilities and obligations in respect of taxes and employee benefit plans (the
"Excluded Liabilities"). The total dollar amount of obligations to be assumed by
Buyer (as of April 27, 1996) is expected to approximate $6.5 million at the
Closing Date.

In addition, at the Closing it is contemplated that the parties will enter
into a non-competition agreement (collectively, the "Non-Competition
Agreements") whereby (a) Buyer will agree not to compete against Rymer Foods and
its Subsidiaries in the red meat processing and distribution business for three
years following the Closing Date, and (b) Rymer Foods will agree not to compete
against Buyer in the seafood brokerage business for three years following the
Closing Date. The Non-Competition Agreements are referred to herein collectively
as the "Ancillary Agreements."

Purchase Price

In addition to the assumption by Buyer of the Assumed Liabilities, the
Purchase Price consists of $1.5 million in cash and a $1.5 million secured
subordinated promissory note (the "Purchase Note").

Buyer has advised the Company that its source of funds to pay the cash
portion of Purchase Price will be cash on hand. The Purchase Note will accrue
interest at the rate of 8% per annum on unpaid principal payable quarterly in
arrears. The Buyer will pay principal in the amount of $37,500 quarterly on the
last date of each calendar quarter commencing on March 31, 1999, with the entire
unpaid balance being due and payable on December 31, 2005. The Purchase Note
will be subordinated in right at payment and upon litigation to "Senior Debt,"
as defined, of Buyer. The Purchase Note will be secured by substantially all of
the assets of Buyer, on a basis subordinate to the liens of Senior Indebtedness.
There can be no assurances that the Buyer will be able to pay principal and
interest on the Purchase Note when due.

10
<PAGE>

The Purchase Note includes certain affirmative and negative covenants of
Buyer, the breach of which, after notice and opportunity to cure, would
constitute an event of default thereunder, including agreements to supply
financial information, restrictions on additional indebtedness and liens,
restrictions on dividends and similar distributions, maintenance of certain
financial ratios (including total liabilities to net worth), maintenance of
current assets of at least $1,800,000 in excess of current liabilities plus
non-current liabilities owed to Buyer's bank, maintenance of at least $2,000,000
of tangible net worth, restrictions on investments and capital expenditures,
limitations on transactions with affiliates and maintenance of insurance. There
can be no assurances that Buyer will remain in compliance with these covenants
for the entire period that the Purchase Note is outstanding. Furthermore, the
terms of the Sale, including the Purchase Price, were determined by negotiation
of the parties, as conducted by members of their respective managements and, in
the case of Rymer Foods, by representatives of Kirkland Messina, Inc.

Closing Date

The Asset Purchase Agreement provides for the Closing to occur on the fifth
business day occurring after Rymer has obtained shareholder approval of the Sale
and has received the necessary waiver from the Senior Noteholders. If the
Closing does not occur on or before August 31, 1996, the Asset Purchase
Agreement may be terminated by either party.

Conditions to Closing

Rymer and Rymer Seafood's obligation to close the Sale is subject to the
satisfaction or waiver by Rymer of a number of conditions, including (i)
approval by Rymer Foods stockholders of the Sale; (ii) receipt by Rymer of the
Senior Note Waivers; (iii) receipt by the Board of Directors of Rymer of an
opinion of Chanin Capital Partners, Inc. to the effect that the Sale is fair,
from a financial point of view, to the stockholders of Rymer, (iv) the
representations and warranties of Buyer set forth in the Agreement being true
and correct in all material respects and (v) other customary conditions.

Buyers' obligation to close is subject to the satisfaction or waiver by
Buyer of a number of conditions, including (i) approval by Rymer Foods
stockholders of the Sale; (ii) receipt of Rymer of the Senior Note Waivers;
(iii) receipt by the Board of Directors of Rymer of an opinion of Chanin Capital
Partners, Inc. to the effect that the Sale is fair, from a financial point of
view, to the stockholders of Rymer, (iv) the representations and warranties of
Buyer set forth in the Agreement being true and correct in all material respects
and (v) other customary conditions.

Representations, Warranties and Covenants

The Asset Purchase Agreement contains certain representations and
warranties by Rymer Seafood to Buyer, including representations and warranties
as to (i) organization and good standing, (ii) legality and due authorization of
the Asset Purchase Agreement, the Ancillary Agreements and the transactions
contemplated thereby, (iii) title to the Transferred Assets, (iv) absence of
pending or threatened legal actions, (v) absence of undisclosed material
liabilities or obligations, (vi) compliance with laws, and (viii) absence of
material adverse changes since October 28, 1995.

The Asset Purchase Agreement contains certain representations and
warranties by Buyer to Rymer Foods, including representations and warranties as
to (i) organization and good standing, (ii) legality and due authorization of
the transaction, and (iii) consents and approvals.

Rymer also agrees, for a period of eighteen months from the Closing Date,
to indemnify the Buyer from and against (i) misrepresentation or breach of
Rymer's representations or warranties set forth in the Asset Purchase Agreement,
(ii) all claims relating to the status or conduct of the Business or the Assets
existing, arising or occurring on or prior to the Closing Date (other than
Assumed Liabilities), (iii) Excluded Liabilities and (iv) Excluded Assets. Buyer
agrees to indemnify Parent from and against all claims relating to the Acquired
Assets and the Assumed Liabilities. The agreements also permits Buyer to set off
any amounts owed to Rymer in the event that Buyer is entitled to indemnity
payments under the Asset Purchase Agreement.

See "Summary of the Asset Purchase Agreement -- General."

Conduct of Business Pending the Closing

The Asset Purchase Agreement requires Rymer Seafood to conduct its business
in the ordinary course from the date of execution of the Asset Purchase
Agreement to the Closing Date.

11
<PAGE>

Amendment of Asset Purchase Agreement

The Asset Purchase Agreement may be amended by the parties only in writing.

Expenses

Under the Asset Purchase Agreement, each party bears its own expenses
incurred in connection with the Asset Purchase Agreement and related
transactions.

Summary of the Non-Competition Agreements

The following summarizes the material terms of Rymer Food's Non-Competition
Agreement.

Noncompete. Rymer will agree that for a period of three years from the
Closing Date ("Rymer's Restricted Period"), it shall not, directly or indirectly
(whether as an owner, partner, shareholder, agent, officer, director, employee,
independent contractor, consultant, or otherwise) (i) own an interest in any
venture or enterprise that directly or indirectly engages or proposes to engage
in the Business (as defined) or any similar business in which seafood is
purchased, sold or brokered, or (ii) sell seafood products or perform services
for any person or entity that sells seafood products, in each case anywhere in
the United States (the "Territory").

Non-Solicitation. Rymer also agrees that during Rymer's Restricted Period,
it will not, directly or indirectly, advise, encourage or direct any business to
solicit business from any person, firm, corporation or other entity which is or
was a customer of Rymer Seafood during the twelve-month period preceding the
effective date of this Agreement and/or during the term of this Agreement, or
from any successor in interest to any such person, firm, corporation or other
entity, for the purpose of securing business or contracts related to the
Business.

Confidential Information. During the term of the agreement (and
thereafter), Rymer shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Buyer, furnish, make
available or disclose to any third party or use for the benefit of itself or any
third party, any proprietary information relating to the business or affairs of
Rymer Seafood or the Business, including but not limited to information relating
to financial statements, customer identities, potential customers, employees,
suppliers, servicing methods, programs, strategies and information, analyses,
profit margins or other proprietary information used by Rymer Seafood in
connection with the Business; provided, however, that such information shall not
include any information which is in the public domain or becomes known in the
industry through no wrongful act on the part of Buyer, Parent or any of its
agents or representatives.

Interference with Relationships. During Rymer's Restricted Period, Rymer
shall not, directly or indirectly, as agent, consultant, stockholder, director,
partner, owner or in any other representative capacity: (i) without the prior
written consent of Buyer, employ or engage, recruit or solicit for employment or
engagement, any person who is or becomes employed or engaged by the Buyer, or
otherwise seek to influence or alter any such person's relationship with Buyer,
or (ii) solicit or encourage any present or future customer or supplier of the
Company to terminate or otherwise alter his, her or its relationship with Buyer.

Consideration. In consideration for Rymer abiding by the covenants set
forth in the Non-Competition Agreement (the "Restrictive Covenants"), Buyer
agreed to enter into a non-competition agreement with Rymer pursuant to which
the Buyer will agree not to engage in the purchasing and selling and/or
brokering the purchase and sale of beef, pork, poultry and other meat products,
other than seafood ("Meat Business") and to pay Rymer $100,000 which amount has
been included in the Purchase Price.

Remedies. Rymer has agreed that in the event of any actual or threatened
breach by it of any of such Restrictive Covenants, the Buyer shall be entitled
to such injunctive and other equitable relief, without the necessity of showing
actual monetary damages, as may be deemed necessary or appropriate by a court of
competent jurisdiction. Nothing contained herein shall be construed as
prohibiting the Buyer from pursuing any other remedies available to it for such
breach or threatened breach, including the recovery of any damages which it is
able to prove.

The following summarizes the material provisions of Buyer's Non-Competition
Agreement:

Noncompete. Buyer will agree that during a period of three years from the
Closing Date ("Buyer's Restricted Period"), it shall not, directly or indirectly
(whether as an owner, partner, shareholder, agent, officer, director, employee,
independent contractor, consultant, or otherwise) (i) own an interest in any
venture or enterprise that directly or indirectly engages or proposes to engage

12
<PAGE>

in the Meat Business, or (ii) sell meat products or perform services for any
person or entity that sells meat products, in each case anywhere in the
Territory.

Non-Solicitation. Buyer also agrees that during Buyer's Restricted Period,
it will not, directly or indirectly, advise, encourage or direct any business to
solicit business from any person, firm, corporation or other entity which is or
was a customer of Rymer or any of its subsidiaries engaged in the Meat Business
during the twelve-month period preceding the effective date of this Agreement
and/or during the term of this Agreement, or from any successor in interest to
any such person, firm, corporation or other entity, for the purpose of securing
business or contracts related to the Meat Business.

Confidential Information. During the term of the agreement (and
thereafter), Buyer shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of Rymer, furnish, make available
or disclose to any third party or use for the benefit of itself or any third
party, any proprietary information relating to the business or affairs of Rymer
or the Meat Business, including but not limited to information relating to
financial statements, customer identities, potential customers, employees,
suppliers, servicing methods, programs, strategies and information, analyses,
profit margins or other proprietary information used by Rymer in connection with
the Meat Business; provided, however, that such information shall not include
any information which is in the public domain or becomes known in the industry
through no wrongful act on the part of Buyer.

Interference with Relationships. During Buyer's Restricted Period, Buyer
shall not, directly or indirectly, as agent, consultant, stockholder, director,
partner, owner or in any other representative capacity: (i) without the prior
written consent of the Company, employ or engage, recruit or solicit for
employment or engagement, any person who is or becomes employed or engaged by
the Company or otherwise seek to influence or alter any such person's
relationship with the Company, or (ii) solicit or encourage any present or
future customer or supplier of the Buyer to terminate or otherwise alter his,
her or its relationship with the Company.

Remedies. Buyer has agreed that in the event of any actual or threatened
breach by it of any of such Restrictive Covenants, the Company shall be entitled
to such injunctive and other equitable relief, without the necessity of showing
actual monetary damages, as may be deemed necessary or appropriate by a court of
competent jurisdiction. Nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.

Tax Consequences of the Asset Purchase Agreement

The Company will recognize loss equal to the difference between the
Purchase Price (less the amount allocated to the Non-Competition Agreement) plus
any assumed liabilities and the Company's tax basis in the assets sold to Buyer.
The amount allocated to the Non-Competition Agreement will be treated as
ordinary income.

Accounting Treatment

The sale of substantially all of the assets of Rymer Seafood pursuant to
the Asset Purchase Agreement will be recorded as an asset sale. As a result of
the Sale, it is expected that a loss of approximately $1.5 million would be
realized in 1996. In addition, the Purchase Note will be recorded on the
Company's Balance Sheet at a 34% discount to its face amount.

Advantages and Disadvantages of the Sale

13
<PAGE>

the view of the Company's management, a material disadvantage to the Company
resulting from the Asset Purchase Agreement. This view is based on management's
belief that regardless of the Non-Competition Agreement the Company would not be
likely to re-enter the seafood products business.

The Board of Directors of Rymer Foods has determined that the terms and
conditions of the proposed Sale and the Sale are expedient and in the best
interests of the corporation. The Board of Directors has received an opinion of
Chanin Capital Partners, Inc., an independent financial advisor, to the effect
that the Sale is fair from a financial point of view to the stockholders of
Rymer Foods.

14
<PAGE>

STOCKHOLDER APPROVAL OF THE ASSET PURCHASE AGREEMENT;
APPRAISAL RIGHTS; SENIOR NOTE WAIVERS

Stockholder Approval

Rymer Foods' Certificate requires that Rymer Foods obtain the affirmative
vote of the holders of not less than 66-2/3% of the outstanding shares of the
Common Stock prior to the transfer, conveyance, lease or other disposition to
any third party of all or substantially all of the assets or the stock of any
Subsidiary (as defined) having a book value equal to or in excess of 10% of the
aggregate book value of the assets of Rymer Foods and its Subsidiaries on a
consolidated basis (a "Material Asset Disposition"). In addition, the
Certificate requires that Rymer Foods obtain the affirmative vote of the holders
of not less than 66 % of the outstanding shares of Common Stock prior to the
sale, transfer, conveyance or other disposition of all or substantially all of
the assets of Rymer Foods.

Because Rymer Seafood's assets constitute more than 10% of the consolidated
book value of Rymer Foods and its Subsidiaries and such assets may constitute
all or substantially all of the assets of Rymer Foods and the Subsidiaries,
Rymer Foods is hereby seeking the affirmative vote of holders of 66 % (or more)
of the shares of the outstanding Common Stock "For" the resolution authorizing
the Sale. The proposed resolution authorizing the Sale is attached as Annex II
to this Proxy Statement.

Approval of Rymer Foods' stockholders is not being sought hereby of the
agreements contemplated to be executed and delivered in connection with the
consummation of the Asset Purchase Agreement and discussed herein.

If the Asset Purchase Agreement is not approved by Rymer Foods'
stockholders or otherwise consummated, the Company expects that it will continue
to operate the Rymer Seafood business and will evaluate alternatives relating to
such business, including future prospects for its sale.

No Appraisal Rights

Rymer Foods is a Delaware corporation. Stockholders are not entitled to any
rights of appraisal or similar rights of dissenters under Delaware corporation
law in connection with the approval or consummation of the Asset Purchase
Agreement because the transactions contemplated thereby do not involve a merger
or consolidation of Rymer Foods.

THE BOARD OF DIRECTORS OF RYMER FOODS UNANIMOUSLY RECOMMENDS (WITH ONE
DIRECTOR ABSTAINING) THAT THE STOCKHOLDERS APPROVE THE SALE. See "Recommendation
of Rymer Foods' Board of Directors; Fairness to Stockholders" below.

Senior Note Waivers

The Indenture includes a covenant pertaining to the form of consideration
to be received by the Company in connection with asset dispositions, in
particular, Section 5.16 of the Indenture requires, among other things, that the
consideration for the proposed Sale consist of cash or readily marketable cash
equivalents. Since a portion of the consideration to be received in the Sale is
comprised of the Purchase Note, which is not a readily marketable cash
equivalent, the Company will seek to obtain a modification to Section 5.16 of
the Indenture as it relates to the Sale from the holders of a majority in
principal amount of the Senior Notes to the Sale. In addition, Section 5.09 of
the Indenture sets forth restrictions on Rymer Food's ability to sell all or
substantially all of its assets, unless prior to or concurrently with the
effectiveness of such transaction all outstanding indebtedness under the
Indenture is repaid in full. Since the Sale may constitute a sale of all or
substantially all of the assets of Rymer Foods, Rymer Foods will also seek a
waiver of Section 5.09 with respect to the Sale. Obtaining the waivers from
holders of Senior Notes is a condition to the Sale.

Bank Waivers

The Sale also requires that the Company obtain certain waivers from its
bank lender from various covenants in the loan documentation that would
otherwise prohibit or restrict the Sale. The Company is seeking such waivers,
which are a condition to the Sale.

15
<PAGE>

USE OF PROCEEDS

The Company intends to use the proceeds from the Asset Purchase Agreement
to repay a portion of its bank indebtedness. The Company is presently borrowing
from its bank lender at prime plus 1/2% with a maturity date of April 7, 1997.
There can be no assurance that the Company will be able to reborrow the funds so
repaid, or that such funds will be available to the Company for any specific
purpose.

RECOMMENDATION OF RYMER FOODS'
BOARD OF DIRECTORS; FAIRNESS TO STOCKHOLDERS

Board of Director's Recommendation

The Board of Directors of Rymer Foods has determined that the terms and
conditions of the proposed Sale and the Sale are expedient and in the best
interests of the corporation. Consequently, the Board of Directors recommends
that you vote "For" the resolution authorizing the Sale.

As discussed in "Description of the Sale - Background of the Sale," in
connection with the proposed sale to Buyer of substantially all of Rymer
Seafood's assets, the Board engaged in discussions concerning the prospects of
returning Rymer Foods to profitability. The Board concluded that a sale of Rymer
Seafood assets to Buyer for a fair price would generate cash proceeds, reduce
indebtedness and would permit Rymer Foods to concentrate on its core business of
red meat processing. Based on the foregoing, the Board determined that in these
circumstances a sale to Buyer at a fair price was in the best interest of the
stockholders of Rymer Foods.

Management and the Board did not seek other potential purchasers of the
Rymer Seafood assets. The Company believed that the universe of potential buyers
would be limited and that a liquidation sale would not be advantageous. In
addition, based on management's general familiarity with other companies in the
industry, the Company believed it would not find other suitable potential
purchasers for the business. In this regard, since the public announcement of
the contemplated sale of the Rymer Seafood assets to Buyer, Rymer Foods has not
received any expressions of interest from other parties concerning the
acquisition of Rymer Seafood (see "Description of the Sale - Background of the
Sale").

The Company determined to sell substantially all of the assets of Rymer
Seafood to Buyer after considering the potential alternatives available to the
Company , including liquidation of the seafood business. The Board of Directors
has obtained the opinion ("Chanin Opinion") of Chanin Capital Partners, Inc.
("Chanin"), an independent financial advisor, that the sale, from a financial
perspective is fair to the stockholders of the Company.

Based on the book value of the Rymer Seafood assets, the sales proceeds
represent a loss for the Company of approximately $1.5 million, as of April 27,
1996 after deducting the costs of sale. Notwithstanding such fact, the Board
believes that the sale of the Rymer Seafood assets and the other transactions
contemplated in the Asset Purchase Agreement will provide greater operating
flexibility for the Company.

Based primarily on the fairness opinion of Chanin and after giving
consideration to the other information discussed above, the Board of Directors,
with one "interested director" abstaining, unanimously agreed that the approval
of the Sale is in the best interest of, and is fair to, the stockholders of
Rymer Foods.

Fairness Opinion

On December 21, 1995, Chanin provided the Chanin Opinion to the effect
that, based upon the terms of the Buyer's offer as outlined to Chanin, the
consideration to be received by the Company from Buyer for the Sale of the Rymer
Seafood Assets is fair to the stockholders from a financial point of view. The
full text of the Chanin Opinion is attached hereto as Annex III and stockholders
are encouraged to read it in its entirety for information with respect to the
procedures followed, assumptions made and matters considered by Chanin in
arriving at its opinion. In rendering the Chanin Opinion, Chanin did not render
any opinion as to the value of the Company, express a view as to the range of
values at which the Common Stock may trade following consummation of the Sale
nor make any recommendation to stockholders with respect to the advisability of
disposing or retaining Common Stock. In addition, the Chanin Opinion does not
constitute a recommendation regarding whether or not it is advisable for the
stockholders to vote in favor of the Sale.

16
<PAGE>

In arriving at its opinion, Chanin, among other things, (i) reviewed the
terms of the proposed Asset Purchase Agreement, (ii) reviewed certain publicly
available business and financial information relating to the Company, (iii)
conducted discussions with members of senior management of the Company and Rymer
Seafood, (iv) conducted discussions with competitors of Rymer Seafood, seafood
brokers, and industry professionals to assess the management of Rymer Seafood,
the nature of the inventory being purchased pursuant to the transaction, the
pricing trend of the inventory being purchased pursuant to the transaction, the
liquidity of the inventory being purchased pursuant to the transaction and the
general industry condition of the market in which Rymer Seafood operates, and
(v) conducted such other financial studies, analyses and investigations, and
considered such other information, as it deemed necessary or appropriate.

In connection with its review, Chanin did not assume any responsibility for
independent verification of any of the foregoing information and relied on its
being complete and accurate in all material respects. In addition, Chanin did
not make any independent evaluation or appraisal of any of the assets or
liabilities (contingent or otherwise) of the Company or any of its subsidiaries
nor was Chanin furnished with any such evaluation or appraisal. Chanin assumed
that all of the information, including the projections, provided to them by the
Company's management was prepared in good faith and was reasonably prepared on a
basis reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of Rymer Seafood,
and was based upon the historical performance of Rymer Seafood and certain
estimates and assumptions which were reasonable at the time made. Further, the
Chanin Opinion is based on economic, monetary and market conditions as they
existed and could be evaluated at that time.

In rendering its opinion, Chanin considered a variety of valuation
approaches including (i) the "Income Approach" which values a business based
upon the discounted present value of the estimated cash flow derived from the
subject business plus the value of the business at the end of the estimation
period, (ii) market approach and (iii), "Cost Approach" which focuses on
restating assets to their replacement cost less depreciation. The Income
Approach was considered in evaluating certain of the securities relating to the
Sale transaction but was not considered in evaluating the subject business since
the management of Rymer indicated a liquidation of the subject business would
likely be pursued if the Sale were not consummated. The Market Approach,
although considered, was not applied due to a lack of acceptable comparable
public companies transactions. Chanin considered and applied the Cost Approach
in evaluating certain portions of the consideration offered in the Sale as well
as in evaluating the assets subject to purchase.

The Cost Approach (on the Adjusted Net Asset Method) focuses on restating
assets to their replacement cost new less depreciation of the asset (i.e., lower
of cost or market). In this context, depreciation has three components: (i)
physical deterioration; (ii) functional obsolescence, and (iii) economic
obsolescence. Physical deterioration is an impairment to the condition of the
asset brought about by "wear and tear," disintegration, use in service, and/or
the action of the elements. Functional obsolescence is the impairment in the
efficiency of the asset brought about by such factors as over capacity,
inadequacy or changes in technology that affect the property. Economic
obsolescence is the impairment in the desirability of the asset arising from
external economic forces, legislative enactment or changes in the supply and
demand relationships.

Chanin evaluated the consideration at approximately $12.0 million.
Specifically, Chanin afforded full value to the cash, the $1.5 million face
amount of the Note (the "Note") was determined to be worth approximately
$826,000 or approximately 55% of the face value, and the assumed liabilities
were accorded full value.

Utilizing the Cost Approach, Chanin evaluated the assets subject to
purchase at approximately $10.0 million to $12.0 million. 75% to 90% of the
receivables were estimated as collectable under a going concern scenario and 50%
to 75% of the stated value of the prepaid expenses and fixed assets were
estimated as replacement cost under the same scenario. Based on discussions with
certain brokers and discussions with management of the Company, Chanin Partners
estimated that the inventory could be liquidated for 75 cents to 90 cents on the
dollar.

Chanin is of the view that inventory valuation is dictated to a large
degree by prevailing market prices as well as management's ability to discern
market movements and take advantage of favorable pricing trends and that
therefore, generally speaking, the Seafood business may be considered as simply
a trading operation. Profits and losses are generated as a direct result of
management's ability to buy and sell inventory at favorable prices. Therefore,
Chanin assumed in valuing the subject business that current Seafood management

17
<PAGE>

has extensive experience in the seafood trading business and will continue to
operate in their respective positions. Were that not the case, Chanin believes
that the liquidation value of the inventory could very likely trade below the 75
cent to 90 cent range indicated above.

Based on these analyses, Chanin concluded that the consideration to be
received by the Company is fair, from a financial perspective, to the
stockholders of the Company.

Chanin is a financial advisory services firm which, as part of its
business, is engaged in the valuation of businesses. The Board selected Chanin
on the basis of the firm's expertise and reputation.

Chanin received a fee of $35,000 for services rendered in connection with
providing the Chanin Opinion. The Company has also agreed to indemnify Chanin
and its officers, directors, employees, agents and controlling persons against
certain liabilities arising in connection with its engagement.

18
<PAGE>

MANAGEMENT

The following is a list of each director of Rymer Foods and each executive
officer of the Company, and their respective positions:

Name Positionm
----- --------
P.E. (Ed) Schenk ............... President and Chief Executive Officer and
Director (term expiring 1999)
Edward M. Hebert ............... Senior Vice President, Chief Financial
Officer and Treasurer
Jose Muguerza .................. Vice President of Operations and Technical
Services
Mark A. Lazare ................. Vice President of Purchasing and Logistics
Barbara McNicholas ............. Secretary
Mark Bailin* ................... President, Rymer International Seafood Inc.
Samuel I. Bailin* .............. Director (term expiring 1998)
David E. Jackson ............... Director (term expiring 1999)
Hannah H. Strasser ............. Director (term expiring 1999)
Joseph Colonnetta .............. Director (term expiring 1999)

- ---------------
* Samuel I. Bailin and Mark Bailin are father and son.

Mr. Schenk has entered into a two year Employment Agreement with Rymer
providing for an annual salary of $200,000 per year. In addition, the Board of
Directors agreed to issue a warrant to Mr. Schenk to acquire 750,000 shares of
Common Stock for an exercise price of $1.00 per share.

During 1995, the following persons resigned as Directors of Rymer: Anders
Maxwell, Barry Rymer, Jeffrey Rymer and John Patten. In addition, Messrs. Rymer
and Patten resigned as executive officers of Rymer Foods.

19
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of March 15, 1996, the beneficial
ownership of Common Stock by each stockholder who is known by Rymer Foods to
beneficially own more than 5% of such outstanding Common Stock, by each director
of Rymer Foods and by all Directors of Rymer Foods and executive officers of the
Company as a group.

Amount and Nature of Percent
Name Title of Security Beneficial Ownership of Class
- ---- ----------------- -------------------- --------
Samuel I. Bailin .......... Common Stock 55,000 - Direct(1) *
0 - Indirect -0-
David E. Jackson .......... Common Stock 0 - Direct -0-
1,827,212 - Indirect(2) 17.0%
P. E. Schenk .............. Common Stock 0 - Direct(3) -0-
0 - Indirect -0-
Hannah H. Strasser ........ Common Stock 2,417 - Direct *
86,285 - Indirect(4) *
Edward M. Hebert .......... Common Stock 11,607 - Direct(5) *
0 - Indirect -0-
Oppenheimer & Co., Inc. ... Common Stock 70,934 - Direct(6) 0.7%
Oppenheimer Tower 1,827,212 - Indirect(7) 17.0%
New York, NY 10281

All directors and
executive officers
as a group (8 persons)(8).. Common Stock 150,113 - Direct 1.4%
1,913,497 - Indirect(8) 17.8%
- --------
* Less than 1% of the outstanding shares.

(1) Such shares include options to purchase within 60 days from the date hereof
30,000 shares of Common Stock.

(2) Mr. Jackson disclaims beneficial ownership of all 1,827,212 of such shares,
which shares are included among the shares listed in the above table next
to the references to footnote (6). Such shares are held by two limited
partnerships, Oppenheimer Horizon Partners, L.P. and Oppenheimer
Institutional Horizon Partners, L.P. (the "Partnerships"), and a
corporation (the "Corporation"). Mr. Jackson is a partner of Contrarian
Capital Management, LLC, a money management concern that has shared voting
and dispositive power with the Partnerships and the Corporation with
respect to such shares.

(3) A warrant to acquire 750,000 shares of Common Stock was issued to Mr.
Schenk in connection with his employment agreement. The exercise price for
such warrants is $1.00 per share of Common Stock, the market value of such
stock on the date of issuance of the warrant. Such Warrant is not
exercisable until November 8, 1996.

(4) Ms. Strasser has sole or shared voting and dispositive power but no equity
interest in all 86,285 of such shares, and Ms. Strasser disclaims
beneficial ownership of such shares.

(5) Such shares include options to purchase within 60 days from the date hereof
4,000 shares of Common Stock.

(6) These shares are held by Oppenheimer on behalf of itself and certain
related entities.

(7) These shares are held by affiliates of Oppenheimer on behalf of themselves
and certain related entities.

(8) See the disclaimers of beneficial ownership set forth in footnotes 2 and 4
above.

Pursuant to the Company's 1994 Stock Option Plan (the "Stock Option Plan"),
the Company issued 101,000 options in 1995 to the following executive officers
to acquire the following number of shares of Common Stock: John L. Patten,
12,000 shares; Ludwig A. Streck, 10,000 shares; Jeffrey Rymer, 10,000 shares;
Thomas F. Bauman, 7,000 shares; Edward M. Hebert, 7,000 shares and other persons
12,000 shares. None of the outstanding options is exercisable within 60 days of
the date hereof. On November 8, 1995, the Company agreed to issue to P.E.
Schenk, President and Chief Executive Officer of the Company, a warrant to
acquire 750,000 shares of Common Stock for an exercise price of $1.00 per share,
the market value of the Common Stock on the date of issuance of such account.

20
<PAGE>

As a result of the significant ownership interest in the Common Stock
(before dilution from the exercise of options granted under the Stock Option
Plan) by former holders of the Company's 13% Senior Subordinated Sinking Fund
Debentures (the "Debentures"), these stockholders, if they act together with the
holders of a relatively small number of other shares of Common Stock, will have
the ability to elect a majority of the Board of Directors and thereby control
the affairs and management of the Company and have the power to approve most
actions requiring stockholder approval. Such a high level of ownership may have
the effect of delaying, deferring or preventing a change in the control of the
Company.

The Indenture (the "Indenture"), dated as of April 7, 1993, between the
Company and Continental Stock Transfer & Trust Company, as Trustee (the
"Trustee"), relating to the Company's 11% Senior Notes due 2000 (the "Senior
Notes"), provides for the immediate acceleration of principal and interest due
on all the Senior Notes in the event of a "Change of Control" (as defined
therein). The Indenture defines a "Change in Control" as the acquisition by any
person or entity (a "Person") or affiliated group of at least 55% of the
aggregate voting power of all classes of capital stock of the Company entitled
to vote generally in the election of directors of the Company, excluding from
such calculation shares held by any Person that were issued to such Person in
its reorganization under Chapter 11 of the United States Bankruptcy Code
completed in 1993 (the "Restructuring") to the extent that such Person is the
acquiror or a member of such affiliated acquiring group.

21
<PAGE>

SELECTED FINANCIAL INFORMATION

The historical information listed below for the five years ended October
28, 1995 has been derived from the Company's Consolidated Financial Statements
audited by Coopers & Lybrand L.L.P., whose report with respect to the three
years ended October 28, 1995 appears elsewhere in the Proxy Statement and
contains explanatory paragraphs regarding the uncertainty of the Company's
ability to continue as a going concern and the Company's adoption of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and the
restatement of the Consolidated Financial Statements. The historical information
listed below is presented on a comparative basis after giving effect to the
Restructuring and the discontinuation of several operations over the course of
such five-year period. (See Notes 3 and 4 to the Consolidated Financial
Statements for a discussion of these transactions.) The information herein
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto (see pages 39-61) and other financial information appearing
elsewhere in the Proxy Statement. The Selected Financial Information for the
twenty-six weeks ended April 27, 1996 and April 29, 1995 is unaudited, but, in
the opinion of management, includes all adjustments consisting of normal
recurring accruals necessary for a fair presentation of the results of
operations for these periods. The operating results for the twenty-six weeks
ended April 27, 1996 are not necessarily indicative of operating results for the
full year.

<TABLE>
<CAPTION>
Twenty-six Weeks Ended Fiscal Years Ended
-------------------- -------------------------------------------------------------
April 27, April 29, Oct. 28, Oct. 29, Oct. 30, Oct. 31, Oct. 26,
1996 1995 1995 1994 1993 1992 1991
-------- -------- --------- --------- --------- --------- ---------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Results from continuing
operations:
Net sales ..................... $ 54,047 $ 72,105 $ 150,297 $ 162,256 $ 147,850 $ 159,427 $ 152,509
Income (loss) from continuing
operations before extraordinary
item .......................... (4,664) (1,737) (29,330) 2,470 (23,810) (3,609) (5,779)
Income (loss) from discontinued
operations .................... -- -- -- (466) 720 (6,214) 1,394
Gain (loss) on dispositions of
discontinued operations ....... -- -- -- 4,474 261 400 9
Net income (loss) ............... (4,644) (1,737) (29,330) 6,478 (11,441) (9,423) (4,376)
Working capital (deficit) ....... (14,531) 33,315 (10,566) 15,980 20,620 (41,962) 24,707
Total assets .................... 22,687 65,408 35,524 58,492 72,865 90,289 100,234
Long-term liabilities ........... 801 38,129 842 19,994 45,968 2,462 64,544
Stockholders' equity (deficit) .. (11,116) 20,737 (6,858) 22,464 15,590 18,109 26,630
Primary per share common
stock data:
Income (loss) from continuing
operations ................... $ (.43) $ (.16) $ (2.69) $ .23 $ (3.49) $ (1.82) $ (2.57)
Net income (loss) ............. $ (.43) $ (.16) $ (2.69) $ .61 $ (1.68) $ (3.80) $ (2.09)
Cash dividends ................ -- -- -- -- -- -- --
</TABLE>

See Notes 3 and 4 to the Consolidated Financial Statements for information
regarding the Restructuring and discontinued operations.

22
<PAGE>

PRO FORMA FINANCIAL INFORMATION

The Pro Forma Unaudited Consolidated Balance Sheet presents the historical
Consolidated Balance Sheet of the Company as if the sale of substantially all of
the assets of Rymer Seafood pursuant to the Asset Purchase Agreement was
consummated as of April 27, 1996. The Pro Forma Unaudited Consolidated
Statements of Operations for the twenty-six weeks ended April 27, 1996 and the
Pro Forma Unaudited Consolidated Statements of Operations for the fiscal year
ended October 28, 1995 are presented assuming that the sale of substantially all
of the assets of Rymer Seafood pursuant to the Asset Purchase Agreement was
consummated at the opening of business on October 30, 1994.

The following pro forma financial information should be read in conjunction
with the Consolidated Financial Statements and Notes thereto. The pro forma
financial information is not necessarily indicative of the results of operations
of the Company as they may be in the future or as they might have been had the
Sale been effective on the dates indicated.

23
<PAGE>

RYMER FOODS INC.

PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET

The following Pro Forma Unaudited Consolidated Balance Sheet as of April
27, 1996 has been prepared on the basis set forth in the Notes to the Pro Forma
Unaudited Consolidated Financial Statements.

<TABLE>
<CAPTION>
At April 27, 1996
-----------------------------------------------
Consolidated Pro Forma Consolidated
Historical Adjustments Pro Forma
------------ ----------- ------------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Receivables, net ............................. $ 7,349 $ (4,661)(a) $ 2,688
Inventories .................................. 10,660 (5,695)(a) 4,965
Other ........................................ 462 (13)(a) 449
-------- -------- --------
TOTAL CURRENT ASSETS ..................... 18,471 (10,369) 8,102
-------- -------- --------
PROPERTY, PLANT AND EQUIPMENT:
Buildings and improvements ................... 1,735 -- 1,735
Machinery and equipment ...................... 6,871 (210)(a) 6,661
-------- -------- --------
8,606 (210) 8,396
Less accumulated depreciation and amortization 6,703 (174)(a) 6,529
-------- -------- --------
1,903 (36) 1,867
OTHER:
Note receivable, net of discount ............. -- 983(b) 983
Assets held for sale or lease ................ 1,600 -- 1,600
Other ........................................ 713 -- 713
-------- -------- --------
$ 22,687 $ (9,422) $ 13,265
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt:
Banks ...................................... $ 8,344 $ (6,399)(a)(c) $ 1,945
Senior Notes ............................... 19,765 -- 19,765
Other ...................................... 186 -- 186
Accounts payable ............................. 1,504 (1,024)(a) 480
Accrued liabilities .......................... 3,203 (479)(a)(d) 2,724
-------- -------- --------
TOTAL CURRENT LIABILITIES ................ 33,002 (7,902) 25,100
-------- -------- --------
LONG TERM DEBT:
Other ........................................ 70 -- 70
OTHER NON-CURRENT LIABILITIES .................. 731 -- 731
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Common Stock, $1 par--20,000,000 shares
authorized; 10,754,086 shares outstanding
after deducting treasury shares of 225,031 ... 10,754 -- 10,754
Additional paid-in capital ..................... 44,363 -- 44,363
Retained deficit ............................... (66,233) (1,520)(a) (67,753)
-------- -------- --------
TOTAL STOCKHOLDERS' DEFICIT .............. (11,116) (1,520) (12,636)
-------- -------- --------
$ 22,687 $ (9,422) $ 13,265
======== ======== ========
</TABLE>

24
<PAGE>

RYMER FOODS INC.

PRO FORMA UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Twenty Six Weeks Ended April 27, 1996
-----------------------------------------------
Consolidated Pro Forma Consolidated
Historical Adjustments Pro Forma
------------ ----------- ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Net sales .................................... $ 54,047 $(31,379)(a) $ 22,668
Cost of sales ................................ 52,537 (29,620)(a) 22,917
-------- -------- --------
Gross profit ............................... 1,510 (1,759) (249)
Selling, general and administrative expenses . 3,689 (1,176)(a) 2,513
-------- -------- --------
Operating loss ............................... (2,179) (583) (2,762)
Interest expense ............................. 2,486 (485)(a)(b) 2,001
Other income ................................. (1) (65)(a)(c) (66)
-------- -------- --------
Loss from continuing operations .............. $ (4,664) $ (33) $ (4,697)
======== ======== ========
</TABLE>

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

<TABLE>
<CAPTION>
Fiscal Year Ended October 28, 1995
-----------------------------------------------
Consolidated Pro Forma Consolidated
Historical Adjustments Pro Forma
------------ ----------- ------------
(in thousands, except per share amounts)
<S> <C> <C> <C>
Net sales .................................... $ 150,297 $(70,377)(a) $ 79,920
Cost of sales ................................ 143,134 (67,086)(a) 76,048
--------- -------- --------
Gross profit ............................... 7,163 (3,291) 3,872
Selling, general and administrative expenses . 11,151 (2,109)(a) 9,042
Restructuring charge ......................... 761 -- 761
Goodwill writedown ........................... 20,377 -- 20,377
--------- -------- --------

Operating loss ............................... (25,126) (1,182) (26,308)
Interest expense ............................. 4,665 (999)(a)(d) 3,666
Other income ................................. (461) (133)(a)(e) (594)
--------- -------- --------
Loss from continuing operations .............. $ (29,330) $ (50) $(29,380)
========= ======== ========
</TABLE>

25
<PAGE>

RYMER FOODS INC.

NOTES TO PRO FORMA UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)

Note 1 - Pro Forma Unaudited Consolidated Financial Statement Basis of
Presentation

The pro forma unaudited consolidated financial statements present the
historical consolidated financial statements of the Company adjusted for the
sale of substantially all of the assets of Rymer Seafood pursuant to the Asset
Purchase Agreement.

Basis of Presentation

The Pro Forma Unaudited Consolidated Balance Sheet presents the historical
Consolidated Balance Sheet of the Company as if the above transaction was
consummated as of April 27, 1996. The Pro Forma Unaudited Consolidated
Statements of Operations present the historical Consolidated Statements of
Operations of the Company for the twenty-six weeks ended April 27, 1996 and the
fiscal year ended October 28, 1995 as if the transactions set forth in the Notes
to the Pro Forma Consolidated Financial Statements had occurred October 30,
1994. All non-recurring charges or credits related to the sale of Rymer Seafood
have been excluded from the presentation of pro forma loss from continuing
operations.

Note 2 - Pro Forma Unaudited Consolidated Statements of Operations

(a) To reflect Rymer Seafood as
a discontinued operation

(b) Reduction of continuing operating
interest expense due to pay down of
revolving line of credit ............................. $ (60)
=====

(d) Reduction of continuing operations
interest expense due to paydown
of revolving line of credit .......................... $(120)
=====

(e) Interest income from Purchase Note Receivable ........ $(120)
=====
Note 3 - Pro Forma Unaudited Consolidated Balance Sheet

(a) Record sale of substantially all of the
assets of Rymer Seafood and record
a loss on disposition of $1,520,000

(b) Record Purchase Note receivable of
$1,500,000, recorded at a 34% discount
to its face amount ................................ $ 983
=======

(d) Reduction in accrued liabilities
for payment of expenses associated
with the sale of Rymer Seafood .................... $ (215)
=======

26
<PAGE>

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

Cautionary Statement

The statements in this Proxy Statement, including in this Management's
Discussion and Analysis, that are forward looking are based upon current
expectations and actual results may differ materially. Therefore, the inclusion
of such forward looking information should not be regarded as a representation
by the Company that the objectives or plans of the Company will be achieved.
Such statements include, but are not limited to, the Company's expectations
regarding future expenses, capital liquidity position, plans to restructure,
reductions in inventory and outstanding debt, compliance with financial
covenants and use of proceeds. Forward looking statements contained in this
Proxy Statement, including in this Management's Discussion and Analysis, involve
numerous risks and uncertainties that could cause actual results to differ
materially, including but not limited to the effect of changing economic
conditions, business conditions and growth in the meat industry, the Company's
ability to maintain its lending arrangements, or if necessary, access external
sources of capital, implementing current restructuring plans and accurately
forecasting capital expenditures. In addition, the Company's future results of
operations and financial condition may be adversely impacted by various factors.
Certain of these factors are described in the description of the Company's
business, operations and financial condition contained in this Proxy Statement.
Assumptions relating to budgeting, marketing, product development and other
management decisions are subjective in many respects and thus susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause the Company to alter its marketing,
capital expenditure or other budgets, which may in turn affect the Company's
financial position and results of operations.

General

The Company's consolidated results from continuing operations are generated
by its Meat processing operation and its Seafood importing and distribution
segment.

Going Concern

The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 2 to
the consolidated financial statements, certain conditions raise substantial
doubt about the Company's ability to continue operating as a going concern. The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

Management believes that the Company's future success is dependent upon
reversing the sales decline experienced in 1995 and the first half of 1996, on
the continued reduction of operating costs and on the success of negotiations
with its major lenders. The Company is pursuing new sales opportunities while
continuing to streamline its production process and to reduce other costs. In
addition, negotiations with the Company's lenders are continuing. Significant
expense and personnel reductions implemented during the fourth quarter of 1995,
including an approximate 20% reduction of the Company's work force, are expected
to reduce wage, salary and other expenses by approximately $4.0 million in 1996.

In addition, the completion of the sale of Rymer Seafood is expected to
improve the Company's liquidity position. The cash infusion from such sale will
allow the Company to pay down a portion of debt and may provide working capital
flexibility to help the Company operate more efficiently. However, there can be
no assurances that the proceeds of the Sale, if consummated, will be available
to the Company for any specific purpose.

First Half of 1996 versus First Half of 1995

Consolidated sales for the first half of 1996 of $54.0 million decreased
from the first half of 1995 by $18.1 million or 25%. Sales decreased primarily
due to reduced sales volume due to increased competition. A significant portion
of the sales volume decrease resulted from the termination of sales to a major
customer during the second quarter of 1995. Sales of the Company's meat
processing segment decreased by $18.8 million or 45% and sales of its seafood
importing and distribution segment increased by $0.7 million.

The Company experienced a decline in unit sales of approximately 43% in its
meat segment primarily due to the loss of certain major customers and increased
competition. In addition, sales decreased partially as a result of the Company's

27
<PAGE>

customers experiencing sales declines. Many restaurant chains have experienced
sales declines due to ever-increasing competitive pressures in the casual dining
segment of the foodservice market and due to adverse weather conditions in
certain areas of the country. The Company experienced a decrease of 4.3% in the
average selling price primarily due to price reductions.

As compared to 1995, consolidated cost of sales decreased by $13.6 million
or 20.5% while total gross profit decreased by $4.5 million or 74.8%. As a
percentage of sales, the gross margin decreased to 2.8% as compared to 8.3% in
1995.

Gross profit decreased compared to 1995 primarily due to decreased unit
sales. The Company was unable to achieve reductions in certain factory expenses
proportionate to the decline in sales. Factory expenses declined by 24% as
compared to a 43% decrease in unit sales. The Company experienced increases in
maintenance and depreciation expense. Increased maintenance and building
improvements have been necessary primarily due to the age and condition of the
current Meat facility. The Company is depreciating the building improvements
over the building lease term which is through July 1996. Management is currently
negotiating a new lease for its existing facility. Management is also pursuing
the possibility of relocating in the future. Management is continuing to
streamline its operations. The hourly work force has declined by approximately
35% at the end of the first half of 1996 versus 1995.

Selling, general and administrative expenses decreased by $2.2 million or
37% in 1996 as compared to 1995. Administrative expenses decreased by $1.7
million. A reduction in goodwill amortization of $0.6 million was experienced as
compared to the first half of 1995 due to the required writedown of goodwill
recorded in the Company's 1995 fourth quarter. Reductions in salaries and
related expenses due to headcount reductions at the meat processing operation
and of corporate personnel contributed to the majority of the remaining decrease
of $1.1 million. Selling expenses decreased by $0.5 million primarily due to a
reduction in expenses related to the Company's retail products sold in grocery
and wholesale club stores and reduced salary expenses due to decreases in
personnel.

Interest Expense

Interest expense increased by $314,000 or 14.5% as compared to 1995. This
increase was attributable to increased interest expense on the Company's 11%
Senior Notes. On December 15, 1995, the Company announced that, as permitted by
the terms of its 11% Senior Notes due December 15, 2000, it had elected to make
its December 15, 1995 interest payment on its Senior Notes by issuing additional
Senior Notes in a principal amount equal to the interest payment due. According
to the Senior Note Indenture, such an election requires the Company to pay its
interest at a rate of 18% versus the 11% rate applicable if the interest is paid
in cash. The Company did not pay its June 15, 1996 Senior Note interest payment
and there is doubt whether the Company will have funds available to pay its
December 15, 1996 Senior Note interest payment in cash. Accordingly, the Company
is accruing interest expense on the Senior Notes at a rate of 18% for fiscal
1996. The Company recorded an additional interest charge of approximately
$690,000 in the first half of 1996 related to the increase in the interest rate
on the Senior Notes. After considering the increase in Senior Note interest of
approximately $690,000, interest expense decreased by approximately $376,000
compared to 1995 due primarily to lower interest rates on the credit line
facility due to the replacement of the higher-cost former credit facility with
BA Business Credit Inc. with the LaSalle credit facility on April 7, 1995.

The Company may also seek to restructure the terms of its 11% Senior Notes
in an effort to improve its liquidity. This restructuring could involve the
conversion of some or all of the Company's Senior Notes into equity. There can
be no assurances that such a restructuring will occur.

Other Income

The Company earned other income of $307,000 in 1995 which was comprised
primarily of consulting fees. The Company earned other income in 1996 of $1,000
consisting primarily of interest income.

28
<PAGE>

Income Taxes

In both 1996 and 1995, no provision for income taxes was recorded due to
the loss from operations.

Fiscal 1995 Compared with Fiscal 1994
1995 1994
-------- --------
(in thousands)
Net Sales:
Processing .............................. $ 79,921 $ 106,251
Seafood Importing and Distributing ...... 70,376 56,005
--------- ---------
Total ............................. $ 150,297 $ 162,256
========= =========
Gross Profit:
Processing .............................. $ 3,872 $ 14,299
Seafood Importing and Distributing ...... 3,291 3,048
--------- ---------
Total ............................. $ 7,163 $ 17,347
========= =========
Operating Income (Loss):
Processing .............................. $ (4,439) $ 6,005
Seafood Importing and Distributing ...... 15 457
--------- ---------
(4,424) 6,462
Corporate Expenses ......................... (20,702) (576)
--------- ---------
Total ............................. $ (25,126) $ 5,886
========= =========
Income (loss) from continuing operations
before extraordinary item ............... $ (29,330) $ 2,470
========= =========

Consolidated sales for 1995 of $150.3 million decreased from 1994 by $12.0
million or 7.4%. Sales decreased by $26.3 million or 24.8% at the Meat
operation. Sales increased at the Seafood operation by $14.4 million or 25.7%.

At the Meat operation, sales volume accounted for approximately 90% of the
sales decrease with lower prices and changes in the sales mix accounting for the
remaining decrease. Sales decreased primarily due to termination of sales to a
major customer during the second quarter of 1995. The Company also experienced a
significant decline of approximately 22% in unit sales to national restaurant
chains. This decrease was primarily due to reduced sales volume due to increased
competition. In addition, sales decreased partially as a result of the Company's
customers experiencing sales declines. Many restaurant chains have experienced
sales declines due to ever-increasing competitive pressures in the casual dining
segment of the foodservice market. The sales decrease to national restaurant
chains was partially offset by an increase of 29% in unit sales to distributors.
The Company experienced a decline of 3.2% in the average selling price primarily
due to a lower priced mix of products sold in 1995 as compared to 1994.

The increase in sales at the Seafood operation was due to increased volume.
In 1995, the Seafood operation started buying shrimp from Equador which provided
a new product line that accounted for the increases in sales.

As compared to 1994, consolidated cost of sales decreased by $1.8 million
or 1.2%. At the Meat operation, compared to 1994, cost of sales decreased by
$15.9 million or 17.3% while gross profit decreased by $10.4 million or 73%. As
a percentage of sales, the gross margin decreased to 4.8% as compared to 13.5%
in 1994.

At the Seafood operation, cost of sales increased by $14.1 million or
26.7%. The increased cost of sales was proportionate to the increased sales
volume from the Ecuadorian shrimp.

As compared to 1994, the gross profit decreased by $10.2 million or 58.7%.
At the Meat operation, gross profit decreased compared to 1994 primarily due to
decreased unit sales along with mix changes in sales to national restaurant
chain accounts and higher raw material costs. In addition, the Meat operation
experienced inefficiencies in production related to changes in personnel. These
inefficiencies were addressed in connection with the reorganization of
operations and personnel implemented by the Company in October 1995.

At the Seafood operation, the gross profit increased by $.2 million or 8%.
The increase in profit is attributable to the increased volume.

29
<PAGE>

Selling, general and administrative expenses decreased by $310,000 or 3%.
Administrative expenses remained approximately equal to 1994 as decreases in
salaries and related expenses were offset by increased bad debt and legal
expenses. Selling expenses decreased primarily due to a reduction in expenses
related to the Company's retail products sold in grocery and wholesale club
stores which were partially offset by increased salary expenses.

At the end of the first quarter of 1995, certain issues between the Company
and CFM resulted in certain lawsuits being filed. On June 28, 1995, the Company
announced that it had reached a settlement with CFM of the litigation pending
between the two companies. As a result of the settlement, all lawsuits between
the companies were dismissed and no further actions will be taken by either
company on these matters. The allowance for doubtful accounts established prior
to and during the Company's 1995 second quarter contained sufficient reserves to
resolve the matters in dispute. All terms of the settlement are confidential.
The Company does not expect to have a supply relationship with CFM in the
future. CFM had been one of Rymer's major customers, and during its 1994 fiscal
year CFM accounted for approximately 8% of Rymer's sales. During 1995, CFM
accounted for approximately 2% of the Company's sales.

Restructuring Charge

On October 5, 1995, the Company announced that it had retained the
financial advisory and turnaround firm of Kirkland Messina, Inc. (KM) to assist
the Company in developing a comprehensive financial and operating plan designed
to return the Company to profitability. KM was engaged for a three month period
for a monthly fee plus expenses. In addition, as part of KM's compensation, the
Company issued KM 500,000 warrants to purchase common stock of the Company at an
exercise price in cash of $1.675 per share.

The Company announced on October 10, 1995 that it had begun implementation
of a comprehensive reorganization plan of its operations and personnel in order
to return to profitability. As part of the reorganization, the Company announced
an approximate 20 percent reduction of its work force.

During the fourth quarter of 1995, the Company recorded a restructuring
charge of $761,000 for severance payments and fees and expenses of the financial
advisory firm of KM.

Interest Expense

Interest expense increased by $703,000 or 17.7% as compared to 1994. In
connection with the reclassification of the operating results of the Company's
chicken processing operations to discontinued operations in the first quarter of
1994, a portion of interest expense related to the Company's unsecured debt was
allocated to discontinued operations. Interest expense on unsecured debt
allocated to the loss from discontinued operations amounted to $185,000 in the
first quarter of 1994. After giving effect to this allocation, interest expense
increased by $518,000 compared to 1994.

This increase was primarily attributable to increased interest expense on
the Company's 11% Senior Notes. On December 15, 1995, the Company announced
that, as permitted by the terms of its 11% Senior Notes due December 15, 2000,
it had elected to make its December 15, 1995 interest payment on its Senior
Notes by issuing additional Senior Notes in a principal amount equal to the
interest payment due. According to the Senior Note Indenture, such an election
requires the Company to pay its interest at a rate of 18% versus the 11% rate
applicable if the interest is paid in cash. Accordingly, the Company recorded an
additional interest charge of approximately $470,000 in the fourth quarter of
1995 related to this interest payment. This increase in Senior Note interest was
partially offset by a reduction in Senior Note interest of approximately
$289,000 related to reductions in the outstanding principal amount of the
Company's 11% Senior Notes. The Company redeemed $1,050,000 of these notes in
June 1994 and $2,250,000 in December 1994. After considering the increase in
Senior Note interest of approximately $181,000, interest expense increased by
approximately $377,000 compared to 1994 due primarily to higher borrowings under
bank lines of credit and increases in the prime lending rate charged by banks as
compared to 1994.

The Company may also seek to restructure the terms of its 11% Senior Notes
in an effort to improve its liquidity. There can be no assurances that such a
restructuring will occur.

30
<PAGE>

Other Income

The Company earned other income of $461,000 in 1995 which was comprised
primarily of consulting fees.

Restructuring Expense Resulting from Goodwill Writedown

During the fourth quarter of 1995, the Company recorded a goodwill
writedown of $20,377,000 (See Note 1 to the Consolidated Financial Statements).

This writedown eliminates all remaining goodwill of the Company. The asset
of goodwill was determined to have been impaired because of the current
financial condition of the Company and the Company's inability to generate
future operating income without substantial sales volume increases which are
uncertain. Moreover, anticipated future cash flows of the Company indicate that
the recoverability of the asset is not reasonably assured.

Discontinued Operations and Proposed Sale of Rymer Seafood

The Company continues to carry its idle Plant City, Florida property at its
estimated net realizable value of $1.6 million. In January 1996, the Company
entered into an agreement to lease the Plant City facility for a period of ten
years. The preliminary lease agreement was cancelled in June 1996. As a result
the property continues to be marketed for sale or lease. Management believes,
based on a recent estimate of the property's value that the carrying value is
appropriate. The Company will continue to evaluate the carrying value in the
future.

On January 5, 1996, the Company announced that it had signed an agreement
in principle to sell the assets of Rymer Seafood (Sale of Rymer Seafood) to an
entity to be formed by the current President of Rymer Seafood. The agreement
specifies that the sales price for the assets, based on balances as of April 27,
1996, would be approximately $9.5 million, consisting of $1.5 million in cash,
$1.5 million in a ten year subordinated note of the buyer and the assumption by
the buyer of approximately $5.1 million in bank debt and $1.4 million of other
current liabilities. Consummation of the transaction is subject to a variety of
conditions, including approval by the holders of 66 2/3% of the outstanding
Common Stock of the Company and the holders of a majority of Rymer's outstanding
11% Senior Notes. The Company plans to seek these approvals and, if received, to
complete the Sale of Rymer Seafood during the fourth quarter of 1996.

The Company previously reported its Rymer Seafood segment as a discontinued
operation. As a result of discussions with the staff at the Securities and
Exchange Commission, the Company has reclassified these operations to continuing
operations and has reversed the expected loss previously recorded in 1995. The
Company expects to record a loss on the sale of Rymer Seafood of approximately
$1.5 million, which will be recorded as of the measurement date which is
expected to be in the fourth quarter of 1996. Absent this proposed sale,
management believes that the carrying value of the Seafood assets is recoverable
in the course of normal operations.

Income Taxes

In 1995, no provision for income taxes was recorded due to the Company's
loss.

Effective with the first quarter of 1994, the Company adopted the
provisions of SFAS 109. (See Notes 1 and 8 to the Consolidated Financial
Statements.)

The Company recognizes the deferred tax benefit related to its deferred tax
asset within its income tax provision as income is earned and the benefits are
realized.

31
<PAGE>

Fiscal 1994 Compared With Fiscal 1993

The Company's consolidated results by business segment are summarized as
follows:

1994 1993
-------- --------
(in thousands)
Net Sales:
Processing .............................. $ 106,251 $ 99,642
Seafood Importing and Distributing ...... 56,005 48,208
--------- ---------
Total ............................. $ 162,256 $ 147,850
========= =========
Gross Profit:
Processing .............................. $ 14,299 $ 12,487
Seafood Importing and Distributing ...... 3,048 2,405
--------- ---------
Total ............................. $ 17,347 $ 14,892
========= =========
Operating Income:
Processing .............................. $ 6,005 $ 4,088
Seafood Importing and Distributing ...... 457 (476)
--------- ---------
6,462 3,612
Corporate Expenses ......................... (576) (2,823)
--------- ---------
Total ............................. $ 5,886 $ 789
========= =========
Income (loss) from continuing operations
before extraordinary item .............. $ 2,470 $ (23,810)
========= =========

Consolidated sales for 1994 of $162.3 million increased from 1993 by $14.4
million or 9.7%. Sales increases were experienced by both the Meat processing
operation and the Seafood operation. On a consolidated basis, sales volume
accounted for approximately 12% of the sales increase while higher prices along
with changes in the sales mix account for approximately 88% of the sales
increase.

The Meat operation comprised approximately $6.6 million of the sales
increase. Sales volume for the Meat operation increased from 1993 by
approximately 6.8% while average selling prices increased by approximately 6.2%.
A significant increase in sales to certain foodservice customers and increased
sales of retail products were partially offset by a decline in steakhouse sales.
Home delivery sales increased by 3% compared to a year ago while other retail
sales approximately doubled as compared to 1993.

The Seafood operation experienced an increase in sales of $7.8 million or
16.2%. This sales increase was primarily due to higher average selling prices
which resulted from a supply shortage. Shortages were especially acute from
China, which produces primarily smaller sized shrimp. Larger sized shrimp, which
are more expensive, were in adequate supply and thus comprised a larger
percentage of sales. In addition, a 4% increase in sales volume accounted for
approximately 25% of the sales increase. Stronger distributor sales offset
decreased sales to restaurants.

As compared to 1993, consolidated cost of sales increased by $12.0 million
or 9.0% while total gross profit increased by $2.5 million or 16.5%. As a
percentage of sales, the consolidated gross margin increased to 10.7% as
compared to 10.1% in 1993.

Gross profit for the Meat operation increased by $1.8 million or 14.5%
primarily due to higher selling prices along with lower raw material costs. The
Company's improved liquidity position in 1994 as compared to 1993 enabled
management to purchase raw materials at favorable prices primarily due to the
improved timing of inventory purchases. The gross profit margin earned by Meat
rose to 13.5% in 1994 from 12.5% in 1993.

Gross profit increased for the Seafood operation by $0.6 million or 27%
compared to 1993 as shown by an increase in the gross profit percentage earned
to 5.4% from 5.0% in 1993. The increase in the gross profit margin percent
earned was primarily due to rising selling prices coupled with slower rising
supply costs.

Selling, general and administrative expenses decreased in total by $0.6
million or 5.1% compared to 1993. Administrative expenses decreased by $1.3
million primarily resulting from lower bad debt expense and lower legal and
other professional consulting fees. Selling expenses increased by $0.7 million
primarily due to higher brokerage expense and increased travel expenses related
to increased sales revenues.

32
<PAGE>

The Company incurred charges during 1993 of $2.0 million relating to the
1993 financial restructuring. Restructuring charges consisted primarily of
professional fees of the Company's investment advisors, legal and accountants.

Restructuring Expense Resulting From Goodwill Writedown

In connection with the 1993 Restructuring, goodwill was adjusted to its
estimated fair value at April 7, 1993 of approximately $29.1 million. This
resulted in a writedown of $20.8 million of goodwill. (See Note 3 to the
Consolidated Financial Statements.)

Interest Expense

Interest expense related to continuing operations increased by $147,000 or
3.9% in 1994 as compared to 1993. The increase in interest expense was primarily
attributable to a greater allocation of interest to the Company's discontinued
Chicken operations in 1993.

In connection with the reclassification of the operating results of the
Company's chicken processing operations to discontinued operations, a portion of
interest expense related to the Company's unsecured debt was allocated to
discontinued operations. Interest expense on unsecured debt allocated to
discontinued operations amounted to approximately $185,000 in 1994 versus
$1,218,000 in 1993.

After giving effect to the allocation described above, interest expense
decreased by $886,000 compared to 1993 reflecting primarily the effect of lower
borrowings under the Company's bank lines of credit offset partially by the
effect of increases in the prime lending rate charged by banks in 1994.
Borrowings decreased significantly due to the use of proceeds from the sale of
Rymer Chicken during the first quarter of 1994 to reduce borrowings under lines
of credit.

Other Income

The Company earned other income of $621,000 in 1994 which was comprised
primarily of consulting fees.

Discontinued Operations

The Company sold its Van Buren, Arkansas chicken processing operations
("Rymer Chicken") during the first quarter of 1994 at a gain of $4 million
before income taxes. During the first quarter of 1994, the Company also sold
stock (which it had received in connection with the sale of its Murry's, Inc.
subsidiary in 1989) at a gain of $0.7 million before income taxes. The Company
recorded a provision for income taxes related to these dispositions of $0.2
million which resulted in a net gain on dispositions of discontinued operations
in 1994 of $4.5 million after income taxes. (See Note 4 to the Consolidated
Financial Statements.)

The Company incurred losses related to its discontinued chicken processing
operations during 1994 of $0.5 million compared to income of $0.7 million in
1993. The 1994 loss reflects operating results through the sale date of December
10, 1993 while the 1993 results are for the entire fiscal year. The decrease in
income reflects a decrease in sales of $76 million or 89% compared to 1993 as
well as increased raw material costs and increased operating expenses in
preparation for the sale of the operation.

During 1992, the Company decided to place its idle Plant City, Florida
chicken facility and equipment for sale.

During the fourth quarter of 1993, the Company recognized a loss of
$344,000 to reduce the carrying value of the Plant City property to its
estimated net realizable value of $1.6 million. This loss was partially offset
by income of $272,000 from the elimination of reserves established during 1992
for Plant City expenses. The net loss related to the Plant City facility of
$72,000 is included within the gain on dispositions of discontinued operations
on the Consolidated Statement of Operations for 1993.

Other Discontinued Operations

The Company eliminated reserves relating to other discontinued operations
totalling $333,000 in 1993 with $250,000 of this amount reflecting a reduction
in the reserve for Murry's, a business sold in 1989.

33
<PAGE>

Income Taxes

The 1994 provision for income taxes amounted to $0.3 million which related
primarily to the gain arising from the sale of Rymer Chicken in the first
quarter. In 1993, no provision for income taxes was recorded due to the loss
from operations.

Extraordinary Item - Restructuring of Debentures

In connection with the Restructuring recorded during the second and fourth
quarters of 1993, the Company recorded the exchange of Debentures (net of
unamortized debt discount) of $36,962,000 for approximately $20,000,000
principal amount of Senior Notes and 4,661,150 shares of common stock valued at
$1.64 per share. This transaction resulted in an extraordinary gain on
Restructuring of $11,388,000. After issuance of these additional shares, the
former Debentureholders received approximately 45% of the common stock of the
Company.

Liquidity and Capital Resources

The Company makes sales primarily on a seven to thirty day balance due
basis. Purchases from suppliers have payment terms generally ranging from wire
transfer to fourteen days including the use of letters of credit for purchases
of imported seafood.

The Company's cash management techniques involve the use of zero balance
disbursement accounts. Check clearings are covered by advances from the
Company's credit lines. Thus, in the absence of excess funds classified as cash
equivalents, the Company's cash balances are credit balance accounts
representing outstanding checks. The Company classified such credit balances as
accounts payable in the Consolidated Financial Statements as of October 28, 1995
and April 27, 1996.

On April 7, 1995, the Company replaced its credit facility of $20 million
provided by BA Business Credit, Inc. (BABC) and $12.5 million provided by
LaSalle with a $25 million credit facility provided by LaSalle. The credit line
facility, with an initial term of two years, has lower interest rates and
reduced lending restrictions as compared to the former facilities. The LaSalle
credit facility has an annual interest rate of 1/2% over Prime as compared to an
annual rate of 2% over Prime on the former BABC facility and 1% over Prime on
the former LaSalle facility.

As of January 27, 1996, October 28, 1995 and July 29, 1995, the Company was
in violation of certain financial covenants under its Loan and Security
Agreement with LaSalle. LaSalle agreed to waive these covenant violations for
the third quarter of 1995. The Company was charged a financing fee in connection
with execution of this waiver.

In response to the October 28, 1995 violations, on January 5, 1996, LaSalle
and the Company entered into a Forbearance Agreement and Amendment. Under this
agreement, which was subsequently amended, LaSalle agreed to temporarily forbear
from exercising its remedies under the Loan and Security Agreement. In addition,
the Loan Agreement was amended to, among other things, reduce advance rates for
inventories and, for purposes of computing interest, loan payments are applied
by the bank on the second business day after available funds are received.

On February 7, 1996, LaSalle and the Company entered into an Amendment to
the Forbearance Agreement (the "Letter Agreement"). In the Letter Agreement,
LaSalle agreed to waive certain financial covenant violations and the resulting
events of default as of October 28, 1995. The Forbearance Agreement and the
Letter Agreement were executed on the assumption that no other events of default
existed under the Loan Agreement. As discussed below, the Company subsequently
determined that another event of default under the Loan Agreement existed at the
time of the execution of these agreements. This event of default related to the
non-payment of certain notes payable to former executives of the Company (the
"Affiliate Debt Default"). On February 22, 1996, the Company received a letter
from LaSalle confirming that the waiver as of October 28, 1995 contained in the
Letter Agreement was valid for the specified events of default despite the
subsequent determination of the Affiliate Debt default. The Company remains in
default under the LaSalle agreement, however, due to non-payment of the
Affiliate Debt.

In the Letter Agreement, LaSalle also agreed to amend the Loan and Security
Agreement in order to revise the next test date for the financial covenants to
be as of February 24, 1996. On March 12, 1996, the Company and LaSalle entered
into an Amendment to Loan Agreement that modified certain provisions of the Loan
and Security Agreement between the Company and LaSalle, including covenants
relating to financial amounts and ratios. The Company was in compliance with
such financial covenants, as so modified as of February 24, 1996. However, there
is no assurance that the Company will remain in compliance with the covenants,
as modified. In particular, the Company is in violation of a covenant that

34
<PAGE>

limits the Company's cumulative loss through May 30, 1996 of the current fiscal
year. To date, LaSalle has not taken any action with regard to this violation;
however, there can be no assurance that LaSalle will not take action in the
future. Also, effective on June 27, 1996, the Company and LaSalle signed an
Amendment to the Loan Agreement that modified certain provisions including an
increase in the interest rate applied on the loan. LaSalle has the right, upon
the occurrence of an event of default, to terminate the credit facility and
declare all loans due and payable on demand. The Company's bank indebtedness and
indebtedness under the Senior Notes have been classified as current liabilities
at both April 27, 1996 and October 28, 1995.

In January of 1996, the Company did not make required payments of $255,000
under notes payable due to former executives ("Affiliate Debt"). The Affiliate
Debt is related to certain amended employment and consulting agreements between
the Company and the former executives (See Note 11 to the Consolidated Financial
Statements). The Company has deferred payment of this debt in order to conserve
cash for use in operation of its business. The Company intends to continue to
accrue interest on the debt at 9.5%. The non-payment of the Affiliate Debt
caused cross-defaults under the Loan and Security Agreement with LaSalle and
under the Senior Note Indenture. While LaSalle did not waive this default, no
action was taken by LaSalle as a result of the default. In March and April 1996,
the Company made partial principal payments to the former executives. The
Company has negotiated revised payment terms with the former executives whereby
the remaining debt due to them will be paid in installments.

In March of 1996, the Company entered into Supplement No. 1 to the
Indenture (the "Supplemental Indenture") with Continental Stock Transfer and
Trust Company as Trustee for the Senior Notes which was dated as of February 8,
1996. The Supplemental Indenture, which received the approval of a majority of
the Senior Note holders, amended the Indenture to exclude the non-payment of the
Affiliate Debt, and the resulting cross-default under any other debt that arises
by reason of non-payment of the Affiliate Debt, from the definition of events of
default. If another event of default occurs and continues under the Company's
bank agreement with LaSalle, however, it would constitute an event of default
under the Indenture, enabling the Trustee or the holders of 25% in aggregate
principal amount of the Notes to declare the Notes to be immediately due and
payable.

At April 27, 1996 and October 28, 1995, the Company had a bank loan of $3.2
million and $8.1 million, respectively, outstanding under its line of credit
with LaSalle for Rymer Meat. In addition, as of April 27, 1996 and October 28,
1995, $5.1 million and $8.2 million, respectively, was outstanding under the
LaSalle line of credit for Rymer Seafood. According to the proposed agreement to
sell Rymer Seafood, the loan balance for Rymer Seafood is to be assumed by the
buyers of Rymer Seafood.

On December 15, 1995, the Company announced that, as permitted by the terms
of its 11% Senior Notes due December 15, 2000, it had elected to make its
December 15, 1995 interest payment on its Senior Notes by issuing additional
Senior Notes in a principal amount equal to the interest payment due of
$1,632,000. According to the Senior Note Indenture, such an election requires
the Company to pay its interest at a rate of 18% versus the 11% rate applicable
if the interest is paid in cash. Accordingly, the Company recorded an additional
interest charge of approximately $470,000 in the fourth quarter of 1995 related
to this interest payment. There is doubt whether the Company will have funds
available to pay its June 15, 1996 or December 15, 1996 Senior Note interest
payments in cash. Accordingly, the Company is accruing interest expense on the
Senior Notes at a rate of 18% for fiscal 1996.

The Company had a net working capital deficit at April 27, 1996 of $14.5
million which is a decrease in working capital of $3.9 million as compared to a
working capital deficit of $10.6 million at October 28, 1995. The decrease was
primarily due to a decrease in current assets of $12.5 million partially offset
by a decrease in current liabilities of $8.5 million. Accounts receivable
decreased by $3.9 million primarily due to decreased sales. Inventories
decreased by $8.3 million due to decreased purchasing along with efforts by the
Company to reduce inventories in order to reduce debt. Other assets decreased by
$0.3 million due to the amortization of prepaid expenses. Current liabilities
decreased due to a decrease in bank loans of $8.0 million, a decrease in accrued
liabilities of $1.3 million, and decreases in accounts payable and other debt of
$0.4 million and $0.5 million, respectively. These decreases were partially
offset by an increase in the principal amount of Senior Notes of $1.6 million.
The decrease in accrued expenses is primarily attributable to the payment of
Senior Note Interest of $1.6 million on December 5, 1995 by the issuance of new
Senior Notes. Other long-term debt decreased due to the offset of notes payable
of approximately $406,000 against notes receivable of approximately the same
amount on January 2, 1996. The notes receivable were classified as a reduction
of stockholders' equity as they related to stock purchase agreements. In
addition, the Company made cash payments on other notes payable of $81,000.

35
<PAGE>

The Company had a net working capital deficit at October 28, 1995 of $11
million which is a decrease of $27 million as compared to working capital of $16
million at October 29, 1994. The decrease was primarily due to an increase in
current liabilities of $26 million. Decreases in cash, accounts receivable and
an increase in inventories net to a $1 million decrease.

Current liabilities increased primarily due to an increase in current
maturities of long term debt of $27.1 million. The classification of the
Company's Senior Notes of $18.1 million as current contributed $15.9 million of
the increase. Senior Notes of $2.2 million were classified as current at October
29, 1994. Under its Senior Note Indenture, the Company made a mandatory
redemption of its Senior Notes of $2,250,000 on December 29, 1994 using funds
available under bank lines of credit. The remaining increase was due primarily
to an increase in bank loans of $8.1 million. The Company's bank debt was
classified as current at October 29, 1994 due to the maturity of credit
agreements with BABC and LaSalle on April 7, 1995.

Assuming the necessary sales increases and cost improvements are achieved,
management expects LaSalle to continue to provide the Company with a credit line
facility. Availability under this facility, together with cash flows from
operations, are expected by management to provide sufficient resources to meet
its working capital needs through the next year. The anticipated future cash
flows of the Company may not be sufficient to retire the Senior Notes upon
maturity on December 15, 2000. Accordingly, the Company may seek to restructure
the terms of its 11% Senior Notes. There can be no assurances that such a
restructuring will occur. Furthermore, if a Senior Note restructuring should
occur, it would likely affect the equity capitalization of the Company.

The Company's Meat subsidiary had total lines of credit available under
notes payable of $3.7 million at April 27, 1996, $11.7 million at October 28,
1995 and $10.8 million at October 29, 1994 of which $0.5 million, $3.6 million
and $10.5 million, respectively, was unused. It is anticipated that proceeds
from the proposed Rymer Seafood sale will be used to repay a portion of the
LaSalle bank loan.

The Company's Seafood subsidiary had total lines of credit available under
notes payable of $9.0 million at April 27, 1996, $10.8 million at October 28,
1995, and $9.3 million at October 29, 1994 of which $1.5 million, $1.1 million
and $2.0 million, respectively, was unused.

Total availability under credit lines is reduced by the amount of letters
of credit outstanding. Letters of credit are used primarily for purchase of
seafood inventory from foreign sources. Rymer Seafood had letters of credit
outstanding totalling approximately $2.4 million at April 27, 1996 and $1.5
million at both October 28, 1995 and October 29, 1994. Rymer Meat had a letter
of credit of $0.3 million outstanding at October 29, 1994.

The Company has agreements with certain of its customers to sell
merchandise over the next year for specified prices. The Company's aggregate
commitment under sales agreements was approximately $3.6 million and $4.1
million at April 27, 1996 and October 28, 1995, respectively. The Company also
has agreements with certain of its suppliers to purchase raw materials. The
agreements extend for up to one year and provide the price and quantity of
materials to be supplied. The Company had purchase commitments of approximately
$1.6 million as of April 27, 1996 and $2.9 million as of October 28, 1995.

In the first quarter of 1994, the immediate families of certain former
members of senior management purchased certain raw material. This inventory was
sold to the Company as it was needed by the Company to fulfill sales
commitments. In the first quarter of 1994, the Company purchased all remaining
inventory held by these persons of approximately $1 million using proceeds from
the sale of Rymer Chicken.

At October 28, 1995, the Company had an operating loss carryforward for tax
reporting purposes of approximately $31.2 million. See Note 8 to the
Consolidated Financial Statements for expiration dates of the carryforwards. The
utilization of operating loss carryforwards will enhance future cash flow by
reducing cash outlays which would otherwise be required for income tax payments.

The Company anticipates a total of approximately $500,000 for capital
expenditures in 1996. The expenditures are primarily for planned improvements at
the Meat operation. There are no specific commitments outstanding related to
these planned expenditures.

36
<PAGE>

Seasonality

The quarterly results of the Company are affected by seasonal factors.
Sales are usually lower in the fall and winter.

Impact of Inflation

Raw materials are subject to fluctuations in price. However, the Company
does not expect such fluctuations to materially impact its competitive position.

Fourth Quarter Adjustments

1995

During the fourth quarter of 1995, the Company recorded a goodwill
writedown of $20.4 million. (See Note 1). This writedown eliminates all
remaining goodwill of the Company.

During the fourth quarter of 1995, the Company recorded an additional
interest charge of approximately $470,000. This charge was attributable to
increased interest expense on the Company's 11% Senior Notes. On December 15,
1995, the Company announced that, as permitted by the terms of its 11% Senior
Notes due December 15, 2000, it had elected to make its December 15, 1995
interest payment on its Senior Notes by issuing additional Senior Notes in a
principal amount equal to the interest payment due. According to the Senior Note
Indenture, such an election requires the Company to pay its interest at a rate
of 18% versus the 11% rate applicable if the interest is paid in cash.

1994

None

1993

During the fourth quarter of 1993, the Company recorded a charge of
$661,000 related to the restructuring of the Debentures which reduced the
extraordinary gain on Restructuring previously reported for a revised gain of
$11,388,000. The charge related to the issuance of an additional 402,960 shares
to the holders of the Debentures in order to eliminate the dilutive effect of
the issuance of common shares in payment of certain Restructuring expenses.

During the fourth quarter of 1993, the Company recorded an additional
Restructuring charge of approximately $600,000 consisting primarily of
professional fees of the Company's legal counsel, accountants.

The Company eliminated reserves related to discontinued operations
totalling $333,000 in the fourth quarter of 1993 with $250,000 of this amount
reflecting a reduction in the reserve for Murry's, a business sold in 1989. In
addition, an additional loss of $72,000 was recorded related to the disposition
of the Plant City facility.

New Accounting Pronouncements

The Company will implement the provisions of Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" in fiscal 1997. Management believes
that the adoption of these provisions will not have a material impact on the
financial conditions or results of the operations of the Company.

The Company will implement the provisions of Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-Based Compensation" (SFAS
#123) in fiscal 1997. The Company is currently reviewing its implementation
options under SFAS #123.

37
<PAGE>

MARKET PRICES AND DIVIDENDS

Market Prices

The Common Stock is listed on the New York Stock Exchange (the "NYSE")
(Symbol: RYR). The following table sets forth, for the fiscal quarters
indicated, the high and low sales prices of the Common Stock as reported on the
NYSE-Composite Tape. As of June 25, 1996, there were approximately 750 holders
of record of Common Stock and approximately 12 holders of record of the Senior
Notes.

High Low
---- ----
1996
First Quarter ...................... $1-1/2 5/8
Second Quarter ..................... 1 11/16
Third Quarter (2) .................. 15/16 11/16

1995
First Quarter ...................... 4 2-3/4
Second Quarter ..................... 3-1/8 1-3/4
Third Quarter ...................... 2-3/8 1-1/2
Fourth Quarter ..................... 2-1/2 1-1/4

1994
First Quarter ...................... 3-1/4 2
Second Quarter ..................... 2-3/8 1-3/4
Third Quarter ...................... 3-3/8 1-3/4
Fourth Quarter(1) .................. 4-3/8 2-5/8

- ---------------
(1) On October 28, 1994, a $376,000 note payable to a former Senior Note holder
was converted into 232,507 shares of the Company's common stock.

(2) Through June 6, 1996.

Rymer Foods is required by the Indenture to use reasonable efforts to
maintain its listing on the NYSE or obtain a listing on the National Association
of Securities Dealers Automated Quotation System National Market System (the
"NASDAQ/NMS") and continue to maintain its status as a reporting company under
the Securities Exchange Act of 1934, as amended. Rymer Foods, however, does not
currently meet the criteria for continued listing on the NYSE. The NYSE has not
taken any action to delist the Common Stock. There can be no assurance that it
will continue to be listed on the NYSE or meet the listing requirements of the
NASDAQ/NMS.

Dividends

INDEPENDENT PUBLIC ACCOUNTANTS

Since 1981, Coopers & Lybrand L.L.P. has served as the Company's principal
independent public accountants. Representatives of Coopers & Lybrand L.L.P. are
not expected to be present at the Special Meeting.

38
<PAGE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Item Page
- ---- ----

Report of Independent Accountants ........................................ 40

Financial Statements:

Consolidated Statements of Operations
for the years ended October 28, 1995,
October 29, 1994 and October 30, 1993
and for the twenty-six weeks ended
April 27, 1996 (unaudited) and April 29, 1995 (unaudited) .......... 41

Consolidated Balance Sheets as of October 28, 1995
and October 29, 1994 and as of April 27, 1996 (unaudited) .......... 42

Consolidated Statements of Cash Flows for
the years ended October 28, 1995, October 29, 1994
and October 30, 1993 and for the twenty-six
weeks ended April 27, 1996 (unaudited) and
April 29, 1995 (unaudited) ......................................... 43

Consolidated Statements of Stockholders' Equity
(Deficit) for the years ended October 28, 1995,
October 29, 1994 and October 30, 1993 and for
the twenty-six weeks ended April 27, 1996 (unaudited) .............. 44

Notes to Consolidated Financial Statements ......................... 45

Financial Statement Schedule:

Schedule II - Valuation and Qualifying Accounts and Reserves ....... 62

Supplementary Financial Data:

Computation of Earnings Per Share for the years ended
October 28, 1995, October 29, 1994 and October 30, 1995 ............ 63

Computation of Earnings Per Share for the twenty-six weeks ended
April 27, 1996 and April 29, 1995 .................................. 64

Subsidiaries of the Company ........................................ 65

39
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors
Rymer Foods Inc.

We have audited the consolidated balance sheets of Rymer Foods Inc. and
subsidiaries at October 28, 1995 and October 29, 1994 and the related
consolidated statements of operations, cash flows, and stockholders' equity
(deficit) for each of the three fiscal years in the period ended October 28,
1995. We have also audited the financial statement schedule listed in the index
on page 39 of this Proxy Statement. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Rymer Foods Inc.
and subsidiaries as of October 28, 1995 and October 29, 1994 and the
consolidated results of their operations and their cash flows for the three
years in the period ended October 28, 1995, in conformity with generally
accepted accounting principles. Also, in our opinion, the financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.

The accompanying aforementioned consolidated financial statements and financial
statement schedule have been prepared assuming that Rymer Foods Inc. will
continue as a going concern. As more fully described in Notes 2 and 6 to the
Consolidated Financial Statements, the Company has reported recurring losses
from continuing operations, has experienced a significant decrease in net sales
from its processing segment in 1995, and at October 28, 1995 has a stockholders'
deficit of $6.9 million. Additionally, in 1995 the Company violated certain debt
covenants under various loan agreements. Without future amendments, the Company
expects to be in violation of its loan agreements in 1996. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding these matters are also described in Note
2. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

As discussed in Note 8 to the consolidated financial statements, during 1994
Rymer Foods Inc. adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes".

The accompanying consolidated financial statements have been restated as
discussed in Note 4.

Chicago, Illinois
February 12, 1996, except for Note 4 COOPERS & LYBRAND L.L.P.
as to which the date is July 1, 1996

40
<PAGE>

RYMER FOODS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the fiscal years ended October 28, 1995, October 29, 1994
and October 30, 1993 and for the twenty-six weeks ended
April 27, 1996 and April 29, 1995

<TABLE>
<CAPTION>
Twenty-six Weeks Ended Fiscal Years Ended
---------------------- -----------------------------------------
April 27, April 29, Oct. 28, Oct. 29, Oct. 30,
1996 1995 1995 1994 1993
--------- --------- -------- -------- --------
(Unaudited) (Unaudited)
(in thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Net sales ..................................... $ 54,047 $72,105 $ 150,297 $ 162,256 $ 147,850
Cost of sales ................................. 52,537 66,123 143,134 144,909 132,958
-------- ------- --------- --------- ---------
Gross profit .............................. 1,510 5,982 7,163 17,347 14,892
Selling, general and
administrative expenses ..................... 3,689 5,854 11,151 11,461 12,083
Restructuring charge .......................... -- -- 761 -- 2,020
Goodwill writedown ............................ -- -- 20,377 -- 20,828
-------- ------- --------- --------- ---------
Operating income (loss) ................... (2,179) 128 (25,126) 5,886 (20,039)
Interest expense .............................. 2,486 2,172 4,665 3,962 3,815
Other income .................................. (1) (307) (461) (621) (44)
-------- ------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes ............. (4,664) (1,737) (29,330) 2,545 (23,810)
Provision for income taxes .................... -- -- -- 75 --
-------- ------- --------- --------- ---------
Income (loss) from continuing
operations before extraordinary item ....... (4,664) (1,737) (29,330) 2,470 (23,810)
Income (loss) from discontinued operations, net -- -- -- (466) 720
Gain on dispositions of discounted
operations, net ............................ -- -- -- 4,474 261
-------- ------- --------- --------- ---------
Income (loss) before extraordinary item . (4,664) (1,737) (29,330) 6,478 (22,829)
Extraordinary item resulting from restructuring
of subordinated debentures ................. -- -- -- -- 11,388
-------- ------- --------- --------- ---------
Net income (loss) ............................. $ (4,664) $(1,737) $ (29,330) $ 6,478 $ (11,441)
======== ======= ========= ========= =========

Per common share:
Primary:
Income (loss) from continuing
operations ............................. $ (.43) $ (.16) $ (2.69) $ .23 $ (3.49)
Income (loss) before extraordinary item ... (.43) (.16) $ (2.69) $ .61 $ (3.35)
Net income (loss) ......................... (.43) (.16) $ (2.69) $ .61 $ (1.68)
Fully diluted:
Income (loss) from continuing operations .. (.43) (.16) $ (2.69) $ .23 $ (3.49)
Income (loss) before extraordinary item ... (.43) (.16) $ (2.69) $ .61 $ (3.35)
Net income (loss) ......................... $ (.43) $ (.16) $ (2.69) $ .61 $ (1.68)
Weighted average shares of common stock
outstanding:
Primary .................................. 10,754,000 10,975,000 10,888,000 10,662,000 6,821,000
Fully diluted ............................. 10,754,000 10,975,000 10,888,000 10,782,000 6,875,000

</TABLE>

See accompanying notes.

41
<PAGE>

RYMER FOODS INC.

CONSOLIDATED BALANCE SHEETS

April 27, October 28, October 29,
1996 1995 1994
-------- ------ --------
(unaudited)
(in thousands)
ASSETS
Current assets:
Cash and cash equivalants ............... $ -- $ -- $ 2,492
Receivables, net of allowance for
doubtful accounts of $777,000
in 1996, $568,000 in 1995 and
$731,000 in 1994 ...................... 7,349 11,214 11,847
Inventories ............................. 10,660 18,985 16,951
Other ................................... 462 775 724
-------- -------- --------
Total current assets .............. 18,471 30,974 32,014
-------- -------- --------
Property, plant and equipment:
Buildings and improvements .............. 1,735 1,441 1,195
Machinery and equipment ................. 6,871 6,761 6,173
-------- -------- --------
8,606 8,202 7,368
Less accumulated depreciation
and amortization ........................ 6,703 6,172 5,399
-------- -------- --------
1,903 2,030 1,969
Goodwill, net of accumulated
amortization and writedown
of $56,930,000 in 1996 and
1995 and $35,386,000 in 1994 ............ -- -- 21,544
Assets held for sale or lease .............. 1,600 1,600 1,600
Other ...................................... 713 920 1,365
-------- -------- --------
$ 22,687 $ 35,524 $ 58,492
======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt,
including amounts to related parties .. $ 28,295 $ 35,178 $ 8,120
Accounts payable ........................ 1,504 1,909 2,953
Accrued liabilities ..................... 3,203 4,453 4,961
-------- -------- --------
Total current liabilities ......... 33,002 41,540 16,034
Long term debt, including amounts
to related parties ..................... 70 70 18,843
Deferred employee benefits ................. 731 772 810
Other noncurrent liabilities ............... -- -- 341
-------- -------- --------
33,803 42,382 36,028
-------- -------- --------
Commitments and contingencies (Note 13)
Stockholders' equity (deficit)
Preferred stock, none outstanding ....... -- -- --
Common stock, $1 par, 20,000,000
shares authorized; 10,754,086,
10,753,934 and 10,741,451 shares
outstanding in 1996, 1995 and 1994
after deducting treasury shares of
225,031 in 1996, 225,183 in 1995 and
237,666 in 1994 ....................... 10,754 10,754 10,741
Additional paid-in capital .............. 44,363 44,363 44,344
Retained deficit ........................ (66,233) (61,569) (32,239)
Notes receivable from sale of
common shares to related parties ..... -- (406) (382)
-------- -------- --------
Total stockholders' equity
(deficit) ...................... (11,116) (6,858) 22,464
-------- -------- --------
$ 22,687 $ 35,524 $ 58,492
======== ======== ========

See accompanying notes.

42
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the fiscal years ended October 28, 1995, October 29, 1994 and
October 30, 1993 and for the twenty-six weeks ended April 27, 1996
(unaudited) and April 29, 1995 (unaudited)
<TABLE>
<CAPTION>

Twenty-six Weeks Ended Fiscal Years Ended
---------------------- --------------------------------
April 27, April 29, Oct. 28, Oct. 29, Oct. 30,
1996 1995 1995 1994 1993
--------- --------- ------ -------- ---------
(unaudited) (unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations
before extraordinary item ....................... $ (4,664) $ (1,737) $(29,330) $ 2,470 $(23,810)
Non-cash adjustments to income (loss):
Depreciation .................................... 531 305 786 637 667
Amortization of other assets .................... 100 893 1,577 1,822 1,753
Writedown of goodwill ........................... -- -- 20,377 -- 20,828
Restructuring charge ............................ -- -- 761 -- 2,020
(Gain) loss on disposal of properties ........... -- -- (3) 20 --
Deferred compensation expense (income) .......... -- (25) (24) 1 219
Provision for bad debts ......................... 209 584 789 461 391
Amortization of debt discount ................... -- -- -- -- 226
Payment in kind interest on Senior Notes ........ 1,730 -- 1,206 -- 1,456
Stock issued in payment of restructuring expenses -- -- -- -- 891
Interest expense ................................ -- -- -- -- 33
Net (increase) decrease to accounts receivable .. 3,658 (2,615) (157) (3,466) 1,704
Net (increase) decrease to inventories .......... 8,325 (8,344) (2,035) (1,227) (3,342)
Net (increase) decrease to other current
and other long-term assets .................... 419 137 (16) 5 (417)
Net increase (decrease) to accounts payable
and accrued expenses ......................... (1,753) (1,461) (3,356) 563 (919)
-------- -------- -------- -------- --------
Net cash flows from operating activities
of continuing operations ...................... 8,555 (12,263) (9,425) 1,286 1,700
Net cash flows from operating activities
of discontinued operations .................... (9) (515) (515) (1,524) 624
-------- -------- -------- -------- --------
Net cash flows from operating activities .... 8,546 (12,778) (9,940) (238) 2,324
-------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of Rymer Chicken assets .... -- -- -- 24,323 --
Proceeds from the sale of Mendelson stock ......... -- -- -- 750 --
Capital expenditures .............................. (405) (368) (848) (504) (516)
Other ............................................. (34) (9) (21) (14) (35)

Net cash flows from investing activities of
discontinued operations ......................... -- -- -- (628) (972)
-------- -------- -------- -------- --------
Net cash flows from investing activities .... (439) (377) (869) 23,927 (1,523)
-------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
line-of-credit facilities ....................... (8,026) 12,886 10,529 (14,580) (3,736)
Principal payments on debt ........................ (81) (2,270) (2,292) (6,679) (1,709)
Proceeds from borrowings .......................... -- 25 48 45 6,696
Proceeds from employee stock purchases ............ -- 22 32 17 7
Recording of debt issuance costs .................. -- -- -- (2,059)
-------- -------- -------- -------- --------
Net cash flows from financing activities .... $ (8,107) $ 10,663 8,317 (21,197) (801)
-------- -------- -------- -------- --------
Net change in cash ................................ -- (2,492) (2,492) 2,492 --
Cash and cash equivalents balance
at beginning of period .......................... -- 2,492 2,492 -- --
-------- -------- -------- -------- --------
Cash and cash equivalents balance at end of period $ $ -- $ -- $ 2,492 $ --
======== ======== ======== ======== ========
</TABLE>

See accompanying notes.

43
<PAGE>

RYMER FOODS INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

For the fiscal years ended October 28, 1995, October
29, 1994 and October 30, 1993 and for the
twenty-six weeks ended April 27, 1996 (unaudited)
<TABLE>
<CAPTION>
Notes Receivable
from Sale of
$1.175 Common Stock and Total
Preferred Additional Deferred Stockholders'
Stock Common Paid-In Retained Unearned Equity
Class A Stock Capital Deficit Compensation (Deficit)
------- ----- ------- ------- ------------ ---------
(in thousands)

<S> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1992 .................. $ 14,947 $ 2,962 $ 28,206 $(27,276) $(730) $ 18,109
Net loss ..................................... (11,441) (11,441)
Exchange of preferred stock .................. (14,947) 2,242 12,705 --
Exchange of Subordinated Debentures .......... 4,661 2,983 7,644
Shares issued in payment of restructuring
expenses .................................. 612 279 891
Shares issued in payment of bank
interest .................................. 20 13 33
Shares issued under employee stock
purchase plan ............................. 5 2 7
Amortization of notes receivable from sale
of common shares and deferred
unearned compensation agreement ........... 242 242
Interest charge on notes receivable .......... (22) (22)
Stock price reduction under amended
stock purchase agreements ................. 127 127
-------- -------- ------- -------- ----- --------
Balance at October 30, 1993 .................. -- 10,502 44,188 (38,717) (383) 15,590
Net income ................................... 6,478 6,478
Shares issued from conversion of note
payable ................................... 233 146 379
Shares issued under employee stock
purchase plan ............................. 6 10 16
Amortization of deferred unearned
compensation agreement .................... 23 23
Interest charged on notes receivable ......... (22) (22)
-------- -------- ------- -------- ----- --------
Balance at October 29, 1994 .................. -- 10,741 44,344 (32,239) (382) 22,464
Net loss ..................................... (29,330) (29,330)
Shares issued under employee stock
purchase plan ............................. 13 19 32
Interest charged on notes receivable ......... (24) (24)
-------- -------- ------- -------- ----- --------
Balance at October 28, 1995 .................. -- 10,754 44,363 (61,569) (406) (6,858)
-------- -------- ------- -------- ----- --------
Net loss ..................................... (4,664) (4,664)
Payment of note receivable ................... -- 406 406
-------- -------- ------- -------- ----- --------
Balance at April 27, 1996 (unaudited) ........ $ -- $ 10,754 $44,363 $(66,233) $ -- $(11,116)
======== ======== ======= ======== ===== ========
</TABLE>

See accompanying notes.

44
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Fiscal Year

The fiscal year of the Company ends the last Saturday in October. For all
years, the fiscal year was 52 weeks.

Quarterly Information

The accompanying unaudited condensed consolidated financial statements for
the twenty-six weeks ended April 27, 1996 and April 29, 1995 have been prepared
in accordance with the instructions to Form 10-Q and therefore do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles.

Consolidation

The consolidated financial statements include the accounts of the Company
and all of its subsidiaries after elimination of all significant intercompany
accounts and transactions.

Cash Equivalents

The Company considers short-term investments with original maturities of
ninety days or less to be cash equivalents.

Inventories

Inventories are stated at the lower of first-in, first-out cost or market.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is
recognized on a straight-line basis over the estimated useful lives of the
related assets. Expenditures for maintenance and repairs are charged to
operations as incurred. Gains or losses on the disposition of assets are
reflected in income.

Goodwill

In October of 1995, the Company recorded a goodwill writedown of $20.4
million. This writedown eliminated all remaining goodwill of the Company. The
asset of goodwill was determined to have been impaired because of the financial
condition of the Company and the Company's inability to generate future
operating income without substantial sales volume increases which are uncertain.
Moreover, anticipated future cash flows of the Company indicated that the
recoverability of the asset was not reasonably assured.

Prior to October of 1995, goodwill was amortized using the straight-line
method over twenty years. In connection with the financial restructuring
completed in 1993, goodwill was adjusted to its estimated fair value at that
time of approximately $29.1 million which resulted in a writedown of $20.8
million of goodwill.

The Company is required to analyze the value of its recorded intangible
assets on an ongoing basis to determine that the recorded amounts are reasonable
and are not impaired. The Company's management considers the Company's financial
condition and expected future operating income in determining if goodwill is
impaired at each balance sheet date. Upon determination that goodwill was
impaired at October 28, 1995, the amount of the impairment was calculated by
determining that portion of the goodwill which would not be expected to be
recovered against operating income during the remaining amortization period.

Profit Sharing and Savings Plans

The Company sponsors a 401(k) savings plan. The Company matches employee
contributions up to 5% of an employees' annual salary. Accrued benefits are
funded on a current basis (See Note 12).

Revenue Recognition

The Company recognizes sales revenues at the time of shipment.

Income Taxes

Effective with the first quarter of 1994, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". Adoption of this standard did not materially impact the
Company's operating results. The Company recognizes the deferred tax benefit
related to its deferred tax asset within its income tax provision as income is
earned and the benefits are realized (See Note 8).

45
<PAGE>

2. Going Concern

The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern.

In the first half of 1996, the Company reported a decrease in net sales
from its meat processing segment as compared to the first half of 1995 of 45%
principally due to the loss of certain major customers and increased
competition. In 1995, the Company reported a decrease in net sales from its meat
processing segment as compared to 1994 of 25% principally due to the loss of a
major customer. Also, in 1995, the Company reported a net loss of $29.3 million,
its fourth loss from continuing operations before extraordinary item in the last
five years. In the first quarter of 1996, Rymer Meat was informed that its
supply contracts with restaurants owned by Darden Restaurants (formerly, General
Mills) would not be renewed. Sales to these restaurant chains comprised
approximately 10% of net sales for its meat processing segment in the first half
of 1996, 16% in the first half of 1995 and 14% for the full year of 1995. At
April 27, 1996 and October 28, 1995, the Company had a stockholders' deficit of
$11.1 and $6.9 million, respectively.

As explained more fully in Note 6, the Company was not in compliance at
July 29, 1995, October 28, 1995 and January 27, 1996 with certain covenants
contained in the loan agreement between the Company and LaSalle National Bank
("LaSalle"). It is likely that in 1996, the Company will continue to be in
violation of certain covenants contained in the loan agreement, unless such
covenants are modified or waived. The Company is renegotiating certain of these
covenants, but there is no assurance that it will be successful in this regard.
In addition, an event of default under the LaSalle Agreement and a cross-default
under the Senior Note Indenture existed at January 27, 1996 and October 28, 1995
due to the non-payment of certain notes to former affiliates in January 1996
(See Note 6). The Company received a waiver of such event of default under the
Indenture in March 1996 with an effective date as of February 8, 1996. The
payment terms of these notes to affiliates were revised during the second
quarter of 1996.

These conditions raise substantial doubt about the Company's ability to
continue operating as a going concern. The 1995 consolidated financial
statements and the unaudited condensed consolidated financial statements for the
first quarters of 1996 and 1995 do not include any adjustments that might result
from the outcome of this uncertainty.

Management believes that the Company's future success is dependent upon
reversing the sales decline experienced in 1995 and the first half of 1996 and
on the continued reduction of operating costs. The Company is pursuing new sales
opportunities while continuing to streamline its production process and to
reduce other costs. Significant expense and personnel reductions implemented
during the fourth quarter of 1995, including an approximate 20% reduction of the
Company's work force, are expected to reduce wage, salary and other expenses by
approximately $4.0 million in 1996.

3. Restructuring and Restructuring Charges

1995 Restructuring

During the fourth quarter of 1995, the Company recorded a Restructuring
charge of $761,000 related to the restructuring plan commenced in October of
1995 to reduce operating costs, improve efficiencies, and return the Company to
profitability. Of this amount, approximately $200,000 represents fees and
expenses of financial and turnaround consultants. The remaining amount
represents primarily severance payments related to the reduction of sixteen
non-union employees. Four of these employees were executive officers, six were
selling and administrative positions, and six were related to operations. In
addition, the Company eliminated approximately 80 union positions. No severance
costs were incurred related to the union reductions. In total, the restructuring
resulted in an approximate 20% reduction of the Company's work force.

1993 Restructuring

As of October 31, 1992, the Company had a substantial portion of its bank
debt due currently, had not paid a $2.5 million interest payment on its 13%
Senior Subordinated Sinking Fund Debentures ("Debentures") due on October 15,
1992, and had received written notification from its primary lender that its
credit line would not be extended or renewed beyond its maturity date of March
31, 1993.

The Company announced on February 3, 1993 that it had received the
necessary approvals from its creditors and stockholders for confirmation of a
prepackaged plan of reorganization under Chapter 11 of the Bankruptcy Code (the

46
<PAGE>

"Plan"). The Plan, as confirmed by the United States Bankruptcy Court, became
effective on April 7, 1993 and implemented the financial restructuring proposed
in a Registration Statement filed by the Company with the Securities and
Exchange Commission on December 17, 1992. Rymer Foods' operating subsidiaries
were not parties to the Chapter 11 proceedings.

Immediately following consummation of the Plan, but prior to dilution by
exercise of certain employee stock options issued in connection with the
restructuring, (a) holders of Debentures received an aggregate of approximately
45% of the outstanding Common Stock and approximately $20 million principal
amount of Senior Notes, (b) holders of Preferred Stock received an aggregate of
approximately 21.5% of the outstanding Common Stock, and (c) existing holders of
Common Stock retained an aggregate of approximately 28.4% of the outstanding
Common Stock.

On April 7, 1993, in connection with the consummation of the Prepackaged
Plan, the Company's former credit facility was replaced by a $23,700,000 credit
facility with BA Business Credit, Inc. (BABC).

Liabilities compromised by the Plan were stated at the present values of
amounts to be paid and forgiveness of debt was reported as an extraordinary
item. In addition, the Company recorded an adjustment in connection with the
Restructuring to adjust goodwill to its estimated fair value.

The Common Stock issued in exchange for the Debentures and Preferred Stock
pursuant to the Plan was valued at $1.64 per share based on the terms of the
Plan. The following summarizes the adjustments related to the recording of the
Restructuring:

1. The Debentures (net of unamortized debt discount) of $36,962,000 were
exchanged for approximately $20,000,000 in Senior Notes and 4,661,150 shares of
common stock valued at $1.64 per share. This transaction resulted in an
extraordinary gain on Restructuring of $11,388,000.

2. The Preferred Stock with a par value of $14,947,000 was exchanged for
2,242,050 shares of Common Stock. This transaction resulted in a total increase
to Additional Paid-In Capital of approximately $12.7 million.

3. Goodwill was adjusted to its estimated fair value at April 7, 1993 of
approximately $29.1 million. This resulted in a writedown of $20.8 million of
goodwill.

1993 Restructuring Charge

The Company incurred restructuring charges during 1993 of $2,020,000.
Restructuring charges consisted primarily of professional fees of the Company's
financial advisors, legal counsel and accountants.

4. Discontinued Operations and Proposed Sale of Rymer Seafood

The accompanying consolidated financial statements reflect the operations
of the Company's Rymer Chicken subsidiary as a discontinued operation for
accounting purposes.

Rymer Chicken - Van Buren

In July 1993, the management of the Company designed a plan to sell the Van
Buren, Arkansas chicken processing operation. On December 10, 1993,
substantially all of the assets of Rymer Chicken were sold (the "Sale of Rymer
Chicken") to Simmons Poultry Farms, Inc., Siloam Springs, Arkansas ("Simmons")
pursuant to an Asset Purchase Agreement, dated as of November 19, 1993, among
the Company, Rymer Chicken, Simmons and Simmons Industries, Inc., an affiliate
of Simmons, as amended (the "Asset Purchase Agreement"). The purchase price was
$24 million (subject to certain adjustments) plus the assumption of
substantially all of Rymer Chicken's obligations and liabilities other than its
obligations under its senior bank facility. The Asset Purchase Agreement was
approved by the Company's stockholders on December 6, 1993.

Upon consummation of the Asset Purchase Agreement, the Company received
proceeds of $24.3 million and recorded a gain of approximately $4.0 million in
the first quarter of 1994. The calculation of such gain reflects all actual
expenses and estimated future expenses associated with the sale of Rymer Chicken
assets and is net of the writeoff of approximately $5.4 million of goodwill
related to Rymer Chicken.

Rymer Chicken - Plant City

During 1992, the Company decided to place its idle Plant City chicken
facility and equipment for sale.

During 1993, the Company recognized a loss of $344,000 to reduce the
carrying value of the Plant City property to its estimated net realizable value
of $1.6 million. This loss was partially offset by income of $272,000 from the

47
<PAGE>

elimination of reserves established during 1992 for Plant City losses. The net
loss related to the Plant City facility of $72,000 is included within Gain on
Dispositions of Discontinued Operations on the Consolidated Statement of
Operations for 1993.

The facility has not yet been sold. In January 1996, the Company entered
into a preliminary agreement to lease the Plant City facility for a period of
ten years. In June 1996, the preliminary lease agreement was cancelled. As a
result, the property continues to be marketed for sale or lease. Management
believes, based on a recent estimate of the property's value that the carrying
value is appropriate. The Company will continue to evaluate the carrying value
in the future. Rymer Chicken-Plant City assets are classified as assets held for
sale or lease at April 27, 1996, October 28, 1995 and October 29, 1994.

Reserves established in 1992 and 1993 are considered adequate to maintain
the idle facility through the expected date of disposition. The Company incurred
costs related to maintaining the idle facility of approximately $66,000 during
1995, $92,000 during 1994 and $715,000 during 1993 which were charged to the
reserve established for such losses during fiscal 1992 and 1993. Costs incurred
which were charged to the reserve during the first half of 1996 and 1995
amounted to $25,000 and $34,000, respectively.

Other Discontinued Operations

In July 1989, the Company received voting and non-voting shares of common
stock in The Mendelson Holding Company, Ltd. ("Mendelson Holding") representing
approximately a 12.5% interest in Mendelson Holding as partial consideration for
the sale of an indirect, wholly-owned subsidiary, Murry's, Inc. ("Murry's").
During the fourth quarter of 1993, a reserve established for possible future
payments related to the sale of Murry's was reduced by $250,000, as these
reserves were deemed to no longer be needed.

On November 17, 1993 (the "Mendelson Closing Date"), the Company sold its
stock in Mendelson Holding to Murry's for $750,000 in cash. The Company used
these proceeds to pay down debt and recorded a gain on the sale before income
taxes of $670,000 during the first quarter of 1994. In connection with the sale,
Murry's and Mendelson Holding and the Company released all claims against each
other (stipulating to the dismissal of a pending lawsuit brought by Mendelson
Holding against the Company in Delaware Chancery Court). In addition, Murry's
engaged the Company as a consultant for three years for fees aggregating
$800,000. The Company recognized consulting income during 1995 and 1994 of
$300,000 and $250,000, respectively.

The following summarizes the results of the various discontinued operations
reflected in the accompanying Consolidated Statements of Operations:

<TABLE>
<CAPTION>
Twenty-six Weeks Ended Fiscal Years Ended
------------------- -------------------------------
Apr. 27 Apr. 29, Oct. 28, Oct. 29, Oct. 30,
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(unaudited) (in thousands)
<S> <C> <C> <C> <C> <C>
Sales:
Rymer Chicken ............................. -- -- -- 9,468 85,516

Income (loss) from discontinued operations:
Rymer Chicken
Rymer Chicken ............................. -- -- -- (492) 720
Credit equivalent to benefit for income tax -- -- -- 26 --
-------- -------- -------- -------- --------
$ -- $ -- $ -- $ 466 $ 720
======== ======== ======== ======== ========
Gain (loss) on dispositions of
discontinued operations:
Rymer Chicken ............................. -- -- -- $ 4,017 $ (72)
Rymer Shrimp .............................. -- -- -- -- 25
Murry's ................................... -- -- -- 670 250
Kroehler .................................. -- -- -- -- 58
Provision for income taxes ................ -- -- -- (213) --
-------- -------- -------- -------- --------
$ -- $ -- $ -- $ 4,474 $ 261
======== ======== ======== ======== ========
</TABLE>

48
<PAGE>

The above discontinued operations include the following allocation of
interest expense on debt not attributable to specific operations of the Company.
The allocation was based on the proportion of net assets sold to total net
assets of the Company.

Twenty-six Weeks Ended Fiscal Years Ended
------------------- -------------------------------
Apr. 27 Apr. 29, Oct. 28, Oct. 29, Oct. 30,
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
(in thousands)

Interest allocated ... $ -- $ -- $ -- $ 185 $ 1,218
======== ======== ======== ======== ========

In addition, the above discontinued operations also include an allocation
of interest expense which specifically related to the operations of the
discontinued segment.Discontinued Operations and Proposed Sale of Rymer Seafood

Proposed Sale of Rymer Seafood

On January 5, 1996, the Company announced that it had signed an agreement
in principle to sell the assets of Rymer Seafood to an entity to be formed by
the current President of Rymer Seafood. The agreement specifies that the sales
price for the assets, based on balances as of April 27, 1996, will be
approximately $9.5 million, consisting of $1.5 million in cash, $1.5 million in
a ten year subordinated note of the buyer and the assumption by the buyer of
approximately $5.1 million in bank debt and $1.4 million of other current
liabilities. Consummation of the transaction is subject to a variety of
conditions, including negotiation of definitive documentation and approval by
the holders of 66 2/3% of the outstanding Common Stock of the Company and the
holders of a majority of Rymer's outstanding 11% Senior Notes. The Company plans
to proceed with solicitation of these approvals and if it receives them, will
record a loss of approximately $1.5 million at that time. If the approvals are
received, it is anticipated that the sale of Rymer Seafood will be completed in
the fourth quarter of 1996.

The net assets of Rymer Seafood expected to be sold are as follows:

April 27, October 28,
1996 1995
-------- --------
(unaudited)
(in thousands)

Receivables .......................... $ 4,661 $ 6,537
Inventories .......................... 5,696 6,866
Other current assets ................. 12 8
Net Property, plant and
equipment ......................... 37 43
-------- --------
Total assets ...................... 10,406 13,454
Less: current liabilities ............ (6,403) (9,451)
-------- --------
$ 4,003 $ 4,003
======== ========

The following summarizes the results of Rymer Seafood reflected in the
consolidated statements of operations (in thousands):

Twenty-six Weeks Ended
----------------------
Apr.27, Apr.29,
1996 1995 1995 1994 1993
------- ------- ------- ------- -------
(unaudited) (unaudited)
Net Sales ............... $31,379 $30,605 $70,377 $56,004 $48,208
======= ======= ======= ======= =======

Income from Operations .. $ 153 $ 376 $ 290 $ 587 $ 57
======= ======= ======= ======= =======

49
<PAGE>

The following presents the pro forma unaudited condensed consolidated
balance sheet of the Company as if the sale of substantially all of the assets
of Rymer Seafood was consummated as of October 28, 1995 (in thousands):

Assets
Total current assets ........................... $ 17,563
Plant, property and equipment, net ............. 1,988
Note receivable, net ........................... 983
Other long-term assets ......................... 2,520
--------
$ 23,054
========
Liabilities and Stockholders' Equity (Deficit)
Total current liabilities ...................... $ 30,590
Long-term debt ................................. 70
Other .......................................... 772
Stockholders' deficit .......................... (8,378)
--------
$ 23,054
========

The following presents the pro forma unaudited condensed consolidated
statements of continuing operations of the Company for the year ended October
30, 1995 as if the sale of substantially all of the assets of Rymer Seafood was
consummated as of October 30, 1994 (in thousands):

Net sales ..................................... $ 79,920
Cost of sales ................................. 76,048
--------
Gross profit ............................... 3,872
Selling, general and administrative expenses .. 9,042
Restructuring charge .......................... 761
Goodwill ...................................... 20,377
--------
(26,308)
Interest expense .............................. 3,666
Other income .................................. (594)
--------
Loss from continuing operations ............... $ 29,380
========

The Company, in its originally filed 1995 Annual Report on Form 10-K,
reported its Rymer Seafood segment as a discontinued operation. As a result of
discussions with the staff of the Securities and Exchange Commission, the
Company has reclassified these operations to continuing operations and has
reversed the previously recorded expected loss on the Sale of Rymer Seafood of
approximately $1.5 million, since absent the proposed sale, the carrying value
of the Seafood assets is recoverable in the course of normal operations. Such
restatement resulted in a corresponding decrease in 1995 stockholders' deficit
and loss amounts previously reported.

5. Inventories

Inventories are stated principally at the lower of first-in, first-out cost
or market.

Inventories consist of the following (in thousands):

Apr. 27, Oct. 28, Oct. 29,
1996 1995 1994
------- ------- -------
(unaudited)
Raw materials .................. $ 2,353 $ 6,415 $ 5,339
Finished goods ................. 8,307 12,570 11,612
------- ------- -------
$10,660 $18,985 $16,951
======= ======= =======

50
<PAGE>

6. Long-Term Debt and Lines of Credit

Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
Apr. 27, Oct. 28, Oct. 29,
1996 1995 1994
------- ------- -------
(unaudited)
<S> <C> <C> <C>
Banks, with interest of 1/2% over prime in 1996 and
1995 and 2% over prime in 1994 ................. $ 8,344 $16,372 $ 5,844
Senior Notes due December 15, 2000, with interest
at 18% in 1996 and 1995 and at 11% in 1994 ..... 19,765 18,133 20,383
Other, including capitalized leases and amounts to
related parties:
Due to former executives under restructured
employment and consulting agreements ........... 186 656 611
Other ............................................. 70 87 125
------- ------- -------
28,365 35,248 26,963
Less current maturities ........................... 28,295 35,178 8,120
------- ------- -------
$ 70 $ 70 $18,843
======= ======= =======
</TABLE>

The prime rate applicable to the Company's outstanding bank notes payable
was 8.50% at April 27, 1996, 8.75% at October 28, 1995 and 7.75% at October 29,
1994.

On April 7, 1995, the Company replaced its credit facility of $20 million
provided by BABC for Rymer Meat and $12.5 million provided by LaSalle for Rymer
Seafood with a $25 million credit facility provided by LaSalle consisting of a
$12.5 million credit line for Rymer Meat and a $12.5 million credit line for
Rymer International Seafood. Availability under credit lines is subject to
certain borrowing base computations. The credit line facility, with an initial
term of two years, has lower interest rates and reduced lending restrictions as
compared to the former facilities. The LaSalle credit facility has an annual
interest rate of 1/2% over Prime as compared to an annual rate of 2% over Prime
on the former BABC facility and 1% over Prime on the former LaSalle facility.

On January 5, 1996, LaSalle and the Company entered into the Forbearance
Agreement and Amendment. Under this agreement, which was subsequently amended,
LaSalle agreed to temporarily forbear from exercising its remedies under the
Loan and Security Agreement. In addition, the Loan Agreement was amended to,
among other things, reduce advance rates for inventories and, for purposes of
computing interest, loan payments are applied by the bank on the second business
day after available funds are received.

On February 7, 1996, LaSalle and the Company entered into an Amendment to
the Forbearance Agreement (Letter Agreement). In the Letter Agreement, LaSalle
agreed to waive certain financial covenant violations and the resulting events
of default as of October 28, 1995. The Forbearance Agreement and the Letter
Agreement were executed on the assumption that no other events of default
existed under the loan agreement. As discussed below, the Company subsequently
determined that another event of default under the loan agreement existed at the
time of the execution of these agreements. This event of default related to the
non-payment of certain notes payable to former executives of the Company (the
"Affiliate Debt Default"). On February 22, 1996, the Company received a letter
from LaSalle confirming that the waiver as of October 28, 1995 contained in the
Letter Agreement was valid for the events of default specified in the
Forbearance Agreement despite the subsequent determination of the Affiliate Debt
default. The Company remains in default under the LaSalle agreement, however,
due to non-payment of the Affiliate Debt. LaSalle also agreed to amend the Loan
and Security Agreement in order to revise the next test date for the financial
covenants to be as of February 24, 1996. On March 12, 1996, the Company and
LaSalle entered into an Amendment to Loan Agreement that modified certain
provisions of the Loan and Security Agreement between the Company and LaSalle,
including covenants relating to financial amounts and ratios. The Company was in
compliance with such financial covenants, as so modified as of February 24,
1996. However, there is no assurance that the Company will remain in compliance

51
<PAGE>

with the covenants, as modified. LaSalle has the right, upon the occurrence of
an event of default, to terminate the credit facility and declare all loans due
and payable on demand. The Company's bank indebtedness and indebtedness under
the Senior Notes have been classified as current liabilities at both April 27,
1996 and October 28, 1995.

In January 1996, the Company did not make required payments of $255,000
under notes payable due to former executives ("Affiliate Debt"). The Affiliate
Debt is related to certain amended employment and consulting agreements between
the Company and the former executives (See Note 11). The Company has deferred
payment of this debt in order to conserve cash for use in operation of its
business. The Company intends to continue to accrue interest on the debt at
9.5%. The non-payment of the Affiliate Debt caused cross-defaults under the Loan
and Security Agreement with LaSalle and under the Senior Note Indenture. While
LaSalle did not waive this default, no action was taken by LaSalle as a result
of the default. In March and April 1996, the Company made partial payments to
both the former executives. The Company has negotiated revised payment terms
with the former executives whereby the remaining debt due to them will be paid
in installments.

In March of 1996, the Company entered into Supplement No. 1 to the
Indenture (Supplemental Indenture) with Continental Stock Transfer and Trust
Company as Trustee for the Senior Notes which was dated as of February 8, 1996.
The Supplemental Indenture, which received the approval of a majority of the
Senior Note holders, amended the Indenture to exclude the non-payment of the
Affiliate Debt, and the resulting cross-default under any other debt that arises
by reason of non-payment of the Affiliate Debt, from the definition of events of
default. If another event of default occurs and continues under the Company's
bank agreement with LaSalle, however, it would constitute an event of default
under the Indenture, enabling the Trustee or the holders of 25% in aggregate
principal amount of the Notes to declare the Notes to be immediately due and
payable.

The Company's Rymer Meat subsidiary had total lines of credit available
under notes payable of $3.7 million at April 27, 1996, $11.7 million at October
28, 1995 and $10.8 million at October 29, 1994, of which $0.5 million, $3.6
million and $10.5 million, respectively, was unused. At April 27, 1996 and
October 28, 1995, the Company had a bank loan of $3.2 million and $8.1 million,
respectively, outstanding related to its line of credit with LaSalle for Rymer
Meat.

The Company's Rymer Seafood subsidiary had total lines of credit available
under notes payable of $9.0 million at April 27, 1996, $10.8 million at October
28, 1995 and $9.3 million at October 29, 1994, of which $1.5 million, $1.1
million and $2.0 million, respectively, was unused. The Company had a bank loan
outstanding related to its Rymer Seafood operation of $5.1 million, $8.2 million
and $5.8 million at April 27, 1996, October 28, 1995 and October 29, 1994,
respectively.

Total availability under credit lines is reduced by the amount of letters
of credit outstanding. Letters of credit are used primarily for purchases of
seafood inventory from foreign sources. Rymer Seafood had letters of credit
outstanding totalling approximately $2.4 million at April 27, 1996 and $1.5
million at both October 28, 1995 and October 29, 1994. Rymer Meat had a letter
of credit of $0.3 million outstanding at October 29, 1994.

On both lines of credit, interest is payable monthly on the unpaid
principal at an interest rate of 1/2% over prime.

The Company's bank agreements contain certain restrictive covenants which,
among other things, limit the amount of indebtedness incurred by the Company and
its subsidiaries and require the maintenance of certain financial ratios by the
Company and its subsidiaries. The most restrictive covenants under the Company's
bank agreements include a tangible net worth requirement, a minimum coverage
ratio of earnings to interest expense requirement, and a limitation as to
capital expenditures.

Substantially all of the Company's property, plant and equipment and
certain current assets are pledged as collateral under its lines of credit.

The Senior Notes were issued pursuant to the Indenture between the Company
and Continental Stock Transfer & Trust Company, as trustee (the "Indenture").
The Senior Notes bear interest at 11% payable semi-annually in arrears on June
15 and December 15. Through December 15, 1996, the Company may issue additional
Senior Notes in payment of interest to the extent that the Company lacks
sufficient available cash (as defined in the Indenture) to pay the interest in
cash. For interest paid by the issuance of additional Senior Notes after June
15, 1993, and through December 15, 1996, the interest rate will be increased to
18% per annum.

52
<PAGE>

The following summarizes the most restrictive covenants of the Indenture.
The Company is restricted from paying cash dividends on its capital stock. In
addition, the Company is limited as to the incurrence of additional debt and as
to capital expenditures and other acquisitions. The Indenture requires that
Available Cash, as defined and under certain circumstances, be applied to the
prepayment of the outstanding principal of the Senior Notes. The Indenture also
contains certain other covenants including limitations on liens, requirements to
maintain its status as a reporting company under the Securities Exchange Act and
to maintain a stock exchange listing, restrictions on transactions with
affiliates and related persons, and covenants to maintain assets and pay taxes.
The Indenture also contains provisions whereby the Company is considered to be
in default under the Indenture if it is in default under the terms of any of its
other debt agreements.

The Company elected to make the June 15, 1993 interest payment due on the
Senior Notes by issuing additional Senior Notes totalling $1,456,000 in
accordance with the terms of the Indenture.

Under the Indenture, the Company made mandatory redemptions of its Senior
Notes of $1,050,000 in June 1994 and $2,250,000 in December 1994.

The following table summarizes activity of the Company's Senior Notes (in
thousands):

Senior Notes originally issued in
connection with the 1993
Restructuring .................................... $ 19,977
Interest payment-in-kind on June 15, 1993 ......... 1,456
Mandatory redemptions:
June 1994 ....................................... (1,050)
December 1994 ................................... (2,250)
--------
Senior Note principal outstanding at
October 28, 1995 ................................. 18,133
Interest payment-in-kind on Decembe 15, 1995 ...... 1,632
--------
Senior Note principal outstanding at April 27, 1996 $ 19,765
========

The Company may seek to restructure the terms of its 11% Senior Notes in an
effort to improve its liquidity. There can be no assurances that such a
restructuring will occur.

In accordance with Statement of Financial Accounting Standards No. 107
"Disclosures About Fair Value of Financial Instruments", the Company has
determined the fair value of its bank debt at October 28, 1995, to approximate
the market value as the interest rates that are utilized are similar to those
that are currently available for issuance of debt with similar terms and
maturities. The fair value of the Company's Senior Notes is estimated based on
recent transactions. The estimated fair market value of the Company's Senior
Notes at April 27, 1996 and October 28, 1995 was 60% of the face amount of the
Senior Notes or approximately $10.9 million.

The notes payable to former executives under the restructured employment
and consulting agreements (See Note 11) were amended in connection with the
Restructuring. At October 28, 1995, the balance consisted of unsecured notes
totalling $406,000 which bore interest at 9.5% per annum and matured on January
1, 1996 and non-interest bearing notes with a face value of $255,000 which were
due and payable on January 2, 1996. The Company did not make the required
payments under these notes, as discussed previously. In March, 1996 the Company
made a partial payment of $81,000 on the notes.

53
<PAGE>

The interest bearing notes payable were equal to, and were offset against,
notes receivable owed to the Company by the former executives under stock
purchase agreements (See Note 11). The notes receivable also bore interest at
9.5% per annum and were due January 1, 1996.

At October 28, 1995, aggregate maturities of long-term debt and capitalized
leases for each of the next five years and thereafter were as follows (in
thousands):

1996 .......................................... $35,178
1997 .......................................... 70
1998 .......................................... --
1999 .......................................... --
2000 .......................................... --
Thereafter .................................... --
-------
Total long-term debt .......................... $35,248
=======

7. Leases

The Company and its subsidiaries lease certain buildings and equipment used
for offices and manufacturing. Total rental expense from continuing operations
under all operating leases was approximately $1,012,000, $998,000 and $1,172,000
in 1995, 1994 and 1993, respectively. The above lease costs do not include the
costs of taxes, insurance, maintenance and utilities which the Company and its
subsidiaries are required to pay.

The lease for the Chicago meat processing facility, which expires in July
1996, includes a provision for a two year extension under certain conditions.

Property, plant and equipment recorded under capital leases and the related
amortization are as follows (in thousands):

1995 1994
---- ----
Machinery and equipment ................ $178 $205
Less accumulated amortization .......... 150 137
---- ----
$ 28 $ 68
==== ====

Capital leases are principally related to production and office equipment.
Lease commitments under non-cancelable leases as of October 28, 1995 are as
follows (in thousands):

Capital Operating
Leases Leases
------ ------
1996 .................................... $ 20 $657
1997 .................................... -- 30
1998 .................................... -- 11
1999 .................................... -- 11
2000 .................................... -- 4
---- ----
Net future minimum lease payments ....... $ 20 $713
====
Less amount representing interest ....... 3
----
Present value of net future minimum
lease payments under capital leases .. $ 17
====

8. Income Taxes

Effective with the first quarter of 1994, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (SFAS 109). Adoption of this standard did not materially
impact the Company's operating results. The Company's deferred tax asset is
related primarily to its operating loss carryforward for tax reporting purposes
which approximated $31.2 million at October 28, 1995. The Company recorded a
valuation allowance amounting to the entire deferred tax asset balance because
the Company's financial condition, its lack of a history of consistent earnings,
possible limitations on the use of carryforwards, and the expiration dates of
certain of the net operating loss carryforwards give rise to uncertainty as to
whether the deferred tax asset is realizable.

54
<PAGE>

The Company recognizes the deferred tax benefit related to its deferred tax
asset within its income tax provision as income is earned and the benefits are
realized.

The components of the net deferred tax asset recorded in the accompanying
consolidated balance sheets as of October 28, 1995 and October 29, 1994 are as
follows (in thousands):

1995 1994
-------- --------
Deferred tax assets:
Accounts receivable ................ $ 514 $ 325
Inventories ........................ 67 29
Property, plant and equipment ...... 846 2,325
Other liabilities and reserves ..... 845 901
Alternative minimum tax credits .... 98 119
Net operating loss carryforwards ... 10,652 11,228
Investment tax credits ............. 512 512
Capital loss carryforwards ......... -- 262
-------- --------
Total deferred tax assets .......... 13,534 15,701
Less: Valuation allowance ......... (13,534) (15,701)
-------- --------
Net deferred tax asset ............. $ -- $ --
======== ========

The following table accounts for the difference between the actual tax
provision attributable to income before income taxes and the amounts obtained by
applying the statutory U.S. Federal income tax rate of 34% to the income before
income taxes.

Fiscal Years Ended
October 28, October 29,
1995 1994
-------- --------
(in thousands)

Income (loss) before income taxes:
Income (loss) from continuing operations ............ $(29,330) $ 2,545
Income (loss) from discontinued operations .......... -- (492)
Income (loss) on dispositions of discontinued
operations -- 4,687
-------- --------
Total income (loss) before income taxes ............. $(29,330) $ 6,740
======== ========
Total benefit computed by applying the U.S. .........
statutory rate (34%) ............................. $ (9,972) $ 2,292
Increases in taxes due to:
Goodwill written off ................................ 6,936 1,847
Goodwill amortization ............................... 391 411
Other differences, net .............................. 8 (349)
Losses which provide no current tax benefit ......... 2,637 --
Utilization of net operating loss and capital
loss carryforwards ............................... -- (3,939)
-------- --------
Actual tax provision ................................ $ -- $ 262
======== ========

The tax provision recorded in the Consolidated Statement of Operations for
the year ended October 29, 1994 is as follows:

Provision for income taxes for:
Income from continuing operations ................ $ 75
Gain on disposal of discontinued operations ...... 213
Credit equivalent to benefit for income taxes
related to loss from discontinued operations .. (26)
-----
Net provision for income taxes ................... $ 262
=====

55
<PAGE>

The Company's Federal income tax returns are subject to review by the
Internal Revenue Service, the results of which cannot be predicted with
certainty. At October 28, 1995, the Company had an operating loss carryforward
for tax reporting purposes approximating $31,230,000; (expiring $2,500,000 in
1996; $1,600,000 in 1997; $12,700,000 in 1998; $700,000 in 2000; $2,800,000 in
2001; $100,000 in 2002, $100,000 in 2003; $300,000 in 2004; and $2,800,000 in
2007; $130,000 in 2009; and $7,500,000 in 2010) which is available to offset
future Federal taxable income.

Upon consummation of the Restructuring in 1993, the amount of the net
operating loss carryforward for tax purposes was reduced by approximately $12.8
million.

9. Capital Stock

The Company has authorized 400,000 shares of preferred stock with a par
value of $10 per share. The Company's Board of Directors may establish the
dividend rates, liquidation preferences, redemption, conversion and voting
rights, and any further limitations or restrictions of such a preferred stock
upon issuance.

Treasury common stock is recorded at cost and is reflected in the
accompanying balance sheet as a direct reduction of stockholders' equity.

At October 28, 1995, 918,000 shares of common stock were reserved for the
exercise of stock options including 118,500 shares reserved for future grants of
options.

10. Stock Options and Warrants

On April 7, 1993, in connection with consummation of the Plan (See Note 3),
all outstanding options were cancelled and the Company adopted the 1993 Stock
Option Plan (the "1993 Plan"). The 1993 Plan permitted the issuance to key
employees and directors of options to purchase shares of common stock.

Options granted under the 1993 Plan are exercisable at a price of $1.88 per
share, the fair market value of the Common Stock on April 7, 1993, the date the
options were granted. The right of an optionee to exercise options granted is
dependent upon a combination of time vesting and the price performance of the
common stock as indicated below. Failure to meet the performance criteria would
not result in any change in the exercise price or the number of shares subject
to the option.

Options generally vest, as to time, at the rate of 25% for each year of
service by the optionee following the option grant date. The number of options
within an option grant which may be exercised during any calendar quarter will
equal the lesser of: (a) the number of options time vested or (b) the number of
options determined by multiplying the performance percentage (Performance
Percentage) and the total number of options held within such option grant by an
optionee. The Performance Percentage is based on the average trading price per
share of the common stock during the last fifteen trading days of the preceding
calendar quarter as follows: $3.00 - 40%, $4.00 - 80%, $5.00 - 100%. At October
29, 1994, 338,000 options were outstanding under the 1993 Plan. All options
expire on April 7, 1998.

In 1994, the Company adopted the 1994 Stock Plan (the "1994 Plan"). The
1994 Plan succeeds the 1993 Plan. The 1994 Plan permits the issuance to key
employees and directors of options to purchase up to 580,000 shares of common
stock.

Options granted under the 1994 Plan are exercisable at the fair market
value of the Common Stock on the date the option is granted. The term during
which each option may be exercised is determined by the Company at each grant
date. In no event will the option be exercisable more than ten years from the
grant date. There is no performance vesting aspect of the 1994 Plan. Options
time vest as designated in the individual grant. Options currently outstanding
vest in one to three years. At October 28, 1995, 527,000 options were
outstanding under the 1994 Plan.

56
<PAGE>

A summary of stock option transactions and other related information is as
follows:

<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Shares under option at beginning of year ............ 755,000 570,500 34,130
Options granted (at prices of $1.63 to $3.25 in 1995,
at $1.38 to $2.88 in 1994 and $1.88 in 1993) ..... 101,000 417,000 570,500
Options exercised at $1.88 in 1994 .................. (1,000)
Options cancelled and expired ....................... (56,500) (231,500) (34,130)
-------- -------- --------
Shares under option at the end of the year (at prices
ranging from $1.38 to $3.25) - 407,000 shares
exercisable at October 28, 1995 .................. 799,500 755,000 570,500
======== ======== ========
Shares available for option at end of year .......... 118,500 163,000 580,191
======== ======== ========
</TABLE>

In October 1995, the Company engaged the financial advisory and turnaround
firm of Kirkland Messina, Inc. (KM) to assist the Company in developing a plan
to return the Company to profitability. As part of KM's compensation, the
Company issued KM 500,000 warrants to purchase common stock of the Company at an
exercise price in cash of $1.675 per share.

On November 8, 1995, the Company announced that it had hired P. E. (Ed)
Schenk as its President and Chief Executive Officer. As part of Mr. Schenk's
compensation, he was issued 750,000 warrants to purchase common stock of the
Company at an exercise price of $1.00 per share.

11. Stock Purchase Agreements

On April 11, 1989, the stockholders approved the sale and issuance of
180,000 shares of common stock for $9.00 per share to three former executives
for recourse promissory notes, commitments, and in one case, to provide
consulting services to the Company. The notes due the Company bear 9.5% interest
and were originally due on February 24, 1994. In fiscal years 1991, 1992 and
1993, the Board of Directors approved amendments to the employment, consulting
and stock purchase agreements. In these amendments, the former executives
accepted annual salary reductions and reductions in the amount of additional
compensation payable under the employment agreements. In consideration for these
reductions, the former executives received notes in settlement for all future
obligations for additional compensation under the employment and consulting
agreements. Concurrently, the contractual purchase obligations of the former
executives under the 1989 stock purchase agreements were reduced by a total of
$7.75 per share.

The notes payable and notes receivable related to these amended agreements
matured in January 1996. As described in Note 6, on January 1, 1996, notes
payable of approximately $406,000 were offset against notes receivable of
approximately the same amount. The notes receivable were classified as a
reduction of Stockholders' equity as they related to stock purchase agreements.
Notes payable to the former executives totalling $255,000 were due on January 2,
1996. The Company has deferred payment of this debt in order to conserve cash
for use in operation of its business. The Company will continue to accrue
interest on the debt at 9.5%. The non-payment of this debt resulted in events of
default under the Company's loan agreement with LaSalle and under its Senior
Note Indenture (See Note 6). In March and April 1996, the company made partial
principal payments to the former executives. The Company has also negotiated
revised payment terms with the former executives whereby the remaining debt due
will be repaid in installments.

12. Employee Benefit Plans

Prior to 1995, the Company's Rymer Meat operation sponsored a
non-contributory profit sharing plan (the "Rymer Meat Plan") covering certain
salaried personnel at the Company's Chicago, Illinois meat processing plant and
the Company's corporate headquarters who had completed one year of service.
Annual contributions to the Rymer Meat Plan were at the discretion of the
Company's management. In 1994 and 1993, the Company contributed approximately 5%
of each participant's compensation to the Rymer Meat Plan. Contributions and
costs expensed under the Rymer Meat Plan for the 1994 and 1993 fiscal years
amounted to approximately $202,000 and $160,000, respectively.

Prior to 1995, the Company's Rymer Seafood operation sponsored a 401(k)
savings plan for eligible employees employed at the Rymer Seafood operation (the
"Savings Plan"). Contributions and costs expensed under the Savings Plan for the
1994 and 1993 fiscal years amounted to approximately $14,000 and $13,000,
respectively.

57
<PAGE>

Effective November 1, 1994, the Rymer Meat Plan was amended to include a
Company-wide 401(k) savings plan ("Company-wide Savings Plan"). At the same
time, the Rymer Seafood Savings Plan was eliminated and those employees joined
the Company-wide Savings Plan. The Company makes matching contributions to the
Company-wide Savings Plan of up to 5% of each participant's compensation.
Contributions and costs expensed under the Company-wide Savings Plan amounted to
approximately $201,000.

Under terms of a deferred compensation agreement with a former
officer/director of the Company, the present value of future payments under the
agreement has been included in deferred employee benefits, amounting to $603,000
at October 28, 1995 and $627,000 at October 29, 1994.

13. Commitments and Contingencies

The amounts of liability, if any, for claims and actions against the
Company and its subsidiaries at October 28, 1995 are not determinable but, in
the opinion of management, such liability, if any, would not have a material
effect upon the Company's financial position or results of operations.

The Company has agreements with certain of its customers to sell
merchandise over the next year for specified prices. The Company's aggregate
commitment under sales agreements was approximately $3.6 million and $4.1
million at April 27, 1996 and October 28, 1995, respectively. The Company also
has agreements with certain of its suppliers to provide raw materials. The
agreements extend for up to one year and provide the price and quantity of
materials to be supplied. The Company had purchase commitments of $1.6 million
as of April 27, 1996 and $2.9 million as of October 28, 1995.

14. EEOC Settlement

On April 26, 1990, United States District Court for the Northern District
of Illinois, Eastern Division dismissed EEOC v Rymer Foods Inc., No. 88 C 10680;
an action brought by the Equal Employment Opportunity Commission against the
Company on December 21, 1988, alleging certain discriminatory employment
practices by the Company at its Chicago meat processing facility.

The present value of the cost of the settlement and estimated additional
legal fees relating to such dismissal was included in the net loss for fiscal
1990. The remaining liability related to this settlement approximated $380,000
at October 28, 1995. This liability is classified as current and the Company's
final settlement payment was paid in February 1996.

15. Supplemental Cash Flow Information

Supplemental cash flow information is as follows (in thousands):

First Half Fiscal Year
--------------- ------------------------
1996 1995 1995 1994 1993
------ ------ ------ ------ ------
(unaudited)
Cash paid for:
Interest ....................... $ 686 $1,887 $2,763 $3,668 $2,200
Federal, state and local income
taxes (net of tax refunds) ... 15 632 613 219 6

Non-cash transactions:

In connection with the retirement of a note payable due to a former Senior
Note holder on October 28, 1994, by conversion into common stock, the following
non-cash transaction was recorded:

1994
----
Decrease in notes payable ...................... $(376)
Decrease in accrued interest payable ........... (3)
Issuance of common shares:
Common stock at par .......................... 233
Additional paid-in capital ................... 146
-----
$ --
=====

58
<PAGE>

In connection with the 1993 Restructuring (See Note 3), the Company
recorded the following transactions (in thousands):

1993
----
Retirement of subordinated debentures of $38,565,000
net of original issue discount of $1,603,000 .................... $(36,962)
Reduction in accrued interest payable resulting from
restructuring of subordinated debentures ........................ (2,506)
Reduction of debt issuance costs related to subordinated debentures 436
Issuance of new Senior Notes ....................................... 19,972
Increase in accrued liabilities for Senior Notes yet to be issued .. 5
Issuance of common shares .......................................... 7,644
Extraordinary gain resulting from re-structuring of
subordinated debentures ......................................... 11,388
--------
Cash paid for fractional shares of debentures ...................... $ (23)
========

In connection with the Restructuring, which was recorded in the Company's
1993 second quarter, the Preferred Stock with a par value of $14,947,000 was
exchanged for 2,242,050 shares of common stock. This transaction resulted in a
total increase to Additional Paid-In Capital of approximately $12.7 million. The
effect of this transaction is summarized as follows (in thousands):

1993
----
Exchange of Preferred Stock:
Elimination of Preferred Stock ............. $(14,947)
Issuance of Common Shares .................. 2,242
Increase in additional paid-in capital ..... 12,705
--------
$ --
========

16. Supplemental Sales Information

Sales to customers outside the United States were less than 10% of
consolidated sales in each year presented. Sales to three restaurant chains
owned by Darden Restaurants (formerly General Mills) comprised approximately 8%
and 18% of the Company's net sales in the first half of 1996 and 1995,
respectively and 12% and 13% of the Company's revenues from continuing
operations in 1995 and 1994, respectively. During the first quarter of 1996,
Darden Restaurants informed Rymer Meat that certain supply contracts would not
be renewed for 1996.

Sales to one of the Company's retail customers, Country Fed Meat Company,
Inc. (CFM), accounted for approximately 8% and 10% of the Company's revenues
from continuing operations in fiscal 1994 and 1993, respectively. At the end of
the first quarter of 1995, certain issues between the Company and CFM resulted
in certain lawsuits being filed. On June 28, 1995, the Company announced that it
had reached a settlement with CFM of the litigation pending between the two
companies. As a result of the settlement, all lawsuits between the companies
were dismissed and no further actions will be taken by either company on these
matters. The allowance for doubtful accounts established prior to and during the
Company's 1995 second quarter contained sufficient reserves to resolve the
matters in dispute without additional charges to operations during the third
quarter of 1995. All terms of the settlement are confidential. The Company does
not expect to have a supply relationship with CFM in the future.

Sales to two groups of the Company's other customers, Bonanza and
Ponderosa, together accounted for approximately 12%, 11% and 14% of the
Company's consolidated revenues from continuing operations in fiscal 1995, 1994
and 1993, respectively. Franchise rights for both Bonanza and Ponderosa are
owned by Metromedia, Inc. The Bonanza and certain of the Ponderosa restaurants
are independently owned and operated.

The loss of any of the Company's major customers, or a substantial portion
of these accounts, could have a material adverse effect on the Company.

17. Earnings (Loss) Per Share

Earnings (loss) per share are calculated by the treasury stock method.

59
<PAGE>

For all periods, primary earnings (loss) per common share is computed by
dividing earnings (loss) by the weighted average number of common shares
outstanding plus common stock equivalents calculated using the average market
price. Fully diluted earnings (loss) per common share for all periods is
computed on the same basis except the ending market price is utilized to
calculate common stock equivalents.

18. Fourth Quarter Adjustments

1995

During the fourth quarter of 1995, the Company recorded a goodwill
writedown of $20.4 million (See Note 1). This writedown eliminated all remaining
goodwill of the Company. The asset of goodwill was determined to have been
impaired because of the financial condition of the Company and the Company's
inability to generate future operating income without substantial sales volume
increases which are uncertain. Moreover, anticipated future cash flows of the
Company indicated that the recoverability of the asset was not reasonably
assured.

1994

None

1993

During the fourth quarter of 1993, the Company recognized an additional
loss of $344,000 to reduce the carrying value of the Plant City facility to its
estimated net realizable value of $1.6 million. This loss was partially offset
by income of $272,000 from the elimination of reserves established during 1992
for losses expected to operate the plant through the date of disposal.

60
<PAGE>

19. Business Segment Information

The Company designates two business segments for reporting its financial
position and results of operations: the Processing segment and the Seafood
Importing and Distributing segment. The Processing segment consists of the Meat
processing operation. The Seafood operation comprises the Seafood Importing and
Distributing segment. The Company's consolidated results by business segment are
summarized as follows (in thousands):

1995 1994 1993
--------- --------- ---------
(in thousands)
Net Sales:
Processing ............................ $ 79,921 $ 106,251 $ 99,642
Seafood Importing and Distributing .... 70,376 56,005 48,208
--------- --------- ---------
Total ........................... $ 150,297 $ 162,256 $ 147,850
========= ========= =========
Operating Income:
Processing ............................ $ (4,439) $ 6,005 $ 4,088
Seafood Importing and Distributing .... 15 457 (476)
--------- --------- ---------
(4,424) 6,462 3,612
Corporate Expenses .................... (20,702) (576) (23,651)
--------- --------- ---------
Total ........................... $ (25,126) $ 5,886 $ (20,039)
========= ========= =========
Earnings (loss) from continuing operations
before income taxes:
Processing ............................ $ (4,166) $ 6,271 $ 4,059
Seafood Importing and Distributing .... (866) (159) (1,078)
--------- --------- ---------
(5,032) 6,112 2,981
Corporate Expenses .................... (24,298) (3,567) (26,791)
--------- --------- ---------
Total ........................... $ (29,330) $ 2,545 $ (23,810)
========= ========= =========
Identifiable Assets:
Processing ............................ $ 19,080 $ 42,625 $ 40,367
Seafood Importing and Distributing .... 13,454 12,501 10,165
Corporate ............................. 1,390 1,766 2,196
Assets held for sale .................. 1,600 1,600 20,137
--------- --------- ---------
Total ........................... $ 35,524 $ 58,492 $ 72,865
========= ========= =========
Capital Expenditures:
Processing ............................ $ 816 $ 472 $ 555
Seafood Importing and Distributing .... 33 26 9
Corporate ............................. -- 6 5
--------- --------- ---------
849 504 569
Discontinued Operations ............... -- 628 1,269
--------- --------- ---------
Total ........................... $ 849 $ 1,132 $ 1,838
========= ========= =========
Depreciation and Amortization of Plant
and Equipment and Other Assets:
Processing ............................ $ 987 $ 1,743 $ 1,864
Seafood Importing and Distributing .... 22 26 24
Corporate ............................. 21,730 690 21,355
--------- --------- ---------
22,739 2,459 23,243
Discontinued Operations ............... -- 145 1,263
--------- --------- ---------
Total ........................... $ 22,739 $ 2,604 $ 24,506
========= ========= =========

61
<PAGE>

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED OCTOBER 28, 1995,
OCTOBER 29, 1994 AND OCTOBER 30, 1993
RYMER FOODS INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>
Additions
------------------------
Charged to
Balance at Charged to Other Balance at
Beginning Costs and Accounts Deductions end
Description of Year Expenses (describe) (describe) of Year
------------------- --------- ---------- --------- ---------- --------
(in thousands)
<S> <C> <C> <C> <C>
Deducted in the balance sheets
from the assets to which
they apply:
Allowance for doubtful
accounts-current:
For the year ended
October 28, 1995 ................. $731 $789 $952(a) $568
For the year ended
October 29, 1994 ................. 475 461 205(a) 731
For the year ended
October 30, 1993 ................. 330 391 246(a) 475
</TABLE>

- ----------
(a) Accounts written off, net of recoveries

62
<PAGE>

RYMER FOODS INC.

COMPUTATION OF EARNINGS PER SHARE

For the years ended October 28, 1995, October 29, 1994 and October 30, 1993

1995 1994 1993
------------------- ----------------- -------------------
Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted
------- ------- ------- ------- ------- -------
(in thousands except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING
1 Average shares outstanding ........... 10,748 10,748 10,506 10,506 6,821 6,821

2 Net additional shares assuming stock
options and warrants exercised and
proceeds used to purchase treasury
shares ............................... 140 140 156 276 -- 54

3 Net additional shares assuming
conversion of preferred stock not
considered a common stock
equivalent at issuance ............... -- -- -- -- -- --
-------- -------- ------ ------ -------- --------
4 Average number of common shares
outstanding .......................... 10,888 10,888 10,662 10,782 6,821 6,875
======== ======== ====== ====== ======== ========
EARNINGS
5 Income (loss) from continuing
operations ........................... $(29,330) $(29,330) $2,470 $2,470 $(23,810) $(23,810)
======== ======== ====== ====== ======== ========
6. Income (loss) before extraordinary
item ................................. $(29,330) $(29,330) $6,478 $6,478 $(22,829) $(22,829)
======== ======== ====== ====== ======== ========
7 Net income (loss) .................... $(29,330) $(29,330) $6,478 $6,478 $(11,441) $(11,441)
======== ======== ====== ====== ======== ========

PER SHARE AMOUNTS
Income (loss) from continuing
operations (line 5 / line 4) ......... $(2.69) $(2.69) $.23 $.23 $(3.49) $(3.46)(a)
====== ====== ==== ==== ====== ======
Income (loss) before extraordinary
item (line 6 / line 4) ............... $(2.69) $(2.69) $.61 $.60(a) $(3.35) $(3.32)(a)
====== ====== ==== ==== ====== ======
Net income (loss) (line 7 / line 4) .. $(2.69) $(2.69) $.61 $.60(a) $(1.68) $(1.66)(a)
====== ====== ==== ==== ====== ======
</TABLE>

Note: In all years, earnings per share has been calculated using the treasury
stock method.

(a) Amounts are anti-dilutive; accordingly, primary earnings per share is
disclosed for reporting purposes in accordance with generally accepted
accounting principles.

63
<PAGE>

RYMER FOODS INC.

COMPUTATION OF EARNINGS PER SHARE

For the twenty-six weeks ended April 27, 1996 and April 29, 1995

<TABLE>
<CAPTION>
Assuming Primary Dilution Assuming Full Dilution
Twenty-six Weeks Ended Twenty-six Weeks Ended
------------------------ -----------------------
April 27, April 29, April 27, April 29,
1996 1995 1996 1995
---------- ---------- ---------- ----------
(in thousands except per share amounts)
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING
1 Average shares outstanding .................... 10,754 10,746 10,754 10,746

2 Net additional shares outstanding assuming
exercise of stock options ..................... -- 229 -- 229
------ ------ ------ ------
3 Average number of common shares
outstanding ................................... 10,754 10,975 10,754 10,975
====== ====== ====== ======

EARNINGS
4 Net loss ...................................... (4,664) (1,737) (4,664) (1,737)
====== ====== ====== ======

PER SHARE AMOUNTS
Net loss (line 4 / line 3) .................... $ (.43) $ (.16) $ (.43) $ (.16)
====== ====== ====== ======
</TABLE>

Note: In all years, earnings per share has been calculated using the treasury
stock method.

64
<PAGE>

RYMER FOODS INC.
SUBSIDIARIES OF THE COMPANY
OCTOBER 28, 1995

State of Percent
Subsidiary Name Incorporation Owned Owner
--------------- ------------- ------ ------
Rymer Meat Inc. .................. Illinois 100 Rymer Foods Inc.
Rymer Chicken Inc. (1) ........... Arkansas 100 Rymer Meat Inc.
Rymer International
Seafood Inc. (2) .............. Illinois 100 Rymer Meat Inc.
Rymer Chicken Inc. - Plant City .. Florida 100 Rymer Meat Inc.
Queen City Foods Inc. ............ Georgia 100 Rymer Meat Inc.

(1) Substantially all of the assets of Rymer Chicken Inc. were sold on December
10, 1993. See Item 1 and Note 4 to the Consolidated Financial Statements.

(2) The Company announced on January 5, 1996 that it had signed an agreement in
principle to sell the assets of Rymer International Seafood Inc. See Item 1
and Note 4 to the Consolidated Financial Statements.

65
<PAGE>

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of certain U.S. Federal income tax
consequences under present law for transactions contemplated by the Asset
Purchase Agreement. The discussion does not consider the effect of any
applicable state, local, foreign or other tax laws.

SOLICITATION AGENT

Rymer Foods has retained Hill and Knowlton, Inc. as the Solicitation Agent
(the "Solicitation Agent") in connection with the Special Meeting. The
Solicitation Agent may solicit proxies from stockholders and other persons in
person or by mail, telephone, facsimile or other means. The Solicitation Agent
may also request brokers, dealers and other nominee holders of shares of Common
Stock to forward this Proxy Statement and the related materials to the
beneficial owners thereof. Rymer Foods will pay the Solicitation Agent a base
fee of $20,500 and reimburse it for its out-of-pocket expenses in connection
with this solicitation. The officers and other employees of the Company may also
solicit proxies from stockholders and other persons in person or by mail,
facsimile, telephone, or other means. The Company will not pay these officers
and employees any extra compensation for their participation in this
solicitation.

EXPENSES

Rymer Foods will bear all costs of this solicitation. As stated above,
Rymer Foods will pay certain fees to the Solicitation Agent and will reimburse
the Solicitation Agent for its out-of-pocket expenses. In addition, Rymer Foods
will reimburse banks, custodians, fiduciaries, nominees, securities dealers,
trust companies, and other persons for their reasonable expenses in forwarding
this Proxy Statement, proxies and other related materials to the beneficial
owners of shares of Common Stock.

STOCKHOLDER PROPOSALS

Any stockholder proposal to be considered for inclusion in Rymer Foods'
proxy solicitation materials for its 1997 Annual Meeting must be received at
Rymer Foods' executive offices at 4600 South Packers Avenue, Suite 400, Chicago,
Illinois 60609, not later than November 30, 1996. If the 1997 Annual Meeting is
not held on April 1, 1997, (the currently anticipated meeting date) and is held
either (i) more than 30 calendar days preceding such currently anticipated
meeting date or (ii) more than 90 calendar days after such currently anticipated
meeting date, then Rymer Foods will, in a timely manner, inform stockholders of
such change, and the date by which stockholder proposals must be received.

OTHER MATTERS

Management knows of no other business that will be presented for action at
the Special Meeting. If any other matters properly come before the Special
Meeting, the persons named in the enclosed proxy will vote or refrain from
voting such proxy in accordance with their best judgment.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements, and other
information with the Securities and Exchange Commission (the "Commission"). The
public may inspect and copy at prescribed rates such reports, proxy statements,
and other information that the Company has filed with the Commission, at the
public reference facilities that the Commission maintains at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices located at
500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center,
New York, New York 10048. In addition, the public may obtain such reports, proxy
statements and other information concerning the Company from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates.
Such material can also be inspected at the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005, where the Common Stock is listed.

<PAGE>

ANNEX I
================================================================================

ASSET PURCHASE AGREEMENT

by and among

RYMER FOODS INC.,
RYMER INTERNATIONAL SEAFOOD, INC.

AND

BGL I, INC.

Dated as of February 26, 1996

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

<PAGE>

TABLE OF CONTENTS

Page
----
ARTICLE I
PURCHASE AND SALE OF ASSETS ................................................ 1
Section 1.1. Assets ................................................ 1
Section 1.2. Excluded Assets ....................................... 3
Section 1.3. Assets of Affiliates .................................. 3
Section 1.4. Limited Assumption of Liabilities ..................... 3

ARTICLE II
CONSIDERATION FOR ASSETS, ADDITIONAL PAYMENTS AND MANNER OF PAYMENT ........ 4
Section 2.1. Purchase Price ........................................ 4
Section 2.2. Payment of Purchase Price ............................. 4

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER .................................... 4
Section 3.1. Corporate Organization ................................ 4
Section 3.2. Authorization ......................................... 5
Section 3.3. No Violation .......................................... 5
Section 3.4. Consents and Approvals ................................ 5
Section 3.5. Buyer Brokerage Fees .................................. 5

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT ........................ 6
Section 4.1. Organization and Good Standing ........................ 6
Section 4.2. Authorization ......................................... 6
Section 4.3 No Consent Required ................................... 6
Section 4.4. Subsidiaries .......................................... 6
Section 4.5. No Violation .......................................... 7
Section 4.6. Assets ................................................ 7
Section 4.7. Compliance with Applicable Laws ....................... 7
Section 4.8. Leases ................................................ 7
Section 4.9. Absence of Undisclosed Liabilities .................... 8
Section 4.10. Taxes ................................................. 8
Section 4.11. Litigation ............................................ 8
Section 4.12. Intellectual Property ................................. 9
Section 4.13. Employee Benefit Plans ................................ 9
Section 4.14. Personnel Agreements, Plans and Arrangements .......... 10
Section 4.15. Workers Compensation and Medical Claims ............... 10
Section 4.16. Environmental and Safety Requirements ................. 10
Section 4.17. Consents and Approvals ................................ 11
Section 4.18. Intercompany Transactions ............................. 11
Section 4.19. Bank Accounts ......................................... 11
Section 4.20. Seller Brokerage Fees, etc. ........................... 11
Section 4.21. Limited Survival of Representatives and Warranties .... 11

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Annex I
<PAGE>

ARTICLE V
COVENANTS .................................................................. 12
Section 5.1. Conduct of the Business of Seller Prior to Closing .... 12
Section 5.2. Compliance with Laws .................................. 13
Section 5.3. Access to Properties and Records ...................... 13
Section 5.4. Negotiations .......................................... 13
Section 5.5. Further Actions ....................................... 13
Section 5.6. Successor Liability ................................... 14
Section 5.7. Name Change ........................................... 14
Section 5.8 Obtain Consents ....................................... 14

ARTICLE VI
CONDITIONS PRECEDENT ....................................................... 14
Section 6.1. Conditions to Each Party's Obligation
to Effect the Closing ................................. 14
Section 6.2. Conditions to the Obligation of Parent
and Seller to Effect the Closing ...................... 15
Section 6.3. Conditions to Obligations of Buyer
to Effect the Closing ................................. 16

ARTICLE VII
INDEMNIFICATION AND SETOFF ................................................. 17
Section 7.1. Indemnification by Seller and Parent .................. 17
Section 7.2. Indemnification by Buyer .............................. 17
Section 7.3. Indemnification Procedure for Third Party Claims ...... 17
Section 7.4. Failure to Give Timely Notice ......................... 19
Section 7.5. Right of Set-Off ...................................... 19
Section 7.6. Litigation Cooperation ................................ 20

ARTICLE VIII
CLOSING .................................................................... 20
Section 8.1. Closing ............................................... 20
Section 8.2. Deliveries by the Seller .............................. 20
Section 8.3. Deliveries by Buyer ................................... 21

ARTICLE IX
MISCELLANEOUS .............................................................. 22
Section 9.1. Notices ............................................... 22
Section 9.2. Entire Agreement ...................................... 23
Section 9.3. Documents ............................................. 23
Section 9.4. Counterparts .......................................... 24
Section 9.5. Third Parties ......................................... 24
Section 9.6. Expenses .............................................. 24
Section 9.7. Governing Law ......................................... 24
Section 9.8. Headings .............................................. 24
Section 9.9. Publicity ............................................. 24
Section 9.10. Amendment ............................................. 24
Section 9.11. Waiver ................................................ 24
Section 9.12. Definitions ........................................... 24

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Annex I
<PAGE>

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this "Agreement"), made as of this 26th day
of February, 1996, is entered into by and among RYMER FOODS INC., a Delaware
corporation ("Parent"), RYMER INTERNATIONAL SEAFOOD, INC., an Illinois
corporation ("Seller"), and BGL I, INC., an Illinois corporation ("Buyer").

WITNESSETH

WHEREAS, Seller is engaged in the purchasing and selling, and/or brokering
the purchase and sale, of seafood, and related activities (the "Business"), with
its principal place of business located at 300 West Washington Street, Suite
1505, Chicago, Illinois;

WHEREAS, Parent indirectly owns beneficially all of the issued and
outstanding shares of Seller's capital stock and, accordingly, controls the
business and operations of Seller; and

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Business and property and assets used in connection with the
Business, which assets and property constitute substantially all of Seller's
property and assets, upon the terms and conditions set forth below.

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

ARTICLE I

PURCHASE AND SALE OF ASSETS.

Section 1.1. Assets. On the terms and subject to the conditions set forth
in this Agreement, at the Closing (as defined herein), Seller is selling,
transferring and delivering to Buyer, free and clear of all liens, mortgages,
charges, security interests, pledges or other encumbrances or adverse claims or
interests of any nature ("Liens"), except as otherwise provided herein and as
assumed by Buyer as provided in Section 1.4 below, and Buyer is purchasing from
Seller, the Business and all of Seller's right, title and interest in and to all
property and assets (other than Excluded Assets, as defined below) that are used
in connection with or arise out of the conduct of the Business as of the Closing
Date (as defined below), wherever located and whether or not all or any of said
property and assets appear on or are reflected upon Seller's books, records or
financial statements (collectively, the "Assets"), including, but not limited
to, the following:

(a) Tangible Personal Property. All fixtures, equipment (including
computer hardware and software), furniture, office furniture and equipment,
and other similar personal property of Seller used in the Business and
located at 300 West Washington Street;

(b) Inventories and Supplies. All inventory of Seller, including,
without limitation, merchandise for resale, containers and office,
operating and other supplies;

(c) Receivables. All notes and accounts receivable of Seller and all
notes, bonds and other evidences of indebtedness of any corporation or
other person held by Seller arising from or in connection with the
Business;

(d) Contracts. All rights Seller may have under any and all
agreements, contracts, purchase orders, licenses, purchase and sale
commitments and leases pertaining to the Business ("Contracts") but
excluding all Employee Benefit Plans (this and each other capitalized term
not otherwise defined herein shall have the meaning assigned thereto in
Section 9.12 hereof);

(e) Intellectual Property. Any and all trademarks, trademark
registrations and trademark applications, trade-names (including the use of
the name Rymer solely in connection with the purchase, sale or brokering
the purchase or sale of seafood), logos, copyrights, patent and patent
applications, patent and other licenses thereof, know-how, trade secrets,
lists of past, present and potential customers, recorded knowledge,
business plans, performance standards, catalogues, research data, analyses
and computer software and programs, sales data, sales and advertising
materials, scheduling and service methods, sales and service manuals and

1
Annex I
<PAGE>

all other proprietary, confidential and other similar information (in
whatever form or medium) relating to the purchase, merchandising, sale or
distribution of products and the conduct of the Business (collectively,
"Intellectual Property");

(f) Records. All records, files, and papers of Seller, including, but
not limited to, sales and purchase correspondence, books of account and
employment records;

(g) Licenses, Permits and Approvals. All rights of Seller in and to
transferable permits, franchises, licenses, approvals and authorizations by
or of governmental authorities or third parties ("Permits") relating
primarily to, or necessary for the continued conduct of, the Business or
required in connection with ownership or operation of the Assets, to the
extent assignable;

(h) Claims. All causes of actions, claims, warranties, guarantees,
refunds, rights of recovery and set-off of every kind and character of
Seller relating to the Assets or arising out of the conduct of the
Business;

(i) Prepaids. All deposits and prepaid assets and expenses of Seller;

(j) Certain Proceeds. All insurance and warranty proceeds of Seller
received after the Closing Date with respect to damage, nonconformance of
or loss to the Assets; and

(k) Other Assets. All other properties and assets owned or held by
Seller and identified on Schedule 1.1(k) that are used primarily in, or are
necessary for the continued conduct of, or are otherwise customarily used
in, the Business as of the Closing Date, whether or not of a type falling
within any of the categories of assets or properties described above.

Section 1.2. Excluded Assets. Notwithstanding the foregoing, the following
properties and assets of Seller (collectively, the "Excluded Assets") are
retained by Seller and are expressly excluded from the purchase and sale
contemplated by this Agreement:

(a) Corporate Records and Tax Returns. Seller's formal corporate
records, including Articles of Incorporation, corporate seal, minute books,
stock books and other records having exclusively to do with the corporate
organization of Seller and all of Seller's Tax Returns and financial
records and those records relating solely to the Excluded Assets and
Excluded Liabilities (as defined in Section 1.4);

(b) This Agreement. Seller's rights pursuant to or under this
Agreement;

(c) Claims. All causes of action, claims, rights of recovery and
set-off of Seller not relating to the Assets or arising out of the conduct
of the Business;

(d) Nonassignable Permits. Any Permits which may not be transferred
without the consent, novation, waiver or approval of a third person or
entity and for which such consent, novation, waiver or approval has not
been obtained; and

(e) Employee Benefit Plans. All Employee Benefit Plans and any and all
rights and obligations thereunder.

Section 1.3. Assets of Affiliates. To the extent any personal property,
inventory, supplies, contracts or other rights owned by any Affiliate of Seller
and identified on Schedule 1.3 are used primarily in, arise out of or are
necessary to the continued conduct of the Business, they shall be included
within the defined term Assets if they would have been so included had they been
owned by Seller, and Seller and/or Parent shall cause each such Affiliate to
convey such assets and property to Buyer, or to Seller for conveyance to Buyer,
on or prior to the Closing, in accordance with the terms hereof.

Section 1.4. Limited Assumption of Liabilities. Notwithstanding anything to
the contrary contained in this Agreement or any agreement, document, certificate
or instrument being delivered pursuant to or in connection with this Agreement
(collectively, the "Transaction Documents"), and regardless of whether such
liability is disclosed in this Agreement, in any of the Transaction Documents or
on any Schedule or Exhibit hereto or thereto, Buyer will not assume, agree to
pay, perform or discharge or in any way be responsible for any debts,
liabilities or obligations of Seller, Parent, any Employee Benefit Plan, or any
Affiliate of the foregoing of any kind or nature whatsoever, not described in
this Section 1.4 as being specifically assumed, including any liabilities
whatsoever relating, directly or indirectly, to any Excluded Assets or any

2
Annex I
<PAGE>

existing loans to Seller. As of the Closing Date, Buyer will assume and
thereafter pay and fully satisfy when due all liabilities and obligations (i)
which arise prior to the Closing Date and represent normal trade payables or
accruals incurred by Seller and are set forth on Schedule 1.4, the approximate
amount of which, as of October 28, 1995, was $1.4 million, (ii) first resulting
from, caused by or arising out of the conduct of the Business or ownership or
lease of any of the Assets by Buyer after the Closing Date other than under any
Contract or Permit, (iii) first arising after October 28, 1995 under any
Contract or Permit assumed by Buyer pursuant to this Agreement, (iv) in the
event the amounts owing under that certain Credit Agreement between Seller and
LaSalle National Bank, dated as of April 7, 1995 (the "Credit Agreement"),
including reimbursement obligations in respect of letters of credit, which
liabilities and obligations (including such reimbursement obligations) as of
October 28, 1995, equalled approximately $9.75 million (the "Bank Debt"), are
not paid in full as of the Closing Date, relating to the Bank Debt, and (v) all
outstanding intercompany payables set forth on Schedule 4.18, in each case only
to the extent that the existence of such liabilities or obligations is not
contrary to any covenant, representation or warranty of Seller and/or Parent
under this Agreement (all such liabilities and obligations to be so assumed by
Buyer being referred to herein as the "Assumed Liabilities"; all liabilities and
obligations of Seller not specifically assumed hereunder are herein referred to
as the "Excluded Liabilities").

ARTICLE II

CONSIDERATION FOR ASSETS,
ADDITIONAL PAYMENTS AND MANNER OF PAYMENT.

Section 2.1. Purchase Price. The aggregate purchase price for the Assets
(the "Purchase Price") to be paid by Buyer to Seller for the Business and the
Assets shall be (i) $3 million payable to Seller at the Closing in accordance
with Section 2.2 below, plus (ii) Buyer's assumption of the Assumed Liabilities
as set forth herein. The Purchase Price shall be allocated as set forth on
Schedule 2.1.

Section 2.2. Payment of Purchase Price. The Purchase Price shall be paid as
follows:

2.2.1. Cash. Cash in the amount of $1.5 million shall be paid by Buyer
at the Closing by wire transfer of immediately available funds to an
account or accounts designated by Seller, of which $25,000 shall be in
consideration for Seller and Parent executing a non-competition agreement
substantially in the form of Exhibit A (the "Seller Non-Competition
Agreement").

2.2.2. Subordinated Note. An unsecured subordinated promissory note in
the aggregate principal amount of $1.5 million and substantially in the
form of Exhibit B hereto (the "Subordinated Note") shall be delivered by
Buyer at Closing to Seller or a designee of Seller.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER.

As an inducement to each of Seller and Parent to enter into and perform its
obligations under this agreement, Buyer hereby represents and warrants to Seller
and Parent as follows:

Section 3.1. Corporate Organization and Good Standing. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois and has all requisite corporate power and authority to
execute and deliver this Agreement and each Transaction Document to which it is
a party, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. Buyer is duly qualified or
otherwise authorized as a foreign corporation to transact business and is in
good standing in each jurisdiction in which the nature of its business or
location of its properties requires such qualification and in which the failure
to obtain such qualification would have a material adverse effect on Buyer.

Section 3.2. Authorization. The execution and delivery of this Agreement
and the Transaction Documents to which Buyer is a party by Buyer, the
performance by Buyer of its obligations hereunder and thereunder and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action other than the
Stockholder Authorization and the Senior Note Waiver (each as defined in Section

3
Annex I
<PAGE>

4.17). This Agreement and the Transaction Documents to which Buyer is a party,
when executed and delivered by Buyer, will have been duly executed and delivered
by Buyer and, assuming the due authorization, execution and delivery hereof and
thereof by Seller and Parent, will constitute the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and the availability of equitable remedies.

Section 3.3. No Violation. The execution, delivery and performance by Buyer
of this Agreement and the Transaction Documents to which Buyer is a party and
the consummation of the transactions contemplated herein and therein will not:

(a) result in the breach of any of the terms or conditions of, or
constitute a default under, or in any manner release any party thereto from
any obligation under, any mortgage, note, bond, indenture, contract,
agreement, license or other instrument or obligation of any kind or nature
by which Buyer is bound;

(b) violate any order, writ, injunction, regulation, statute or decree
of any court, administrative agency, or governmental body by which Buyer is
bound; or

Section 3.4. Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any person, entity or
governmental or regulatory authority is required to be made or obtained by Buyer
in connection with the execution and delivery of this Agreement and the
Transaction Documents to which Buyer is a party, the performance by Buyer of its
obligations hereunder and thereunder and the consummation by it of the
transactions contemplated hereby and thereby, other than such consents,
approvals, authorizations, declarations, filings or registrations in which the
failure to make or obtain, either individually or in the aggregate, would not
have a material adverse effect upon Buyer, or its ability to perform its
obligations hereunder or under the Transaction Documents to which it is a party.

Section 3.5. Buyer Brokerage Fees. Except as set forth on Schedule 3.5,
there are no claims for brokerage commissions, finder's fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement binding upon Buyer. Buyer shall pay, and
hold Parent and Seller harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any such claim.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT.

As an inducement to Buyer to enter into and perform its obligations under
this Agreement, Seller and Parent hereby jointly and severally represent and
warrant to Buyer as follows:

Section 4.1. Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of Seller and Parent has
full corporate power and authority to execute and deliver this Agreement and the
Transaction Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. Each of Parent and Seller is duly licensed and qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its business or location of its properties requires such
qualification and in which the failure to obtain such qualification would have a
material adverse effect on Parent or Seller.

Section 4.2. Authorization. The execution and delivery of this Agreement
and the Transaction Documents to which Seller or Parent is a party by Seller or
Parent, as applicable, the performance by Seller and Parent of its obligations
hereunder and thereunder and the consummation by Seller and Parent of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action, except that any necessary approval by the
stockholders or creditors of Parent has not yet been obtained and Parent shall
use all reasonable efforts to obtain such approvals prior to the Closing. This
Agreement and the Transaction Documents to which Seller or Parent is a party,

4
Annex I
<PAGE>

when executed and delivered, will have been duly executed and delivered by
Seller or Parent, as applicable, and assuming the due authorization, execution
and delivery hereof and thereof by Buyer, will constitute the legal, valid and
binding obligation of Seller or Parent, as applicable, enforceable in accordance
with their respective terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally, and the availability of equitable
remedies.

Section 4.3. No Consent Required. Other than as set forth on Schedule 4.3,
no consent, approval, order or authorization of, or declaration, filing or
registration with, any person or governmental authority is required to be made
or obtained by Seller or Parent in connection with the authorization, execution,
delivery or performance of this Agreement, the Transaction Documents or the
transactions contemplated hereby and thereby.

Section 4.4. Subsidiaries. Seller does not own or control (directly or
indirectly), or own or hold any right to acquire, any stock, partnership
interest, joint venture interest, equity participation or other security or
interest in any other corporation, partnership, trust or any other business
association.

Section 4.5. No Violation. The execution, delivery and performance by each
of Seller and Parent of this Agreement and the Transaction Documents to which it
is a party and the consummation of the transactions contemplated herein and
therein will not:

(b) violate any order, writ, injunction, regulation, statute or decree
of any court, administrative agency, or governmental body by which Parent
or Seller is bound; or

Section 4.6. Title to Assets. Except for the Excluded Assets, the Assets
constitute all of the property and assets which are considered part of the
Business and all of the assets necessary to conduct the Business as presently
conducted. Seller has the right to convey, and upon the consummation of the
transactions contemplated by this Agreement, Seller will have conveyed and Buyer
will be vested with, good and marketable title and interest in and to the Assets
free and clear of all Liens, other than Permitted Encumbrances. Such transfer of
the Assets free and clear of all Liens, other than Permitted Encumbrances, shall
not affect Buyer's obligation to assume the Assumed Liabilities pursuant to
Section 1.4.

Section 4.7. Compliance with Applicable Laws. Seller has complied with all
writs, injunctions, decrees, and orders applicable to it or to the operation of
the Business and has received no notice of any alleged violation of any law,
regulation, writ, injunction decree or order. Without limiting the generality of
the foregoing, Seller has complied, in all material respects, with all
applicable federal, state and local laws, ordinances or regulations relating to
the employment of labor, including the provisions thereof relating to wages and
hours, to customs and to any Employee Benefit Plans, and Seller is not liable
for any arrears of wages or any taxes or penalties for failure to comply with
any such laws, ordinances or regulations. Parent has complied with all writs,
injunctions, decrees, and orders applicable to it and the operation of the
Business and has received no notice of alleged violation of any law, regulation,
writ, injunction, decree or order applicable to it and the operation of the
Business.

Section 4.8. Leases. All leases of real and personal property leased by
Seller and utilized in the Business, including all such leases with related
parties or Affiliates, are listed on Schedule 4.8, correct and complete copies
of which previously have been furnished to Buyer. All of such leases are valid
and in full force and effect and neither the lessor nor the lessee is in default
under any of such leases and no event has occurred which with the giving of
notice or the passage of time or both could constitute a default under any of
such leases.

Section 4.9. Absence of Undisclosed Liabilities. To the best knowledge of
Seller and Parent, as of the Closing Date, Seller will not have, with respect to
the Business, any material debts, liabilities or obligations of any nature
(whether accrued, absolute, contingent, direct, indirect, perfected, inchoate,
unliquidated or otherwise and whether due or to become due) arising on or prior

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to the Closing Date, or any transaction, series of transactions, action or
inaction occurring on or prior to the Closing Date, or any state of facts or
condition existing on or prior to the Closing Date (regardless of when such
liability or obligation is asserted), including, but not limited to, liabilities
or obligations on account of Taxes or governmental charges or penalties,
interest or fines thereon or in respect thereof, except (a) as and to the extent
clearly and accurately reflected and accrued for or reserved against in the
financial statements (the "Financial Statements") set forth in Schedule 4.9(a),
(b) those assumed by Buyer pursuant to Section 1.4, and (c) for liabilities
specifically delineated on Schedule 4.9(b).

Section 4.10. Taxes. Parent and/or Seller have filed all Tax Returns that
they are required to have filed in connection with the Assets or the operation
of the Business, and such returns are true and correct. Parent and/or Seller
have paid all Taxes, interest and penalties, if any, reflected on such Tax
Returns or otherwise due and payable by it in connection with the operation of
the Business. Any deficiencies proposed as a result of any governmental audits
of such Tax Returns have been paid or settled, and there are no present disputes
as to Taxes payable by Parent or Seller in connection with the operation of the
Business. With respect to all amounts of Taxes imposed on Seller, for which
Seller is or could be liable, whether to taxing authorities (as, for example,
under law) or to other persons or entities, with respect to all taxable periods
or portions of periods ending on or before the Closing Date, all applicable Tax
laws and agreements have been fully complied with, and all such amounts required
to be paid by Parent and/or Seller to taxing authorities or others on or before
the Closing Date have been paid, or have been accrued for or fully reserved
against on the Financial Statements. No issues have been raised and are
currently pending by any taxing authority in connection with any of the Tax
Returns. No waivers of statutes of limitation with respect to the Tax Returns
have been given by or requested from Parent and/or Seller.

Section 4.11. Litigation. To the best knowledge of Seller and Parent,
except as set forth in Schedule 4.11, there is no claim, counter-claim, action,
suit, order, proceeding or investigation pending or threatened against or
involving Seller or Parent in connection with the Assets or the operation of the
Business (or pending or threatened against any of the officers, directors or key
employees of Seller or Parent with respect to their business activities on
behalf of Seller) or any Employee Benefit Plan with respect to or affecting the
Assets or the Business, or relating to the transactions contemplated hereby,
before any court, agency or other governmental body; nor is there any reasonable
basis for any such claim, action, suit, proceeding or governmental
investigation. To the best knowledge of Seller and Parent, neither Seller nor
Parent, with respect to the Assets or the Business, is directly subject to or
affected by any order, judgment, decree or ruling of any court or governmental
agency. To the best knowledge of Seller and Parent, neither Seller nor Parent
has received any opinion or memorandum or legal advice from legal counsel
retained by them to the effect that either of them is exposed, from a legal
standpoint, to any liability which may be material to the Business or the
Assets. Seller or Parent is not engaged in any legal action to recover monies
due it or for damages sustained by it.

Section 4.12. Intellectual Property. Schedule 4.12 contains a complete and
correct list of all patented and registered Intellectual Property owned by
Seller and all pending patent applications and applications for the registration
of other Intellectual Property owned or filed by Seller. Schedule 4.12 also
contains a complete and correct list of all trade or corporate names used by
Seller and a complete and correct list of all licenses and other rights granted
by Seller to any third party with respect to Intellectual Property and licenses
and other rights granted by any third party to Seller. Except as set forth on
Schedule 4.12, (a) Seller owns and possesses all right, title and interest in
and to, or has a valid license to use, all of the Intellectual Property
necessary for the operation of the Business as presently conducted and none of
such Intellectual Property have been abandoned; (b) no claim by any third party
contesting the validity, enforceability, use or ownership of any such
Intellectual Property has been made, is currently outstanding or is threatened,
and, to the best knowledge of Seller and Parent, there is no reasonable basis
for any such claim; (c) neither Seller, Parent nor any registered agent of
Seller or Parent has received any notices of, nor are Seller or Parent aware of
any reasonable basis for, an allegation of, any infringement or misappropriation
by, or conflict with, any third party with respect to such Intellectual
Property, nor has Seller, Parent or any registered agent of Seller received any
claims of infringement or misappropriation of or other conflict with any
Intellectual Property of any third party; and (d) Seller has not infringed,
misappropriated or otherwise violated any Intellectual Property of any third
parties, and neither Seller nor Parent are aware of any infringement,
misappropriation or conflict which will occur as a result of the continued
operation of the Business.

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Section 4.13. Employee Benefit Plans. Except as set forth in Schedule 4.13,
neither Seller nor any Plan Affiliate (as defined below) has maintained,
sponsored, adopted, made contributions to or obligated itself to make
contributions to or to pay any benefits or grant rights under or with respect to
any "Employee Pension Benefit Plan" (as defined in Section 3(2) of ERISA),
"Employee Welfare Benefit Plan (as defined in Section 3(1) of ERISA),
"multi-employer plan" (as defined in Section 3(37) of ERISA), plan of deferred
compensation, medical plan, life insurance plan, long-term disability plan,
dental plan or other plan providing for the welfare of any of Seller's or any
Plan Affiliate's employees or former employees or beneficiaries thereof,
personnel policy (including, but not limited to, vacation time, holiday pay,
bonus programs, moving expense reimbursement programs and sick leave), excess
benefit plan, bonus or incentive plan (including, but not limited to, stock
options, restricted stock, stock bonus and deferred bonus plans), salary
reduction agreement, change-of-control agreement, employment agreement,
consulting agreement, workers compensation law, unemployment compensation law,
social security law or any other benefit, program or contract (all such plans
listed on Schedule 4.13 collectively, "Employee Benefit Plans"), whether or not
written, voluntary or pursuant to a collective bargaining agreement or law,
which could give rise to or result in Seller or such Plan Affiliate having any
debt, liability, claim or obligation of any kind or nature, whether accrued,
absolute, contingent, direct, indirect, known or unknown, perfected or inchoate
or otherwise and whether or not due or to become due. Correct and complete
copies of all Employee Benefit Plans have been previously furnished to Buyer and
are in substantial compliance with governing documents and agreements and with
all applicable laws. For purposes of this Agreement, "Plan Affiliate" means any
person or entity with which Seller constitutes all or part of a controlled group
of corporations, a group of trades or businesses under common control or an
affiliated service group, as each of those terms are defined in Section 414 of
the U.S. Internal Revenue Code.

Section 4.14. Personnel Agreements, Plans and Arrangements. To the best
knowledge of Seller and Parent, except as listed in Schedule 4.14, Seller is not
a party to or obligated in connection with the Business with respect to any (a)
outstanding contracts with current or former employees, agents, consultants,
advisers, salesmen, sales representatives, distributors, sales agents,
independent contractors, or dealers, or (b) collective bargaining agreements or
contracts with any labor union or other representative of employees or any
employee benefits provided for by any such agreement, correct and complete
copies of which previously have been furnished to Buyer. To the best knowledge
of Seller and Parent, no strike, union organizational activity, allegation,
charge or complaint of employment discrimination or other similar occurrence has
occurred or is pending or threatened against Seller nor does Seller know any
basis for any such allegation, charge, or complaint. To the best knowledge of
Seller and Parent, Seller has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
thereof relating to wages, hours, equal opportunity, collective bargaining and
the payment of social security and other taxes. To the best knowledge of Seller
and Parent, there are no administrative charges or court complaints pending or
threatened against Seller before the U.S. Equal Employment Opportunity
Commission or any state or federal court or agency concerning alleged employment
discrimination or any other matters relating to the employment of labor.

Section 4.15. Workers Compensation and Medical Claims. To the best
knowledge of Seller and Parent, Schedule 4.15 sets forth all expenses,
obligations, duties and liabilities relating to any claims by employees and
former employees (including dependents and spouses) of Seller (or predecessors)
made since January 1, 1995 and the extent of any specific accrual on or reserve
therefor set forth on the Financial Statements, for (a) costs, expenses and
other liabilities under any workers compensation laws, regulations, requirements
or programs, and (b) any other medical costs and expenses. To the best knowledge
of Seller and Parent, except as set forth on Schedule 4.15, no claims, injuries,
fact, event or condition exists which would give rise to a material claim
(individually or in the aggregate) by employees and former employees (including
dependents and spouses) of Seller under any Employee Benefit Plans that comply
with workers compensation laws, regulations, requirements or programs or that
provide for any other medical costs and expenses or under any similar plans or
programs maintained or contributed to by either of Buyers following the Closing
Date.

Section 4.16. Environmental and Safety Requirements.

(a) Compliance with Environmental and Safety Requirements. To the best
knowledge of Seller and Parent, Seller is in compliance with all applicable
Environmental and Safety Requirements (as defined in clause (c) below), and
Seller possesses all required permits, licenses and certificates, and has filed
all notices or applications, required thereby.

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(b) Other Condition. No facts, events or conditions with respect to any
facilities ever used by Seller or past or present operations of Seller or the
Business, exist which could reasonably be expected to interfere with or prevent
continued compliance with, or could give rise to any common law or statutory
liability, which would result in a material adverse impact on Seller, the Assets
or the Business, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation against or involving the Business under any
Environmental and Safety Requirement based on any such fact, event or
circumstance, including, without limitation, liability for cleanup costs,
personal injury or property damage.

(c) Definition. For purposes of this Agreement, "Environmental and Safety
Requirements" means all federal, state and local laws, rules, regulations,
ordinances, orders, statutes, actions, policies and requirements relating to
public health and safety, worker health and safety, pollution or protection of
the environment, all as amended or hereafter amended.

Section 4.17. Consents and Approvals. Other than the affirmative vote of
the holders of 66-2/3 percent of the outstanding common stock of Parent
authorizing the transactions contemplated hereby (the "Stockholder
Authorization") and waiver of the provisions in that certain Trust Indenture,
dated as of April 7, 1993 (the "Indenture"), between Parent and Continental
Stock Transfer & Trust Company pursuant to which Parent's 11% Senior Notes due
2000 (the "Senior Notes") were issued, by holders of a majority in principal
amount of the Senior Notes (the "Senior Note Waiver"), which provisions restrict
Parent from selling or transferring significant assets under certain conditions,
no consent, approval or authorization of, or declaration, filing or registration
with, any person, entity or governmental or regulatory authority is required to
be made or obtained by Seller or Parent in connection with the execution and
delivery of this Agreement and the Transaction Documents or the transactions
contemplated thereby and hereby.

Section 4.18. Intercompany Transactions. Schedule 4.18 describes (i) all
material management, administrative, computer, telephone or other services
provided by Parent or any of Seller's or Parent's Affiliates to Seller and all
such services provided by Seller to Parent or any of Seller's or Parent's
Affiliates as of the Closing Date, and (ii) all other material contracts,
agreements, arrangements or transactions (including the purchase and sale of
inventory, supplies and other goods) between Seller, on the one hand, and Parent
or any of Seller's or Parent's Affiliates on the other hand, currently in
effect.

Section 4.19. Bank Accounts. Schedule 4.19 is a complete and correct list
of each bank in which Seller has an account or safe deposit box, the number of
each such account or box and the names of all persons authorized to draw thereon
or to have access thereto.

Section 4.20. Seller Brokerage Fees, etc. Except as set forth on Schedule
4.20, there are no claims for brokerage commissions, finders' fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement binding upon the Parent or Seller. Parent
and Seller shall pay, and hold Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorneys' fees and
out-of-pocket expenses) arising in connection with any such claim.

Section 4.21. Limited Survival of Representatives and Warranties.
Notwithstanding any other provisions hereof (i) the representations and
warranties of Parent and Seller herein shall not survive the Closing, except for
those contained in Sections 4.1, 4.2, 4.3, 4.5 and 4.6, which shall survive
indefinitely, and (ii) the representations and warranties of Buyer herein shall
survive indefinitely.

ARTICLE V

COVENANTS.

Section 5.1. Conduct of the Business of Seller Prior to Closing. Parent and
Seller agree that prior to the Closing, except as otherwise consented to or
approved or directed by Buyer (or its affiliates), Parent shall cause Seller to:

(a) conduct its business only in the ordinary course;

(b) not declare, set aside or pay any dividend or other distribution
or payment in cash, stock or property in respect of shares of its common
stock;

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(c) not (i) issue, grant, sell or pledge or agree or propose to issue,
grant, sell or pledge any shares of, or rights of any kind to acquire any
shares of, the capital stock of Seller; (ii) acquire any assets or enter
into any other transaction, other than in the ordinary course of business;
(iii) dispose of, encumber or mortgage any Assets; (iv) waive, release,
grant or transfer any rights of value or modify or change in any material
respect any existing license, lease, contract or other document, other than
in the ordinary course of business; or (v) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;

(d) use its best efforts to preserve intact its business organization,
to keep available the services of its present officers and key employees,
and to preserve the goodwill of those having business relationships with
Seller;

(e) not (i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than normal,
ordinary course trade payables and accruals; any such payments shall be
consistent with past practice; (ii) permit or allow any of the Assets
(real, personal or mixed, tangible or intangible) to be subject to any Lien
not already existing and accounted for on the Financial Statements, except
for liens arising in the ordinary course of business and consistent with
past practice; (iii) cancel any material debt or waive any material claim
or right or sell, transfer, or otherwise dispose of any Assets; (iv) grant
any general increase in the compensation of non-executive officers,
executive officers, managers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment)
or any increase in the compensation payable or to become payable to any
such person, except for reasonable increases or bonus payments, all in the
ordinary course of business and consistent with past practice; (v) make any
material capital expenditure or commitment; (vi) pay, loan or advance any
amount to, or sell, transfer or lease any properties or assets to, or enter
into any agreement or arrangement with, any of its Affiliates, any officer
or director of any Affiliate, or any associate of any Affiliate; or (vii)
agree, whether in writing or otherwise, to do any of the foregoing; and

(f) (i) maintain all of the Assets (including leased properties) in
good repair, order and condition, (ii) use its best efforts to maintain and
keep in full force existing insurance, (iii) maintain the books and records
in the usual, regular and ordinary manner on a basis consistent with past
practices, and (iv) perform and comply with its obligations under all
Contracts.

Section 5.2. Compliance with Laws. Seller shall duly comply with all laws
applicable to it and its properties, operations, business and assets except to
the extent that such non-compliance would not have a material adverse effect on
the properties, operations, business or Assets of Seller.

Section 5.3. Access to Properties and Records.

(a) Seller shall, upon reasonable request, afford to Buyer and its
accountants, counsel and other authorized representatives, reasonable access,
subject to normal security procedures, during normal business hours throughout
the period prior to the Closing Date, to all of its facilities, properties,
books, contracts, commitments and records (including, but not limited to, tax
returns, declarations of estimated tax and tax reports) in order that Buyer may
have the opportunity to make such reasonable investigation, as it shall desire
to make of the affairs of Seller and, during such period, shall furnish promptly
to Buyer such financial and other information concerning its business,
properties and personnel as Buyer or its representatives may from time to time
reasonably request.

(b) No investigation pursuant to this Section 5.3 shall affect any
representations or warranties or the conditions to the obligations of the
parties hereto to consummate the transactions contemplated by this Agreement or
the Transaction Documents.

Section 5.4. Negotiations. Following the execution of this Agreement by
Seller, neither Seller, Parent nor any of their respective Affiliates, officers,
directors, representatives or agents shall, directly or indirectly, solicit or
participate in discussions or negotiations with, provide any non-public
information concerning Seller or the transactions contemplated hereby to, or
cooperate with any corporation, partnership, person or other entity or group
(other than Buyer or its Affiliates or associates or an officer, director,
employee or other authorized representatives of Buyer) concerning any merger,
sale of substantial assets, sale of a substantial equity interest or similar
transaction involving Seller; provided, however, that if Seller or Parent should

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receive any unsolicited offer of such nature, it may negotiate concerning such
offer, provide any non-public information concerning Seller (except to the
extent such non-public information relates to Buyer or the transactions
contemplated hereby) to any person or entity making any such unsolicited offer
or its agents and representatives, and, if in the judgment of the majority of
the disinterested directors of Parent, such offer is superior from a financial
point of view to Parent than the transactions contemplated hereby, then Buyer
and Parent may accept such offer and, in such event, Seller and Parent shall pay
to Buyer $100,000.

Section 5.5. Further Actions. Subject to the terms and conditions hereof,
each of the parties hereto agrees to use its best efforts to take, or cause to
be taken, all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate the transactions contemplated by this
Agreement and the Transaction Documents, including using all reasonable efforts
to: (i) obtain all necessary waivers, consents and approvals, to give all
notices and to effect all necessary registrations and filings, and (ii) to
defend any lawsuits or other legal proceedings, whether judicial or
administrative and whether brought derivatively or on behalf of third parties
(including governmental agencies or officials), challenging this Agreement, the
Transaction Documents, or the consummation of the transactions contemplated
hereby and thereby. If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement or the
Transaction Documents, the proper officers and/or directors of Buyer and Seller
and Parent shall use their best efforts to take such action.

Section 5.6. Successor Liability. Except as set forth in Schedule 5.6,
Buyer shall not have any liability of any nature or kind whatsoever with respect
to any Employee Benefit Plan with respect to any employee or former employee of
Seller or its Plan Affiliates or beneficiary of any of them, whether by statute,
regulations or judicial development. With respect to those matters listed in
Schedule 5.6 where Buyer intends to assume liabilities with respect to an
identified Employee Benefit Plan, Seller and Parent shall take all acts within
their control as may be necessary to accomplish the intended result.

Section 5.7. Name Change. No later than the Closing Date, Seller and Parent
shall discontinue using, and permitting others (other than Buyer) to use, the
name Rymer International Seafoods, Inc. or any variation thereof and any other
Intellectual Property.

Section 5.8 Obtain Consents. Parent and Seller shall (i) prepare and file a
proxy statement with the Securities and Exchange Commission relating to
obtaining the Stockholder Authorization no later than May 1, 1996; (ii) notice
and hold a special meeting of the stockholders of Parent no later than June 28,
1996 for purposes of seeking the required Stockholder Authorization, and use its
reasonable best efforts to obtain the Stockholder Authorization no later than
June 28, 1996, and to cause such authority to remain in effect until the Closing
has occurred, (iii) use its reasonable best efforts to obtain the Senior Note
Waiver no later than June 28, 1996, and to cause such waiver to remain in effect
until the Closing has occurred, and (iv) use its reasonable best efforts to
cause Chanin and Company to conclude its engagement on behalf of Seller and
Parent no later than June 28, 1996.

ARTICLE VI

CONDITIONS PRECEDENT.

Section 6.1. Conditions to Each Party's Obligation to Effect the Closing.
Each and every obligation under this Agreement of each party hereto to be
performed by such party on or before the Closing Date shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:

(a) Counsel for Buyer and counsel for Parent and Seller shall be
satisfied with the steps taken for compliance with applicable requirements
of the securities, antitrust and regulatory laws and with all other legal
matters.

(b) No preliminary or permanent injunction or other order shall have
been issued by any federal or state court of competent jurisdiction in the
United States or by any United States federal or state governmental or
regulatory body nor shall any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state governmental
authority which prevents the consummation of the transactions contemplated
by this Agreement be in effect.

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(c) No change shall have occurred or been announced or proposed after
the date hereof and prior to the Closing Date in the laws, rules,
regulations or policies of any governmental authority in any jurisdiction
in which Seller conducts business which might reasonably be expected to
materially adversely affect the Assets, the Business or the transactions
which are contemplated by this Agreement.

Section 6.2. Conditions to the Obligation of Parent and Seller to Effect
the Closing. Each and every obligation of Parent and Seller under this Agreement
to be performed on or before the Closing Date shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:

(a) Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior
to the Closing Date pursuant to the terms hereof. Seller shall have also
received all of the documents and other items to be delivered pursuant to
Section 8.3.

(b) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of such time.

(c) All actions, proceedings, instruments and documents required to
carry into effect the provisions of this Agreement; and all other legal
matters incidental thereto, shall have been effected in a manner reasonably
satisfactory to Seller, and its counsel shall have received such
counterpart originals or certified or other copies of such other documents
as they may reasonably request.

(d) Seller shall have been furnished with an opinion of Katten Muchin
& Zavis, counsel for Buyer, dated as of the Closing Date, in substantially
the form attached hereto as Exhibit 6.2(d). In giving their opinion,
counsel shall be entitled to rely on certificates of officers of Buyer,
public officials or such other persons or opinions of such other counsel
(which other counsel shall be identified by name) which such counsel shall
reasonably consider to be an appropriate and reliable source of information
on which counsel's opinion is based, which sources shall be specified in
such opinion.

(e) No action or proceeding before any court or any governmental or
regulatory authority and no investigation by any governmental or regulatory
authority shall be pending, and no action or proceeding by any governmental
or regulatory authority shall have been threatened against the parties
hereto, or any of their respective Affiliates, associates, officers or
directors seeking to prevent or delay the transactions contemplated hereby
or challenging any of the terms or provisions of this Agreement or seeking
material damages in connection therewith.

(f) Buyer shall have furnished such certificate of its Chief Executive
Officer to evidence its compliance with the conditions set forth in
Sections 6.1(b), 6.2(a)-(c) and 6.2(e) hereof, as may have been reasonably
requested by Seller.

(g) The Stockholder Authorization and the Senior Note Waiver shall
have been obtained and remain in effect.

(h) Parent shall have received the opinion of Chanin and Company to
the effect that the transactions contemplated hereby are fair from a
financial point of view to the stockholders of Parent.

Section 6.3. Conditions to Obligations of Buyer to Effect the Closing. Each
and every obligation of Buyer under this Agreement to be performed on or before
the Closing Date shall be subject to the fulfillment at or prior to the Closing
Date of the following additional conditions:

(a) The Parent and Seller shall have performed in all material
respects each of their respective obligations under this Agreement required
to be performed by them at or prior to the Closing Date pursuant to the
terms hereof. Buyer shall have received copies of all of the required
consents from third parties in connection with the transfer to Buyer of all
of Seller's contracts, permits and licenses contemplated hereunder. Buyer
shall have also received all of the documents and other items to be
delivered pursuant to Section 8.2.

(b) The representations and warranties of Parent and Seller contained
in this Agreement shall be true and correct in all material respects at and
as of the Closing Date as if made at and as of such time. If, prior to the
Closing, Parent and Seller inform the Buyer (by written notice) of any
changes to the Seller's representations and warranties set forth herein,
any such change must not result in, or reflect, a material adverse change
to the Business or any of the Assets.

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(c) All actions, proceedings, instruments and documents required to
carry into effect the provisions of this Agreement, and all other legal
matters incidental thereto, shall have been effected in a manner reasonably
satisfactory to Buyer, and its counsel shall have received counterpart
originals or certified or other copies of such other documents as they may
reasonably request.

(d) Buyer shall have been furnished with an opinion of counsel for
Seller and Parent, dated as of the Closing Date, in substantially the form
attached hereto as Exhibit 6.3(d). In giving their opinion, counsel shall
be entitled to rely on certificates of officers of each of Parent and
Seller, public officials or such other persons or opinions of such other
counsel (which other counsel shall be identified by name) which such
counsel shall reasonably consider to be an appropriate and reliable source
of information which counsel's opinion is based, which sources shall be
specified in such opinion.

(f) Each of Seller and Parent shall have furnished such certificate of
its Chief Financial Officer to evidence its compliance with Section 5.4,
Section 6.1(b) and Sections 6.3(a)-(c) and (e) hereof as may have been
reasonably requested by Buyer, and that all necessary approvals of the
stockholders and creditors of Parent have been obtained.

(g) The Stockholder Authorization and the Senior Note Waiver shall
have been obtained and remain in effect.

ARTICLE VII

INDEMNIFICATION AND SETOFF.

Section 7.1. Indemnification by Seller and Parent. From and after the
Closing, for a period of eighteen (18) months, Parent and Seller agree to
jointly and severally indemnify, defend and save Buyer and its Affiliates, and
each of their respective officers, directors, employees, agents, Employee
Benefit Plans, and fiduciaries, plan administrators or other parties dealing
with any such plans (each, a "Buyer Indemnified Party"), harmless from and
against any and all liabilities (whether contingent, fixed or unfixed,
liquidated or unliquidated, or otherwise), obligations, deficiencies, demands,
claims, suits, actions, or causes of action, assessments, losses, costs,
expenses, interest, fines, penalties, actual or punitive damages or costs or
expenses of any and all investigations, proceedings, judgments, environmental
analyses, remediations, settlements and compromises (including reasonable fees
and expenses of attorneys, accountants and other experts) (individually and
collectively, the "Losses") sustained or incurred by any Buyer Indemnified Party
relating to, resulting from, arising out of or otherwise by virtue of any
obligation of Seller or Parent not expressly assumed by Buyer pursuant to this
Agreement, including any claim (whenever made) arising out of, relating to,
resulting from, or caused by any transaction, status, event, condition,
occurrence or situation relating to, arising out of or in connection with (i)
any misrepresentation or breach of a representation or warranty made by Seller
or Parent, or non-compliance with or breach by Seller or Parent of any of the
covenants or agreements to be preformed by either of them. contained in this
Agreement or any other Transactional Document to which either of them is a
party; (ii) the status or conduct of the Business or any of the Assets existing,
arising or occurring on or prior to the Closing Date, other than the Assumed
Liabilities; (iii) the Excluded Assets; or (iv) the Excluded Liabilities.

Section 7.2. Indemnification by Buyer. From and after the Closing, Buyer
agrees to indemnify, defend and save Seller and its Affiliates, and its
officers, directors, employees and agents, employee benefit plans, and
fiduciaries, plan administrators or other parties dealing with any such plans
(each, a "Seller Indemnified Party") forever harmless from and against, and to
promptly pay to a Seller Indemnified Party or reimburse a Seller Indemnified
Party for, any and all losses sustained or incurred by any Seller Indemnified
Party relating to, resulting from arising out of or otherwise by virtue of any
claim arising out of (i) any misrepresentation or breach of a representation or

12
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warranty made by Buyer, or non-compliance with or breach by Buyer of any of the
covenants or agreements to be performed by it, contained in this Agreement or
any other Transactional Document to which it is a party; or (ii) Buyer's failure
to pay, satisfy or discharge the Assumed Liabilities.

Section 7.3. Indemnification Procedure for Third Party Clams. In the event
that subsequent to the Closing any person or entity entitled to indemnification
under this Agreement (an "Indemnified Party") asserts a claim for
indemnification or receives notice of the assertion of any claim or of the
commencement of any action or proceeding by any entity who is not a party to
this Agreement or an affiliate of a party to this Agreement (including, but not
limited to, any domestic or foreign court or governmental authority, federal,
state or local) (a "Third Party Claim") against such Indemnified Party, against
which a party to this Agreement is required to provide indemnification under
this Agreement (an "Indemnifying Party"), the Indemnified Party shall give
written notice together with a statement of any available information (other
than privileged information) regarding such claim to the Indemnifying Party
within twenty (20) business days after learning of such claim (or within such
shorter time as may be necessary to give the Indemnifying Party a reasonable
opportunity to respond to such claim). The Indemnifying Party shall have the
right, upon written notice to the Indemnified Party (the "Defense Notice")
within fifteen days (15) after receipt from the Indemnified Party of notice of
such claim, which notice by the Indemnifying Party shall specify the counsel it
will appoint to defend such claim ("Defense Counsel"), to conduct at its expense
the defense against such claim in its own name, or if necessary in the name of
the Indemnified Party; provided, however, that the Indemnified Party shall have
the right to approve the Defense Counsel, which approval shall not be
unreasonably withheld, and in the event the Indemnifying Party and the
Indemnified Party cannot agree upon such counsel within ten (10) days after the
Defense Notice is provided, then the Indemnifying Party shall propose an
alternate Defense Counsel, which shall be subject again to the Indemnified
Party's approval which approval shall not be unreasonably withheld. If the
parties still fail to agree on the Defense Counsel, then, at such time, they
shall mutually agree in good faith on a procedure to determine the Defense
Counsel.

(i) In the event that the Indemnifying Party shall fail to give the
Defense Notice, it shall be deemed to have elected not to conduct the
defense of the subject claim, and in such event the Indemnified Party
shall have the right to conduct the defense in good faith and to
compromise and settle the claim in good faith without prior consent of
the Indemnifying Party and the Indemnifying Party will be liable for
all costs, expenses, settlement amounts or other Losses paid or
incurred in connection therewith.

(ii) In the event that the Indemnifying Party does deliver a Defense Notice
and thereby elects to conduct the defense of the subject claim, the
Indemnified Party will cooperate with and make available to the
Indemnifying Party such assistance and materials as it may reasonably
request, all at the expense of the Indemnifying Party, and the
Indemnified Party shall have the right at its expense to participate
in the defense assisted by counsel of its own choosing; provided,
however, that the Indemnified Party shall have the right to compromise
and settle such claim only with the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld
or delayed.

(iii)Without the prior written consent of the Indemnified Party, the
Indemnifying Party will not enter into any settlement of any Third
Party Claim or cease to defend against such claim, if pursuant to or
as a result of such settlement or cessation, (i) injunctive relief or
specific performance would be imposed against the Indemnified Party,
or (ii) such settlement or cessation would lead to liability or create
any financial or other obligation on the part of the Indemnified Party
for which the Indemnified Party is not entitled to indemnification
hereunder.

(iv) The Indemnifying Party shall not be entitled to control, and the
Indemnified Party shall be entitled to have sole control over, the
defense or settlement or any claim to the extent that claim seeks a
temporary restraining order, a preliminary or permanent injunction or
specific performance against the Indemnified Party which, if
successful, could materially interfere with the business, operations,
assets, condition (financial or otherwise) or prospects of the
Indemnified Party (and the cost of such defense shall constitute an
amount for which the Indemnified Party is entitled to indemnification
hereunder).

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(v) If a firm decision is made to settle a Third Party Claim, which claim
the Indemnifying Party is permitted to settle under this Section 7.3,
and the Indemnifying Party desires to accept and agree to such
settlement, the Indemnifying Party will given written notice to the
Indemnified Party to that effect. If the Indemnified Party fails to
consent to such settlement within 30 calendar days after its receipt
of such notice, the Indemnified Party may continue to contest or
defend such Third Party Claim and, in such event, the maximum
liability of the Indemnifying Party as to such Third Party Claim will
not exceed the amount of such settlement offer.

(vi) Any final judgment entered or settlement agreed upon in the manner
provided herein shall be binding upon the Indemnifying Party, and
shall conclusively be deemed to be an obligation with respect to which
the Indemnified Party is entitled to prompt indemnification hereunder.

Section 7.4. Failure to Give Timely Notice. A failure by an Indemnified
Party to give timely, complete or accurate notice as provided in Section 7.3
will not affect the rights or obligations of any party hereunder except and only
to the extent that, as a result of such failure, any party entitled to receive
such notice was deprived of its right to recover any payment under its
applicable insurance coverage or was otherwise directly and materially damaged
as a result of such failure to give timely notice.

Section 7.5. Right of Set-Off. In addition to, and not in limitation of,
Buyer's rights to indemnity as set forth in Section 7.1 hereof, Buyer shall have
the right to set off against any and all monies to be paid or delivered to
Seller, from and after the Closing, for any and all amounts for which Seller and
Parent are required to indemnify Buyer (or its Affiliates) pursuant to Section
7.1 above. Any amounts set off by Buyer in accordance with this Section 7.5
shall be deposited into an escrow account (the "Escrow Account") with a
FDIC-insured national bank, located in Chicago, Illinois, chosen by the Buyer
and agreeing to act as the escrow agent (the "Escrow Agent") in connection with
the Escrow Account until such time as (i) Buyer and Seller agree that such
amount shall be released from the Escrow Account and provide joint directions to
the Escrow Agent for the payment of any such released amounts, or (ii) an
arbitrator chosen in accordance with the terms of this Section 7.5 and acting in
accordance with the rules, regulations and procedures of the American
Arbitration Association shall determine that Buyer or Seller is entitled to such
amounts and shall direct the Escrow Agent to pay such amounts to such party. Any
such arbitration shall be conducted in Chicago, Illinois by an arbitrator chosen
by the Buyer and the Seller. In the event Buyer and Seller cannot agree on an
arbitrator within thirty (30) days after the Escrow Agent has agreed to act as
such, Buyer and Seller shall designate one Person who is not an Affiliate of
Buyer or Seller to choose an arbitrator to act in accordance with this Section
7.5. If such Persons fail to choose such an arbitrator within thirty (30) days
after they have been so chosen, the parties shall request that the American
Arbitration Association pick such an arbitrator, and any such designation shall
be final.

Section 7.6. Litigation and Tax Cooperation. Subject to the terms and
conditions hereof, Buyer hereby agrees to use all reasonable efforts to
cooperate with Seller, at Seller's sole expense, in connection with any
litigation or other proceeding now or hereafter existing involving Parent and
Morey Fish Company. Buyer also agrees to cooperate with Seller in connection
with the preparation of any Federal, or state or local income tax or other tax
returns or filings, and in connection with any pending or future audits in
respect thereof including, without limitation, the current sales and use tax
audit by the State of Illinois.

ARTICLE VIII

CLOSING.

Section 8.1. Closing. The transactions that are the subject of this
Agreement shall be consummated at a closing (the "Closing") which shall be held
at the offices of Katten Muchin & Zavis, Chicago, Illinois 60661, on the fifth
Business Day occurring after the Seller and/or the Parent shall have received
the Stockholder Authorization and the Senior Note Waiver, or at such other time
and place as the parties may mutually agree (the "Closing Date"). This Agreement
may be terminated by any party hereto if the Closing shall not have occurred
prior to August 31, 1996; provided, however, that the termination of this
Agreement in accordance with this Section 8.1 shall not terminate any cause of
action of any party hereto existing prior to such termination.

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Section 8.2. Deliveries by the Seller. At the Closing, Seller and Parent
shall deliver to Buyer, against payment of the consideration set forth in
Article II hereof and assumption of the Assumed Liabilities in accordance with
the terms hereof:

8.2.1. Bill of Sale. Such bills of sale with respect to Seller's ownership
of Assets, assignments, endorsements and other documents of title and other good
and sufficient instruments of conveyance and transfer, as shall be effective to
vest Buyer with full, complete and marketable right, title and interest in and
to the Assets, in form and substance reasonably satisfactory to Buyer;

8.2.2. Consents. Copies of all written consents obtained in connection with
the transfer of the Contracts and the Permits, in form and substance reasonably
satisfactory to Buyer;

8.2.3. Good Standing Certificates. Certificates of good standing, dated not
more than five days prior to the Closing Date, with respect to Seller and
Parent, issued by the offices of the Secretary of State of Delaware and by the
Secretary of State of each jurisdiction in which Seller or Parent is qualified
to do business as a foreign corporation;

8.2.4. Officers Certificate. The officers' certificate provided for in
Section 6.3(f) hereof;

8.2.5. Opinion of Counsel. The opinion of counsel for Seller and Parent
provided for in Section 6.3(d) hereof;

8.2.6. Resolutions. Copies of resolutions of the Board of Directors of each
of Seller and Parent, certified by their respective Secretaries as having been
duly adopted and being in current force and effect, authorizing the transactions
contemplated by this Agreement and the Transaction Documents;

8.2.7. Seller Non-Competition Agreement. The Seller Non-Competition
Agreement duly executed by each of Parent and Seller;

8.2.8. Lien Searches. Such Uniform Commercial Code lien searches and such
other instruments stating that there were no financing statements, judgments,
taxes or other liens outstanding against Seller relating to the Assets as of the
Closing Date or a date that is not more than five (5) days prior to the Closing
Date;

8.2.9. Name Change Documents. Evidence satisfactory to Buyer that Seller
and Parent have discontinued using, and permitting others (other than Buyer) to
use, the name Rymer International Seafoods, Inc. and other Intellectual
Property;

8.2.10. Security Agreement. A security agreement pursuant to which Buyer
grants to Seller a security interest on all of Buyer's assets (the "Security
Agreement") executed by Seller;

8.2.11. Subordinated Note. The Subordinated Note executed by Seller;

8.2.12. Subordination Agreement. The Subordination Agreement (as defined in
the Subordinated Note) executed by Seller and LaSalle National Bank; and

8.2.13. Other Documents. Such other documents and instruments as Buyer may
reasonably require in order to effectuate the transactions which are the subject
of this Agreement.

All documents and instruments delivered to Buyer shall be in form and
substance reasonably satisfactory to Katten Muchin & Zavis, counsel for Buyer.

Section 8.3. Deliveries by Buyer. At the Closing, Buyer shall deliver to
Seller:

8.3.1. Cash Consideration. The cash consideration set forth in Section
2.2.1 hereof;

8.3.2. Subordinated Note. The Subordinated Note duly executed by Buyer;

8.3.3. Instruments of Assumption. Instruments of assumption of all
Contracts and Permits to be assumed hereunder and of the Assumed Liabilities
(the "Assumption Agreement");

8.3.4. Officer's Certificate. The officers' certificate provided for in
Section 6.2(f) hereof;

8.3.5 Opinion of Counsel. The opinion of counsel for Buyer provided for in
Section 6.2(d) hereof;

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8.3.6. Resolutions. Copies of resolutions of Buyer, certified by the
Secretary of Buyer as having been duly adopted and being in current force and
effect, authorizing the transactions contemplated by this Agreement and the
Transaction Documents to which Buyer is a party;

8.3.7. Buyer Non-Competition Agreement. A non-competition agreement, dated
as of the Closing Date and substantially in the form of Exhibit C hereto (the
"Buyer Non-Competition Agreement"), duly executed by Buyer in favor of Seller
and Parent;

8.3.8. Evidence of Satisfaction of Bank Debt. In the event Buyer elects to
satisfy all liabilities and obligations relating to the Bank Debt as of the
Closing Date rather than assume such liabilities and obligations, evidence that
such liabilities have been satisfied and fully performed;

8.3.9. Security Agreement. The Security Agreement executed by Buyer;

8.3.10. Subordination Agreement. The Subordination Agreement (as defined in
the Subordinated Note) executed by Buyer; and

8.3.11. Other Documents. Such other documents and instruments as Seller may
reasonably require in order to effectuate the transactions which are the subject
of this Agreement.

All documents and instruments delivered to Seller shall be in form and
substance reasonably satisfactory to Berlack, Israels & Liberman LLP, counsel
for Seller.

ARTICLE IX

MISCELLANEOUS

Section 9.1. Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered, telegraphed, telexed or sent by facsimile transmission
or if mailed, five days after the date of deposit in the United States mail or
three (3) days after deposit with an express mail delivery services, as follows:

If to Seller or Parent:
Rymer Foods Inc
4600 South Packers Avenue
Suite 400
Chicago, Illinois 60604
Attention: Edward M. Hebert
Senior Vice President
Phone: (312) 927-7777
Fax: (312) 650-0500
with copies to:
Berlack, Israels & Liberman LLP
120 West 45th Street
New York, New York 10036
Attention: Theodore La Pier, Esq.
Phone: (212) 704-0100
Fax: (212) 704-0196
If to Buyer:
BGL I, Inc.
300 West Washington Street
Chicago, Illinois 60661
Attention: Mark Bailin
Phone: 312/236-3266
Fax: 312/236-4169
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<PAGE>

with copies to:
Katten Muchin & Zavis
525 West Monroe, Suite 1600
Chicago, Illinois 60661-3693
Attention: David R. Shevitz, Esq.
Jeffery Larry, Esq.
Phone: (312) 902-5200
Fax: (312) 902-1061

Section 9.2. Entire Agreement. This Agreement and the other Transaction
Documents set forth the entire understanding of the parties and may be modified
only by instruments signed by both of the parties hereto.

Section 9.3. Documents. Each party will execute all documents and take such
other actions as the other parties may reasonably request in order to consummate
the transactions provided for herein and to accomplish the purposes of this
Agreement.

Section 9.4. Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.

Section 9.5. Third Parties. Nothing in this Agreement express or implied is
intended to confer any right or remedy under or by reason of this Agreement on
any person other than the parties hereto and their respective heirs,
representatives, successors and assigns, nor is anything set forth herein
intended to affect or discharge the obligation or liability of any third persons
to any party to this Agreement nor shall any provision give any third party any
right of subrogation or action over against any party to this Agreement.

Section 9.6. Expenses. Each of the parties shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
the Transaction Documents and in closing and carrying out the transactions
contemplated by hereunder and thereunder.

Section 9.7. Governing Law. This Agreement shall be construed and governed
in accordance with the laws of the State of Illinois.

Section 9.8. Headings. The subject headings of paragraphs and subparagraphs
of this Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.

Section 9.9. Publicity. So long as this Agreement is in effect, the parties
hereto agree to consult with each other in issuing any press release or
otherwise making any public statement with respect to the transactions hereby,
and none of them shall issue any press release or make any public statement
prior to such consultation, except as may be required by law.

Section 9.10. Amendment. This Agreement may be amended by the parties
hereto; however, such amendment must be in writing and signed on behalf of each
of the parties hereto.

Section 9.11. Waiver. At any time prior to the Closing, the parties hereto
may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (iii) 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 an instrument in
writing signed on behalf of such party.

Section 9.12. Definitions. As used herein, the following terms have the
following meanings:

(i) "Affiliate" means any person, firm or entity which directly or
indirectly, through one or more intermediaries, controls or is controlled
by, or is under common control with any other person (including members of
such person's family), firm or entity;

(ii) "Business Day" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in Chicago, Illinois;

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<PAGE>

(iii) "ERISA" means the Employment Retirement Income Security Act of
1974, as amended;

(iv) "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or any
successor authority) that are applicable as of the date of determination,
consistently applied;

(v) "Person" means any individual, corporation, partnership,
association, trust or any unincorporated organization;

(vi) "Permitted Encumbrances" means (i) any Lien securing the Bank
Debt, and (ii) easements, restrictions, and other minor defects of title
which are not, in the aggregate, material and which do not, individually or
in the aggregate, materially and adversely affect the right or remedies of
Buyer in connection with the Assets or the Business.

(vii) "Tax" means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales,
use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental,
customs, duties, real property, personal property, capital stock, social
security, unemployment, disability, payroll, license, employee or other
withholding, or other tax, of any kind whatsoever, including any interest,
penalties or additions to tax or additional amounts in respect of the
foregoing; the foregoing shall include any transferee or secondary
liability for a Tax and any liability assumed by agreement or arising as a
result of being (or ceasing to be) a member of any Affiliated Group, as
defined in Section 1504 of the Code, (or being included (or required to be
included) in any Tax Return relating thereto); and

(viii) "Tax Returns" means returns, declarations, reports, claims for
refund, information returns or other documents (including any related or
supporting Schedules, statements or information) filed or required to be
filed in connection with the determination, assessment or collection of any
Taxes of any party or the administration of any laws, regulations or
administrative requirements relating to any Taxes.

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

PARENT:
RYMER FOODS INC.

By:____________________________________

Its:___________________________________

SELLER:
RYMER INTERNATIONAL SEAFOOD, INC.

By:____________________________________

Its:___________________________________

BUYER:
BGL I, INC.

By:_____________________________________

Its:____________________________________

18
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<PAGE>

SCHEDULES AND EXHIBITS

Schedule 1.1(k) - Other Assets

Schedule 1.3 - Affiliate Assets

Schedule 1.4 - Trade Payables

Schedule 2.1 - Purchase Price Allocation

Schedule 3.5 - Buyer Brokerage Fees, etc.

Schedule 4.3 - Required Consents

Schedule 4.8 - Leases

Schedule 4.9 - Absence of Undisclosed Liabilities

Schedule 4.11 - Litigation

Schedule 4.12 - Intellectual Property

Schedule 4.13 - Employee Benefit Plans

Schedule 4.14 - Personnel Agreements, Plans and Arrangements

Schedule 4.15 - Workers Compensation and Medical Claims

Schedule 4.18 - Intercompany Transactions

Schedule 4.19 - Bank Accounts

Schedule 4.20 - Seller Brokerage Fees, etc.

Schedule 5.6 - Successor Liability

Exhibit A - Seller Non-Competition Agreement

Exhibit B - Subordinated Note

Exhibit C - Buyer Non-Competition Agreement

Exhibit 6.2(d) - Opinion of Counsel for Buyer

Exhibit 6.3(d) - Opinion of Counsel for Seller

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<PAGE>

SCHEDULE 1.1(K)

Other Assets

None

<PAGE>

SCHEDULE 1.3

Affiliate Assets

Other than the Assets, there is no personal property, inventory, supplies,
contracts or other rights owned by any Affiliate of Seller used primarily in, or
arise out of or necessary to the continued conduct of, the Business.

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 1.4

TRADE PAYABLE

Accounts Payable as per 10/27/95 Aged Invoice Report ........... $ 723,105

Other Payable as per 10/27/95 Listing .......................... 161,682

Accrued Expenses & Freight Costs ............................... 203,170

Accrued Liabilities per 10/28/95 Lead Schedule ................. 272,171
----------
Total Liabilities at 10/28/95 .............................. $1,360,128
==========

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 2.1

Purchase Price Allocation

Based on October 28, 1995 Financial Statements:

Accounts Receivable $ 6,536,875

Inventory 5,981,443

Deposits 6,146

Prepaid Expenses 1,879

Furniture and Equipment 43,085

Trademarks, Tradenames, etc 10,000

Non-competition Agreement 25,000

Goodwill 1,000

-----------
Total Purchase Price $12,605 428

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 3.5

Buyer Brokerage Fees

None

<PAGE>

ASSET PURCHASE AGREEMENT

SCHEDULE 4.3

Required Consents

- - Stockholder Authorization and related filings

- - Senior Note Waiver and related filings

- - LaSalle National Bank release of any UCC-1 financing statements filed on
any of the Assets

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.8

Leases

Other Lease:

300 West Washington
Suite 1505
Chicago, Illinois 60606

Lessee - Rymer International Seafood, Inc.

Lessor - FC & S Management Company

Dated - February 10, 1987 as amended by Amendment February 19, 1994.

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.9

Absence of Undisclosed Liabilities

Schedule 4.9(a)

Attached hereto are the financial statements of Seller for the fiscal quarter
ended December 31, 1995.

Schedule 4.9(b)

None

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.11

Litigation

Morey Fish Company vs Rymer Foods, Inc.

* Philip R. Bell vs. Horatios, Rymer Seafoods, K & N
Meats, Inc., Azure Pacific Trading Co., Inc.

* Sadie Graves vs Sizzler Restaurant International, Rymer
Seafood, Inc., Martin Brower Company

Sales and use tax audit by the State of Illinois

- --------

* Product Liability Claims

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.12

Intellectual Property

Trade names and trademarks:

Rymer International Seafoods, Inc.
Rymer International Seafoods, Inc.
R. I. S.
Rymer Seafood
Rymer Shrimp
Rymer Black Tiger Shrimp
Rymer Fresh Frozen Black Tiger Shrimp
Rymer Menu Maker Black Tiger Shrimp
Rymer Menu Maker Cooked Black Tiger Shrimp
Rymer Menu Maker Shrimp
Rymer Cooked Black Tiger Shrimp
Rymer International
Rymer Shrimp and Seafood
Rymer Seafood International

Telephone Numbers:

312/236-3266
800/443-9586
312/236-4169 (Fax)
312/236-3516 (Fax)
282-194 Rymer Sea (Telex)

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.13

Employee Benefit plans

o 401K Plan

o Health and Dental Insurance Plan

o Life Insurance Plan

o Workers Compensation Plan

o Rymer Foods Stock Option Plan

o Rymer Foods Stock Purchase Plan

o Incentive/Bonus Plan

o Change of Control Agreement

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.14

Personnel Agreements, Plans and Arrangements

None

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.15

Workers Compensation and Medical Claims

None

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.18

Intercompany Transactions

o 401K Program Administration

o Health/Medical/Dental Program Administration

o Product Liability Program Administration

o Warehouse Insurance Administration

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.19

Bank Accounts

LaSalle National Bank

Account #9003336 - General Disbursement Account
Account #2169803 - Payroll Account
Account #2295569 - Cash Account

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 4.20

Seller Brokerage Fees, ect.

None

<PAGE>

ASSET PURCHASE AGREEMENT
SCHEDULE 5.6

Successor Liability

None
<PAGE>

EXHIBIT A

NONCOMPETITION AGREEMENT

This NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
August __, 1996 by and among BGL I, INC., an Illinois corporation (the
"Company"), RYMER FOODS INC., a Delaware corporation (the "Parent"), and RYMER
INTERNATIONAL SEAFOOD, INC., an Illinois corporation (the "Seller").

PRELIMINARY RECITALS

A. WHEREAS, the Seller is engaged in the purchasing and selling, and/or
brokering the purchase and sale, of seafood, and related activities (the
"Business");

B. WHEREAS, the Company is buying the Business and property used in
connection with the Business (the "Asset Purchase") of Seller pursuant to an
Asset Purchase Agreement dated as of February 26, 1996 (the "Asset Purchase
Agreement") by and among the parties hereto;

C. WHEREAS, Parent indirectly owns beneficially all of the issued and
outstanding shares of Seller's capital stock and, accordingly, controls the
business and operations of the Seller;

D. WHEREAS, if Parent or Seller were to compete with the Company in
connection with the Business, great harm might come to the Company; and

E. WHEREAS, it is a condition precedent to the Company performing its
obligations under the Asset Purchase Agreement that Seller and Parent enter into
this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Covenant Not to Compete.

1.1 Acknowledgement by Seller and Parent. Seller and Parent agree and
acknowledge that to assist the Company to retain the value, if any, of the
Business as a going concern, each of Seller and Parent hereby undertake not to
utilize its special knowledge of the Business and its knowledge of Seller's
relationships with customers and suppliers to compete with the Company in
connection with the Business. Seller and Parent further acknowledge that:

(a) the Company is and will be engaged in the Business; and

(b) the agreements and covenants contained in this Section 1 are a
condition precedent to the Company's obligation to consummate the
transactions contemplated by the Asset Purchase Agreement.

1.2 Noncompete. Each of Seller and Parent hereby agree that for a period of
three years from the date of this Agreement (the "Restricted Period"), it shall
not, directly or indirectly (whether as an owner, partner, shareholder, agent,
officer, director, employee, independent contractor, consultant, or otherwise)
(i) own an interest in any venture or enterprise that directly or indirectly
engages or proposes to engage in the Business or any similar business in which
seafood is purchased, sold or brokered, or (ii) sell seafood products, or
perform services for any person or entity that sells seafood products, in each
case anywhere in the United States (the "Territory"). Each of Seller and Parent
specifically acknowledges that Seller has heretofore conducted the Business
throughout the Territory and, following the consummation of the transactions
contemplated by the Asset Purchase Agreement, the Company intends to continue
engaging in the Business throughout the Territory. All capitalized terms used
but not otherwise defined herein shall have the meaning assigned thereto in the
Asset Purchase Agreement.

1.3 Non-Solicitation. Without limiting the generality of the provisions of
Section 1.2 above, each of Seller and Parent hereby agree that during the
Restricted Period, it will not, directly or indirectly, advise, encourage or
direct any business to solicit business from any person, firm, corporation or
other entity which is or was a customer of the Company during the twelve-month
period preceding the effective date of this Agreement and/or during the term of
this Agreement, or from any successor in interest to any such person, firm,
corporation or other entity, for the purpose of securing business or contracts
related to the Business.

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1.4 Blue-Pencil. If any court of competent jurisdiction shall at any time
deem the term of this Agreement or any particular Restrictive Covenant (as
defined) in Section 4 too lengthy or the Territory too extensive, the other
provisions of this Section 1 shall nevertheless stand, the Restricted Period
shall be deemed to be the longest period permissible by law under the
circumstances and the Territory shall be deemed to comprise the largest
territory permissible by law under the circumstances. The court in each case
shall reduce the Restricted Period and/or Territory to permissible duration or
size.

2. Confidential Information. During the term of this Agreement and
thereafter, Seller and Parent shall keep secret and retain in strictest
confidence, and shall not, without the prior written consent of the Company,
furnish, make available or disclose to any third party or use for the benefit of
itself or any third party, any Confidential Information (as defined in the next
sentence). As used in this Section2, "Confidential Information" shall mean any
propriety information relating to the business or affairs of the Company or the
Business, including but not limited to information relating to financial
statements, customer identities, potential customers, employees, suppliers,
servicing methods, programs, strategies and information, analyses, profit
margins or other proprietary information used by the Company in connection with
the Business; provided, however, that Confidential Information shall not include
any information which is in the public domain or becomes known in the industry
through no wrongful act on the part of Seller, Parent or any of their agents or
representatives. Seller and Parent acknowledge that the Confidential Information
is vital, sensitive, confidential and proprietary to the Company. In the event
that Seller or Parent reasonably believes that, after consultation with counsel,
it is required by law to disclose any Confidential Information, it will use
reasonable efforts to (a) provide the Company with sufficient notice before such
disclosure in order that the Company may attempt to obtain a protective order or
other assurance that confidential treatment will be accorded such confidential
matters and (b) cooperate, at the Company's expense, with the Company in
attempting to obtain such order or assurance.

3. Interference with Relationships. During the Restricted Period, Seller
and Parent shall not, directly or indirectly, as agent, consultant, stockholder,
director, partner, owner or in any other representative capacity: (i) without
the prior written consent of the Company, employ or engage, recruit or solicit
for employment or engagement, any person who is or becomes employed or engaged
by the Company, or otherwise seek to influence or alter any such person's
relationship with the Company, or (ii) solicit or encourage any present or
future customer or supplier of the Company to terminate or otherwise alter his,
her or its relationship with the Company.

4. Consideration. In consideration for Seller and Parent abiding by the
covenants set forth in Section 1 of this Agreement (the "Restrictive
Covenants"), the Company has agreed to enter into a non-competition agreement
with Seller and Parent pursuant to which the Company will not engage in the
purchasing and selling and/or brokering the purchase and sale, of beef, pork,
poultry and other meat products, other than seafood (hereinafter, "Meat") and to
pay the Seller and Parent Twenty Five Thousand Dollars ($25,000), which amount
has been included in the Purchase Price.

5. Remedies. Seller and Parent acknowledge and agree that the Restrictive
Covenants are reasonable and necessary for the protection of the Company's
business interests, that irreparable injury will result to the Company if Seller
or Parent breaches any of the terms of any Restrictive Covenant, and that in the
event of Seller's or Parent's actual or threatened breach of any such
Restrictive Covenants, the Company will have no adequate remedy at law. Each of
Seller and Parent accordingly agrees that in the event of any actual or
threatened breach by it of any of such Restrictive Covenants, the Company shall
be entitled to such injunctive and other equitable relief, without the necessity
of showing actual monetary damages, as may be deemed necessary or appropriate by
a court of competent jurisdiction. Nothing contained herein shall be construed
as prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach, including the recovery of any damages which it
is able to prove.

6. Assignment. No party hereto may assign or delegate any of its rights or
obligations hereunder without the prior written consent of the other parties
hereto; provided, however, that the Company shall have the right to assign all
or any part of its rights and obligations under this Agreement (i) to any
affiliate of the Company to which the Business is assigned at any time, or (ii)
in connection with the sale of the Business by the Company. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective legal representatives, heirs, successors and
assigns of the parties hereto whether so expressed or not.

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7. Entire Agreement. Except as otherwise expressly set forth herein, this
Agreement and all other agreements entered into by the parties hereto on the
date hereof set forth the entire understanding of the parties, and supersede and
preempt all prior oral or written understandings and agreements, with respect to
the subject matter hereof.

8. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.

9. Amendment; Modification. No amendment or modification of this Agreement
and no waiver by any party of the breach of any covenant contained herein shall
be binding unless executed in writing by the party against whom enforcement of
such amendment, modification or waiver is sought. No waiver shall be deemed a
continuing waiver or a waiver in respect of any subsequent breach or default,
either of a similar or different nature, unless expressly so stated in writing.

10. Governing Law. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Illinois, without giving effect to provisions thereof regarding
conflict of laws.

11. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been properly served if delivered in
accordance with Section 9.1 of the Asset Purchase Agreement.

12. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same Agreement and shall become effective when one or
more counterparts have been executed by each of the parties hereto and delivered
to the other.

13. Descriptive Headings; Interpretation. The descriptive headings in this
Agreement 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. The use
of the word "including" in this Agreement shall be by way of example rather than
by limitation.

14. Preamble; Preliminary Recitals. The Preliminary Recitals set forth in
the Preamble hereto are hereby incorporated and made part of this Agreement.

15. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
interest, and no rule of strict construction will be applied against any party
hereto.

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

COMPANY:

BGL I, INC.

By:_________________________________________

Its:________________________________________

PARENT:

RYMER FOODS INC.

By:________________________________________

Its:_______________________________________

SELLER:

RYMER INTERNATIONAL SEAFOOD, INC.

By:________________________________________

Its:_______________________________________

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EXHIBIT B

SUBORDINATED PROMISSORY NOTE

$1,500,000 Chicago, Illinois
August __, 1996

FOR VALUE RECEIVED, BGL I, INC., an Illinois corporation ("Company"),
promises to pay to RYMER INTERNATIONAL SEAFOOD, INC., an Illinois corporation
and wholly owned subsidiary of Rymer Foods Inc., a Delaware corporation
("Parent"), and any of such company's permitted assignees (collectively "Payee")
at such places as may be designated by Payee in writing, the principal sum of
ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00), together with
interest on the unpaid amounts thereof, from the date hereof in accordance with
the provisions of this Subordinated Promissory Note ("Subordinated Note").

1. Reference to Asset Purchase Agreement, Subordination Agreement and
Security Documents.

(a) This Subordinated Note is being issued and delivered by the
Company pursuant to the terms of that certain Asset Purchase Agreement (the
"Purchase Agreement"), dated as of February 26, 1996, by and among the
Company, Payee and Parent, and is the Subordinated Note referred to in the
Purchase Agreement. The rightful holders of this Subordinated Note are
entitled to the benefits of, and subject to the obligations and conditions
set forth in, this Subordinated Note and the Purchase Agreement. Reference
is also made to that Subordination Agreement, of even date herewith (the
"Subordination Agreement"), by and among the Company, Payee and LaSalle
National Bank (LaSalle National Bank, together with any other Person to
whom or which the Company owes Senior Indebtedness, as such term is defined
in the Subordination Agreement, is hereinafter referred to as the "Senior
Lender") pursuant to which the outstanding indebtedness hereunder is
expressly subordinated to the Senior Indebtedness (Senior Indebtedness is
used herein as it is defined in the Subordination Agreement). The
Subordination Agreement also sets forth, among other things, provisions
regarding acceleration of the maturity hereof upon the happening of certain
stated events. Any capitalized terms used herein and not otherwise defined
herein shall have the meanings given them in the Purchase Agreement.

(b) The obligations of the Company hereunder are secured by
substantially all of the assets of the Company on a basis junior to and
subordinate to the liens and security interests that secure the Senior
Indebtedness on terms substantially similar to those terms on which the
Senior Indebtedness is secured and in accordance with the Subordination
Agreement.

2. Payment of Interest. Interest on the principal amount of this
Subordinated Note from time to time outstanding and unpaid shall accrue at a
rate per annum equal to eight percent (8%). The Company shall pay to Payee all
accrued interest hereunder on the last day of each calendar quarter following
the date hereof. To the extent lawful, the Company shall pay interest on (i)
overdue principal, at the rate of 8% per annum, plus 200 basis points,
compounded quarterly; and (ii) installments of interest greater than five days
overdue, at the rate of 8% per annum, plus 200 basis points. Interest shall be
payable on overdue principal and interest regardless of the applicable grace
period therefor.

3. Payment of Principal. The Company shall pay a principal amount of
$37,500 to Payee on the last day of each calendar quarter, commencing on March
31, 1999, with the balance of the then outstanding principal amount hereof
payable in full on December 31, 2005. If any payment of principal or interest
hereunder shall become due on a day which is either a Saturday or Sunday or a
legal holiday on which banks are authorized or require to be closed in Chicago,
Illinois or New York, New York (a "Business Day"), such payment shall be made on
the next succeeding Business Day and, in the case of a principal payment, such
extension of time shall be included in computing interest in connection with
such payment.

4. SUBORDINATION. THE RIGHTS OF THE HOLDER OF THIS SUBORDINATED NOTE ARE
AND SHALL BE SUBORDINATED AND JUNIOR TO THE SENIOR INDEBTEDNESS ON TERMS AND
CONDITIONS SET FORTH IN THE SUBORDINATION AGREEMENT. TO THE EXTENT THAT THE
TERMS AND CONDITIONS OF THIS SUBORDINATED NOTE CONFLICT WITH OR ARE OTHERWISE
INCONSISTENT WITH THE TERMS AND CONDITIONS OF THE SUBORDINATION AGREEMENT, THE
PROVISIONS OF THE SUBORDINATION AGREEMENT SHALL GOVERN.

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5. Ranking. The Company agrees that all Indebtedness (as hereinafter
defined) of the Company hereafter incurred, other than Senior Indebtedness, or
any refinancing or refunding of such Senior Indebtedness, which Payee agrees is
senior to the Indebtedness hereunder as contemplated by the Subordination
Agreement, will be subordinated to the indebtedness of the Company hereunder on
substantially the terms and conditions set forth in Annex I hereto. Any such
Indebtedness required to be so subordinated is referred to herein as Junior
Indebtedness. Junior Indebtedness owed to stockholders of the Company and
outstanding on the date hereof shall not require by its terms any principal
payments on or before the final maturity of this Subordinated Note. The Company
agrees that it shall cause the holder of any Junior Indebtedness to agree to and
be bound by the subordination provisions set forth in Annex I prior to the
incurrence of such Indebtedness, and that the terms of Annex I shall be
incorporated into the instruments governing the rights of such holders. For
purposes hereof, Indebtedness shall mean and include without duplication any
obligation for borrowed money which under GAAP is shown on the consolidated
balance sheet of the Company as a liability (including, without limitation,
capitalized lease obligations).

6. Covenants. Until this Subordinated Note shall have been paid in full,
the Company covenants and agrees that it shall:

(a) Annual Audit Report. Furnish Payee within ninety (90) days after
the end of each fiscal year, a copy of the annual audit report for the
Company prepared in conformity with GAAP and certified by an independent
certified public accountant, consisting of at least a balance sheet as at
the close of such fiscal year and statements of earnings and cash flow
statement for such fiscal year, together with a certificate from such
accountant to the effect that, in making the examination necessary for the
signing of such annual audit reports, such accountant has not become aware
of any Event of Default (as defined in Section 7) with respect to this
Subordinated Note or any event which after notice and opportunity to cure
would constitute an Event of Default (an "Unmatured Event of Default") that
has occurred and is continuing, or, if such accountant has become aware of
any such event, describing it and the steps, if any, being taken to cure
it.

(b) Interim Financial Statement. Furnish Payee (i) within 45 days
after the end of each quarterly accounting period, a copy of the unaudited
financial statements of the Company prepared in the same manner as the
reports referred to in the preceding clause (a) (except that no footnotes
shall be appended to such interim financial statements), consisting of at
least a balance sheet as at the close of such accounting period and
statements of earnings and cash flow statement for such accounting period
and for the period from the beginning of such fiscal year to the close of
such accounting period, and, in each case, signed and certified by the
President and either the Treasurer or another officer of the Company.

(c) Officer's Certificate. Furnish the Company together with the
financial statements furnished by the Company under preceding clauses (a)
and (b), a certificate of the Company's President and either the Treasurer
or another officer of the Company, dated the date of such annual audit
report or such interim financial statement, as the case may be, to the
effect that no Event of Default (as defined in Section 7.1 hereof) or
Unmatured Event of Default has occurred and is continuing, or, if there is
any such event, describing it and the steps, if any, being taken to cure
it, and containing a computation of, and showing compliance with, each of
the financial ratios and restrictions contained in this Section 6.

(d) Corporate Existence. Do or cause to be done all things necessary
to preserve and keep in full force and effect the Company's corporate
existence, rights and franchises so as to maintain its business as in
existence on the date hereof; at all times maintain, preserve and protect
in all material respects all trademarks, copyrights, patents, permits,
service marks, licenses, or rights thereto used in the conduct of the
Company's business; preserve, in all material respects, property used or
useful in the conduct of the Company's business and keep the same in good
repair, working order and condition, ordinary wear and tear excepted, and
from time to time make, or cause to be made, all needful and proper
repairs, renewals, replacements, betterments and improvements thereto so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.

(e) Obligations. Pay all of the Company's Indebtedness and obligations
promptly and in accordance with normal terms and trade practices, subject
to the terms of this Subordinated Note and the Subordination Agreement, and
pay and discharge or cause to be paid and discharged promptly all taxes,
assessments and governmental charges or levies imposed upon the Company or
upon the Company's income and profits, or upon any of the Company's
property, real, personal or mixed, or upon any part thereof, before the

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same becomes in default, as well as all lawful claims for labor, materials
and supplies or otherwise that, if unpaid, might become a Lien upon the
Company's properties or any part thereof; provided, however, that the
Company shall not be required to pay and discharge or cause to be paid and
discharged any such Indebtedness, obligation, tax assessment, charge, levy
or claim so long as (i) the applicability or validity thereof is being
contested in good faith by appropriate corporate procedures and (ii) the
Company has set aside on its books adequate reserves with respect to
contests in excess of $50,000.

(f) Regulations. Observe and comply in all material respects with all
applicable statutes, rules, regulations, guidelines or other requirements
having the force of law from time to time in effect the noncompliance with
which could materially adversely affect the Company's business, assets,
operations or financial condition.

(g) Books and Records. Keep proper books of record and account in
which full, true and correct entries in conformity with GAAP.

(h) Consents; Approvals. Promptly obtain and make each consent,
license, authorization, approval, filing or registration that is necessary
or desirable to enable the Company to comply with the Company's
obligations hereunder and promptly upon Payee's request furnish evidence
thereof to the Payee.

(i) Places of Business. Promptly advise Payee in writing of the
proposed opening of new places of business by the Company, or the closing
of any existing places of business of the Company, or any changes in the
name of the Company, or the use of any new trademarks, service marks or
trade names by the Company.

(j) Indebtedness; Liens. Not incur, create, assume or permit to
exist: 1) any Indebtedness, except (i) the Senior Indebtedness, (ii) trade
and other accounts payable incurred in the ordinary course of business
that are current within the pay terms or, if not, are being contested in
good faith and for which adequate reserves have been established; (iii)
Indebtedness secured by Liens permitted hereunder, (iv) other Indebtedness
not exceeding $100,000 in the aggregate at any one time outstanding, and
(v) Junior Indebtedness; or 2) any Liens upon or with respect to any
assets or property of the Company except:

(i) Liens in connection with the acquisition of property after
the date hereof by way of purchase money mortgage, conditional sale or
other title retention agreement, capitalized lease or other deferred
payment contract, attaching only to the property being acquired and
having an aggregate value of no more than $100,000;

(ii) Liens for current taxes not delinquent or taxes being
contested in good faith and by appropriate proceedings;

(iii) carriers', warehousemen, mechanics', materialmen's,
repairmen's, and other like statutory liens arising in the ordinary
course of business securing obligations which are not overdue for a
period of more than 30 days or which are being contested in good faith
and by appropriate proceedings;

(iv) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security
legislation;

(v) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business;

(vi) Liens in favor of holders of Senior Indebtedness; and

(vii) liens, if any described on the attached Exhibit __.

(k) Merger, Sale of Assets, Creation of Subsidiaries. Without the
prior written consent of Payee (i) enter into any merger or consolidation
or acquire all or substantially all of the assets of any other Person, (ii)
sell, lease or otherwise transfer or dispose of any of the Company's assets
to any affiliate of the Company, except in the ordinary course of business,
or (iii) create any subsidiary.

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(l) Dividends and Distributions. Except as expressly provided below,
not pay or declare any dividends or distributions, or set apart any sum for
the payment of any dividends or distributions, on any shares of any class
of the Company's capital stock (other than dividends solely in shares of
the Company's capital stock) or apply or set apart any of the Company's
property or assets to or for the purchase, redemption or other retirement
of, or make any other distribution, by reduction of capital or otherwise,
in respect of, any shares of any class of the Company's capital stock, or
pay, apply, or set apart for payment or application, any funds, property or
assets of the Company as compensation to any stockholder of the Company
(all of whom are identified on Schedule ___ hereto) or other affiliate of
the Company (all of the foregoing, other than dividends solely in shares of
the Company's capital stock, being referred to herein collectively as
"Distributions"); provided, however, that, so long as after giving effect
to any such Distributions, no Event of Default or Unmatured Event of
Default shall have occurred and be continuing and so long as no such
Distributions are with respect to liabilities or obligations designated as
part of Junior Indebtedness the payment of which is prohibited under the
terms hereof, the Company may make Distributions to the stockholders of the
Company in the aggregate amount (inclusive of all prior Distributions) of
up to 75% of Adjusted EBT (as defined). "Adjusted EBT" means the Company's
cumulative earnings before taxes, determined in accordance with GAAP as if
the Company were a taxpayer for Federal income tax purposes, reduced by
amounts paid during the period to stockholders of the Company who are
employees or directors of the Company in respect of compensation, fees or
other remuneration measured from the date of issuance hereof, to the date
of the proposed Distribution. Notwithstanding the above, Distributions may
be made without regard to any restrictions contained herein to the extent
that, after giving effect to such Distribution, stockholder's equity of the
Company (determined in accordance with GAAP) would equal or exceed
$750,000.

(m) Total Liabilities to Net Worth Ratio. Not permit the ratio of its
total liabilities (direct or contingent) excluding this Subordinated Note
and Subordinated Debt, as defined in that certain Loan and Security
Agreement, dated as of ________, 1996, between the Company and LaSalle
National Bank (as amended or otherwise modified and in effect, the "Senior
Debt Agreement") in effect on the date hereof, to Tangible Net Worth (as
defined in the Senior Debt Agreement in effect on the date hereof) to
exceed 6.0 to 1.0.

(n) Current Assets. Maintain current assets in an amount which shall
be at least $1,800,000 greater than the sum of its current liabilities
plus any non current Liabilities (as defined in the Senior Debt Agreement
in effect on the date hereof) to any Senior Lender.

(o) Change of Ownership. Not permit the sale or issuance of any
stock, convertible debt, warrants, options or similar rights to any Person
other than the stockholders of the Company unless, in connection with such
transaction, this Subordinated Note is repaid in full.

(p) Tangible Net Worth. Maintain Tangible Net Worth (as defined in the
Senior Debt Agreement in effect on the date hereof) at all times in an
aggregate amount not less than $2,000,000.

(q) Investments. Make no investments in, or loans or advances to, any
Person or Persons except (i) advances not to exceed $50,000 in the
aggregate at any one time outstanding to officers and employees; (ii)
extensions of credit in the nature of accounts or notes receivable arising
from the sale of goods and services in the ordinary course of business;
(iii) shares of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business; and (iv)
investments in obligations of the United States of America, certificates of
deposit or banker's acceptances issued by any commercial bank organized or
licensed under the laws of the United States or any political subdivision
thereof with combined capital and surplus in excess of $100,000,000, and
commercial paper rated A-1 or higher by Standard & Poor's Corporation or
P-1 or higher by Moody's Investors Service, Inc., in each case maturing
within 180 days after the issuance thereof.

(r) Capital Expenditures. Not make annual capital expenditures in
excess of $100,000 during any fiscal year.

(s) Fiscal Year; Accounting Periods. Not change its fiscal year or
fiscal accounting periods without the prior written consent of the Payee.

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(t) Inspection. Payee shall have the right to visit and inspect any of
the properties of the Company and its subsidiaries, to examine the books of
account and records of the Company and its subsidiaries, and to be advised
as to the same, by its and their officers and employees, auditors and their
independent public accountants (and the Company authorizes such independent
public accounts to discuss the Company's or its subsidiaries' financial
matters with Payee or its representatives, regardless of whether any
representative of the Company is present, but provided that an officer of
the Company will be afforded a reasonable opportunity to be present at such
discussion), all at such reasonable times and intervals as Payee may
desire.

(u) Transactions with Affiliates. The Company will not make any
payment to or investment in, or enter into any transaction with, any
affiliate, including without limitation the purchase, sale or exchange of
property or the rendering of any service other than salary and other
benefits payable to employees of the Company and other than distributions
to stockholders of the Company permitted by Section 6(1) hereof.

(v) Limitation on Activities. The Company shall not be permitted to
engage in any business or investment activities other than those necessary
for, incident to, connected with, or arising out of its principal
activities in the food industry or a directly related industry.

(w) Maintenance of Insurance. The Company shall maintain insurance
with responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged
in similar business and owning similar properties in the same general areas
in which the Company and its subsidiaries operates. All insurance shall be
maintained with insurance carriers having an A.M. Best & Co. rating of "A"
or better.

7. Events of Default.

7.1 Definition. For purposes of this Subordinated Note, an event of default
(an "Event of Default") shall be deemed to have occurred:

(a) Failure to Pay interest. If the Company fails to pay when due the
full amount of interest then accrued and payable with respect to this
Subordinated Note and such failure continues for a period of fifteen (15)
days;

(b) Failure to Pay Principal. If the Company fails to pay when due the
full amount of any principal payment on this Subordinated Note;

(c) Cross Defaults. An event of default occurs and is continuing under
the Senior Debt Agreement or any instrument relating to Junior Indebtedness
and the maturity of such Indebtedness is either automatically due and
payable or declared to be immediately due and payable by the holders
thereof.

(d) Covenants. If the Company fails to perform or breaches any other
covenant of the Company contained herein and such failure or breach
continues for 20 days after notice thereof has been given by the Payee to
the Company.

(e) Bankruptcy, Etc. If the Company makes an assignment for the
benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Company bankrupt or insolvent; or any order for relief
with respect to the Company is entered under the United States Bankruptcy
Code or any regulations promulgated thereunder; or the Company petitions or
applies to any tribunal for the appointment of a custodian, trustee,
receiver or liquidator of the Company, or of any substantial part of the
assets of the Company, or commences any proceeding relating to the Company
under any bankruptcy reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation law of any jurisdiction; or any such
petition or application is filed, or any such proceeding is commenced,
against the Company and either (A) the Company by any act indicates its
approval thereof, consent thereto or acquiescence therein, or (B) such
petition, application or proceeding is not dismissed within sixty (60)
days.

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7.2 Consequences of Events of Default.

(a) If an Event of Default of the type described in paragraph (e) of
Section 7.1 above has occurred, the entire outstanding principal amount of
this Subordinated Note, plus all accrued and unpaid interest thereon, shall
immediately become due and payable, without any demand or other action on
the part of the Payee and, subject to the terms of the Subordination
Agreement, Payee may exercise all of its rights and remedies thereupon.

(b) If any Event of Default (other than of the type described in
paragraph (e) of Section 7.1 above) has occurred and is continuing, the
holder of this Subordinated Note may declare, by written notice delivered
to the Company, all or any portion of the outstanding principal amount of
this Subordinated Note due and payable and demand immediate payment of all
or any portion of the outstanding principal amount of this Subordinated
Note. If the holder of this Subordinated Note demands immediate payment of
all or any portion of this Subordinated Note pursuant to the terms of this
paragraph (b) of Section 7.2, the Company shall pay to such holder the
principal amount of this Subordinated Note requested to be paid plus
accrued interest thereon within fifteen (15) days after the initial
declaration of acceleration subject to the terms of the Subordination
Agreement; provided that if at any time after this Subordinated Note shall
have become due and payable pursuant to this paragraph (b) of Section 7.2,
the Company shall pay all arrears of interest on this Subordinated Note and
all payments on account of the principal (if any) on this Subordinated Note
which shall have become due otherwise than by acceleration and all Events
of Default (other than nonpayment of principal of, and interest on, this
Subordinated Note due and payable solely by virtue of acceleration) shall
be remedied or waived by the holder of this Subordinated Note, then, and in
every such case, the holder of this Subordinated Note may, in his sole
discretion, by written notice to the Company, rescind and annul such
acceleration and its consequences.

8. Governing Laws. This Subordinated Note has been delivered and accepted
in Chicago, Illinois and shall be interpreted, and the rights and liabilities of
the parties hereto determined, in accordance with the laws of the State of
Illinois.

9. Limit on Interest. In no contingency or event whatsoever shall interest
charged hereunder, however such interest may be characterized or computed,
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that holders have received interest hereunder
in excess of the highest rate applicable hereto, such holders shall promptly
refund such excess interest to the Company for such period as the court
determines.

10. Assignment. The Payee's rights to payment hereunder, on the terms and
conditions hereof and of the Purchase Agreement, may be assigned by Payee;
provided, however, that no other rights of Payee hereunder may be assigned
except to the creditors of Payee or to persons or entities consented to in
writing by the Company, each of whom is a permitted assignee hereunder.

BGL I, INC.

By:__________________________________________

Its:_________________________________________

Agreed to and Accepted By:

RYMER INTERNATIONAL SEAFOOD, INC.

By:___________________________________

Its:__________________________________

B-6
Annex I
<PAGE>

Annex I

(a) Subordination of Junior Indebtedness. The payment of principal of,
premium, if any, and interest on all Junior Indebtedness shall be expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full and of the performance and compliance with
all other obligations of Company to Rymer International Seafood, Inc., as payee
("Payee") under a certain Subordinated Promissory Note of BGL I, dated March,
1996, in the principal amount of $1.5 million (the "Senior Note") hereunder
(such obligations being hereinafter referred to as the "Obligations"). For
purposes hereof, the Obligations shall be deemed not to have been paid,
performed or complied with in full unless the holders or owners of the
Obligations shall have been irrevocably and unconditionally received payment of
the Obligations in cash.

(b) Payment Blockage on Junior Indebtedness. The Company shall not pay, and
the holders of Junior Indebtedness shall not ask, demand, sue for, take or
receive from Company, directly or indirectly, in cash or other property or by
set-off, counterclaim, recoupment or in any other manner (including without
limitation from or by way of collateral), payment of all or any of the Junior
Indebtedness (all such actions and payments being herein collectively called
"Subordinated Actions") so long as (i) there shall have occurred and be
continuing any event of default under the Senior Note and (ii) such Event of
Default shall not have been cured or expressly waived in writing by Payee,
unless and until the Obligations shall have been paid, performed or complied
with in full; provided, however, the holders of Junior Indebtedness may take any
Subordinated Actions if (i) an event of default under the Senior Note shall have
occurred and be continuing, and (ii) the maturity of the Senior Debt shall not
have been accelerated within ___ days from the date of such Event of Default.

(a) Upon distribution of any of or all the assets of Company to
creditors of Company upon the dissolution, winding up, liquidation,
arrangement or reorganization of Company, whether in any bankruptcy,
insolvency, arrangement, reorganization or receivership proceedings or upon
an assignment for the benefit of creditors or any other marshalling of the
assets and liabilities of Company or otherwise, any payment or distribution
of any kind (whether in cash, property or securities) which otherwise would
be payable or deliverable upon or with respect to Junior Indebtedness shall
be paid or delivered directly to Payee, for the benefit of the holders and
owners of the Obligations, for application (in the case of cash) to the
payment or prepayment of the Obligations until the Obligations shall have
been paid in full.

(b) All payments or distributions upon or with respect to Junior
Indebtedness which are received by the holders of Junior Indebtedness
contrary to the provisions hereof shall be received in trust for the
benefit of any holders or owners of Obligations, shall be segregated from
other funds and property held by the holders of Junior Indebtedness and
shall be forthwith paid over to Payee, for the benefit of the holders and
owners of the Obligations, in the same form as so received (with any
necessary endorsement) to be applied for the payment or prepayment of the
Obligations in accordance with the terms hereof.

(c) Payee, for the benefit of the holders and owners of the
Obligations, is hereby authorized to demand specific performance hereof,
whether or not Company shall have complied with any of the provisions
hereof applicable to it, at any time when the holders of Junior
Indebtedness shall have failed to comply with any of the provisions of
these terms of subordination applicable to it. The holders of Junior
Indebtedness shall irrevocably waive any defense based on the adequacy of a
remedy at law which might be asserted as a bar to such remedy of specific
performance.

(d) The Company agrees, and the holders of Junior Indebtedness agree,
for the benefit of Payee and each holder and owner of any Obligation, that
in the event any Junior Indebtedness is, for any reason, declared due and
payable before its stated maturity (i) Company will give prompt written
notice thereof to the holders and owners of Obligations and (ii) the Senior
Note shall forthwith become due and payable upon demand. The Company
agrees, and each holder of Junior Indebtedness agrees, for the benefit of
Payee and each holder and owner of any Obligation, that Company will not
make, and no holder of Junior Indebtedness will accept, any payment in
respect of the Junior Indebtedness at the time prohibited by Section 2
hereof, and any such payment made and accepted shall be held in trust for
the benefit of, and shall be returned to, Company upon demand of Company,
Payee or any holder or owner of any Obligation.

B-7
Annex I
<PAGE>

(d) No Commencement or Maintenance of Any Proceeding. So long as any of
the Obligations shall remain unpaid, the holders of Junior Indebtedness will
not, except as otherwise provided in Section 2 above, without the prior written
consent of Payee, commence or maintain, or join with any creditor in commencing
or maintaining, any suit, action or proceeding, whether or not of the nature,
referred to in paragraph 3(a), against Company; provided, however, that nothing
contained herein shall prevent the holders of Junior Indebtedness from
commencing or maintaining or joining in the commencement or maintenance of any
suit, action or proceeding (i) seeking equitable relief against the Company
pursuant to their agreements with the Company or (ii) seeking monetary payment
or damages; provided, however, that no holder of Junior Indebtedness shall
commence any action described in clause (ii) above prior to the expiration of
180 days after the date on which a holder of Junior Indebtedness has given the
Payee notice of the intention to commence such action. If the commencement of
any proceeding by the holders of Junior Indebtedness results in an Event of
Default, Section 2 hereof shall not require any additional delay in the taking
of any such action; provided, further, however, that nothing herein or in
Section 2 hereof shall prevent the holders of Junior Indebtedness from
accelerating the maturity of the Company's obligations to them and taking action
related thereto in the event that the maturity of the Senior Debt has been
accelerated.

(e) No Rights of Subrogation. No payment or distribution to any holder or
owner of an Obligation pursuant to the provisions hereof shall entitle the
holders of Junior Indebtedness to exercise any right of subrogation in respect
thereof until the Obligations shall have been paid, performed and complied with
in full. Upon full payment and performance of and compliance with all
Obligations, the holders of Junior Indebtedness (together with the holders of
any other indebtedness of Company which is subordinate in right of payment to
the payment of the Obligations and by its terms grants such right of subrogation
to the holders thereof) shall be subrogated to the rights of the holders and
owners of the Obligations to receive distributions of assets of Company, or
payments by or on behalf of Company, made with respect to the Obligations, until
the Junior Indebtedness shall be paid in full.

(f) Reliance by Holders of Obligations. Each holder of Junior Indebtedness,
by his acceptance thereof, acknowledges and agrees that the subordination
provisions contained in this Agreement are, and are intended to be, an
inducement and a consideration to each holder or owner of any Obligation,
whether created or acquired before or after the issuance of the Junior
Indebtedness, to acquire and continue to hold, or to continue to hold, such
Obligation, and such holder or owner shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Obligation.

(g) Limitation on Securing Junior Indebtedness. Company will not give, and
the holders of Junior Indebtedness will not take or receive, any security
interest for the payment of the principal of, or premium, if any, or interest on
Junior Indebtedness.

B-8
Annex I

<PAGE>

EXHIBIT C

NONCOMPETITION AGREEMENT

This NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
August ___, 1996 by and among BGL I, INC., an Illinois corporation (the
"Buyer"), RYMER FOODS INC., a Delaware corporation (the "Parent"), and RYMER
INTERNATIONAL SEAFOOD, INC., an Illinois corporation (the "Seller").

PRELIMINARY RECITALS

A. WHEREAS, the Seller is engaged in the purchasing and selling, and/or
brokering the purchase and sale, of seafood, and related activities (the
"Seafood Business");

B. WHEREAS, the Buyer is purchasing the Seafood Business and property used
in connection with the Seafood Business (the "Asset Purchase") of Seller
pursuant to an Asset Purchase Agreement dated as of February 26, 1996 (the
"Asset Purchase Agreement") by and among the parties hereto;

C. WHEREAS, Parent and/or certain of its subsidiaries (the "Meat
Companies") are engaged in the purchasing and selling, and/or brokering the
purchase and sale, of beef, pork, poultry and other meat products, other than
seafood (hereinafter "Meat"), and related activities (the "Meat Business");

D. WHEREAS, Parent indirectly owns beneficially all of the issued and
outstanding shares of Seller's capital stock and, accordingly, controls the
business and operations of Seller;

E. WHEREAS, if Buyer were to compete with the Meat Companies in connection
with the Meat Business, great harm might come to the Meat Companies; and

F. WHEREAS, it is a condition precedent to the Seller and Parent performing
their obligations under the Asset Purchase Agreement that Buyer enter into this
Agreement.

1. Covenant Not to Compete.

1.1 Acknowledgement by Buyer. Buyer agrees and acknowledges that to assist
the Meat Companies to retain the value of the Meat Business as a going concern,
Buyer hereby undertakes not to utilize its knowledge to compete with the Meat
Companies in connection with the Meat Business. Buyer further acknowledges that
the agreements and covenants contained in this Section 1 are a condition
precedent to the obligation of Seller and Parent to consummate the transactions
contemplated by the Asset Purchase Agreement.

1.2 Noncompete. Buyer hereby agrees that for a period of three years from
the date of this Agreement (the "Restricted Period"), it shall not, directly or
indirectly (whether as an owner, partner, shareholder, agent, officer, director,
employee, independent contractor, consultant, or otherwise) (i) own an interest
in any venture or enterprise that directly or indirectly engages or proposes to
engage in the Meat Business or any similar business in which Meat is purchased,
sold or brokered, or (ii) sell Meat or perform services (other than services
directly related to the Seafood Business) for any person or entity that sells
Meat, in each case anywhere in the United States (the "Territory"). Buyer
specifically acknowledges that the Meat Companies have heretofore conducted the
Meat Business throughout the Territory and, following the consummation of the
transactions contemplated by the Asset Purchase Agreement, intend to continue
engaging in the Meat Business throughout the Territory. All capitalized terms
used but not otherwise defined herein shall have the meaning assigned thereto in
the Asset Purchase Agreement.

1.3 Non-Solicitation. Without limiting the generality of the provisions of
Section 1.2 above, Buyer hereby agrees that during the Restricted Period, it
will not, directly or indirectly, advise, encourage or direct any business to
solicit business from any person, firm, corporation or other entity which is or

C-1
Annex I
<PAGE>

was a customer of any Meat Company during the twelve-month period preceding the
effective date of this Agreement and/or during the term of this Agreement, or
from any successor in interest to any such person, firm, corporation or other
entity, in each case for the purpose of securing business or contracts directly
related to the Meat Business.

1.4 Blue-Pencil. If any court of competent jurisdiction shall at any time
deem the term of this Agreement or any particular Restrictive Covenant (as
defined in Section 4) too lengthy or the Territory too extensive, the other
provisions of this Section 1 shall nevertheless stand, the Restricted Period
shall be deemed to be the longest period permissible by law under the
circumstances and the Territory shall be deemed to comprise the largest
territory permissible by law under the circumstances. The court in each case
shall reduce the Restricted Period and/or Territory to permissible duration or
size.

2. Confidential Information. During the term of this Agreement and
thereafter, Buyer shall keep secret and retain in strictest confidence, and
shall not, without the prior written consent of the Seller and Parent, furnish,
make available or disclose to any third party or use for the benefit of itself
or any third party, any Confidential Information (as defined in the next
sentence). As used in this Section2, "Confidential Information" shall mean any
proprietary information relating to the business or affairs of the Meat
Business, including but not limited to information relating to financial
statements, customer identities, potential customers, employees, suppliers,
servicing methods, programs, strategies and information, analyses, profit
margins or other proprietary information used by the Seller and Parent in
connection with the Meat Business; provided, however, that Confidential
Information shall not include any information which is in the public domain or
becomes known in the industry through no wrongful act on the part of Buyer.
Buyer acknowledges that the Confidential Information is vital, sensitive,
confidential and proprietary to the Seller and Parent. In the event that Buyer
reasonably believes that after consultation with counsel that it is required by
law to disclose any Confidential Information, it will use reasonable efforts to
(a) provide the Seller and Parent with sufficient notice before such disclosure
in order that the Seller and Parent may attempt to obtain a protective order or
other assurance that confidential treatment will be accorded such confidential
matters, and (b) cooperate, at the expense of Seller and Parent, with the Seller
and Parent in attempting to obtain such order or assurance.

3. Interference with Relationships. During the Restricted Period, Buyer
shall not, directly or indirectly, as agent, consultant, stockholder, director,
partner, owner or in any other representative capacity: (i) without the prior
written consent of Seller and Parent, employ or engage, recruit or solicit for
employment or engagement, any person who is or becomes employed or engaged by
Seller or Parent, or otherwise seek to influence or alter any such person's
relationship with Seller or Parent, or (ii) solicit or encourage any present or
future customer or supplier of Seller or Parent in connection with the Meat
Business to terminate or otherwise alter his, her or its relationship with
Seller or Parent in connection with the Meat Business.

4. Consideration. In consideration for Buyer abiding by the covenants set
forth in Section 1 of this Agreement (the "Restrictive Covenants"), the Seller
and Purchaser have agreed to enter into a non-competition agreement with Buyer
pursuant to which neither the Seller nor the Parent will, among other things,
engage in the purchasing and selling, and/or brokering the purchase and sale, of
seafood.

5. Remedies. Buyer acknowledges and agrees that the Restrictive Covenants
are reasonable and necessary for the protection of the business interests of
Seller and Parent, that irreparable injury will result to the Seller and Parent
if Buyer breaches any of the terms of any Restrictive Covenant, and that in the
event of Buyer's actual or threatened breach of any such Restrictive Covenants,
the Seller and Parent will have no adequate remedy at law. Buyer accordingly
agrees that in the event of any actual or threatened breach by it of any of such
Restrictive Covenants, the Seller and Parent shall be entitled to such
injunctive and other equitable relief, without the necessity of showing actual
monetary damages, as may be deemed necessary or appropriate by a court of
competent jurisdiction. Nothing contained herein shall be construed as
prohibiting the Seller or Parent from pursuing any other remedies available to
it for such breach or threatened breach, including the recovery of any damages
which it is able to prove.

C-2
Annex I
<PAGE>

as otherwise expressly provided herein, all covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective legal representatives, heirs, successors
and assigns of the parties hereto whether so expressed or not.

14. Preamble; Preliminary Recitals. The Preliminary Recitals set forth in
the Preamble hereto are hereby incorporated and made part of this Agreement.

C-3
Annex I
<PAGE>

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

BUYER:

BGL I, INC.

By:
---------------------------------

Its:
--------------------------------

PARENT:

RYMER FOODS INC.

By:
---------------------------------

Its:
--------------------------------

SELLER:

RYMER INTERNATIONAL SEAFOOD, INC.

By:
---------------------------------

Its:
--------------------------------

C-4
Annex I

<PAGE>

Exhibit 6.2(d)

August ___, 1996

Rymer Foods Inc.
Rymer International Seafood, Inc.
4600 South Packers Avenue
Chicago, Illinois 60604

Ladies and Gentlemen:

We have acted as counsel to BGL I, Inc., an Illinois corporation (the
"Company"), in connection with the negotiation, execution and delivery of that
certain Asset Purchase Agreement, dated as of February 26, 1996 (the "Purchase
Agreement"), by and among the Company, Rymer Foods Inc., a Delaware corporation
("Parent"), and Rymer International Seafood, Inc., an Illinois corporation
("Seller"). This opinion is required under Section 6.2(d) of the Purchase
Agreement. Except as otherwise indicated, capitalized terms used herein are
defined as set forth in the Purchase Agreement.

In connection with this opinion, we have examined:

(i) the Purchase Agreement;

(ii) the Subordinated Note;

(iii)the Buyer Non-Competition Agreement;

(iv) the Seller Non-Competition Agreement;

(v) the Subordination Agreement;

(vi) the Assumption Agreement; and

(vii)the Security Agreement.

((i) through (vii) are hereinafter sometimes collectively referred to as the
"Transaction Documents"), and such other agreements, instruments and documents
as we have deemed necessary or appropriate to enable us to render the opinions
expressed below.

Additionally, we have examined originals or copies, certified to our
satisfaction, of such certificates of public officials and officers and
representatives of the Company, and we have made such inquiries of officers and
representatives of the Company as we have deemed relevant or necessary, as the
basis for the opinions set forth herein.

<PAGE>

Rymer Foods Inc.
August ___, 1996
Page 2

In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the genuineness
of all signatures (other than those on behalf of the Company), the authenticity
of the documents submitted to us as originals and the conformity to authentic
original documents of all documents submitted to us as certified, conformed or
reproduced copies. We have further assumed that:

(i) Each party to any Transaction Document other than the Company
(collectively, the "Other Parties") has satisfied all legal
requirements that are applicable to it to the extent necessary to
make such Transaction Document enforceable against it.

(ii) Each of the Other Parties has complied with all legal requirements
pertaining to its status as such status relates to its rights to
enforce any Transaction Document to which it is a party against the
Company.

(iii) The conduct of the parties to any Transaction Document comply with
any requirement of good faith, fair dealing and conscionability.

(iv) There has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence.

(v) All statutes, judicial and administrative decisions, and rules and
regulations of governmental agencies, applicable to this opinion are
generally available to lawyers practicing in Illinois and are in a
format that makes legal research reasonably feasible.

In rendering this opinion, as to questions of fact material to this
opinion, we have relied to the extent we have deemed such reliance appropriate,
without investigation, on certificates and other communications from public
officials and from officers of the Company and on representations of the Company
set forth in the Purchase Agreement.

Wherever we indicate that our opinion with respect to the existence or
absence of facts is based on our knowledge, our opinion is based solely on the
current actual knowledge of the attorneys in this firm who are representing the
Company in connection with the execution and delivery of the Transaction
Documents to which the Company is a party, and we have conducted no special
investigation of factual matters in connection with this opinion.

The opinions set forth in paragraph 2 below are subject to the following
qualifications:

(i) the effects of bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws affecting the rights and remedies
of creditors generally; and

(ii) the effects of general principles of equity, whether applied by a
court of law or equity, with respect to the performance and
enforcement of the Transaction Documents.

Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:

1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Illinois.

2. The Company has all requisite corporate power and authority to enter
into and perform its obligations under the Transaction Documents to which it is
a party. The execution, delivery and performance of each of the Transaction
Documents to which the Company is a party have been duly authorized by all
requisite corporate action of the Company, and each of the Transaction Documents
to which the Company is a party (a) has been duly executed and delivered by the
Company, and (b) constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms.

<PAGE>

Rymer Foods Inc.
August __, 1996
Page 3

3. Neither the execution, delivery and performance by the Company of the
Transaction Documents to which it is a party, nor the consummation by the
Company of the transactions contemplated thereby: (a) violates any provision of
the Company's Articles of Incorporation or By-laws; (b) violates any law or
regulation applicable to the Company; (c) to the best of our knowledge, results
in the breach of, or constitutes a default under, any indenture, mortgage, deed
of trust, lease or other agreement to which the Company is a party or by which
it or any of its properties are bound (which breach or default would have a
material adverse effect on the Company's financial condition or business); (d)
to the best of our knowledge, results in the creation or imposition of any lien
upon any of the property of the Company, other than a Permitted Encumbrance,
under any indenture, mortgage or other agreement described in clause (c) above;
or (e) requires the consent or approval of, or any filing or registration with,
any governmental body, agency or authority which consent or approval has not
already been received or which filing or registration has not already been made.

Our opinions expressed above are limited to the laws of the State of
Illinois and the laws of the United States of America, and we do not express any
opinion herein concerning any other law. In addition, we express no opinion
herein concerning any statutes, ordinances, administrative decisions, rules or
regulations of any county, town, municipality or special political subdivision
(whether created or enabled through legislative action at the federal state or
regional level) brought to our attention. This opinion is solely for the
information of the addressees hereof and is not to be quoted in whole or in part
or otherwise referred to, nor is it to be filed with any governmental agency or
any other person or entity without our prior written consent. No one other than
the addressees hereof is entitled to rely on this opinion. This opinion is
rendered solely for the purposes stated herein and should not be relied upon for
any other purpose. This opinion is limited to the matters set forth herein and
no opinion is intended to be implied or may be inferred beyond those expressly
stated herein. This opinion is given as of the date hereof and we assume no
obligation to advise you of changes which may hereafter be brought to our
attention.

Respectively submitted,

/s/ KATTEN MUCHIN & ZAVIS

<PAGE>

Exhibit 6.3(d)

August __, 1996

BGL I, Inc.
300 West Washington Street
Chicago, Illinois 60661

Ladies and Gentlemen:

We have acted as counsel to Rymer Foods, Inc., a Delaware corporation
("Parent"), and Rymer International Seafood, Inc., an Illinois corporation
("Seller"), in connection with the negotiation, execution and delivery of that
certain Asset Purchase Agreement, dated as of February 26, 1996 (the "Purchase
Agreement"), by and among Parent, Seller and BGL I, Inc., an Illinois
corporation. This opinion is required under Section 6.3(d) of the Purchase
Agreement. Except as otherwise indicated, capitalized terms used herein are
defined as set forth in the Purchase Agreement.

In connection with this opinion, we have examined:

(i) the Purchase Agreement;

(ii) the Subordinated Note;

(iii) the Buyer Non-Competition Agreement;

(iv) the Seller Non-Competition Agreement;

(v) the Subordination Agreement;

(vi) the Bill of Sale; and

(vii) the Security Agreement.

Additionally, we have examined originals or copies, certified to our
satisfaction, of such certificates of public officials and of officers and
representatives of Parent and Seller, and we have made such inquiries of
officers and representatives of Parent and Seller as we have deemed relevant or
necessary, as the basis for the opinions set forth herein.

In connection with this opinion, we have assumed the accuracy and
completeness of all document and records that we have reviewed, the genuineness
of all signatures (other than those on behalf of Parent or Seller), the
authenticity of the documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as certified,
conformed or reproduced copies. We have further assumed that:

(i) Each party to any Transaction Document other than Parent and Seller
(collectively, the "Other Parties") has satisfied all legal
requirements that are applicable to it to the extent necessary to
make such Transaction Document enforceable against it.

<PAGE>

BGL I, Inc.
August , 1996
Page 2

(ii) Each of the Other Party has complied with all legal requirements
pertaining to its status as such status relates to its rights to
enforce any Transaction Document to which it is a party against
Parent or Seller.

(iii) The conduct of the parties to any Transaction Document comply with
any requirement of good faith, fair dealing and conscionability.

(iv) There has not been any mutual mistake of fact or misunderstanding,
fraud, duress or undue influence.

(v) All statutes, judicial and administrative decisions, and rules and
regulations of governmental agencies, applicable to this opinion are
generally available to lawyers practicing in New York and are in a
format that makes legal research reasonably feasible.

In rendering this opinion, as to questions of fact material to this
opinion, we have relied to the extent we have deemed such reliance appropriate,
without investigation, on certificates and other communications from public
officials and from officers of Parent and Seller and on representations of
Parent and Seller set forth in the Purchase Agreement.

Wherever we indicate that our opinion with respect to the existence or
absence of facts is based on our knowledge, our opinion is based solely on the
current actual knowledge of the attorneys in this firm who are representing
Parent and Seller in connection with the execution and delivery of the
Transaction Documents to which Parent or Seller is a party, and we have
conducted no special investigation of factual matters in connection with this
opinion.

The opinions set forth in paragraph 2 below are subject to the following
qualifications:

(i) the effects of bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws affecting the rights and remedies
of creditors generally; and

(ii) the effects of general principles of equity, whether applied by a
court of law or equity, with respect to the performance and
enforcement of the Transaction Documents.

Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:

1. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

2. Each of Seller and Parent has all requisite corporate power and
authority to enter into and perform its obligations under the Transaction
Documents to which it is a party. The execution, delivery and performance of
each of the Transaction Documents to which Parent or Seller is a party have been
duly authorized by all requisite corporate action of such Person, and each of
the Transaction Documents to which Parent or Seller is a party (a) has been duly
executed and delivered by such Person, and (b) constitutes the valid and binding
obligation of such Person, enforceable in accordance with its terms.

3. Neither the execution, delivery and performance by Parent or Seller of
the Transaction Documents to which it is a party, nor the consummation by Parent
or Seller of the Transactions contemplated thereby: (a) violates any provision
of such Person's Articles of Incorporation or By-laws; (b) violates any law or
regulation applicable to such Person; (c) to the best of our knowledge, results
in the breach of, or constitutes a default under, any indenture, mortgage, deed
of trust, lease or other agreement to which such Person is a party or by which
it or any of its properties are bound (which breach or default would have a
material adverse effect on such Person's financial condition or business); (d)
to the best of our knowledge, results in the creation or imposition of any
filing upon any of the property of such Person under any indenture, mortgage or
other agreement described in clause (c) above; or (c) requires the consent or

<PAGE>

BGL I, Inc.
August , 1996
Page 3

approval of, or any filing or registration with, any governmental body, agency
or authority which consent or approval has not already been received or which
filing or registration has not already been made.

Our opinions expressed above are limited to the General Corporation Laws of
Delaware and the laws of the United States of America, and we do not express any
opinion herein concerning any other law. In addition, we express no opinion
herein concerning any statutes, ordinances, administrative decisions, rules or
regulations of any county, town, municipality or special political subdivision
(whether created or enabled through legislative action at the federal, state or
regional level) brought to our attention. This opinion is solely for the
information of the addressees hereof and is not to be quoted in whole or in part
or otherwise referred to, nor is it to be filed with any governmental agency or
any other person or entity without our prior written consent. No one other than
the addressees hereof is entitled to rely on this opinion. This opinion is
rendered solely for the purposed herein in and should not be relied upon for any
other purpose. This opinion is limited to the matters set forth herein and no
opinion is intended to be implied or may be inferred beyond those expressly
stated herein. This opinion is given as of the date hereof and we assume no
obligation to advise you of changes which may hereafter be brought to our
attention.

Respectfully submitted,

<PAGE>

ANNEX II

RYMER FOODS INC.
(the "Corporation")

Resolution of the Stockholders
Pursuant to Section 271 of the
Delaware General Corporation Law

"RESOLVED, that the Corporation sell all or substantially all of its assets
on the terms and conditions, and for such consideration, as are described in,
and are contemplated by, the Asset Purchase Agreement by and among Rymer Foods
Inc., Rymer International Seafood, Inc. and BGL I, Inc. dated as of February 26,
1996, annexed to the Proxy Statement of the Corporation dated July 23, 1996,
pursuant to which this Resolution is furnished".

<PAGE>

ANNEX III

[LETTERHEAD OF CHANIN CAPITAL PARTNERS, INC]

December 21, 1995

Board of Directors
Rymer Foods, Inc.
4600 South Packers Avenue
Suite 400
Chicago, Illinois 60609

Re: Fairness opinion for sale of assets of Rymer International
Seafoods ("Seafood")

Gentlemen:

You have asked Chanin Capital Partners ("CCP") to consider a proposed
Transaction (the "Transaction") comprising the sale of Seafood by Rymer Foods,
Inc. ("Rymer") and Newco, a company formed by Mark Bailin, who is the son of Sam
Bailin, a director of Rymer for the purpose of acquiring the assets of Seafood.

The Transaction

It is our understanding that:

(1) The purchase price will be based upon the October 28, 1995 balance
sheet of Seafood. The purchase price as represented by the balance
sheet will be $12,661,331, consisting of:

(a) $1.5 million cash;

(b) $1.5 million in the form of a ten year 8% subordinated note (the
"Note") from Newco. No principal payments shall be due on the
Note for the first three years after its issuance; beginning in
year four, $37,500 of principal shall be paid on the last date of
each calendar quarter beginning with March 31, 1999, with the
balance of $487,500 payable in full on December 31, 2005;

(c) As represented on the balance sheet, $8,245,300 in the form of
assumption by Newco of the existing bank debt owing with respect
to Seafood; and

(d) As represented on the balance sheet, $1,421,031 in the form of
assumption by Newco of Seafood's trade payables, accrued expenses
and intercompany obligations.

(2) The assets purchased pursuant to the Transaction are comprised of:

(a) As represented on the balance sheet, $6,536,875 of receivables;

(b) As represented on the balance sheet, $6,866,355 of inventory; and

Due Diligence

As part of this assignment, CCP conducted due diligence with officers from Rymer
and Seafood. In addition, CCP contacted competitors, seafood brokers, and
industry professionals to asses (i) the management of Seafood, (ii) the nature
of the inventory being purchased pursuant to the transaction, (iii) the pricing
trend of

<PAGE>

CHANIN CAPITAL PARTNERS, INC.
Board of Directors
Rymer Foods, Inc.
December 21, 1995

Page 2

the inventory being purchased pursuant to the transaction, (iv) the liquidity of
the inventory being purchased pursuant to the transaction and (v) the general
industry condition of the market in which Seafood operates.

In our due diligence, CCP relied upon certain documents and data which were made
available by the management of Rymer and Seafood, as well as information
generally available to the public. CCP did not independently verify the books
and records of Seafood or Rymer, nor does CCP represent herein the financial
condition of Rymer or Seafood now or at any time.

Conclusion

As a result of our due diligence and our analysis of the specific Transaction as
outlined herein, it is our opinion that, from a financial perspective, the
Transaction is fair to the shareholders of Rymer Foods, Inc.

Sincerely,

Chanin Capital Partners, Inc.

<PAGE>

Attachment I

RYMER FOODS INC.

SPECIAL MEETING OF STOCKHOLDERS

August 21, 1996

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned, revoking all prior proxies, hereby acknowledges receipt of
the Proxy Statement dated July 23, 1996 (the "Proxy Statement"), which Proxy
Statement describes the terms and conditions of the proposed sale by Rymer Foods
Inc. of substantially all of the assets of its subsidiary, Rymer International
Seafood Inc. (the "Sale") and appoints P. Edward Schenk and Edward M. Hebert and
each of them, with full power of substitution, as the undersigned's proxies (the
"Proxies") to vote at the Special Meeting of Stockholders to be held at 11:00
a.m., on August 21, 1996 at The Midland Hotel, 172 West Adams Street, Chicago,
Illinois, and at any adjournments thereof (the "Meeting").

(Continued on reverse side)

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE
VOTED FOR THE SALE.

To adopt the resolution authorizing the Sale, attached as Annex II to the
Proxy Statement.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

Dated: _______________________________

--------------------------------------
Stockholder's Signature

--------------------------------------
Print Stockholder's Name

(Please sign exactly as name appears above. When
signing as attorney, executor, trustee, guardian, etc.
please give full title as such.)