Marketing And Facilitation Agreement

This is an agreement dated as of November 3, 1994 between Pro-Fac Cooperative, Inc. ('Pro-Fac') and Curtice-Burns Foods, Inc. ('Curtice Burns').


The members and patrons of Pro-Fac are active growers who have joined together in their cooperative to market their crops at a fair price and to try to achieve as much stability and continuity as is possible in agriculture. While Pro-Fac and its members and patrons have considerable expertise in the growing of crops, they do not have such expertise in the processing and sale of those crops in the form of commercially viable processed food products.


Curtice Burns has long been engaged in the processing, distribution and sale of processed foods, now on a diversified geographical basis, but it lacks expertise in the farming and growing of the crops on which it depends for a reliable and long term source of supply for its products.


Pro-Fac and Curtice Burns came together in 1961 because of the need of Pro-Fac to find a stable market for crops grown by its members and patrons and because of the need of Curtice Burns for a reliable supply of such crops. While Curtice Burns has always believed that it has available to it adequate funds to finance its non-Pro-Fac related operations, in order to process and market Pro-Fac products Curtice Burns has required significant additional sources of financing in the form of working capital and facilities necessary to give it the capacity to provide a reliable and stable market for Pro-Fac crops. Consequently, the willingness of Curtice Burns to enter into its relationship with Pro-Fac, which has been embodied, since 1961, in the Integrated Agreement dated June 27, 1992 and in substantially similar predecessor agreements, has always depended upon the commitment of Pro-Fac to provide financial support and other accommodations to Curtice Burns from a variety of sources not directly available to Curtice Burns. Pro-Fac has always provided such accommodations in order to achieve its primary objective of a guaranteed and stable market for crops grown by its members and patrons.


When Agway Inc. announced in March of 1993 that it was looking for ways to dispose of its controlling interest in Curtice Burns, it became evident that a sale of Curtice Burns would take place and that such a sale to anyone other than Pro-Fac would almost certainly lead to a termination of the Integrated Agreement and the reliable and stable market for the products of Pro-Fac members that this arrangement provided. During the bidding process that ensued, the members of Pro-Fac voted overwhelmingly in favor of pursuing a bid by Pro-Fac for the stock of Curtice Burns as being the best alternative available of protecting for the future the market for their crops historically provided by Curtice Burns. The Pro-Fac bid was accepted by the Curtice Burns Board of Directors and has led to the acquisition of control by Pro-Fac of Curtice Burns through the acquisition by PF Acquisition Corp., a wholly-owned subsidiary of Pro-Fac ('Subsidiary') of the stock of Curtice Burns and the subsequent merger of Subsidiary into Curtice Burns (the 'Transaction'), after which Curtice Burns is to continue its operations as a wholly-owned subsidiary of Pro-Fac.


Following the Transaction, the relationship between Pro-Fac and Curtice Burns will continue to embody many of the same elements that have historically existed which have been


specified in this Marketing and Facilitation Agreement. The continuation of the arms length nature of this agreement is required by the new financial arrangements incurred in connection with the Transaction. Both parties agree that, to the extent consistent with these new financial obligations, the basic relationship between them set forth in the Integrated Agreement should be continued in a manner as close to its historically successful terms as possible.


Pro-Fac continues to realize that Curtice Burns cannot, on its own, provide the stable and reliable market for the crops of the members of Pro-Fac, and that in order to achieve the primary Pro-Fac purpose of obtaining that stable and reliable market, it will continue to be necessary for Curtice Burns to require that Pro-Fac make available financial and other resources and accommodations to Curtice Burns as set forth primarily in the 'Finance, ' the 'Marketing,' and the 'Pro-Fac Facilitation Accommodations' sections of this Agreement.


It is therefore agreed as follows:


TERMINATION


1. As a result of the completion of the Transaction, the Integrated Agreement is terminated and the relationship between Pro-Fac and Curtice Burns shall be as expressed in this Marketing and Facilitation Agreement. As a part of the termination, neither Pro-Fac nor Curtice Burns exercised any right to purchase assets owned by the other, and Curtice Burns repaid debt to Pro-Fac in an amount equal to the debt of Pro-Fac to the Springfield Bank for Cooperatives.


DEFINITIONS


2. Definitions. When used in this agreement, the following terms shall have the meanings indicated below:


a. 'Commercial Market Value' of crops sold by Pro-Fac to Curtice Burns
shall mean the weighted average of the prices paid by other commercial
processors for similar crops used for similar or related purposes sold
under pre-season contracts and in the open market in the same or similar
marketing areas. Where such price cannot be readily determined, then
Commercial Market Value shall be determined by some other method acceptable
to each party. Commercial Market Value shall be determined as provided in
paragraph 11 hereof.


b. 'Pro-Fac Products' shall mean all products sold by Curtice Burns
which were processed from crops supplied by Pro-Fac. The determination of
what is a Pro-Fac Product shall be made in an annual examination of
products made from crops supplied by Pro-Fac. If made from crops supplied
by Pro-Fac and from similar crops purchased directly by Curtice Burns to
supplement and facilitate the marketing of crops by Pro-Fac, then such
product shall be considered to be a Pro-Fac Product, provided that the
value of such crops purchased by Curtice Burns for use in the product is
not greater than the value of crops supplied by Pro-Fac for the product. If
Pro-Fac supplies less than half the value of crops necessary to make the
product, then only that portion of the product actually made from crops
supplied by Pro-Fac shall be considered a Pro-Fac Product.


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c. 'Earnings (Losses) on Pro-Fac Products' shall mean the entire
proceeds received by Curtice Burns from the sale of Pro-Fac Products less
the costs incurred by Curtice Burns in its own behalf or in behalf of
Pro-Fac in processing and selling such products. Such costs shall be
determined in accordance with generally accepted accounting practices in
the food industry as modified by past practices and accounting methods used
by the parties and shall include all variable product costs, a pro rata
share of plant and warehousing overhead costs based upon the estimated
usage of facilities and a pro rata share of selling, general and
administrative, overhead and financial expenses. Such costs shall include
Commercial Market Value to be paid pursuant to paragraph 13 but shall not
include any additional payment pursuant to paragraph 14. 'Earnings on
Pro-Fac Products' shall mean the amount by which such proceeds exceed such
costs; 'Losses on Pro-Fac Products' shall mean the amount by which such
proceeds are less than such costs.


d. 'Pro-Fac Facilitation Accommodations' shall include (but not be
necessarily limited to): (i) the guarantee by Pro-Fac of all indebtedness
for borrowed funds of Curtice Burns; (ii) making available by Pro-Fac to
Curtice Burns access to the Federal Farm Credit System for borrowing of
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