Smithfield Companies Inc – ‘PREM14A’ for 6/29/01

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Preliminary Proxy Solicitation Material — Merger or Acquisition   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PREM14A     Preliminary Proxy Solicitation Material -- Merger    124    436K 
                          or Acquisition                                         

Document Table of Contents

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SCHEDULE 14A

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 Registrant  [ ]                                     

Check the appropriate box                                                       
[X]  Preliminary Proxy Statement            [ ]  Confidential, for Use of the   
                                     Commission Only (as
                                                permitted by Rule 14a-6(e)(2))

[ ]  Definitive Proxy Statement                                                 
[ ]  Definitive Additional Materials                                            
[ ]  Soliciting Material Under Rule 14a-12                                      

THE SMITHFIELD COMPANIES, INC.
--------------------------------------------------------------------------------
Name of Registrant as Specified in Charter

 N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):                              

[ ]  No fee required.                                                           

[X]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.   

(1) Title of each class of securities to which transaction applies:   
Common stock, no par value per share
......................................................................

(2) Aggregate number of securities to which transaction applies:      
 2,114,593
......................................................................

(3) Per unit price or other underlying value of transaction computed  
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the 
filing fee is calculated and state how it was determined):            
 $8.50 per share of common stock, as specified in the merger agreement
......................................................................

(4) Proposed maximum aggregate value of transaction:                  
 $17,974,041
......................................................................

(5) Total fee paid:                                                   
$3,595
......................................................................

[ ]  Fee paid previously with preliminary materials.                            

[ ]  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:                                                       
......................................................................

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 PRELIMINARY COPY SUBJECT TO
COMPLETION, DATED MAY 11, 2001

 [The Smithfield Companies, Inc. Letterhead]

To Our Shareholders:                                                            

  You are cordially invited to attend a special meeting of shareholders of
The Smithfield Companies, Inc. to be held at ____________ on _________,         
_________, 2001, at [11:00 a.m.], local time.                                   

At the special meeting, you will be asked to consider and vote upon a 
proposal to approve the Agreement and Plan of Merger, dated as of April 30,     
2001, between The Smithfield Companies, Inc., Smithfield Foods, Inc., and TSCI  
Acquisition, Inc., a wholly-owned subsidiary of Smithfield Foods, Inc. If the   
merger contemplated by the merger agreement is completed, Smithfield Companies  
will become a wholly-owned subsidiary of Smithfield Foods and you will receive  
$8.50 in cash for each of your shares of our common stock.                      

  Your board of directors has determined that the merger is fair to and in
the best interests of The Smithfield Companies, Inc. and its shareholders.      
ACCORDINGLY, YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER        
AGREEMENT AND THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"        
APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING.                        

    The accompanying notice of special meeting and proxy statement explain the
proposed merger and provide specific information concerning the special meeting.
Please read these materials carefully.                                          

  Certain of our shareholders have agreed to vote all shares of our common
stock over which they exercise voting control for approval of the merger        
agreement. When combined with the shares of our common stock held by a          
subsidiary of Smithfield Foods, the holders of approximately 77 percent of our  
common stock have agreed to vote their shares for approval of the merger        
agreement. Accordingly, we expect that the merger agreement will be approved at 
the special meeting, without the votes of any additional shareholders.          
Nevertheless, I urge you to complete, sign and promptly return the enclosed     
proxy card to assure that your shares will be voted at the special meeting.     

     On behalf of your board of directors, I thank you for your support and urge
you to vote for approval of the merger agreement.                               

                   /s/ Richard S. Fuller

                                   President and Chief Executive Officer

     This proxy statement is dated _________, 2001, and is first being mailed to
shareholders on or about _________, 2001.                                       

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 [The Smithfield Companies, Inc. Letterhead]

 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON __________, 2001

To Our Shareholders:                                                            

     A special meeting of shareholders of The Smithfield Companies, Inc. will be
held on _________, 2001, at [11:00 a.m.], local time, at _____________________  
for the following purposes:                                                     

    1.  to consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of April 30, 2001, among The Smithfield Companies, Inc.,    
Smithfield Foods, Inc. and a wholly-owned subsidiary of Smithfield Foods        
providing for the merger of the subsidiary of Smithfield Foods with and into    
Smithfield Companies; and                                                       

    2.  to transact any other business as may properly come before the special
meeting or any adjournment thereof.                                             

   Your board of directors has fixed _________, 2001, as the record date for
the determination of shareholders entitled to notice of and to vote at the      
special meeting or any adjournments thereof. You may vote only if you were a    
shareholder of record on __________, 2001. Approval of the merger proposal      
requires the affirmative vote of the holders of more than two-thirds of the     
outstanding shares of our common stock.                                         

    Your attention is directed to the proxy statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the     
special meeting.                                                                

                                 By Order of the Board of Directors,

                      /s/ Peter D. Pruden, III

                             Peter D. Pruden, III, Secretary

Portsmouth, Virginia                                                            
_________, 2001                                                                 

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

IMPORTANT NOTICE

 Whether or not you plan to attend the special meeting, please complete, sign,
date and return the enclosed proxy card as soon as possible in the postage
 paid envelope provided.

YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
MERGER AGREEMENT AT THE SPECIAL MEETING.

YOU SHOULD NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.

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

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 SUMMARY TERM SHEET FOR THE MERGER

     This summary term sheet for the merger highlights selected information from
this proxy statement regarding the merger and the merger agreement, and may not 
contain all of the information that is important to you as a Smithfield         
Companies shareholder. Accordingly, we encourage you to carefully read this     
entire document and the documents to which we have referred.                    

THE PROPOSED TRANSACTION                                                        

 THE PROPOSAL (PAGE __). You are being asked to consider and vote upon a
proposal to approve the agreement and plan of merger (which we sometimes refer  
to as the "merger agreement") that provides for Smithfield Companies to be      
acquired by Smithfield Foods.                                                   

  WHAT YOU WILL RECEIVE (PAGE __). Upon completion of the merger, you will
receive $8.50 in cash for each of your shares of our common stock, unless you   
properly dissent.                                                               

    THE ACQUIROR (PAGE __). Smithfield Foods, Inc., a Virginia corporation, is
the world's largest pork processor and hog producer. Smithfield Foods is        
headquartered in Smithfield, Virginia.                                          

RECOMMENDATION OF OUR BOARD (PAGE __)                                           

   Our board of directors has determined by a unanimous vote that the merger
is fair to and in the best interests of Smithfield Companies and its            
shareholders and has approved the merger agreement and the merger. Our board of 
directors recommends that you vote FOR approval of the merger agreement at the  
special meeting.                                                                

OPINION OF EWING MONROE BEMISS & CO. (PAGE __ AND APPENDIX B)                   

On April 25, 2001, Ewing Monroe Bemiss & Co., our board of directors' 
financial advisor, delivered to our board of directors an opinion, which was    
confirmed in a written opinion dated April 30, 2001. Ewing Monroe's opinion     
provided that, as of the date of its opinion and based on and subject to the    
matters and various assumptions and limitations stated in the opinion, the $8.50
per share cash consideration to be received by the holders of our shares of     
common stock pursuant to the merger agreement was fair to those holders from a  
financial point of view.                                                        

Ewing Monroe provided its advisory services and its opinion for the   
information and assistance of our board of directors in connection with its     
consideration of the merger. Ewing Monroe's opinion is not a recommendation as  
to how you should vote at the special meeting, and should not be relied upon by 
you as a recommendation. THE FULL TEXT OF THE OPINION, WHICH SETS FORTH THE     
ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN,  
IS ATTACHED AS APPENDIX B TO THIS PROXY STATEMENT, AND YOU ARE URGED TO, AND    
SHOULD, READ THE OPINION IN ITS ENTIRETY.                                       

THE SPECIAL MEETING                                                             

DATE, TIME AND PLACE (PAGE __). The special meeting will be held on   
_________, 2001, at [11:00 a.m.], local time, at ______________________________.

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   REQUIRED VOTE AND VOTING AGREEMENTS (PAGE __ AND APPENDIX C). Approval of
the merger requires the affirmative vote of the holders of more than two-thirds 
of our outstanding shares of common stock. Certain of our shareholders have     
agreed to vote all shares of our common stock over which they exercise voting   
control for approval of the merger agreement. When combined with the shares of  
our common stock held by a subsidiary of Smithfield Foods, the holders of       
approximately 77 percent of our common stock have agreed to vote their shares   
for approval of the merger agreement. Accordingly, we expect that the merger    
agreement will be approved at the special meeting, without the votes of any     
additional shareholders. The form of the voting agreements is attached as       
Appendix C to this proxy statement.                                             

    WHO MAY VOTE (PAGE __). You are entitled to vote at the special meeting if
you owned shares of our common stock at the close of business on _________,     
2001, the record date for the special meeting. On the record date, [2,114,593]  
shares of our common stock were outstanding and entitled to be voted.           

HOW YOU CAN VOTE (PAGE __). You can vote in the following ways:       

  o    Voting by Mail. If you choose to vote by mail, simply complete your
       proxy, date and sign it, and return it in the postage paid envelope
provided, or                                                

    o    Voting in Person. You can also vote by appearing and voting in person
at the special meeting.                                     

 You can revoke your proxy at any time before it is voted at the special
meeting by:                                                                     

o    giving written notice of revocation to our Secretary,            

o    submitting a later dated proper written proxy, or                

o    attending the special meeting and voting in person.              

THE MERGER                                                                      

   THE STRUCTURE AND EFFECTIVE TIME (PAGE __). Upon the terms and conditions
of the merger agreement, a wholly-owned subsidiary of Smithfield Foods will     
merge with and into Smithfield Companies. Smithfield Companies will remain in   
existence as a wholly-owned subsidiary of Smithfield Foods. Smithfield Companies
shareholders will have no equity interest in Smithfield Companies or Smithfield 
Foods after the merger.                                                         

  MATERIAL FEDERAL INCOME TAX CONSEQUENCES (PAGE __). The merger will be a
taxable transaction to you. For United States federal income tax purposes, you  
will generally recognize gain or loss in the merger in an amount determined by  
the difference between the cash you receive and your tax basis in our common    
stock. Because determining the tax consequences of the merger can be            
complicated, you should consult your tax advisor in order to understand fully   
how the merger will affect you.                                                 

     DISSENTERS' RIGHTS (PAGE __ AND APPENDIX D). Under Virginia law, holders of
our shares of common stock are entitled to dissenters' rights in connection with
the merger.                                                                     

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THE MERGER AGREEMENT (PAGE __ AND APPENDIX A)                                   

  CONDITIONS TO THE MERGER (PAGE __). Before we can complete the merger, a
number of conditions must be satisfied or waived by the applicable party. These 
include:                                                                        

o    the approval of the merger agreement by the holders of more than 
two-thirds of our shares of common stock,                   

o    the absence of any injunction or other legal order preventing the
completion of the merger,                                   

o    the receipt or making of any governmental consents, approvals or 
          filings, the absence of which would (1) be reasonably likely to have a
material adverse effect on Smithfield Foods or (2) provide a
        reasonable basis to conclude that Smithfield Companies or Smithfield
          Foods, or our or their directors, officers or agents, would be subject
to the risk of criminal or material financial liability,    

    o    our material compliance with our representations and warranties under
the merger agreement,                                       

 o    Smithfield Foods' material compliance with its representations and
warranties under the merger agreement,                      

    o    each party's material performance of its obligations under the merger
agreement,                                                  

   o    since the date of the merger agreement, there shall have occurred no
   material adverse change in our business, financial condition or
results of operations,                                      

   o    the holders of not more than 10% of our outstanding shares of common
stock shall have exercised their dissenters' rights, and    

o    Smithfield Foods shall be satisfied, in its sole and absolute    
     discretion, with its due diligence investigation of our business,
financial condition, results of operations and prospects.   

We expect to complete the merger within three business days after the 
conditions to the merger have been satisfied or waived.                         

    TERMINATION OF THE MERGER AGREEMENT (PAGE __). The merger agreement may be
terminated at any time prior to the effective time of the merger, whether before
or after our shareholders have approved it, in any of the following cases:      

o    by mutual consent of the parties,                                

 o    by either Smithfield Foods or us if the merger is not completed by
September 30, 2001,                                         

o    by us if Smithfield Foods materially breaches any of its         
      representations, warranties, covenants or agreements in the merger
  agreement and the breach remains uncured for ten business days
following its receipt of notice of the breach,              

o    by Smithfield Foods if we materially breach any of our           
representations, warranties,                                

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          covenants or agreements in the merger agreement and the breach remains
        uncured for ten business days following our receipt of notice of the
breach,                                                     

 o    by Smithfield Foods if the merger agreement is not approved by our
shareholders at the special meeting,                        

   o    by Smithfield Foods if our board of directors fails to recommend the
  approval of the merger agreement to our shareholders or if its
recommendation is made and subsequently withdrawn,          

o    by Smithfield Foods if our cost to perform certain environmental 
remediation exceeds $250,000,                               

o    by either Smithfield Foods or us if any final injunction or other
final legal order prevents the completion of the merger, or 

o    by us if                                                         

      o    we receive a bona fide proposal with respect to the
                   acquisition of all of our outstanding capital stock, or all
or substantially all of our assets,     

       o    our board of directors believes, in good faith after
                    consultation with its financial advisors, that the competing
                   proposal is more favorable, from a financial point of view,
              to our shareholders than the proposal described in the
merger agreement, and                   

       o    Smithfield Foods does not, within five business days
                 following notice of the competing proposal, make an offer
                 that our board of directors believes, in good faith after
                consultation with its financial advisors, is at least as
         favorable, from a financial point of view, to our
shareholders as the competing proposal. 

TERMINATION FEES AND EXPENSES IF THE MERGER IS NOT COMPLETED (PAGE __)          

    If the merger agreement is terminated for any of the following reasons, we
must pay Smithfield Foods a termination fee of $1 million, together with        
Smithfield Foods' out-of-pocket expenses incurred in connection with the merger 
agreement:                                                                      

   o    the merger has not been completed by September 30, 2001, as a result
      of our willful failure to fulfill any of our obligations under the
merger agreement,                                           

o    we willfully and materially breach any of our representations,   
       warranties, covenants or agreements in the merger agreement and the
         breach remains uncured for ten business days following our receipt of
notice of the breach,                                       

o    the merger agreement is not approved by our shareholders at the  
special meeting,                                            

   o    our board of directors fails to recommend the approval of the merger
      to our shareholders or its recommendation is made and subsequently
withdrawn, or                                               

 o    Smithfield Foods does not match a proposal received by us that our
          board of directors believes, in good faith after consultation with its
financial advisors, is more favorable, from a               

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  financial point of view, to our shareholders than the proposal
described in the merger agreement.                          

 If the merger agreement is terminated for any of the following reasons,
Smithfield Foods must pay us a termination fee of $1 million, together with our 
out-of-pocket expenses incurred in connection with the merger agreement:        

   o    the merger has not been completed by September 30, 2001, as a result
          of Smithfield Foods' willful failure to fulfill any of its obligations
under the merger agreement, or                              

o    Smithfield Foods' willfully and materially breaches any of its   
      representations, warranties, covenants or agreements in the merger
  agreement and the breach remains uncured for ten business days
following Smithfield Foods' receipt of notice of the breach.

 If the merger agreement is terminated for any of the following reasons,
Smithfield Foods may pursue any remedies that it may have against us, subject to
a cap of $250,000:                                                              

   o    the merger has not been completed by September 30, 2001, as a result
         of our failure, other than our willful failure, to fulfill any of our
obligations under the merger agreement, or                  

o    we materially breach, other than a willful breach, any of our    
      representations, warranties, covenants or agreements in the merger
  agreement and the breach remains uncured for ten business days
following our receipt of notice of the breach.              

    If the merger agreement is terminated for any of the following reasons, we
may pursue any remedies that we may have against Smithfield Foods, subject to a 
cap of $250,000:                                                                

   o    the merger has not been completed by September 30, 2001, as a result
    of Smithfield Foods' failure, other than its willful failure, to
 fulfill any of its obligations under the merger agreement, or

     o    Smithfield Foods materially breaches, other than a willful breach, any
      of its representations, warranties, covenants or agreements in the
         merger agreement and the breach remains uncured for ten business days
following its receipt of notice of the breach.              

INTERESTS OF OUR DIRECTORS AND OFFICERS IN THE MERGER (PAGE __)                 

     When our board of directors considered the merger and the merger agreement,
it was aware that some of our directors and officers have interests and         
arrangements that may be different from, or in addition to, your interests as a 
Smithfield Companies shareholder.                                               

  Under the merger agreement, all vested and unvested Smithfield Companies
stock options, including those held by our directors and officers, will be      
canceled. Holders of options with exercise prices below $8.50 will receive cash 
for each option in an amount equal to the difference between the exercise price 
and $8.50. In addition, two of our executive officers have entered into         
consulting agreements with Smithfield Foods, which become effective upon        
completion of the merger. Finally, under the merger agreement, Smithfield Foods 
is required to maintain all existing indemnification rights in favor of our     
directors and officers for a period of six years following the completion of the
merger.                                                                         

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 TABLE OF CONTENTS

A CAUTION ABOUT FORWARD-LOOKING INFORMATION.................................  1 

THE COMPANIES...............................................................  2 

   The Smithfield Companies, Inc...........................................  2
   Smithfield Foods, Inc...................................................  2
   TSCI Acquisition, Inc...................................................  2

THE SPECIAL MEETING.........................................................  2 

   General - The Proposal..................................................  2
   Record Date and Voting..................................................  3
   How You Can Vote........................................................  3
Voting By Participants in Smithfield Companies Employee Stock           
      Ownership Plan.......................................................  4
   How You May Revoke or Change Your Vote..................................  4
   Adjournments............................................................  4

THE MERGER..................................................................  5 

   Background of the Merger................................................  5
   Our Reasons for the Merger - Recommendation of Our Board................  7
   Opinion of Our Financial Advisor........................................  8
   Material Federal Income Tax Consequences................................ 13
   Governmental and Regulatory Clearances.................................. 14
   Merger Financing; Source and Amount of Funds............................ 14
Interests of Smithfield Companies' Directors and Officers in the        
     Merger................................................................ 14
   Amendment of Our Rights Agreement....................................... 15
   Dissenters' Rights...................................................... 15

THE MERGER AGREEMENT........................................................ 17 

   Structure and Effective Time............................................ 17
   Merger Consideration.................................................... 17
   Payment Procedures...................................................... 18
   Treatment of Stock Options.............................................. 18
   Representations and Warranties.......................................... 18
   Covenants; Conduct of Our Business Prior to the Merger.................. 20
   No Solicitation......................................................... 22
   Indemnification......................................................... 22
   Our Board's Recommendation.............................................. 22
   Conditions to the Merger................................................ 22
   Termination............................................................. 24
   Termination Fees and Expenses........................................... 25

VOTING AGREEMENTS........................................................... 26 

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS...................... 27 

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SHAREHOLDER PROPOSALS....................................................... 28 

WHERE YOU CAN FIND MORE INFORMATION......................................... 28 

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 29 

APPENDICES                                                                      

Appendix A - Agreement and Plan of Merger                                       
Appendix B - Opinion of Ewing Monroe Bemiss & Co.                               
Appendix C - Form of Voting Agreement                                           
Appendix D - Article 15 of the Virginia Stock Corporation Act                   

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 A CAUTION ABOUT FORWARD-LOOKING INFORMATION

This proxy statement (including information incorporated by reference)
contains forward-looking statements relating to the financial condition, results
of operations, plans, objectives, future performance and businesses of          
Smithfield Companies and Smithfield Foods, as well as information relating to   
the merger, including, without limitation, statements preceded by, followed by  
or that include the words "believes," "expects," "anticipates," "estimates" or  
similar expressions. These forward-looking statements involve risks and         
uncertainties. Actual results may differ materially from those contemplated by  
such forward-looking statements due to, among others, matters described in the  
documents incorporated by reference and the following factors:                  

o    availability and prices of live hogs, raw materials and supplies,          

o    live hog production costs,                                                 

o    product pricing,                                                           

o    the competitive environment and related market conditions,                 

o    operating efficiencies,                                                    

o    access to capital,                                                         

o    the cost of compliance with environmental and health standards, and        

o    actions of domestic and foreign governments.                               

 These forward-looking statements are found at various places throughout
this proxy statement and the other documents incorporated by reference in this  
proxy statement. You are cautioned not to place undue certainty on these        
forward-looking statements, since any forward-looking statement speaks only as  
of the date on which the statement was made. Neither Smithfield Companies nor   
Smithfield Foods undertakes any obligation to publicly release any revisions to 
these forward-looking statements to reflect events or circumstances after the   
date of this proxy statement or to reflect the occurrence of unanticipated      
events. See "WHERE YOU CAN FIND MORE INFORMATION."                              

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 THE COMPANIES

The Smithfield Companies, Inc.                                                  

    The Smithfield Companies, Inc. (which we sometimes refer to as "Smithfield
Companies") was incorporated in Virginia on April 3, 1981. Smithfield Companies 
is a diversified producer of specialty food products. Smithfield Companies      
markets it products primarily to the retail grocery, food service and gourmet   
food industries, as well as through its own retail outlets and consumer         
catalogs. Its five operating units are The Smithfield Companies Ham and Products
Company, Inc., V.W. Joyner & Co., Pruden Packing Company, The E.M. Todd Company 
and Williamsburg Foods, Inc. Smithfield Companies maintains its principal       
executive offices at The Smithfield Companies Building, Suite 203, 311 County   
Street, Portsmouth, Virginia 23704-3716 and its telephone number is (757)       
399-3100.                                                                       

  For additional information with respect to Smithfield Companies, see the
documents specified under "Incorporation of Certain Documents by Reference."    

Smithfield Foods, Inc.                                                          

    Smithfield Foods, Inc. (which we sometimes refer to as "Smithfield Foods")
is a Virginia corporation and the world's largest pork processor and hog        
producer. As a holding company, Smithfield Foods conducts its business through  
two groups, the meat processing group and the hog production group. The meat    
processing group produces domestically and internationally a wide variety of    
fresh pork and processed meat products and markets them nationwide and to over  
25 foreign markets, including Canada, Poland, France, Japan and Mexico. To      
complement its processing operations, Smithfield Foods has vertically integrated
into hog production through its hog production group, which currently provides  
the meat processing group with approximately 50% of its live hog requirements.  
Smithfield Foods maintains its principal executive offices at 200 Commerce      
Street, Smithfield, Virginia 23430 and its telephone number is (757) 365-3000.  

TSCI Acquisition, Inc.                                                          

    TSCI Acquisition, Inc. (which we sometimes refer to as "Acquisition") is a
Virginia corporation formed by Smithfield Foods in April 2001 solely for the    
purpose of merging into Smithfield Companies. Acquisition is a direct,          
wholly-owned subsidiary of Smithfield Foods. Acquisition maintains its principal
executive offices at 200 Commerce Street, Smithfield, Virginia 23430 and its    
telephone number is (757) 365-3000.                                             

 THE SPECIAL MEETING

General - The Proposal                                                          

This proxy statement is being furnished to Smithfield Companies'      
shareholders as part of the solicitation of proxies by Smithfield Companies'    
board of directors for use at a special meeting to be held on ________, 2001,   
starting at [11:00] a.m., local time, at ______________. The purpose of the     
special meeting is for Smithfield Companies' shareholders to consider and vote  
upon a proposal to approve the merger agreement, which provides for the merger  
of Acquisition with and into Smithfield Companies. A copy of the merger         
agreement is attached to this proxy statement as Appendix A. This proxy         
statement and the enclosed form of proxy are first being mailed to Smithfield   
Companies' shareholders on or about ________, 2001.                             

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Record Date and Voting                                                          

  The holders of record of our common stock as of the close of business on
the record date, which was ___________, 2001, are entitled to receive notice of,
and to vote at, the special meeting. On the record date, there were [2,114,593] 
shares of our common stock outstanding, with each share entitled to one vote.   

    The holders of a majority of the outstanding shares of our common stock on
_________, 2001, represented in person or by proxy, will constitute a quorum for
purposes of the special meeting. In the event that a quorum is not present at   
the special meeting, it is expected that the meeting will be adjourned or       
postponed to solicit additional proxies. We will count shares of our common     
stock present in person at the special meeting but not voting, and shares of our
common stock for which we have received proxies but where holders of those      
shares have abstained, as present at the special meeting for purposes of        
determining whether a quorum is present for the transaction of business. Brokers
who hold shares of our common stock in nominee or "street name" for customers   
who are the beneficial owners of the shares are prohibited from giving a proxy  
to vote shares for those customers on the matters to be voted on at the special 
meeting without specific instructions from these customers. Shares of our common
stock represented by properly executed proxies returned by a broker holding     
those shares in nominee or "street name" will be counted for purposes of        
determining whether a quorum exists, even if the shares are broker non-votes.   

   The approval of the merger agreement requires the affirmative vote of the
holders of more than two-thirds of the outstanding shares of our common stock on
__________, 2001. Abstentions and broker non-votes will have the same effect as 
votes against the approval of the merger agreement. Certain of our shareholders 
have executed voting agreements in which they agreed to vote in favor of the    
merger agreement. Because the number of shares of our common stock subject to   
voting agreements, when combined with the number of shares held by a wholly-    
owned subsidiary of Smithfield Foods, exceeds the vote required to approve the  
merger agreement, we expect that the merger agreement will be approved at the   
special meeting.                                                                

     Furthermore, you should note that, under Virginia law, holders of shares of
our common stock are entitled to dissenters' rights in connection with the      
merger. See "The Merger - Dissenters' Rights" for information on the            
requirements of Virginia law for a proper dissent.                              

How You Can Vote                                                                

Each share of our common stock outstanding on ____________, 2001, is  
entitled to vote at the special meeting. Approval of the merger agreement       
requires the affirmative vote of more than two-thirds of the outstanding shares 
of our common stock. Because the vote is based on the number of shares          
outstanding rather than on the number of votes cast, failure to vote your shares
is effectively a vote against approval of the merger agreement. You may vote    
your shares in either of two ways:                                              

 1.  Voting by Mail. If you choose to vote by mail, simply complete your
proxy, date and sign it, and return it in the postage paid envelope provided.   

   2.  Voting in Person. You can also vote by appearing and voting in person
at the special meeting.                                                         

As of the record date, Smithfield Companies' directors and executive  
officers owned, in the                                                          

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aggregate, [1,231,177] outstanding shares of our common stock, or collectively  
approximately 58 percent of the outstanding shares of our common stock. In      
addition, SF Investments, Inc., a wholly-owned subsidiary of Smithfield Foods,  
owns 428,496 outstanding shares of our common stock, or approximately 20 percent
of the outstanding shares of our common stock. SF Investments and three of our  
directors and executive officers, who together hold approximately 77 percent of 
the outstanding shares of our common stock, have agreed to vote in favor of the 
merger. See "Voting Agreements."                                                

Voting By Participants in Smithfield Companies Employee Stock Ownership Plan    

 If you own stock through Smithfield Companies' Employee Stock Ownership
Plan as of __________, 2001, your proxy will serve as voting instructions to the
trustee, Wachovia Bank, N.A., for the shares of our common stock credited to    
your account on that date. The terms of the plan provide that the trustee may   
not vote your shares of our common stock held in the plan if you fail to direct 
the vote of the trustee.                                                        

How You May Revoke or Change Your Vote                                          

 If you vote your shares of our common stock by submitting a proxy, your
shares will be voted at the special meeting as you indicate on your proxy card. 
If no instructions are indicated on your signed proxy card, all of your shares  
of our common stock will be voted for the approval of the merger agreement.     

 You can revoke your proxy at any time before it is voted at the special
meeting by:                                                                     

o    giving written notice of revocation to our Secretary,            

o    submitting a later dated proper written proxy, or                

o    attending the special meeting and voting in person. If your      
          shares are held in the name of a bank, broker, trustee or other holder
      of record, including the trustee or other fiduciary of an employee
    benefit plan, you must transfer the shares into your own name or
        obtain a proxy, executed in your favor, from the holder of record to
be able to vote in person at the special meeting.           

  We will pay the costs of soliciting proxies for the special meeting. Our
officers, directors and employees may solicit proxies by telephone, mail, the   
internet or in person. However, they will not be paid for soliciting proxies. We
also will request that individuals and entities holding shares in their names,  
or in the names of their nominees, that are beneficially owned by others, send  
proxy materials to and obtain proxies from those beneficial owners, and will    
reimburse those holders for their reasonable expenses in performing those       
services.                                                                       

Adjournments                                                                    

Although it is not expected, the special meeting may be adjourned for,
among other reasons, the purpose of soliciting additional proxies to a date not 
later than 90 days after the date of the special meeting. You should note that  
the meeting could be successively adjourned to a specified date not longer than 
90 days after such adjournment. If the special meeting is adjourned for the     
purpose of soliciting additional proxies, Smithfield Companies' shareholders who
have already sent in their proxies will be allowed to revoke them at any time   
prior to their use.                                                             

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THE MERGER

Background of the Merger                                                        

    Smithfield Companies is a diversified producer of specialty food products.
Smithfield Companies markets it products primarily to the retail grocery, food  
service and gourmet food industries, as well as through its own retail outlets  
and consumer catalogs. Its five operating units, structured as divisions or     
subsidiaries, are The Smithfield Companies Ham and Products Company, Inc., V.W. 
Joyner & Co., Pruden Packing Company, The E.M. Todd Company and Williamsburg    
Foods Inc.                                                                      

  Prior to 1999, Smithfield Companies produced its refrigerated and frozen
products from its original facilities in Smithfield, Virginia. As a result of   
regulations passed by the Food and Drug Administration dealing with temperature 
controls, Smithfield Companies' desire for increased production capacity and    
Smithfield Companies' acquisition of the Doughties business in 1997, Smithfield 
Companies constructed a state of the art processing facility. This new facility 
replaced Smithfield Companies' original processing facility, and significantly  
increased our processing capacity. This increased capacity necessitated the     
addition of new business in order to fully utilize the facility.                

 Smithfield Companies' management and board of directors pursued ways to
improve the operating efficiencies of the new facility through increased sales. 
Among other things, management and the board of directors pursued without       
success the acquisition of smaller, complementary businesses as a means to      
increase production and usage of the facility. While management was able to     
increase the operating efficiency of the new facility, the full utilization of  
the facility remained a concern.                                                

  In light of the Company's difficulty in increasing sales to a level that
would permit optimal use of the new processing facility, our board of directors 
determined to consider the strategic alternatives available to Smithfield       
Companies. In the course of considering those strategic alternatives, including 
ways to increase the efficiency of the new processing facility, management      
engaged the services of Ewing Monroe to determine the interest, if any, in a    
combination of the businesses of Smithfield Companies and Smithfield Foods. In  
late February 2001, Ewing Monroe contacted a representative of Smithfield Foods 
regarding its interest in a possible strategic transaction with an unnamed      
company. Following the execution of a confidentiality agreement on February 26, 
2001, Ewing Monroe provided Smithfield Foods with preliminary due diligence     
materials concerning Smithfield Companies, its operations, financial results and
prospects, and requested a preliminary indication of interest regarding a       
possible strategic transaction. On March 14, 2001, Mr. Joseph W. Luter, III,    
Chairman of the Board, President and Chief Executive Officer of Smithfield      
Foods, advised Mr. Richard S. Fuller, President and Chief Executive Officer of  
Smithfield Companies, that Smithfield Foods was prepared to offer to acquire all
of the outstanding shares of Smithfield Companies common stock in a merger in   
which each holder of Smithfield Companies' common stock would receive $8.50 in  
cash per share. Mr. Luter noted that Smithfield Foods' proposal was subject to a
number of conditions, including its satisfactory completion of a due diligence  
investigation of Smithfield Companies and negotiation and execution of a        
definitive merger agreement.                                                    

   Between March 14, 2001, and April 30, 2001, representatives of Smithfield
Foods and Smithfield Companies engaged in preliminary, non-binding discussions  
regarding the terms of a possible acquisition of Smithfield Companies by        
Smithfield Foods. During this period, Smithfield Foods also                     

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commenced a preliminary due diligence investigation of Smithfield Companies,    
including a review of its financial and operational prospects.                  

On April 6, 2001, Smithfield Foods' legal advisors provided an initial
draft of the merger agreement to Smithfield Companies and its legal and         
financial advisors. On April 11, 2001, Smithfield Companies' legal advisors     
negotiated with Smithfield Foods' legal advisors certain terms of the merger    
agreement, including the scope of representations and warranties, the conditions
to closing, events permitting either party to terminate the transaction, the    
circumstances under which the parties would be required to pay a termination fee
and the size of such fee. A number of material terms remained unresolved        
following that discussion.                                                      

   On April 24, 2001, representatives of Smithfield Companies and Smithfield
Foods discussed the results of Smithfield Foods' preliminary due diligence      
investigation and attempted to resolve the remaining outstanding issues         
associated with the merger agreement, generally relating to environmental       
matters and the size of the termination fee. Early the following morning,       
Smithfield Foods' legal advisors provided a draft to Smithfield Companies and   
its legal and financial advisors reflecting Smithfield Foods' proposed          
resolution of the remaining outstanding issues.                                 

   At a special meeting of Smithfield Companies' board of directors on April
25, 2001, Mr. Fuller updated the board of directors with respect to the         
negotiations with Smithfield Foods. The most recent draft of the merger         
agreement was distributed to each member of the board of directors and          
unresolved issues were discussed. Following a detailed presentation by          
Smithfield Companies' legal advisors with respect to the director's standard of 
conduct under Virginia law in evaluating any potential extraordinary            
transaction, representatives of Ewing Monroe reviewed Smithfield Companies'     
current business environment and the proposed transaction including, among other
things, a preliminary review of the financial and structural aspects of the     
transaction and a comparison of other transactions involving companies of a     
similar size. Ewing Monroe further advised the board of directors that, in its  
opinion, the proposed transaction was fair to the shareholders of Smithfield    
Companies from a financial point of view. At the close of the meeting,          
Smithfield Companies' board of directors authorized management to enter into    
exclusive discussions with Smithfield Foods in an effort to finalize a          
definitive merger agreement.                                                    

   On April 26, 2001, Smithfield Companies and Smithfield Foods entered into
an exclusivity agreement pursuant to which the parties agreed that, for a 20 day
period commencing on the date thereof, the parties would engage in good faith   
negotiations with respect to the possible acquisition of Smithfield Companies by
Smithfield Foods, and Smithfield Companies would not engage in any discussions  
with, or provide any non-public information to, any third party regarding a     
possible acquisition of Smithfield Companies. Later that day, Smithfield        
Companies and Smithfield Foods issued a joint press release announcing that they
were in exclusive discussions regarding the possible acquisition by Smithfield  
Foods of Smithfield Companies for cash consideration of $8.50 per share.        

 Confirmatory due diligence and negotiations concerning the terms of the
draft merger agreement proceeded until April 30, 2001, among Smithfield         
Companies, Smithfield Foods and their respective legal and financial advisors.  
On April 30, 2001, following resolution of the remaining principal issues       
associated with the merger agreement, Smithfield Companies' board of directors  
convened a special meeting. At the meeting, Smithfield Companies' management and
legal counsel reviewed the revised merger agreement. Following Mr. Fuller's     
review of developments with respect to the proposed transaction since April 25, 
2001, Ewing Monroe confirmed its previous opinion by a written opinion that, as 
of the date of the opinion and based upon and subject to the matters and various

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assumptions and  limitations stated in the opinion,  the $8.50 cash per share   
consideration to be  received by holders of Smithfield Companies common stock   
pursuant to the merger  agreement was fair, from a financial point of view, to  
such holders.                                                                   

     After extensive discussion and deliberation, Smithfield Companies' board of
directors voted unanimously to approve the merger, the merger agreement and all 
related matters (including, among other things, employee benefit and            
compensation related matters) and to recommend to Smithfield Companies'         
shareholders that they vote to approve the merger and the merger agreement. The 
Smithfield Companies board of directors also voted unanimously to amend         
Smithfield Companies' shareholders rights agreement to exclude the merger from  
its operation.                                                                  

 Thereafter on April 30, 2001, Smithfield Companies and Smithfield Foods
executed the merger agreement, and the parties issued a joint press release     
announcing its execution.                                                       

Our Reasons for the Merger - Recommendation of Our Board                        

At a special board of directors meeting on April 30, 2001, Smithfield 
Companies' board of directors unanimously determined that the merger was fair to
and in the best interests of Smithfield Companies and its shareholders and      
unanimously approved the merger agreement and the merger. ACCORDINGLY, THE      
SMITHFIELD COMPANIES BOARD OF DIRECTORS RECOMMENDS THAT SMITHFIELD COMPANIES'   
SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING.  

     In reaching its decision to approve the merger agreement and the merger and
to recommend that Smithfield Companies' shareholders vote to approve the merger 
agreement and the merger, the Smithfield Companies' board of directors          
considered the following material factors:                                      

o  the Smithfield Companies' board of directors' familiarity with, and      
presentations by Smithfield Companies' management and its financial   
advisors regarding, the business, operations, properties and assets,  
    financial condition, competitive position, business strategy and prospects
   of Smithfield Companies (as well as the risks involved in achieving those
  prospects), and the current environment for the sale of pork products in
   the markets in which Smithfield Companies competes, and current industry,
   economic and market conditions, both on a historical and on a prospective
basis for all of its products,                                        

o  the fact that the $8.50 per share price would provide Smithfield         
     Companies shareholders with a substantial premium over the closing price of
    Smithfield Companies' common stock on April 26, 2001, the last trading day
prior to the announcement of the exclusive negotiations regarding the 
merger,                                                               

o  the current, historical and estimated future market prices of            
Smithfield Companies' common stock relative to those of other industry
participants and general market and sector indices,                   

o  the fact that the merger consideration is all cash, which provides       
certainty of value to Smithfield Companies' shareholders,             

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o  the costs associated with operating Smithfield Companies' processing     
     facility in Smithfield, Virginia and Smithfield Companies' need to generate
sufficient sales to fully utilize that facility,                      

o  the presentation by Ewing Monroe on April 25, 2001, including the        
     opinion of such firm, which was confirmed in a written opinion, dated April
     30, 2001, that, as of the date of such opinion, and based on and subject to
the matters, assumptions and limitations set forth in the opinion, the
    $8.50 per share cash consideration to be received by holders of Smithfield
   Companies' common stock pursuant to the merger agreement was fair, from a
   financial point of view, to such holders (see "- Opinion of Our Financial
Advisor"),                                                            

o  the fact that the terms of the merger agreement provide that, under      
certain circumstances and subject to certain conditions more fully    
described under "The Merger Agreement - Termination" and "The Merger  
  Agreement - Termination Fees and Expenses," Smithfield Companies retains
   the right to accept a superior proposal for the sale of its common stock,
and                                                                   

o  the fact that, under the terms of the merger agreement, the completion   
of the merger is not conditioned on obtaining financing.              

  The Smithfield Companies' board of directors also considered other facts
and potential risks relating to the merger, including the following material    
facts and risks:                                                                

o  the fact that gains arising from an all-cash transaction would be taxable
    to Smithfield Companies' shareholders for United States federal income tax
purposes, and                                                         

o  the possibility that the termination fee payable upon the termination of 
the merger agreement in connection with a superior proposal might     
   discourage other parties from considering a business combination with, or
an acquisition of, Smithfield Companies (see "The Merger Agreement -  
Termination Fees and Expenses").                                      

     The foregoing discussion addresses certain material information and factors
considered by Smithfield Companies' board of directors in its consideration of  
the merger, including factors that support the merger as well as those that may 
weigh against it. In view of the variety of factors and the quality and amount  
of information considered, Smithfield Companies' board of directors did not find
it practicable to, and did not make specific assessments of, quantify or        
otherwise assign relative weights to, the specific factors considered in        
reaching its determination. In addition, Smithfield Companies' board of         
directors did not undertake to make any specific determination as to whether any
particular factor, or any aspect of any particular factor, was favorable or     
unfavorable to its ultimate determination. The determination to approve the     
merger agreement was made after consideration of all of the factors in the      
aggregate. In addition, individual members of Smithfield Companies' board of    
directors may have given different weights to different factors.                

Opinion of Our Financial Advisor                                                

    Smithfield Companies retained Ewing Monroe to act as its financial advisor
in connection with an analysis of a possible sale or merger of Smithfield       
Companies, and to render an opinion as to the fairness of the terms of the      
merger agreement. Ewing Monroe was selected by the Smithfield Companies' board  
of directors to act as Smithfield Companies' financial advisor based on Ewing   
Monroe's qualifications, expertise and reputation as well as Ewing Monroe's     
investment banking                                                              

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relationship and familiarity with Smithfield Companies.                         

 At the meeting of Smithfield Companies' board of directors on April 30,
2001, Ewing Monroe rendered its written opinion that, as of such date, based    
upon and subject to the various considerations set forth in the opinion, the    
merger consideration was fair, from a financial point of view, to the holders of
Smithfield Companies common stock.                                              

The full text of Ewing Monroe's opinion, which sets forth, among other
things, assumptions made, procedures followed, matters considered, and          
limitations on the scope of the review undertaken by Ewing Monroe in rendering  
its opinion, is attached as Appendix B to this proxy statement. Smithfield      
Companies shareholders are urged to read the opinion carefully and in its       
entirety. Ewing Monroe did not recommend to Smithfield Companies that any       
specific consideration constituted the appropriate purchase price for Smithfield
Companies. Ewing Monroe's opinion addresses only the fairness of the merger     
consideration, from a financial point of view, to the holders of Smithfield     
Companies' common stock as of the date of the opinion, and does not constitute a
recommendation to any shareholder as to how such shareholder should vote at the 
special meeting. The summary of Ewing Monroe's opinion set forth in this proxy  
statement is qualified in its entirety by reference to the full text of the     
opinion.                                                                        

  In rendering its opinion, Ewing Monroe, among other things: (1) analyzed
certain publicly available financial statements and other information of        
Smithfield Companies and Smithfield Foods; (2) analyzed certain internal        
financial statements and other financial and operating data concerning          
Smithfield Companies prepared by the management of Smithfield Companies; (3)    
discussed the past and current operations and financial condition and the       
prospects of Smithfield Companies with senior executives of Smithfield          
Companies; (4) reviewed the reported prices and trading activity for Smithfield 
Companies' common stock; (5) compared the financial performance of Smithfield   
Companies and the prices and trading activity of Smithfield Companies' common   
stock with those of certain other publicly-traded companies in the same industry
as Smithfield Companies; (6) reviewed the financial terms, to the extent        
publicly available, of certain merger and acquisition transactions that Ewing   
Monroe deemed to be relevant; (7) participated in discussions and negotiations  
among representatives of Smithfield Companies and Smithfield Foods and their    
respective legal advisors; (8) reviewed the merger agreement and related        
ancillary documents; and (9) performed such other analyses and considered such  
other factors as Ewing Monroe deemed appropriate.                               

 In rendering its opinion, Ewing Monroe assumed and relied upon, without
independent verification, the accuracy and completeness of the information      
reviewed by it for the purposes of its opinion. With respect to the information 
furnished by Smithfield Companies, and with respect to the information discussed
with the management of Smithfield Companies regarding its views of future       
operations, Ewing Monroe assumed that such information was reasonably prepared  
and reflected the best currently available estimates and judgments of Smithfield
Companies' management as to the competitive, operating and regulatory           
environments, and related financial performance of Smithfield Companies, for the
relevant periods. Ewing Monroe did not make any independent valuation or        
appraisal of the assets or liabilities of Smithfield Companies, and it was not  
furnished with any such appraisals. Ewing Monroe assumed that the merger will be
accounted for as a purchase in accordance with generally accepted accounting    
principles and will be consummated in accordance with the terms set forth in the
merger agreement. Ewing Monroe's opinion is necessarily based on economic,      
market and other conditions as in effect on, and the information made available 
to Ewing Monroe as of, the date of its opinion.                                 

 The following is a summary of the analysis performed by Ewing Monroe in
preparation of its opinion and reviewed with Smithfield Companies' board of     
directors at meetings held on April 25 and April 30, 2001. This analysis was    
provided to Smithfield Companies' board of directors for background             

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information only and was one of the many factors considered by Ewing Monroe in  
rendering its opinion. No conclusions can be independently drawn from any       
individual part of the analysis described below.                                

 Comparison to Selected Publicly Traded Companies. Ewing Monroe examined
certain available financial and market information of six publicly traded       
companies in the meat products industry. This group of six companies included:  

o    Atlantic Premium Brands (AMEX: ABR)                              

o    Bob Evans Farms (NASDAQ: BOBE)                                   

o    Bridgford Foods (NASDAQ: BRID)                                   

o    Hormel Foods (NYSE: HRL)                                         

o    IBP (NYSE: IBP)                                                  

o    Smithfield Foods (NYSE: SFD)                                     

For the selected public companies, Ewing Monroe compared, among other 
things, enterprise value (or market capitalization plus debt less cash and cash 
equivalents) as a multiple of latest twelve months ("LTM") revenues, LTM        
earnings before interest, taxes, depreciation and amortization ("EBITDA"), and  
LTM earnings before interest and taxes ("EBIT"), as well as equity value as a   
multiple of LTM net income (loss). All multiples were based on closing stock    
prices as of April 24, 2001. The results of this analysis are summarized as     
follows:                                                                        

                                                        [Enlarge/Download Table]

                         Enterprise Value  Enterprise Value  Enterprise Value     Equity Value  
                          to LTM Revenue     to LTM EBITDA      to LTM EBIT    to LTM Net Income
                          --------------     -------------      -----------    -----------------
                                                                                                
Selected Company Range:    0.2 - 0.8 x        4.8 - 8.5 x       6.7-16.2 x       10.0 - 16.4 x  

Selected Company Mean:         0.5                6.7              10.0               13.0      

     Based on the multiples derived from this analysis and Smithfield Companies'
preliminary and unaudited financial results for its fiscal year ended March 31, 
2001 ("fiscal 2001"), Ewing Monroe calculated a range of implied aggregate      
equity values for Smithfield Companies between $11.2 million and $16.8 million  
(or between $5.30 and $7.95 per share).                                         

 Ewing Monroe deemed these companies similar to Smithfield Companies for
purposes of Ewing Monroe's financial analysis, but not directly comparable due  
primarily to Smithfield Companies' relatively small equity value as well as the 
proportional income contribution from the gourmet peanut and retail business.   
The analysis of similar public companies necessarily involves complex           
considerations and judgments concerning differences in financial and operating  
characteristics of the companies reviewed and other factors that would affect   
the acquisition, public trading or other values of the companies being compared.

 Selected Precedent Transactions. Ewing Monroe reviewed and analyzed the
consideration paid in nine merger and acquisition transactions since 1997       
involving companies in the meat products industry, none of which was deemed     
directly comparable to the merger.                                              

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   For the selected transactions, Ewing Monroe compared, among other things,
enterprise value as a multiple of LTM revenues, LTM EBITDA and LTM EBIT. The    
results of this analysis are summarized as follows:                             

                                                                [Download Table]

                         Enterprise Value  Enterprise Value  Enterprise Value
                          to LTM Revenue     to LTM EBITDA      to LTM EBIT  
                          --------------     -------------      -----------  
                                                                             
Selected Company Range:     0.2 - 2.5 x       4.6 - 14.7 x      9.0 - 17.7 x 

Selected Company Mean:          0.5               9.0               14.2     

Based upon the multiples derived from this analysis and Smithfield    
Companies' historical and projected results, Ewing Monroe calculated a range of 
implied aggregate equity value for Smithfield Companies between $16.8 million   
and $19.0 million (or between $7.93 and $8.97 per share).                       

    Ewing Monroe noted that, due primarily to Smithfield Companies' relatively
small equity value and the proportional contribution of the gourmet peanut and  
retail division, none of the precedent transactions is directly comparable to   
the Merger. All multiples for the selected transactions were based on public    
information available at the time of announcement of each transaction, without  
taking into account differing market and other conditions during the periods    
during which the selected transactions occurred.                                

     Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Ewing
Monroe calculated a range of implied equity values for Smithfield Companies     
based on its projected free cash flow (projected earnings before interest and   
after taxes plus depreciation and amortization expense minus projected capital  
expenditures and increases in working capital) for fiscal years 2002 through    
2006, inclusive, using discount rates from 10% to 12% and terminal value        
multiples for fiscal year 2006 EBITDA ranging from 4.0x to 6.0x. This analysis  
indicated a range of implied aggregate equity value between $12.7 million and   
$14.5 million (or between $6.02 and $6.87 per share).                           

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    Analysis of Premiums Paid in Selected Merger and Acquisition Transactions.
Ewing Monroe analyzed the transaction premiums paid in merger and acquisition   
transactions with a reported value of less than $100 million involving          
publicly-traded targets, effected since January 1, 2000, based on the target    
company's stock price one day, one week and four weeks prior to public          
announcement of the transaction. This analysis indicated the following premiums 
paid in the selected transactions:                                              

   Timeline                            Premium
----------------------------------------         -------------          
1 Day Prior to Announcement:                        40.3%             
1 Week Prior to Announcement:                       46.6%             
4 Weeks Prior to Announcement:                      55.3%             

Using this precedent data, Ewing Monroe calculated an average implied 
equity value per share for Smithfield Companies of $8.58, $7.54 and $7.81 per   
share based upon the one day, one week and four weeks premiums paid in the      
selected transactions, respectively. Ewing Monroe's analysis did not include a  
premium with respect to Smithfield Companies' net cash (debt less cash and cash 
equivalents) per share.                                                         

    Ewing Monroe performed a variety of financial and comparative analyses for
the purpose of rendering its opinion. While the foregoing summary describes all 
material analyses and factors reviewed by Ewing Monroe with Smithfield          
Companies' board of directors, it does not purport to be a complete description 
of the presentations by Ewing Monroe to Smithfield Companies' board of directors
or the analyses performed by Ewing Monroe in arriving at its opinion. The       
preparation of a fairness opinion is a complex process and is not necessarily   
susceptible to partial analysis or summary description. Ewing Monroe believes   
that its analyses must be considered as a whole and that selecting portions of  
its analyses and of the factors considered by it, without considering all       
analyses and factors, could create a misleading view of the processes underlying
its opinion. In addition, Ewing Monroe may have given various analyses more or  
less weight that other analyses, and may have deemed various assumptions more or
less probable than other assumptions, so that the range of valuations resulting 
from any particular analysis described above should not be taken to be Ewing    
Monroe's view of the actual value of Smithfield Companies. In performing its    
analyses, Ewing Monroe made numerous assumptions with respect to industry       
performance, general business and economic conditions and other matters, many of
which are beyond the control of Smithfield Companies. The analyses performed by 
Ewing Monroe are not necessarily indicative of actual values or actual future   
results, which may be significantly more or less favorable than suggested by the
analyses. In addition, analyses relating to the value of businesses or assets do
not purport to be appraisals or to necessarily reflect the prices at which      
businesses or assets may actually be sold. The analyses performed were prepared 
solely as part of Ewing Monroe's analysis of the fairness of the merger         
consideration, from a financial point of view, to the holders of Smithfield     
Companies common stock and were provided to Smithfield Companies' board of      
directors in connection with the delivery of the opinion.                       

     Smithfield Companies has agreed to pay Ewing Monroe a fee for its financial
advisory services in connection with the merger, including, among other things, 
rendering the opinion and making the presentations referred to above. Pursuant  
to a letter agreement between Smithfield Companies and                          

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Ewing Monroe, Smithfield Companies has agreed to pay Ewing Monroe, in the event 
the merger is consummated, a transaction fee of $262,500. In addition,          
Smithfield Companies has agreed to reimburse Ewing Monroe for its reasonable    
out-of-pocket expenses incurred in connection with its engagement, and to       
indemnify Ewing Monroe and certain related persons against certain liabilities  
and expenses arising out of or in conjunction with its rendering of services    
under its engagement, including certain liabilities under the federal securities
laws.                                                                           

Material Federal Income Tax Consequences                                        

   General. The following is a summary of the material United States federal
income tax consequences of the merger to Smithfield Companies' shareholders.    
This summary is based upon the provisions of the Internal Revenue Code of 1986, 
as amended, applicable current and proposed United States Treasury Regulations, 
judicial authority, and administrative rulings and practice. Legislative,       
judicial or administrative rules and interpretations are subject to change,     
possibly on a retroactive basis, at any time, and, therefore, the following     
statements and conclusions could be altered or modified. It is assumed that the 
shares of Smithfield Companies' common stock are held as capital assets by a    
United States person (i.e., a citizen or resident of the United States or a     
domestic corporation). This discussion does not address all aspects of United   
States federal income taxation that may be relevant to a particular Smithfield  
Companies shareholder in light of that shareholder's personal investment        
circumstances, or those Smithfield Companies' shareholders subject to special   
treatment under the United States federal income tax laws (for example, life    
insurance companies, tax-exempt organizations, financial institutions, United   
States expatriates, foreign corporations and nonresident alien individuals). In 
addition, this discussion does not address the aspects of United States federal 
income taxation that may be relevant to Smithfield Companies' shareholders who  
hold shares of Smithfield Companies' common stock as part of a hedging,         
"straddle," conversion or other integrated transaction, or Smithfield Companies'
shareholders who acquired their shares of Smithfield Companies' common stock    
through the exercise of directors or employee stock options or other            
compensation arrangements. In addition, the discussion does not address any     
aspect of foreign, state or local taxation or estate and gift taxation that may 
be applicable to a Smithfield Companies shareholder.                            

Consequences of the Merger to Smithfield Companies' Shareholders. The 
receipt of the merger consideration in the merger will be a taxable transaction 
for United States federal income tax purposes. In general, for United States    
federal income tax purposes, a holder of Smithfield Companies' common stock will
recognize gain or loss equal to the difference between such shareholder's       
adjusted tax basis in Smithfield Companies' common stock canceled in the merger,
and the amount of cash received. Gain or loss will be calculated separately for 
each block of shares converted in the merger (i.e., shares acquired at the same 
cost basis in a single transaction). The gain or loss will generally be capital 
gain or loss, and will be long-term gain or loss if, at the effective time of   
the merger, the shares of Smithfield Companies' common stock canceled were held 
for more than one year. In the case of shareholders who are individuals,        
long-term capital gain is currently eligible for reduced rates of federal income
tax. There are limitations on the deductibility of capital losses.              

     Cash received pursuant to a Smithfield Companies' shareholder's exercise of
dissenters' rights should be treated as a sale of that shareholder's Smithfield 
Companies common stock. Any Smithfield Companies shareholder considering the    
exercise of dissenters' rights should consult a tax advisor to determine the tax
consequences of exercising his dissenters' rights.                              

   Backup Federal Income Tax Withholding. The following discussion of backup
federal income tax withholding applies only if Smithfield Foods appoints a third
party paying agent. Under the United States federal income tax backup           
withholding rules, unless an exemption applies, the payor is required to        

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and will withhold 31% of all payments to which a Smithfield Companies           
shareholder or other payee is entitled in the merger, unless the Smithfield     
Companies shareholder or other payee provides, on a substitute Form W-9, its    
taxpayer identification number ("TIN") (social security number, in the case of  
an individual, or employer identification number, in the case of other          
shareholders), and certifies under penalties of perjury that the TIN provided is
correct (or that such shareholder or other payee is awaiting a TIN) and that the
shareholder is not subject to backup withholding. Each Smithfield Companies     
shareholder and, if applicable, each other payee, should complete and sign the  
substitute Form W-9 that will be part of the letter of transmittal to be        
returned to the paying agent (or other agent) in order to provide the           
information and certification necessary to avoid backup withholding, unless an  
applicable exemption exists or is otherwise proved in a manner satisfactory to  
the paying agent (or other agent). The exemptions provide that certain          
Smithfield Companies' shareholders (including, among others, all corporations   
and certain foreign individuals) are not subject to these backup withholding    
requirements. In order for a foreign individual to qualify as an exempt         
recipient, however, he or she must submit a signed statement (a Certificate of  
Foreign Status on Form W-8) attesting to his or her exempt status. Any amounts  
withheld will be allowed as a credit against the holder's United States federal 
income tax liability for that year. If withholding results in an overpayment of 
taxes, a refund may be obtained by filing a tax return with the Internal Revenue
Service.                                                                        

    SMITHFIELD COMPANIES SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE UNITED STATES FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES  
OF THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.            

Governmental and Regulatory Clearances                                          

   Except for the articles of merger that must be filed with and accepted by
the Virginia State Corporation Commission, the merger is not subject to any     
significant governmental or regulatory clearances.                              

Merger Financing; Source and Amount of Funds                                    

  The total amount of funds required by Smithfield Foods to consummate and
pay all related fees and expenses in connection with the merger is estimated to 
be approximately $_________, which will be provided by Smithfield Foods'        
internally generated funds.                                                     

Interests of Smithfield Companies' Directors and Officers in the Merger         

General. Some members of Smithfield Companies' management and board or
directors have certain interests in the merger that may be different from, or in
addition to, the interests of Smithfield Companies' shareholders generally.     
Smithfield Companies' board of directors was aware of these interests and       
considered them in approving the merger agreement and the merger. These         
additional interests, to the extent material, are described below. In addition  
to the following, the information relating to compensation plans and executive  
compensation as disclosed in Smithfield Companies' Annual Report on Form 10-K   
for the fiscal year ended March 31, 2000, as well as Smithfield Companies' Proxy
Statement, dated June 27, 2000, and Quarterly Reports on Form 10-Q for the      
periods ended September 30, 2000, and December 31, 2000, are hereby incorporated
by reference (except as amended or superseded by the following).                

  Stock-Based Rights. All stock options held by employees and directors of
Smithfield Companies                                                            

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outstanding immediately prior to the effective time of the merger, whether      
vested or unvested, will automatically be canceled in return for the right to   
receive an amount of cash equal to the excess, if any, of $8.50 over the        
exercise price of such option. Mr. Richard S. Fuller, Smithfield Companies'     
President and Chief Executive Officer, holds 42,500 stock options with an       
exercise price below $8.50, which will be canceled at the effective time of the 
merger in consideration of a cash payment to Mr. Fuller equal to $147,188. Mr.  
Peter D. Pruden, III, Smithfield Companies' Executive Vice President and        
Secretary, holds 30,000 stock options with an exercise price below $8.50, which 
will be canceled at the effective time of the merger in consideration of a cash 
payment to Mr. Pruden equal to $103,125.                                        

  Consulting Agreements. In connection with the merger, Messrs. Fuller and
Pruden have entered into consulting agreements with Smithfield Foods. Pursuant  
to Mr. Fuller's consulting agreement, Mr. Fuller will provide consulting        
services to Smithfield Foods for a period of five years following the effective 
date of the merger for a consulting fee of $50,000 per year. Pursuant to Mr.    
Pruden's consulting agreement, Mr. Pruden will provide consulting services to   
Smithfield Foods for a period of three years following the effective date of the
merger for a consulting fee of $50,000 per year. In addition, Smithfield Foods  
has agreed to provide to Messrs. Fuller and Pruden health insurance during the  
terms of their respective consulting agreements. At the effective time of the   
merger, Messrs. Fuller and Pruden will terminate all of their employment        
arrangements currently in effect with Smithfield Companies. In the event that   
the merger is not completed, neither consulting agreement shall be of any force 
or effect.                                                                      

Other. Bernard C. Baldwin, III, a Smithfield Companies director, is a 
partner with the law firm of Edmunds & Williams, Smithfield Companies' legal    
counsel. Edmunds & Williams is expected to be paid approximately $________ in   
legal fees in connection with the merger.                                       

Amendment of Our Rights Agreement                                               

In connection with its approval of the merger agreement, Smithfield   
Companies' board of directors amended Smithfield Companies' shareholder rights  
agreement to provide that the shareholder rights agreement is inapplicable to   
(1) any transaction undertaken by Smithfield Foods, Acquisition or any of their 
"affiliates" or "associates" pursuant to the merger agreement or (2) any action 
taken by any Smithfield Companies shareholder pursuant to the voting agreements.
In addition, the amendment provides that (1) neither Smithfield Foods,          
Acquisition nor any of their "affiliates" or "associates" or any person that is 
a party to a voting agreement shall be deemed to be an "acquiring person" and   
(2) no "distribution date," "stock acquisition date" or "triggering event" shall
be deemed to have occurred as a result of any transaction undertaken in         
connection with the merger agreement or the execution of the voting agreements. 
The rights will be cancelled in the merger without any consideration.           

Dissenters' Rights                                                              

   Smithfield Companies' record shareholders (which we sometimes refer to as
"eligible holders") who comply with the procedures described below will be      
entitled to dissenters' rights under Article 15 of the Virginia Stock           
Corporation Act (which we sometimes refer to as the "Virginia corporate code"). 
The merger agreement provides, as a condition to Smithfield Foods' obligation to
complete the merger, that no more than 10% of our shareholders shall have       
perfected their dissenters' rights.                                             

     A VOTE IN FAVOR OF THE MERGER BY AN ELIGIBLE HOLDER WILL RESULT IN A WAIVER
OF THAT ELIGIBLE HOLDER'S DISSENTERS' RIGHTS.                                   

 The following discussion is only a summary and does not purport to be a
complete statement of                                                           

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the law pertaining to dissenters' rights under the Virginia corporate code. The 
text of Article 15 of the Virginia corporate code is reprinted in its entirety  
as Exhibit D to this proxy statement.                                           

   Eligible holders who follow the procedures set forth in Article 15 of the
Virginia corporate code will be entitled to receive payment of the "fair value" 
of their shares. Any eligible holder who wishes to exercise dissenters' rights  
should review the following discussion and Exhibit D carefully because the      
failure to comply in a timely and proper manner with the procedures specified   
may result in the loss of dissenters' rights under the Virginia corporate code. 

   An eligible holder wishing to exercise dissenters' rights must deliver to
Smithfield Companies, prior to or at the special meeting (but in any event      
before the vote is taken), a written notice of intent to demand payment for his 
shares (which we sometimes refer to as a "notice of intent"). An eligible holder
delivering a notice of intent (which we sometimes refer to as a "dissenting     
holder") must not vote his shares in favor of the merger or he will lose his    
dissenters' rights. All notices of intent should be sent or delivered to The    
Smithfield Companies, Inc., Attention: Secretary, The Smithfield Companies      
Building, Suite 203, 311 County Street, Portsmouth, Virginia 23704-3716.        

 If our shareholders approve the merger agreement, then, within ten days
after the effective time of the merger, Smithfield Companies shall deliver a    
dissenter's notice in writing to all dissenting holders. The dissenter's notice 
shall (1) state where the dissenting holders' payment demands shall be sent and 
where and when certificates shall be deposited, (2) set a date by which the     
surviving corporation must receive the payment demand and (3) any other         
information required by the Virginia corporate code. A dissenting holder to whom
a dissenters' notice is sent must demand payment within the time specified in   
the dissenter's notice, deposit his certificates in accordance with the terms of
the dissenter's notice and make the certifications required by the Virginia     
corporate code. If a dissenting holder fails to take these actions, the         
dissenting holder loses his dissenters' rights.                                 

 Within 30 days of Smithfield Companies' receipt of a demand for payment
from a dissenting holder, it must pay the dissenting holder its estimate of the 
fair value of the dissenting holders' shares, plus interest. With any payment,  
Smithfield Companies must provide its most recent year-end and interim financial
statements, an explanation of how Smithfield Companies calculated the fair value
of the shares and interest, a statement of the dissenting holder's right to     
continue to demand fair value for his shares and a copy of Article 15 of the    
Virginia corporate code. Smithfield Companies' payment obligation may be        
enforced by a dissenting holder on an expedited basis in a Virginia circuit     
court, if necessary.                                                            

     A dissenting holder who is not satisfied with the amount paid or offered by
Smithfield Companies must notify Smithfield Companies of the dissenting holder's
own estimate of the fair value of his shares and the amount of interest due     
(less any amount already received by the dissenting holder from Smithfield      
Companies). This notice must be given in writing within 30 days of the date that
Smithfield Companies made or offered to make payment for the dissenting holder's
shares.                                                                         

   If a dissenting holder's demand for payment remains unsettled, Smithfield
Companies must commence a proceeding to determine the fair value of the shares  
and accrued interest within 60 days of the receipt of the dissenting holder's   
payment demand. If Smithfield Companies fails to commence a proceeding in       
accordance with the Virginia corporate code, Smithfield Companies must pay the  
dissenting holder the amount demanded by the dissenting holder. The proceeding  
must be brought in a Virginia circuit court.                                    

   Dissenting holders should be aware that the fair value of their shares of
our common stock, as                                                            

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determined under Article 15 of the Virginia corporate code, could be more than, 
the same as or less than the merger consideration that would be paid to them    
under the merger agreement. The costs and expenses of the appraisal proceeding  
will be determined by the court and assessed against Smithfield Companies,      
unless the court determines that the dissenting holder did not act in good faith
in demanding payment of the fair value of his shares, in which case those costs 
and expenses may be assessed against the dissenting holder.                     

   Dissenting holders will only be entitled to receive payment in accordance
with Article 15 of the Virginia corporate code and will not be entitled to vote 
their shares of our common stock or exercise any other rights of a shareholder. 
A dissenting holder may withdraw his demand only with the consent of Smithfield 
Companies.                                                                      

The shares of any eligible holder who fails to perfect, or effectively
withdraws or loses, his right to dissent, as provided in the Virginia corporate 
code, will be converted into the right to receive the merger consideration of   
$8.50 per share of our common stock, without interest, in accordance with the   
merger agreement.                                                               

FAILURE TO FOLLOW THE STEPS REQUIRED BY ARTICLE 15 OF THE VIRGINIA    
CORPORATE CODE FOR PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF THOSE
RIGHTS. The preceding discussion summarizes for general information the         
dissenters' rights provisions of Article 15 of the Virginia corporate code. You 
are urged to consult Exhibit D, which sets forth in full Article 15 of the      
Virginia corporate code. This summary is qualified in its entirety by the full  
text of Article 15 of the Virginia corporate code, which is incorporated herein 
by reference.                                                                   

THE MERGER AGREEMENT

   The following is a summary of the material terms of the merger agreement.
The summary is qualified in its entirety by reference to the merger agreement, a
copy of which is attached to this proxy statement as Appendix A and is          
incorporated herein by reference.                                               

Structure and Effective Time                                                    

   The merger agreement provides for the merger of Acquisition with and into
Smithfield Companies upon the terms and subject to the conditions of the merger 
agreement. Smithfield Companies will survive the merger and continue to exist as
a wholly-owned subsidiary of Smithfield Foods. The merger will become effective 
at the time stated in the articles of merger to be filed with the Virginia State
Corporation Commission. We expect to complete the merger within three business  
days after the conditions to the merger have been satisfied. See "- Conditions  
to the Merger."                                                                 

Merger Consideration                                                            

The merger agreement provides that each share of Smithfield Companies'
common stock outstanding immediately prior to the effective time of the merger  
will be converted into and become exchangeable for an amount in cash equal to   
$8.50, without interest. However, shares of Smithfield Companies' common stock  
outstanding immediately prior to the effective time of the merger held by       
shareholders who have perfected their dissenters' rights under Virginia law     
shall not be converted into and become exchangeable for an amount in cash equal 
to $8.50, without interest. Rather, the shares of Smithfield Companies' common  
stock held by any dissenting shareholder shall represent only the right to      

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receive payment of the fair value of such shares in cash as determined under    
Virginia law. See "The Merger - Dissenters' Rights."                            

   All shares of Smithfield Companies' common stock held by Smithfield Foods
or Acquisition will be canceled at the effective time of the merger, and no     
payment will be made for those shares.                                          

Payment Procedures                                                              

Smithfield Foods may, at its election, act as the paying agent for the
merger or may select a bank, trust company or shareholder services firm to act  
as paying agent. The paying agent will make payment of the merger consideration 
in exchange for certificates representing shares of Smithfield Companies' common
stock. If Smithfield Foods does not act as the paying agent, it will provide the
paying agent, immediately prior to the effective time of the merger, the cash   
necessary to pay the merger consideration as and when needed after the merger.  
Promptly after the merger, the paying agent will send each shareholder of record
a letter of transmittal and instructions explaining how to send his or her stock
certificates to the paying agent. The paying agent will mail checks for the     
appropriate merger consideration, minus any withholding of taxes required by    
law, to Smithfield Companies' shareholders following the paying agent's receipt 
and processing of Smithfield Companies' stock certificates and properly         
completed transmittal documents.                                                

Treatment of Stock Options                                                      

Upon the completion of the merger, each option to acquire Smithfield  
Companies' common stock outstanding immediately prior to the effective time of  
the merger, whether vested or unvested, will automatically be canceled in return
for the right to receive an amount of cash equal to the excess, if any, of $8.50
over the exercise price of such option. Options to acquire Smithfield Companies'
common stock outstanding immediately prior to the effective time of the merger  
that have an exercise price equal to or greater than $8.50 will be canceled     
without any payment. The surviving corporation in the merger is required under  
the merger agreement to use its commercially reasonable efforts to provide      
checks representing any such payments at the closing of the merger.             

Representations and Warranties                                                  

   The merger agreement contains representations and warranties made by each
of the parties to the agreement. None of these representations and warranties   
will survive beyond the time the merger becomes effective.                      

   The merger agreement contains customary representations and warranties of
Smithfield Companies and Smithfield Foods as to, among other things:            

o  due organization,                                                        

 o  corporate authorization of the merger agreement and authorization to enter
into the transactions contemplated thereby,                           

o  the binding effect of the merger agreement,                              

o  governmental approvals required in connection with the transactions      
contemplated by the merger agreement,                                 

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o  conflicts, violations and defaults under (1) its charter and bylaws, (2) 
  any other agreements or instruments or (3) any judgments, orders or laws
resulting from the transactions contemplated by the merger agreement, 

o  brokers fees, commissions or similar fees in connection with the         
transactions contemplated by the merger agreement, and                

o  absence of material misstatements in or omissions from the information   
supplied for use in this proxy statement.                             

   In addition, the merger agreement contains representations and warranties
by Smithfield Companies as to, among other things:                              

o  good standing,                                                           

o  capitalization,                                                          

o  filings with the Securities and Exchange Commission,                     

o  material adverse changes or effects since March 31, 2000, except as      
 disclosed in prior filings with the Securities and Exchange Commission,

o  pending actions, suits and proceedings,                                  

o  ownership of tangible assets,                                            

o  material contracts,                                                      

o  labor matters,                                                           

o  employee benefit plans,                                                  

o  tax matters and compliance with relevant tax laws,                       

o  compliance with laws,                                                    

o  transactions with affiliates,                                            

o  environmental matters,                                                   

o  rights to intangible assets,                                             

o  accuracy of information supplied,                                        

o  undisclosed liabilities,                                                 

o  receipt of a fairness opinion from its financial advisor,                

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o  the required vote of its shareholders to approve the merger agreement and
the merger,                                                           

o  the applicability of state anti-takeover statutes or of anti-takeover    
    provisions in its organizational documents to Smithfield Foods, Smithfield
 Companies' common stock and the transactions contemplated by the merger
agreement, and                                                        

  o  the amendment of its shareholder rights agreement to render it inapplicable
to the merger agreement and the merger.                               

    The representations and warranties in the merger agreement are complicated
and not easily summarized. You are urged to read carefully the articles of the  
merger agreement entitled "Representations and Warranties."                     

Covenants; Conduct of Our Business Prior to the Merger                          

  Smithfield Companies has agreed that, prior to the effective time of the
merger, it and its subsidiaries will conduct their respective operations        
according to their ordinary and usual course of business consistent with past   
practice and use their reasonable best efforts to preserve intact their business
organizations, keep available the services of their officers and employees and  
preserve their relationships with customers, suppliers and others having        
business relationships with them. Except as otherwise permitted or disclosed    
under the merger agreement, Smithfield Companies and its subsidiaries will      
conduct their business in compliance with restrictions relating to the          
following:                                                                      

o  amending its articles of incorporation or bylaws,                        

 o  issuing capital stock, securities convertible into shares of capital stock
or rights to acquire capital stock,                                   

o  splitting, combining or reclassifying any shares of its capital stock,   

 o  declaring, setting aside or paying dividends or other distributions, other
   than the dividend declared by Smithfield Companies' board of directors on
March 2, 2001, in an amount equal to $.040 per share of Smithfield    
Companies' common stock,                                              

o  incurring or guaranteeing indebtedness,                                  

o  entering into or modifying contracts,                                    

o  authorizing capital expenditures,                                        

o  making loans, advances, capital contributions or investments,            

o  selling securities of third parties,                                     

o  adopting or amending pension, stock, employee benefit and other plans,   
arrangements and policies for the benefit of any director, officer or 
employee,                                                             

o  increasing the compensation of officers, employees and directors,        

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o  acquiring or disposing of material assets,                               

o  amending accounting policies and procedures,                             

o  making tax elections and settling material tax liabilities,              

o  paying material claims,                                                  

o  holding meetings of shareholders, and                                    

o  taking actions that would result in any of its conditions to closing not 
being satisfied.                                                      

     The covenants in the merger agreement relating to the conduct of Smithfield
Companies' business are complicated and not easily summarized. You are urged to 
read carefully the section of the merger agreement entitled "Conduct of the     
Business of Smithfield Companies."                                              

     Other Covenants. The merger agreement contains a number of mutual covenants
of Smithfield Companies and Smithfield Foods, including covenants relating to:  

o  cooperating in the preparation and filing of this proxy statement,       

o  providing accurate information for inclusion in this proxy statement,    

 o  using their respective best efforts to do, or cause to be done, all things
    required to consummate and make effective the transactions contemplated by
the merger agreement, and                                             

o  cooperating in obtaining governmental approvals necessary to the         
consummation of the merger.                                           

The merger agreement also contains covenants of Smithfield Companies  
relating to:                                                                    

  o  causing the trustee of its employee stock ownership plan to comply with the
pass-through voting requirements of the employee stock ownership plan,

o  soliciting proxies from its shareholders in favor of the approval of the 
merger agreement and the merger,                                      

o  redeeming the rights issued in connection with its shareholder rights    
    agreement, amending its shareholder rights agreement and the taking of any
action that would allow any person (other than Smithfield Foods or    
Acquisition) to be the beneficial owner of 15% or more of Smithfield  
Companies' common stock without triggering the provisions of the      
shareholder rights agreement, and                                     

 o  remediating certain environmental matters in accordance with applicable or
relevant and appropriate requirements under environmental laws.       

In addition, Smithfield Foods has agreed to vote all of the shares of 
Smithfield Companies' common stock over which it, directly or indirectly,       
exercises voting control for approval of the merger agreement and pay to certain
non-executive employees of Smithfield Companies a severance benefit in          

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the event the employee is terminated within eight weeks of the effective time of
the merger.                                                                     

No Solicitation                                                                 

    Prior to the effective time of the merger, Smithfield Companies has agreed
not to solicit, initiate or encourage the submission of proposals or offers     
relating to any acquisition or purchase of all or (other than in the ordinary   
course of business) a substantial portion of the assets of, or any equity       
interest in, it or its subsidiaries or any business combination involving it or 
its subsidiaries. Smithfield Companies has also agreed not to participate in any
negotiations regarding, or furnish to any other person any non-public           
information with respect to, or otherwise cooperate in any way with, or assist  
or participate in, facilitate or encourage, any effort or attempt by any other  
person with respect to any such proposals.                                      

   Smithfield Companies may, however, participate in negotiations regarding,
or furnish to any other person any non-public information with respect to, or   
otherwise cooperate in any way with, or assist or participate in, facilitate or 
encourage, any effort or attempt by any other person with respect to any such   
proposals in response to an unsolicited written proposal that Smithfield        
Companies' board of directors believes, in good faith after consultation with   
its financial advisors, is more favorable, from a financial point of view, to   
Smithfield Companies' shareholders than the proposal described in the merger    
agreement.                                                                      

    Smithfield Companies has agreed to promptly advise Smithfield Foods if any
proposal, offer, inquiry or contact with any person is made and provide         
Smithfield Foods with detailed information in connection therewith.             

Indemnification                                                                 

   The merger agreement provides that Smithfield Foods will, for a period of
six years following the effective time of the merger, cause Smithfield Companies
to maintain all rights of indemnification existing in favor of Smithfield       
Companies' directors and officers on terms no less favorable than those provided
in Smithfield Companies' articles of incorporation and bylaws on the date of the
merger agreement with respect to matters occurring prior to the effective time  
of the merger. See "The Merger - Interests of Our Directors and Executive       
Officers in the Merger."                                                        

Our Board's Recommendation                                                      

Smithfield Companies' board of directors agreed to recommend to its   
shareholders that they approve the merger agreement and the merger and the      
transactions contemplated thereby.                                              

Conditions to the Merger                                                        

   The parties' respective obligations to complete the merger are subject to
the satisfaction or waiver of each of the following conditions:                 

o  approval of the merger agreement and the merger by Smithfield Companies' 
shareholders by the requisite vote under Virginia law,                

o  no order, decree or injunction shall have been enacted, entered or       
promulgated that prohibits the consummation of the merger,            

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o  all notices, reports and other filings required to be made prior to the  
effective time of the merger with, and all consents, registrations,   
    approvals, permits and authorizations required to be obtained prior to the
  effective time of the merger from, any governmental authority shall have
   been made or obtained and become final, except for those that the failure
to make or to obtain are not reasonably likely to (1) have a material 
    adverse effect on Smithfield Foods or Smithfield Companies, as applicable,
or (2) provide a reasonable basis to conclude that the parties to the 
     merger agreement or any of their affiliates or directors, officers, agents,
    advisors or other representatives would be subject to the risk of criminal
or material financial liability,                                      

o  each of the consulting agreements with Messrs. Fuller and Pruden shall   
remain in full force and effect, and                                  

  o  all necessary and material governmental, regulatory and third party lender,
  customer or other clearances, consents, licenses or approvals shall have
been received.                                                        

The obligations of Smithfield Companies to consummate the merger are  
further subject to the following conditions:                                    

 o  (1) Smithfield Foods' representations and warranties that are qualified by
     materiality must be true and correct in all respects at the time the merger
     is to become effective and Smithfield Foods' representations and warranties
   not so qualified must be true and correct in all material respects at the
    time the merger is to become effective, as if made at and as of that time,
   and (2) Smithfield Foods must have performed in all material respects all
of its obligations under the merger agreement required to be performed
     before the effective time of the merger, and Smithfield Companies must have
     received a certificate of the president or any vice president of Smithfield
Foods to the effect that each of (1) and (2) have been satisfied.     

  The obligations of Smithfield Foods to consummate the merger are further
subject to the following conditions:                                            

o  during the period from the date of the merger agreement to the effective 
time of the merger, there must not have occurred any material adverse 
 change in the business, financial condition or results of operations of
Smithfield Companies,                                                 

o  (1) the representations and warranties made by Smithfield Companies that 
  are qualified by materiality must be true and correct in all respects at
the time the merger is to become effective and Smithfield Companies'  
     representations and warranties not so qualified must be true and correct in
    all material respects at the time the merger is to become effective, as if
made at and as of that time, and (2) Smithfield Companies must have   
    performed in all material respects all of its obligations under the merger
     agreement required to be performed before the effective time of the merger,
   and Smithfield Foods must have received a certificate of the president or
   any vice president of Smithfield Companies to the effect that each of (1)
and (2) have been satisfied,                                          

o  the holders of not more than ten percent of the shares of Smithfield     
    Companies' common stock entitled to vote at the special meeting shall have
provided written notice of their intent to exercise their dissenters' 
rights pursuant to Virginia law, and                                  

o  Smithfield Foods shall be satisfied, in its sole and absolute discretion,
 with its due diligence investigation of Smithfield Companies' business,
financial condition, results of operations and                        

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prospects.                                                            

Termination                                                                     

   The merger agreement may be terminated, and the transactions contemplated
by the merger agreement abandoned, at any time prior to the closing of the      
merger, whether before or after approval of the merger agreement and the merger 
by Smithfield Companies' shareholders:                                          

o  by mutual written agreement of Smithfield Companies and Smithfield Foods,

o  by either Smithfield Companies or Smithfield Foods if the merger has not 
    become effective on or before September 30, 2001, except that the right to
terminate the merger agreement for this reason is not available to any
  party whose failure to fulfill any obligation under the merger agreement
  has been the cause of or resulted in the failure of the merger to become
effective by such time,                                               

o  by either Smithfield Companies or Smithfield Foods if there is a final,  
    nonappealable governmental order or other action restraining, enjoining or
otherwise prohibiting the merger,                                     

 o  by Smithfield Foods if the merger agreement fails to receive the requisite
vote of Smithfield Companies' shareholders at the special meeting,    

 o  by Smithfield Foods if Smithfield Companies materially breaches any of its
     representations, warranties, covenants or other agreements contained in the
    merger agreement, which breach is not cured within ten business days after
    Smithfield Companies receives notice of such breach from Smithfield Foods,

o  by Smithfield Foods if Smithfield Companies' board of directors withdraws
its recommendation of the merger agreement,                           

o  by Smithfield Foods if Smithfield Companies' aggregate costs and expenses
in connection with certain environmental remediation exceeds $250,000,

 o  by Smithfield Companies if Smithfield Foods materially breaches any of its
     representations, warranties, covenants or other agreements contained in the
    merger agreement, which breach is not cured within ten business days after
    Smithfield Foods receives notice of such breach from Smithfield Companies,
or                                                                    

  o  by Smithfield Companies if it receives a bona fide proposal with respect to
the acquisition of all of its outstanding capital stock, or all or    
substantially all of its assets, that Smithfield Companies' board of  
 directors believes, in good faith after consultation with its financial
    advisors, is more favorable, from a financial point of view, to Smithfield
Companies' shareholders than the proposal set forth in the merger     
agreement, provided that                                              

     o  Smithfield Companies complies with its obligation to promptly advise
         Smithfield Foods of any such proposal, inform Smithfield Foods of all
        the terms and conditions of any such proposal and furnish Smithfield
Foods with copies of any written proposal, and              

       o  Smithfield Foods does not make, within five business days of receiving
notice of such                                              

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    proposal, an offer that Smithfield Companies' board of directors
 believes, in good faith after consultation with its financial
          advisors, is at least as favorable, from a financial point of view, to
Smithfield Companies' shareholders as such proposal.        

In the event the merger agreement is terminated as described above, no
provision of the merger agreement will survive other than provisions relating to
(1) Smithfield Foods' obligation to keep confidential and not to use certain    
information obtained from Smithfield Companies, (2) each party's obligation to  
pay all costs and expenses incurred by it in connection the transactions        
contemplated by the merger agreement and (3) each party's obligation to pay a   
termination fee to the other party in certain circumstances described below.    

Termination Fees and Expenses                                                   

  Pursuant to the merger agreement, Smithfield Companies must promptly pay
Smithfield Foods (1) a termination fee of $1.0 million and (2) all out-of-pocket
expenses incurred by or on behalf of Smithfield Foods in connection with the    
merger agreement and the merger if the merger agreement is terminated:          

o  by Smithfield Foods if the merger has not occurred on or before September
     30, 2001, because of the willful failure of Smithfield Companies to fulfill
any of its obligations under the merger agreement,                    

o  by Smithfield Foods because of Smithfield Companies' willful and material
    breach of any representation, warranty, covenant or agreement that has not
 been cured within ten business days following receipt of notice of such
breach by Smithfield Companies,                                       

o  by Smithfield Foods because of the failure of Smithfield Companies       
shareholders to approve the merger agreement,                         

o  by Smithfield Foods if Smithfield Companies' board of directors withdraws
its recommendation of the merger agreement, or                        

o  by Smithfield Foods because Smithfield Companies has received a bona fide
    proposal with respect to the acquisition of all of its outstanding capital
stock, or all or substantially all of its assets, that Smithfield     
  Companies' board of directors believes, in good faith after consultation
   with its financial advisors, is more favorable, from a financial point of
    view, to Smithfield Companies' shareholders than the proposal set forth in
the merger agreement and Smithfield Foods does not make at least as   
favorable a proposal within five business days after receiving notice 
thereof.                                                              

Pursuant to the merger agreement, Smithfield Companies' liability to  
Smithfield Foods is limited to Smithfield Foods' proven actual damages, not to  
exceed $250,000, if Smithfield Foods terminates the merger agreement because:   

o  the merger has not occurred on or before September 30, 2001, because of  
     Smithfield Companies' failure (other than a willful failure) to fulfill any
of its obligations under the merger agreement, or                     

o  Smithfield Companies materially breaches (other than in connection with a
willful breach) any                                                   

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 representation, warranty, covenant or agreement contained in the merger
agreement, and such breach has not been cured within ten business days
following Smithfield Companies' receipt of notice of such breach.     

Pursuant to the merger agreement, Smithfield Foods must promptly pay  
Smithfield Companies (1) a termination fee of $1.0 million and (2) all          
out-of-pocket expenses incurred by or on behalf of Smithfield Companies in      
connection with the merger agreement and the merger if the merger agreement is  
terminated:                                                                     

o  by Smithfield Companies if the merger has not occurred on or before      
   September 30, 2001, because of the willful failure of Smithfield Foods to
fulfill any of its obligations under the merger agreement, or         

o  by Smithfield Companies because of Smithfield Foods' willful and material
    breach of any representation, warranty, covenant or agreement that has not
 been cured within ten business days following receipt of notice of such
breach by Smithfield Foods.                                           

     Pursuant to the merger agreement, Smithfield Foods' liability to Smithfield
Companies is limited to Smithfield Companies' proven actual damages, not to     
exceed $250,000, if Smithfield Companies terminates the merger agreement        
because:                                                                        

o  the merger has not occurred on or before September 30, 2001, because of  
    Smithfield Foods' failure (other than a willful failure) to fulfill any of
its obligations under the merger agreement, or                        

o  Smithfield Foods materially breaches (other than in connection with a    
willful breach) any representation, warranty, covenant or agreement   
contained in the merger agreement, and such breach has not been cured 
   within ten business days following Smithfield Foods' receipt of notice of
such breach.                                                          

   Other than as set forth above, (1) neither party will be entitled to seek
other damages or remedies from the other party in connection with the           
termination of the merger agreement and (2) the parties to the merger agreement 
will each bear their respective costs and expenses related to the merger        
agreement and the merger.                                                       

 VOTING AGREEMENTS

     Concurrently with the execution of the merger agreement, Richard S. Fuller,
Peter D. Pruden, III and James L. Cresimore, each a director of Smithfield      
Companies, entered into voting agreements under which, among other things, each 
such person agreed to vote all shares of Smithfield Companies common stock over 
which they exercise voting control for approval of the merger. A total of       
1,201,932 shares of Smithfield Companies' common stock, representing in the     
aggregate approximately 57 percent of the outstanding shares of Smithfield      
Companies' common stock, are subject to the voting agreements. Combined with the
shares of Smithfield Companies' common stock beneficially owned by SF           
Investments, Inc., a wholly-owned subsidiary of Smithfield Foods, shares        
representing approximately 77 percent of the total outstanding shares of        
Smithfield Companies' common stock have agreed to vote in favor of the merger.  
Accordingly, we expect that the merger agreement will be approved at the special
meeting, without the votes of any additional shareholders.                      

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   The voting agreements terminate automatically upon the termination of the
merger agreement and the payment of any amounts payable by Smithfield Companies 
to Smithfield Foods in connection with any such termination. The foregoing      
summary is qualified in its entirety by reference to the voting agreements, the 
form of which is attached to this proxy statement as Appendix C and is          
incorporated herein by reference.                                               

STOCK OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS

The following table shows, as of ____________, 2001 (unless otherwise 
indicated), the direct and indirect beneficial ownership of Smithfield          
Companies' common stock by each director of Smithfield Companies; all directors 
as a group; and all persons beneficially owing more than 5% of Smithfield       
Companies' common stock (based upon filings with the SEC and to Smithfield      
Companies' knowledge):                                                          

Name and Address                           Shares of Stock        Percent of    
of Beneficial Owner                        Beneficially Owned     Class         
--------------------------------------------------------------------------------

Bernard C. Baldwin, III                                                         
800 Main Street, Suite 400                                                      
Lynchburg, VA 24505...................     15,000 (1)                *          

Frank H. Buhler                                                                 
P.O. Box 680                                                                    
Lynchburg, VA 24505...................     30,040 (2)              1.4%         

James L. Cresimore                                                              
P.O. Box 17743                                                                  
Raleigh, NC 27619.....................     514,236 (3)            23.1%         

Richard S. Fuller                                                               
311 County Street                                                               
Portsmouth, VA 237045.................     377,066 (4)            16.9%         

R. Scott Morgan                                                                 
5716 High Street West                                                           
Portsmouth, VA 23703..................     2,667                     *          

Peter D. Pruden, III                                                            
311 County Street                                                               
Portsmouth, VA 237045.................     392,030 (5)            17.6%         

All Directors and Executive Officers                                            
as a Group (6 Persons)..............     1,331,039              59.7%       

SF Investments, Inc.                                                            
1105 North Market Street                                                        
Wilmington, DE 19899..................     428,496                19.2%         

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Quest Advisory Corp.                                                            
1414 Avenue of the Americas                                                     
New York, NY 10019....................     148,400                 6.7%         

--------                                                                        

(*) Less than 1%.                                                     

(1) Includes 10,000 shares subject to presently exercisable options.  

     (2) Includes 9,960 shares owned by Mr. Buhler's wife as to which Mr. Buhler
disclaims beneficial ownership and as to which Mr. Buhler's wife has sole voting
power and investment power. Includes 10,000 shares subject to presently         
exercisable stock options.                                                      

 (3) Includes 7,000 shares owned by Mr. Cresimore's wife as to which Mr.
Cresimore disclaims beneficial ownership and as to which Mr. Cresimore's wife   
has sole voting power and investment power. Includes 10,000 shares subject to   
presently exercisable stock options.                                            

   (4) Includes 35,000 shares subject to presently exercisable stock options
and 400 shares owned by Mr. Fuller's wife as to which Mr. Fuller disclaims      
beneficial ownership and as to which Mr. Fuller's wife has sole voting power and
investment power. Includes 17,666 shares in which Mr. Fuller had a vested       
interest pursuant to Smithfield Companies' Employee Stock Ownership Plan over   
which he exercises voting power but as to which he does not exercise dispositive
power.                                                                          

   (5) Includes 25,000 shares subject to presently exercisable stock options
and 4,000 shares held as custodian under the Uniform Gift to Minors Act.        
Includes 14,454 shares in which Mr. Pruden had a vested interest pursuant to    
Smithfield Companies' Employee Stock Ownership Plan over which he exercises     
voting power but as to which he does not exercise dispositive power.            

 SHAREHOLDER PROPOSALS

If for any reason the merger agreement is terminated (other than in   
connection with Smithfield Companies' execution of an agreement relating to a   
more favorable proposal), Smithfield Companies will hold its annual meeting of  
shareholders for 2001 as soon as possible following the termination of the      
merger agreement. Any proposal that a Smithfield Companies shareholder wishes to
have included in Smithfield Companies' proxy materials for any such annual      
meeting of shareholders to be held in 2001 must be received at the main office  
of Smithfield Companies at 311 County Street, Suite 203, Portsmouth, Virginia   
23704-3716, a reasonable time before Smithfield Companies begins to print and   
mail its proxy materials. Smithfield Companies' board of directors reviews each 
proposal received to determine if it satisfies the criteria established by      
Smithfield Companies' bylaws and applicable law for inclusion in Smithfield     
Companies' proxy materials.                                                     

 WHERE YOU CAN FIND MORE INFORMATION

Both Smithfield Companies and Smithfield Foods are subject to the     
informational requirements of the Securities Exchange Act of 1934, as amended.  
Smithfield Companies and Smithfield Foods file reports, proxy statements and    
other information with the SEC. You may read and copy these reports, proxy      
statements and other information at the SEC's Public Reference Section at 450   
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the   
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains an Internet website, located at www.sec.gov, that contains   
reports, proxy statements and other information regarding companies and         
individuals that file electronically with the SEC. You may also obtain filed    
documents from commercial                                                       

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document retrieval services (some of which also provide on-line delivery).      

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows Smithfield Companies to "incorporate by reference"     
information into this proxy statement. This means that Smithfield Companies can 
disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is considered
to be a part of this proxy statement, except for any information that is        
superseded by information that is included directly in this document.           

  Smithfield Companies incorporates by reference into this proxy statement
the documents listed below that it has filed with the SEC (File No. 0-17084).   
They contain important information about Smithfield Companies and its financial 
condition.                                                                      

Smithfield Companies' SEC                                                       
Filings                                             Period                      
------------------------------                      -----------                 
Annual Report on Form 10-K...................       For the fiscal year ended   
                                                   March 31, 2000, as filed on
                                     June 27, 2000

Quarterly Reports on Form 10-Q...............       For the fiscal quarters     
                                            ended June 30, 2000,
                                               September 30, 2000, and
                                                   December 31, 2000, as filed
                                                    on August 14, 2000, November
                                                14, 2000 and February 5,
                                          2001, respectively

Current Reports on Form 8-K..................       Filed on April 27, 2001, and
                                   May 4, 2001

Proxy Statement on Schedule 14A..............       Filed on June 27, 2000      

            Any statement contained in a document incorporated or deemed to be
incorporated by reference in this proxy statement will be deemed to be modified 
or superseded for purposes of this proxy statement to the extent that a         
statement contained herein or in any other subsequently filed document which    
also is or is deemed to be incorporated by reference in this proxy statement    
modifies or supersedes that statement. Any statement so modified or superseded  
will not be deemed, except as so modified or superseded, to constitute a part of
this proxy statement.                                                           

         Any person receiving a copy of this proxy statement may obtain,
without charge, upon written or oral request, a copy of any of the documents    
incorporated by reference except for the exhibits to such documents (other than 
the exhibits expressly incorporated in those documents by reference). Requests  
should be directed to: Secretary, The Smithfield Companies, The Smithfield      
Companies Building, Suite 203, 311 County Street, Portsmouth, Virginia          
23704-3716. A copy will be provided by first class mail or other equally prompt 
means within one business day after receipt of your request.                    

          WE HAVE AUTHORIZED NO ONE TO GIVE YOU ANY INFORMATION OR TO MAKE
ANY REPRESENTATION ABOUT THE MERGER OR OUR COMPANY THAT DIFFERS FROM OR ADDS TO 
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT OR IN THE DOCUMENTS WE HAVE   
PUBLICLY FILED WITH THE SEC. THEREFORE, IF ANYONE SHOULD GIVE YOU ANY DIFFERENT 
OR ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT.                           

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             THE INFORMATION CONTAINED IN THIS PROXY STATEMENT SPEAKS ONLY AS OF
THE DATE INDICATED ON THE COVER OF THIS PROXY STATEMENT UNLESS THE INFORMATION  
SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.                               

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                                                                      Appendix A
                                                                      ----------

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

 SMITHFIELD FOODS, INC.,

TSCI ACQUISITION, INC.

 AND

THE SMITHFIELD COMPANIES, INC.

Dated as of April 30, 2001

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                                                 TABLE OF CONTENTS                                                 
                                                 -----------------                                                 

                                                                                                               PAGE
                                                                                                               ----
                                                                                                                   
ARTICLE I  DEFINITIONS..........................................................................................A-2
         Section 1.1.      Agreement............................................................................A-2
         Section 1.2.      Certificates.........................................................................A-2
         Section 1.3.      Closing; Closing Date................................................................A-2
         Section 1.4.      Code.................................................................................A-2
         Section 1.5.      Company..............................................................................A-2
         Section 1.6.      Company Benefit Plan.................................................................A-2
         Section 1.7.      Company Common Stock.................................................................A-2
         Section 1.8.      Company Group........................................................................A-2
         Section 1.9.      Company SEC Reports..................................................................A-3
         Section 1.10.     Confidentiality Agreement............................................................A-3
         Section 1.11.     Consulting Agreements................................................................A-3
         Section 1.12.     Contracts............................................................................A-3
         Section 1.13.     Dissenting Shares....................................................................A-3
         Section 1.14.     Effective Time.......................................................................A-3
         Section 1.15.     ERISA................................................................................A-3
         Section 1.16.     Exchange Act.........................................................................A-4
         Section 1.17.     Ewing................................................................................A-4
         Section 1.18.     Funded Debt..........................................................................A-4
         Section 1.19.     GAAP.................................................................................A-4
         Section 1.20.     Governmental Authority...............................................................A-4
         Section 1.21.     IRS..................................................................................A-4
         Section 1.22.     Knowledge of the Company.............................................................A-4
         Section 1.23.     Law .................................................................................A-4
         Section 1.24.     Material Adverse Effect..............................................................A-5
         Section 1.25.     Merger...............................................................................A-5
         Section 1.26.     Merger Consideration.................................................................A-5
         Section 1.27.     Merger Subsidiary....................................................................A-5
         Section 1.28.     Nasdaq...............................................................................A-5
         Section 1.29.     Parent...............................................................................A-5
         Section 1.30.     Partnership; Partnerships............................................................A-5
         Section 1.31.     Paying Agent.........................................................................A-6
         Section 1.32.     Permits..............................................................................A-6
         Section 1.33.     Plan of Merger.......................................................................A-6
         Section 1.34.     Proxy Statement......................................................................A-6
         Section 1.35.     Rights; Rights Agreement.............................................................A-6
         Section 1.36.     SEC .................................................................................A-6
         Section 1.37.     Securities Act.......................................................................A-6
         Section 1.38.     Special Meeting......................................................................A-6
         Section 1.39.     Subsidiary; Subsidiaries.............................................................A-7
         Section 1.40.     Taxes................................................................................A-7

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         Section 1.41.     Tax Returns..........................................................................A-7
         Section 1.42.     VSCA.................................................................................A-7

ARTICLE II  THE MERGER..........................................................................................A-8
         Section 2.1.      The Merger...........................................................................A-8
         Section 2.2.      Exchange of Certificates.............................................................A-9
         Section 2.3.      Dissenting Shares...................................................................A-12

ARTICLE III  SHAREHOLDER APPROVAL; CLOSING.....................................................................A-13
         Section 3.1.      Shareholder Approval................................................................A-13
         Section 3.2.      Time and Place of Closing...........................................................A-14

ARTICLE IV  REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.....................................A-14
         Section 4.1.      Organization and Authority..........................................................A-14
         Section 4.2.      Authority Relative to this Agreement................................................A-14
         Section 4.3.      Consents and Approvals; No Violations...............................................A-15
         Section 4.4.      Information Supplied................................................................A-16
         Section 4.5.      Fees and Expenses of Brokers and Others.............................................A-16

ARTICLE V  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................................A-17
         Section 5.1.      Organization and Authority of the Company Group.....................................A-17
         Section 5.2.      Capitalization......................................................................A-18
         Section 5.3.      Authority Relative to this Agreement................................................A-19
         Section 5.4.      Consents and Approvals; No Violations...............................................A-20
         Section 5.5.      Reports.............................................................................A-21
         Section 5.6.      Absence of Certain Events...........................................................A-22
         Section 5.7.      Proxy Statement.....................................................................A-23
         Section 5.8.      Litigation..........................................................................A-24
         Section 5.9.      Title to and Sufficiency of Assets..................................................A-24
         Section 5.10.     Contracts...........................................................................A-25
         Section 5.11.     Labor Matters.......................................................................A-26
         Section 5.12.     Employee Benefit Plans..............................................................A-27
         Section 5.13.     Tax Matters.........................................................................A-29
         Section 5.14.     Compliance with Law.................................................................A-32
         Section 5.15.     Transactions With Affiliates........................................................A-32
         Section 5.16.     Environmental Conditions............................................................A-33
         Section 5.17.     Insurance...........................................................................A-36
         Section 5.18.     Intellectual Property...............................................................A-36
         Section 5.19.     Fees and Expenses of Brokers and Others.............................................A-37
         Section 5.20.     Accuracy of Information.............................................................A-37
         Section 5.21.     Absence of Undisclosed Liabilities..................................................A-37
         Section 5.22.     Opinion of Financial Advisor........................................................A-38
         Section 5.23.     Vote Required.......................................................................A-38
         Section 5.24.     State Takeover Statutes.............................................................A-38

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         Section 5.25.     Rights Agreement....................................................................A-39

ARTICLE VI  COVENANTS..........................................................................................A-39
         Section 6.1.      Conduct of the Business of the Company..............................................A-39
         Section 6.2.      No Solicitation.....................................................................A-43
         Section 6.3.      The Proxy Statement.................................................................A-44
         Section 6.4.      Access to Information; Confidentiality Agreement....................................A-45
         Section 6.5.      Best Efforts........................................................................A-46
         Section 6.6.      Consents............................................................................A-47
         Section 6.7.      Public Announcements................................................................A-47
         Section 6.8.      Employment Matters..................................................................A-47
         Section 6.9.      Stock Options.......................................................................A-48
         Section 6.10.     Letter of the Company's Accountants.................................................A-48
         Section 6.11.     Opinions of Financial Advisors......................................................A-48
         Section 6.12.     Indemnification.....................................................................A-49
         Section 6.13.     Rights Agreement....................................................................A-49
         Section 6.14.     Certain Environmental Matters.......................................................A-49

ARTICLE VII  CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER................................................A-50
         Section 7.1.      Conditions Precedent to Each Party's Obligation to Effect the Merger................A-50
         Section 7.2.      Conditions Precedent to Obligations of the Company..................................A-51
         Section 7.3.      Conditions Precedent to Obligations of Parent and Merger Subsidiary.................A-52

ARTICLE VIII  TERMINATION; AMENDMENT; WAIVER...................................................................A-54
         Section 8.1.      Termination.........................................................................A-54
         Section 8.2.      Effect of Termination...............................................................A-56
         Section 8.3.      Termination Fee.....................................................................A-56
         Section 8.4.      Amendment...........................................................................A-58
         Section 8.5.      Extension; Waiver...................................................................A-59

ARTICLE IX  MISCELLANEOUS......................................................................................A-59
         Section 9.1.      Survival of Representations and Warranties..........................................A-59
         Section 9.2.      Entire Agreement; Assignment........................................................A-59
         Section 9.3.      Notices.............................................................................A-59
         Section 9.4.      Governing Law.......................................................................A-61
         Section 9.5.      Descriptive Headings................................................................A-61
         Section 9.6.      Parties in Interest.................................................................A-61
         Section 9.7.      Counterparts........................................................................A-61
         Section 9.8.      Specific Performance................................................................A-61
         Section 9.9.      Fees and Expenses...................................................................A-61
         Section 9.10.     Severability........................................................................A-62

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EXHIBITS                        

Exhibit 1.11A           Parties to Consulting Agreements                        
Exhibit 1.11B           Form of Consulting Agreement                            
Exhibit 1.22            Knowledge of the Company                                
Exhibit 1.30            Partnerships of the Company                             
Exhibit 1.33            Plan of Merger                                          
Exhibit 1.39            Subsidiaries of the Company                             
Exhibit 3.1A            Certain Shareholders of the Company                     
Exhibit 3.1B            Form of Shareholder Letter                              
Exhibit 4.3             Parent and Merger Subsidiary Required Consents          
Exhibit 5.2             Company Options, Warrants, Subscriptions or Other Rights
Exhibit 5.4             Company Required Consents                               
Exhibit 5.6             Adverse Changes Affecting the Company                   
Exhibit 5.8             Company Litigation                                      
Exhibit 5.9             Certain Permitted Liens                                 
Exhibit 5.11            Company Labor Matters                                   
Exhibit 5.12            Company Benefit Plans                                   
Exhibit 5.13            Tax Matters Concerning the Company                      
Exhibit 5.15            Transactions With Affiliates by the Company             
Exhibit 5.16            Environmental Conditions                                
Exhibit 6.1             Conduct of the Business of the Company                  
Exhibit 6.8             Certain Employees of the Company                        
Exhibit 6.14            Certain Environmental Matters                           

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AGREEMENT AND PLAN OF MERGER

                AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2001, by
and among SMITHFIELD FOODS, INC., a Virginia corporation ("Parent"), TSCI       
ACQUISITION, INC., a Virginia corporation and wholly owned subsidiary of Parent 
("Merger Subsidiary") and THE SMITHFIELD COMPANIES, INC., a Virginia corporation
(the "Company").                                                                

RECITALS
--------

               WHEREAS, the respective Boards of Directors of the Company,
Parent and Merger Subsidiary have determined that it is in the best interests of
their respective shareholders that the businesses and operations of the Company 
and Parent be combined; and                                                     

                WHEREAS, the parties have determined that the most practical
manner to give effect to such combination is through the merger of Merger       
Subsidiary with and into the Company (the "Merger"), with the Company to be the 
surviving corporation of such Merger; and                                       

              WHEREAS, pursuant to the Merger, each outstanding share of
Company Common Stock (as hereinafter defined) will be converted into the right  
to receive the Merger Consideration (as hereinafter defined) upon the terms and 
conditions set forth in this Agreement.                                         

               NOW, THEREFORE, in consideration of the premises, which are
incorporated into and made part of this Agreement, and of the mutual            
representations, warranties, covenants, agreements and conditions set forth     
herein and for other good and valuable consideration, the receipt and           
sufficiency of which are hereby acknowledged, the parties hereby agree as       
follows:                                                                        

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 ARTICLE I

 DEFINITIONS

        Section 1.1.      Agreement. "Agreement" shall mean this Agreement and
Plan of Merger, together with the Plan of Merger and other Exhibits attached    
hereto, as amended from time to time in accordance with the terms hereof.       

       Section 1.2.      Certificates. "Certificates" shall have the meaning
given in Section 2.2 hereof.                                                    

   Section 1.3.      Closing; Closing Date. "Closing" shall mean the
closing conference held pursuant to Section 3.2 hereof, and "Closing Date" shall
mean the date on which the Closing occurs.                                      

         Section 1.4.      Code. "Code" shall mean, as appropriate, the Internal
Revenue Code of 1954 or of 1986, each as amended.                               

Section 1.5.      Company. "Company" shall mean The Smithfield
Companies, Inc., a Virginia corporation.                                        

      Section 1.6.      Company Benefit Plan. "Company Benefit Plan" shall
have the meaning given in Section 5.12 hereof.                                  

      Section 1.7.      Company Common Stock. "Company Common Stock" shall
mean the common stock, no par value, of the Company.                            

 Section 1.8.      Company Group. "Company Group" shall mean the
Company, its Subsidiaries and the Partnerships in which it has an interest.     

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         Section 1.9.      Company SEC Reports. "Company SEC Reports" shall mean
(a) the Company's Annual Reports on Form 10-K for the fiscal years ended March  
31, 1998, March 31, 1999 and March 31, 2000, and (b) all documents filed by the 
Company with the SEC pursuant to Sections 13(a) and 13(c) of the Exchange Act,  
any definitive proxy statements filed pursuant to Section 14 of the Exchange Act
and any report filed pursuant to Section 15(d) of the Exchange Act following the
filing of the Company's Annual Report on Form 10-K for the fiscal year ended    
March 31, 2000.                                                                 

Section 1.10.     Confidentiality Agreement. "Confidentiality 
Agreement" shall mean the letter agreement, dated February 28, 2001, between    
Parent and the Company.                                                         

        Section 1.11.     Consulting Agreements. "Consulting Agreements" shall
mean the agreements, dated as of the date hereof and effective as of the        
Effective Time, between Parent and each person listed on Exhibit 1.11A attached 
hereto, which agreements are in the form of Exhibit 1.11B attached hereto.      

Section 1.12.     Contracts. "Contracts" shall mean contracts,
agreements, leases, licenses, arrangements, understandings and commitments,     
whether written or oral.                                                        

         Section 1.13.     Dissenting Shares. "Dissenting Shares" shall have the
meaning given in Section 2.3 hereof.                                            

   Section 1.14.     Effective Time. "Effective Time" shall have the
meaning given in Section 3.1 hereof.                                            

     Section 1.15.     ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended.                                        

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Section 1.16.     Exchange Act. "Exchange Act" shall mean the 
Securities Exchange Act of 1934, as amended.                                    

        Section 1.17.     Ewing. "Ewing" shall mean Ewing Monroe Bemiss & Co.,
financial advisors to the Company.                                              

     Section 1.18.     Funded Debt. "Funded Debt" shall have the meaning
given in Section 6.1 hereof.                                                    

         Section 1.19.     GAAP. "GAAP" shall mean generally accepted accounting
principles as in effect in the United States of America at the time of the      
preparation of the subject financial statement.                                 

    Section 1.20.     Governmental Authority. "Governmental Authority"
shall mean any federal, state, provincial, municipal or other governmental      
department, commission, board, bureau, agency or instrumentality, or any court, 
in each case whether of the United States, any of its possessions or            
territories, or of any foreign nation.                                          

        Section 1.21.     IRS.  "IRS" shall mean the Internal Revenue Service.

        Section 1.22.     Knowledge of the Company. "Knowledge of the Company"
shall mean the actual knowledge of those officers and employees of the Company  
identified on Exhibit 1.22 attached hereto.                                     

         Section 1.23.     Law. "Law" shall mean any federal, state, provincial,
local or other law or governmental requirement of any kind, and the rules,      
regulations and orders promulgated thereunder.                                  

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      Section 1.24.     Material Adverse Effect. "Material Adverse Effect"
shall mean, with respect to any entity or group of entities, an adverse effect  
(or any development which, insofar as reasonably can be foreseen, is reasonably 
likely to have an adverse effect), on the business, assets, financial or other  
condition, results of operations or prospects of such entity or group of        
entities taken as a whole, which exceeds $500,000.                              

    Section 1.25.     Merger. "Merger" shall have the meaning given in
Section 2.1 hereof.                                                             

      Section 1.26.     Merger Consideration. "Merger Consideration" shall
have the meaning given in Section 2.1 hereof.                                   

     Section 1.27.     Merger Subsidiary. "Merger Subsidiary" shall mean
TSCI Acquisition, Inc., a Virginia corporation and wholly-owned subsidiary of   
Parent.                                                                         

   Section 1.28.     Nasdaq. "Nasdaq" shall mean The Nasdaq SmallCap
Market.                                                                         

         Section 1.29.     Parent. "Parent" shall mean Smithfield Foods, Inc., a
Virginia corporation.                                                           

       Section 1.30.     Partnership; Partnerships. "Partnership" shall mean
(a) any limited or general partnership, joint venture or other business         
association, other than a Subsidiary, in which the Company has a direct or      
indirect interest and (b) each other such entity with respect to which the      
Company has any obligation or made any commitment to acquire any such interest  
described in clause (a) (collectively, "Partnerships"), all of such Partnerships
of the Company being listed on Exhibit 1.30 attached hereto.                    

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         Section 1.31.     Paying Agent. "Paying Agent" shall mean Parent or, at
Parent's election, a nationally recognized bank, trust company or shareholder   
services firm (including each of Parent and the Company's transfer agents).     

       Section 1.32.     Permits. "Permits" shall mean permits, licenses and
governmental authorizations, registrations and approvals.                       

        Section 1.33.     Plan of Merger. "Plan of Merger" shall mean the plan
of merger of Merger Subsidiary with and into the Company, in substantially the  
form attached hereto as Exhibit 1.33.                                           

     Section 1.34.     Proxy Statement. "Proxy Statement" shall mean the
Proxy Statement of the Company distributed to the shareholders of the Company in
connection with the Special Meeting.                                            

     Section 1.35.     Rights; Rights Agreement. "Rights" shall mean the
preferred share purchase rights issued by the Company pursuant to the Amended   
and Restated Rights Agreement, dated as of August 16, 1991 (the "Rights         
Agreement"), between the Company and The Riggs National Bank of Washington,     
D.C., as rights agent.                                                          

     Section 1.36.     SEC. "SEC" shall mean the Securities and Exchange
Commission.                                                                     

   Section 1.37.     Securities Act. "Securities Act" shall mean the
Securities Act of 1933, as amended.                                             

     Section 1.38.     Special Meeting. "Special Meeting" shall mean the
special meeting of shareholders of the Company called pursuant to Section 3.1   
hereof to consider and approve the transactions contemplated herein, and any    
adjournments thereof.                                                           

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         Section 1.39.     Subsidiary; Subsidiaries. "Subsidiary" shall mean (a)
each corporate entity with respect to which the Company has the right to vote   
(directly or indirectly through one or more other entities or otherwise) shares 
representing 50% or more of the votes eligible to be cast in the election of    
directors of such entity, (b) each other corporate entity that constitutes a    
"significant subsidiary," as defined in Rule 1-02 of Regulation S-X adopted     
under the Exchange Act, of the Company and (c) each other corporate entity with 
respect to which the Company has any obligation or made any commitment to       
acquire any such entity described in clauses (a) and (b) (collectively,         
"Subsidiaries"), all of the Subsidiaries of the Company being listed on Exhibit 
1.39 attached hereto.                                                           

      Section 1.40.     Taxes. "Taxes" shall mean any and all taxes, fees,
levies, imposts, duties, assessments, withholdings and other charges of any kind
imposed or required to be collected by or paid over to any Governmental         
Authority, including any interest, penalties, fines, assessments or additions   
imposed in respect of the foregoing, or in respect of any failure to comply with
any requirement regarding Tax Returns.                                          

     Section 1.41.     Tax Returns. "Tax Returns" shall mean any report,
return, information statement, payee statement or other information required to 
be provided to any Governmental Authority, or otherwise retained, with respect  
to Taxes or Company Benefit Plans.                                              

Section 1.42.     VSCA. "VSCA" shall mean the Virginia Stock  
Corporation Act, as amended.                                                    

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ARTICLE II

THE MERGER

Section 2.1.      The Merger.                                 
----------                

             (a) Parent has formed Merger Subsidiary as a wholly-owned
subsidiary under the laws of the Commonwealth of Virginia. Subject to the terms 
and conditions of this Agreement, Parent will cause Merger Subsidiary to execute
and deliver the Plan of Merger, and Parent, as the sole shareholder of Merger   
Subsidiary, will approve the execution, delivery and performance of the Plan of 
Merger by Merger Subsidiary.                                                    

                 (b) Subject to the terms and conditions of this Agreement and
the Plan of Merger, at the Effective Time, Merger Subsidiary shall be merged    
with and into the Company in accordance with the provisions of, and with the    
effects provided in, Section 13.1-721 of the VSCA (the "Merger"). The Company   
shall be the surviving corporation resulting from the Merger (hereinafter       
sometimes referred to as the "Surviving Corporation") and as a result shall     
become a wholly-owned subsidiary of Parent and shall continue to be governed by 
the laws of the Commonwealth of Virginia. The Plan of Merger provides for the   
terms and conditions of the Merger, which terms and conditions are incorporated 
herein and made a part of this Agreement by reference.                          

                  (c) Pursuant to the Merger, each share of Company Common Stock
(and the associated Right) outstanding immediately prior to the Effective Time  
(other than (i) shares of Company Common Stock (and the associated Rights) held 
by Parent or Merger Subsidiary, which shares (and the associated Rights) shall  
be canceled in the Merger, and (ii) Dissenting Shares (and the associated       
Rights)) shall be converted into and become exchangeable for an amount in cash  
equal to $8.50 per share (the "Merger Consideration").                          

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                  (d) Pursuant to the Merger, each share of the common stock, no
par value per share of Merger Subsidiary, outstanding immediately prior to the  
Effective Time shall automatically be converted into one fully paid and         
non-assessable common share, no par value per share, of the Surviving           
Corporation. Such shares shall thereafter constitute all of the issued and      
outstanding shares of the Surviving Corporation.                                

                 (e) The Articles of Incorporation and Bylaws of the Surviving
Corporation shall be amended and restated at the Effective Time in the form of  
the Articles of Incorporation and Bylaws of Merger Subsidiary as in effect      
immediately prior to the Effective Time.                                        

                (f) At the Effective Time, the persons who are directors and
officers of Merger Subsidiary at the Effective Time will become the directors   
and officers of the Surviving Corporation.                                      

                 (g) Parent and the Company agree to use their best efforts to
cause the Merger to be consummated in accordance with the terms of the Plan of  
Merger.                                                                         

Section 2.2.      Exchange of Certificates.                   

             (a) Prior to the Effective Time, Parent shall appoint the
Paying Agent to act as the Paying Agent in connection with the Merger. From and 
after the Effective Time, each holder of a certificate which immediately prior  
to the Effective Time represented outstanding shares of Company Common Stock    
(the "Certificates") shall be entitled to receive in exchange therefor, upon    
surrender thereof to the Paying Agent, a check representing the Merger          
Consideration to which such holder shall have become entitled pursuant to       
Section 2.1(c) hereof. Immediately prior to the Effective Time, Parent will     
deliver to the Paying Agent, in trust for the benefit of the holders of Company 
Common Stock, cash in the amount of the Merger Consideration payable pursuant to
Section 2.1(c) hereof.                                                          

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                 (b) Promptly after the Effective Time, the Paying Agent shall
mail to each record holder of the Company Common Stock as of the Effective Time,
a letter of transmittal (which shall specify that delivery shall be effected,   
and risk of loss and title to Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent) and instructions for use in effecting  
the surrender of Certificates in exchange for the Merger Consideration. Upon    
surrender to the Paying Agent of a Certificate, together with such letter of    
transmittal duly executed, and any other required documents, the holder of such 
Certificate shall be entitled to receive in exchange therefor a check           
representing the Merger Consideration to which such holder shall have become    
entitled pursuant to Section 2.1(c) hereof, and such Certificate shall forthwith
be canceled. If any portion of the Merger Consideration is to be paid to a      
person other than the person in whose name the Certificate surrendered is       
registered, it shall be a condition of such payment that the Certificate so     
surrendered shall be properly endorsed or otherwise in proper form for transfer 
and that the person requesting such exchange shall pay any transfer or other    
taxes required by reason of the issuance of a check representing cash to a      
person other than the registered holder of the Certificate surrendered or       
establish to the satisfaction of Parent that such tax has been paid or is not   
applicable. Until surrendered in accordance with the provisions of this Section 
2.2, each Certificate shall represent for all purposes only the right to receive
the Merger Consideration as provided in Section 2.1 hereto, without any interest
thereon.                                                                        

              (c) If any Certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such        
Certificate to be lost, stolen or destroyed and, if required by the Surviving   
Corporation, the posting by such person of a bond in such reasonable amount as  
the Surviving Corporation may direct as indemnity against any claim that may be 
made against it with respect to such Certificate, the Paying Agent shall issue  
in exchange for                                                                 

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such lost, stolen or destroyed Certificate the Merger Consideration due to such 
person as provided in Section 2.1 of this Agreement.                            

                 (d) Parent shall be entitled to deduct and withhold, or cause
the Paying Agent to deduct and withhold, from the consideration otherwise       
payable pursuant to this Agreement to any holder of Certificates such amounts as
are required to be deducted and withheld with respect to the making of such     
payment under the Code, or any provision of any other Tax Law. To the extent    
that amounts are so withheld, (i) such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the Certificates
in respect of which such deduction and withholding was made and (ii) Parent     
shall provide, or cause the Paying Agent to provide, to the holders of such     
Certificates written notice of the amounts so deducted or withheld.             

                (e) After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the shares of the Company Common     
Stock that were outstanding immediately prior to the Effective Time. If, after  
the Effective Time, Certificates are presented to Parent or the Company for     
transfer, they shall be canceled and exchanged for the Merger Consideration as  
described in Sections 2.1 and 2.2 hereof and in accordance with the Plan of     
Merger.                                                                         

                 (f) Any cash delivered to the Paying Agent for payment of the
Merger Consideration that remains unclaimed by the former shareholders of the   
Company for 180 days following the Effective Time shall be delivered by the     
Paying Agent to Parent. Any former shareholders of the Company who have not     
theretofore complied with this Section 2.2 shall thereafter look only to Parent 
for satisfaction of their claim for the consideration set forth in the Plan of  
Merger, without any interest thereon. Notwithstanding the foregoing, neither    
Parent nor                                                                      

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the Company shall be liable to any holder of shares of the Company Common Stock 
for any cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.                                               

Section 2.3.      Dissenting Shares. Notwithstanding any other
provisions of this Agreement to the contrary, shares of Company Common Stock    
that are outstanding immediately prior to the Effective Time and which are held 
by shareholders who have perfected their dissenters' rights in accordance with  
and as contemplated by Article 15 of the VSCA (collectively, "Dissenting        
Shares") shall not be converted into the right to receive the Merger            
Consideration. Such shares instead shall, from and after the Effective Time,    
represent only the right to receive payment of the fair value of such shares in 
cash as determined pursuant to Article 15 of the VSCA; provided, however, that  
no such payment shall be made to any dissenting shareholder unless and until    
such dissenting shareholder has complied with the applicable provisions of the  
VSCA and surrendered to the Company the Certificate or Certificates representing
the shares for which a demand of payment is being made. In the event that after 
the Effective Time a dissenting shareholder of the Company fails to perfect, or 
effectively withdraws or loses, his dissenters' rights with respect to his      
shares, Parent shall, or shall cause the Paying Agent to, issue and deliver the 
consideration to which such holder of shares of Company Common Stock would be   
entitled under this Article II, without interest, had such shareholder not      
exercised dissenters' rights with respect to such shares, upon surrender by such
holder of the Certificate or Certificates representing all shares of Company    
Common Stock held by him.                                                       

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 ARTICLE III

 SHAREHOLDER APPROVAL; CLOSING

Section 3.1.      Shareholder Approval.                       

                (a) This Agreement and the Plan of Merger shall be submitted
for consideration and approval to the holders of shares of Company Common Stock 
at the Special Meeting. Each of the shareholders of the Company identified in   
Exhibit 3.1A hereto, being the holders of an aggregate 56% of the outstanding   
shares of Company Common Stock, has duly executed and delivered to Parent a     
letter agreement in the form of Exhibit 3.1B hereto with respect to, among other
things, such shareholder's agreement to vote all shares of Company Common Stock 
over which such shareholder exercises voting control for approval of this       
Agreement and the Plan of Merger at the Special Meeting.                        

                 (b) The Company shall endeavor to hold the Special Meeting as
soon as practicable after the date hereof. The Board of Directors of the Company
shall recommend that shareholders approve this Agreement and the Plan of Merger 
and the transactions contemplated hereby and thereby, and such recommendation   
shall be contained in the Proxy Statement. On the first business day on or by   
which (i) this Agreement and the Plan of Merger have been duly approved by the  
requisite vote of the holders of shares of Company Common Stock, and (ii) the   
Closing of the transactions contemplated by this Agreement and the Plan of      
Merger shall have occurred, or such later date as shall be agreed upon by Parent
and the Company, (x) articles of merger shall be filed in accordance with the   
VSCA and (y) the Merger shall become effective in accordance with the terms of  
the Plan of Merger at the time and date contemplated therein (such time and date
being referred to herein as the "Effective Time").                              

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 Section 3.2.      Time and Place of Closing. The Closing of the
transactions contemplated by this Agreement and the Plan of Merger will take    
place at a time and date mutually agreed upon by the parties hereto, which shall
be no later than the third business day following the date on which all of the  
conditions to the obligations of the parties hereunder set forth in Article VII 
hereof have been satisfied or waived. The place of Closing shall be at the      
offices of Hunton & Williams, 951 East Byrd Street, Richmond, Virginia or such  
other place as may be mutually agreed upon by the parties hereto.               

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY

             Parent and Merger Subsidiary represent and warrant to the
Company as follows:                                                             

Section 4.1.      Organization and Authority.                 

               (a) Each of Parent and Merger Subsidiary is duly organized,
validly existing and in good standing under the laws of the Commonwealth of     
Virginia. Merger Subsidiary was formed solely for the purpose of engaging in the
transactions contemplated hereby and has not engaged in any business activities 
or conducted any operations other than in connection with the transactions      
contemplated hereby.                                                            

        Section 4.2.      Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement and of all of the other documents and
instruments required hereby by Parent and Merger Subsidiary are within the      
corporate power of Parent and Merger Subsidiary. The execution and delivery of  
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Boards of Directors of Parent and Merger Subsidiary,
and by Parent as the sole shareholder of Merger Subsidiary, and no other        

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corporate proceedings on the part of Parent and Merger Subsidiary are necessary 
to authorize this Agreement or to consummate the transactions contemplated      
herein. This Agreement and all of the other documents and instruments required  
hereby have been or will be duly and validly executed and delivered by Parent   
and Merger Subsidiary and (assuming the due authorization, execution and        
delivery hereof and thereof by the Company) constitute or will constitute valid 
and binding agreements of Parent and Merger Subsidiary, enforceable against     
Parent and Merger Subsidiary in accordance with their respective terms, except  
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors generally, by    
general equitable principles (regardless of whether such enforceability is      
considered in a proceeding in equity or at law) or by an implied covenant of    
good faith and fair dealing.                                                    

         Section 4.3.      Consents and Approvals; No Violations. Except for (a)
any applicable requirements of the Securities Act, the Exchange Act and any     
applicable filings under state securities, "Blue Sky" or takeover laws, (b) the 
filing and recordation of articles of merger as required by the VSCA and (c)    
those required filings, registrations, consents and approvals listed on Exhibit 
4.3 attached hereto, no filing or registration with, and no permit,             
authorization, consent or approval of, any public body or authority is necessary
or required in connection with the execution and delivery of this Agreement by  
Parent and Merger Subsidiary or for the consummation by Parent and Merger       
Subsidiary of the transactions contemplated by this Agreement. Assuming that all
filings, registrations, permits, authorizations, consents and approvals         
contemplated by the immediately preceding sentence have been duly made or       
obtained, neither the execution, delivery and performance of this Agreement nor 
the                                                                             

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consummation of the transactions contemplated hereby by Parent and Merger       
Subsidiary will (i) conflict with or result in any breach of any provision of   
the Articles of Incorporation or bylaws of Parent or Merger Subsidiary, (ii)    
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,     
cancellation or acceleration) under, or otherwise result in any diminution of   
any of the rights of Parent or Merger Subsidiary with respect to, any of the    
terms, conditions or provisions of any note, bond, mortgage, indenture, license,
Contract or other instrument or obligation to which Parent or Merger Subsidiary 
is a party or by which either of them or any of their properties or assets may  
be bound or (iii) violate any order, writ, injunction, decree, statute, rule or 
regulation applicable to Parent or Merger Subsidiary or any of their properties 
or assets except, in the case of clauses (ii) or (iii) above, for violations,   
breaches or defaults that would not have a Material Adverse Effect on Parent or 
Merger Subsidiary and that will not prevent or delay the consummation of the    
transactions contemplated hereby.                                               

      Section 4.4.      Information Supplied. None of the information with
respect to Parent and its affiliates supplied in writing by Parent specifically 
for inclusion in the Proxy Statement will, at the time of the mailing of the    
Proxy Statement or any amendments thereof or supplements thereto, and at the    
time of the Special Meeting, contain any untrue statement of a material fact or 
omit to state any material fact required to be stated therein or necessary in   
order to make the statements therein, in light of the circumstances under which 
they are made, not misleading.                                                  

    Section 4.5.      Fees and Expenses of Brokers and Others. Neither
Parent nor any of its affiliates (a) has had any dealings, negotiations or      
communications with any broker or other intermediary in connection with the     
transactions contemplated by this Agreement, (b) is                             

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committed to any liability for any brokers' or finders' fees or any similar fees
in connection with the transactions contemplated by this Agreement or (c) has   
retained any broker or other intermediary to act on its behalf in connection    
with the transactions contemplated by this Agreement.                           

 ARTICLE V

 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

            The Company represents and warrants to Parent and Merger
Subsidiary as follows:                                                          

         Section 5.1.      Organization and Authority of the Company Group. Each
member of the Company Group is duly organized, validly existing and in good     
standing under the laws of its respective jurisdiction of organization. Each    
member of the Company Group has full corporate, limited liability or partnership
power to carry on its respective business as it is now being conducted and to   
own, operate and hold under lease its assets and properties as, and in the      
places where, such properties and assets now are owned, operated or held. Each  
member of the Company Group is duly qualified as a foreign entity to do         
business, and is in good standing, in each jurisdiction where the failure to be 
so qualified would have a Material Adverse Effect on the Company Group. Exhibit 
1.39 constitutes a true and complete list of all of the Subsidiaries of the     
Company and Exhibit 1.30 constitutes a true and complete list of all of the     
Partnerships in which the Company has an interest. The copies of the Articles of
Incorporation and Bylaws of the Company that have been delivered to Parent are  
complete and correct and in full force and effect on the date hereof.           

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   Section 5.2.      Capitalization. The Company's authorized equity
capitalization consists of 5,000,000 shares of Company Common Stock, no par     
value per share, and 250,000 shares of preferred stock, $100.00 par value per   
share. As of the close of business on April 26, 2001, (i) 2,144,593 shares of   
Company Common Stock and no shares of the Company's preferred stock were issued 
and outstanding, and (ii) 164,500 shares of Company Common Stock were subject to
outstanding options issued pursuant to the Company's stock option plan (the     
"Option Plan"). Such shares of Company Common Stock constituted all of the      
issued and outstanding shares of capital stock of the Company as of such date.  
All issued and outstanding shares of Company Common Stock have been duly        
authorized and validly issued and are fully paid and nonassessable, are not     
subject to and have not been issued in violation of any preemptive rights and   
have not been issued in violation of any federal or state securities laws. All  
of the outstanding shares of capital stock of the Company's Subsidiaries are    
validly issued, fully paid and nonassessable and are, except as disclosed on    
Exhibit 1.39 attached hereto, owned by the Company, directly or indirectly, free
and clear of all liens, claims, charges or encumbrances. Except for the         
declaration and payment of dividends in the ordinary course of business, the    
Company has not, subsequent to March 31, 2000, declared or paid any dividend on,
or declared or made any distribution with respect to, or authorized or effected 
any split-up or any other recapitalization of, any of the Company Common Stock, 
or directly or indirectly redeemed, purchased or otherwise acquired any of its  
outstanding capital stock or agreed to take any such action and will not take   
any such action during the period between the date of this Agreement and the    
Effective Time. Except for Rights issued pursuant to the Rights Plan, and except
as set forth on Exhibit 5.2 attached hereto, there are no outstanding options,  
warrants, subscriptions or other rights to purchase or acquire any capital stock
of any member of the Company Group, and                                         

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there are no Contracts pursuant to which any member of the Company Group is     
bound to sell or issue any shares of its capital stock. No holders of Company   
Common Stock are party to any voting agreement, voting trust or similar         
arrangement with respect to Company Common Stock to which any member of the     
Company Group is a party. Shares of the Company Common Stock are traded on the  
OTC Bulletin Board.                                                             

        Section 5.3.      Authority Relative to this Agreement. The execution,
delivery and performance of this Agreement and of all of the other documents and
instruments required hereby by the Company are within the corporate power of the
Company. The execution and delivery of this Agreement and the consummation of   
the transactions contemplated hereby have been duly authorized by the Board of  
Directors of the Company and no other corporate proceedings on the part of the  
Company are necessary to authorize this Agreement or to consummate the          
transactions contemplated herein (other than, with respect to the Merger, the   
approval of this Agreement and the Plan of Merger by more than two-thirds of the
outstanding shares of Company Common Stock entitled to vote at the Special      
Meeting). This Agreement and all of the other documents and instruments required
hereby have been or will be duly and validly executed and delivered by the      
Company and (assuming the due authorization, execution and delivery hereof and  
thereof by Parent and Merger Subsidiary) constitute or will constitute valid and
binding agreements of the Company, enforceable against the Company in accordance
with their respective terms, except as such enforceability may be limited by    
bankruptcy, insolvency, reorganization, moratorium and similar laws relating to 
or affecting creditors generally, by general equitable principles (regardless of
whether such enforceability is considered at a proceeding in equity or at law)  
or by an implied covenant of good faith and fair dealing.                       

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         Section 5.4.      Consents and Approvals; No Violations. Except for (a)
any applicable requirements of the Securities Act, the Exchange Act, and any    
applicable filings under state securities, "Blue Sky" or takeover laws, (b) the 
filing and recordation of articles of merger as required by the VSCA and (c)    
those required filings, registrations, consents and approvals listed on Exhibit 
5.4 attached hereto, no filing or registration with, and no permit,             
authorization, consent or approval of, any public body or authority is necessary
or required in connection with the execution and delivery of this Agreement by  
the Company or for the consummation by the Company of the transactions          
contemplated by this Agreement. Assuming that shareholder approval of this      
Agreement and the Plan of Merger has been obtained in accordance with the       
Company's Articles of Incorporation and bylaws and the VSCA, and that all       
filings, registrations, permits, authorizations, consents and approvals         
contemplated by the immediately preceding sentence have been duly made or       
obtained, neither the execution, delivery and performance of this Agreement nor 
the consummation of the transactions contemplated hereby by the Company will (i)
conflict with or result in any breach of any provision of the Articles of       
Incorporation, bylaws, partnership or joint venture agreements or other         
organizational documents of any member of the Company Group, (ii) result in a   
violation or breach of, or constitute (with or without due notice or lapse of   
time or both) a default (or give rise to any right of termination, cancellation 
or acceleration) under, or otherwise result in any diminution of the rights of  
any member of the Company Group with respect to, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, Contract or other   
instrument or obligation to which any member of the Company Group is a party or 
by which any of them or any of their properties or assets may be bound or (iii) 
violate any order, writ, injunction, decree, statute, rule or regulation        
applicable to any member of the Company Group or any of their properties or     
assets except, in                                                               

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the case of clauses (ii) or (iii) above, for violations, breaches or defaults   
that would not have a Material Adverse Effect on the Company Group and that will
not prevent or delay the consummation of the transactions contemplated hereby.  

Section 5.5.      Reports.                                    

                  (a) The filings required to be made by the Company since March
31, 1998, under Nasdaq rules, the Securities Act, the Exchange Act and          
applicable Virginia laws and regulations, have been filed with Nasdaq and each  
applicable Governmental Authority and the Company has complied with all         
requirements of such acts, laws and rules and regulations thereunder, except to 
the extent any such failure to comply would not have a Material Adverse Effect  
on the Company Group.                                                           

                (b) The Company SEC Reports complied, as of their respective
dates of filing (and any Company SEC Reports filed after the date hereof will   
comply), with all applicable requirements of the Securities Act, the Exchange   
Act and the rules and regulations of the SEC. As of their respective dates, none
of such forms, reports or documents, including, without limitation, any         
financial statements or schedules included therein, contained (and none of the  
Company SEC Reports filed after the date hereof will contain) any untrue        
statement of a material fact or omitted (or will omit) to state a material fact 
required to be stated therein or necessary in order to make the statements      
therein not misleading in light of the circumstances under which they were made.
Each of the balance sheets (including the related notes and schedules) included 
in the Company SEC Reports fairly presented the consolidated financial position 
of the Company Group as of the respective dates thereof, and the other related  
financial statements (including the related notes and schedules) included       
therein fairly presented the results of operations and cash                     

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flows of the Company Group for the respective fiscal periods or as of the       
respective dates set forth therein. Each of the financial statements (including 
the related notes and schedules) included in the Company SEC Reports (a)        
complied as to form with the applicable accounting requirements and rules and   
regulations of the SEC and (b) was prepared in accordance with GAAP consistently
applied during the periods presented, except as otherwise noted therein and     
subject to normal year-end and audit adjustments in the case of any unaudited   
interim financial statements. Except for the Company, no member of the Company  
Group is required to file any forms, reports or other documents with the SEC,   
Nasdaq or any other foreign or domestic securities exchange or Governmental     
Authority with jurisdiction over securities laws. Since March 31, 2000, the     
Company has timely filed all reports, registration statements and other filings 
required to be filed by it with the SEC.                                        

         Section 5.6.      Absence of Certain Events. Except as set forth in the
Company SEC Reports filed prior to the date of this Agreement or as otherwise   
specifically disclosed in Exhibit 5.6 attached hereto, since March 31, 2000, no 
member of the Company Group has suffered any change in its business, financial  
condition or results of operations that has had or will have a Material Adverse 
Effect upon the Company Group. Except as disclosed in the Company SEC Reports or
in Exhibit 5.6 attached hereto, or as otherwise specifically contemplated by    
this Agreement, there has not been since March 31, 2000, (a) any entry into any 
agreement or understanding or any amendment of any agreement or understanding   
between any member of the Company Group, on the one hand, and any of their      
respective directors,                                                           

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officers or employees, on the other hand, providing for employment of any such  
director, officer or employee or any general or material increase in the        
compensation, severance or termination benefits payable or to become payable by 
any member of the Company Group to any of their respective directors, officers  
or employees (except for normal increases in the ordinary course of business    
that are consistent with past practices and that, in the aggregate, do not      
result in a material increase in benefits or compensation expense), or any      
adoption of or increase in any bonus, insurance, pension or other employee      
benefit plan, payment or arrangement (including, without limitation, the        
granting of stock options or stock appreciation rights or the award of          
restricted stock) made to, for or with any such director, officer or employee;  
(b) any labor dispute that has had or is expected to have a Material Adverse    
Effect upon the Company Group; (c) any entry by any member of the Company Group 
into any material commitment, agreement, license or transaction (including,     
without limitation, any borrowing, capital expenditure, sale of assets or any   
mortgage, pledge, lien or encumbrances made on any of the properties or assets  
of any of the Company Group) other than in the ordinary and usual course of     
business; (d) any change in the accounting policies or practices of the Company;
(e) any damage, destruction or loss, whether covered by insurance or not, which 
has had or will have a Material Adverse Effect upon the Company Group; or (f)   
any agreement to do any of the foregoing.                                       

  Section 5.7.      Proxy Statement. None of the information to be
included in the Proxy Statement will, at the time of the mailing of the Proxy   
Statement or any amendments thereof or supplements thereto, and at the time of  
the Special Meeting, contain any untrue statement of a material fact or omit to 
state any material fact required to be stated therein or necessary in order to  
make the statements therein, in light of the circumstances under which they are 
made, not misleading, except that no representation is made by the Company with 
respect to information supplied by Parent or any affiliate of Parent for        
inclusion in the Proxy Statement. The Proxy                                     

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Statement will comply as to form with the provisions of the Securities Act, the 
Exchange Act and the rules and regulations promulgated thereunder.              

  Section 5.8.      Litigation. Except as set forth in Exhibit 5.8
attached hereto, there is no action, suit, proceeding or, to the Knowledge of   
the Company, investigation pending or, to the Knowledge of the Company,         
threatened against or relating to any member of the Company Group at law or in  
equity, or before any federal, state, provincial, municipal or other            
governmental department, commission, board, bureau, agency or instrumentality,  
whether in the United States or otherwise, that is expected, in the reasonable  
judgment of the Company, to have a Material Adverse Effect upon the Company     
Group or that seeks restraint, prohibition, damages or other relief in          
connection with this Agreement or the consummation of the transactions          
contemplated hereby.                                                            

Section 5.9.      Title to and Sufficiency of Assets.         
        ----------------------------------

                As of the date hereof, the Company Group owns, and as of the
Effective Time, the Company Group will own, good and marketable title to all of 
their assets (excluding, for purposes of this sentence, assets held under       
leases), free and clear of any and all mortgages, liens, encumbrances, charges, 
claims, restrictions, pledges, security interests or impositions, except as     
disclosed on Exhibit 5.9 attached hereto. Such assets, together with all assets 
held by the Company Group under leases, include all tangible and intangible     
assets, Contracts and rights necessary or required for the operation of the     
businesses of the Company Group in accordance with past practice.               

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Section 5.10.     Contracts.                                  

                 (a) Prior to the date hereof, the Company has provided Parent
with access to true and correct copies of all of the Contracts to which any     
member of the Company Group is a party that constitute: (i) a lease of any      
interest in any real property; (ii) a lease of any personal property with       
aggregate annual rental payments in excess of $50,000; (iii) an option to       
acquire or lease any interest in real property or a right of first refusal with 
respect thereto; (iv) an agreement to purchase or sell a capital asset or an    
interest in any business entity for a price in excess of $50,000 or a right of  
first refusal with respect thereto; (v) an agreement relating to the borrowing  
or lending of money or the purchase or sale of securities; (vi) a guaranty,     
contribution agreement or other agreement that includes any indemnification,    
contribution or support obligation; (vii) an agreement limiting in any respect  
the ability of any member of the Company Group to compete in any line of        
business or with any person; (viii) a customer supply or requirements agreement 
or an agreement with a vendor to which any member of the Company Group is a     
party or by which any member of the Company Group is bound; (ix) an employment  
or consulting agreement to which any member of the Company Group is a party or  
by which any member of the Company Group is bound; and (x) any other agreement  
involving an amount over its term in excess of $50,000. Each member of the      
Company Group has performed and, to the Knowledge of the Company, every other   
party has performed, each material term, covenant and condition of each of the  
Contracts to which any member of the Company Group is a party that is to be     
performed by any of them at or before the date hereof. No event has occurred    
that would, with the passage of time or compliance with any applicable notice   
requirements or both, constitute a default by any member of the Company Group   
or, to the Knowledge of the Company, any other party under any of the Contracts 
to which any member of the Company Group is a party, and, to the                

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Knowledge of the Company, no party to any of the Contracts to which any member  
of the Company Group is a party intends to cancel, terminate or exercise any    
option under any of such Contracts.                                             

            (b) With respect to each customer supply or requirements
agreement and vendor agreement to which any member of the Company Group is a    
party, the copy of such agreement that has been provided by the Company to      
Parent accurately discloses: (i) the remaining term of such agreement; (ii) all 
incentive or other payments paid or to be paid thereunder by any member of the  
Company Group after March 31, 2000; (iii) all purchase commitments or minimum   
purchase guarantees binding on any member of the Company Group for periods after
March 31, 2000; and (iv) any deviation in the economic terms thereof from and   
after March 31, 2000, from those that were in effect under such agreements (or  
under any similar predecessor agreements) over the course of the Company's      
entire fiscal year ended March 31, 2000.                                        

Section 5.11.     Labor Matters.                              

                 (a) Except as set forth in Exhibit 5.11 attached hereto, with
respect to employees of the Company Group: (i) to the Knowledge of the Company, 
no senior executive, key employee or group of employees has any plans to        
terminate employment with any member of the Company Group; (ii) there is no     
unfair labor practice charge or complaint against any member of the Company     
Group pending or, to the Knowledge of the Company, threatened before the        
National Labor Relations Board or any other comparable authority; (iii) no      
grievance or any arbitration proceeding arising out of or under collective      
bargaining agreements is pending and, to the Knowledge of the Company, no claims
therefor exist or have been threatened; and (iv) there is no litigation,        
arbitration proceeding, governmental investigation, administrative              

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charge, citation or action of any kind pending or, to the Knowledge of the      
Company, proposed or threatened against any member of the Company Group relating
to employment, employment practices, terms and conditions of employment or wages
and hours.                                                                      

               (b) Except as described in Exhibit 5.11 attached hereto, no
member of the Company Group has any collective bargaining relationship or duty  
to bargain with any Labor Organization (as such term is defined in Section 2(5) 
of the National Labor Relations Act, as amended), and no member of the Company  
Group has recognized any Labor Organization as the collective bargaining        
representative of any of its employees.                                         

Section 5.12.     Employee Benefit Plans.                     

               (a) For purposes of this Section, the term "Company Benefit
Plans" shall mean all pension, retirement, profit-sharing, deferred             
compensation, stock option, employee stock ownership, severance pay, vacation,  
bonus or other incentive plans, all medical, vision, dental and other health    
plans, all life insurance plans, and all other employee benefit plans or fringe 
benefit plans, whether arrived at through collective bargaining or otherwise,   
including, without limitation, any "employee benefit plan," as that term is     
defined in Section 3(3) of ERISA, currently adopted, maintained by, sponsored in
whole or in part by, or contributed to by any member of the Company Group or    
affiliates thereof for the benefit of employees, retirees, dependents, spouses, 
directors, independent contractors or other beneficiaries and under which       
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries are eligible to participate. Any of the Company Benefit     
Plans which is an "employee pension benefit plan," as that term is defined in   
Section 3(2) of ERISA, is referred to herein as a "Company ERISA Plan."         

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              (b) No Company Benefit Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA. No member of the Company     
Group has incurred any "withdrawal liability" from a multiemployer plan that has
not been paid in full. All Company Benefit Plans are, and have been             
administered, in compliance with the applicable provisions (including, without  
limitation, any funding requirements or limitations) of ERISA, the Code and any 
other applicable Laws, the breach or violation of which could have a Material   
Adverse Effect on the Company Group. No Company Benefit Plan provides for       
post-retirement medical benefit obligations (other than the health care         
continuation coverage requirements of Section 601 et seq. of ERISA). No Company 
ERISA Plan is a defined benefit pension plan as that term is defined in Section 
3 (35) of ERISA and Section 414 of the Code.                                    

             (c) Exhibit 5.12 hereto is a true and correct list of all
Company Benefit Plans. The Company has provided Parent with access to true and  
correct copies of each governing document for each Company Benefit Plan (or a   
description of any Company Benefit Plan that does not have a written plan       
document), together with the most recent summary plan description, annual report
and audited financial statement for each such plan and the actuarial report for 
any Company Benefit Plan that is a defined benefit pension plan or funded       
welfare benefit plan.                                                           

                (d) With respect to each Company ERISA Plan that is intended
to be "qualified" under Section 401(a) of the Code, the Company has received a  
favorable determination letter from the IRS upon which the Company is entitled  
to rely and, to the Knowledge of the Company, there are no facts or             
circumstances which would adversely affect the qualification of any such Company
ERISA Plan.                                                                     

             (e) All of the shares of Company Common Stock held by The
Smithfield Companies, Inc. Employee Stock Ownership Plan (the "ESOP") are       
allocated to the accounts of                                                    

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participants in the ESOP. None of the Company Common Stock held by the ESOP was 
acquired by the ESOP in a transaction that was intended to satisfy the          
requirements of Section 1042 of the Code. None of the Company Common Stock held 
by the ESOP is subject to a put, special valuation or other right not applicable
to all outstanding shares of Company Common Stock.                              

               (f) None of the transactions contemplated by this Agreement
will subject the Company or any member of the Company Group to liability for the
excise tax under Section 4999 of the Code or the disallowance of a federal      
income tax deduction under Section 280G of the Code.                            

Section 5.13.     Tax Matters.                                

            (a) Except as set forth on Exhibit 5.13 attached hereto:

                    (i)     The Company and each of its Subsidiaries that is
incorporated under the laws of the United States or of any of the United States 
are members of the affiliated group, within the meaning of Section 1504(a) of   
the Code, of which the Company is the common parent, such affiliated group files
a consolidated federal income Tax Return and neither the Company nor any of its 
Subsidiaries has ever filed a consolidated federal income Tax Return with (or   
been included in a consolidated return of) a different affiliated group;        

                     (ii)    each member of the Company Group has timely filed
or caused to be filed all Tax Returns required to have been filed by or for it, 
and all information set forth in such Tax Returns is accurate and complete in   
all material respects;                                                          

                     (iii)   each member of the Company Group has paid or made
adequate provision on its books and records in accordance with GAAP for all     
Taxes covered by such Tax Returns;                                              

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                   (iv)    each member of the Company Group is in material
compliance with, and its records contain all information and documents          
(including, without limitation, properly completed IRS Forms W-8 and Forms W-9) 
necessary to comply with, all applicable information reporting and tax          
withholding requirements under Law, and such records identify with specificity  
all accounts subject to withholding under Section 1441, 1442 or 3406 of the Code
or similar provisions of state, local or foreign Laws;                          

                      (v)     there is not a material amount of unpaid Taxes due
and payable by any member of the Company Group or by any other person that is or
could become a lien on any asset of, or otherwise have a Material Adverse Effect
on, the Company Group;                                                          

                     (vi)    each member of the Company Group has collected or
withheld all Taxes required to be collected or withheld by it, and all such     
Taxes have been paid to the appropriate Governmental Authority or set aside in  
appropriate accounts for future payment when due;                               

                     (vii)   no member of the Company Group has granted (or is
subject to) any waiver, which is currently in effect, of the period of          
limitations for the assessment of any Tax; no unpaid Tax deficiency has been    
assessed or asserted against, or with respect to, any member of the Company     
Group by any Governmental Authority; no power of attorney relating to Taxes that
is currently in effect has been granted by, or with respect to, any member of   
the Company Group; there are no currently pending administrative or judicial    
proceedings, or any deficiency or refund litigation, with respect to Taxes of   
any member of the Company Group, the adverse outcome of which would have a      
Material Adverse Effect on the Company Group; and any such assertion,           
assessment, proceeding or litigation disclosed in Exhibit 5.13 hereto is being  

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contested in good faith through appropriate measures, and its status is         
described in Exhibit 5.13 hereto;                                               

                      (viii)  no member of the Company Group has made or entered
into, or holds any asset subject to, a consent filed pursuant to Section 341(f) 
of the Code and the regulations thereunder or a "safe harbor lease" subject to  
former Section 168(f)(8) of the Code and the regulations thereunder;            

                 (ix)    no member of the Company Group is required to
include in income any amount from an adjustment pursuant to Section 481 of the  
Code or the regulations thereunder or any similar provision of state or local   
Law, and the Company has no Knowledge that any Governmental Authority has       
proposed any such adjustment;                                                   

                  (x)     no member of the Company Group is obligated to
make any payments, or is a party to any Contract that could obligate it to make 
any payments, that would not be deductible by reason of sections 162(m) or 280G 
of the Code;                                                                    

                 (xi)    there are no excess loss accounts or deferred
intercompany gains with respect to any member of the affiliated group of which  
the Company is the common parent which would have a Material Adverse Effect on  
the Company Group if taken into account;                                        

                      (xii)   the most recent audited consolidated balance sheet
included in the Company SEC Reports fully and properly reflects, as of the date 
thereof, the liabilities of the Company and its Subsidiaries for all accrued    
Taxes and deferred liability for Taxes and, for periods ending after such date, 
the books and records of each such corporation fully and properly reflect its   
liability for all accrued Taxes;                                                

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                  (xiii)  since April 16, 1997, no member of the Company
Group has distributed stock or securities of a controlled corporation in a      
transaction to which section 355(a) of the Code applies; and                    

                   (xiv)   the Company is not, and has not been within the
last five years, a "United States real property holding corporation" for        
purposes of section 897 of the Code.                                            

              (b) Exhibit 5.13 describes all material and continuing Tax
elections, consents and agreements made by or affecting any member of the       
Company Group, lists all types of material Taxes paid and Tax Returns filed by  
or on behalf of any member of the Company Group and expressly indicates each Tax
with respect to which any member of the Company Group is or has been included in
a consolidated, unitary or combined return.                                     

         Section 5.14.     Compliance with Law. The conduct of the businesses of
the Company Group and their use of their assets does not violate or conflict,   
and has not violated or conflicted, with any Law, which violation or conflict   
could have a Material Adverse Effect on the Company Group.                      

      Section 5.15.     Transactions With Affiliates. For purposes of this
Section, the term "Affiliate" shall mean (a) any holder of 5% or more of the    
voting securities of the Company, (b) any director, officer or employee of any  
member of the Company Group, (c) any person, firm or corporation that directly  
or indirectly controls, is controlled by or is under common control with any    
member of the Company Group or (d) any member of the immediate family of any of 
such persons. Except as set forth in Exhibit 5.15 attached hereto, since March  
31, 2000, no member of the Company Group has, in the ordinary course of business
or otherwise, (i) purchased, leased or otherwise acquired any material property 
or assets or obtained any material services from, (ii)                          

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sold, leased or otherwise disposed of any material property or assets or        
provided any material services to (except with respect to remuneration for      
services rendered in the ordinary course of business as a director, officer or  
employee of one or more members of the Company Group), (iii) entered into or    
modified in any manner any Contract with, or (iv) borrowed any money from, or   
made or forgiven any loan or other advance to, any Affiliate. Except as set     
forth in Exhibit 5.15, (v) the Contracts of the Company Group do not include any
obligation or commitment between any member of the Company Group and any        
Affiliate, (vi) the assets of the Company Group do not include any receivable or
other obligation or commitment from an Affiliate to any member of the Company   
Group and (vii) the liabilities of the Company Group do not include any payable 
or other obligation or commitment from any member of the Company Group to any   
Affiliate. Except as set forth in Exhibit 5.15 hereto, no Affiliate of any      
member of the Company Group is a party to any Contract with any customer or     
supplier of the Company that affects in any manner the business, financial      
condition or results of operation of any member of the Company Group.           

Section 5.16.     Environmental Conditions.                   

     (a) Definitions.  When used in this Section 5.16:

               (i)     "Environmental Laws" shall mean any and all
federal, state, local or municipal laws, rules, orders, regulations, statutes,  
ordinances, codes, decrees or requirements of any Governmental Authority        
regulating, relating to or imposing liability or standards of conduct concerning
any Hazardous Materials or Petroleum Products or environmental protection as now
or at any time hereafter in effect, together with any amendment or              
re-authorization thereto or thereof;                                            

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                  (ii)    "Hazardous Materials" shall mean any hazardous
material, hazardous waste, infectious medical waste, hazardous or toxic         
substance defined or regulated as such in or under any Environmental Law,       
including, without limitation, materials exhibiting the characteristics of      
ignitability, corrosivity, reactivity or extraction procedure toxicity, as such 
terms are now or hereafter defined in connection with hazardous materials or    
hazardous wastes or hazardous or toxic substances in any Environmental Law; and 

                    (iii)   "Petroleum Products" shall mean gasoline, diesel
fuel, motor oil, waste or used oil, heating oil, kerosene and any other         
petroleum products.                                                             

                (b) Except as set forth in Exhibit 5.16 attached hereto, and
except for such violations that in the aggregate would not have a Material      
Adverse Effect on the Company Group, (i) no member of the Company Group has     
used, stored, treated, transported, manufactured, refined, handled, produced or 
disposed of any Hazardous Materials or Petroleum Products on, under, at, from or
in any way affecting any of their properties or assets (including, without      
limitation, any properties or assets now or previously owned or operated by any 
member of the Company Group) or otherwise, in any manner which at the time of   
the action in question violated any Environmental Law governing the use,        
storage, treatment, transportation, manufacture, refinement, handling,          
production or disposal of Hazardous Materials or Petroleum Products, and (ii) to
the Knowledge of the Company, no prior owner of such property or asset or any   
tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous   
Materials or Petroleum Products on, from or in any way affecting any such       
property or asset, or otherwise, in any manner which at the time of the action  
in question violated any Environmental Law governing the use, storage,          
treatment, transportation, manufacture, refinement, handling, production or     
disposal of Hazardous Materials or Petroleum Products.                          

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               (c) Except as set forth in Exhibit 5.16 attached hereto, no
member of the Company Group has any obligations or liabilities, whether absolute
or contingent, accrued or unaccrued, asserted or unasserted, known or unknown,  
or otherwise, that could have a Material Adverse Effect on the Company Group,   
and no claims have been made against any member of the Company Group and no     
citations or notices have been issued against any member of the Company Group   
that could have a Material Adverse Effect on the Company Group, and that in the 
case of any of the foregoing, have been or are imposed by reason of or based    
upon any provision of any Environmental Laws, including, without limitation, any
such obligations or liabilities relating to or arising out of or attributable,  
in whole or in part, to the manufacture, processing, distribution, use,         
treatment, storage, release, disposal, arranging for disposal, transport or     
handling of any Hazardous Materials or Petroleum Products by any member of the  
Company Group or, to the Knowledge of the Company, by any predecessors in       
interest in connection with or in any way arising from or relating to any member
of the Company Group or any of their respective properties, or relating to or   
arising from or attributable, in whole or in part, to the manufacture,          
processing, distribution, use, treatment, storage, disposal, transport or       
handling of any such substance by any other person at or on or under any of the 
real properties owned or used by any member of the Company Group.               

                 (d) Each member of the Company Group has received all Permits
as may be required of it under applicable Environmental Laws to conduct its     
respective business, and each member of the Company Group is in compliance with 
the terms and conditions of any such Permit. No member of the Company Group has 
received any notices or claims that it is a responsible party in connection with
any claim or notice asserted pursuant to 42 U.S.C. Section 9601 et seq., or any 
state superfund law.                                                            

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                  (e) Except as set forth on Exhibit 5.16 attached hereto, there
are no "wetlands" (as that term has ever been defined by the U.S. Army Corps of 
Engineers or any other regulatory agency) on any of the real property owned,    
operated or leased by any member of the Company Group.                          

         Section 5.17.     Insurance. Except to the extent adequately accrued on
the most recent balance sheet contained in the Company SEC Reports, no member of
the Company Group has any obligation (contingent or otherwise) to pay in        
connection with any insurance policies any retroactive premiums or              
"retro-premiums" that, individually or in the aggregate, would reasonably be    
expected to have a Material Adverse Effect.                                     

         Section 5.18.     Intellectual Property. No member of the Company Group
currently utilizes, or to the Knowledge of the Company, has in the past         
utilized, any existing or pending patent, trademark, trade name, service mark,  
copyright, software, trade secret or know-how, except for those which are owned,
possessed or lawfully used by the members of the Company Group in their business
operations, and no member of the Company Group infringes upon or unlawfully uses
any patent, trademark, trade name, service mark, copyright or trade secret owned
or validly claimed by another person except, in each case, as would not,        
individually or in the aggregate, reasonably be expected to have a Material     
Adverse Effect. Each member of the Company Group owns, has a valid license to   
use or has the right validly to use all existing and pending patents,           
trademarks, tradenames, service marks, copyrights and software necessary to     
carry on its respective business substantially as currently conducted except the
failure of which to own, validly license or have the right validly to use,      
individually or in the aggregate, would not reasonably be expected to have a    
Material Adverse Effect.                                                        

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         Section 5.19.     Fees and Expenses of Brokers and Others. No member of
the Company Group (a) has had any dealings, negotiations or communications with 
any broker or other intermediary in connection with the transactions            
contemplated by this Agreement, (b) is committed to any liability for any       
brokers' or finders' fees or any similar fees in connection with the            
transactions contemplated by this Agreement or (c) has retained any broker or   
other intermediary to act on its behalf in connection with the transactions     
contemplated by this Agreement, except that the Company has engaged Ewing to    
represent it in connection with such transactions, and shall pay all of Ewing's 
fees and expenses in connection with such engagement. In addition, the Company  
has engaged Edmunds & Williams, P.C. and PricewaterhouseCoopers LLP in          
connection with the transactions contemplated by this Agreement, and the Company
shall pay all of such firms' fees and expenses in connection with such          
engagement.                                                                     

       Section 5.20.     Accuracy of Information. Neither this Agreement nor
any other document provided by any member of the Company Group or their         
respective employees or agents to Parent in connection with the transactions    
contemplated herein contains an untrue statement of a material fact or omits to 
state a material fact necessary to make the statements contained therein not    
misleading.                                                                     

        Section 5.21.     Absence of Undisclosed Liabilities. No member of the
Company Group has, as of the date hereof, or will have, as of the Effective     
Time, any liabilities or obligations of any kind, whether absolute, accrued,    
asserted or unasserted, contingent or otherwise, except liabilities, obligations
or contingencies that were (a) reflected on or accrued or reserved against in   
the consolidated balance sheet of the Company as of March 31, 2000, which is    
included in the Company SEC Reports, or reflected in the notes thereto, or (b)  
incurred after the date of such                                                 

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balance sheet in the ordinary course of business and consistent with past       
practices and which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company Group. No member of the Company Group is a party  
to any Contract, or subject to any charter or other corporate or partnership    
restriction, or subject to any judgment, order, writ, injunction, decree, rule  
or regulation, which will have a Material Adverse Effect on the Company Group.  

        Section 5.22.     Opinion of Financial Advisor. The Board of Directors
of the Company has received the written opinion of Ewing to the effect that, as 
of April 30, 2001, the Merger Consideration is fair to the holders of shares of 
Company Common Stock from a financial point of view, and a true and complete    
copy thereof has been provided to Parent.                                       

         Section 5.23.     Vote Required. The affirmative vote of the holders of
more than two-thirds of the outstanding shares of Company Common Stock entitled 
to vote thereon is the only vote of the holders of any class or series of the   
Company's capital stock necessary to approve this Agreement and the Plan of     
Merger. The Board of Directors of the Company (at a meeting duly called and     
held) has (a) unanimously approved this Agreement and the transactions          
contemplated hereby, (b) determined that the Merger is fair to and in the best  
interests of the holders of Company Common Stock, (c) resolved to recommend this
Agreement and the Plan Merger to such holders for approval and (d) directed that
this Agreement and the Plan of Merger be submitted to holders of Company Common 
Stock at the Special Meeting.                                                   

      Section 5.24.     State Takeover Statutes. The Board of Directors of
the Company has taken all action necessary to render the provisions of Sections 
13.1-725 through 13.1-727.1 of the VSCA inapplicable to the Merger and the      
transactions contemplated herein and in the Plan of Merger. No other state      
takeover statute or similar statute or regulation applies or purports to        

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apply to this Agreement, the Merger or any of the other transactions            
contemplated hereby and no provision of the Articles of Incorporation, bylaws or
other governing instruments of any member of the Company Group would, directly  
or indirectly, restrict or impair the ability of Parent to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of the Company     
Group that may be acquired or controlled by Parent as contemplated by this      
Agreement.                                                                      

  Section 5.25.     Rights Agreement. The Company and the Board of
Directors of the Company have taken all necessary action to amend the Rights    
Agreement to (a) render the Rights Agreement inapplicable with respect to the   
Merger and the other transactions contemplated by this Agreement and the Plan of
Merger, and (b) ensure that (i) none of Parent, Merger Subsidiary or any of     
their respective Affiliates (as defined in the Rights Agreement) or Associates  
(as defined in the Rights Agreement) is considered to be an Acquiring Person (as
defined in the Rights Agreement) and (ii) the provisions of the Rights          
Agreement, including the occurrence of a Distribution Date (as defined in the   
Rights Agreement), are not and shall not be triggered by reason of the          
announcement or consummation of the Merger or the consummation of any of the    
other transactions contemplated by this Agreement and the Plan of Merger. The   
Company has delivered to Parent and Merger Subsidiary a complete and correct    
copy of the Rights Agreement as amended and supplemented to the date hereof.    

ARTICLE VI

 COVENANTS

Section 6.1.      Conduct of the Business of the Company.     

                 (a) Except as otherwise expressly provided in this Agreement,
during the period from the date of this Agreement to the Effective Time, members
of the Company Group                                                            

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will conduct their respective operations according to their ordinary and usual  
course of business and consistent with past practice, and will use their        
respective reasonable best efforts to preserve intact their respective business 
organizations, to keep available the services of their officers and employees   
and to maintain satisfactory relationships with licensors, licensees, suppliers,
contractors, distributors, customers and others having material business        
relationships with them. Without limiting the generality of the foregoing, and  
except as otherwise expressly provided in this Agreement, prior to the Effective
Time, no member of the Company Group will, without the prior written consent of 
Parent:                                                                         

                (i)     amend its Articles of Incorporation, bylaws,
partnership or joint venture agreements or other organizational documents;      

                    (ii)    authorize for issuance or issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,    
subscriptions, rights to purchase or otherwise) any stock of any class or any   
other securities or interests, except as required by the terms of any Company   
Benefit Plan existing on the date hereof, or any options, warrants, rights or   
other securities outstanding as of the date hereof and disclosed pursuant to    
this Agreement;                                                                 

                  (iii)   split, combine or reclassify any shares of its
capital stock or declare, set aside or pay any dividend or other distribution   
(whether in cash, stock or property or any combination thereof) in respect of   
its capital stock, or redeem or otherwise acquire any of its securities or any  
securities of their respective Subsidiaries and Partnerships; provided, however,
that the Company may pay to its shareholders the dividend declared by the       
Company's Board of Directors on March 2, 2001, in an amount equal to $0.040 per 
share of Company Common Stock;                                                  

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                 (iv)    except in the ordinary course of business (A)
incur or assume any Funded Debt (as defined below) not currently outstanding,   
(B) assume, guarantee, endorse or otherwise become liable or responsible for the
obligations of any person, other than a Subsidiary or Partnership, (C) enter    
into any Contract, or alter, amend, modify or exercise any option under any     
existing Contract, other than in the ordinary course of business or in          
connection with the transactions contemplated by this Agreement, or (D)         
authorize any single capital expenditure which is in excess of $25,000 or       
capital expenditures which are, in the aggregate, in excess of $25,000, other   
than capital expenditures pursuant to Contracts entered into prior to the date  
hereof or reflected in the Company's fiscal 2002 capital budget previously      
furnished to Parent, and other than routine repairs to and maintenance of the   
Company's equipment;                                                            

                     (v)     make any loans, advances or capital contributions
to, or investments in, any other person, including, without limitation, the     
purchase of the securities of any other person;                                 

                      (vi)    sell any securities of any person, which are owned
by any member of the Company Group on the date hereof, in any single transaction
or series of transactions, for consideration which, individually or in the      
aggregate, is in excess of $25,000;                                             

                    (vii)   adopt or amend (except as may be required by Law
or as provided in this Agreement) any bonus, profit sharing, compensation,      
severance, termination, stock option, stock appreciation right, restricted      
stock, pension, retirement, deferred compensation, employment, severance or     
other employee benefit agreements, trusts, plans, funds or other arrangements   
for the benefit or welfare of any director, officer or employee, or (except for 
normal increases in the ordinary course of business that are consistent with    
past practices and that, in the aggregate, do not result in a material increase 
in benefits or compensation expense)                                            

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increase in any manner the compensation or fringe benefits of any director,     
officer or employee or pay any benefit not required by any existing plan or     
arrangement (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or enter  
into any Contract, agreement, commitment or arrangement to do any of the        
foregoing;                                                                      

               (viii)  except as set forth on Exhibit 6.1 attached
hereto, acquire, sell, lease or dispose of any material assets outside the      
ordinary course of business;                                                    

                     (ix)    take any action other than in the ordinary course
of business and in a manner consistent with past practice with respect to       
accounting policies or practices;                                               

               (x)     make any material Tax election or settle or
compromise any material Tax liability;                                          

                     (xi)    except for the payment of professional fees, pay,
discharge or satisfy any material claims, liabilities or obligations (absolute, 
accrued or unasserted, contingent or otherwise), other than the payment,        
discharge or satisfaction in the ordinary course of business of liabilities     
reflected or reserved against in the Company's audited consolidated balance     
sheets as of March 31, 2000, or incurred in the ordinary course of business     
since the date thereof; or                                                      

                      (xii)   hold any meeting of its shareholders except to the
extent required by the request of the shareholders entitled to call a meeting   
under the Company's bylaws or the VSCA;                                         

                      (xiii)  take any action that would or is reasonably likely
to result in any of the conditions set forth in Article VII not being satisfied 
as of the Closing Date; or                                                      

                    (xiv)   agree in writing or otherwise to take any of the
foregoing actions.                                                              

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           For purposes of this Section, "Funded Debt" shall mean,
without duplication, (i) all indebtedness for borrowed money or which has been  
incurred in connection with the acquisition of assets, in each case having a    
final maturity of one or more than one year from the date of origin thereof (or 
which is renewable or extendible at the option of the obligor for a period or   
periods more than one year from the date of origin), but excluding all payments 
in respect thereof that are required to be made within one year from the date of
any determination of Funded Debt to the extent the obligation to make such      
payments shall constitute a current liability of the obligor under GAAP, (ii)   
all rentals payable under capitalized leases and (iii) all guaranties of Funded 
Debt of others.                                                                 

                 (b) Parent and the Company agree that, during the period from
the date of this Agreement to the Effective Time: (i) they will cause           
representatives of their respective companies to meet, no less frequently than  
every two weeks, to discuss the operations and business prospects of the Company
and (ii) the Company will promptly advise Parent of the occurrence of any       
Material Adverse Effect with respect to the Company Group.                      

     Section 6.2.      No Solicitation. The Company agrees that it shall
not, after the date hereof and before the Effective Time, directly or           
indirectly, through any officer, director, employee, agent or otherwise,        
solicit, initiate or encourage submission of proposals or offers from any person
relating to any acquisition or purchase of all or (other than in the ordinary   
course of business) a substantial portion of the assets of, or any equity       
interest in, any member of the Company Group or any business combination        
involving any member of the Company Group or, except in response to an          
unsolicited written proposal regarding a Superior Proposal (as defined in       
Section 8.1(e) hereof), participate in any negotiations regarding, or furnish to
any                                                                             

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other person any information with respect to, or otherwise cooperate in any     
way with, or assist or participate in, facilitate or encourage, any effort or   
attempt by any other person to do or seek any of the foregoing. The Company     
shall promptly advise Parent if any such proposal or offer, or any inquiry or   
contact with any person with respect thereto, is made, shall promptly inform    
Parent of all the terms and conditions thereof, and shall furnish to Parent     
copies of any such written proposal or offer and the contents of any            
communications in response thereto. The Company shall not waive any provisions  
of any "standstill" agreements between the Company and any party, except to the 
extent that such waiver is, as advised by counsel, required by fiduciary        
obligations under applicable Law.                                               

Section 6.3.      The Proxy Statement.                        

            (a) The Company and Parent shall, as soon as practicable
following the execution of this Agreement, cooperate in taking steps to prepare 
and file with the SEC the Proxy Statement (in a form mutually agreeable to the  
Company and Parent). The Company and Parent shall cooperate to respond promptly 
to any comments of the SEC and the Company shall use its reasonable efforts to  
have the Proxy Statement cleared by the SEC as promptly as practicable. Promptly
after the Proxy Statement has been cleared by the SEC, the Company shall cause  
the Proxy Statement to be mailed to its shareholders and shall use its          
reasonable best efforts to solicit proxies in favor of the approval of this     
Agreement and the Plan of Merger.                                               

                 (b) The Company shall cause the Trustee of the ESOP to comply
with the pass-through voting requirements of the ESOP and the Code in a manner  
reasonably acceptable to Parent. By way of example and not of limitation, the   
Company shall cause the Trustee of the ESOP to furnish to each participant a    
copy of the Proxy Statement and such other information as                       

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may be necessary to explain the participant's right to direct the Trustee as to 
the voting of Company Common Stock allocated to his ESOP account at the Special 
Meeting and the participant's right to exercise dissenters' rights under the    
applicable provisions of the VSCA. The Company shall cause the Trustee of the   
ESOP to take such steps as may be required to assure the confidentiality of the 
ESOP participants' directions.                                                  

               (c) If, at any time prior to the Special Meeting, any event
occurs as a result of which the Proxy Statement as then amended or supplemented 
would include any untrue statement of a material fact or omit to state any      
material fact necessary to make the statements contained therein, in light of   
the circumstances under which they were made, not misleading, or if it shall be 
necessary to amend the or supplement the Proxy Statement to comply with the     
Securities Act, the Exchange Act or the rules thereunder, the Company and Parent
will cooperate to permit Parent promptly to prepare and file with the SEC and   
mail to its shareholders and the participants in the ESOP, subject to clause (a)
of this Section 6.3, an amendment or supplement that will correct such statement
or omission or effect such compliance.                                          

     Section 6.4.      Access to Information; Confidentiality Agreement.

                  (a) Between the date of this Agreement and the Effective Time,
the Company will give Parent and its authorized representatives reasonable      
access during normal business hours to all plants, offices, warehouses and other
facilities and to all books and records of the Company Group, will permit Parent
to make such inspections (including, without limitation, environmental site     
assessments of the facilities of the Company Group) as it may reasonably request
and will cause its officers and those of its Subsidiaries and Partnerships to   
furnish such financial and operating data and other information with respect to 
their businesses and properties                                                 

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as may from time to time reasonably be requested by Parent. Subject to Section  
6.7 hereof, all such information shall be kept confidential in accordance with  
the Confidentiality Agreement.                                                  

            (b) Notwithstanding the execution of this Agreement, the
Confidentiality Agreement shall remain in full force and effect through the     
Effective Time, at which time the Confidentiality Agreement shall terminate and 
be of no further force and effect. Each party hereto hereby waives the          
provisions of the Confidentiality Agreement as and to the extent necessary to   
permit the solicitation of votes of the shareholders of the Company pursuant to 
the Proxy Statement and to permit consummation of the transactions contemplated 
hereby. Each party further acknowledges that the Confidentiality Agreement shall
survive any termination of this Agreement pursuant to Section 8.1 hereof.       

     Section 6.5.      Best Efforts. Subject to the terms and conditions
herein provided and subject to fiduciary obligations under applicable Law as    
advised by counsel, 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 and advisable under applicable Law, to consummate and  
make effective the transactions contemplated by this Agreement. In case at any  
time after the Effective Time any further action is necessary or desirable to   
carry out the purposes of this Agreement, the proper officers and directors of  
each party to this Agreement shall take all such necessary action. The parties  
hereto will execute any additional instruments necessary to consummate the      
transactions contemplated hereby. Parent hereby agrees to vote all shares of    
Company Common Stock over which it, directly or indirectly, exercises voting    
control for approval of this Agreement and the Plan of Merger at the Special    
Meeting.                                                                        

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       Section 6.6.      Consents. The parties hereto each will use its best
efforts to obtain consents of, and make all required filings with, all third    
parties and Governmental Authorities necessary to the consummation of the       
transactions contemplated by this Agreement.                                    

        Section 6.7.      Public Announcements. The parties hereto have agreed
upon the text of a joint press release announcing, among other things, the      
execution of this Agreement, which joint press release shall be disseminated    
promptly following the execution hereof. The Company and Parent will consult    
with each other before issuing any additional press release or otherwise making 
any additional public statement with respect to this Agreement, the Plan of     
Merger, the Merger or the transactions contemplated herein and shall not issue  
any such press release or make any such public statement prior to such          
consultation or as to which the other party promptly and reasonably objects,    
except as may be required by Law in the written opinion of such party's counsel 
or by obligations pursuant to any listing agreement with any national securities
exchange or inter-dealer quotation system, in which case the party proposing to 
issue such press release or make such public announcement shall use its best    
efforts to consult in good faith with the other party before issuing any such   
press release or making any such public announcements.                          

Section 6.8.      Employment Matters. In the event that Parent
terminates the employment of any person listed on Exhibit 6.8 attached hereto,  
and such termination occurs prior to the expiration of eight (8) weeks following
the Closing Date, Parent shall pay to each such person an amount in cash equal  
to the product of such person's weekly salary (as of the date hereof) times the 
number of full years that such person has been continuously employed by the     
Company.                                                                        

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       Section 6.9.      Stock Options. Except as may be otherwise agreed in
writing between the Company and any holder of any Option (as hereinafter        
defined), upon the consummation of the Merger, each option to acquire Company   
Common Stock outstanding immediately prior to the Effective Time under the      
Option Plan, whether vested or unvested (each, an "Option" and, collectively,   
the "Options"), shall automatically be canceled and each holder of an Option    
shall have the right to receive from the Surviving Corporation a cash payment   
(less applicable federal, state and local withholding Taxes) in an aggregate    
amount equal to the difference, if any, between the Merger Consideration and the
exercise price of such Option as expressly stated in the applicable Option Plan,
stock option agreement or other agreement (to the extent such difference is a   
positive number) (the "Option Consideration"). The Surviving Corporation shall  
use its commercially reasonable efforts to provide checks representing the      
Option Consideration at the Closing. Options with an exercise price equal to or 
greater than the Merger Consideration will be cancelled without any             
consideration.                                                                  

    Section 6.10.     Letter of the Company's Accountants. The Company
shall use its best efforts to cause to be delivered to Parent two letters from  
PricewaterhouseCoopers LLP, one dated the date of the Proxy Statement and one   
dated the Closing Date, in form and substance reasonably satisfactory to Parent 
and customary in scope and substance for agreed-upon procedures letters         
delivered by independent accountants in connection with proxy statements similar
to the Proxy Statement.                                                         

         Section 6.11.     Opinions of Financial Advisors. The Company shall use
its best efforts to cause Ewing to provide its opinion, as of a date no earlier 
than three business days prior to the date that the Proxy Statement is mailed to
shareholders of the Company, as to the fairness of the                          

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Merger Consideration to the shareholders of the Company, from a financial point 
of view, as contemplated by this Agreement and the Plan of Merger, and shall    
include such updated opinion in the Proxy Statement.                            

Section 6.12.     Indemnification. Except as may be limited by
applicable Law, from the Effective Time and for a period of six (6) years       
thereafter, Parent shall cause the Company to maintain all rights of            
indemnification existing in favor of the directors and officers of the Company  
on terms no less favorable than those provided in the Articles of Incorporation 
and Bylaws of the Company on the date of this Agreement with respect to matters 
occurring prior to the Effective Time.                                          

   Section 6.13.     Rights Agreement. The Company shall not, unless
required to do so by a court of competent jurisdiction, (a) redeem the Rights,  
(b) amend (other than to delay the Distribution Date (as defined therein) or to 
render the Rights inapplicable to the Merger) or terminate the Rights Agreement 
prior to the Effective Time without the consent of Parent and Merger Subsidiary 
or (c) take any action that would allow any Person (as such term is defined in  
the Rights Agreement) other than Parent or Merger Subsidiary to be the          
Beneficial Owner (as such term is defined in the Rights Agreement) of 15% or    
more of the Company Common Stock without causing a Distribution Date (as such   
term is defined in the Rights Agreement) or a Triggering Event (as such term is 
defined in the Rights Agreement) to occur.                                      

     Section 6.14.     Certain Environmental Matters. The Company shall,
with respect to those environmental matters listed on Exhibit 6.14 attached     
hereto: (a) remediate such matters as soon as practicable (and in any event     
before the Closing Date) such that the subject item and the remediation work    
related thereto meets all standards of applicable or relevant and appropriate   

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requirements under Environmental Laws; (b) complete such remediation in the most
reasonably cost-effective manner that is practicable and that is consistent with
the operations of the Company as of the date hereof; and (c) provide notice to  
appropriate Governmental Authorities with respect thereto, and pay any and all  
fines and penalties (if any) associated therewith prior to the Closing Date.    
Representatives of Buyer shall be entitled to participate with the Company in   
all meetings and negotiations with Governmental Authorities regarding the       
matters listed on Exhibit 6.14 attached hereto.                                 

 ARTICLE VII

CONDITIONS PRECEDENT TO CONSUMMATION OF THE MERGER

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

             The respective obligation of each party to consummate the
Merger is subject to the satisfaction at or prior to the Effective Time of the  
following conditions precedent:                                                 

               (a) the transactions contemplated in this Agreement and the
Plan of Merger shall have been approved by the affirmative vote of the          
shareholders of the Company by the requisite vote in accordance with the VSCA;  

               (b) no order, decree or injunction shall have been enacted,
entered, promulgated or enforced by any United States court of competent        
jurisdiction or any Governmental Authority which prohibits the consummation of  
the Merger; provided, however, that the parties hereto shall use their best     
efforts to have any such order, decree or injunction vacated or reversed;       

                 (c) (i) all applicable requirements of the Exchange Act shall
have been satisfied, (ii) all notices, reports and other filings required to be 
made prior to the Effective Time                                                

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by Parent or the Company or any of their respective Subsidiaries with, and all  
consents, registrations, approvals, permits and authorizations required to be   
obtained prior to the Effective Time by Parent or the Company or any of their   
respective Subsidiaries from, any Governmental Authority in connection with the 
execution and delivery of this Agreement and the consummation of the Merger and 
the other transactions contemplated hereby by the parties hereto shall have been
made or obtained (as the case may be) and become final, except for those that   
the failure to make or to obtain are not reasonably likely to (y) have a        
Material Adverse Effect on Parent or the Company, as applicable, or (z) provide 
a reasonable basis to conclude that the parties hereto or any of their          
Affiliates or respective directors, officers, agents, advisors or other         
representatives would be subject to the risk of criminal or material financial  
liability and (iii) any applicable filings under state securities, "Blue Sky" or
takeover laws shall have been made;                                             

              (d) each of the Consulting Agreements shall remain in full
force and effect; and                                                           

               (e) the receipt of all necessary and material governmental,
regulatory, shareholder and third party lender, customer or other clearances,   
consents, licenses or approvals.                                                

       Section 7.2.      Conditions Precedent to Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the      
satisfaction or waiver at or prior to the Effective Time of the following       
conditions precedent:                                                           

               (a) the representations and warranties of Parent and Merger
Subsidiary contained in Article IV shall be true and correct in all respects (as
to representations and warranties qualified or limited by the term "Material    
Adverse Effect," the word "material," or                                        

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phrases of like import), and in all material respects (as to representations and
warranties not so limited or qualified) when made and at and as of the Effective
Time with the same force and effect as if those representations and warranties  
had been made at and as of such time except (i) to the extent such              
representations and warranties speak as of a specified earlier date, and (ii) as
otherwise contemplated or permitted by this Agreement;                          

                  (b) Parent shall, in all material respects, have performed all
obligations and complied with all covenants necessary to be performed or        
complied with by it on or before the Effective Time;                            

            (c) The Company shall have received a certificate of the
President or any Vice President of Parent, in form satisfactory to counsel for  
the Company, certifying fulfillment of the matters referred to in paragraphs (a)
and (b) of this Section 7.2;                                                    

              (d) The Company shall have received the opinion from Ewing
contemplated by Section 6.11 hereof as to the fairness of the Merger            
Consideration, from a financial point of view, to the shareholders of the       
Company; and                                                                    

                  (e) all proceedings, corporate or other, to be taken by Parent
or Merger Subsidiary in connection with the transactions contemplated by this   
Agreement, and all documents incident thereto, shall be reasonably satisfactory 
in form and substance to the Company and counsel for the Company, and Parent    
shall have made available to the Company for examination the originals or true  
and correct copies of all documents that the Company may reasonably request in  
connection with the transactions contemplated by this Agreement.                

     Section 7.3.      Conditions Precedent to Obligations of Parent and
Merger Subsidiary.                                                              

                  The obligations of Parent to consummate the Merger are subject
to the satisfaction or waiver at or prior to the Effective Time of the following
conditions precedent:                                                           

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               (a) there shall have occurred no material adverse change in
the business, financial condition or results of operations of the Company Group 
from the date hereof to the Effective Time;                                     

         (b) the representations and warranties of the Company
contained in Article V shall be true and correct in all respects (as to         
representations and warranties qualified or limited by the term "Material       
Adverse Effect," the word "material," or phrases of like import), and in all    
material respects (as to representations and warranties not so limited or       
qualified) when made and at and as of the Effective Time with the same force and
effect as if those representations and warranties had been made at and as of    
such time except (i) to the extent such representations and warranties speak as 
of a specified earlier date, and (ii) as otherwise contemplated or permitted by 
this Agreement;                                                                 

         (c) The Company shall, in all material respects, have
performed all obligations and complied with all covenants necessary to be       
performed or complied with by it on or before the Effective Time;               

                 (d) Parent shall have received a certificate of the President
or any Vice President of the Company, in form satisfactory to counsel for       
Parent, certifying fulfillment of the matters referred to in paragraphs (a)     
through (c) of this Section 7.3;                                                

               (e) all proceedings, corporate or other, to be taken by the
Company in connection with the transactions contemplated by this Agreement, and 
all documents incident thereto, shall be reasonably satisfactory in form and    
substance to Parent and Parent's counsel, and the Company shall have made       
available to Parent for examination the originals or true and correct copies of 
all documents that Parent may reasonably request in connection with the         
transactions contemplated by this Agreement;                                    

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                 (f) the holders of not more than 10% of the shares of Company
Common Stock entitled to vote at the Special Meeting shall have provided written
notice of their intent to demand payment pursuant to Section 13.1-733 of the    
VSCA;                                                                           

           (g) Parent shall have received each of the accountants'
letters contemplated by Section 6.10 hereof to be received by it; and           

           (h) Parent shall be satisfied, in its sole and absolute
discretion, with its due diligence investigation of the Company's business,     
financial condition, results of operations and prospects.                       

ARTICLE VIII

TERMINATION; AMENDMENT; WAIVER

         Section 8.1.      Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time:    

            (a) by mutual written consent of the Company and Parent;

                 (b) by the Company or Parent, if the Effective Time shall not
have occurred on or before September 30, 2001 (provided that the right to       
terminate this Agreement under this Section 8.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the 
cause of or has resulted in the failure of the Effective Time to occur on or    
before such date);                                                              

             (c) by the Company if there has been a material breach by
Parent of any representation, warranty, covenant or agreement set forth in this 
Agreement or the Plan of                                                        

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Merger, which breach has not been cured within ten business days following      
receipt by the breaching party of notice of such breach;                        

              (d) by Parent if (i) the transactions contemplated in this
Agreement and the Plan of Merger shall have been voted on by holders of Company 
Common Stock at a meeting duly convened therefor, and the votes shall not have  
been sufficient to satisfy the condition set forth in Section 7.1(a) hereof,    
(ii) there has been a material breach by the Company of any representation,     
warranty, covenant or agreement set forth in this Agreement or the Plan of      
Merger, which breach has not been cured within ten business days following      
receipt by the breaching party of notice of such breach; or (iii) the Board of  
Directors of the Company should fail to recommend to its shareholders approval  
of the transactions contemplated by this Agreement and the Plan of Merger or    
such recommendation shall have been made and subsequently withdrawn;            

         (e) by the Company if, prior to the Effective Time, a
corporation, partnership, person or other entity or group shall have made a bona
fide proposal with respect to the acquisition of all of the Company's           
outstanding capital stock, or all or substantially all of the Company's assets, 
that the Board of Directors of the Company believes, in good faith after        
consultation with its financial advisors, is more favorable, from a financial   
point of view, to the shareholders of the Company than the proposal set forth in
this Agreement and the Plan of Merger (a "Superior Proposal"); provided, that   
Parent does not make, within five business days of receiving notice of such     
third party proposal, an offer that the Board of Directors of the Company       
believes, in good faith after consultation with its financial advisors, is at   
least as favorable, from a financial point of view, to the Company's            
shareholders as such Superior Proposal;                                         

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                 (f) by Parent in the event that the Company's aggregate costs
and expenses (including, without limitation, expert and consulting fees,        
remediation costs, attorneys' fees, penalties and fines) associated with the    
Company's performance of the covenant set forth in Section 6.14 hereof exceeds  
$200,000; or                                                                    

           (g) by the Company or Parent, if any court of competent
jurisdiction in the United States or other United States Governmental Authority 
shall have issued an order, decree or ruling or taken any other action          
restraining, enjoining or otherwise prohibiting the Merger and such order,      
decree, ruling or other action shall have become final and nonappealable.       

  Section 8.2.      Effect of Termination. If this Agreement is so
terminated and the Merger is not consummated, this Agreement shall forthwith    
become void and have no effect, without any liability on the part of either     
party or its directors, officers or shareholders, other than the provisions of  
Section 6.4(b), this Section 8.2, Section 8.3 and Section 9.9.                  

Section 8.3.      Termination Fee.                            

                 (a) If this Agreement is terminated (i) by Parent pursuant to
Section 8.1(b) hereof, and the failure of the Effective Time to occur has been  
caused by or is attributable to any failure (other than a willful failure) by   
the Company to fulfill any of its obligations under this Agreement, or (ii) by  
Parent pursuant to Section 8.1(d)(ii) hereof (other than in connection with a   
willful breach by the Company of any representation, warranty, covenant or      
agreement set forth in this Agreement or the Plan of Merger), and in either case
if the Company is not entitled to terminate this Agreement by reason of Section 
8.1(c) hereof, then Parent will be entitled to pursue its remedies at law or in 
equity against the Company; provided, however, the parties                      

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hereto agree that Parent shall only be entitled to recover in any such          
proceeding its proven actual damages, not to exceed $250,000.                   

                 (b) If this Agreement is terminated (i) by Parent pursuant to
Section 8.1(b) hereof, and the failure of the Effective Time to occur has been  
caused by or is attributable to any willful failure of the Company to fulfill   
any of its obligations under this Agreement, (ii) by Parent pursuant to Section 
8.1(d)(ii) hereof in connection with a willful breach by the Company of any     
representation, warranty, covenant or agreement set forth in this Agreement or  
the Plan of Merger, (iii) by Parent pursuant to Section 8.1(d)(i) or 8.1(d)(iii)
hereof, or (iv) by the Company pursuant to Section 8.1(e) hereof, and in each   
case if the Company is not entitled to terminate this Agreement by reason of    
Section 8.1(c) hereof, then the Company shall promptly (and in any event within 
two days of receipt by the Company of written notice from Parent) pay to Parent 
(by wire transfer of immediately available funds to an account designated by    
Parent) a termination fee of $1,000,000 plus all out-of-pocket expenses         
(including all fees and expenses of its counsel, advisors, accountants and      
consultants) incurred by Parent or on its behalf in connection with the         
transactions contemplated in this Agreement.                                    

          (c) If this Agreement is terminated by the Company (i)
pursuant to Section 8.1(b) hereof, and the failure of the Effective Time to     
occur has been caused by or is attributable to any failure (other than a willful
failure) by Parent to fulfill any of its obligations under this Agreement, or   
(ii) pursuant to Section 8.1(c) hereof (other than in connection with a willful 
breach by Parent of any representation, warranty, covenant or agreement set     
forth in this Agreement or the Plan of Merger), and in each case if Parent is   
not entitled to terminate this Agreement by reason of Section 8.1(d)(ii) hereof,
then the Company will be entitled to pursue its remedies at law or in equity    
against Parent; provided, however, the parties hereto agree that the            

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Company shall only be entitled to recover in any such proceeding its proven     
actual damages, not to exceed $250,000.                                         

          (d) If this Agreement is terminated by the Company (i)
pursuant to Section 8.1(b) hereof, and the failure of the Effective Time to     
occur has been caused by or is attributable to any willful failure of Parent to 
fulfill any of its obligations under this Agreement, or (ii) pursuant to Section
8.1(c) hereof in connection with a willful breach by Parent of any              
representation, warranty, covenant or agreement set forth in this Agreement or  
the Plan of Merger, and in either case if Parent is not entitled to terminate   
this Agreement by reason of Section 8.1(d)(ii) hereof, then Parent shall        
promptly (and in any event within two days of receipt by Parent of written      
notice from the Company) pay to the Company (by wire transfer of immediately    
available funds to an account designated by the Company) a termination fee of   
$1,000,000 plus all out-of-pocket expenses (including all fees and expenses of  
its counsel, advisors, accountants and consultants) incurred by the Company or  
on its behalf in connection with the transactions contemplated in this          
Agreement.                                                                      

            (e) If this Agreement is terminated pursuant to Sections
8.1(a), (f) or (g) hereof, each of the parties hereto shall pay their respective
out-of-pocket expenses (including all fees and expenses of the respective       
counsel, advisors, accountants and consultants) incurred in connection with the 
transactions contemplated in this Agreement.                                    

                (f) This Section 8.3 shall be the sole remedy of the parties
hereto in the event of any termination of this Agreement.                       

        Section 8.4.      Amendment. This Agreement and the Plan of Merger may
be amended by action taken by both Parent and the Company at any time before or 
after approval of the transactions contemplated herein by the shareholders of   
the Company but, after any such                                                 

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approval, no amendment shall be made that would have any of the effects         
specified in VSCA Section 13.1-718(I) without the approval of the shareholders  
affected thereby. This Agreement may not be amended except by an instrument in  
writing signed on behalf of both of the parties hereto.                         

         Section 8.5.      Extension; Waiver. At any time prior to the Effective
Time, either party hereto may (a) extend the time for the performance of any of 
the obligations or other acts of the other party hereto, (b) waive any          
inaccuracies in the representations and warranties contained herein or in any   
document, certificate or writing delivered pursuant hereto by the other party   
hereto or (c) waive compliance with any of the agreements or conditions         
contained herein by the other party hereto. Any agreement on the part of any    
party to any such extension or waiver shall be valid only if set forth in an    
instrument in writing signed on behalf of such party.                           

ARTICLE IX

 MISCELLANEOUS

   Section 9.1.      Survival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the         
Effective Time.                                                                 

    Section 9.2.      Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes, except as set forth in Section 6.4(b) hereof, all 
other prior agreements and understandings, both written and oral, between the   
parties or any of them with respect to the subject matter hereof, and (b) shall 
not be assigned by operation of law or otherwise.                               

       Section 9.3.      Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given                                               

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upon receipt) by delivery in person, by cable, telecopy, telegram or telex, or  
by registered or certified mail (postage prepaid, return receipt requested) to  
the respective parties as follows:                                              

if to Parent:                               

Smithfield Foods, Inc.    
200 Commerce Street       
Smithfield, Virginia 23430
        Attention:   Michael H. Cole, Esq.
                                       Secretary and Associate General Counsel
Facsimile: (757) 365-3025 

with a copy to:                             

Hunton & Williams         
  Riverfront Plaza, East Tower
951 East Byrd Street      
    Richmond, Virginia  23219-4074
        Attention:  Gary E. Thompson, Esq.
Facsimile:  (804) 788-8218

if to the Company:                          

    The Smithfield Companies, Inc.
311 County Street         
Portsmouth, Virginia 23704
     Attention:    Richard S. Fuller
                                       President and Chief Executive Officer
Facsimile:  (757) 399-0916

with a copy to:                             

Edmunds & Williams, P.C.  
800 Main Street           
P.O. Box 958              
Lynchburg, Virginia 24505 
               Attention:  Bernard C. Baldwin, III, Esq.
Facsimile:  (804) 846-0337

or to such other address as the person to whom notice is given may have         
previously furnished to the others in writing in the manner set forth above.    

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      Section 9.4.      Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Virginia       
regardless of the laws that might otherwise govern under applicable principles  
of conflicts of laws thereof.                                                   

         Section 9.5.      Descriptive Headings. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part  
of or to affect the meaning or interpretation of this Agreement.                

        Section 9.6.      Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this  
Agreement, express or implied, is intended to or shall confer upon any other    
person any rights, benefits or remedies of any nature whatsoever under or by    
reason of this Agreement; provided, however, that, notwithstanding the          
foregoing, the persons described in Sections 6.8 and 6.12 hereof are intended   
beneficiaries of such Sections.                                                 

       Section 9.7.      Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all  
of which shall constitute one and the same agreement.                           

       Section 9.8.      Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this       
Agreement were not performed in accordance with the terms hereof and that the   
parties shall be entitled to specific performance of the terms hereof, in       
addition to any other remedy at law or equity.                                  

         Section 9.9.      Fees and Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring                                                     

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such expenses, whether or not the Merger is consummated (including, without     
limitation, legal and accounting fees).                                         

        Section 9.10.     Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law 
or public policy, all other conditions and provisions of this Agreement shall   
nevertheless remain in full force and effect so long as the economic or legal   
substance of the transactions contemplated hereby is not affected in any manner 
adverse to either party. Upon such determination that any term or other         
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the      
original intent of the parties as closely as possible in an acceptable manner,  
to the end that the transactions contemplated hereby are fulfilled to the extent
possible.                                                                       

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                  IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf by its officers thereunto duly      
authorized, all as of the day and year first above written.                     

                          SMITHFIELD FOODS, INC.

                         By: /s/ C. LARRY POPE
                                              ----------------------------------
                       Name: C. Larry Pope
                                  Its:  Vice President and Chief
                                 Financial Officer

                          TSCI ACQUISITION, INC.

                         By: /s/ C. LARRY POPE
                                              ----------------------------------
                       Name: C. Larry Pope
                                  Its:  Vice President and Chief
                                 Financial Officer

                                  THE SMITHFIELD COMPANIES, INC.

                             By: /s/ RICHARD S. FULLER
                                              ----------------------------------
                           Name: Richard S. Fuller
                   Its:  President

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                                                                      Appendix B
                                                                      ----------

 [Letterhead of Ewing Monroe Bemiss & Co.]

April 30, 2001                                                                  

Board of Directors                                                              
The Smithfield Companies, Inc.                                                  
311 County Street                                                               
Portsmouth, VA 23704                                                            

Gentlemen:                                                                      

You have asked that Ewing Monroe Bemiss & Co. ("EMB&Co.") render an opinion (the
"Opinion") as to the fairness, from a financial point of view, to the           
shareholders of The Smithfield Companies, Inc. (the "Company"), of the          
consideration (the "Consideration") to be paid by Smithfield Foods, Inc.        
("Smithfield Foods") in connection with the merger (the "Merger") of a          
wholly-owned subsidiary of Smithfield Foods into the Company pursuant to the    
draft Agreement and Plan of Merger dated April 24, 2001.                        

As part of our investment banking business, EMB&Co. regularly engages in the    
valuation of private and publicly-traded companies and debt and equity          
securities thereof, in connection with mergers and acquisitions, private        
placements and valuations for estate, corporate and other purposes.             

In arriving at our Opinion, we have taken into account such financial and other 
factors as we considered relevant and performed such investigations and analyses
as we have deemed necessary and appropriate under the circumstances. Among other
things, we have:                                                                

(i)      reviewed the Agreement and Plan of Merger and related ancillary        
documents;                                                    

(ii)     reviewed the audited financial statements of the Company for the fiscal
  years ended March 31, 1996 through 2000; the unaudited financial
         statements of the Company for the fiscal year ended March 31, 2001; the
      audited financial statements of Smithfield Foods for the fiscal year
 ended April 30, 2000; and the unaudited financial statements of
    Smithfield Foods for the nine month period ended January 28, 2001;

(iii)    reviewed such internally prepared financial and operating information  
   developed by the management of the Company as we deemed relevant;

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Board of Directors                                                              
The Smithfield Companies, Inc.                                                  
April 30, 2001                                                                  
Page 2                                                                          

(iv)     discussed the business and operations, assets, financial condition and 
   future prospects of the Company with the senior management of the
Company;                                                      

(v)      compared the Company from a financial point of view with certain other 
         publicly-traded companies in the same industry category as the Company,
and reviewed the historical performance of, and current market
      conditions for, the common stock of the Company in relation to those
other companies;                                              

(vi)     considered the terms of the Merger in light of the terms of certain    
         recent business merger and acquisition transactions involving companies
which we deemed similar to the Company;                       

(vii)    considered the future prospects of the Company, prepared discounted    
     cash flow analyses and compared the Consideration to the discounted
   present value of the cash flows that the Company could reasonably
expect to generate in the future;                             

(viii)   participated in discussions and negotiations among representatives of  
the Company and Smithfield Foods and their legal advisors; and

(ix)     performed such other investigations and analyses, and considered such  
other factors, as we deemed appropriate and relevant.         

In arriving at our Opinion, we have assumed and relied upon the accuracy and    
completeness of the information that has been provided to us by the management  
of the Company or that we have obtained from public sources. We have not        
attempted independently to verify any such information, nor have we conducted an
appraisal of the assets or liabilities of the Company, nor have we been given   
any such appraisals.                                                            

This Opinion is based on economic, market and other conditions as they exist,   
and can be evaluated, as of the date of this letter. Because subsequent         
developments may affect this Opinion, we understand that you may ask that we    
update, revise or reaffirm this Opinion at a later date. We do not hereby       
express, nor will we subsequently express, any opinion as to the price at which 
the common stock of the Company may trade at any time in the future.            

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Board of Directors                                                              
The Smithfield Companies, Inc.                                                  
April 30, 2001                                                                  
Page 3                                                                          

This Opinion is for the benefit of the Directors of the Company in connection   
with their evaluation of the Merger. This Opinion may be included in its        
entirety in any filing made by the Company with the Securities and Exchange     
Commission in respect of the Merger. We hereby express no recommendation as to  
how the shareholders of the Company should vote at any shareholders' meeting in 
connection with the Merger.                                                     

Based upon and subject to the foregoing, it is our Opinion that, as of the date 
hereof, the Consideration is fair, from a financial point of view, to the       
shareholders of the Company.                                                    

                                  Sincerely,

                                                 EWING MONROE BEMISS & CO.

                                               /s/ Mary A. Bacon

                                             By:   Mary A. Bacon
                                                       Managing Director

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                                                                      Appendix C
                                                                      ----------

[Form of Voting Agreement]

April 30, 2001  

Board of Directors                                                              
Smithfield Foods, Inc.                                                          
200 Commerce Street                                                             
Smithfield, Virginia 23430                                                      

 Agreement to Vote Shares of
The Smithfield Companies, Inc.
------------------------------
Gentlemen:                                                                      

       I, the undersigned shareholder of The Smithfield Companies, Inc. (the
"Company"), to induce Smithfield Foods, Inc. ("Parent") to enter into the       
Agreement and Plan of Merger, dated as of ______, 2001, by and among Parent,    
TSCI Acquisition, Inc. and the Company (the "Agreement"), hereby agree as       
follows:                                                                        

         (a)    to vote all shares of Company Common Stock over which I exercise
voting control (the "Shares") for approval of the Agreement at the Special      
Meeting;                                                                        

   (b)    that I will not sell, transfer, pledge, give, hypothecate,
assign or otherwise alienate or transfer (including any transfer by operation of
law or by will or by the laws of descent and distribution) any of my voting     
rights with respect to the Shares, except to a person who is a party to a voting
agreement with Parent in the form of this letter agreement;                     

(c)    irreparable damage would occur in the event any of the 
provisions of this agreement were not performed in accordance with the terms    
hereof and Parent shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or equity;                               

    (d)    this agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with  
respect to the subject matter hereof, and shall be binding upon the successors, 
assigns, heirs, executors and personal representatives (as applicable) of the   
parties hereto;                                                                 

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Board of Directors                                                              
The Smithfield Companies, Inc.                                                  
April 30, 2001                                                                  
Page 2                                                                          

       (e)    this agreement will be governed by and construed in accordance
with the laws of the Commonwealth of Virginia regardless of the laws that might 
otherwise govern under applicable principles of conflicts of laws thereof;      

      (f)    capitalized terms not otherwise defined herein shall have the
meanings given to them in the Agreement; and                                    

(g)    this agreement shall automatically terminate upon the  
termination (prior to Closing) of the Agreement pursuant to Section 8.1 thereof 
and the payment of any amounts payable by the Company to Parent pursuant to     
Section 8.3 of the Agreement.                                                   

                               Very truly yours,

Dated: April 30, 2001                          Signed:                          
     ---------------------                           -------------------------

                         Print Name:
                                                         ---------------------
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                                                                      Appendix D
                                                                      ----------
Virginia Stock Corporation Act  
Article 15. 
Dissenters' Rights. 

ss. 13.1-729. Definitions.                                    

In this article:                                              

         "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, except that (i) with respect to a merger, "corporation"   
means the surviving domestic or foreign corporation or limited liability company
by merger of that issuer, and (ii) with respect to a share exchange,            
"corporation" means the acquiring corporation by share exchange, rather than the
issuer, if the plan of share exchange places the responsibility for dissenters' 
rights on the acquiring corporation.                                            

 "Dissenter" means a shareholder who is entitled to dissent from
corporate action under ss. 13.1-730 and who exercises that right when and in the
manner required by ss.ss. 13.1-732 through 13.1-739.                            

        "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which 
the dissenter objects, excluding any appreciation or depreciation in            
anticipation of the corporate action unless exclusion would be inequitable.     

    "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the     
corporation on its principal bank loans or, if none, at a rate that is fair and 
equitable under all the circumstances.                                          

"Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to 
the extent of the rights granted by a nominee certificate on file with a        
corporation.                                                                    

        "Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder.                             

"Shareholder" means the record shareholder or the beneficial  
shareholder.                                                                    

ss. 13.1-730. Right to dissent.                               

         A.     A shareholder is entitled to dissent from, and obtain payment of
the fair value of his shares in the event of, any of the following corporate    
actions:                                                                        

       1.     Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by ss. 13.1-718 or 
the articles of                                                                 

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incorporation and the shareholder is entitled to vote on the                    
merger or (ii) if the corporation is a subsidiary that is merged with its parent
under ss. 13.1-719;                                                             

2.     Consummation of a plan of share exchange to which the  
corporation is a party as the corporation whose shares will be acquired, if the 
shareholder is entitled to vote on the plan;                                    

         3.     Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation if the shareholder was entitled to vote on   
the sale or exchange or if the sale or exchange was in furtherance of a         
dissolution on which the shareholder was entitled to vote, provided that such   
dissenter's rights shall not apply in the case of (i) a sale or exchange        
pursuant to court order, or (ii) a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the 
shareholders within one year after the date of sale;                            

         4.     Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board of   
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.                                            

     B.     A shareholder entitled to dissent and obtain payment for his
shares under this article may not challenge the corporate action creating his   
entitlement unless the action is unlawful or fraudulent with respect to the     
shareholder or the corporation.                                                 

  C.     Notwithstanding any other provision of this article, with
respect to a plan of merger or share exchange or a sale or exchange of property 
there shall be no right of dissent in favor of holders of shares of any class or
series which, at the record date fixed to determine the shareholders entitled to
receive notice of and to vote at the meeting at which the plan of merger or     
share exchange or the sale or exchange of property is to be acted on, were (i)  
listed on a national securities exchange or on the National Association of      
Securities Dealers Automated Quotation System (NASDAQ) or (ii) held by at least 
2,000 record shareholders, unless in either case:                               

      1.     The articles of incorporation of the corporation issuing such
shares provide otherwise;                                                       

       2.     In the case of a plan of merger or share exchange, the holders
of the class or series are required under the plan of merger or share exchange  
to accept for such shares anything except:                                      

a.     Cash;                                                  

b.     Shares or membership interests, or shares or membership
interests and cash in lieu of fractional shares (i) of the surviving or         
acquiring corporation or limited                                                

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liability company or (ii) of any other corporation or limited liability company 
which, at the record date fixed to determine the shareholders entitled to       
receive notice of and to vote at the meeting at which the plan of merger or     
share exchange is to be acted on, were either listed subject to notice of       
issuance on a national securities exchange or held of record by at least 2,000  
record shareholders or members; or                                              

        c.     A combination of cash and shares or membership interests as set
forth in subdivisions 2 a and 2 b of this subsection; or                        

      3.     The transaction to be voted on is an "affiliated transaction"
and is not approved by a majority of "disinterested directors" as such terms are
defined in ss.13.1-725.                                                         

       D.     The right of a dissenting shareholder to obtain payment of the
fair value of his shares shall terminate upon the occurrence of any one of the  
following events:                                                               

 1.     The proposed corporate action is abandoned or rescinded;

      2.     A court having jurisdiction permanently enjoins or sets aside
the corporate action; or                                                        

        3.     His demand for payment is withdrawn with the written consent of
the corporation.                                                                

E.     Notwithstanding any other provision of this article, no
shareholder of a corporation located in a county having a county manager form of
government and which is exempt from income taxation under ss. 501 (c) or ss. 528
of the Internal Revenue Code and no part of whose income inures or may inure to 
the benefit of any private share holder or individual shall be entitled to      
dissent and obtain payment for his shares under this article.                   

ss. 13.1-731. Dissent by nominees and beneficial owners.      

       A.     A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in his name only if he dissents with respect to  
all shares beneficially owned by any one person and notifies the corporation in 
writing of the name and address of each person on whose behalf he asserts       
dissenters' rights. The rights of a partial dissenter under this subsection are 
determined as if the shares as to which he dissents and his other shares were   
registered in the names of different shareholders.                              

     B.     A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if:                                              

       1.     He submits to the corporation the record shareholder's written
consent to                                                                      

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the dissent not later than the time the beneficial shareholder asserts          
dissenters' rights; and                                                         

 2.     He does so with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the vote.           

ss. 13.1-732. Notice of dissenters' rights.                   

       A.     If proposed corporate action creating dissenters' rights under
ss. 13.1-730 is submitted to a vote at a shareholders' meeting, the meeting     
notice shall state that shareholders are or may be entitled to assert           
dissenters' rights under this article and be accompanied by a copy of this      
article.                                                                        

  B.     If corporate action creating dissenters' rights under ss.
13.1-730 is taken without a vote of shareholders, the corporation, during the   
ten-day period after the effectuation of such corporate action, shall notify in 
writing all record shareholders entitled to assert dissenters' rights that the  
action was taken and send them the dissenters' notice described in ss. 13.1-734.

ss. 13.1-733. Notice of intent to demand payment.             

       A.     If proposed corporate action creating dissenters' rights under
ss. 13.1-730 is submitted to a vote at a shareholders' meeting, a shareholder   
who wishes to assert dissenters' rights (i) shall deliver to the corporation    
before the vote is taken written notice of his intent to demand payment for his 
shares if the proposed action is effectuated and (ii) shall not vote such shares
in favor of the proposed action.                                                

B.     A shareholder who does not satisfy the requirements of 
subsection A of this section is not entitled to payment for his shares under    
this article.                                                                   

ss. 13.1-734. Dissenters' notice.                             

       A.     If proposed corporate action creating dissenters' rights under
ss. 13.1-730 is authorized at a shareholders' meeting, the corporation, during  
the ten-day period after the effectuation of such corporate action, shall       
deliver a dissenters' notice in writing to all shareholders who satisfied the   
requirements of ss. 13.1-733.                                                   

B.     The dissenters' notice shall:                          

        1.     State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;                        

        2.     Inform holders of uncertificated shares to what extent transfer
of the shares will be restricted after the payment demand is received;          

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      3.     Supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the terms of the     
proposed corporate action and requires that the person asserting dissenters'    
rights certify whether or not he acquired beneficial ownership of the shares    
before or after that date;                                                      

     4.     Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty nor more than sixty days after  
the date of delivery of the dissenters' notice; and                             

5.     Be accompanied by a copy of this article.              

ss. 13.1-735. Duty to demand payment.                         

 A.     A shareholder sent a dissenters' notice described in ss.
13.1-734 shall demand payment, certify that he acquired beneficial ownership of 
the shares before or after the date required to be set forth in the dissenters' 
notice pursuant to subdivision 3 of subsection B of ss. 13.1-734, and, in the   
case of certificated shares, deposit his certificates in accordance with the    
terms of the notice.                                                            

         B.     The shareholder who deposits his shares pursuant to subsection A
of this section retains all other rights of a shareholder except to the extent  
that these rights are canceled or modified by the taking of the proposed        
corporate action.                                                               

         C.     A shareholder who does not demand payment and deposits his share
certificates where required, each by the date set in the dissenters' notice, is 
not entitled to payment for his shares under this article.                      

ss. 13.1-736. Share restrictions.                             

    A.     The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received.                  

  B.     The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder except to the   
extent that these rights are canceled or modified by the taking of the proposed 
corporate action.                                                               

ss. 13.1-737. Payment.                                        

     A.     Except as provided in ss. 13.1-738, within thirty days after
receipt of a payment demand made pursuant to ss. 13.1-735, the corporation shall
pay the dissenter the amount the corporation estimates to be the fair value of  
his shares, plus accrued interest. The obligation of the corporation under this 
paragraph may be enforced (i) by the circuit court in the city or county where  
the corporation's principal office is located, or, if none in this Commonwealth,
where its registered office is located or (ii) at the election of any           

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dissenter residing or having its principal office in the Commonwealth, by the   
circuit court in the city or county where the dissenter resides or has its      
principal office. The court shall dispose of the complaint on an expedited      
basis.                                                                          

B.     The payment shall be accompanied by:                   

       1.     The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the effective date of the corporate  
action creating dissenters' rights, an income statement for that year, a        
statement of changes in shareholders' equity for that year, and the latest      
available interim financial statements, if any;                                 

       2.     An explanation of how the corporation estimated the fair value
of the shares and of how the interest was calculated;                           

3.     A statement of the dissenters' right to demand payment 
under ss.13.1-739; and                                                          

4.     A copy of this article.                                

ss. 13.1-738. After-acquired shares.                          

    A.     A corporation may elect to withhold payment required by ss.
13.1-737 from a dissenter unless he was the beneficial owner of the shares on   
the date of the first publication by news media or the first announcement to    
shareholders generally, whichever is earlier, of the terms of the proposed      
corporate action, as set forth in the dissenters' notice.                       

       B.     To the extent the corporation elects to withhold payment under
subsection A of this section, after taking the proposed corporate action, it    
shall estimate the fair value of the shares, plus accrued interest, and shall   
offer to pay this amount to each dissenter who agrees to accept it in full      
satisfaction of his demand. The corporation shall send with its offer an        
explanation of how it estimated the fair value of the shares and of how the     
interest was calculated, and a statement of the dissenter's right to demand     
payment under ss. 13.1-739.                                                     

     ss. 13.1-739. Procedure if shareholder dissatisfied with payment or
offer.                                                                          

     A.     A dissenter may notify the corporation in writing of his own
estimate of the fair value of his shares and amount of interest due, and demand 
payment of his estimate (less any payment under ss. 13.1-737), or reject the    
corporation's offer under ss. 13.1-738 and demand payment of the fair value of  
his shares and interest due, if the dissenter believes that the amount paid     
under ss. 13.1-737 or offered under ss. 13.1-738 is less than the fair value of 
his shares or that the interest due is incorrectly calculated.                  

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  B.     A dissenter waives his right to demand payment under this
section unless he notifies the corporation of his demand in writing under       
subsection A of this section within thirty days after the corporation made or   
offered payment for his shares.                                                 

ss. 13.1-740. Court action.                                   

      A.     If a demand for payment under ss. 13.1-739 remains unsettled,
the corporation shall commence a proceeding within sixty days after receiving   
the payment demand and petition the circuit court in the city or county         
described in subsection B of this section to determine the fair value of the    
shares and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay each dissenter whose demand remains   
unsettled the amount demanded.                                                  

     B.     The corporation shall commence the proceeding in the city or
county where its principal office is located, or, if none in this Commonwealth, 
where its registered office is located. If the corporation is a foreign         
corporation without a registered office in this Commonwealth, it shall commence 
the proceeding in the city or county in this Commonwealth where the registered  
office of the domestic corporation merged with or whose shares were acquired by 
the foreign corporation was located.                                            

  C.     The corporation shall make all dissenters, whether or not
residents of this Commonwealth, whose demands remain unsettled parties to the   
proceeding as in an action against their shares and all parties shall be served 
with a copy of the petition. Nonresidents may be served by registered or        
certified mail or by publication as provided by law.                            

  D.     The corporation may join as a party to the proceeding any
shareholder who claims to be a dissenter but who has not, in the opinion of the 
corporation, complied with the provisions of this article. If the court         
determines that such shareholder has not complied with the provisions of this   
article, he shall be dismissed as a party.                                      

 E.     The jurisdiction of the court in which the proceeding is
commenced under subsection B of this section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend 
a decision on the question of fair value. The appraisers have the powers        
described in the order appointing them, or in any amendment to it. The          
dissenters are entitled to the same discovery rights as parties in other civil  
proceedings.                                                                    

     F.     Each dissenter made a party to the proceeding is entitled to
judgment (i) for the amount, if any, by which the court finds the fair value of 
his shares, plus interest, exceeds the amount paid by the corporation or (ii)   
for the fair value, plus accrued interest, of his after-acquired shares for     
which the corporation elected to withhold payment under ss. 13.1-738.           

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ss. 13.1-741. Court costs and counsel fees.                   

 A.     The court in an appraisal proceeding commenced under ss.
13.1-740 shall determine all costs of the proceeding, including the reasonable  
compensation and expenses of appraisers appointed by the court. The court shall 
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to 
the extent the court finds the dissenters did not act in good faith in demanding
payment under ss. 13.1-739.                                                     

      B.     The court may also assess the reasonable fees and expenses of
experts, excluding those of counsel, for the respective parties, in amounts the 
court finds equitable:                                                          

         1.     Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the           
requirements of ss.ss.13.1-732 through 13.1-739; or                             

       2.     Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and        
expenses are assessed did not act in good faith with respect to the rights      
provided by this article.                                                       

C.     If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,   
the court may award to these counsel reasonable fees to be paid out of the      
amounts awarded the dissenters who were benefited.                              

         D.     In a proceeding commenced under subsection A of ss. 13.1-737 the
court shall assess the costs against the corporation, except that the court may 
assess costs against all or some of the dissenters who are parties to the       
proceeding, in amounts the court finds equitable, to the extent the court finds 
that such parties did not act in good faith in instituting the proceeding.      

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THE SMITHFIELD COMPANIES, INC.
 This Proxy is solicited on behalf of the Board of Directors

     The undersigned hereby appoints RICHARD S. FULLER and PETER D. PRUDEN, III,
and each of them, as Proxies (and if the undersigned is a Proxy, as substitute  
Proxy), each with full power of substitution, and hereby authorizes each of them
to represent and to vote, as designated below, all shares of common stock of The
Smithfield Companies, Inc. held of record by the undersigned on ________, 2001, 
at a Special Meeting of Shareholders to be held on ________, 2001, or any       
adjournments thereof.                                                           

 Please mark your vote as in this example using dark ink only [X].

1.   To approve the Agreement and Plan of Merger, dated as of April 30, 2001, by
and among The Smithfield Companies, Inc., Smithfield Foods, Inc. and a
     wholly-owned subsidiary of Smithfield Foods, Inc., providing for the merger
    of the wholly-owned subsidiary of Smithfield Foods, Inc. with and into The
Smithfield Companies, Inc. as described in the proxy statement.       

[ ]  FOR              [ ]  AGAINST              [ ]  ABSTAIN

The Board of Directors recommends a vote "FOR" the above proposal.    

2.   In their discretion, the Proxies are authorized to vote upon such other    
business as may properly come before the special meeting.             

  This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will 
be voted for Proposal 1 above, and if any other business is presented at such   
meeting, this Proxy will be voted by those named in the Proxy in their best     
judgment.                                                                       

[ ] PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE MEETING.              

                                  Dated: _______________________, 2001

                                              ----------------------------------
                                             Signature

                                              ----------------------------------
                                               Signature if held jointly

                                            PLEASE SIGN EXACTLY AS YOUR NAME
                                            APPEARS ON THIS PROXY CARD, DATE
                                           AND MAIL THIS PROXY PROMPTLY IN
                                        THE ENCLOSED POSTAGE-PREPAID
                                          ENVELOPE. When shares are held
                                             jointly, each holder should sign.
                                     When signing as attorney,
                                            executor, administrator, trustee
                                         or guardian, please give full
                                            title as such. If a corporation,
                                              please sign in full corporate name
                                     by the President or other
                                    authorized officer. If a
                                            partnership or limited liability
                                         company, an authorized person
                                          should sign in the name of the
                              applicable entity.

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 [The Smithfield Companies, Inc. letterhead]

                                                                  ________, 2001

To:  Participants in The Smithfield Companies, Inc. Employee Stock Ownership    
Plan                                                                  

Enclosed are proxy materials for use in connection with The Smithfield
Companies, Inc.'s special meeting of shareholders to be held on ______, 2001.   
Also enclosed are the instructions for Wachovia Bank, N.A. to vote the shares of
The Smithfield Companies, Inc. common stock allocated to your account in The    
Smithfield Companies, Inc. Employee Stock Ownership Plan (the "Plan"). It is    
important that you instruct Wachovia Bank, the trustee of the Plan, to vote the 
shares allocated to your Plan account by completing and returning the enclosed  
instructions. All voting instructions given to Wachovia Bank will be            
confidential.                                                                   

     To be effective, your voting instructions must be received by Wachovia Bank
by the close of business (4:00 p.m. EDT) on _______, 2001. If you do not direct 
the vote of the shares of common stock allocated to your Plan account, Wachovia 
Bank will not vote those shares. You may revoke your voting instructions by     
delivering a written notice of revocation to Wachovia Bank at the address below 
by the close of business (4:00 p.m. EDT) on _________, 2001. Any notice of      
revocation must be timely, contain your name, your social security number and be
signed and dated.                                                               

 Wachovia Bank, N.A.

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

     As a participant in the Plan, you are invited to attend the special meeting
of shareholders of The Smithfield Companies, Inc. to be held at                 
____________________ on _________________, 2001, at __:___ a.m. If you plan to  
attend the meeting and have not otherwise received an admission card, you may   
request an admission card by contacting our corporate office in Portsmouth,     
Virginia at (757) 399-3100.                                                     

        Sincerely,

                  Peter D. Pruden, III
       Secretary

PLEASE MARK THE ENCLOSED VOTING INSTRUCTIONS
 AND MAIL TO WACHOVIA BANK IN THE ENVELOPE PROVIDED.

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 VOTING INSTRUCTIONS

TO:  WACHOVIA BANK, N.A.                                                        
 Trustee of The Smithfield Companies, Inc. Employee Stock Ownership Plan

With respect to the shares of common stock of The Smithfield Companies, Inc.    
allocated to my account in The Smithfield Companies, Inc. Employee Stock        
Ownership Plan, you are directed to sign and forward a proxy in the form being  
solicited by the board of directors of The Smithfield Companies, Inc. to        
instruct the persons named therein, or their substitutes, to vote in accordance 
with the proxy statement as designated below.                                   

The board of directors unanimously recommends a vote FOR the following proposal:

1.  To approve the Agreement and Plan of Merger, dated as of April 30, 2001, by 
and among The Smithfield Companies, Inc., Smithfield Foods, Inc. and a          
wholly-owned subsidiary of Smithfield Foods, Inc., providing for the merger of  
the wholly-owned subsidiary of Smithfield Foods, Inc. with and into The         
Smithfield Companies, Inc. as described in the proxy statement.                 

[ ]  FOR              [ ]  AGAINST              [ ]  ABSTAIN

 PLEASE MARK
CHOICE LIKE THIS [X]

Signature                                          Date __________________, 2001
-----------------------                                     

 PLEASE MAIL THESE INSTRUCTIONS IN THE ENCLOSED POSTAGE PAID
ENVELOPE TO WACHOVIA BANK.

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PREM14A’ Filing		Date		First		Last			Other Filings
		9/30/01		6		99
For Period End:		6/29/01							10-K,  DEF 14A
Filed on:		5/11/01		2
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		8/14/00		39					10-Q
		6/30/00		39					10-Q
		6/27/00		24		39			10-K,  DEF 14A
		4/30/00		109
		3/31/00		24		87			10-K,  DEF 14A
		1/1/00		22
		3/31/99		48					10-K,  DEF 14A
		3/31/98		48		66			10-K,  DEF 14A
		4/16/97		77
		3/31/96		109					10-K,  DEF 14A
									List all Filings