EXHIBIT 4(e)
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                                   TELMARK LLC







                              --------------------
                                 NOTE AGREEMENT
                              --------------------



                           DATED AS OF AUGUST 1, 2002









           $35,000,000 4.34% SERIES A SENIOR NOTES DUE AUGUST 1, 2004
           $25,000,000 4.94% SERIES B SENIOR NOTES DUE AUGUST 1, 2005
           $40,000,000 6.09% SERIES C SENIOR NOTES DUE AUGUST 1, 2012



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<PAGE>
                                TABLE OF CONTENTS
                                                                            PAGE

1.   PURCHASE AND SALE OF NOTES ............................................   1
     1.1.  Issue of Notes. .................................................   1
     1.2.  Purchase of the Notes. ..........................................   2
     1.3.  Expenses; Issue Taxes. ..........................................   2
     1.4.  Source of Funds. ................................................   3
     1.5.  Failure to Deliver, Failure of Conditions. ......................   4
     1.6.  Representations and Closing Conditions. .........................   4

2.   PAYMENT OF THE NOTES ..................................................   4
     2.1.  Required Payments of Principal and Interest. ....................   4
     2.2.  Optional Prepayment of Principal. ...............................   5
     2.3.  Notice, Pro-Rata Payments. ......................................   5
     2.4.  Offer to Prepay upon Change in Control. .........................   6

3.   INFORMATION AS TO COMPANY .............................................   8
     3.1.  Financial and Business Information. .............................   8
     3.2.  Officer's Certificates. .........................................  10
     3.3.  Accountants' Certificates. ......................................  10
     3.4.  Inspection. .....................................................  10
     3.5.  Report to NAIC. .................................................  11

4. COMPANY BUSINESS COVENANTS ..............................................  11
     4.1.  Payment of Taxes and Claims. ....................................  11
     4.2.  Maintenance of Properties and Existence. ........................  11
     4.3.  Maintenance of Office. ..........................................  12
     4.4.  Tangible Net Worth. .............................................  12
     4.5.  Debt. ...........................................................  12
     4.6.  Interest Coverage. ..............................................  13
     4.7.  Debt Ratio. .....................................................  13
     4.8.  Guaranties. .....................................................  13
     4.9.  Liens and Encumbrances. .........................................  13
     4.10. Distributions and Restricted Investments. .......................  15
     4.11. Leases. .........................................................  16
     4.12. Disposal of a Restricted Subsidiary. ............................  17
     4.13. Sale of Assets or Merger. .......................................  18
     4.14. Sale or Discount of Receivables. ................................  20
     4.15. Restrictions on Business. .......................................  20
     4.16. Transactions With Affiliates. ...................................  20
     4.17. Restricted Subsidiary Indebtedness. .............................  21
     4.18. ERISA Compliance. ...............................................  21
     4.19. Federal Tax Consolidation. ......................................  21
     4.20. Equal Support Rights. ...........................................  22

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5.   DEFAULT ...............................................................  23
     5.1.  Nature of Default. ..............................................  23
     5.2.  Default Remedies. ...............................................  25

6.   INTERPRETATION OF THIS AGREEMENT ......................................  26
     6.1.  Terms Defined. ..................................................  26
     6.2.  Accounting Principles. ..........................................  43
     6.3.  Directly or Indirectly. .........................................  43
     6.4.  Section Headings, Table of Contents; Independent Construction. ..  43
     6.5.  Governing Law. ..................................................  44

7.   PURCHASER'S SPECIAL RIGHTS ............................................  44
     7.1.  Registration of Notes. ..........................................  44
     7.2.  Exchange of Notes. ..............................................  44
     7.3.  Replacement of Notes. ...........................................  44
     7.4.  Direct Payment. .................................................  44

8.   MISCELLANEOUS .........................................................  45
     8.1.  Notices. ........................................................  45
     8.2.  Reproduction of Documents. ......................................  45
     8.3.  Purchase for Investment. ........................................  46
     8.4.  Successors and Assigns. .........................................  46
     8.5.  Amendment and Waiver; Acquisition of Notes. .....................  46
     8.6.  Payments, When Received. ........................................  47
     8.7.  Duplicate Originals. ............................................  47

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                       ANNEXES, ATTACHMENTS AND EXHIBITS


Annex 1:                   Purchaser Information
Attachment A-1:            Form of Series A Senior Note
Attachment A-2:            Form of Series B Senior Note
Attachment A-3:            Form of Series C Senior Note
Attachment B:              Warranties and Representations
Schedule A:                Disclosure Schedule to Attachment B
Attachment C:              Closing Conditions
Exhibit A1:                Form of Company General Counsel's Opinion
Exhibit A2:                Form of Company Delaware Counsel's Opinion
Exhibit A3:                Form of Purchasers' Special Counsel's Opinion
Exhibit B:                 Form of Company Officer's Certificate
Exhibit C:                 Form of Company Secretary's Certificate



                                       iii
<PAGE>
                                   TELMARK LLC

                                 NOTE AGREEMENT

           $35,000,000 4.34% SERIES A SENIOR NOTES DUE AUGUST 1, 2004
           $25,000,000 4.94% SERIES B SENIOR NOTES DUE AUGUST 1, 2005
           $40,000,000 6.09% SERIES C SENIOR NOTES DUE AUGUST 1, 2012


                                                      Dated as of August 1, 2002

To the Purchaser Named on
the Signature Page Hereto

Dear Purchaser:

Telmark LLC, a Delaware limited liability company (the "Company"), hereby agrees
with you as follows:

1.   PURCHASE AND SALE OF NOTES

     1.1.      ISSUE OF NOTES.

               (a)  The Company will authorize the issue of:

                    (i)  Thirty-Five  Million  Dollars  ($35,000,000)  principal
               amount of its 4.34% Series A Senior Notes due August 1, 2004 (the
               "Series A Notes"),

                    (ii)  Twenty-Five Million  Dollars  ($25,000,000)  principal
               amount of its 4.94% Series B Senior Notes due August 1, 2005 (the
               "Series B Notes"), and

                    (iii) Forty Million Dollars ($40,000,000)  principal  amount
               of its 6.09% Series C  Senior  Notes  due  August  1,  2012  (the
               "Series C Notes", and together with the Series A  Notes  and  the
               Series B Notes, the "Notes").

               (b)  The Notes shall rank pari passu  with  the  Company's  other
     unsecured  Senior  Debt  and will be in the  form of the  Notes  set out in
     Attachment A-1 hereto in the case of the Series A Notes,  in Attachment A-2
     hereto in the case of the Series B Notes,  and in Attachment  A-3 hereto in
     the case of the Series C Notes.  Each Note will bear interest on the unpaid
     principal  balance  thereof  from the date of the Note at the  annual  rate
     indicated with respect to Notes of such series in Section 1.1(a) hereof. If
     payment  on any  note is not  paid  when  due,  such  unpaid  amount  shall
     thereafter bear interest until paid at an annual rate equal to 2% per annum
     in excess of the rate  indicated  with  respect to Notes of such  series in
<PAGE>
     Section 1.1(a) hereof. Interest payable on the Notes shall be calculated on
     the basis of a 360-day year consisting of twelve 30-day months.

     1.2.      PURCHASE OF THE NOTES.

               (a)  Subject to the provisions of this  Agreement,  the   Company
     hereby  agrees to sell to you and you  hereby  agree to  purchase  from the
     Company,  Notes in the  aggregate  principal  amount  and in the series set
     forth opposite your name on Annex I hereto at one hundred percent (100%) of
     the principal amount thereof.  The closing (the "Closing") of your purchase
     will be held at 10:00  a.m.  on August 1, 2002 or such other date as may be
     mutually  agreed upon by you,  the Company  and the Other  Purchasers  (the
     "Closing Date") at the office of your special  counsel,  Bingham  McCutchen
     LLP, Hartford,  Connecticut.  On the Closing Date, the Company will deliver
     to you one or more  Notes  (as set  forth  opposite  your  name on  Annex 1
     hereto)  of the  series  and in the  aggregate  principal  amount  of  your
     purchase, dated the Closing Date, and registered in the manner specified in
     Annex 1 hereto,  against  payment  to the  Company  by  federal  funds wire
     transfer in immediately available funds of the purchase price thereof.

               (b)  Contemporaneously herewith, the Company  is  entering   into
     separate Note Agreements (the "Other Agreements") identical (except for the
     name and signature of the purchasers) to this Agreement (this Agreement and
     the Other Agreements being herein sometimes referred to,  collectively,  as
     the "Note  Agreement") with each other purchaser  (individually,  an "Other
     Purchaser"  and  collectively,  the "Other  Purchasers")  listed on Annex 1
     hereto,  providing  for the sale to each  Other  Purchaser  of Notes of the
     series and in the aggregate principal amount set forth opposite its name on
     such  Annex 1  hereto.  This  Agreement  and  the  Other  Agreements  shall
     constitute   one  single   agreement  for  purposes  of  New  York  General
     Obligations Law Section 5-501.

     1.3.      EXPENSES; ISSUE TAXES.

     Whether or not the Notes are  sold,  the  Company  will  pay  all  expenses
relating to this Agreement, including but not limited to:

               (a)  the cost of reproducing this Agreement and the Notes;

               (b)  the  reasonable  fees  and  disbursements  of  your  special
     counsel;

               (c) the  cost  of  delivering  to or from  your  home  office  or
     custodian bank, insured  to your satisfaction,  the Notes purchased by you,
     any Note  surrendered  by you to the Company pursuant to this Agreement and
     any Note  issued to you in  substitution  or replacement  for a surrendered
     Note;

               (d) all costs  relating  to any  amendments,  waivers or consents
     pursuant  to  the  provisions  hereof  whether  or not any such  amendment,
     waiver or consent  becomes effective;

               (e) all costs,  reasonable  attorney's fees and expenses of every
     kind  and character  incurred in the  enforcement  or defense of any of the
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     provisions  of  this   Agreement  or  the  Notes,   the  preparation   for,
     negotiations regarding,  consultations  concerning, or the defense of legal
     proceedings  involving,  any claim or claims made or threatened against you
     arising out of this Agreement or the Notes; and

               (f) the cost of obtaining a private placement number with respect
     to  the  Notes  from the  CUSIP  Service  Bureau  of  Standard  & Poor's (a
     division  of The McGraw-Hill  Companies (in cooperation with the Securities
     Valuation  Office of the National Association of Insurance Commissioners)).

     The  Company will pay all taxes in connection with the issuance and sale of
the Notes and in connection with any modification of the Notes and will save you
harmless  against  any and all  liabilities  with  respect  to such  taxes.  The
obligations  of the Company  under this Section 1.3 shall survive the payment of
the Notes and the termination of this Agreement.

     1.4.      SOURCE OF FUNDS.

     You represent, with respect to the funds with which you are  acquiring  the
Notes, either that:

               (a) GENERAL  ACCOUNT -- such funds are from your general  account
     assets or from assets of one or more  segments of such general account,  as
     the case may be, and that, solely  for purposes of determining whether such
     acquisition is a "prohibited   transaction" (as provided for in section 406
     of ERISA or section 4975  of the IRC),  all  requirements  for an exemption
     under DOL  Prohibited   Transaction  Exemption  95-60 (60 Federal  Register
     35925,  July 12, 1995)  which are within your control have been  satisfied.
     It is understood that  in making the  representation set out in this clause
     (a) you are  relying  on the  representations  of the  Company set forth in
     Section 17(d) of  Attachment B hereto);

               (b)  SEPARATE  ACCOUNT  --  such  funds  are  attributable  to  a
     "separate  account" (as defined in section 3 of ERISA),

                    (i) 10% POOLED  SEPARATE  ACCOUNT -- in respect of which all
               requirements  for an exemption  under DOL Prohibited  Transaction
               Class  Exemption  90-1  are met with  respect  to the use of such
               funds to purchase the Notes,

                    (ii) IDENTIFIED PLAN ASSETS -- that is comprised of employee
               benefit  plans  identified  by you in writing and with respect to
               which the Company hereby warrants and represents  that, as of the
               Closing  Date,  neither the Company nor any ERISA  Affiliate is a
               "party  in  interest"  (as  defined  in  section 3 of ERISA) or a
               "disqualified  person"  (as  defined in section  4975 of the IRC)
               with respect to any plan so identified, or

                    (iii)  GUARANTEED  SEPARATE  ACCOUNT  -- that is  maintained
               solely in connection  with fixed  contractual  obligations  of an
               insurance company,  under which any amounts payable, or credited,
               to any  employee  benefit plan having an interest in such account

                                       3

<PAGE>
               and to any  participant or beneficiary of such plan (including an
               annuitant)  are not  affected  in any  manner  by the  investment
               performance  of the  separate  account (as  provided by 29 C.F.R.
               section 2510.3-101 (h)(1)(iii));

               (c) QUALIFIED  PLAN ASSET MANAGER -- such funds are  attributable
     to an  "investment  fund" managed by a  "qualified  plan" asset manager (as
     such  terms are  defined  in Part V of DOL   Prohibited  Transaction  Class
     Exemption  84-14)  and  all  requirements   for  an  exemption  under  such
     Exemption  are  met with  respect to the use of such funds to purchase  the
     Notes;  or

               (d) EXCLUDED PLAN -- such funds are  attributable  to an employee
     benefit plan  that is excluded from the  provisions of section 406 of ERISA
     by virtue of  section 4(b) of ERISA.

     1.5.      FAILURE TO DELIVER, FAILURE OF CONDITIONS.

     If at  the  Closing  the  Company  fails to  tender  to you the Notes to be
purchased by you thereat, or if the conditions  specified in Attachment C hereto
have not been  fulfilled,  you may thereupon elect to be relieved of all further
obligations  under this Agreement.  Nothing in this Section 1.5 shall operate to
relieve the Company  from any of its  obligations  hereunder  or to waive any of
your rights against the Company.

     1.6.      REPRESENTATIONS AND CLOSING CONDITIONS.

     To induce you to enter into this  Agreement and to purchase the Notes,  the
Company  makes the  warranties  and  representations  set forth in  Attachment B
hereto,  effective as of the Closing Date. Your obligation to purchase the Notes
at the Closing is subject to the satisfaction of all of the conditions precedent
listed in Attachment C hereto.

2.   PAYMENT OF THE NOTES

     2.1.      REQUIRED PAYMENTS OF PRINCIPAL AND INTEREST

               (a) The Company shall pay :

                   (i)  the entire outstanding  principal amount of the Series A
               Notes and all interest accrued thereon on August 1, 2004.

                   (ii) the  entire outstanding principal amount of the Series B
               Notes and all interest accrued thereon on August 1, 2005.

                   (iii) in  addition to paying the entire outstanding principal
               amount of the Series C Notes and all interest  accrued thereon on
               August 1, 2012, the Company shall prepay $10,000,000 of principal
               of the  Series C Notes on  August  1,  2006,  and  $5,000,000  of
               principal of the Series C Notes on each of August 1, 2007, August
               1, 2008,  August 1, 2009, August 1, 2010 and August 1, 2011 (each
               a "Series C Required Principal Prepayment" and, collectively, the
               "Series  C  Required  Principal   Prepayments"),   together  with
               interest accrued on the Series C Notes to the date of prepayment.
                                       4
<PAGE>
               (b) Each prepayment  required by Section 2.1(a) will be allocated
     among  the  Notes of the  applicable  series  at  the time  outstanding  in
     proportion,  as  nearly  as  practicable,  to the   respective  outstanding
     principal amounts of the Notes of such series,  with   adjustments,  to the
     extent  practicable,  to equalize  for any prior   prepayments  not in such
     proportion.

               (c) The Company's  obligation to make any prepayment  required by
     Section  2.1(a)(iii)  hereof shall not be reduced by any partial prepayment
     pursuant to  Section 2.2 hereof.

               (d) Interest on the Notes shall be paid  semi-annually in arrears
     on August 1 and February  1 of each year  beginning  February 1, 2003 until
     the Notes are paid in full.

     2.2.      OPTIONAL PREPAYMENT OF PRINCIPAL.

               (a) The  Company  may prepay the Notes in whole or in part at any
     time, in multiples  of Fifty  Thousand  Dollars  ($50,000),  at one hundred
     percent (100%) of  the principal  amount then being prepaid,  together with
     the applicable  Make Whole Amount at such time and accrued  interest on the
     principal  amount so prepaid, accrued to the prepayment date.

               (b) If a Change in Control shall have occurred prior to August 1,
     2003, the Company may  prepay the Notes in whole,  but not in part,  within
     thirty  (30) days of  such  event,  at one  hundred  percent  (100%) of the
     principal amount then  being prepaid, together with the applicable Modified
     Make  Whole  Amount  at such time and  accrued  interest  on the  principal
     amount so prepaid, accrued to the prepayment date.

     2.3.      NOTICE, PRO-RATA PAYMENTS.

               (a) The Company  will give notice of any optional  prepayment  of
     the Notes to each  holder of the Notes  not less than  thirty (30) days nor
     more  than  sixty  (60)  days  before   the  date  fixed  for   prepayment,
     specifying:

                    (i) such date,

                    (ii)  the  aggregate  principal  amount  of the  Notes to be
               prepaid on such date

                    (iii)  the  principal  amount of such  holder's  Notes to be
               prepaid on such date

                    (iv) the interest to be paid on such holder's Note,  accrued
               to the date fixed for payment, and

                    (v) a calculation (calculated as of the date of such notice)
               of the  estimated  Make Whole  Amount,  if any, due in connection
               with such prepayment.

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<PAGE>
     Such notice of prepayment shall also certify all facts which are conditions
     precedent  to any such  prepayment.  Notice of  prepayment  having  been so
     given,  the  aggregate  principal  amount  of the Notes  specified  in such
     notice,  together with the Make Whole Amount,  if any, and accrued interest
     thereon, shall become due and payable on the specified prepayment date. Two
     (2) Business Days prior to the making of such prepayment, the Company shall
     deliver to each holder of Notes by facsimile  transmission a certificate of
     a Principal  Financial Officer of the Company specifying the details of the
     calculation of such Make Whole Amount as of the specified prepayment date.

               (b) If there is more  than one Note  outstanding,  the  principal
     amount of each optional  partial  prepayment  will be  allocated  among the
     Notes at the time outstanding  (irrespective of series) in  proportion,  as
     nearly as practicable,  to the respective outstanding principal  amounts of
     the Notes, with adjustments,  to the extent  practicable,  to  equalize for
     any prior prepayments not in such proportion.

     2.4.      OFFER TO PREPAY UPON CHANGE IN CONTROL

               (a)  NOTICE AND OFFER. In the event of either:

                    (i) a Change in Control, or

                    (ii) the  obtaining of  knowledge of a Control  Event by any
               officer of the  Company  or any  Subsidiary  (including,  without
               limitation, via the receipt of notice of a Control Event from any
               holder of Notes),

     the Company  will,  within three (3)  Business  Days of the  occurrence  of
     either of such  events,  give  written  notice of such Change in Control or
     Control  Event  to each  holder  of Notes by  certified  mail  (with a copy
     thereof  sent  via  an  overnight  courier  of  national  reputation)  and,
     simultaneously  with the sending of such written  notice,  give  telephonic
     advice of such Change in Control or Control Event to an investment  officer
     or other similar  representative  or agent of each such holder specified on
     Annex 1 hereto at the telephone number specified thereon,  or to such other
     Person at such other  telephone  number as any holder of a Note may specify
     to the Company in writing.

               In the event of a Change in Control,  such  written  notice shall
     contain, and such written notice shall constitute,  an irrevocable offer to
     prepay all,  but not less than all, the Notes held by such holder on a date
     specified in such notice (the "Control  Prepayment  Date") that is not less
     than  thirty  (30) days and not more than sixty (60) days after the date of
     such notice. If the Control  Prepayment Date shall not be specified in such
     notice, the Control Prepayment Date shall be the thirtieth (30th) day after
     the date of posting of such notice.  If the Company shall not have received
     a written response to such notice from each holder of Notes within ten (10)
     days after the date of posting of such notice to such holder of Notes, then
     the Company shall immediately send a second written notice via an overnight
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<PAGE>
     courier of national  reputation to each such holder of Notes who shall have
     not  previously  responded to the Company,  which notice shall also specify
     the Control Prepayment Date.

               (b)  ACCEPTANCE  AND  PAYMENT.  To accept or reject such  offered
     prepayment,  a holder of Notes shall cause a notice  of such  acceptance or
     rejection  to be  delivered  to the  Company on or  prior to the  fifteenth
     (15th) day after the date of receipt by such holder  of the latest  written
     offer of such prepayment (the "Offer  Determination Date"). If so accepted,
     such offered prepayment shall be due  and payable on the Control Prepayment
     Date. Such offered  prepayment shall  be made at one hundred percent (100%)
     of the  principal  amount  of  such  Notes,  together  with the  applicable
     Modified Make Whole Amount  as of the Control  Prepayment Date with respect
     thereto  and  interest   on the Notes  then  being  prepaid  accrued to the
     Control  Prepayment  Date. If a holder of Notes shall not have responded to
     such offered  prepayment on or prior to the Offer  Determination Date, such
     holder shall  be deemed to have accepted such offered prepayment.

               (c)  OFFICER'S  CERTIFICATE.  Each  offer  to  prepay  the  Notes
     pursuant  to  this  Section  2.4  shall be  accompanied  by a  certificate,
     executed  by  a  Principal  Financial  Officer of the Company and dated the
     date of  such offer, specifying:

                    (i) the Control Prepayment Date;

                    (ii) that such offer is made pursuant to Section 2.4 of this
               Agreement;

                    (iii) the  principal  amount and series of each Note offered
               to be prepaid;

                    (iv)  the  interest  that  would  be due on each  such  Note
               offered to be prepaid, accrued to the date fixed for payment;

                    (v) the  calculation  of an  estimated  Modified  Make Whole
               Amount,  if any (calculated as if the date of such notice was the
               date of  prepayment),  that would be due in connection  with such
               offered  prepayment,  accompanied  by a copy  of  any  applicable
               documentation  used in connection with determining the Make Whole
               Discount Rate in respect of such prepayment; and

                    (vi) in reasonable  detail,  the nature and date or proposed
               date of the Change in Control.

     Each such notice  shall also contain a legend  specifying  that such holder
shall be deemed to have  accepted  such offered  prepayment if such holder shall
not  have  responded  to such  offer on or prior  to the  fifteenth  (15th)  day
following such holder's receipt of such notice.

               (d)  EFFECT  OF  PREPAYMENT.   Each  partial  prepayment  of  the
     principal  of the Notes of any  series made  pursuant  to this  Section 2.4
     shall be applied  against and reduce each of  the then  remaining  Required

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<PAGE>
     Principal  Prepayments  of the  Notes and the payment of  principal  due at
     maturity by a percentage  equal to  the aggregate  principal  amount of the
     Notes of such series so prepaid divided  by the aggregate  principal amount
     of  the  Notes  of  such  series  outstanding  immediately  prior  to  such
     prepayment.

               (e) NOTICE CONCERNING STATUS OF HOLDERS OF NOTES.  Promptly after
     each  Control   Prepayment   Date  and   the  making  of  all   prepayments
     contemplated on such Control  Prepayment  Date under this Section 2.4 (and,
     in any event,  within  thirty (30)  days  thereafter),  the  Company  shall
     deliver  to each  remaining   holder  of Notes a  certificate  signed  by a
     Principal  Financial Officer of  the Company  containing a list of the then
     current holders of Notes (together  with their addresses) and setting forth
     as to each such holder  the outstanding  principal  amount of Notes of each
     series held by each such holder at such time.

3.   INFORMATION AS TO COMPANY

     3.1.      FINANCIAL AND BUSINESS INFORMATION.

     The Company will  deliver to you, if at the time you or your nominee  holds
any Notes (or if you are  obligated  to purchase  any Notes),  and to each other
Institutional Holder of outstanding Notes:

               (a) QUARTERLY STATEMENTS -- within forty-five (45) days after the
     end  of each of the first  three  quarterly  fiscal  periods in each fiscal
     year of  the Company, two copies of:

                    (i) a  consolidated  balance  sheet of the  Company  and its
               consolidated  subsidiaries,  and a consolidating and consolidated
               balance sheet of the Company and the Restricted Subsidiaries, all
               as at the end of such quarter; and

                    (ii)  consolidated  statements of income,  retained earnings
               and cash flows of the Company and its consolidated  subsidiaries,
               and similar  consolidating  and  consolidated  statements  of the
               Company and the Restricted Subsidiaries, for that quarter and for
               the portion of the fiscal year ending with such quarter;

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, and accompanied by a certificate  signed by
a  Principal  Financial  Officer  of the  Company  stating  that such  financial
statements  present  fairly  the  financial  condition  of the  companies  being
reported  upon and have been  prepared in  accordance  with  Generally  Accepted
Accounting Principles consistently applied;

               (b) ANNUAL STATEMENTS -- within ninety (90) days after the end of
     each  fiscal year of the Company, two copies of,

                    (i) a  consolidated  balance  sheet of the  Company  and its
               consolidated  subsidiaries,  and a consolidating and consolidated

                                      8

<PAGE>
               balance sheet of the Company and the Restricted Subsidiaries, all
               as at the end of that year; and

                    (ii)  consolidated  statements of income,  retained earnings
               and cash flows of the Company and its consolidated  subsidiaries,
               and similar  consolidating  and  consolidated  statements  of the
               Company and the Restricted Subsidiaries, for that year;

setting  forth in each case in  comparative  form the figures  for the  previous
fiscal  year and, in the case of  consolidated  balance  sheets and  statements,
accompanied by an opinion of a firm of independent  certified public accountants
of recognized national standing stating,  without  qualification as to the scope
of the audit or the Company's ability to continue as a going concern,  that such
financial  statements  present  fairly the financial  condition of the companies
being reported upon and have been prepared in accordance with Generally Accepted
Accounting  Principles  consistently  applied (except for changes in application
which are  noted in such  financial  statements  and in which  such  accountants
concur),  and  supplemented  by the Robert Morris  Associates  "Captive  Finance
Company Questionnaire" fully and accurately completed for such fiscal year;

               (c) SEC  AND  OTHER  REPORTS  --  promptly  upon  their  becoming
     available one copy of each  financial  statement,  report,  notice or proxy
     statement sent by the Company or any Subsidiary to stockholders  generally,
     and of each  regular or  periodic  report and any  registration  statement,
     prospectus or written  communication  (other than  transmittal  letters) in
     respect thereof filed by the Company or any Subsidiary with, or received by
     such Person in connection  therewith  from, any securities  exchange or the
     Securities and Exchange Commission or any successor agency;

               (d) NOTICE OF DEFAULT  OR EVENT OF  DEFAULT --  immediately  upon
     becoming  aware of the  existence  of any Default,  or Event of Default,  a
     written notice  describing  the nature and period of existence  thereof and
     the action the Company is taking or proposes to take with respect thereto;

               (e) NOTICE OF CLAIMED DEFAULT -- immediately  upon becoming aware
     that the holder of any other evidence of  indebtedness or other Security of
     the Company or any  Subsidiary has given notice (or taken any other action)
     with respect to a claimed default,  breach,  Default or Event of Default, a
     written notice describing the notice given (or action taken) and the nature
     of the claimed default,  breach, Default or Event of Default and the action
     the Company or such  Subsidiary,  as the case may be, is taking or proposes
     to take with respect thereto;

               (f) AUDIT REPORTS -- promptly upon receipt  thereof,  one copy of
     each  report  submitted  to  the  Company  by  independent  accountants  in
     connection  with any annual,  interim or special  audit made by them of the
     books of the Company or any Subsidiary;


               (g) ERISA -- immediately upon becoming aware of the occurrence of
     any:

                                       9
<PAGE>
                    (i)  "reportable  event," as such term is defined in Section
               4043 of ERISA, or

                    (ii)  "Prohibited  transaction,"  as such term is defined in
               Section 4975 of the IRC,

in connection with any Benefit Plan or any trust created  thereunder,  a written
notice  specifying  the nature  thereof,  what  action the  Company is taking or
proposes to take with respect thereto,  and, when known, any action taken by the
Internal  Revenue  Service,  the PBGC and/or the U.S.  Department  of Labor with
respect thereto; and

               (h) REQUESTED  INFORMATION  -- with  reasonable  promptness,  any
     other data and information  which may be reasonably  requested from time to
     time.

     3.2.      OFFICER'S CERTIFICATES.

     With each set of financial  statements delivered pursuant to Section 3.1(a)
or Section  3.1(b)  hereof,  the Company will deliver a certificate  signed by a
Principal Financial Officer of the Company setting forth:

               (a) COVENANT  COMPLIANCE  -- the  information  (including,  where
      appropriate,   detailed  calculations)  required  in  order  to  establish
      compliance  with  Section  4 hereof  during  the  periods  covered  by the
      financial statements then being furnished; and

               (b)  DEFAULT OR EVENT OF DEFAULT -- that the signer has  reviewed
      the relevant  terms of this  Agreement and has made, or caused to be made,
      under  the  signer's  supervision,   a  review  of  the  transactions  and
      conditions of the Company and the  Subsidiaries  during the period covered
      by the financial  statements  then being furnished and that the review has
      not  disclosed the existence of any Default or Event of Default or, if any
      such Default or Event of Default exists,  describing the nature and period
      of existence  thereof and what action the Company has taken or proposes to
      take with respect thereto.

     3.3.      ACCOUNTANTS' CERTIFICATES.

     Each set of  financial  statements  delivered  pursuant  to Section  3.1(b)
hereof will be accompanied by a certificate of the  accountants who certify such
financial  statements,  stating  that  they have  reviewed  this  Agreement  and
indicating whether, in making their audit, they have become aware of any Default
or Event of  Default,  and,  if any such  Default  or Event of  Default  exists,
describing its nature.

     3.4.      INSPECTION.

     The Company  will permit your  representatives,  while you or your  nominee
holds any Note, or the representatives of any other Institutional  Holder of the
Notes  to  visit  and  inspect  any of the  Properties  of  the  Company  or any
Subsidiary,  to examine  and make  copies  and  extracts  of all their  books of
account,  records,  reports and other papers,  and to discuss  their  respective
affairs,  finances and accounts with their respective  officers,  employees with

                                       10
<PAGE>
management duties and independent  public accountants (and by this provision the
Company  authorizes said  accountants to discuss the finances and affairs of the
Company and the  Subsidiaries),  all at reasonable  times and as often as may be
reasonably  requested.  The costs of each such inspection  shall be borne by the
holder conducting same; provided that if a Default or an Event of Default exists
at the time of an inspection,  the costs of such inspection shall be paid by the
Company.

     3.5.      REPORT TO NAIC.

     Concurrently with the delivery to you of each annual statement  required by
Section  3.1(b) hereof,  the Company will deliver a copy thereof to:  Securities
Valuation Office, National Association of Insurance Commissioners, 195 Broadway,
19th Floor, New York, New York 10007, provided, that failure to so deliver shall
not result in an Event of Default hereunder.

4.   COMPANY BUSINESS COVENANTS

     The Company  covenants  that on and after the Closing  Date until the Notes
are paid in full:

     4.1.      PAYMENT OF TAXES AND CLAIMS.

     The Company, and each Subsidiary, will pay, before they become delinquent,

               (a) all taxes,  assessments  and  governmental  charges or levies
     imposed upon it or its Property, and

               (b) all claims or demands of any kind  (including but not limited
     to those of suppliers,  mechanics,  carriers,  warehousers,  landlords  and
     other like Persons)  which,  if  unpaid,  might result in the creation of a
     Lien upon its Property;   provided that items of the foregoing  description
     need not be paid  while being  contested  in good faith and by  appropriate
     proceedings, if  and for so long as:

                    (i) in  the  opinion  of the  accountants  who  certify  the
               financial statements delivered pursuant to Section 3.1(b) hereof,
               adequate  book  reserves  have  been   established  with  respect
               thereto,

                    (ii)  the  owning  company's  title to its  Property  is not
               materially adversely affected, and

                    (iii)  the  owning  company's  use  of the  Property  in the
               ordinary  course of its  business  is not  materially  interfered
               with.

     4.2.      MAINTENANCE OF PROPERTIES AND EXISTENCE.

     The Company, and each Subsidiary, will:

               (a) PROPERTY -- maintain its Property in good  condition and make
      all  necessary   renewals,   replacements,   additions,   betterments  and
      improvements thereto;

                                     11
<PAGE>
               (b) INSURANCE -- maintain,  with financially  sound and reputable
     insurers,  insurance  with respect to its  Properties and business  against
     such  casualties  and   contingencies,  of  such  types  (including  public
     liability,   larceny,  embezzlement   or  other  criminal  misappropriation
     insurance) and in such amounts as is  customary in the case of companies of
     established  reputations  engaged  in  the  same or  similar  business  and
     similarly  situated;

               (c) FINANCIAL  RECORDS -- keep true books of records and accounts
     in  which  full  and  correct  entries  will be  made  of all its  business
     transactions,  and   will  reflect  in its  financial  statements  adequate
     accruals and  appropriations to reserves,  all in accordance with Generally
     Accepted  Accounting Principles consistently applied;

               (d)  EXISTENCE  AND  RIGHTS -- do or cause to be done all  things
     necessary:

                    (i) to  preserve  and  keep in full  force  and  effect  its
               existence, rights and franchises, and

                    (ii) to maintain each Restricted  Subsidiary as a Restricted
               Subsidiary,  except as  otherwise  permitted  by Section 4.12 and
               Section 4.13 hereof, and

               (e)  COMPLIANCE  WITH  LAW -- not be in  violation  of any  laws,
     ordinances,  or  governmental  rules and regulations to which it is subject
     and will not fail  to maintain any licenses,  permits,  franchises or other
     governmental  authorizations  necessary  to the ownership of its Properties
     or to the  conduct  of its  business,  if  such  violation  or  failure  to
     maintain  might,  individually or in the  aggregate,  materially  adversely
     affect  the   Properties,   business,   prospects,   profits  or  condition
     (financial or otherwise) of the Company or the Subsidiaries.

     4.3.      MAINTENANCE OF OFFICE.

     The Company will maintain an office in the State of New York where notices,
presentations  and demands in respect of this Agreement or the Notes may be made
upon it. Such office shall be maintained  at Telmark LLC, 333  Butternut  Drive,
DeWitt, New York, until such time as the Company shall notify the holders of the
Notes of a change of location.

     4.4.      TANGIBLE NET WORTH.

     The Company will at all times maintain  Tangible Net Worth in an amount not
less than the sum of $96,936,500  plus fifty percent (50%) of  Consolidated  Net
Income (if a positive number) for each fiscal year ending after June 30, 2001.

     4.5.      DEBT

               (a) Neither the Company nor any Restricted Subsidiary will become
     liable  for or permit  any of its  Property  to become  subject to any Debt
     (other than Subordinated  Debt) in favor of any Affiliate or any Restricted
     Subsidiary unless the proceeds of such Debt are used by the Company or such
     Restricted  Subsidiary  for  working  capital  purposes,  and such  Debt is

                                       12
<PAGE>
     unsecured  and payable  either on demand or within one (1) year of the date
     such Debt is incurred and is not renewable or extendible at the sole option
     of the Company or such  Restricted  Subsidiary  to a date more than one (1)
     year after the date such Debt is incurred.

               (b) Any Person which  becomes a Restricted  Subsidiary  after the
     date of this  Agreement  shall be deemed to become  liable,  at the time it
     becomes a Restricted  Subsidiary,  for all Debt for which it is then liable
     or to which any of its Property is then subject.

     4.6.      INTEREST COVERAGE.

     The Company will at all times maintain Earnings Available for Fixed Charges
for the period of four fiscal quarters then most recently ended at not less than
one hundred twenty-five percent (125%) of Fixed Charges for such period.

     4.7.      DEBT RATIO.

     The Company will at all times  maintain a Debt Ratio of no greater than six
to one (6:1).

     4.8.      GUARANTIES.

     Neither the Company nor any Restricted  Subsidiary  will become liable for,
or permit any of its Property to become subject to, any Guaranty, unless:

               (a) such Guaranty is made by the Company;

               (b) the maximum dollar amount of the obligation  being guaranteed
     is readily ascertainable  by the terms of such obligation, or the agreement
     or  instrument   evidencing  such Guaranty  specifically  limits the dollar
     amount of  the maximum exposure of the guarantor thereunder; and

               (c) either:

                    (i) such Guaranty is permitted by Section 4.14 hereof, or

                    (ii) after  giving  effect to such  Guaranty  the  aggregate
               amount  of  all  Guaranties  of the  Company  (other  than  those
               permitted  by Section  4.14  hereof)  does not exceed ten percent
               (10%) of the  aggregate  Debt (other than  Subordinated  Debt and
               Guaranties permitted under Section 4.14 hereof) of the Company.


     4.9.      LIENS AND ENCUMBRANCES.

               (a) Neither the Company nor any Restricted  Subsidiary will cause
      or permit,  or agree or consent to cause or permit in the future (upon the
      happening of a contingency or otherwise), any of its Property, whether now
      owned or subsequently acquired, to be subject to a Lien; provided that the
      following Liens shall be excepted from such prohibition:

                                       13
<PAGE>
                    (i) Liens  securing  the  payment of taxes,  assessments  or
               governmental  charges  or levies  or the  claims  or  demands  of
               suppliers, mechanics, carriers, warehousers,  landlords and other
               like  Persons,  provided  that the payment  thereof is not at the
               time required by Section 4.1 hereof;

                    (ii) Liens incurred or deposits made in the ordinary  course
               of business:

                         (A)   in   connection   with   workers    compensation,
                    unemployment insurance, social security and other like laws,
                    or

                         (B) to secure  the  performance  of  letters of credit,
                    bids,   tenders,   sales   contracts,    leases,   statutory
                    obligations,  surety, appeal and performance bonds and other
                    similar obligations,

               in each case not  incurred in  connection  with the  borrowing of
     money,  the  obtaining of advances or the payment of the deferred  purchase
     price of Property;

                    (iii)  attachment,  judgment and other similar Liens arising
               in connection with court proceedings, provided that:

                         (A) the execution and other enforcement are effectively
                    stayed,

                         (B)  all  claims  which  the  Liens  secure  are  being
                    actively   contested  in  good  faith  and  by   appropriate
                    proceedings, and

                         (C) adequate book reserves have been  established  with
                    respect thereto;

                    (iv) Liens on Property of a Restricted Subsidiary,  provided
               that they  secure  only  obligations  owing to the  Company  or a
               Wholly-Owned Restricted Subsidiary;

                    (v)  inchoate  liens  arising  under  ERISA  to  secure  any
               contingent  liability  of the Company  permitted  by Section 4.18
               hereof;

                    (vi) Liens on Property of a Person existing at the time such
               Person is merged or  consolidated  with or into the  Company or a
               Restricted  Subsidiary or at the time of a sale of the Properties
               of such Person as an entirety or  substantially as an entirety to
               the Company or a Restricted Subsidiary,  and Purchase Money Liens
               on  Property  first  acquired  by  the  Company  or a  Restricted
               Subsidiary  after the date of this  Agreement;  provided  that in
               either case,

                         (A) no such Lien shall  extend to or cover any Property
                    other  than  the  Property  initially  subject  thereto  and
                    improvements thereto,

                                       14
<PAGE>
                         (B) no such Lien shall  secure an  aggregate  amount of
                    Debt  which is  greater  than  eighty  percent  (80%) of the
                    lesser of:

                              (I) the Fair Market Value of the Property which is
                         the subject of such Lien, and

                              (II) the related  purchase price or acquisition or
                         construction costs of such Property, and

                         (C) the  incurrence  of the Debt  secured  by each such
                    Lien does not  violate  any  restriction  of Section  4.5 or
                    Section 4.7 hereof;

                    (vii)  Liens on  property  acquired  by the  Company  in the
               ordinary  course of business in  satisfaction of debt owed to the
               Company, provided that the Company shall undertake, in accordance
               with industry practice, to dispose promptly of any such property;

                    (viii) Liens on assets of a Securitization Subsidiary;

                    (ix)  Statutory  liens  created  by the Farm  Credit Act (12
               U.S.C. section 2131(c)) encumbering the Company's equity holdings
               in a Bank for  Cooperatives  which is a member of the Farm Credit
               System; and

                    (x) Liens  existing on the Closing  Date and  identified  in
               Attachment B hereto.

               (b) In case any Property  shall be subject to a Lien in violation
     of this Section 4.9, the  Company shall make or cause to be made  provision
     whereby  the Notes shall  be secured  equally  and  ratably  with all other
     obligations secured  thereby, and in any such case the Notes shall have the
     benefit,  to  the full extent that,  and with such priority as, the holders
     may be entitled thereto under applicable law, of an  equitable Lien on such
     Property  securing  the Notes.  Such  violation  of this  Section 4.9 shall
     constitute  an  Event  of  Default  hereunder,  whether  or  not  any  such
     provision is  made pursuant to this Section 4.9(b).

     4.10.     DISTRIBUTIONS AND RESTRICTED INVESTMENTS.

               (a)  Neither  the  Company  nor any  Restricted  Subsidiary  will
     declare,  make  or incur any liability to make,  any  Distribution  unless,
     immediately after giving effect thereto:

                    (i) no Default or Event of Default would exist; and

                    (ii) the Company could incur at least One Dollar  ($1.00) of
               additional  Debt  without  violating  Section  4.5 or Section 4.7
               hereof,

     provided,  that  the  Company  or  any  Restricted  Subsidiary  may  make a
     Distribution  which would  otherwise be prohibited by this Section 4.10 if,

                                     15
<PAGE>
     at the time of the declaration  thereof,  the payment of such  Distribution
     would not have violated the provisions of this Section 4.10.

               (b)  Neither  the  Company  nor any  Restricted  Subsidiary  will
     authorize  a Distribution  which is payable more than sixty (60) days after
     authorization.

               (c)  Neither  the  Company  nor any  Restricted  Subsidiary  will
     declare,  make  or   incur  any  liability  to  make  any  Distribution  or
     Restricted  Investment  unless  immediately  after  giving  effect  to  the
     proposed  Distribution or Restricted Investment:

                    (i) no Default or Event of Default would exist, and

                    (ii) the sum of:

                         (A) the amount of all  Restricted  Investments  (valued
                    immediately after such action, as provided in the definition
                    thereof)  made  by the  Company  after  June  30,  2000  and
                    outstanding as of the date of calculation, plus

                         (B) the amount of all Distributions made after June 30,
                    2000 by the Company,

                    would not exceed fifty  percent  (50%) of  Consolidated  Net
                    Income for the period from July 1, 1999  through the date of
                    determination.

     4.11.     LEASES.

               (a)  OPERATING  LEASES.  Neither the  Company nor any  Restricted
     Subsidiary  will become liable,  renew or extend as lessee under, or become
     liable by Guaranty of the  obligations of any other Person as lessee under,
     any  Operating  Lease  unless,  after  giving  effect  thereto  and  to any
     concurrent transactions,  aggregate annual Rentals during any future period
     of twelve (12)  consecutive  months under all outstanding  Operating Leases
     would not exceed ten percent  (10%) of  Consolidated  Net  Revenues for the
     then most recently completed fiscal year of the Company.

               (b)  FINANCING  LEASES.  Neither the  Company nor any  Restricted
     Subsidiary  will become liable as lessee,  renew or extend as lessee under,
     or become  liable by Guaranty  of the  obligations  of any other  Person as
     lessee under,  any Financing  Lease unless the  incurrence of such Debt and
     any related Lien under such  Financing  Lease does not cause a violation of
     Section 4.5, Section 4.7 or Section 4.9 hereof.

               (c) LEASE-BACK. Neither the Company nor any Restricted Subsidiary
     will sell and lease  back  (whether  or not under a  Financing  Lease)  any
     Property.

               (d) RESTRICTED SUBSIDIARY.  Any Person which becomes a Restricted
     Subsidiary  after  the date of this  Agreement  shall be  deemed  to become

                                       16
<PAGE>
     liable,  at the time it becomes a Restricted  Subsidiary,  under all leases
     under which it is liable as lessee,  or by Guaranty of the  obligations  of
     any  other  person  as  lessee,  existing  immediately  after it  becomes a
     Restricted Subsidiary.

     4.12.     DISPOSAL OF A RESTRICTED SUBSIDIARY.

     Neither the Company nor any  Restricted  Subsidiary  will sell or otherwise
dispose of any Debt or any  equity  interest  (or any  options  or  warrants  to
purchase equity  interests or other  Securities  exchangeable for or convertible
into equity  interests)  of a  Restricted  Subsidiary  (said  equity  interests,
options,  warrants and other Securities herein called "Subsidiary  Stock"),  nor
will any Restricted Subsidiary issue, sell or otherwise dispose of any shares of
its own  Subsidiary  Stock  except to the Company or a  Wholly-Owned  Restricted
Subsidiary; provided that the foregoing restrictions do not apply to:

               (a) the issue of directors' qualifying shares;

               (b) the issue by a Restricted Subsidiary of additional Subsidiary
     Stock in a stock  dividend  or  similar  transaction  which  maintains  the
     proportionate interest of the Company and its other Restricted Subsidiaries
     in the Subsidiary Stock of the issuing company; and

               (c) the sale at one time to a Person  other than an  Affiliate of
     the entire investment of the Company and its other Restricted  Subsidiaries
     in any Restricted Subsidiary, if all of the following conditions are met:

                    (i) the amount of the assets  (valued at net book  value) of
               such Restricted Subsidiary, together with the amount of all other
               assets of the Company and all Restricted  Subsidiaries previously
               disposed of (other than in Ordinary  Course  Transactions  and as
               permitted  by Section  4.13(a)  (ii)  hereof)  during the current
               fiscal year,  does not exceed five  percent (5%) of  Consolidated
               Assets as of the end of the fiscal year of the Company  then most
               recently ended;

                    (ii) in the opinion of the Board of  Directors,  the sale is
               for fair value and is in the best interests of the Company;

                    (iii) the  Restricted  Subsidiary  being  disposed of has no
               continuing  investment  in any other  Restricted  Subsidiary  not
               being simultaneously disposed of or in the Company; and

                    (iv) immediately  after the consummation of the transaction,
               and after giving effect thereto,

                         (A) no Default or Event of Default would exist, and

                         (B) the Company could incur at least One Dollar ($1.00)
                    of additional Debt without  violating Section 4.5 or Section
                    4.7 hereof.

                                       17
<PAGE>
     4.13.     SALE OF ASSETS OR MERGER.

               (a) SALE OF ASSETS --  Neither  the  Company  nor any  Restricted
     Subsidiary  will,  except in Ordinary  Course  Transactions,  sell,  lease,
     transfer  or  otherwise  dispose of any of its  assets;  provided  that the
     foregoing restriction does not apply to:

                    (i)  transactions  permitted  by  Section  4.12  or  Section
               4.13(b) hereof, or

                    (ii)  sale  of  assets  at  Fair  Market  Value  for a  cash
               consideration to a Securitization Subsidiary, or

                    (iii) the sale of  assets,  including,  without  limitation,
               participation  interests in leases, for a cash consideration to a
               Person  (other  than  an  Affiliate),  if all  of  the  following
               conditions are met:

                         (A) the  amount  of such  assets  (valued  at net  book
                    value),  together with the amount of all other assets of the
                    Company and all Restricted  Subsidiaries previously disposed
                    of (other than in Ordinary Course Transactions) as permitted
                    by this Section 4.13(a) or by Section 4.12 hereof during the
                    current  fiscal  year,  does not exceed five percent (5%) of
                    Adjusted  Consolidated  Assets  as of the end of the  fiscal
                    year of the Company then most recently ended;

                         (B) in the opinion of the Board of Directors,  the sale
                    is  for  fair  value  and is in the  best  interests  of the
                    Company; and

                         (C)   immediately   after  the   consummation   of  the
                    transaction, and after giving effect thereto,

                              (I) no Default or Event of  Default  would  exist,
                         and

                              (II) the  Company  could incur at least One Dollar
                         ($1.00) of additional  Debt without  violating  Section
                         4.5 or Section 4.7 hereof.

               (b)  MERGER AND  CONSOLIDATION  -- Neither  the  Company  nor any
     Restricted  Subsidiary will  consolidate with or merge into, or sell all or
     substantially  all of its assets  to, any other  Person or permit any other
     Person to  consolidate  with or merge  into it  (except  that a  Restricted
     Subsidiary may consolidate with or merge into, or sell all or substantially
     all of its assets to, the Company or a Wholly-Owned  Restricted  Subsidiary
     other  than a  Securitization  Subsidiary);  provided  that  the  foregoing
     restriction  does not apply to the merger or  consolidation  of the Company
     with, or to the sale of all or  substantially  all of the Company's  assets
     to, a  corporation  or limited  liability  company if all of the  following
     conditions are met:

                    (i)  the  entity   which   results   from  such   merger  or
               consolidation or which acquires all or  substantially  all of the

                                       18
<PAGE>
               Company's assets (the "Surviving  Entity") is organized under the
               laws of the United States or a jurisdiction thereof,

                    (ii) the due and  punctual  payment of the  principal of and
               premium,  if any, and interest on all of the Notes,  according to
               their tenor, and the due and punctual  performance and observance
               of all the  covenants  in the  Notes  and  this  Agreement  to be
               performed or observed by the Company,  are  expressly  assumed in
               writing by the Surviving Entity;

                    (iii)  after   giving   effect  to  the   proposed   merger,
               consolidation  or sale of assets,  the  Surviving  Entity will be
               primarily  engaged in the business of the Company as described in
               Attachment B hereto;

                    (iv) immediately  after the consummation of the transaction,
               and after giving effect thereto,

                         (A) no Default or Event of Default would exist, and

                         (B) the  Surviving  Entity  could  incur at  least  One
                    Dollar ($1.00) of additional Debt without  violating Section
                    4.5 or Section 4.7 hereof;

                    (v) if any Property of the Surviving Entity would be subject
               to one or more Liens  (other than Liens  permitted  by clause (i)
               through clause (viii) of Section 4.9(a) hereof) upon consummation
               of the  transaction,  the  Surviving  Entity  shall  have made or
               caused to be made provision  whereby the Notes will, at all times
               subsequent to the  consummation of said merger,  consolidation or
               sale of assets,  be secured  equally and ratably  with each other
               obligation  secured by any one or more of such Liens  pursuant to
               documentation  satisfactory to the holders of at least sixty-five
               percent  (65%) of the  principal  amount of the Notes at the time
               outstanding  (exclusive  of Notes then owned by the Company,  the
               Subsidiaries or Affiliates);

                    (vi) the  Surviving  Entity shall make, or cause to be made,
               adequate provision whereby the Notes will at all times be secured
               equally and ratably with each obligation thereafter issued by the
               Surviving  Entity  and  secured  by  a  Lien  (other  than  Liens
               permitted by clause (i) through  clause  (vii) of Section  4.9(a)
               hereof); and

                    (vii)   prior   to  the   consummation   of   said   merger,
               consolidation  or  sale  of  assets  the  Surviving  Entity  will
               promptly  deliver or cause to be  delivered to each holder of the
               Notes:
                         (A) a  certificate  signed by the  President  or a Vice
                    President and the Treasurer or an Assistant Treasurer of the
                    Surviving  Entity  certifying that the  requirements of this
                    Section 4.13(b) have been complied with; and

                                       19
<PAGE>
                         (B) an opinion of counsel for the  Surviving  Entity to
                    the effect that

                              (I) such requirements have been complied with,

                              (II)   the   assumptions   required   by   Section
                         4.13(b)(ii) hereof are valid and binding obligations of
                         the Surviving  Entity  enforceable  in accordance  with
                         their terms, and

                              (III) the merger, consolidation or sale of assets,
                         as the  case may be,  is  permitted  by all  applicable
                         laws.

               (c)  SECURITIZATIONS  -- at no time shall the Company  permit (i)
      the aggregate  liabilities of all  Securitization  Subsidiaries  to exceed
      twenty-five  percent (25%) of Total  Liabilities at such time, or (ii) any
      Securitization  Subsidiary to be designated as other than a Securitization
      Subsidiary for purposes of this Agreement.

     4.14.     SALE OR DISCOUNT OF RECEIVABLES.

     Neither the Company nor any Restricted Subsidiary will discount or sell for
less than the greater of the face value or market value thereof any of its notes
receivable or accounts  receivable  or any interest in any thereof.  Neither the
Company nor any Restricted  Subsidiary  will sell with recourse any of its notes
receivable  or accounts  receivable  unless (i) the recourse  obligation  of the
selling  company  with  respect to any such sale is not greater  than 15% of the
proceeds of such sale,  and (ii) the  selling  company  establishes  an adequate
provision  for  losses  from  recourse  at the  time of sale  and  retains  full
responsibility  for servicing and collecting  such notes or receivables so sold.
Neither the Company nor any Restricted  Subsidiary will sell any note receivable
or account  receivable  having a balance of  $2,500,000 or more (or any interest
therein)  unless such sale is without  recourse and the selling  company retains
full responsibility for servicing and collecting such note or receivable.

     4.15.     RESTRICTIONS ON BUSINESS.

     Neither the Company nor any Subsidiary will engage in any business if, as a
result of such action,  the nature of the business engaged in by the Company and
the Restricted  Subsidiaries as of the Closing Date (and described in Attachment
B hereto) would be substantially  changed.  No  Securitization  Subsidiary shall
take any  action  other  than the  actions  contemplated  by the  definition  of
"Securitization Subsidiary" in Section 6.1 hereof.

     4.16.     TRANSACTIONS WITH AFFILIATES.

               (a)   ARMS-LENGTH.   Neither  the  Company  nor  any   Restricted
     Subsidiary will enter into any transaction (including the purchase, sale or
     exchange of Property or the  rendering of any service)  with any  Affiliate
     except upon fair and  reasonable  terms which are at least as  favorable to
     the  Company  or the  Restricted  Subsidiary  as  would  be  obtained  in a
     comparable arm's-length transaction with a non-Affiliate.

                                       20
<PAGE>
               (b)  CONCENTRATION  LIMITS. At no time shall the aggregate amount
     owing  from any one or more  Affiliates  constitute  more than ten  percent
     (10%) of Consolidated Tangible Assets.

     4.17.     RESTRICTED SUBSIDIARY INDEBTEDNESS.

     No Restricted  Subsidiary will incur or have  outstanding any  indebtedness
for  borrowed  money or any  obligations  as lessee under any  Financing  Lease,
except:

               (a) indebtedness owed to the Company or a Wholly-Owned Restricted
     Subsidiary,

               (b) indebtedness of a Securitization Subsidiary, and

               (c) indebtedness of Telease  Financial  Services LTD. of up to an
     aggregate amount of $10,000,000.

     4.18.     ERISA COMPLIANCE.

               (a) The Company will not permit the present value of all employee
      benefits  vested under any Benefit Plan to exceed the present value of the
      assets of such Benefit Plan allocable to such vested benefits.

               (b) All  assumptions  and methods used to determine the actuarial
      valuation  of vested  employee  benefits  under each  Benefit Plan and the
      present  value of assets of each Benefit Plan shall be  reasonable  in the
      good faith judgment of the Company and shall comply with all  requirements
      of law.

               (c)  Neither  the  Company  nor any  Subsidiary  will at any time
      permit any Benefit Plan to:

                    (i) engage in any  "prohibited  transaction" as such term is
               defined in Section 4975 of the IRC or Section 406 of ERISA;

                    (ii) incur any "accumulated funding deficiency" as such term
               is defined in Section 302 of ERISA, whether or not waived; or

                    (iii)  terminate  any such  Benefit  Plan in a manner  which
               could result in the  imposition  of a Lien on the Property of the
               Company or any Restricted  Subsidiary pursuant to Section 4068 of
               ERISA.

     4.19.     FEDERAL TAX CONSOLIDATION.

               (a) With  respect to any  period  during  which the  Company is a
     corporation,  the  Company  will not file or  consent  to the filing of any
     consolidated  federal tax return for any taxable year with any Person other
     than a  Subsidiary,  Agway,  a subsidiary  of Agway or a subsidiary of such
     subsidiary.  In the event that a consolidated  federal tax return permitted
     by the  preceding  sentence  is filed for any  taxable  year,  neither  the
     Company nor any  Subsidiary  shall be required to pay a greater  portion of

                                       21
<PAGE>
     the  consolidated  tax liability for such year of the group of corporations
     joining in the filing of such return than the portion thereof  allocated to
     such corporation  under the method  regularly  employed by Agway heretofore
     for purposes of making such allocation,  provided that the total portion of
     such  consolidated  tax  liability  paid by the Company and the  Restricted
     Subsidiaries  joining in the filing of such  return  for any  taxable  year
     shall not  exceed  the  consolidated  tax  liability  that  would have been
     incurred by the Company and the Restricted Subsidiaries if they had filed a
     separate  consolidated  tax  return  for  such  taxable  year.  Any  amount
     determined  in  accordance  with this Section  4.19(a)  shall be subject to
     appropriate  adjustment  in  accordance  herewith  in the  event  that  the
     consolidated  federal tax  liability  shown on any  consolidated  return is
     increased or reduced by reason of a final  determination in connection with
     any audit by a taxing authority or a successful claim for a refund.

               (b) With  respect to any  period  during  which the  Company is a
     limited liability  company,  if a consolidated  federal tax return filed by
     Agway for any  taxable  year  reflects  the  income,  credits and other tax
     attributes  of the Company or any  Subsidiary,  neither the Company nor any
     Subsidiary  shall be required to pay a greater portion of the  consolidated
     tax  liability  for such year of the group of  corporations  joining in the
     filing of such return than the portion thereof  allocated to the Company or
     such Subsidiary under the method regularly  employed by Agway prior to July
     1, 1998, provided that the total portion of such consolidated tax liability
     paid by the Company and the  Restricted  Subsidiaries  for any taxable year
     shall not  exceed  the  consolidated  tax  liability  that  would have been
     incurred by the Company and the  Restricted  Subsidiaries  if they had been
     corporations  and had filed a  separate  consolidated  tax  return for such
     taxable year. Any amount determined in accordance with this Section 4.19(b)
     shall be subject to  appropriate  adjustment in accordance  herewith in the
     event that the consolidated federal tax liability shown on any consolidated
     return is  increased  or  reduced  by reason  of a final  determination  in
     connection with any audit by a taxing authority or a successful claim for a
     refund.

     4.20.     EQUAL SUPPORT RIGHTS.

     Pursuant to Section 2.2 and Section 2.3 of certain  Amendment,  Termination
and Reinstatement Agreements,  dated as of February 28, 1997 (collectively,  the
"Support  Termination  Agreement"),  the holders of certain  other  senior notes
issued by the  Company  have the right to obtain  certain  credit  support  from
Agway, and certain  modifications  to their  respective note  agreements,  under
certain circumstances (collectively, "Support Rights"). The holders of the Notes
shall have the same Support Rights (including,  without limitation, the right to
receive a substantially  identical support agreement and substantially identical
amendments to this  Agreement)  that the holders of such other senior notes have
on the date hereof,  whether or not such other notes are outstanding at any time
in the future,  and no  amendment  or  termination  of the  Support  Termination
Agreement  or of the  Support  Rights of such  other  holders  shall  affect the
Support  Rights of the holders of the Notes  without the written  consent of the
holders of Notes necessary to amend this Agreement.

                                       22
<PAGE>
5.   DEFAULT

     5.1.      NATURE OF DEFAULT.

     An "Event of  Default"  shall exist if any of the  following  occurs and is
continuing:

               (a)  PRINCIPAL  PAYMENTS  --  failure  to  make  any  payment  of
     principal  or Make  Whole  Amount  on any Note on or  before  the date such
     payment is due;

               (b) INTEREST PAYMENTS -- failure to make a payment of interest on
     any Note on the date such  payment  is due,  and the  continuation  of such
     delinquency for more than five (5) days;

               (c) BREACH OF PARTICULAR  COVENANTS -- failure to comply with any
     covenant  contained  in Section  3.1(d),  Section  3.1(e) or in Section 4.4
     through Section 4.20 hereof, inclusive;

               (d) OTHER BREACHES -- failure to comply with any other  provision
     of this Agreement,  which continues for more than thirty (30) days after it
     first becomes known to any officer of the Company;

               (e) FAILURE TO REINSTATE -- failure to comply with Section 2.2 or
     Section  2.3 of  that  certain  Amendment,  Termination  and  Reinstatement
     Agreement, dated as of February 28, 1997, among the Company, Agway, and the
     holders of certain of the senior notes of the Company other than the Notes,
     as such agreement  existed on the date thereof without giving effect to any
     subsequent amendments or modifications; and

               (f)  DEFAULT ON DEBT OR SECURITY -- failure by the Company or any
     Restricted  Subsidiary  to  make  one or  more  payments  due on any  Debt,
     interest  rate swap or currency  exchange  obligation  having an  aggregate
     outstanding amount exceeding One Million Dollars ($1,000,000); or any event
     shall  occur or any  condition  shall  exist,  the effect of which event or
     condition is:

                    (i) to cause (or  permit  one or more  Persons  to cause) to
               become due before its  stated  maturity  or before its  regularly
               scheduled  date of  payment  of any Debt,  interest  rate swap or
               currency  exchange  obligation  of the Company or any  Restricted
               Subsidiary having an aggregate  outstanding  amount exceeding One
               Million Dollars ($1,000,000), or

                    (ii) to permit a trustee  or the  holder or  holders  of any
               Security  (other  than  Voting  Stock) to elect a majority of the
               directors of the Company or any Restricted Subsidiary;

               (g) WARRANTIES OR REPRESENTATIONS -- any warranty, representation
     or  other  statement  by or on  behalf  of the  Company  contained  in this
     Agreement or in any instrument furnished in compliance with or in reference
     to this  Agreement  shall  prove to have been  false or  misleading  in any
     material respect on the date as of which made;

                                       23
<PAGE>
               (h)  INVOLUNTARY BANKRUPTCY PROCEEDINGS, ETC. --

                    (i) a  custodian,  receiver,  liquidator  or  trustee of the
               Company  or  any  Restricted   Subsidiary  or  of  any  of  their
               respective Property,  is appointed or takes possession,  and such
               appointment  or possession  remains in effect for more than sixty
               (60) days; or

                    (ii)  the  Company  or  any  Restricted   Subsidiary   fails
               generally  to pay its debts as they become due; or the Company or
               any Restricted  Subsidiary is adjudicated  bankrupt or insolvent;
               or an order for relief is entered  under the  Federal  Bankruptcy
               Code against the Company or any Restricted Subsidiary; or

                    (iii) any of the  Property of the Company or any  Restricted
               Subsidiary is sequestered by court order and the order remains in
               effect for more than sixty (60) days; or

                    (iv)  a  petition  is  filed  against  the  Company  or  any
               Restricted  Subsidiary  under  any  bankruptcy,   reorganization,
               arrangement,  insolvency,  readjustment  of debt,  dissolution or
               liquidation law of any jurisdiction,  whether now or subsequently
               in  effect,  and is not  dismissed  within  sixty (60) days after
               filing;

               (i)  VOLUNTARY BANKRUPTCY PROCEEDINGS, ETC. -- the Company or any
     Restricted  Subsidiary

                    (i) files a petition in voluntary bankruptcy or seeks relief
               under   any   provision   of  any   bankruptcy,   reorganization,
               arrangement,  insolvency,  readjustment  of debt,  dissolution or
               liquidation law of any jurisdiction,  whether now or subsequently
               in effect; or

                    (ii) consents to the filing of any petition against it under
               any such law; or

                    (iii) consents to the appointment of or taking possession by
               a custodian, receiver, trustee or liquidator of itself, or of all
               or any part of its Property; or

                    (iv) makes an assignment  for the benefit of its  creditors;
               or

                    (v) takes any action to authorize or  accomplish  any of the
               foregoing; or

               (j)  UNDISCHARGED  FINAL JUDGMENTS -- final judgment or judgments
     for the  payment  of money  aggregating  in excess of One  Million  Dollars
     ($1,000,000)  is or are  outstanding  against one or more of the Company or
     any  Restricted  Subsidiary,  and  any  one  of  such  judgments  has  been
     outstanding  for more than  sixty  (60) days from the date of its entry and
     has not been discharged in full or stayed.

                                       24
<PAGE>
     5.2.      DEFAULT REMEDIES.

               (a)  ACCELERATION.  If an Event of Default  described  in Section
     5.1(a) or Section  5.1(b)  hereof  exists,  any holder of Notes may, at its
     option, exercise any right, power or remedy permitted by law, including the
     right,  by notice to the Company,  to declare the Notes held by such holder
     to be  immediately  due and payable;  if any Event of Default  exists,  the
     holder or  holders of at least  thirty-five  percent  (35%) in  outstanding
     principal of the Notes (exclusive of Notes owned by the Company, Restricted
     Subsidiaries  and  Affiliates)  may, at its or their  option,  exercise any
     right,  power or remedy permitted by law, including the right, by notice to
     the Company, to declare all the outstanding Notes to be immediately due and
     payable. Upon any such declaration, the principal of the Notes declared due
     shall  become  immediately  due and  payable,  together  with  all  accrued
     interest and, to the extent allowed by applicable  law, the applicable Make
     Whole  Amount at such  time.  If an Event of Default  described  in Section
     5.11(h) or Section  5.1(i)  hereof  exists,  all principal of all the Notes
     then outstanding shall immediately and automatically become due and payable
     together with all accrued interest and, to the extent allowed by applicable
     law, the  applicable  Make Whole  Amount at such time.  In the event of any
     such  declaration or automatic  acceleration,  the Company,  to the fullest
     extent  permitted by applicable law, will  immediately  make payment of the
     Notes to the holders thereof without any  presentment,  demand,  protest or
     other notice of any kind, all of which are hereby expressly waived.

               No course of dealing or delay or failure to exercise any right on
     the part of any holder of the Notes shall operate as a waiver of such right
     or otherwise prejudice such holders rights, powers or remedies. The Company
     will pay or  reimburse  the holders of the Notes for all costs and expenses
     (including  reasonable  attorneys' fees) incurred by them in collecting any
     sums due on the Notes or in otherwise assessing, analyzing or enforcing any
     of their rights.

               (b) ANNULMENT OF  ACCELERATION.  In the event of any  declaration
     pursuant  to  Section  5.2(a)  hereof,  the  holder or  holders of at least
     seventy-five percent (75%) of the outstanding principal amount of the Notes
     (exclusive  of Notes  owned by the  Company,  Restricted  Subsidiaries  and
     Affiliates)  may, by written notice to the Company,  annul such declaration
     and its consequences if:

                    (i) no judgment  or decree has been  entered for the payment
               of any amount due pursuant to such declaration;

                    (ii) all  sums  payable  under  the  Notes  and  under  this
               Agreement  (except any principal or interest or Make Whole Amount
               on the Notes  which has become  payable  solely by reason of such
               declaration) shall have been duly paid; and

                    (iii) each and every other Default or Event of Default shall
               have been waived  pursuant to Section  8.5(a) hereof or otherwise
               made good or cured;

                                       25
<PAGE>
provided that no such annulment shall extend to or affect any subsequent Event
of Default or impair any right consequent thereon.

6.   INTERPRETATION OF THIS AGREEMENT

     6.1.      TERMS DEFINED.

     As used in this Agreement (including Attachments), the following terms have
the  respective  meanings  set forth below or in the  Section of this  Agreement
following such term:

     ADJUSTED  CONSOLIDATED  ASSETS- means, at any time,  Consolidated Assets at
such time minus the aggregate  amount of assets (valued at net book value) owned
by all Securitization Subsidiaries at such time.

     AFFILIATE  --  means  any  Person  (other  than a  Wholly-Owned  Restricted
Subsidiary)

               (a)  which   directly   or   indirectly   through   one  or  more
     intermediaries  controls,  or is controlled  by, or is under common control
     with, the Company,

               (b) which beneficially owns or holds ten percent (10%) or more of
     any class of Voting Stock of the Company, or

               (c) ten percent (10%) or more of the Voting Stock (or in the case
     of a Person which is not a  corporation,  ten percent  (10%) or more of the
     equity interest) of which is beneficially owned or held by the Company or a
     Subsidiary.

     The term "control"  means the  possession,  directly or indirectly,  of the
power to direct or cause the  direction  of the  management  and  policies  of a
Person, whether through the ownership of Voting Stock, by contract or otherwise.

     AGREEMENT,  THIS -- means this Note Agreement (including  Attachments),  as
amended or modified from time to time.

     AGWAY -- means Agway, Inc., a Delaware corporation.

     ALLOWANCE  FOR  CREDIT  LOSSES  -- shall  mean,  at any  time,  the  amount
determined  by the Company in  accordance  with  Generally  Accepted  Accounting
Principles  (and  reflected in its financial  statements)  to be an  appropriate
allowance at such time for losses  anticipated to be suffered by the Company and
its Restricted Subsidiaries on notes receivable and leases receivable.

     BANK FOR  COOPERATIVES -- means any bank for  cooperatives  included in the
Farm Credit System pursuant to 12 U.S.C. section 2002(a).

     BENEFIT PLAN -- means all "employee  benefit plans" as such term is defined
in Section 3 of ERISA,  maintained  by, or for the benefit of the  employees of,
any one or more of the Company and any ERISA Affiliates, as from time to time in
effect.

                                       26
<PAGE>
     BOARD OF DIRECTORS -- means,

               (a) at any time when the Company is a  Corporation,  the board of
     directors of the Company or any committee  thereof which,  in the instance,
     shall have the lawful  power to exercise  the power and  authority  of such
     board of directors, or

               (b) at any time when the Company is a limited liability  company,
     the managers of the Company.

     BUSINESS DAY -- means,  at any time, a day other than a Saturday,  a Sunday
or a day on which  national  banks  located  in New  York  City or  Chicago  are
required by law (other than a general banking moratorium or holiday for a period
exceeding four (4) consecutive days) to be closed.

     CHANGE IN CONTROL -- means, at any time:

               (a) the  failure  of  Agway  to  beneficially  own,  directly  or
     indirectly (through one or more Wholly-Owned Restricted  Subsidiaries),  at
     least fifty-one  percent (51%) (by number of votes) of the aggregate Voting
     Stock of the Company outstanding at such time; or

               (b) the  failure of Agway to have the power to elect or cause the
     election of at least fifty-one percent (51%) of the members of the Board of
     Directors of the Company at such time.

     CLOSING -- Section 1.2(a).

     CLOSING DATE -- Section 1.2(a).

     COMPANY -- Initial sentence hereof.

     CONSOLIDATED  ASSETS -- means as of the date of any determination  thereof,
the  net  book  value  (after  deducting  related  depreciation,   obsolescence,
amortization,  valuation  and other proper  reserves) at which the assets of the
Company and all Restricted Subsidiaries would be shown on a consolidated balance
sheet of such Persons at such time.

     CONSOLIDATED NET INCOME -- means, for any period, net earnings after income
taxes of the Company and the Restricted  Subsidiaries for such period determined
on a consolidated basis, but excluding:

               (a) the  amount of any  capital  gains  and  other  extraordinary
     credits and any capital losses and extraordinary charges;

               (b) any gain  arising  from any  write-up  of  assets or from the
     acquisition of any Securities of the Company or any Restricted Subsidiary;

               (c) earnings of any Person  realized prior to the date it becomes
     a Restricted  Subsidiary  or its assets are acquired by merger or otherwise
     by the Company or any Restricted Subsidiary;

                                       27
<PAGE>
               (d) earnings of any Persons (other than a Restricted  Subsidiary)
     in  which  the  Company  or any  Restricted  Subsidiary  has  an  ownership
     interest,  not received by the Company or such Restricted Subsidiary in the
     form of cash distributions, provided that any earnings excluded pursuant to
     this  clause (d) may be  included  in the year in which  they are  actually
     received as cash distributions; and

               (e) any  portion of the  earnings  of any  Restricted  Subsidiary
     which for any reason is unavailable for payment of dividends to the Company
     or any other Restricted Subsidiary.

     CONSOLIDATED NET REVENUES -- means,  for any period,  the net revenues from
operations  of the  Company  and the  Restricted  Subsidiaries  for such  period
determined on a consolidated basis.

     CONSOLIDATED TANGIBLE ASSETS -- means, at any time, the amount at which all
assets  of the  Company  and all  Restricted  Subsidiaries  would  be shown on a
consolidated  balance  sheet of such  Persons at such time,  but  excluding  any
amount on account of all assets which do not constitute Tangible Assets.

     CONTROL EVENT -- means:

               (a) the execution by the Company,  any Subsidiary,  any Affiliate
     or Agway of any letter of intent or similar  agreement  with respect to any
     proposed  transaction  or event or series of  transactions  or events that,
     individually or in the aggregate, could reasonably be expected to result in
     a Change in Control; or

               (b) the  execution  of any  written  agreement  that,  when fully
     performed by the parties thereto, would result in a Change in Control.

     CONTROL PREPAYMENT DATE -- Section 2.4(a).

     DEBT -- means, with respect to any Person, without duplication:

               (a) its liabilities for borrowed money;

               (b)  liabilities  secured by any Lien  existing  on its  Property
     (whether or not such Person has assumed such liabilities);

               (c)  its   Guaranties   of   indebtedness,   dividends  or  other
     obligations of any other Person;

               (d) its Financing Lease Obligations; and

               (e) any of its other  obligations  (other  than  deferred  taxes)
     which are required by Generally Accepted Accounting  Principles to be shown
     as  liabilities on its balance sheet and which are payable or remain unpaid
     more than one year from their creation.

                                       28
<PAGE>
     DEBT RATIO -- means, at any time, the ratio of:

               (a)  Total  Liabilities  at  such  time  less  Subordinated  Debt
     outstanding at such time, to

               (b) the result of:

                    (i) Total Capital and Retained Margins at such time, plus

                    (ii) Subordinated Debt outstanding at such time, less

                    (iii) the  amount,  if any,  by which the  product of ninety
               percent (90%) times  Non-Earning  Assets at such time exceeds the
               Allowance for Credit Losses at such time.

     DEFAULT -- means an event or condition  which will,  with the lapse of time
or the giving of notice or both, become an Event of Default.

     DISTRIBUTION -- means:

               (a)  dividends or other  distributions  in respect of the capital
     stock or other equity interests of a company, except:

                    (i) distributions in such stock or interests, and

                    (ii) distributions payable to the Company or a  Wholly-Owned
               Restricted Subsidiary; and

               (b) the  redemption  or  acquisition  of  such  stock  or  equity
     interests or of warrants, rights or other options to purchase such stock or
     equity  interests  (except when solely in exchange for such stock or equity
     interests) unless made, contemporaneously,  from the net proceeds of a sale
     of such stock or equity interests;

in either case, valued at the fair market value of the Property being
distributed or otherwise transferred as a Distribution.

     EARNINGS AVAILABLE FOR FIXED CHARGES -- means, for any period, Consolidated
Net Income for such  period plus the net amount  deducted  in the  determination
thereof for (i) income taxes, and (ii) Fixed Charges.

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

     ERISA  AFFILIATE -- means any company or trade or business that is a member
of the same  controlled  group of companies  as the Company,  or is under common
control with the Company,  in each case within the meaning of section  414(b) or
section 414(c) of the IRC or section 4001 (b)(1) of ERISA.

     EVENT OF DEFAULT -- Section 5.1.

                                       29
<PAGE>
     FAIR MARKET VALUE -- means,  at any time with respect to any Property,  the
sale value of such  Property that would be realized in an  arm's-length  sale at
such time  between an informed  and willing  buyer,  and an informed and willing
seller, under no compulsion to buy or sell, respectively.

     FARM  CREDIT  SYSTEM  -- means the Farm  Credit  System  as  defined  in 12
U.S.C. section 2002(a).

     FINANCING  LEASE -- means any  lease  which is shown or is  required  to be
shown in accordance with Generally Accepted Accounting Principles as a liability
on a balance sheet of the lessee thereunder.

     FINANCING  LEASE  OBLIGATIONS -- means the obligation of the lessee under a
Financing  Lease.  The amount of a Financing Lease Obligation at any date is the
amount at which  the  lessee's  liability  under the  Financing  Lease  would be
required to be shown on its balance sheet at such date.

     FIXED CHARGES -- means, for any period, the sum of:

               (a) all  interest  charges  on all  Debt of the  Company  and the
     Restricted  Subsidiaries  (including Guaranties but not including Debt owed
     to the  Company  or to any  Wholly-Owned  Restricted  Subsidiary)  and  all
     amortization  of original  issue  discount  and expenses  relating  thereto
     during such period; plus

               (b) all Rentals paid or payable by the Company or any  Restricted
     Subsidiary during such period under all leases other than Financing Leases.

     In the  case  of any  Debt  of the  Company  or any  Restricted  Subsidiary
constituting a Financing  Lease,  the interest  charges shall be that portion of
all rental  payments which is allocated to interest  expense in accordance  with
Generally Accepted Accounting Principles.

     GENERALLY ACCEPTED ACCOUNTING  PRINCIPLES -- means accounting principles as
promulgated from time to time in statements,  opinions and pronouncements by the
American Institute of Certified Public Accountants and the Financial  Accounting
Standards  Board and in such  statements,  opinions and  pronouncements  of such
other  entities with respect to financial  accounting of for-profit  entities as
shall be accepted by a substantial  segment of the accounting  profession in the
United States.

     GUARANTY -- means,  with respect to any Person,  all guaranties of, and all
other obligations which in effect guaranty, any indebtedness,  dividend or other
obligation of any other Person (the "primary obligor") in any manner (except any
indebtedness or obligation of any Wholly-Owned Restricted Subsidiary), including
obligations  incurred  through an agreement,  contingent  or otherwise,  by such
Person:

               (a) to purchase such  indebtedness  or obligation or any Property
     constituting security therefor;

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<PAGE>
               (b) to advance or supply funds:

                    (i) for the  purchase  or  payment of such  indebtedness  or
               obligation, or

                    (ii) to maintain  working  capital or any  balance  sheet or
               income statement condition;

               (c)  to  lease  Property,  or to  purchase  Securities  or  other
     Property or  services,  primarily  for the purpose of assuring the owner of
     such  indebtedness  or obligation of the ability of the primary  obligor to
     make payment of the indebtedness or obligation; or

               (d)  otherwise  to  assure  the  owner  of such  indebtedness  or
     obligation,  or the  primary  obligor,  against  loss,  including,  but not
     limited to, the  contingent  liability  of such Person  under the  recourse
     provisions  of any  assignment  by such Person of its notes  receivable  or
     accounts receivable;  provided,  for purposes of determining  compliance by
     the Company  with  Section 4.4 and  Section  4.7  hereof,  such  contingent
     liability  shall be  considered  as a  "Guaranty"  only to the extent  such
     contingent  liability  exceeds  amounts  specifically   reserved  for  such
     contingent  liability in the  determination  of Total  Capital and Retained
     Margins;

but  excluding  endorsements  in the ordinary  course of business of  negotiable
instruments for deposit or collection.

     The amount of any  Guaranty  shall be deemed to be the  maximum  amount for
which such  Person may be liable,  upon the  occurrence  of any  contingency  or
otherwise, under or by virtue of such Guaranty.

     INSTITUTIONAL  HOLDER -- means any of the following  Persons existing under
the laws of the United States of America or any state thereof or of Canada or of
any province thereof:

               (a) any bank,  savings  institution,  trust  company or  national
     banking association, acting for its own account or in a fiduciary capacity;

               (b) any charitable foundation;

               (c) any insurance company;

               (d) any pension,  retirement or profit  sharing trust or fund for
     which any bank, trust company,  national banking  association or investment
     adviser  registered under the Investment  Advisers Act of 1940, as amended,
     is acting as trustee or agent;

               (e) any investment  company, as defined in the Investment Company
     Act of 1940, as amended; or

               (f) any government,  any public employees'  pension or retirement
     system,  or any other  governmental  agency  supervising  the investment of
     public funds.

                                       31
<PAGE>
     INVESTMENT -- means any investment in any Person, whether by acquisition of
stock or other equity  interest,  indebtedness,  other obligation or Security of
such Person, or by loan, advance, extension of credit or capital contribution to
such Person, or by creation or assumption of a contingent  liability or Guaranty
in respect of any  obligation of such Person,  or otherwise,  provided,  that in
computing any investment in any Person:

               (a) all  expenditures  for such  Investment  shall be taken  into
     account at the actual amounts  thereof in the case of  expenditures of cash
     and in the case of  Property  (other  than cash) at the greater of the Fair
     Market  Value  thereof  (as  determined  in  good  faith  by the  Board  of
     Directors)  or the  depreciated  cost thereof (as  determined in accordance
     with Generally Accepted Accounting Principles then in effect),

               (b)  there  shall  not be  included  any  account,  lease or note
     receivable from, any installment  sales contract with, or similar financing
     extended  to, any such Person so long as in each case such  account,  lease
     note,  installment  sales  contract or  financing  shall have arisen in the
     ordinary  course of  business  between  such Person and the Company or such
     Restricted Subsidiary, as the case may be, and

               (c) a Guaranty or contingent liability of any kind of any Debt or
     other  obligation of such Person shall be deemed to be an Investment  equal
     to the total  outstanding  amount of such Debt or obligation at the time of
     determination.

Subject to the foregoing,  all  Investments  shall be valued in accordance  with
Generally Accepted Accounting Principles at the time in effect.

     IRC -- means the Internal Revenue Code of 1986, together with all rules and
regulations promulgated pursuant thereto, as amended from time to time.

     LIEN -- means any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of such  Property,  whether the interest
is based on common law,  statute or contract  (including  the security  interest
lien arising from a mortgage,  encumbrance,  pledge,  conditional  sale or trust
receipt or a lease,  consignment  or bailment for security  purposes).  The term
"Lien"  shall  not  include  minor  reservations,   exceptions,   encroachments,
easements,  rights-of-way,  covenants, conditions,  restrictions and other minor
title  exceptions  affecting  Property  provided  that  they  do not  constitute
security  for a monetary  obligation.  For the purposes of this  Agreement,  the
Company  or a  Restricted  Subsidiary  shall be  deemed  to be the  owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
Financing Lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes,  and such
retention or vesting shall be deemed to be a Lien.

     MAKE WHOLE AMOUNT -- means,  at any time with respect to all or any portion
of the  principal  of any Note  being paid as a result of  optional  prepayment,
Section 2.4, or  acceleration  due to the existence of an Event of Default,  the
greater of zero (0) or that amount which is equal to:

                                       32
<PAGE>
               (a)  the sum of the present values of the remaining principal and
     interest  payments that would become due on such  principal  amount of such
     Note  (exclusive  of  interest  accrued  on  such  prepaid  or  accelerated
     principal  to the date of such  prepayment  or  acceleration)  but for such
     prepayment  or  acceleration,  discounted  at the Make Whole  Discount Rate
     determined in respect of such prepayment or acceleration, less

               (b)  such principal amount.

As used in this definition,

     Make  Whole  Discount  Rate --  means,  at any  time  with  respect  to the
principal of any Note being paid or accelerated, the lesser of:

               (a)  the rate of interest payable on such Note, or

               (b)  the Treasury Rate as calculated at such time with respect to
     such Note.

     Treasury Rate -- means

               (a)  the sum of:

                    (x)  fifty one-hundredths percent (0.50%), plus

                    (y)  the per annum yield reported on the display  designated
                         as page  PX1 as  reported  by the  Bloomberg  Financial
                         Markets  System  (or,  if  not  available,   any  other
                         nationally  recognized trading screen reporting on-line
                         intraday   trading   in   United   States    government
                         Securities)  at 10:00 a.m. (New York time) on the third
                         (3rd)   Business  Day   preceding   the  date  of  such
                         prepayment or acceleration for United States government
                         Securities  having a maturity  (rounded  to the nearest
                         month)  corresponding  to the Weighted  Average Life to
                         Maturity,  determined  as of the  date  of  payment  or
                         acceleration, of such Note, or

               (b)  in the event  that no  such  nationally  recognized  trading
     screen reporting on-line trading in United States government  Securities is
     available, "Treasury Rate" shall mean the sum of:

                    (x)  fifty one-hundredths percent (0.50%), plus

                    (y)  the arithmetic  mean of the yields under the respective
                         headings  "This Week" and "Last Week"  published in the
                         Statistical   Release   under  the  caption   "Treasury
                         Constant  Maturities" for the maturity  (rounded to the
                         nearest month)  corresponding  to the Weighted  Average
                         Life to Maturity,  determined as of the date of payment
                         or  acceleration,  of such Note;  for the  purposes  of
                         calculating   the  Treasury   Rate,   the  most  recent
                         Statistical  Release published prior to the third (3rd)
                         Business Day preceding  the date of such  prepayment or
                         acceleration shall be used.

                                       33
<PAGE>
For purposes of clauses (a) and (b) of the  preceding  sentence,  if no maturity
exactly  corresponds to the Weighted Average Life to Maturity of the Notes being
prepaid or accelerated, yields for the two (2) published maturities most closely
corresponding to such scheduled maturity (one (1) with a longer maturity and one
(1) with a shorter  maturity)  shall be calculated  pursuant to the  immediately
preceding  sentence and the Treasury Rate shall be interpolated from such yields
on a straight-line basis.

     Statistical Release -- means, at any time, the then most recently published
statistical  release designated "H.15 (519)" or, if at any time of determination
of the Treasury  Rate,  the Federal  Reserve  Board shall have ceased to publish
Statistical  Release  H.15  (519),  the  Treasury  Rate shall be  determined  by
reference to any  comparable  release of the Federal  Reserve Board  substituted
therefor or, if the Federal  Reserve Board shall not then be  publishing  such a
comparable release,  by reference to any official  publication or release of any
other United States governmental department or agency that purports to set forth
weekly average yields to maturity of United States  Treasury fixed interest rate
obligations  with a constant  maturity in accordance with the criteria set forth
in an  attachment  to Federal  Reserve Board  Statistical  Release  G.13,  dated
February 2, 1977,  or such other  criteria as may, from time to time, be adopted
by such department or agency.

     MODIFIED MAKE WHOLE AMOUNT -- means, at any time, the amount which the Make
Whole Amount would be at such time calculated if:

               (a)  in  the  case  of  any  Modified  Make  Whole  Amount  being
     calculated  in  connection   with  Section  2.2(b)   hereof,   "eighty-five
     one-hundredths  percent (0.85%)" were substituted for "fifty one-hundredths
     percent (0.50%)", or

               (b)  in  the  case  of  any  Modified  Make  Whole  Amount  being
     calculated in connection  with Section 2.4 hereof,  "one percent (1%)" were
     substituted for "fifty one- hundredths percent (0.50%)",

in each case in subsection  (a)(x) and  subsection  (b)(x) of the  definition of
"Treasury  Rate" set forth in the  definition  of "Make  Whole  Amount"  in this
Section 6.1.

     NON-EARNING  ASSETS -- shall mean, at any time, an amount equal to the sum,
without duplication, of:

               (a) the  amount,  determined  by the Company in  accordance  with
     Generally Accepted Accounting Principles,  of the investment of the Company
     and the  Restricted  Subsidiaries  in all leases and notes with  respect to
     which the  recognition of interest  income has been suspended at such time,
     plus

               (b) the  amount,  determined  by the Company in  accordance  with
     Generally  Accepted  Accounting  Principles,  of the net  investment of the
     Company and the Restricted Subsidiaries in all leases and notes sold by the
     Company or a Restricted  Subsidiary with recourse and with respect to which
     the  recognition  of interest  income would have been  suspended  were such
     leases and notes  still owned by the  Company or a  Restricted  Subsidiary,
     plus

                                       34
<PAGE>
               (c) the aggregate amount of the investment of the Company and the
     Restricted  Subsidiaries  in all leases  and notes with  respect to which a
     payment remains unpaid more than 120 days after the due date thereof, plus

               (d) the aggregate amount of the investment of the Company and the
     Restricted  Subsidiaries  in all leases and notes with respect to which the
     Company or any Restricted  Subsidiary  has received  notice that any debtor
     under any such lease or note has:

                    (i)  commenced  a  voluntary  case  under  any   bankruptcy,
               reorganization,  arrangement,  insolvency,  readjustment of debt,
               dissolution or liquidation law of any  jurisdiction,  whether now
               or subsequently in effect,

                    (ii)  consented  to or suffered  the filing of a petition or
               other  application  for  relief  against  such  debtor  under any
               bankruptcy, reorganization, arrangement, insolvency, readjustment
               of debt,  dissolution  or  liquidation  law of any  jurisdiction,
               whether now or subsequently in effect,

                    (iii) failed,  suspended business,  ceased to be solvent, or
               consented  to or  suffered a  receiver,  trustee,  liquidator  or
               custodian  to be  appointed  for it or for  all or a  significant
               portion of its assets or affairs, or

                    (iv) suffered a foreclosure,  repossession  or other similar
               action  on any  Property  encumbered  by a Lien in  favor  of the
               Company or any Restricted Subsidiary securing the payment of such
               lease or note.

     NOTE AGREEMENT -- Section 1.2(b).

     NOTES -- Section 1.1(a).

     OFFER DETERMINATION DATE -- Section 2.4(b).

     OPERATING LEASE -- means any lease of Property under which the Company or a
Restricted  Subsidiary  is liable as  lessee,  or is liable by  Guaranty  of the
obligations of another Person as lessee, other than:

               (a) a Financing Lease, or

               (b) a lease under which the Company or a Wholly-Owned  Restricted
     Subsidiary  is lessor.

     ORDINARY COURSE TRANSACTION - means:

               (a) the  leasing  (as  lessor) of  Property  by the  Company or a
     Restricted Subsidiary in the ordinary course of its business, and

               (b)  a  sale  of  Property  of  the  Company  or  any  Restricted
     Subsidiary,  which was previously leased in an Ordinary Course Transaction,
     for a sale  price  reasonably  approximating  the  residual  value  of such
     Property after such lease.

                                       35
<PAGE>
     OTHER PURCHASER -- Section 1.2(b).

     PBGC -- means the  Pension  Benefit  Guaranty  Corporation,  and any Person
succeeding to the functions of the PBGC.

     PERSON -- means any individual, partnership, corporation, limited liability
company,   trust  or   unincorporated   organization,   and  any  government  or
governmental agency or political subdivision.

     PRINCIPAL  FINANCIAL  OFFICER -- means,  with respect to any corporation or
limited liability  company,  any one of the President or a Vice President having
financial  responsibilities,  or the Treasurer or an Assistant Treasurer of such
entity.

     PROPERTY -- means any  interest  in any kind of property or asset,  whether
real, personal or mixed, or tangible or intangible.

     PURCHASERS -- means you and each Other Purchaser.

     PURCHASE MONEY LIEN -- means any Lien:

               (a) held by any Person (whether or not the seller of such assets)
     on  tangible  property  acquired  or  constructed  by  the  Company  or any
     Restricted  Subsidiary after the Closing Date (other than tangible property
     acquired to replace,  repair,  upgrade or alter tangible  property owned by
     the Company or any  Restricted  Subsidiary on the date hereof),  which Lien
     secures  all or a portion of the  related  purchase  price or  construction
     costs of such Property and which was imposed on such Property within twelve
     months after the acquisition or construction thereof, or

               (b)  existing on  tangible  property of any person at the time it
     becomes a Restricted Subsidiary,

provided that, in each such case such Lien does not extend to any other Property
of the Company or any other Restricted Subsidiary.

     RENTALS -- means as to any lease,  all fixed  payments  which the lessee is
required to make by the terms of such lease,  except amounts required to be paid
in respect of maintenance,  repairs,  property taxes, insurance,  assessments or
other similar charges or additional rentals (in excess of fixed minimums)
based upon a percentage of gross receipts.

     REQUIRED PRINCIPAL PREPAYMENT -- Section 2.1(a).

     RESTRICTED  INVESTMENTS  --  means  all  Investments,  made  in  cash or by
delivery of Property, except the following:

               (a)  Investments  in direct  obligations  of the United States of
     America, or any agency thereof which is backed by the full faith and credit
     of the United States of America,  or  obligations  guaranteed by the United

                                       36
<PAGE>
     States of America, provided that such obligations mature within twelve (12)
     months from the date of acquisition thereof,

               (b) Investments in certificates of deposit maturing within twelve
     (12)  months from the date of  issuance  thereof  issued by a bank or trust
     company  organized under the laws of the United States or any state thereof
     which is a member of the  Federal  Reserve  System and which has a combined
     capital  surplus and undivided  profits  aggregating at least Fifty Million
     Dollars ($50,000,000);

               (c)  Investments  in  readily  marketable   commercial  paper  of
     corporations  organized  under the laws of the  United  States or any state
     thereof,  given the highest  rating by Standard and Poors Bond Rating Index
     or by  Moody's  Investors  Service or by any  rating  agency of  nationally
     recognized  standing and maturing not more than two hundred  seventy  (270)
     days from the date of creation thereof;

               (d)  Investments of the Company or any  Restricted  Subsidiary in
               any   Wholly-Owned    Restricted   Subsidiary   (other   than   a
     Securitization  Subsidiary)  and  Investments  in the Company or any Person
     which as a result of such  Investment  and after giving effect thereto will
     become a Wholly-Owned  Restricted  Subsidiary  (other than a Securitization
     Subsidiary);

               (e) Investments in other Subsidiaries  (other than Securitization
     Subsidiaries)  if after giving effect to each such Investment the aggregate
     amount  of all such  Investments  then  outstanding  does not  exceed  five
     percent (5%) of Consolidated Assets at such time;

               (f) Investments acquired solely in exchange for:

                    (i) equity interests in the Company, or

                    (ii) the proceeds of the issuance of such equity interests,

so long as such  Investment with such proceeds shall have been made no more than
one  hundred  twenty  (120) days prior to or after the  issuance  of such equity
interests  giving rise to such  proceeds and so long as, after giving  effect to
such Investment (whether made in exchange for such stock or such proceeds of the
issuance of such equity  interests),  the aggregate  amount of such  Investments
then  outstanding  does not exceed five percent (5%) of  Consolidated  Assets at
such time; and

               (g) Investments in the stock of any Bank for  Cooperatives  which
      is a member of the Farm Credit System.

Investments  shall be valued at cost less any net return of capital  through the
sale or liquidation thereof or other return of capital thereon.

     RESTRICTED SUBSIDIARY -- means any Subsidiary,

               (a) organized under the laws of the United States, Puerto Rico or
      Canada or a jurisdiction thereof;

                                       37
<PAGE>
               (b) which  conducts  substantially  all of its  business  and has
      substantially  all of its Property  within the United States,  Puerto Rico
      and Canada; and

               (c) at least  eighty  percent  (80%) (by  number of votes) of the
      Voting  Stock of which one  hundred  percent  (100%)  of all other  equity
      Securities of which are legally and beneficially  owned by the Company and
      the Wholly-Owned Restricted Subsidiaries.

     SECURITIZATION  SUBSIDIARY -- means a  Wholly-Owned  Restricted  Subsidiary
which is designated as a Securitization Subsidiary on Schedule A to Attachment B
or which the Company shall designate a Securitization Subsidiary in a writing to
each of the holders of the Notes, so long as:

               (a) neither the Company nor any other Subsidiary is in any manner
     liable,   directly  or  indirectly,   in  respect  of  any  liabilities  or
     obligations of such Person; and

               (b) the assets,  liabilities  and  operations  of such Person are
     included in the consolidated financial statements of the Company, and

               (c) such  Person  shall have been  incorporated  (and shall be in
     compliance  with its  articles or  certificate  of  incorporation)  for the
     purpose (and only for the purpose) of:

                    (i) acquiring  assets of the Company in a transaction  which
               shall have been  entered into on an arm's length basis as if such
               Person were in no manner affiliated with or owned by the Company;
               and

                    (ii) issuing Debt secured by such assets.

     SECURITY -- means  "security" as defined in Section 2(l) of the  Securities
Act of 1933, as amended.

     SENIOR DEBT -- Section 6.1 (in clause (g) of the definition of
Subordinated Debt).

     SERIES A NOTES -- Section 1.1(a).

     SERIES B NOTES -- Section 1.1(a).

     SERIES C NOTES -- Section 1.1(a).

     SERIES C REQUIRED PRINCIPAL PREPAYMENT -- Section 2.1(a)(iii).

     SUBORDINATED DEBT -- means Debt of the Company which:

               (a) is evidenced  by notes,  debentures  or similar  evidences of
      indebtedness for borrowed money,

                                       38
<PAGE>
               (b) is unsecured,

               (c) is owed to  Agway,  or to a direct or  indirect  wholly-owned
     subsidiary of Agway,

               (d) is  non-interest  bearing and matures not earlier than August
     1, 2012;

               (e) does not require  payments to be made prior to August 1, 2012
     on account of amortization  thereof  (whether by way of sinking,  purchase,
     prepayment or other analogous fund or otherwise),

               (f) has a  Weighted  Average  Life  to  Maturity  at the  time of
     issuance  thereof  which is  greater  than  the  Weighted  Average  Life to
     Maturity of the Notes at such time, and

               (g) expressly contains in the instruments evidencing such Debt or
     in the  indenture  or other  similar  instrument  under  which it is issued
     (which  indenture  or other  similar  instrument  shall be  binding  on all
     holders  of  such  Debt),  subordination  provisions  substantially  in the
     following  form  (without  limitation  as  to  further,  not  inconsistent,
     provisions, if so desired):

                    "The holder hereof by acceptance of this  instrument  agrees
               that  the  indebtedness  evidenced  by this  instrument,  and any
               renewals  or  extensions  thereof,  shall at all times and in all
               respects be subordinate and junior in right of payment to:

                    (i) all  indebtedness  for money borrowed of the Company not
               expressed in the  agreement  or other  instrument  creating  such
               indebtedness   to  be   subordinated   or  junior  to  any  other
               indebtedness of the Company, and

                    (ii)  any  and  all  extensions  or  renewals  of  any  such
               indebtedness in whole or in part.

               The indebtedness described in the preceding clause (i) and clause
          (ii) is  hereinafter  sometimes  referred to as "Senior Debt." Without
          limiting  the effect of the  foregoing,  the terms  "subordinate"  and
          "junior,"  as used herein,  shall  include  within their  meanings the
          following:

                         (1)  in  the  event  of any  insolvency  or  bankruptcy
                    proceedings,    and    any    receivership,     liquidation,
                    reorganization,  arrangement or other similar proceedings in
                    connection  therewith,  relative  to the  Company  or to its
                    creditors,  as such, or to its property, and in the event of
                    any  proceedings for voluntary  liquidation,  dissolution or
                    other  winding-up  of the Company,  whether or not involving
                    insolvency  or  bankruptcy,  then the holders of Senior Debt
                    shall  be  entitled  to  receive  payment  in  full  of  all
                    principal,  premium  and  interest on all Senior Debt before
                    the  holders of these  Subordinated  Notes are  entitled  to

                                       39
<PAGE>
                    receive  any  payment on account  of  principal,  premium or
                    interest on these  Subordinated  Notes, and to that end (but
                    subject to the power of a court of competent jurisdiction to
                    make  other  equitable  provisions   reflecting  the  rights
                    conferred in these  Subordinated  Notes upon the Senior Debt
                    and the holders  thereof  with  respect to the  subordinated
                    indebtedness represented by these Subordinated Notes and the
                    holders  thereof by a lawful  plan of  reorganization  under
                    applicable  bankruptcy law) the holders of Senior Debt shall
                    be entitled to receive for  application  in payment  thereof
                    each  payment  or  distribution  of any  kind or  character,
                    whether  in cash or  property  or  securities,  which may be
                    payable or deliverable in any such  proceedings,  in respect
                    of these  Subordinated  Notes,  except  securities which are
                    subordinate and junior in right of payment to the payment of
                    all Senior Debt then outstanding;

                         (2) in the event that any of these  Subordinated  Notes
                    or portion thereof shall become due and payable before their
                    expressed  maturity  for any  reason  other  than  the  mere
                    passage of time (under  circumstances when the provisions of
                    the foregoing  paragraph (1) or the following  paragraph (3)
                    shall not be  applicable),  the  holders of the Senior  Debt
                    outstanding  at the time such  Subordinated  Notes so become
                    due and payable  because of such reason shall be entitled to
                    receive  payment  in  full  of all  principal,  premium  and
                    interest  on all Senior  Debt  before  the  holders of these
                    Subordinated  Notes are  entitled  to receive any payment on
                    account  of the  principal,  premium  or  interest  on these
                    Subordinated  Notes;  provided,  that  nothing  herein shall
                    prevent the holder of any Subordinated Note from seeking any
                    remedy  allowed at law or at equity so long as any  judgment
                    or a decree  obtained  thereby makes provision for enforcing
                    this clause;

                         (3) in the event that any  default  shall  occur and be
                    continuing  with respect to any Senior Debt  permitting  the
                    holders  of such  Senior  Debt to  accelerate  the  maturity
                    thereof, no payment or prepayment of any principal,  premium
                    or interest on account of and no  repurchase,  redemption or
                    other  retirement  (whether  at the  option of the holder or
                    otherwise) of these  Subordinated Notes shall be made during
                    the continuance of such default; and

                         (4) in the event that,  notwithstanding  the  foregoing
                    paragraph (1),  paragraph (2) and paragraph (3), any payment
                    or  distribution  of  assets of the  Company  of any kind or
                    character (whether in cash, property or securities) which is
                    prohibited  by any one or more of such  paragraphs  shall be
                    received by the holders of these  Subordinated  Notes before
                    all Senior Debt is paid in full,  or  provision  is made for
                    such payment in accordance  with its terms,  such payment or
                    distribution  shall be held in trust for the benefit of, and
                    shall be paid over or  delivered  to,  the  holders  of such
                    Senior Debt or their  representative or representatives,  or
                    to the trustee or trustees  under any indenture  pursuant to
                    which any instruments evidencing any of such Senior Debt may

                                       40
<PAGE>
                    have been issued as their  respective  interests may appear,
                    for  application to the payment of all Senior Debt remaining
                    unpaid to the extent  necessary  to pay such  Senior Debt in
                    full in  accordance  with its terms,  after giving effect to
                    any  concurrent  payment or  distribution  to the holders of
                    such Senior Debt.

                    The  Company  agrees  that if any  default  shall occur with
               respect to any Senior Debt  permitting the holders of such Senior
               Debt to accelerate  the maturity  thereof,  the Company will give
               prompt  notice in writing of such  happening to all known holders
               of Senior Debt and shall certify to each such holder the names of
               the  holders  of the  two  largest  principal  amounts  of  these
               Subordinated  Notes  outstanding (or "the name of the Trustee" in
               the case of subordinated debt issued under a trust indenture) and
               the names of the holders of the two largest  principal amounts of
               each  other  outstanding  series  of  subordinated  debt  of  the
               Company.  The Company,  forthwith upon receipt of any notice with
               respect  to a claimed  default  on  Senior  Debt  received  by it
               pursuant to this Section, shall send a copy thereof by registered
               mail or by telegram to each holder of a Subordinated  Note at the
               time outstanding (or "to the Trustee" in the case of subordinated
               debt issued under a trust indenture).

                    The Company agrees, for the benefit of the holders of Senior
               Debt, that in the event that any of these  Subordinated  Notes or
               portion  thereof  shall  become  due  and  payable  before  their
               expressed  maturity for any reason other than the mere passage of
               time:

                         (a) the Company  will give prompt  notice in writing of
                    such happening to all known holders of Senior Debt, and

                         (b) any and all  Senior  Debt  shall  forthwith  become
                    immediately  due  and  payable  upon  demand  by the  holder
                    thereof, regardless of the expressed maturity thereof.

                    No  present  or  future  holder  of  Senior  Debt  shall  be
               prejudiced  in  his  right  to  enforce   subordination   of  the
               Subordinated  Notes by any act or  failure  to act on the part of
               the Company.  The  provisions  of this Section are solely for the
               purpose of defining the relative  rights of the holders of Senior
               Debt on the one hand and the holders of the Subordinated Notes on
               the other hand,  and nothing  herein  shall impair as between the
               Company and the holder of any Subordinated Note the obligation of
               the Company,  which is unconditional and absolute,  to pay to the
               holders  thereof the  principal,  premium,  if any,  and interest
               thereon in accordance  with its terms,  nor shall anything herein
               prevent the holder of a  Subordinated  Note from  exercising  all
               remedies otherwise  permitted by applicable law or hereunder upon
               default  hereunder,  subject to the  rights,  if any,  under this
               Section of holders of Senior  Debt to receive  cash,  property or
               securities,  otherwise  payable or  deliverable to holders of the
               Subordinated Notes."

     SUBSIDIARY  -- means an entity  in which  the  Company  owns,  directly  or
indirectly,  sufficient Voting Stock to enable it ordinarily,  in the absence of

                                       41
<PAGE>
contingencies,  to elect a  majority  of the  corporate  directors  (or  Persons
performing similar functions with respect to such entity).

     SUBSIDIARY STOCK -- Section 4.12.

     SURVIVING ENTITY -- Section 4.13(b).

     TANGIBLE ASSETS -- means as of the date of any determination  thereof,  all
assets of the Company and the Restricted Subsidiaries, after deducting:

               (a) deferred  assets,  other than prepaid  insurance  and prepaid
     taxes;

               (b) patents,  copyrights,  trademarks,  trade names,  franchises,
     goodwill, experimental expense and other similar intangibles;

               (c) treasury stock;

               (d) unamortized debt discount and expense;

               (e) assets  located and notes and  receivables  due from obligors
     domiciled outside the United States of America, Puerto Rico or Canada; and

               (f) Restricted Investments.

     TANGIBLE NET WORTH -- means, at any time,  Consolidated  Tangible Assets at
such time less Total Liabilities (other than Subordinated Debt) at such time.

     TOTAL  CAPITAL AND RETAINED  MARGINS -- means,  at any time,  the amount at
which shareholders' equity (excluding, to the extent included in the calculation
thereof,  minority interests in the Restricted  Subsidiaries) would be stated at
such  time  on a  consolidated  balance  sheet  of the  Company  and  Restricted
Subsidiaries  less any amount which would be reflected on such balance sheet for
assets which are not Tangible Assets.

     TOTAL LIABILITIES -- means, at any time, the sum (without duplication) of

               (a) the amount at which all items properly recorded in accordance
     with Generally Accepted Accounting Principles, consistently applied, on the
     liability  side of a  consolidated  balance  sheet of the  Company  and the
     Restricted  Subsidiaries,  other  than  deferred  taxes,  preferred  stock,
     capital stock,  additional  paid-in  capital,  retained  earnings and other
     similar capital accounts, would be shown on such balance sheet at such time
     and

               (b) the aggregate amount (without  duplication) of all Guaranties
     of the Company and the Restricted Subsidiaries outstanding at such time.

     VOTING STOCK - means,  with respect to any entity,  rights,  the holders of
which are entitled at any time (regardless of the happening of a contingency) to
elect a Person or Persons having the authority and responsibility to govern such
entity

                                       42
<PAGE>
     WEIGHTED  AVERAGE  LIFE TO MATURITY -- means,  with  respect to any Debt or
preferred stock as at the time of determination, the number of years obtained by
dividing the then Remaining  Dollar-years of such Debt or preferred stock by the
outstanding  principal  amount  of such Debt or by the par  value  plus  paid-in
capital reserved for such then outstanding  preferred stock. The term "Remaining
Dollar-years" of any Debt or preferred stock means the amount obtained by

               (a) multiplying

                    (i) the amount of each then remaining  sinking fund,  serial
               maturity or other  required  principal  repayment  or  redemption
               (including repayment at final maturity), by

                    (ii)  the  number  of  years   (calculated  to  the  nearest
               one-twelfth)  which will elapse between the time of determination
               and the date such required repayment is due, and

               (b) totaling all products obtained in (a).

     WHOLLY-OWNED  RESTRICTED  SUBSIDIARY  -- means a Restricted  Subsidiary  of
which all of the issued and outstanding equity interests and Debt shall be owned
by any  one or  more  of the  Company  and  the  other  Wholly-Owned  Restricted
Subsidiaries.

     6.2.      ACCOUNTING PRINCIPLES.

     The  character  or amount of any  asset or  liability  or item of income or
expense required to be determined under this Agreement and each consolidation or
other accounting computation required to be made under this Agreement,  shall be
determined or made in accordance with Generally Accepted  Accounting  Principles
at the time in effect,  to the extent  applicable,  except where such principles
are inconsistent with the requirements of this Agreement.

     6.3.      DIRECTLY OR INDIRECTLY.

     Where any provision in this Agreement refers to any action which any Person
is prohibited from taking,  the provision shall be applicable whether the action
is taken directly or indirectly by such Person,  including  actions taken by, or
on behalf of, any  partnership in which such Person is a general partner and all
liabilities of such partnerships shall be considered  liabilities of such Person
under this Agreement.

     6.4.      SECTION HEADINGS, TABLE OF CONTENTS; INDEPENDENT CONSTRUCTION.

     The titles of the Sections and the Table of Contents  appear as a matter of
convenience  only,  do not  constitute  a part of this  Agreement  and shall not
affect the construction  hereof. Each covenant contained in this Agreement shall
be construed (absent an express contrary  provision herein) as being independent
of each other covenant  contained  herein,  and compliance with any one covenant
shall  not  (absent  such an  express  contrary  provision)  be deemed to excuse
compliance with one or more other covenants.

                                       43
<PAGE>
     6.5.      GOVERNING LAW.

     This  Agreement  and the  Notes  shall  be  governed  by and  construed  in
accordance with internal New York law.

7.   PURCHASER'S SPECIAL RIGHTS

     7.1.      REGISTRATION OF NOTES.

     The  Company  will cause to be kept a  register  for the  registration  and
transfer of the Notes.  The names and addresses of the holders of Notes, and all
transfers of and the names and addresses of the  transferees  of Notes,  will be
registered  in the  register.  The Person in whose  name any Note is  registered
shall be deemed  and  treated  as the owner  thereof  for all  purposes  of this
Agreement, and the Company shall not be affected by  any notice or  knowledge to
the contrary.

     7.2.      EXCHANGE OF NOTES.

     Upon surrender of any Note to the Company, the Company,  upon request, will
execute and deliver at its expense (except as provided below),  new Notes of the
same  series  as the  Note or  Notes  surrendered,  in  registered  form  and in
denominations  of at least Fifty Thousand  Dollars  ($50,000)  (except as may be
necessary  to reflect  any  principal  amount  not  equally  divisible  by Fifty
Thousand  Dollars  ($50,000)),  in an  aggregate  principal  amount equal to the
outstanding  principal  amount of the  surrendered  Note. Each new Note shall be
payable to such Person as the  surrendering  holder may  request.  Each new Note
shall be dated and bear interest  from the date to which  interest has been paid
on the surrendered Note or dated the date of the surrendered Note if no interest
has been paid thereon.  The Company may require  payment of a sum  sufficient to
cover any stamp tax or governmental charge imposed in respect of any transfer.

     7.3.      REPLACEMENT OF NOTES.

     Upon receipt by the Company of evidence  reasonably  satisfactory  to it of
the ownership of and the loss, theft, destruction or mutilation of any Note, and

               (a) in the  case of  loss,  theft or  destruction,  of  indemnity
     reasonably  satisfactory  to it (provided that if the holder of the Note is
     an institutional  holder, its own unsecured agreement of indemnity shall be
     deemed to be satisfactory), or

               (b) in the case of mutilation, upon surrender and cancellation of
     the Note,

the  Company at its  expense  will  execute  and  deliver a new Note of the same
series dated and bearing  interest from the date to which interest has been paid
on the lost, stolen,  destroyed or mutilated Note or dated the date of the lost,
stolen, destroyed or mutilated Note if no interest has been paid thereon.

     7.4.      DIRECT PAYMENT.

     Notwithstanding  anything to the  contrary in this  Agreement or the Notes,
the  Company  will pay all  amounts  becoming  due to any  holder  of the  Notes

                                       44
<PAGE>
(without  presentment  of or notation  on the Notes) by federal  funds bank wire
transfer to the account of such holder  designated  in Annex 1 hereto or in such
other manner as may be designated  in writing by such holder.  The holder of any
Note to which this Section applies agrees that it will surrender the Note to the
Company on payment in full of the principal,  accrued  interest and premium,  if
any,  thereon,  and any and all other amounts owed hereunder or under such Note,
and that, in the event it transfers any of its Notes,

               (a) a notation  will be made  thereon of all  principal,  if any,
     paid on the Note and the date to which interest has been paid, and

               (b) notice  will be given to the  Company of the name and address
     of the transferee.

8.   MISCELLANEOUS

     8.1.      NOTICES.

               (a) All notices and other  communications  (other than  financial
     and other  reports  sent in the  ordinary  course of  business)  under this
     Agreement  or under  the  Notes  will be in  writing  and will be mailed by
     certified or registered mail, postage prepaid,  or by nationwide  overnight
     courier,  or sent by hand  delivery or  telephonic  facsimile  transmission
     (confirmed  in writing  by  nationwide  overnight  courier on the date such
     facsimile transmission is sent),

                    (i) if to a holder  of Notes,  at the  address  provided  in
               Annex 1 hereto or at such other  address as such  holder may have
               most recently advised the Company in writing, or

                    (ii) if to the Company,  at 333 Butternut Drive,  DeWitt, NY
               13214,  or at such  other  address  as it may have most  recently
               furnished  in  writing  to you and to all  other  holders  of the
               Notes.

               (b) Any notice so  addressed  shall be deemed to be given when so
     sent.

     8.2.      REPRODUCTION OF DOCUMENTS.

     This Agreement and all related documents, including:

               (a) consents, waivers and modifications which may subsequently be
     executed,

               (b)  documents  received  by you on your  purchase  of the  Notes
     (except the Notes themselves), and

               (c)  financial  statements,  certificates  and other  information
     previously or subsequently furnished to you,

may  be  reproduced  by  you  by  any  photographic,   photostatic,   microfilm,
micro-card,  miniature photographic or other similar process and you may destroy
any original document so reproduced.  The Company agrees and stipulates that any

                                       45
<PAGE>
such  reproduction  shall,  to  the  extent  permitted  by  applicable  law,  be
admissible in evidence as the original itself in any judicial or  administrative
proceeding  whether or not the original is in  existence  and whether or not the
reproduction  was made by you in the regular  course of  business,  and that any
enlargement,  facsimile  or  further  reproduction  of  the  reproduction  shall
likewise be admissible in evidence.

     8.3.      PURCHASE FOR INVESTMENT.

     You represent to the Company that you are purchasing the Notes for your own
account  for  investment  and  with no  present  intention  of  distributing  or
reselling any of the Notes, but without  prejudice to your right at all times to
sell or  otherwise  dispose  of all or  part of the  Notes  under  an  effective
registration  statement  under the Securities Act of 1933, as amended,  or under
any exemption from registration available under that Act.

     8.4.      SUCCESSORS AND ASSIGNS.

     This  Agreement  shall  inure to the  benefit  of and be  binding  upon the
successors  and assigns of each of the parties  except that your  obligation  to
purchase the Notes (as provided in Section 1.2 hereof) shall be a right which is
personal to the Company and such right shall not be  transferable  or assignable
by the  Company  to any  other  Person  (including  successors  at law)  whether
voluntarily or involuntarily.

     8.5.      AMENDMENT AND WAIVER; ACQUISITION OF NOTES.

               (a) AMENDMENT AND WAIVER. This Agreement may be amended,  and the
     observance  of any term of this  Agreement  may be  waived,  with (and only
     with) the  written  consent of the  Company  and the  holder's  of at least
     fifty-one  percent (51%) of the outstanding  principal  amount of the Notes
     (exclusive  of  Notes  then  owned by the  Company,  the  Subsidiaries  and
     Affiliates),  provided that no amendment or waiver of any of the provisions
     of Section 1 and Section 7 hereof and  Attachment B and Attachment C hereto
     shall be  effective  as to any holder of the Notes  unless  consented to by
     such holder in writing,  and provided further,  that no amendment or waiver
     shall,  without the written  consent of the holders of all the  outstanding
     Notes,

                    (i) subject to Section 5.2(b)  hereof,  change the amount or
               time of any payment of  principal  or premium or the rate or time
               of payment of interest,

                    (ii) amend Section 5 hereof, or

                    (iii) amend this Section 8.5(a).

     Executed or complete and correct copies of any amendment or waiver effected
     pursuant to the provisions of this Section 8.5(a) shall be delivered by the
     Company to each holder of outstanding Notes promptly  following the date on
     which such amendment or waiver shall become effective.

               (b) ACQUISITION OF NOTES. Neither the Company, any Subsidiary nor
     any Affiliate  will,  directly or indirectly,  acquire or make any offer to

                                       46
<PAGE>
     acquire any Notes unless the Company or such  Subsidiary or Affiliate shall
     contemporaneously offer to acquire Notes, pro rata, from all holders of the
     Notes and upon the same terms.

     8.6.      PAYMENTS, WHEN RECEIVED.

               (a)  PAYMENTS  DUE ON  HOLIDAYS.  If any  payment due on, or with
     respect  to, any Note  shall  fall due on a day other than a Business  Day,
     then such payment shall be made on the first Business Day following the day
     on which such payment shall have so fallen due; provided that if all or any
     portion  of such  payment  shall  consist  of a payment  of  interest,  for
     purposes of calculating such interest, such payment shall be deemed to have
     been  originally  due on such first  following  Business Day, such interest
     shall  accrue  and be  payable to (but not  including)  the actual  date of
     payment,  and the amount of the next succeeding  interest  payment shall be
     adjusted accordingly.

               (b)  PAYMENTS,  WHEN  RECEIVED.  Any  payment  to be  made to the
     holders of Notes  hereunder or under the Notes shall be deemed to have been
     made on the Business Day such payment  actually  becomes  available to such
     holder at such holder's bank prior to 12:00 noon (local time of such bank).

     8.7.      DUPLICATE ORIGINALS.

     Two or more  duplicate  originals  of this  Agreement  may be signed by the
parties,  each of which shall be an  original  but all of which  together  shall
constitute one and the same instrument.

     [REMAINDER OF PAGE INTENTIONALLY BLANK; NEXT PAGE IS SIGNATURE PAGE.]

                                       47
<PAGE>





     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

PACIFIC LIFE INSURANCE COMPANY


By
   -------------------------------------
Name:
Title:


By
   -------------------------------------
Name:
Title:


                   [Signature Page to Note Purchase Agreement]

<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

PACIFIC LIFE INSURANCE COMPANY


By /s/ Diane W. Dales
   -------------------------------------
Name:  Diane W. Dales
Title: Assistant Vice President


By /s/ Jane Guon
   -------------------------------------
Name:  Jane Guon
Title: Assistant Secretary


                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
BY: CIGNA INVESTMENTS, INC. (AUTHORIZED AGENT)

By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

CONNECTICUT GENERAL LIFE INSURANCE COMPANY
BY: CIGNA INVESTMENTS, INC. (AUTHORIZED AGENT)

By /s/ Debra J. Height
   -------------------------------------
Name:  Debra J. Height
Title: Managing Director



                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

CIGNA LIFE INSURANCE COMPANY OF NEW YORK
BY: CIGNA INVESTMENTS, INC. (AUTHORIZED AGENT)

By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

CIGNA LIFE INSURANCE COMPANY OF NEW YORK
BY: CIGNA INVESTMENTS, INC. (AUTHORIZED AGENT)

By /s/ Debra J. Height
   -------------------------------------
Name:  Debra J. Height
Title: Managing Director



                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

PHOENIX LIFE INSURANCE COMPANY


By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

PHOENIX LIFE INSURANCE COMPANY


By /s/ John H. Beers
   -------------------------------------
Name:  John H. Beers
Title: Vice President




                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

PHL VARIABLE INSURANCE COMPANY


By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
     If this Agreement is satisfactory to you, please so indicate by signing the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

PHL VARIABLE INSURANCE COMPANY


By /s/ John H. Beers
   -------------------------------------
Name:  John H. Beers
Title: Secretary



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

THE TRAVELERS INSURANCE COMPANY


By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

THE TRAVELERS INSURANCE COMPANY


By /s/ Matthew J. McInerny
   -------------------------------------
Name:  Matthew J. McInerny
Title: Investment Officer



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

AMERICAN UNITED LIFE INSURANCE COMPANY


By
   -------------------------------------
Name:  Kent R. Adams
Title: Vice President, Fixed Income Securities



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

AMERICAN UNITED LIFE INSURANCE COMPANY


By /s/ Kent R. Adams
   -------------------------------------
Name:  Kent R. Adams
Title: Vice President, Fixed Income Securities



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

THE CANADA LIFE ASSURANCE COMPANY


By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

THE CANADA LIFE ASSURANCE COMPANY


By /s/ C. Paul English
   -------------------------------------
Name:  C. Paul English
Title: Associate Treasurer



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

NATIONWIDE LIFE INSURANCE COMPANY


By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

NATIONWIDE LIFE INSURANCE COMPANY


By /s/ Mark W. Poeppelman
   -------------------------------------
Name:  Mark W. Poeppelman
Title: Associate Vice President



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED


By
   -------------------------------------
Name:
Title:



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED


By /s/ Scott Brown
   -------------------------------------
Name:  Scott Brown
Title: Managing Director



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By /s/ Daniel J. Edinger
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

ASSURITY LIFE INSURANCE COMPANY


By
   -------------------------------------
Name:  Victor Weber
Title: Director, Securities Investments,
       Chief Investment Officer and Assistant Treasurer



                   [Signature Page to Note Purchase Agreement]
<PAGE>
    If this Agreement is satisfactory to you, please so indicate by signing  the
acceptance  at the  foot  of a  counterpart  of  this  Agreement  and  return  a
counterpart to the Company, whereupon this Agreement will become binding between
us in accordance with its terms.


                                        TELMARK LLC




                                        By
                                           -------------------------------------
                                        Name:  Daniel J. Edinger
                                        Title: President

ACCEPTED:

ASSURITY LIFE INSURANCE COMPANY


By /s/Victor Weber
   -------------------------------------
Name:  Victor Weber
Title: Director, Securities Investments,
       Chief Investment Officer and Assistant Treasurer



                   [Signature Page to Note Purchase Agreement]
<PAGE>

[THIS PAGE LEFT BLANK INTENTIONALLY]

<PAGE>
                                                                  ATTACHMENT A-1


                                  FORM OF NOTE

                                   TELMARK LLC

                 4.34% SERIES A SENIOR NOTES DUE AUGUST 1, 2004



No. RA-[____]                                                  PPN:  87972* AF 8
$[______]                                                        [Date of Issue]

     TELMARK LLC, a Delaware  limited  liability  company (the  "Company"),  for
value  received,  hereby  promises to pay to [_____] or  registered  assigns the
principal  sum of  [______]  DOLLARS  ($[______])  on  August 1, 2004 and to pay
interest  (computed on the basis of a 360- day year of twelve 30-day  months) on
the unpaid  principal  balance  hereof from the date of this Note at the rate of
4.34% per annum,  semiannually  on the first day of August and  February in each
year,  commencing on the later of the next such payment date  following the date
of this Note or February 1, 2003, until the principal amount hereof shall become
due  and  payable;  and to pay  on  demand  interest  on any  overdue  principal
(including any overdue prepayment of principal) and premium, if any, and (to the
extent  permitted by applicable law) on any overdue  payment of interest,  at an
annual rate equal to 6.34% per annum.

     Payments of principal,  premium, if any, and interest shall be made in such
coin or  currency  of the United  States of America as at the time of payment is
legal  tender for the  payment of public and private  debts by check  mailed and
addressed to the  registered  holder hereof at the address shown in the register
maintained  by the  Company  for such  purpose,  or, at the option of the holder
hereof,  in such manner and at such other place in the United  States of America
as the holder hereof shall have designated to the Company in writing.

     This Note is one of the Notes  (herein  called the  "Notes") of the Company
issued in an aggregate  principal  amount limited to One Hundred Million Dollars
($100,000,000)  pursuant to separate Note  Agreements  (collectively,  the "Note
Agreement") with each of the purchasers listed on Annex 1 thereto, each dated as
of August 1, 2002, and is entitled to the benefits  thereof.  The Company agrees
to make  required  payments  on  account of said  Notes in  accordance  with the
provisions of the Note Agreement.

     The Notes are issuable only as registered Notes and are  transferable  only
by surrender  thereof at the office of the Company  maintained  for such purpose
pursuant to Section 4.3 of the Note Agreement, duly endorsed or accompanied by a
written  instrument of transfer duly executed by the  registered  holder of this
Note or his attorney duly authorized in writing.

                                Attachment A-1-1
<PAGE>
     Under  certain  circumstances,  as  specified  in the Note  Agreement,  the
principal  of this Note may be  declared  due and payable in the manner and with
the effect provided in the Note Agreement.

     This Note and the Note  Agreement  are  governed by, and shall be construed
and enforced in accordance with, internal New York law.


                                              TELMARK LLC

                                              By:_______________________________
                                              Name:
                                              Title:







                                Attachment A-1-2
<PAGE>
                                                                  ATTACHMENT A-2

                                  FORM OF NOTE

                                   TELMARK LLC

                 4.94% SERIES B SENIOR NOTES DUE AUGUST 1, 2005



No. RA-[____]                                                   PPN: 87972* AG 6
$[______]                                                        [Date of Issue]

     TELMARK LLC, a Delaware  limited  liability  company (the  "Company"),  for
value  received,  hereby  promises to pay to [_____] or  registered  assigns the
principal  sum of [______]  DOLLARS  ($[______])  on August 1, 2005,  and to pay
interest  (computed on the basis of a 360- day year of twelve 30-day  months) on
the unpaid  principal  balance  hereof from the date of this Note at the rate of
4.94% per annum,  semiannually  on the first day of August and  February in each
year,  commencing on the later of the next such payment date  following the date
of this Note or February 1, 2003, until the principal amount hereof shall become
due  and  payable;  and to pay  on  demand  interest  on any  overdue  principal
(including any overdue prepayment of principal) and premium, if any, and (to the
extent  permitted by applicable law) on any overdue  payment of interest,  at an
annual rate equal to 6.94% per annum.

     Payments of principal,  premium, if any, and interest shall be made in such
coin or  currency  of the United  States of America as at the time of payment is
legal  tender for the  payment of public and private  debts by check  mailed and
addressed to the  registered  holder hereof at the address shown in the register
maintained  by the  Company  for such  purpose,  or, at the option of the holder
hereof,  in such manner and at such other place in the United  States of America
as the holder hereof shall have designated to the Company in writing.

     This Note is one of the Notes  (herein  called the  "Notes") of the Company
issued in an aggregate  principal  amount limited to One Hundred Million Dollars
($100,000,000)  pursuant to separate Note  Agreements  (collectively,  the "Note
Agreement") with each of the purchasers listed on Annex 1 thereto, each dated as
of August 1, 2002, and is entitled to the benefits  thereof.  The Company agrees
to make  required  payments  on  account of said  Notes in  accordance  with the
provisions of the Note Agreement.

     The Notes are issuable only as registered Notes and are  transferable  only
by surrender  thereof at the office of the Company  maintained  for such purpose
pursuant to Section 4.3 of the Note Agreement, duly endorsed or accompanied by a
written  instrument of transfer duly executed by the  registered  holder of this
Note or his attorney duly authorized in writing.

                                Attachment A-2-1
<PAGE>
         Under certain circumstances, as specified in the Note Agreement, the
principal of this Note may be declared due and payable in the manner and with
the effect provided in the Note Agreement.

     This Note and the Note  Agreement  are  governed by, and shall be construed
and enforced in accordance with, internal New York law.

                                              TELMARK LLC

                                              By:_______________________________
                                              Name:
                                              Title:






                                Attachment A-2-2
<PAGE>
                                                                  ATTACHMENT A-3

                                  FORM OF NOTE

                                   TELMARK LLC

                 6.09% SERIES C SENIOR NOTES DUE AUGUST 1, 2012



No. RA-[____]                                                   PPN: 87972* AG 4
$[______]                                                        [Date of Issue]

     TELMARK LLC, a Delaware  limited  liability  company (the  "Company"),  for
value  received,  hereby  promises to pay to [_____] or  registered  assigns the
principal  sum of [______]  DOLLARS  ($[______])  on August 1, 2012,  and to pay
interest  (computed on the basis of a 360- day year of twelve 30-day  months) on
the unpaid  principal  balance  hereof from the date of this Note at the rate of
6.09% per annum,  semiannually  on the first day of August and  February in each
year,  commencing on the later of the next such payment date  following the date
of this Note or February 1, 2003, until the principal amount hereof shall become
due  and  payable;  and to pay  on  demand  interest  on any  overdue  principal
(including any overdue prepayment of principal) and premium, if any, and (to the
extent  permitted by applicable law) on any overdue  payment of interest,  at an
annual rate equal to 8.09% per annum.

     Payments of principal,  premium, if any, and interest shall be made in such
coin or  currency  of the United  States of America as at the time of payment is
legal  tender for the  payment of public and private  debts by check  mailed and
addressed to the  registered  holder hereof at the address shown in the register
maintained  by the  Company  for such  purpose,  or, at the option of the holder
hereof,  in such manner and at such other place in the United  States of America
as the holder hereof shall have designated to the Company in writing.

     This Note is one of the Notes  (herein  called the  "Notes") of the Company
issued in an aggregate  principal  amount limited to One Hundred Million Dollars
($100,000,000)  pursuant to separate Note  Agreements  (collectively,  the "Note
Agreement") with each of the purchasers listed on Annex 1 thereto, each dated as
of August 1, 2002, and is entitled to the benefits  thereof.  The Company agrees
to make  required  payments  on  account of said  Notes in  accordance  with the
provisions of the Note Agreement.

     The Notes are issuable only as registered Notes and are  transferable  only
by surrender  thereof at the office of the Company  maintained  for such purpose
pursuant to Section 4.3 of the Note Agreement, duly endorsed or accompanied by a
written  instrument of transfer duly executed by the  registered  holder of this
Note or his attorney duly authorized in writing.

                                Attachment A-3-1
<PAGE>
         Under certain circumstances, as specified in the Note Agreement, the
principal of this Note may be declared due and payable in the manner and with
the effect provided in the Note Agreement.

         This Note and the Note Agreement are governed by, and shall be
construed and enforced in accordance with, internal New York law.

                                              TELMARK LLC

                                              By:_______________________________
                                              Name:
                                              Title:






                                Attachment A-3-2
<PAGE>
                                                                    ATTACHMENT B

                         WARRANTIES AND REPRESENTATIONS

     The Company warrants and represents to you that:

1.   SUBSIDIARIES.

     Schedule A to this  Attachment  B states the name of each of the  Company's
Subsidiaries   (indicating  which  are  Securitization   Subsidiaries)  and  its
corporate or joint venture Affiliates and the nature of the affiliation.

2.   COMPANY ORGANIZATION AND AUTHORITY.

     The Company:

               (a)  is a  limited  liability  company  duly  organized,  validly
     existing and in good standing under the laws of the State of Delaware;

               (b) has all  requisite  power  and  authority  and all  necessary
     licenses and permits to own and operate its  Properties and to carry on its
     business as now conducted and as presently proposed to be conducted; and

               (c) has duly qualified and is authorized to do business and is in
     good standing as a foreign limited  liability  company in each jurisdiction
     where the character of its Properties or the nature of its activities makes
     such qualification necessary.

3.   INDEBTEDNESS, LIENS, BUSINESS AND PROPERTY.

               (a) Schedule A to this  Attachment B correctly  lists, as of June
     30,  2002,  all  outstanding  Debt  (including  all  Financing  Leases  and
     Guaranties)  of, and all Liens  (other than those  permitted  by clause (i)
     through clause (vii) of Section  4.9(a) of this  Agreement) on Property of,
     the Company.  Since June 30, 2002, there has been no material change in the
     aggregate amount of such Debt, or in the aggregate amount of such Debt that
     is secured by Liens.

               (b) There is set forth in Schedule A to this  Attachment B a true
     and  accurate  description  of  the  general  nature  of the  business  and
     principal Properties of the Company.

4.   FINANCIAL STATEMENTS.

     The  consolidated  balance sheets of the Company and the Subsidiaries as of
June 30 in each of the years 2001,  2000 and 1999 and the related  statements of
income and  retained  earnings and cash flows for the fiscal years ended on such

                                 Attachment B-1
<PAGE>

dates,   all  accompanied  by  reports  thereon   containing   opinions  without
qualification   except  as  therein  noted,   by   PricewaterhouseCoopers   LLP,
independent certified public accountants, and the unaudited consolidated balance
sheet of the Company and the  Subsidiaries  as of March 31, 2002 and the related
statements  of income and  retained  earnings and cash flows for the nine months
ended on such  date,  copies of which  have  been  delivered  to you,  have been
prepared  in  accordance   with   Generally   Accepted   Accounting   Principles
consistently  applied,  and present fairly the financial position of the Company
as of such dates and the results of its operation for such periods,  subject, in
the case of such interim statements, to normal year-end adjustments.

5.   FULL DISCLOSURE.

     Neither  this  Agreement  nor any  financial  statement  or  other  written
material  furnished to you on behalf of or by the Company in connection with the
negotiation of the sale of the Notes contains any untrue statement of a material
fact or  omits a  material  fact  necessary  to make the  information  contained
therein not  misleading.  There are no facts which the Company has not disclosed
to you in writing that,  individually or in the aggregate,  materially adversely
affect or, so far as the  Company can now  foresee,  will  materially  adversely
affect the Properties,  business,  prospects, profits or condition (financial or
otherwise)  of the  Company  or  the  ability  of the  Company  to  perform  its
obligations set forth in this Agreement.  Since June 30, 2001, there has been no
material  adverse  change in the  Properties,  business,  prospects,  profits or
condition (financial or otherwise) of the Company.

6.   PENDING LITIGATION.

     There are no actions,  suits,  investigations or proceedings pending, or to
the knowledge of the Company threatened, against or affecting the Company in any
court or before any  governmental  authority  or  arbitration  board or tribunal
which,  individually  or in the aggregate,  involve the possibility of affecting
the  ability  of the  Company  to  perform  its  obligations  set  forth in this
Agreement or  materially  and  adversely  affecting  the  Properties,  business,
prospects,  profits or condition  (financial or  otherwise) of the Company.  The
Company is not in default with  respect to any order of any court,  governmental
authority or arbitration board or tribunal.

7.   TITLE TO PROPERTIES.

     The Company has good and marketable  title in fee simple (or its equivalent
under  applicable  law) to all the real property,  and has good title to all the
other Property,  it purports to own, including that reflected in the most recent
balance sheet  referred to in Section 4 of this  Attachment B (except as sold or
otherwise  disposed of in the ordinary course of business),  free from Liens not
permitted by Section 4.9 of this Agreement.

8.   PATENTS AND TRADEMARKS.

     The Company owns,  possesses or has the legal right to use all the patents,
trademarks,  service marks,  trade names,  copyrights,  licenses and rights with
respect to the foregoing necessary for the present and planned future conduct of
its business, without any known conflict with the rights of others.

                                 Attachment B-2
<PAGE>
9.   SALE IS LEGAL AND AUTHORIZED.

               (a) The sale of the Notes by the  Company and  compliance  by the
     Company with all of the provisions of this Agreement and of the Notes:

                    (i) are within the powers of the Company;

                    (ii) are legal  and will not  conflict  with,  result in any
               breach in any of the provisions  of,  constitute a default under,
               or result in the  creation  of any Lien upon any  Property of the
               Company  under  the  provisions   of,  any   agreement,   charter
               instrument,  by-law or other instrument to which the Company is a
               party or by which it or its Properties may be bound; and

                    (iii) will not violate any judgment, decree, order, statute,
               rule or regulation applicable to the Company.

               (b) The  execution,  delivery and  performance  by the Company of
     this  Agreement  and the Notes has been duly  authorized  by all  necessary
     proceedings and action on the part of the Company.

10.  NO DEFAULTS.

     No event has occurred and no condition  exists which,  upon the issuance of
the  Notes,  would  constitute  a Default  or an Event of  Default  or any other
violation  of this  Agreement.  The Company is not in  violation in any material
respect  of any  term of any  agreement,  charter  instrument,  by-law  or other
instrument to which it is a party or by which it or any of its Properties may be
bound.

11.  GOVERNMENTAL CONSENT.

     Neither the nature of the Company, or of any of its business or Properties,
nor  any  relationship  between  the  Company  and  any  other  Person,  nor any
circumstance in connection with the offer,  issue, sale or delivery of the Notes
or execution, delivery and performance of this Agreement is such as to require a
consent, approval or authorization of, or filing,  registration or qualification
with,  any  governmental  authority on the part of the Company as a condition to
the execution,  delivery and performance of this Agreement or the offer,  issue,
sale or delivery of the Notes.

12.  TAXES.

               (a) All tax  returns  required  to be filed by the Company in any
     jurisdiction have in fact been filed, and all taxes, assessments,  fees and
     other governmental charges upon the Company, or upon any of its Properties,
     income or franchises, which are due and payable have been paid. The Company
     does not know of any proposed  additional  tax  assessment  against it. The
     Federal income tax returns of the Company have been audited by the Internal
     Revenue Service (or closed by the applicable  statute of  limitations)  for
     all years to and including  the year ending June 30, 1997,  and there is no
     liability  for any tax  asserted  against the Company for that or any prior
     year.

                                 Attachment B-3
<PAGE>
               (b) The  provisions  for  taxes on the books of the  Company  are
     adequate for all open years, and for its current fiscal period.

13.  USE OF PROCEEDS.

     The Company will apply the proceeds from the sale for the Notes to repay on
the Closing Date existing debt and fund future portfolio growth thereafter. None
of  the  transactions   contemplated  in  this  Agreement  (including,   without
limitation  thereof,  the use of the  proceeds  from the sale of the Notes) will
violate or result in a violation of Section 7 of the Securities  Exchange Act of
1934, as amended, or any regulations issued pursuant thereto, including, without
limitation,  Regulations  U, T and X of the Board of  Governors  of the  Federal
Reserve  System,  12 C.F.R.,  Chapter II. The Company  does not own or intend to
carry or purchase any "margin security" within the meaning of said Regulation U,
including margin  securities  originally issued by it. None of the proceeds from
the sale of the  Notes  will be used to  purchase  or carry  (or  refinance  any
borrowing  the proceeds of which were used to purchase or carry) any  "Security"
within the meaning of the Securities Exchange Act of 1934, as amended.

14.  PRIVATE OFFERING.

     Neither the Company nor any Person acting on behalf of the Company,  as its
agent or otherwise,  has offered any of the Notes or any similar Security of the
Company for sale to, or solicited  offers to buy any thereof  from, or otherwise
approached or negotiated with respect  thereto with, any prospective  purchaser,
other  than  you  and  no  more  than  one  hundred   twenty  five  (125)  other
institutional  investors,  each of whom was  offered a  portion  of the Notes at
private  sale for  investment.  The Company  agrees that neither the Company nor
anyone  acting on its  behalf  will  offer the Notes or any part  thereof or any
similar  Securities for issue or sale to, or solicit any offer to acquire any of
the same  from,  any  Person so as to bring the  issuance  and sale of the Notes
within the provisions of Section 5 of the Securities Act of 1933, as amended.

15.  COMPLIANCE WITH LAW.

     The Company:

               (a) is not in violation of any law, ordinance,  governmental rule
     or regulation to which it is subject; and

               (b) has not failed to obtain any  license,  permit,  franchise or
     other governmental authorization necessary to the ownership of its Property
     or to the conduct of its business;

which  violation  or  failure to obtain  might,  either  individually  or in the
aggregate,   materially  adversely  affect  the  business,  prospects,  profits,
Properties or condition (financial or otherwise) of the Company.

                                 Attachment B-4
<PAGE>
16.  RESTRICTIONS ON COMPANY.

     The Company is not a party to any contract or agreement,  or subject to any
charter or other corporate  restriction,  which,  either  individually or in the
aggregate, materially adversely affects the business of the Company. The Company
is not a party to any contract or agreement which restricts its right or ability
to  issue  the  Notes  or to incur  Debt,  other  than  this  Agreement  and the
agreements  governing  Debt listed on Schedule A to this  Attachment  B, none of
which  agreements  prohibits the issuance of the Notes as  contemplated  by this
Agreement.  The  Company has not agreed or  consented  to cause or permit in the
future (upon the happening of a contingency  or otherwise)  any of its Property,
whether now owned or hereafter  acquired,  to be subject to a Lien not permitted
by Section 4.9 of this Agreement.

17.  ERISA.

               (a)  RELATIONSHIP OF VESTED BENEFITS TO BENEFIT PLAN ASSETS.  The
     present value of all benefits vested under each Benefit Plan did not, as of
     June 30,  2002 the last  annual  valuation  date,  exceed  the value of the
     assets of each such Benefit Plan allocable to such vested benefits.

               (b) PROHIBITED  TRANSACTIONS.  The execution and delivery of this
     Agreement and the offer,  issue,  sale and delivery of the Notes  hereunder
     will not constitute a "prohibited  transaction," as such term is defined in
     Section 4975 of the Internal  Revenue Code of 1986, as amended,  or Section
     406 of  ERISA.  The  warranty  and  representation  by the  Company  in the
     preceding sentence is made in reliance upon and subject to the completeness
     and accuracy of the  representations in Section 1.4 of this Agreement as to
     the  source of funds  used or to be used to pay the  purchase  price of the
     Notes purchased or to be purchased by you. Neither any of the Benefit Plans
     nor any trusts created thereunder, nor any trustee or administrator thereof
     has engaged in any such  prohibited  transaction  which  could  subject the
     Benefit Plans, or any of them, or any trustee or administrator  thereof, or
     any party  dealing  with the Benefit  Plans or any such trust to the tax or
     penalty on such prohibited  transactions imposed by said Section 4975 or by
     Section  502(i) of  ERISA.  The  Company  is not a party in  interest  with
     respect to any employee  benefit plan whose name has been  disclosed to the
     Company by you and  securities  of the Company are not employer  securities
     with  respect  to any such  plan.  As used in this  section  17,  the terms
     "employee  benefit  plans"  and  "party in  interest"  have the  respective
     meanings specified in Section 3 of ERISA and the term "employer securities"
     has the meaning specified in section 407(d)(1) of ERISA.

               (c) REPORTABLE  EVENTS.  Neither any of the Benefit Plans nor any
     such  trusts  have been  terminated,  nor have there  been any  "reportable
     events,"  as such term is  defined  in  Section  4043 of  ERISA,  since the
     effective date of ERISA.

                                 Attachment B-5
<PAGE>
               (d)  BENEFIT  PLANS.  Schedule A to this  Attachment  B correctly
     identifies  all Benefit  Plans  maintained  by each of the Company and each
     ERISA Affiliate whose assets, in whole or in part, are currently managed or
     invested by any one or more of the Purchasers.

18.  COMPANY STOCK.

     All of the outstanding capital stock of the Company is owned by Agway.

                                 Attachment B-6
<PAGE>
19.  INVESTMENT COMPANY ACT.

     The Company is not, and is not  directly or  indirectly  controlled  by, or
acting on behalf of any  Person  which is an  "investment  company"  within  the
meaning of the Investment Company Act of 1940, as amended.

20.  SOLVENCY.

     The Company is, and upon giving effect to the execution and delivery of the
Notes on the date of Closing will be, a "solvent  institution,"  as said term is
used in Section  1405(c) of the New York Insurance Law, whose  "obligations  are
not in  default as to  principal  or  interest,"  as said terms are used in said
Section 1405(c).

                                 Attachment B-7
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                           TELMARK LLC NOTE AGREEMENT
                           DATED AS OF AUGUST 1, 2002

Displayed below is a summary of Exhibits and Disclosure  Schedules that have not
been filed. We will furnish  supplementally a copy of any omitted Exhibit and/or
Disclosure Schedule to the Commission upon request.

The following is a list of the Schedules and Exhibits omitted.

Closing Attachment A1 - Theresa Szubas Letter (w/Annex 1)

Closing Attachment A2 - Richards, Layton & Finger Letter (w/Schedule A & B)

Closing Exhibit A3 - Bingham McCutchen Letter (w/Annex 1)

Closing Exhibit B - Certificate of Officers of Telmark LLC

Closing Exhibit C - Secretary's Certificate Telmark LLC

Exhibit A - Unanimous Written Consent of the Board of Directors of Telmark LLC

Exhibit B - Limited Liability Company Agreement of Telmark LLC

Schedule A - Definitions

Schedule B - Members

Schedule C - Management Agreement

Schedule D - to Limited Liability Company Agreement - Initial Officers

Exhibit C - Delaware State Certificate of Formation of Telmark LLC

Exhibit D - Delaware State Certificate of Formation of Telmark LLC Filed

Consent to Use of Name

Certificate of Merger of Telmark Inc. into Telmark LLC
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