<PAGE>

                                                                   EXHIBIT 4.19


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                              CLEAN HARBORS, INC.


                     16% SENIOR SUBORDINATED NOTES DUE 2008

                   WITH DETACHABLE WARRANTS FOR COMMON STOCK

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                         SECURITIES PURCHASE AGREEMENT


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                           Dated as of April 12, 2001

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<PAGE>

                         SECURITIES PURCHASE AGREEMENT

     THIS SECURITIES PURCHASE AGREEMENT, dated as of April 12, 2001, is among
CLEAN HARBORS, INC., a Massachusetts corporation (together with its successors
and assigns, the "COMPANY"), and the institutional investors identified on ANNEX
1 (the "PURCHASERS").

                                    RECITAL

     The Company desires to sell to the Purchasers and the Purchasers are
willing to purchase upon and subject to the terms and conditions of this
Agreement, Thirty-Five Million Dollars ($35,000,000) in aggregate original
principal amount of the Company's 16% Senior Subordinated Notes due 2008, with
detachable warrants entitling the holders to purchase, in the aggregate,
1,519,020 shares of common stock, $.01 par value of the Company (the "COMMON
STOCK") at the time of issue.

                                   AGREEMENT

     NOW, THEREFORE,  it is agreed:

     1.   AUTHORIZATION; RANKING.

     1.1  AUTHORIZATION OF ISSUE OF THE NOTES AND WARRANTS.

          (i)  The Company will authorize the issue and sale of its 16% Senior
     Subordinated Notes in the aggregate principal amount of $35,000,000 to be
     dated the date of issue, to be due on April 30, 2008 and to otherwise be
     repaid and to bear interest as provided herein, which Notes shall be in the
     form of EXHIBIT A (the "NOTES").

          (ii) The Company will authorize the issue and sale, pursuant to the
     Warrant Agreement, of warrants (collectively, the "WARRANTS"; together with
     the Notes, the "SECURITIES") to be dated the date of issue, entitling the
     holders thereof to purchase, in the aggregate, 1,519,020 shares of Common
     Stock of the Company at the time of issue.

     Certain capitalized terms used in this Agreement are defined in SECTION 10;
references to a "SCHEDULE", "ANNEX" or an "EXHIBIT" are, unless otherwise
specified, to a Schedule, Annex or an Exhibit attached to this Agreement.

     1.2  RANKING. The Notes are expressly subordinated to the Senior
Indebtedness as set forth in the Subordination Agreement and will otherwise rank
not less than pari passu in priority of payment with each other and all other
outstanding Debt of the Company, present or future, except to the extent such
other Debt is preferred as a result of being secured (but only to the extent
such security is not prohibited by SECTION 6.2 and then only to the extent of
such security).

     1.3  INTEREST ON THE NOTES. The Company shall pay to the Holders interest
on the unpaid principal amount of the Notes owing to each Holder at the rates,
time and manner set forth below.
<PAGE>

          (i)  RATE OF INTEREST. Each Note shall bear interest on the unpaid
     principal amount thereof, including accrued interest compounded and added
     to the principal of each Note pursuant to clause (ii) of this SECTION 1.3,
     from the date issued through maturity (whether by prepayment, acceleration
     or otherwise) at the annual rate of 16%.

          (ii) INTEREST PAYMENTS. Interest on each Note shall be payable semi-
     annually in arrears on October 30th and April 30th of each year (each, an
     "INTEREST PAYMENT DATE"), commencing on the first of such dates to follow
     the Closing Date, and upon any prepayment or repayment of such Note.
     Interest shall be paid as follows:

               (a)  on each Interest Payment Date through the Interest Payment
          Date occurring on October 30, 2006 (1) interest accrued on the Notes
          since the last Interest Payment Date at an annual rate of 14% shall be
          paid in cash and (2) interest in excess thereof accrued on the Notes
          since the last Interest Payment Date shall be compounded, shall be
          added to and from thereafter shall be deemed to be principal amount
          outstanding of such Note and shall itself bear interest as provided in
          clause (i) of this SECTION 1.3 or, at the election of the Company
          given by irrevocable written notice at least 30 days, and not more
          than 60 days, prior to an Interest Payment Date, shall be paid in
          cash;

               (b)  on each Interest Payment Date after October 30, 2006, all
          then accrued interest on each Note shall be due and payable in cash;
          and

               (c)  upon any date on which principal is prepaid or repaid, all
          accrued interest on the principal amount being prepaid or repaid shall
          be due and payable in cash.

          (iii) DEFAULT INTEREST. After the occurrence and during the
     continuance of any default in payment of any amount due on the Notes, the
     Notes shall bear interest on the unpaid principal amount thereof at a rate
     per annum (the "DEFAULT RATE") equal to the lesser of, (a) the highest rate
     allowed by applicable law; or (b) 18%. After the occurrence and during the
     continuance of any other Event of Default (other than a default in payment
     on the Notes), at the election of the Required Holders, the Notes shall
     bear interest on the unpaid principal amount thereof at the Default Rate.

          (iv) COMPUTATION OF INTEREST. Interest on the Notes shall be computed
     on the basis of a 360-day year and twelve 30-day months. In computing
     interest on the Notes, the date of the issuance of the Notes shall be
     included and the date of payment shall be excluded.

     2.   PURCHASE AND SALE OF THE SECURITIES; CLOSING.

     2.1  PURCHASE AND SALE OF THE SECURITIES. Subject to the terms and
conditions of this Agreement, the Company shall sell to each Purchaser, and each
Purchaser shall purchase from the Company, Notes in the principal amount
specified below such Purchaser's name in ANNEX 1, at a price equal to 100% of
such principal amount. The Warrants will be issued to the Purchasers pro rata in
the same proportion as the principal amount of Notes purchased by each Purchaser
bears to the aggregate original principal amount of the Notes. Notwithstanding
the foregoing, each Purchaser's obligations under this Agreement are several and
not joint and no

                                      -2-
<PAGE>

Purchaser shall have any obligation or liability for the performance or non-
performance by any other Purchaser of such other Purchaser's obligations under
this Agreement.

     2.2  CLOSING. The purchase and sale of the Securities shall take place at
the offices of Sullivan & Worcester LLP, One Post Office Square, Boston,
Massachusetts 02109 at a closing (the "CLOSING") to be held on April 30, 2001 or
on such other Business Day or at such other place as the Purchasers and the
Company may agree (the "CLOSING DATE"). At the Closing, the Company will deliver
to each Purchaser the Securities to be purchased by it, against payment of the
purchase price therefor by transfer of immediately available funds in accordance
with the wiring instructions set forth on ANNEX 2. If at the Closing, the
Company fails to tender any Securities to any Purchaser as provided in this
SECTION 2.2, or if any of the conditions specified in SECTION 3 shall not have
been fulfilled to a Purchaser's satisfaction, such Purchaser may, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights such Purchaser may have by reason of such failure or
non-fulfillment.

     2.3  CERTAIN AGREEMENTS OF THE COMPANY AND THE HOLDERS. The Company and
each Holder, by such Holder's acceptance of the Notes, acknowledges and agrees
that the Company's obligations under this Agreement and the Notes, and all
rights and remedies of the Holders under this Agreement, the Subsidiary
Guaranties and the Notes, are expressly subordinated to the Bank Debt and all
rights of the lenders under the Bank Loan Documents pursuant to the terms of the
Subordination Agreement. The Company and the Holders further acknowledge and
agree that so long as any portion of the Bank Debt shall remain outstanding, the
Notes shall bear the following legend:

     THIS NOTE IS SUBJECT TO A SUBORDINATION AGREEMENT DATED AS OF APRIL 12,
     2001 AMONG THE HOLDER, THE COMPANY, THE SUBSIDIARIES, AND CONGRESS
     FINANCIAL CORPORATION (NEW ENGLAND) WHICH, AMONG OTHER THINGS, SUBORDINATES
     THE COMPANY'S OBLIGATIONS TO THE HOLDER TO THE COMPANY'S OBLIGATIONS TO THE
     HOLDERS OF SENIOR INDEBTEDNESS AS DEFINED IN SAID AGREEMENT.

     3.   CONDITIONS OF CLOSING. Each Purchaser's obligation to purchase and pay
for its Securities is subject to the fulfillment to its satisfaction or its
written waiver, on or before the Closing Date, of the following conditions:

     3.1  ARTICLES OF ORGANIZATION AND PROCEEDINGS. On or before the Closing
Date, the Articles of Organization of the Company and each other organizational
document of the Company and all other proceedings taken or to be taken in
connection with the Transaction Documents and all documents incidental hereto
and thereto shall be satisfactory in form and substance to the Purchasers, and
the Purchasers shall have received the following items, each of which shall be
in form and substance satisfactory to the Purchasers and, unless otherwise
noted, dated the Closing Date, and in sufficient copies (except for the
Securities) for each Purchaser:

          (i)   Certified copies of resolutions of the Board of Directors of the
     Company approving this Agreement, the issuance of Securities, and other
     Transaction Documents to which the Company is or is to be a party, and of
     all documents evidencing other necessary corporate action and governmental
     and other third party approvals and

                                      -3-
<PAGE>

     consents, if any, with respect to this Agreement, the Securities, and each
     other Transaction Document.

          (ii)  A copy of the Articles of Organization and each amendment
     thereto of the Company, certified (as of a date reasonably near the Closing
     Date) by the Secretary of State of the Commonwealth of Massachusetts as
     being a true and correct copy thereof.

          (iii) Copies of the By-Laws of the Company certified by the Clerk or
     an Assistant Clerk as being a true, complete and correct copy as in effect
     as of the Closing Date.

          (iv)  Copies of certificates (as of a date reasonably near the Closing
     Date) of the Secretary of State of the Commonwealth of Massachusetts, and
     of each State in which the Company is identified on SCHEDULE 8.1 as being
     qualified in such State, stating that the Company, is duly qualified and in
     good standing in such State and, if the form of such certificate so
     provides, has filed all annual reports required to be filed to the date of
     such certificate.

          (v)   An Officers' Certificate from the Company, dated the Closing
     Date (and the statements made in such certificate shall be true on and as
     of the Closing Date) certifying as to (a) the absence of any amendments to
     its Articles of Organization since the date of the Secretary of State's
     certificate referred to in subsection (ii) above, (b) the absence of any
     proceeding for the dissolution or liquidation of the Company, (c) the
     matters set forth in SECTION 3.4, (d) the absence of any Default or an
     Event of Default, (e) the names and true signatures of its officers
     authorized to sign this Agreement, the Securities, each other Transaction
     Document to which it is or is to be a party and the other documents to be
     delivered hereunder and thereunder and (f) the Solvency of the Company and
     the Consolidated Group both immediately before and immediately after giving
     effect to consummation of the incurrence of the Bank Debt and the
     transactions contemplated by the Transaction Documents.

          (vi)  Originals of this Agreement, the Securities to be issued to each
     Purchaser in the respective principal amounts set forth below such
     Purchaser's name on ANNEX 1 and each other Transaction Document executed by
     a Senior Officer of the Company to the extent a party thereto.

     3.2  OPINION OF COMPANY COUNSEL. The Purchasers shall have received a
favorable opinion, dated the Closing Date and addressed to them, from Davis,
Malm & D'Agostine, P.C. counsel to the Company, in the form of EXHIBIT B and
such other matters as any Purchaser or Special Counsel may reasonably request in
form and substance reasonably acceptable to the Purchasers. To the extent that
any opinion referred to in this SECTION 3.2 is rendered in reliance upon the
opinion of any other counsel, the Purchasers shall have received a copy of the
opinion of such other counsel, dated the Closing Date and addressed to them, or
a letter from such other counsel, dated the Closing Date and addressed to them,
authorizing them to rely on such other counsel's opinion. The opinions of
counsel to the Company and any such other counsel shall be in form and substance
reasonably satisfactory to the Purchasers and Special Counsel.

     3.3  OPINION OF PURCHASERS' SPECIAL COUNSEL. The Purchasers shall have
received from Special Counsel an opinion satisfactory to them as to such matters
incident to the

                                      -4-
<PAGE>

transactions contemplated by this Agreement as they may reasonably request and
confirmation that Special Counsel has completed a satisfactory review of the
environmental permits held by the Company and its Subsidiaries.

     3.4  REPRESENTATIONS AND WARRANTIES AND COMPLIANCE. The representations and
warranties contained in SECTION 8 shall be true on and as of the Closing Date
after giving effect to the issue and sale of the Securities (and application of
the proceeds as contemplated by SECTION 5.9), no Default or Event of Default
shall have occurred or be continuing, and the Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it at or prior to the Closing.

     3.5  PURCHASE PERMITTED BY APPLICABLE LAWS. The offering, issuance,
purchase and sale of and payment for, the Securities on the Closing Date on the
terms and conditions of this Agreement (including the use of the proceeds of
such sale) shall be permitted by the laws and regulations of each jurisdiction
to which a Purchaser is subject, without recourse to provisions (such as Section
1405(a)(8) of the New York Insurance Law) permitting limited investments by life
insurance companies without restriction as to the character of the particular
investment, shall not violate any applicable law or governmental regulation
(including, without limitation, section 5 of the Securities Act or Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and shall not
subject any Purchaser to any tax, penalty, liability or other condition adverse
to it under or pursuant to any applicable law or governmental regulation, and
the Purchasers shall have received such certificates or other evidence as to
matters of fact as they may reasonably request to enable them to determine
whether such purchase is so permitted.

     3.6  PRIVATE PLACEMENT NUMBERS. Private Placement Numbers shall have been
assigned to the Notes and the Warrants by Standard & Poor's CUSIP Service
Bureau.

     3.7  SALE OF ALL SECURITIES.  The Company shall have sold to each other
Purchaser, and each other Purchaser shall have purchased, the Securities to be
purchased by it as set forth in ANNEX 1.

     3.8  CONSENT OF OTHER PERSONS.  The Company shall have received all
authorizations, consents and approvals necessary in connection with the
transactions contemplated hereby, including those identified in SCHEDULE 8.12,
in form and substance satisfactory to the Purchasers.

     3.9  PAYMENT OF SPECIAL COUNSEL FEES.  Without limiting the provisions of
SECTION 12.1, the Company shall have paid the reasonable fees, charges and
disbursements of Special Counsel (which may include a reasonable reserve for
anticipated fees and expenses) to the extent reflected in a statement of Special
Counsel rendered to the Company at or before the Closing.

     3.10 GUARANTIES. Each Subsidiary of the Company, other than Northeast
Casualty, shall have executed and delivered to the Purchasers a guaranty of all
obligations of the Company under the Notes and the other Transaction Documents
in the form of EXHIBIT C (each a "SUBSIDIARY GUARANTY" and collectively,
including any Subsidiary Guaranties executed after the date hereof pursuant to
SECTION 5.12, the "SUBSIDIARY GUARANTIES").

                                      -5-
<PAGE>

     3.11 OTHER TRANSACTION DOCUMENTS. The Company shall have executed and
delivered to the Purchasers (a) the Registration Rights Agreement in the form of
EXHIBIT D (the "REGISTRATION RIGHTS AGREEMENT"); and (b) the Warrant Agreement
in the form of EXHIBIT E (the "WARRANT AGREEMENT").

     3.12 BANK LOAN DOCUMENTS. The Purchasers shall have received a complete and
correct copy of each of the Bank Loan Documents (including all Exhibits and
Schedules thereto), certified in each case by a Senior Officer as being true,
complete and correct copies of the executed versions thereof. The Bank Loan
Documents shall be in full force and effect and unmodified since the date of
this Agreement and the Purchasers shall have received evidence satisfactory to
them that the full amount of the Term Loan B (as such term is defined in the
Bank Loan Agreement) shall be extended by the Bank simultaneously with the
Closing and that the Company has not less than $3,500,000 of undrawn
availability under the Revolving Loans (as such term is defined in the Bank Loan
Agreement).

     3.13 EXISTING SENIOR NOTES. The contemporaneous redemption in full of the
Existing Senior Notes.

     3.14 2000 FINANCIAL STATEMENTS. The Company's auditors shall have released
their audit of the Consolidated Group's balance sheet dated as of December 31,
2000 and the related statement of income, retained earnings and cash flows for
the 12 months ended on such date in a form containing no material changes from
the draft previously delivered to the Purchasers.

     3.15 CLOSING FEE. The Company shall have paid each Purchaser a fee equal to
1% of the principal amount of Notes purchased by such Purchaser.

     4.   PREPAYMENT AND REPAYMENT. The Notes may be prepaid only under the
circumstances set forth in SECTIONS 4.1 and 4.4 and shall be repaid in
accordance with SECTION 4.3 and upon any acceleration of final maturity as
provided in SECTION 7.2.

     4.1  OPTIONAL PREPAYMENT OF NOTES AT ANY TIME.  The Company may prepay the
Notes, in full, or in part in integral multiples of $1,000,000 on any date.
Prepayments of the principal of any Notes shall be made together with (a)
interest accrued on the principal amount being prepaid to the Settlement Date
and (b) the Make Whole Amount.

     4.2  NOTICE OF OPTIONAL PREPAYMENT.  The Company shall give each Holder
irrevocable written notice of any prepayment to be made pursuant to SECTION 4.1
at least 30 days, and not more than 60 days, prior to the Settlement Date
specifying:

          (i)   the Settlement Date and the aggregate amount of the Called
     Principal of the Notes;

          (ii)  that such prepayment is to be made pursuant to SECTION 4.1; and

          (iii) an estimate of the Make Whole Amount payable on the Called
Principal of the Notes (calculated as if the date of such notice were the date
of prepayment), together with the details of such computation.

                                      -6-
<PAGE>

     Upon the giving of such notice, the Called Principal of the Notes together
with interest accrued thereon to the Settlement Date and the Make Whole Amount
shall become due and payable on the Settlement Date.

     4.3  SCHEDULED REPAYMENT OF NOTES. On April 30, 2007 the Company shall
repay one half of all outstanding principal of the Notes and on April 30, 2008
(the "MATURITY DATE") the Company shall repay in full all outstanding principal
of the Notes. In each case outstanding principal shall include interest deemed
to be principal pursuant to clause (a) of SECTION 1.3(II).

     4.4  PREPAYMENT OF NOTES UPON A CHANGE OF CONTROL.  The Company shall give
written notice (a "CHANGE OF CONTROL NOTICE") to each Holder not less than 30,
and not more than 60 days, prior to the occurrence of any event which may
reasonably be expected to result in a Change of Control.  The Change of Control
Notice shall identify the event, the reason why such event may result in or has
resulted in a Change of Control and the Persons involved, and shall include such
financial and other information as is available to the Company or which may be
obtained by the Company with reasonable effort that would be reasonably
necessary for a Holder to make an informed decision as to whether to elect to
require prepayment of its Notes under this SECTION 4.4 and shall set forth the
proposed effective date for, or if the Change of Control has occurred, the
actual date, of such Change of Control.  Any Holder, by giving written notice to
the Company of such election (an "ELECTION NOTICE") not later than 5 Business
Days prior to the effective date of such Change of Control, if the Change of
Control Notice is given at least 30 days prior to such effective date, shall
have the option to require the Company to prepay all of its Notes at 100% of the
principal amount thereof plus interest accrued thereon to the Settlement Date
and the Make Whole Amount.  Once given, any Election Notice may be revoked, by
notice, given at any time up to the last date an Election Notice could have been
given with respect to the Change of Control Notice.  If the proposed terms of a
Change of Control change substantially, or if any other event which may result
in a Change of Control may or has occurred, the Company shall give each Holder a
revised Change of Control Notice and each Holder shall then have another
opportunity to elect to require prepayment of its Notes under this SECTION 4.4
by delivering to the Company a new Election Notice or to revoke, by written
notice to the Company, any prior Election Notice, not later than 30 days
following the date such revised Change of Control Notice is given.  The
prepayment of a Holder's Notes pursuant to this SECTION 4.4 shall occur on the
later of (a) the effective date of such Change of Control or (b) 5 Business Days
following the date such Holder's Election Notice is given.  Notwithstanding the
foregoing, no prepayment shall be required pursuant to this SECTION 4.4 unless a
Change of Control occurs or has occurred.

     If the Company fails to give a Change of Control Notice and a Change of
Control occurs, or fails to give a proper Change of Control Notice as to a
Change of Control which has occurred, any Holder may, at any time after the
occurrence of such Change of Control, without waiver of any right on the part of
the Holder to accelerate its Notes pursuant to SECTION 7.2, require the Company,
on demand pursuant to this SECTION 4.4, to prepay all of such Holder's Notes
issued by the Company at 100% of the principal amount thereof plus accrued
interest to the Settlement Date and the Make Whole Amount.

     4.5  PAYMENTS PRO RATA; APPLICATION OF PAYMENTS.  Upon any prepayment or
repayment of the Notes, the principal amount so repaid plus the interest accrued
thereon and the Make Whole Amount shall be allocated among the Holders in
proportion to the respective outstanding principal amounts of the Notes held by
them to which such prepayment or repayment applies.

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<PAGE>

     4.6  RETIREMENT OF NOTES. The Company shall not, and shall not permit any
of its Affiliates to, prepay or otherwise retire any Note in whole or in part,
prior to its stated maturity (other than by prepayment pursuant to SECTION 4.1
or 4.4, scheduled repayment pursuant to SECTION 4.3 or upon acceleration of
final maturity pursuant to SECTION 7.2), or purchase or otherwise acquire,
directly or indirectly, any Note held by any Holder unless the Company or such
Affiliate shall have offered to prepay or otherwise retire, purchase, redeem or
otherwise acquire, as the case may be, the same proportion of the aggregate
outstanding principal amount of Notes held by each other Holder at the time
outstanding upon the same terms and conditions. Any such offer shall provide
each Holder with sufficient information to enable it to make an informed
decision with respect to such offer, and shall remain open for at least 10
Business Days. If the Required Holders accept such offer, the Company shall
promptly notify the remaining Holders of such fact and the expiration date for
the acceptance by such Holders of such offer shall be extended by the number of
days necessary to give each such Holder at least 10 Business Days from its
receipt of such notice to accept such offer. No Notes so prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any of its
Affiliates shall thereafter be reissued or deemed to be outstanding for any
purpose under this Agreement.

     4.7  MANNER OF PAYMENT.

          (i)   MANNER OF PAYMENT. Except as specified in clause (a) of SECTION
     1.3(II), the Company shall pay all amounts payable with respect to each
     Note (without any presentment of such Note, unless such payment is the
     final payment thereon, in which case the original of the Note shall be
     delivered to the Company promptly thereafter, and without any notation of
     such payment being made thereon) by crediting, by federal funds bank wire
     transfer, the account of the Holder thereof in any bank in the United
     States of America as may be designated in writing by such Holder, or in
     such other manner or to such other address in the United States of America
     as may be reasonably designated in writing by such Holder. Absent
     subsequent notice from a Purchaser, ANNEX 1 shall constitute the
     designation by the Purchasers to the Company with respect to payments to be
     made to the Purchasers on their Notes. In the absence of a written
     designation by a Holder, all amounts payable with respect to each Note held
     by such Holder shall be paid by check mailed and addressed to the
     applicable Holder at such Holder's Home Office. All payments of principal,
     interest, Make Whole Amount, Expenses and fees hereunder and under the
     Notes by the Company shall be made without defense, set-off or
     counterclaim.

          (ii)  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 was 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.

          (iii) PAYMENTS, WHEN RECEIVED. Any payment to be made to the Holders
hereunder or under the Notes shall be deemed to have been made on the Business
Day such payment actually becomes available at such Holder's bank prior to 1:00
p.m. local time of such bank.

                                      -8-
<PAGE>

     4.8  TAXES.

          (i)   Any and all payments by the Company hereunder or under the Notes
     shall be made free and clear of and without deduction for any and all
     present or future Taxes and all liabilities with respect thereto,
     excluding, (A) in the case of each Holder, net income taxes or withholding
     obligations therefor that are imposed by the United States and net income
     taxes (or franchise taxes imposed in lieu thereof) that are imposed on such
     Holder by the state or foreign jurisdiction under the laws of which such
     Holder is organized or any political subdivision thereof, and (B) in the
     case of each Holder, that is not a United States person (as such term is
     defined in Section 7701(a)(30) of the Code) and that does not comply with
     SECTION 4.8(IV), any taxes imposed by the United States by means of
     withholding at the source unless such withholding results from a change in
     applicable law, treaty or regulations or the interpretation or
     administration thereof (including, without limitation, any guideline or
     policy not having the force of law) by any authority charged with the
     administration thereof subsequent to the date such Holder becomes a Holder,
     (all such Taxes and liabilities other than those excluded in clauses (A)
     and (B) being referred to as "COVERED TAXES"). If the Company shall be
     required by law to deduct any Covered Taxes from or in respect of any sum
     payable hereunder or under any Note to any Holder, (a) the sum payable
     shall be increased as may be necessary so that after making all required
     deductions (including deductions applicable to additional sums payable
     under this SECTION 4.8) such Holder receives an amount equal to the sum it
     would have received had no such deductions been made, (b) the Company shall
     make such deductions and (c) the Company shall pay the full amount deducted
     to the relevant taxation authority or other authority in accordance with
     applicable law.

          (ii)  In addition, the Company shall pay any present or future stamp,
     documentary, excise, property or similar Taxes that arise from or in
     connection with or as a result of the issuance of the Securities, any
     payment made hereunder or under the Securities or the execution, delivery
     or registration of, performing under, or otherwise with respect to, this
     Agreement or the Securities, or any modification, waiver or amendment of
     this Agreement, the Securities or any other Transaction Document ("OTHER
     TAXES").

          (iii) Without reduction of the rights under SECTION 4.8(I), the
     Company shall indemnify each Holder for the full amount of Covered Taxes
     and Other Taxes imposed by any jurisdiction on amounts payable under this
     SECTION 4.8, imposed on or paid by such Holder and any liability (including
     penalties, additions to tax, interest and expenses) arising therefrom or
     with respect thereto, whether or not such Covered Taxes were correctly or
     legally imposed. This indemnification shall be made within thirty (30) days
     from the date such Holder makes written demand on the Company specifying in
     reasonable detail the basis therefor.

          (iv)  Each Holder that is not a United States person (as such term is
     defined in Section 7701(a)(30) of the Code) agrees to deliver to the
     Company prior to the Closing Date, or in the case of a Holder that becomes
     a Holder after the Closing Date, on or prior to the date of such assignment
     to such Holder, becomes a Holder together with any other certificate or
     statement of exemption required under the Code to establish that such
     Holder is not subject to deduction or withholding of United States federal
     income tax with respect to any payments to such Holder, two accurate and
     complete original

                                      -9-
<PAGE>

     signed copies of IRS Form W-8 or W-8ECI (or successor forms) certifying to
     such Holder's entitlement to a complete exemption from United States
     withholding tax with respect to payments to be made under this Agreement
     and under any Note. In addition, each Holder agrees that from time to time
     after the Closing Date, when a lapse in time or change in circumstances
     renders the previous certification obsolete or inaccurate in any material
     respect, it will deliver to the Company two new accurate and complete
     original signed copies of IRS Form W-8 or W-8BEN and W-8ECI, or Form W-8
     and a Section 4.7(d)(ii) Certificate, as the case may be, and such other
     forms as may be required in order to confirm or establish the entitlement
     of such Holder to a continued exemption from or reduction in United States
     withholding Tax with respect to payments under this Agreement and any Note,
     or it shall immediately notify the Company of its inability to deliver any
     such form or certificate. Notwithstanding anything to the contrary
     contained in SECTION 4.8(I), or in the immediately succeeding sentence, (x)
     the Company shall be entitled, to the extent it is required to do so by
     law, to deduct or withhold income or similar Taxes imposed by the United
     States (or any political subdivision or taking authority thereof or
     therein) from interest, fees or other amounts payable hereunder for the
     account of any Holder which is not a United States person (as such term is
     defined in Section 7701(a)(30) of the Code) for United States Federal
     income tax purposes to the extent that such Holder has not provided to the
     Company IRS Forms that establish a complete exemption from such deduction
     or withholding and (y) shall be obligated pursuant to SECTION 4.8(I) hereof
     to gross-up payments to be made to such Holder in respect of income or
     similar Taxes imposed by the United States unless upon timely notice from
     the Company, such Holder has not provided to the Company the IRS Forms
     required to be provided to the Company pursuant to this SECTION 4.8(IV).
     Notwithstanding anything to the contrary contained in the preceding
     sentence or elsewhere in this SECTION 4.8, the Company agrees to pay
     additional amounts and to indemnify each Holder in the manner set forth in
     SECTION 4.8(I) (without regard to the identity of the jurisdiction
     requiring the deduction or withholding) in respect of any amounts deducted
     or withhold by it as described in the immediately preceding sentence as a
     result of any changes after the Closing Date in any applicable law, treaty,
     governmental rule, regulation, guideline or order, or in the interpretation
     thereof, relating to the deducting or withholding of income or similar
     Taxes.

          (v)   Within thirty (30) days after the date of any payment of Covered
     Taxes or Other Taxes, the Company shall furnish to the subject Holder a
     copy of the original receipt, certified as true and correct by a Senior
     Officer. If the Company determines that no Covered Taxes or Other Taxes are
     payable in respect thereof, the Company shall furnish, or shall cause such
     payor to furnish, to the Holders an opinion of counsel or other reasonably
     satisfactory evidence stating that such payment is exempt from Covered
     Taxes or Other Taxes.

     4.9  MAKE WHOLE AMOUNT. The Company acknowledges that the Make Whole Amount
due at any optional or required prepayment of the Notes (including any
prepayment required pursuant to any provision of SECTION 4 or SECTION 7.2) has
been negotiated with the Purchasers to provide a bargained for rate of return on
the Purchasers' investment in the Notes and is not a penalty.

                                      -10-
<PAGE>

     5.   AFFIRMATIVE COVENANTS.

     5.1  FINANCIAL AND OTHER REPORTING BY THE COMPANY. The Company will deliver
to each Holder:

          (i)   as soon as practicable, and in any event not more than 45 days
     after the end of each Fiscal Quarter (other than the fourth quarter), the
     unaudited consolidated balance sheet of the Consolidated Group as at the
     end of such Fiscal Quarter (other than the fourth quarter) and the related
     unaudited consolidated statements of income and retained earnings and of
     cash flows of the Consolidated Group for such Fiscal Quarter and for the
     Fiscal Year to date, setting forth, in each case in comparative form the
     amounts set forth for such period(s), figures for the corresponding
     period(s) in the preceding Fiscal Year, all in reasonable detail and in
     accordance with GAAP, and certified by the chief accounting officer or
     chief financial officer of the Company as fairly presenting the financial
     condition of the Consolidated Group as at the dates indicated and the
     results of its operations and cash flows, in each case for the periods
     indicated, in conformity with GAAP (except as disclosed in such
     certificate) with any changes in accounting policies discussed in
     reasonable detail, subject to changes resulting from year-end adjustments
     not material in scope or amount;

          (ii)  as soon as practicable, and in any event not more than 90 days
     after the end of each Fiscal Year, the consolidated balance sheet of the
     Consolidated Group as of the end of such Fiscal Year and the related
     consolidated statements of income and retained earnings and of cash flows
     of the Consolidated Group for such year, and setting forth, in each case,
     in comparative form, corresponding figures for the preceding Fiscal Year,
     all in reasonable detail and in accordance with GAAP, and accompanied by an
     opinion thereon of the Approved Auditor, which opinion shall be without
     limitation as to the scope of the audit and shall state that such financial
     statements present fairly in all material respects, the consolidated
     financial condition of the Consolidated Group as at the dates indicated and
     the results of their consolidated operations and cash flows for the periods
     indicated in conformity with GAAP (except as otherwise specified in such
     report) and that the audit by such accountants in connection with such
     financial statements has been made in accordance with generally accepted
     auditing standards and provides a reasonable basis for such opinion;

          (iii) together with each delivery of financial statements of the
     Consolidated Group pursuant to subsection (ii) of this SECTION 5.1 and
     within 45 days of the end of each Fiscal Quarter (other than the fourth
     Fiscal Quarter), a certificate of the chief financial officer of the
     Company (a) stating that the signer has reviewed the terms of the
     Transaction Documents and has made, or caused to be made under such
     signer's supervision, a review in reasonable detail of the transactions and
     condition of the Consolidated Group during the fiscal period covered by
     such financial statements and that such review has not disclosed the
     existence during or at the end of such fiscal period, of any Default or
     Event of Default or, if any such Default or Event of Default existed or
     exists, specifying the nature and period of existence thereof and what
     action the Company has taken or is taking or proposes to take with respect
     thereto; (b) demonstrating (if applicable, with computations in reasonable
     detail) compliance by the Company with the provisions of SECTION 6.10; and
     (c) analyzing the principal changes in the results of operations of the
     Consolidated Group for such Fiscal Year or Fiscal

                                      -11-
<PAGE>

     Quarter from the results of operations of the Consolidated Group for the
     immediately preceding Fiscal Year or Fiscal Quarter, if any;

          (iv)  together with each delivery of financial statements pursuant to
     subsection (ii) of this SECTION 5.1, a certificate by the Approved Auditor
     stating (a) that their audit examination has included a review of the terms
     of this Agreement as they relate to accounting matters and that such review
     is sufficient to enable them to make the statement referred to in clause
     (c) of this subsection (iv), (b) whether, in the course of their audit
     examination, there has been disclosed the existence during the fiscal year
     covered by such financial statements (and whether they have knowledge of
     the existence as of the date of such accountants' certificate) of any
     condition or event which constitutes a Default or Event of Default under
     SECTION 6.10 and if during their audit examination there has been disclosed
     (or if they have knowledge of) such a condition or event, specifying the
     nature and period of existence thereof (it being understood, however, that
     such accountants shall not be liable to any Person by reason of their
     failure to obtain knowledge of any Default or Event of Default which would
     not be obtained in the course of an audit conducted in accordance with
     generally accepted auditing standards), and (c) that based on their annual
     examination nothing came to their attention which causes them to believe
     that the information contained in the certificate of the chief financial
     officer of the Company delivered therewith pursuant to subsection (iii) of
     this SECTION 5.1 is not correct or that the matters set forth in such
     certificate are not stated in accordance with the terms of this Agreement;

          (v)   promptly after receipt thereof by the Company, copies of all
     management letters, if any, submitted to any member of the Consolidated
     Group by independent public accountants or consultants in connection with
     each annual, interim or special audit of the books of the Consolidated
     Group;

          (vi)  promptly after any Senior Officer obtains actual knowledge (a)
     of any Default or Event of Default, (b) that any Holder has given notice to
     the Company or taken any other action with respect to a claimed Default or
     Event of Default under this Agreement, or (c) that any Person has given any
     notice to the Company or any other member of the Consolidated Group or
     taken any other action with respect to a claimed default or event or
     condition of the type referred to in subsection (iii) of SECTION 7.1, an
     Officers' Certificate specifying the nature and period of existence of any
     such Default or Event of Default, or specifying the notice given or action
     taken by such Holder or Person and the nature of such claimed Default,
     Event of Default, event or condition, and what action the Company or such
     member has taken, is taking or proposes to take with respect thereto;

          (vii) promptly, and in any event within 5 days after any Senior
     Officer obtains knowledge of any of the following, a written notice setting
     forth the nature thereof and the action, if any, that the Company or any of
     their ERISA Affiliates proposes to take with respect thereto:

               (a)  with respect to any Plan, any "reportable event" (as defined
          in section 4043(b) of ERISA) for which notice thereof has not been
          waived pursuant to regulations of the DOL or "prohibited transaction"
          (as such term is defined in section 406 of ERISA or section 4975 of
          the Code) in connection with any Plan or any trust created thereunder;
          or

                                      -12-
<PAGE>

               (b)  the taking by the PBGC of steps to institute, or the
          threatening by the PBGC of the institution of, proceedings under
          section 4042 of ERISA for the termination of, or the appointment of a
          trustee to administer, any Plan, and any distress termination notice
          delivered to the PBGC under section 4041 of ERISA in respect of any
          Plan, and any determination of the PBGC in respect thereof;

               (c)  the placement of any Multiemployer Plan in reorganization
          status under Title IV of ERISA, any Multiemployer Plan becoming
          "insolvent" (as such term is defined in section 4245 of ERISA) under
          Title IV of ERISA, or the whole or partial withdrawal of the Company
          or any of their ERISA Affiliates from any Multiemployer Plan and the
          withdrawal liability incurred in connection therewith; or

               (d)  any event, transaction or condition that could reasonably be
          expected to result in the incurrence of any liability by the Company
          or any of its ERISA Affiliates, or the imposition of any Lien on any
          of the rights, properties or assets of the Company or any of their
          ERISA Affiliates, pursuant to Title I or IV of ERISA or the penalty or
          excise tax provisions of the Code relating to employee benefit plans,
          if such liability or Lien, taken together with any other such
          liabilities or Liens then existing, could reasonably be expected to
          have a Material Adverse Effect;

          (viii) (a) promptly after transmission thereof, copies of all
          financial statements, proxy statements, notices and reports as the
          Company shall send or make available to its stockholders or holders of
          public debt and copies of all registration statements (with exhibits),
          prospectuses and all periodic reports which it files with the SEC or
          any stock exchange and of all press releases and other statements made
          available generally by the Company to the public concerning material
          developments and (b) promptly after receipt thereof, copies of any
          reports, statements and notices the Company may receive in accordance
          with Section 13(d) or 14(d) of the Exchange Act or the rules and
          regulations of any stock exchange;

          (ix)  promptly after the commencement of any action or proceeding
     relating to any member of the Consolidated Group in any court or before any
     Governmental Authority or arbitration board or tribunal as to which there
     is a reasonable possibility of an adverse determination and that, if
     adversely determined, could reasonably be expected to have a Material
     Adverse Effect, a notice specifying the nature and period of existence
     thereof and what action such member has taken, is taking or proposes to
     take with respect thereto; and

          (x)   with reasonable promptness, such other information and data with
     respect to any member of the Consolidated Group or relating to the ability
     of the Company to perform its obligations under the Transaction Documents
     as may from time to time be reasonably requested by any Holder.

     5.2  INFORMATION REQUIRED BY RULE 144A. The Company will, upon the request
of any Holder, provide to such Holder, and any Qualified Institutional Buyer
designated by such Holder, such financial and other information as such Holder
may reasonably determine to be necessary in order to permit compliance with the
information requirements of Rule 144A in connection with a resale or proposed
resale of any Security.

                                      -13-
<PAGE>

     5.3  INSPECTION OF PROPERTY. Each member of the Consolidated Group will
permit the representatives of any Holder to visit and inspect any of its
Properties, to examine its books of account, records, reports and other papers,
to make copies and extracts therefrom, and to discuss its affairs, finances and
accounts with its and each other member's officers, employees and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the finances and affairs of the Consolidated Group) all
at such reasonable times and as often as may be reasonably requested in advance.
At all times during which there exists a Default or Event of Default, any
reasonable out-of-pocket expenses incurred by the Holders in connection with
this SECTION 5.3 shall be paid by the Company in accordance with SECTION 12.1.

     5.4  EXISTENCE, ETC. Except as otherwise specifically permitted by this
Agreement, each member of the Consolidated Group will at all times preserve and
keep in full force and effect its existence as a corporation or other legal
entity, and rights and franchises material to its business, and qualify and
maintain its qualification to do business and good standing in any jurisdiction
where the failure to do so individually or in the aggregate would have a
Material Adverse Effect.

     5.5  PAYMENT OF TAXES AND CLAIMS.

          (i)    Each member of the Consolidated Group will file all Tax returns
     required to be filed in any jurisdiction and pay all Taxes shown to be due
     and payable on such returns and all other Taxes imposed upon it or any of
     its Properties or in respect of any of its franchises, business, income,
     sales and services, or profits when the same become due and payable, but in
     any event before any penalty or interest accrues thereon, and all claims
     (including, without limitation, claims for labor, services, materials and
     supplies) for sums which have become due and payable and which have or
     might become a Lien upon any of its properties or assets, provided, that no
     such Tax or claim need be paid if (a) it is being actively contested in
     good faith by appropriate proceedings and if adequate surety bonds or
     reasonable reserves or other appropriate provision, if any, as shall be
     required by GAAP shall have been made therefor, and (b) the failure to pay
     such Tax or claim is not expected, if such contest were adversely
     determined, to have a Material Adverse Effect.

          (ii)   No member of the Consolidated Group will consent to or permit
     the filing of or be a party to any consolidated income tax return on its
     behalf or on behalf of any member of the Consolidated Group with any Person
     (other than a consolidated return that includes solely the Consolidated
     Group).

     5.6  COMPLIANCE WITH LAWS, ETC. Each member of the Consolidated Group will
comply with all applicable laws, rules, regulations and orders of any
Governmental Authority to which it is subject, and obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of its Properties or to the conduct of
its businesses, in each case to the extent necessary to reasonably ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, permits, franchises
and other governmental authorizations in the aggregate do not, and could not
reasonably be expected to, have a Material Adverse Effect.

     5.7  MAINTENANCE OF PROPERTIES AND LEASES. Each member of the Consolidated
Group will maintain, in good repair and working order and condition (ordinary
wear and tear and

                                      -14-
<PAGE>

obsolescence excepted) all Properties used in the Consolidated Group's business
(except to the extent the failure to so maintain, repair and keep in good
working order does not, and is not reasonably expected to, have a Material
Adverse Effect), and from time to time make or cause to be made all appropriate
repairs, renewals, replacements, additions and improvements thereof as needed
and comply in all material respects with the provisions of all leases or
licenses under which it leases or licenses any such properties (except to the
extent the failure to do so does not, and is not reasonably expected to, have a
Material Adverse Effect).

     5.8  INSURANCE. Each member of the Consolidated Group will maintain, with
financially sound and reputable insurers, insurance with respect to its
properties and business of such types and in such forms and amounts (including
deductibles, co-insurance and self-insurance if adequate reserves are maintained
with respect thereto) and against such risks as is reasonable and prudent in the
circumstances and as are customarily insured against by Persons of established
reputation engaged in the same or similar business and similarly situated.

     5.9  USE OF PROCEEDS. The Company will use the proceeds it receives from
the sale of the Notes only for repayment of the Existing Senior Notes and for
working capital and not for any purpose which would violate any applicable law
or governmental regulation or which is otherwise prohibited under SECTION 8.10.

     5.10 ENVIRONMENTAL COMPLIANCE AND INDEMNIFICATION.

     5.10.1 Each member of the Consolidated Group will (a) obtain and maintain
all permits, licenses, and other authorizations that are required of it under
all Environmental Laws other than those which the failure to obtain or maintain
individually or in the aggregate do not, and could not reasonably be expected to
have, a Material Adverse Effect, and (b) comply with all terms and conditions of
all such permits, licenses, and authorizations and with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables contained in all Environmental Laws or in any
regulation, ordinance or code applicable to it or in any, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder directly applicable to it, except to the extent of
noncompliance which, in the aggregate, does not, and could not reasonably be
expected to, have a Material Adverse Effect, and (c) operate all property owned
or leased by it such that no claims or obligations, including clean-up
obligations, which in the aggregate, have, or could reasonably be expected to
have, a Material Adverse Effect, shall arise under any Environmental Law, and if
any claim is made against it or any such obligation shall arise under any
Environmental Law, it shall at its own cost and expense, timely satisfy such
claim or obligation, provided no such claim or obligation need be satisfied for
so long as (1) it is being actively contested in good faith by appropriate
proceedings and (2) adequate surety bonds or such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor.

          5.10.2 Each member of the Consolidated Group will defend, indemnify
and hold the Purchasers, each Holder and their respective affiliates, employees,
agents, officers and directors harmless from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature, known or unknown, contingent or otherwise, arising out
of, or in any way relating to the violation of, noncompliance with or liability
under any Environmental Laws applicable to any member of the Consolidated Group
(whether or not such noncompliance constitutes a violation of the other
covenants set

                                      -15-
<PAGE>

forth in this SECTION 5.10) or any orders, requirements or demands of any
Governmental Authority related thereto, including, with limitation, reasonable
attorney's and consultants' fees, response costs, court costs and litigation
expenses, except to the extent that any of the foregoing directly result from
the gross negligence or willful misconduct of the party seeking indemnification
therefor.

     5.11 MAINTENANCE OF BOOKS AND RECORDS. Each member of the Consolidated
Group will: (i) keep proper records and books of account with respect to its
business activities in which proper entries are made in the ordinary course of
all dealings or transactions of or in relation to its business and affairs; (ii)
set up on its books adequate reserves with respect to all Taxes, assessments,
charges, levies and claims; and (iii) set up on its books reserves against
doubtful accounts receivable, advances and all other proper reserves (including
reserves for depreciation, obsolescence or amortization of its property). All
determinations pursuant to this SECTION 5.11 shall be made in accordance with,
or as required by, GAAP in order to fairly reflect all of the Consolidated
Group's financial transactions. Notwithstanding the foregoing, the members of
the Consolidated Group may make adjustments and changes in the manner in which
their books and records are kept, provided, that:

               (a)  all such adjustments and changes shall be required or
          permitted by GAAP, but need not conform with the prior accounting
          practice of such member or its predecessor;

               (b)  each Holder shall be given written notice of all such
          changes or adjustments together with the financial statements required
          by subsection (i) of SECTION 5.1 for the Fiscal Quarter in which such
          change occurred, and together with the financial statements required
          by subsection (ii) of SECTION 5.1, a year-end listing and description
          of all such changes and adjustments and the effect thereof by the
          chief financial officer of the Company;

               (c)  the financial covenants and ratios set forth in SECTION 6.10
          shall continue to be calculated without regard to such adjustments or
          changes unless and until the Required Holders have consented thereto;
          and

               (d)  the Company may not change its Fiscal Year unless and until
          the Required Holders have consented thereto, such consent not to be
          unreasonably withheld, delayed or conditioned.

     5.12 SUBSIDIARY GUARANTIES. The Company will cause each of its
Subsidiaries, other than Northeast Casualty, hereafter existing to guaranty the
obligations of the Company under this Agreement, the Notes and the other
Transaction Documents by executing and delivering to each Holder
contemporaneously with the organization or acquisition of such Subsidiary, a
Subsidiary Guaranty accompanied by copies of the organizational documents of
such Subsidiary and corporate resolutions (or equivalent) authorizing such
transaction, in each case certified as true and correct by an appropriate
officer of such Subsidiary and such opinions of counsel with respect thereto as
the Required Holders reasonably request.

     5.13 BOARD VISITATION RIGHTS. While any of the Notes shall remain
outstanding, the Required Holders shall be entitled to designate one
representative who is reasonably acceptable to the Company who shall receive
prior notice of and shall have the right to attend or participate telephonically
in any meetings of the Board of Directors or any committee thereof.

                                      -16-
<PAGE>

     6.   NEGATIVE COVENANTS.

     6.1  INDEBTEDNESS. After the Closing, no member of the Consolidated Group
will create, incur, assume or permit to exist (regardless of when incurred) any
Debt, except:

     6.1.1 the Senior Indebtedness;

     6.1.2 the Notes;

     6.1.3 Debt existing on the date hereof which is set forth in SCHEDULE 6.1
and has been designated on such schedule as Debt that will remain outstanding
following the Closing (such Debt, "EXISTING DEBT"), and any extension, renewal,
refunding or replacement of any such Debt that does not increase the principal
amount thereof;

     6.1.4 Debt of any Subsidiary Guarantor to the Company or any other
Subsidiary Guarantor except that the aggregate amount of all Debt of Northeast
Casualty to the other members of the Consolidated Group at any time shall not
exceed $500,000;

     6.1.5 other Debt of the Consolidated Group (determined on a consolidated
basis without duplication in accordance with GAAP) consisting of Capitalized
Lease Obligations and/or secured by Liens permitted under SECTION 6.2.8, in an
aggregate principal amount at any time outstanding not in excess of $1,000,000
(which amount shall include Existing Debt consisting of Capitalized Lease
Obligations or Debt secured by Liens permitted under SECTION 6.2.8) at any one
time outstanding;

     6.1.6 Subordinated Debt;

     6.1.7 Guarantees permitted under SECTION 6.3; and

     6.1.8 other unsecured Debt not expressly permitted under SECTIONS 6.1.1
through 6.1.6 in an aggregate amount not to exceed $1,000,000 at any time.

     6.2   LIENS. No member of the Consolidated Group will create, incur, assume
or permit to exist any Lien on any Property now owned or hereafter acquired by
it, or assign or sell any income or revenues (including accounts receivable) or
rights in respect of any thereof, except (the following being called "PERMITTED
LIENS"):

     6.2.1 Liens created under the Bank Loan Documents and any Refinancing Debt
Documents;

     6.2.2 any Lien on any Property existing on the date hereof and set forth in
SCHEDULE 6.1 provided that (i) after the Closing Date such Lien is not extended
to any other property or asset and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;

     6.2.3 Liens imposed by any Governmental Authority for taxes, assessments or
charges not yet delinquent or (in the case of property taxes and assessments not
exceeding $200,000 in the aggregate more than 90 days overdue) which are being
contested in good faith and by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Consolidated Group in
accordance with GAAP;

                                      -17-
<PAGE>

     6.2.4 landlords', carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens, and vendors' Liens imposed by statute or common
law not securing the repayment of Debt, arising in the ordinary course of
business which are not overdue for a period of more than 60 days or which are
being contested in good faith and by appropriate proceedings and Liens securing
judgments (including, without limitation, pre-judgment attachments) but only to
the extent for an amount and for a period not resulting in an Event of Default
under SECTION 7.1(XIII);

     6.2.5 pledges or deposits under worker's compensation, unemployment
insurance and other social security legislation and pledges or deposits to
secure the performance of bids, tenders, trade contracts (other than for
borrowed money), leases (other than capital leases), utility purchase
obligations, statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business;

     6.2.6 easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business and encumbrances consisting of
zoning restrictions, easements, licenses, restrictions on the use of Property or
minor imperfections in title thereto which, in the aggregate, are not material
in amount, and which do not, in the aggregate, materially detract from the value
of the Property or materially interfere with the ordinary conduct of the
business of any member of the Consolidated Group;

     6.2.7 Liens consisting of bankers' liens and rights of setoff, in each
case, arising by operation of law, and Liens on documents presented in letter of
credit drawings; and

     6.2.8 Liens on fixed or capital assets, including real or personal
property, acquired, constructed or improved by a member of the Consolidated
Group after the Closing Date, provided that (A) such Liens secure solely Debt
(including Capitalized Lease Obligations) permitted under SECTION 6.1.5, (B)
such Liens and the Debt secured thereby are incurred prior to or within 90 days
after such acquisition or the completion of such construction or improvement or
were in effect at the time such member acquired such fixed or capital asset, (C)
the Debt secured thereby does not exceed the cost of acquiring, constructing or
improving such fixed or capital assets, and (D) such security interests shall
not apply to any other Property of any other member of the Consolidated Group.

     6.3  CONTINGENT LIABILITIES. No member of the Consolidated Group will
Guarantee the Debt or other obligations of any Person, or Guarantee the payment
of dividends or other distributions upon the stock of, or the earnings of, any
Person, except:

     6.3.1 endorsements of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business;

     6.3.2 Guarantees of obligations of a member of the Consolidated Group to
the extent constituting Debt incurred under the Bank Loan Agreement or the
Transaction Documents (provided that the other members of the Consolidated Group
shall not guarantee, in the aggregate, more than $500,000 of Debt of Northeast
Casualty at any time);

     6.3.3 Guarantees and letters of credit in effect on the date hereof which
are disclosed in SCHEDULE 6.1, and any replacements thereof in amounts not
exceeding such Guarantees; and

                                      -18-
<PAGE>

     6.3.4 obligations in respect of letters of credit issued under the Bank
Loan Agreement.

     6.4  FUNDAMENTAL CHANGES; ASSET SALES.

     6.4.1 No member of the Consolidated Group will enter into any transaction
of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
(or suffer any liquidation or dissolution). No member of the Consolidated Group
will acquire any business or Property from, or capital stock of, or other equity
interests in, or be a party to any acquisition of, any Person except for
purchases of Property to be used in the ordinary course of business, Investments
permitted under SECTION 6.5 and Capital Expenditures. No member of the
Consolidated Group will form or acquire any Subsidiary after the Closing Date
unless such Subsidiary has entered into a Subsidiary Guaranty pursuant to
SECTION 5.12.

     6.4.2 No member of the Consolidated Group will convey, sell, lease,
transfer or otherwise dispose (including any Disposition) of, in one transaction
or a series of transactions, any part of its business or Property, whether now
owned or hereafter acquired, including, without limitation, receivables and
leasehold interests, but excluding obsolete or worn-out property (including
leasehold interests), tools or equipment no longer used or useful in its
business and any inventory or other property sold or disposed of in the ordinary
course of business and on ordinary business terms, provided that each may
sublease real property to the extent such sublease would not interfere with the
operation of the business of any member of the Consolidated Group.

     6.4.3 Notwithstanding the foregoing provisions of this SECTION 6.4:

          (i)   any Subsidiary (other than Northeast Casualty) may be merged or
     combined with or into any Subsidiary Guarantor or the Company; provided
     that if any such transaction shall be between a Subsidiary and the Company
     or a Wholly-Owned Subsidiary, the Company or such Wholly-Owned Subsidiary,
     as applicable, shall be the continuing or surviving corporation;

          (ii)  any Subsidiary may sell, lease, transfer or otherwise dispose of
     any or all of its Property (upon voluntary liquidation or otherwise) to the
     Company or a Wholly-Owned Subsidiary (provided that no member of the
     Consolidated Group shall transfer any Property to Northeast Casualty other
     than Debt permitted under SECTION 6.1.4, Guarantees permitted under SECTION
     6.3.2 and Investments permitted under SECTION 6.5.1);

          (iii) any Wholly-Owned Subsidiary (other than Northeast Casualty) may
     be merged or combined with any other Person not a Subsidiary if (a) such
     Wholly-Owned Subsidiary is the surviving entity, (b) immediately after
     giving effect to such transaction, such Wholly-Owned Subsidiary will not be
     liable with respect to any Debt, or its property subject to any Lien, which
     it could not incur or become liable for or allow its property to be or
     become subject to, under this Agreement on the date of such merger or
     combination, (c) after giving effect to such merger or combination the
     Consolidated Group would, if such merger or combination occurred on the
     last day of the most recently ended Fiscal Quarter, have been in compliance
     with its financial covenants set forth in SECTION 6.10, and (d) immediately
     before and immediately after giving effect to such merger or combination,
     no Default or Event of Default shall exist; and

                                      -19-
<PAGE>

          (iv)  the capital stock of any Subsidiary may be sold, transferred or
     otherwise disposed of to the Company or a Wholly-Owned Subsidiary (other
     than Northeast Casualty).

     6.5  INVESTMENTS; INTEREST RATE PROTECTION PRODUCTS.

     6.5.1 No member of the Consolidated Group will make or permit to remain
outstanding any Investment, other than:

          (i)   Investments consisting of Guarantees permitted by SECTION 6.3.3
     and Debt permitted by SECTION 6.1; loans and advances by the Company to any
     Wholly-Owned Subsidiary or by any Subsidiary to the Company or another
     wholly-owned Subsidiary in the ordinary course of business; and capital
     contributions by the Company to any Wholly-Owned Subsidiary or by any
     Wholly-Owned Subsidiary to a Wholly-Owned Subsidiary; provided that the
     aggregate amount of all loans, advances, Guaranties and capital
     contributions made by the Consolidated Group to Northeast Casualty after
     the Closing Date shall not exceed $500,000;

          (ii)  Permitted Investments; and

          (iii) Checking and deposit accounts with banks used in the ordinary
course of business.

     6.5.2 No member of the Consolidated Group will enter into any Interest Rate
Protection Product, other than Interest Rate Protection Products required to be
entered into under the terms of the Bank Loan Agreement and such other Interest
Rate Protection Products entered into in the ordinary course of business to
hedge or mitigate risks to which the Consolidated Group is exposed in the normal
conduct of its businesses or the management of its liabilities.

     6.6  RESTRICTED JUNIOR PAYMENTS. No member of the Consolidated Group will
declare or make any Restricted Junior Payment at any time; provided, however,
(i) that any Subsidiary Guarantor may pay dividends to the Company or any other
Subsidiary Guarantor which is a Wholly-Owned Subsidiary (except that no
dividends shall be paid to Northeast Casualty); (ii) a member of the
Consolidated Group may make regularly scheduled payments of principal and
interest on Subordinated Debt if such payments are not otherwise prohibited
under the terms under which such Subordinated Debt has been subordinated to the
Notes; and (iii) so long as no Default shall have occurred and be continuing and
no Default shall be caused thereby, the Company may make required quarterly
dividends payable on the Outstanding Preferred Stock.

     6.7  TRANSACTIONS WITH AFFILIATES. Except as expressly permitted by this
Agreement, no member of the Consolidated Group will directly or indirectly (a)
make any Investment in an Affiliate; (b) transfer, sell, lease, assign or
otherwise dispose of any Property to an Affiliate; (c) merge into or consolidate
with an Affiliate, or purchase or acquire Property from an Affiliate; or (d)
enter into any other transaction directly or indirectly with or for the benefit
of an Affiliate (including, without limitation, guarantees and assumptions of
obligations of an Affiliate); provided that:

          (i)   any Affiliate who is an individual may serve as a director,
     officer, employee or consultant of the Company or any Subsidiary, receive
     reasonable

                                      -20-
<PAGE>

     compensation for his or her services in such capacity and benefit from
     Permitted Investments to the extent specified in clause (v) of the
     definition thereof;

          (ii)  each may engage in and continue the transactions with or for the
     benefit of Affiliates which are referred to in SECTION 6.6 (but only to the
     extent specified in such section); and

          (iii) each may engage in transactions with Affiliates in the ordinary
     course of business on terms which are no less favorable to it those likely
     to be obtained in an arms' length transaction between it and a non-
     Affiliated third party.

     6.8  RESTRICTIVE AGREEMENTS. No member of the Consolidated Group will,
directly or indirectly, enter into, incur or permit to exist any agreement or
other arrangement (other than the Transaction Documents and the Bank Loan
Documents) that prohibits, restricts or imposes any condition upon (a) the
ability of any member of the Consolidated Group to pay dividends or other
distributions with respect to any shares of their Equity Interests or to make or
repay loans or advances to any other member of the Consolidated Group or to
Guarantee Debt of any other member of the Consolidated Group; provided that (i)
the foregoing shall not apply to restrictions and conditions imposed by law,
(ii) the foregoing shall not apply to restrictions and conditions existing on
the date hereof identified on SCHEDULE 8.8 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of
stock or Property of a Subsidiary pending such sale, provided such restrictions
and conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder.

     6.9  SALE-LEASEBACK TRANSACTIONS; BILL-AND-HOLD SALES, ETC.

     6.9.1  No member of the Consolidated Group will, directly or indirectly,
enter into any arrangements with any Person whereby such entity shall sell or
transfer (or request another Person to purchase) any property, real, personal or
mixed, used or useful in its business, whether now owned or hereafter acquired,
and thereafter rent or lease such property from any Person.

     6.9.2  No member of the Consolidated Group will make any sale to any
customer on a bill-and-hold, guaranteed sale, sale and return, sale-on-approval,
or consignment basis, or any sale on a repurchase or return basis.

     6.10 CERTAIN FINANCIAL COVENANTS. All of the following covenants shall be
measured at the end of each Fiscal Quarter, based on the four immediately
preceding Fiscal Quarters.

     6.10.1 FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio as of
the end of each Fiscal Quarter shall not be less than 1.10 to 1.

     6.10.2 TANGIBLE CAPITAL BASE. The Tangible Capital Base as of the end of
each Fiscal Quarter set forth below shall not be less than the amount set forth
opposite such Fiscal Quarter below:

                                      -21-
<PAGE>

       Fiscal Quarter             Minimum Tangible Capital Base Amount
-------------------------------   -------------------------------------
Fiscal Quarter ending 3/31/01                    $27,000,000
Fiscal Quarter ending 6/30/01                    $27,000,000
Fiscal Quarter ending 9/30/01                    $30,500,000
Fiscal Quarter ending 12/31/01                   $33,000,000
Each Fiscal Quarter thereafter                   $35,500,000

     6.10.3 TOTAL LIABILITIES TO TANGIBLE CAPITAL BASE RATIO. The Total
Liabilities to Tangible Capital Base Ratio as of the end of each Fiscal Quarter
set forth below shall not exceed the ratio set forth opposite such Fiscal
Quarter below:

                          Fiscal Quarter                               Ratio
----------------------------------------------------------------     ---------
Fiscal Quarters ending 6/30/01, 9/30/01 and 12/31/01                 3.00 to 1
Fiscal Quarter ending 3/31/02 and each Fiscal Quarter thereafter     2.75 to 1

     6.10.4 CAPITAL EXPENDITURES. Neither the Company nor any Subsidiary
Guarantor shall make any Capital Expenditures (including, without limitation,
incurring any Capitalized Lease Obligations) during any Fiscal Year which, in
the aggregate in any Fiscal Year, exceed 20% of the Tangible Capital Base as of
the end of the Fiscal Year then most recently ended.

     6.10.5 MINIMUM EBITDA. EBITDA as at the end of each Fiscal Quarter shall be
not less than $18,000,000.

     6.10.6 PRIORITY DEBT TO EBITDA. The Company shall maintain, on a
consolidated basis, as of the last day of each fiscal quarter, a ratio of:
(i) Priority Debt as of such date; to (ii) EBITDA of not more than 2.25 to 1.00.

     6.11 LINES OF BUSINESS. No member of the Consolidated Group will engage to
any substantial extent in any line or lines of business activity other than (i)
the types of businesses engaged in by the members of the Consolidated Group as
of the date hereof and businesses substantially related thereto, and (ii) such
other lines of business as may be consented to by the Required Holders.

     6.12 OTHER INDEBTEDNESS. No member of the Consolidated Group will purchase,
redeem, retire or otherwise acquire for value, or set apart any money for a
sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of, or make any voluntary payment or prepayment
of the principal of or interest on, or any other amount owing in respect of any
Subordinated Debt, except to the extent permitted by SECTION 6.6.

     6.13 MODIFICATIONS OF CERTAIN DOCUMENTS. No member of the Consolidated
Group will consent to any modification, supplement or waiver of any of the
provisions of any documents or agreements evidencing or governing any
Subordinated Debt. Without limiting the

                                      -22-
<PAGE>

generality of the foregoing, no Subsidiary Guarantor will Guarantee any
Subordinated Debt without the prior consent of the Required Holders.

     6.14 AMENDMENTS TO SENIOR INDEBTEDNESS DOCUMENTS. No member of the
Consolidated Group will enter into or amend any Bank Debt Document or enter into
any agreement governing, evidencing or otherwise executed in connection with
Refinancing Debt (a "REFINANCING DEBT DOCUMENT"), if such amendment or the terms
of such Bank Debt Document or Refinancing Debt Document would (i) directly
prohibit the Company or any Subsidiary Guarantor from making payments in respect
of the Notes in any manner which is not already specifically prohibited in the
Subordination Agreement; (ii) cause the terms and conditions of any financial
covenant or defined term used therein in any Bank Loan Document or in any
Refinancing Debt Document to be less favorable to the Consolidated Group than
those set forth in Section 9.13 through Section 9.14B of the Bank Loan Agreement
and the defined terms used therein as of the date hereof or provide for new
financial covenants or defined terms which do not correspond to the financial
covenants set forth in Section 9.13 through 9.14B of the Bank Loan Agreement and
the defined terms used therein as of the date hereof, unless prior to such
amendment or agreement taking effect, the Holders are given written notice
describing such less favorable or different terms and at the option of the
Required Holders, exercised within five (5) Business Days of the Holders'
receipt of the notice describing such less favorable or different terms,
conforming amendments to this Agreement are made contemporaneously with such
amendment or the execution of such agreement; (iii) extend the maturity of any
Bank Debt or Refinancing Debt to a date beyond April 30, 2008; (iv) permit the
maximum principal amount of the Senior Indebtedness to exceed at any time
$65,000,000; or (v) amend the definition of "Collateral" as set forth in the
Bank Loan Agreement as in effect as of the date of this Agreement except as may
be necessary to conform to amendments to the Uniform Commercial Code.

     6.15 COMPLIANCE WITH ERISA.  The Company and its ERISA Affiliates will not:

          (i)    engage in any transaction in connection with which the Company
     or any ERISA Affiliate could be subject to either a civil penalty assessed
     pursuant to section 502(i) of ERISA or a tax imposed by section 4975 of the
     Code, terminate or withdraw from any Plan (other than a Multiemployer Plan)
     in a manner, or take any other action with respect to any such Plan
     (including, without limitation, a substantial cessation of business
     operations or an amendment of a Plan within the meaning of section 4041(e)
     of ERISA), which could reasonably be expected to result in any liability to
     the PBGC, to a Plan, to a Plan participant, to the Department of Labor or
     to a trustee appointed under section 4042(b) or (c) of ERISA, incur any
     liability to the PBGC or a Plan on account of a withdrawal from or a
     termination of a Plan under section 4063 or 4064 of ERISA, incur any
     liability for post-retirement benefits under any and all welfare benefit
     plans (as defined in section 3(1) of ERISA), fail to make full payment when
     due of all amounts which, under the provisions of any Plan or applicable
     law, it is required to pay as contributions thereto, or permit to exist any
     accumulated funding deficiency, whether or not waived, with respect to any
     Plan (other than a Multiemployer Plan) other than such penalties, taxes,
     liabilities, failures or deficiencies which individually and in the
     aggregate do not, and are not reasonably e xpected to have in the future, a
     Material Adverse Effect;

          (ii)   at any time permit the termination of any defined benefit
     pension plan intended to be qualified under section 401(a) and section
     501(a) of the Code unless such plan is funded so that the value of all
     benefit liabilities upon the termination date

                                      -23-
<PAGE>

     does not exceed the then current value of all assets in such plan by an
     amount the payment of which would have a Material Adverse Effect; or

          (iii)  at any time permit the aggregate complete or partial withdrawal
     liability under Title IV of ERISA with respect to Multiemployer Plans
     incurred by the Company and any ERISA Affiliate, or the aggregate liability
     under Title IV of ERISA incurred by the Consolidated Group and any ERISA
     Affiliate, to exceed an amount the payment of which would have a Material
     Adverse Effect.

For the purposes of subsection (iii) of this SECTION 6.15, the amount of the
withdrawal liability of the Company and its ERISA Affiliates at any date shall
be the aggregate present value of the amounts claimed to have been incurred less
any portion thereof as to which the Company reasonably believes, after
appropriate consideration of possible adjustments arising under subtitle E of
Title IV of ERISA, that no member of the Consolidated Group nor any ERISA
Affiliate will have any liability, provided, that the Company shall promptly
obtain written advice from independent actuarial consultants supporting such
determination.  The Company will (x) once in each calendar year, beginning in
2001, request and obtain a current statement of withdrawal liability from each
Multiemployer Plan to which any member of the Consolidated Group or any ERISA
Affiliate is or has been obligated to contribute and (y) transmit a copy of such
statement to each Holder, within 15 days after the Company receives the same.
As used in this SECTION 6.15, the term "accumulated funding deficiency" has the
meaning specified in section 302 of ERISA and section 412 of the Code, the terms
"present value" and "current value" have the meanings specified in section 3 of
ERISA, the term "benefit liabilities" has the meaning specified in section
4001(a)(16) of ERISA and the term "amount of unfunded liabilities" has the
meaning specified in section 4001(18) of ERISA.

     7.   EVENTS OF DEFAULT.

     7.1  EVENTS OF DEFAULT.  If any of the following events shall occur or
conditions shall exist and be continuing for any reason whatsoever, and whether
such occurrence or condition shall be voluntary or involuntary or come about or
be effected by operation of law or otherwise, such occurrence or condition and
continuance shall constitute an "EVENT OF DEFAULT":

          (i)    the Company defaults in the payment of any principal or Make
     Whole Amount on any of the Notes when due; or

          (ii)   the Company defaults in the payment of any interest on any of
     the Notes when due and such default continues for 3 days; or

          (iii)  any default by the Company or any member of the Consolidated
     Group under any Debt in favor of any Person other than the Notes, in any
     case in an amount in excess of $500,000.00, which default continues
     unwaived for more than the applicable cure period, if any, with respect
     thereto, or any default by the Company or any member of the Consolidated
     Group under any material contract, lease, license or other obligation to
     any Person pursuant to the Transaction Documents, which default continues
     unwaived for more than the applicable cure period, if any, with respect
     thereto; or

          (iv)   any representation or warranty made by the Company or any other
     member of the Consolidated Group in any Transaction Document or in any
     writing

                                      -24-
<PAGE>

     furnished pursuant to a Transaction Document shall be false, incorrect or
     misleading in any material respect; or

          (v)    the Company or any other member of the Consolidated Group fails
     to perform or observe or comply with any covenant contained in SECTION 5.1,
     5.9, 6.1 through 6.14 inclusive; or

          (vi)   the Company or any other member of the Consolidated Group fails
     to perform or observe or comply with any covenant set forth in SECTION 5.2,
     5.4, 5.5, 5.6, 5.10, 5.12, 5.13 or 6.15 and such failure shall not be
     remedied within 30 days after the earlier of (x) actual knowledge by a
     Senior Officer or (y) notice thereof to the Company from any Holder; or

          (vii)  any member of the Consolidated Group fails to perform or
     observe or comply with any other agreement, term or condition of any of the
     Transaction Documents (other than as specified in clauses (i), (ii), (v)
     and (vi)) and such failure shall not be remedied within 30 days from the
     date of notice thereof to the Company from any Holder; or

          (viii) (a) any Subsidiary Guaranty shall cease to be in full force and
     effect or shall be declared by a court or other Governmental Authority of
     competent jurisdiction to be void, voidable or unenforceable against such
     Subsidiary or (b) the validity or enforceability of any Subsidiary Guaranty
     against such Subsidiary shall be contested by such Subsidiary, the Company
     or any of their Affiliates, or (c) any Subsidiary, the Company or any of
     their Affiliates shall deny that such Subsidiary has any further liability
     or obligation under its Subsidiary Guaranty; or

          (ix)   any member of the Consolidated Group (other than Northeast
     Casualty) voluntarily or involuntarily suspends or discontinues operation
     or liquidates all or substantially all of its assets (except, in the case
     of the voluntary suspension of operation or the liquidation of a
     Subsidiary, if the Company or a Wholly-Owned Subsidiary continues the
     business or such liquidation is in favor of the Company or a Wholly-Owned
     Subsidiary); or

          (x)    any member of the Consolidated Group is generally not paying
     its debts as such debts become due or admits in writing that it is not able
     to pay its debts as such debts become due or otherwise becomes insolvent;
     or files, or consents by answer or otherwise to the filing against it of, a
     petition for relief or reorganization or arrangement or any other petition
     in bankruptcy, for liquidation or to take advantage of any bankruptcy or
     insolvency law of any jurisdiction; or makes an assignment for the benefit
     of its creditors; or consents to the appointment of a custodian, receiver,
     trustee or other officer with similar powers with respect to it or with
     respect to any substantial part of its property; or takes corporate action
     for the purpose of any of the foregoing; or

          (xi)   a petition for relief or reorganization or arrangement or any
     other petition in bankruptcy, for liquidation, dissolution or winding up of
     any member of the Consolidated Group or for the appointment of a custodian,
     receiver, trustee or other officer with similar powers with respect to any
     member of the Consolidated Group or with respect to any substantial part of
     any member's Property to take advantage of any bankruptcy or insolvency law
     of any jurisdiction is filed against any member of the

                                      -25-
<PAGE>

     Consolidated Group without its consent or other acquiescence and such
     petition is not dismissed within 60 days or any holder of a Lien on all or
     substantially all of the assets of the Company or any other member of the
     Consolidated Group take any action to foreclose on such Lien and such
     action remains unstayed and in effect for 60 days; or

          (xii)  a Governmental Authority enters an order appointing a
     custodian, receiver, trustee or other officer with similar powers with
     respect to any member of the Consolidated Group or with respect to any
     substantial part of their Property, or constituting an order for relief or
     approving a petition for relief or reorganization or any other petition in
     bankruptcy or for liquidation or to take advantage of any bankruptcy or
     insolvency law of any jurisdiction, or ordering the dissolution, winding-up
     or liquidation of any member of the Consolidated Group without its consent
     and such order remains unstayed and in effect for 30 days; or

          (xiii) a final judgment or judgments for the payment of money
     aggregating in excess of $2,000,000 is rendered against one or more members
     of the Consolidated Group and within 60 days of the entry thereof such
     judgment or judgments are not bonded or discharged or execution thereof
     stayed pending appeal, or within 60 days after the expiration of any such
     stay, such judgment or judgments are not discharged.

     7.2  ACCELERATION ON EVENT OF DEFAULT.

          (i)    AUTOMATIC. If any Event of Default specified in subsections
     (x), (xi) or (xii) of this SECTION 7.1 shall exist, all of the Notes at the
     time outstanding shall automatically become immediately due and payable in
     full at 100% of the outstanding principal amount thereof together with
     interest accrued thereon without presentment, demand, protest or notice of
     any kind, all of which are hereby expressly waived.

          (ii)   BY ACTION OF HOLDERS. If any Event of Default other than those
     specified in subsections (x), (xi) or (xii) of SECTION 7.1 shall exist, the
     Required Holders shall have the right to declare all the Notes then
     outstanding to be immediately due and payable in full at 100% of the
     outstanding principal amount thereof together with all interest accrued
     thereon and the Make Whole Amount, without any presentment, demand, protest
     or other notice of any kind, all of which are hereby expressly waived.

          (iii)  ACCELERATION ON PAYMENT DEFAULT. During the existence of an
     Event of Default described in subsection (i) of SECTION 7.1 and
     irrespective of whether the Notes then outstanding shall have become due
     and payable pursuant to subsections (i) or (ii) of this SECTION 7.2, any
     Holder who or which shall have not consented to any waiver with respect to
     such Event of Default may, at its option, declare its Notes to be
     immediately due and payable in full at 100% of the outstanding principal
     amount thereof together with all interest accrued thereon and the Make
     Whole Amount, without any presentment, demand, protest or other notice of
     any kind, all of which are hereby expressly waived.

     7.3  RESCISSION OF ACCELERATION. At any time after any Note shall have been
declared immediately due and payable pursuant to subsection (ii) or (iii) of
SECTION 7.2, the Holders of Notes representing not less than two-thirds of the
aggregate outstanding principal amount of the Notes may, by written notice to
the Company, rescind and annul any such declaration if (i) the Company shall
have paid all interest, principal and Make Whole Amount,

                                      -26-
<PAGE>

payable with respect to any such Note which have become due otherwise than by
reason of such declaration, including any interest on any such overdue interest,
principal and Make Whole Amount, at the amount specified therein or otherwise in
this Agreement, (ii) the Company shall not have paid any amounts which have
become due solely by reason of such declaration, (iii) all Events of Default and
Defaults, other than non-payment of amounts which have become due solely by
reason of such declaration, shall have been cured or waived pursuant to SECTION
12.2, and (iv) no judgment or decree shall have been entered for the payment of
any amounts due pursuant to the Transaction Documents solely by reason of such
declaration. Any such action by the Holders of Notes representing not less than
two-thirds of the aggregate outstanding principal amount of the Notes shall be
binding on all Holders of all such Notes. No such recision or annulment shall
extend to or affect any subsequent Default or Event of Default or impair any
right arising therefrom.

     7.4  NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable pursuant to subsection (ii) or (iii) of
SECTION 7.2, or any such declaration shall be rescinded and annulled pursuant to
SECTION 7.3, the Company shall forthwith give written notice thereof to each
other Holder at the time outstanding, provided, the failure to give such notice
shall not affect the validity of any such declaration, recision or annulment.

     7.5  OTHER REMEDIES, NO WAIVERS OR ELECTION OF REMEDIES. If any one or more
Events of Default shall occur and be continuing, irrespective of whether any
Notes have become or have been declared immediately due and payable, any Holder
may proceed to protect and enforce its rights under the Transaction Documents by
exercising such remedies as are available to such Holder in respect thereof
under applicable law, either by suit in equity or by action at law or by any
other appropriate proceeding, whether for specific performance of any covenant
or other agreement contained in any Transaction Document or in aid of the
exercise of any power granted in a Transaction Document, in such order as the
Holder may determine in its sole discretion; provided, that the maturity of a
Holder's Notes may be accelerated only in accordance with SECTION 7.2. No remedy
conferred in a Transaction Document upon any Holder is intended to be exclusive
of any other remedy, and each and every such remedy shall be cumulative and
shall be in addition to every other remedy conferred herein or now or hereafter
existing at law or in equity or by statute or otherwise. No course of dealing or
failure or delay by any Holder in exercising any right, power or remedy under a
Transaction Document or any other document executed in connection therewith
shall operate as a waiver thereof or otherwise prejudice such Holder's rights,
powers or remedies, nor shall any single or partial exercise of any such right
or remedy preclude any other right or remedy hereunder or thereunder.

     8.   REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
that:

     8.1  ORGANIZATION, ETC.

          (i)    The Company is a corporation duly organized, validly existing
     and in good standing under the laws of the Commonwealth of Massachusetts
     and is qualified and in good standing in each jurisdiction in which it is
     required to be qualified to do business (other than those jurisdictions in
     which the failure to be so qualified, individually and in aggregate, could
     not reasonably be expected to have a Material Adverse Effect) and has all
     requisite power and authority to own, operate and lease its property and to
     carry on

                                      -27-
<PAGE>

     its business as now being conducted. The Company has all requisite power
     and authority to execute, deliver and perform each Transaction Document to
     which it is a party and to issue and sell the Securities to be issued by
     it. SCHEDULE 8.1 identifies the Company's and each Subsidiary's correct
     legal name, the jurisdiction of organization, the jurisdictions in which
     qualified to do business and its directors and officers.

          (ii)   Each Transaction Document has been duly authorized by all
     necessary action on the part of the Company to the extent a party thereto
     and has been (or will have been as of the Closing Date) duly executed and
     delivered by authorized officers of the Company and constitutes (or will
     constitute upon execution thereof) its legal, valid and binding
     obligations, enforceable against the Company as applicable in accordance
     with their respective terms, except as affected by bankruptcy, insolvency,
     fraudulent conveyance, reorganization, moratorium and other similar laws
     relating to or affecting creditors' rights generally and general equitable
     principles (whether considered in a proceeding in equity or at law).

     8.2  STOCK OWNERSHIP.

          (i)    The authorized capital stock of the Company will consist, as of
     the Closing, of (subject to exercises of stock options outstanding as of
     the date of this Agreement): (a) 20,000,000 shares of Common Stock, of
     which 11,395,988 shares are issued and 11,395,988 shares are outstanding,
     and 2,640,227 shares are reserved for issuance to employees pursuant to the
     plans described in SCHEDULE 8.2; (b) 2,000,000 shares of Series A
     Convertible Preferred Stock, $.01 par value, of which none are issued or
     outstanding; and (c) 156,416 shares of Series B Convertible Preferred
     Stock, $.01 par value, of which 112,000 shares are issued and outstanding.
     All such shares outstanding on the date hereof have been duly authorized
     and validly issued and are fully paid and nonassessable.

          (ii)   Except as set forth in SCHEDULE 8.2, the Company has no
     outstanding rights, options, warrants or other agreements which would
     require it to issue any additional Equity Interests after the Closing Date.

     8.3  FINANCIAL STATEMENTS. The Company has furnished the Purchasers with
the Consolidated Group's combined consolidated audited balance sheets dated as
of December 31, 1998, December 31, 1999 and December 31, 2000 and the related
statements of income, retained earnings and cash flows for the 12 months ended
on such dates (which in the case of the 2000 financial statements, are in draft
form) (collectively, the "AUDITED FINANCIAL STATEMENTS") and the unaudited
combined, consolidated balance sheet of the Consolidated Group as of February
28, 2001 and the related statements of income and cash flows for the 2 months
ended on such date (the "UNAUDITED FINANCIAL STATEMENT" and collectively with
the Audited Financial Statements, the "FINANCIAL STATEMENTS"). The Audited
Financial Statements fairly present in all material respects the combined,
consolidated financial condition of the Consolidated Group and the results of
its operations and cash flows for the respective periods specified thereby and
the Unaudited Financial Statement fairly presents in all material respects the
assets and liabilities of the Consolidated Group as of the date thereof. The
Financial Statements have been prepared in accordance with GAAP, consistently
applied through the periods involved except as set forth in the notes thereto.
Except as disclosed in the Unaudited Financial Statement, since January 1, 2001
there have been no developments or changes affecting the business, assets,
liabilities, condition (financial or otherwise) of the Consolidated

                                      -28-
<PAGE>

Group which in the aggregate have had, or could reasonably be expected to have,
a Material Adverse Effect.

     8.4  ACTIONS PENDING. Except as set forth in SCHEDULE 8.4, there are no
actions, suits, investigations or proceedings pending, or to the knowledge of
the Company threatened, against any member of the Consolidated Group or in
connection with or affecting any of its Properties or rights, by or before any
court, arbitrator or administrative body or other Governmental Authority.

     8.5  TITLE TO PROPERTIES.

          (i)    Each member of the Consolidated Group has, or will have
     immediately following the Closing, good and marketable title to all of its
     assets, subject to no Lien of any kind except Permitted Liens.

          (ii)   Each member of the Consolidated Group enjoys peaceful and
     undisturbed possession under all leases necessary in any material respect
     for the conduct of its business as now conducted and all such leases are
     valid and subsisting and are in full force and effect immediately following
     the Closing;

          (iii)  Each member of the Consolidated Group owns, has or enjoys the
     right to use (under agreements or licenses which are in full force and
     effect) all Intellectual Property necessary for it to conduct its business
     as currently conducted, without any known conflict with the rights of
     others. None of its products infringes in any material respect upon any
     Intellectual Property owned by any other Person; and

          (iv)   To the knowledge of the Company, there is no violation by any
     Person of any member of the Consolidated Group with respect to any
     Intellectual Property owned or used by such member.

     8.6  AFFILIATES AND INVESTMENTS IN OTHERS. The Consolidated Group has no
Investments in any Person other than Investments permitted under SECTION 6.5.1.

     8.7  TAX RETURNS AND PAYMENTS. Except as set forth on SCHEDULE 8.7, each
member of the Consolidated Group has filed all Federal, State, local and foreign
income tax returns, franchise tax returns, real and personal property tax
returns and other tax returns required by law to be filed by or on its behalf,
or with respect to its properties or assets, and all Taxes, assessments and
other governmental charges imposed upon it or any of its Properties, income or
franchises which are due and payable have been paid, other than those presently
payable without penalty or interest, those presently being actively contested in
good faith and for which such reserves or other appropriate provisions, if any,
as may be required by GAAP have been made and those, the non-payment or non-
filing of which, in the aggregate, do not, and could not reasonably be expected
to, have a Material Adverse Effect. Except as set forth on SCHEDULE 8.7, the
charges, accruals and reserves on the books of the Consolidated Group in respect
of any Taxes for all fiscal periods are adequate and the Company knows of no
unpaid assessment for additional Taxes for any period or any basis for any such
assessment that in the aggregate could reasonably be expected to have a Material
Adverse Effect. No charges or Taxes will be imposed by any Governmental
Authority on any member of the Consolidated Group on the execution or delivery
of the Transaction Documents and the issue and sale of the Securities.

                                      -29-
<PAGE>

     8.8  CONFLICTING AGREEMENTS AND OTHER MATTERS.

          (i)    No member of the Consolidated Group is in violation of any term
     of its organizational documents, or in violation or breach of any term of
     any agreement (including its certificate of formation and operating
     agreement), instrument, order, judgment, decree, statute, law, rule or
     regulation to which it is a party or to which it or any of its Property is
     subject other than defaults or violations, which in the aggregate, do not
     have and could not reasonably be expected to have, a Material Adverse
     Effect.

          (ii)   The execution and delivery of the Bank Loan Documents and the
     Transaction Documents, and the consummation of the transactions
     contemplated thereby do not and will not conflict with the provisions of,
     or constitute a default under, or result in any violation of, or result in
     the creation of any Lien upon any of the Properties of any member of the
     Consolidated Group (other than Liens created pursuant to the terms of the
     Bank Loan Documents), pursuant to its organizational documents, any award
     of any arbitrator or any agreement, instrument, order, judgment, decree,
     statute, law, rule or regulation to which it is subject.

          (iii)  Other than the Bank Loan Documents, the Transaction Documents
     and as described in SCHEDULE 8.8, no member of the Consolidated Group is a
     party to, or otherwise subject to any provision contained in, any
     instrument evidencing Debt, any agreement relating thereto or any other
     contract or agreement (including its charter and bylaws) which limits the
     amount of, or otherwise imposes restrictions on the incurring of, Debt by
     any member of the Consolidated Group.

     8.9  OFFERING OF SECURITIES. Neither the Company nor any agent acting on
its behalf has, directly or indirectly, offered the Securities for sale to, or
solicited any offers to buy any of the Securities from, or otherwise approached
or negotiated with respect thereto with, any Person other than the Purchasers,
each of which has been offered the Securities at a private sale for investment.
Neither the Company nor any agent acting on its behalf has taken or will take
any action which would subject the issuance or sale of the Securities to the
provisions of Section 5 of the Securities Act or to the registration provisions
of any securities or Blue Sky law of any applicable jurisdiction. As of the
Closing Date, the Securities will not be of the same class as securities of the
Company listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation system,
within the meaning of Rule 144A.

     8.10 REGULATION U, ETC. The Company does not own or have any present
intention of acquiring any "margin stock" as defined in Regulation U (12 CFR
Part 221) of the Board of Governors of the Federal Reserve System ("MARGIN
STOCK"). None of the proceeds of the sale of the Securities will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any indebtedness which was originally incurred
to purchase or carry any stock that is currently a margin stock or for any other
purpose which might constitute this transaction a "purpose credit" within the
meaning of such Regulation U. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause this Agreement or the
Notes to violate Regulation T, Regulation U, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or to violate
the Exchange Act, in each case as in effect now or hereafter in effect.

                                      -30-
<PAGE>

     8.11 ERISA.

          (i)    The Company and each ERISA Affiliate has operated and
     administered each Plan in compliance with all applicable laws except for
     such instances of noncompliance as have not resulted in and are not
     expected to result in a Material Adverse Effect. Neither the Company nor
     any ERISA Affiliate has incurred any liability pursuant to Title I or IV of
     ERISA or the penalty or excise tax provisions of the Code relating to
     employee benefit plans (as defined in section 3 of ERISA), and no event,
     transaction or condition has occurred or exists that could reasonably be
     expected to result in the incurrence of any such liability by the Company
     or any ERISA Affiliate, or in the imposition of any Lien on any of the
     rights, properties or assets of the Company or any ERISA Affiliate, in
     either case pursuant to Title I or IV of ERISA or to such penalty or excise
     tax provisions or to section 401(a)(29) or 412 of the Code, other than such
     liabilities or Liens that in the aggregate could not reasonably be expected
     to have a Material Adverse Effect.

          (ii)   The present value of the aggregate benefit liabilities under
     each of the Plans that is subject to Title IV of ERISA (other than
     Multiemployer Plans), determined as of the end of such Plan's most recently
     ended plan year on the basis of the actuarial assumptions specified for
     funding purposes in such Plan's most recent actuarial valuation report, did
     not exceed the aggregate current value of the assets of such Plan allocable
     to such benefit liabilities. The term "benefit liabilities" has the meaning
     specified in section 4001 of ERISA and the terms "current value" and
     "present value" have the meaning specified in section 3 of ERISA.

          (iii)  The Company and its ERISA Affiliates have not incurred
     withdrawal liabilities (and are not subject to contingent withdrawal
     liabilities) under section 4201 or 4204 of ERISA in respect of
     Multiemployer Plans that in the aggregate could reasonably be expected to
     have a Material Adverse Effect.

          (iv)   The expected postretirement benefit obligation (determined as
     of the last day of the Company's most recently ended Fiscal Year in
     accordance with Financial Accounting Standards Board Statement No. 106,
     without regard to liabilities attributable to continuation coverage
     mandated by section 4980B of the Code) of the Consolidated Group could not
     reasonably be expected to have a Material Adverse Effect.

          (v)    The execution and delivery of the Transaction Documents, the
     issuance and sale of the Securities and the consummation of the
     transactions contemplated by the Transaction Documents will not involve a
     transaction which is subject to the prohibitions of section 406 of ERISA or
     in connection with which a Tax could be imposed pursuant to section
     4975(c)(1)(A)-(D) of the Code. The representation in the preceding sentence
     is made in reliance upon and subject to the accuracy of the Purchasers'
     representations in subsection (ii) of SECTION 9 as to the source of the
     funds to be used to pay the purchase price of the Securities.

     8.12 GOVERNMENTAL AND OTHER CONSENTS. Except as set forth in SCHEDULE 8.12,
neither the nature of any member of the Consolidated Group nor any of their
businesses or Properties, nor any relationship between any member of the
Consolidated Group and any other Person, nor any circumstance in connection
with, the Bank Loan Documents or any Transaction Document or the offering,
issuance, sale or delivery of the Securities is such as to require any

                                      -31-
<PAGE>

authorization, consent, approval, exemption or any action by or notice to or
filing with any Governmental Authority or any other Person, other than where the
failure to obtain such authorization, consent, approval, exemption or take
action, give notice, or file would not have a Material Adverse Effect.

     8.13 ENVIRONMENTAL MATTERS.  Except as set forth in SCHEDULE 8.13:

          (i)    No member of the Consolidated Group has received any notice of
     any claim, and no proceeding has been instituted raising any claim, against
     it or any of its real properties or other assets now or formerly owned,
     leased or operated by it alleging any damage to the environment or
     violation of any Environmental Laws, except those that, in the aggregate,
     do not, and could not reasonably be expected to, result in a Material
     Adverse Effect.

          (ii)   There are no facts which would give rise to any claim, public
     or private, of violation of Environmental Laws or damage to the environment
     emanating from, occurring on or in any way related to the assets now or
     formerly owned, leased or operated by any member of the Consolidated Group
     or its use, except those that, in the aggregate do not, and could not
     reasonably be expected to, result in a Material Adverse Effect.

          (iii)  No member of the Consolidated Group has stored any Hazardous
     Materials on any real properties now or formerly owned, leased or operated
     by it or disposed of or released any Hazardous Materials in violation of
     any Environmental Laws, except such that, in the aggregate do not and could
     not reasonably be expected to result in a Material Adverse Effect.

          (iv)   All buildings on all real properties now owned, leased or
     operated by each member of the Consolidated Group are in compliance with
     applicable Environmental Laws, except where failures to comply in the
     aggregate do not, and could not reasonably be expected to, result in a
     Material Adverse Effect.

          (v)    Each member of the Consolidated Group has, or will have as of
     the Closing, obtained all permits, licenses and other authorizations and
     has made all filings, registrations and other submittals which are required
     under all Environmental Laws (except to the extent such failures to have
     any such permits, licenses or authorizations or to have made any such
     filings, registrations or submittals in the aggregate do not, and could not
     reasonably be expected to, result in a Material Adverse Effect) and each
     member of the Consolidated Group is in compliance with all Environmental
     Laws and with the terms and conditions of all such permits, licenses,
     authorizations, filings, registrations and submittals or in compliance with
     all applicable orders, decrees, judgments and injunctions, issued, entered,
     promulgated or approved under any Environmental Law (except to the extent
     failures in the aggregate do not, and could not reasonably be expected to,
     result in a Material Adverse Effect).

     8.14 LABOR RELATIONS. There is not now pending, or to the knowledge of the
Company, threatened, any strike, work stoppage, work slow down, or material
grievance or other material dispute between any member of the Consolidated Group
and any bargaining unit or significant number of its employees. To the knowledge
of the Company, there is no existing or imminent effort to organize the
employees of any member of the Consolidated Group into a

                                      -32-
<PAGE>

bargaining unit. To the knowledge of the Company, there is no existing or
imminent labor disturbance by the employees of any member of the Consolidated
Group principal suppliers, contractors or customers that in the aggregate have
had, or could reasonably be expected to have, a Material Adverse Effect.

     8.15 FINANCIAL CONDITION. After giving effect to the transactions
contemplated hereby and by the Bank Loan Documents, each member of the
Consolidated Group will individually and the Consolidate Group on a consolidated
basis be Solvent.

     8.16 DISCLOSURE

          (i)    The Bank Loan Documents, Transaction Documents, the Financial
     Statements, and the certificates furnished to the Purchasers pursuant to
     SECTION 3.1 do not contain any untrue statement of a material fact or omit
     to state a material fact necessary in order to make the statements
     contained herein and therein, in light of the circumstances under which
     they were made, not misleading.

          (ii)   There is no material fact known to the Company, with respect to
     the Consolidated Group, which could reasonably be expected to have a
     Material Adverse Effect and which has not been described in this Agreement
     or otherwise disclosed in writing to the Purchasers by the Company.

     8.17 STATUS UNDER CERTAIN FEDERAL STATUTES. The Company is not subject to
regulation under the Investment Company Act of 1940, as amended, or the Public
Utility Holding Company Act of 1935, as amended. Neither the sale of the
Securities hereunder nor the use of the proceeds thereof will violate the
Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.

     8.18 BANK LOAN AGREEMENT; EXISTING DEBT. As of the date of this Agreement
the Bank Loan Agreement has been executed and delivered and is in full forces
and effect in the form of EXHIBIT F. As of the Closing, no member of the
Consolidated Group will be in default and no waiver of any such default will be
in effect, in the payment of any principal or interest on any Senior
Indebtedness or any Existing Debt and no event or condition will exist as of the
Closing with respect to any such Debt that would permit (or that with notice or
the lapse of time, or both, would permit) one or more Persons to cause such Debt
to become due and payable before its regularly scheduled dates of payment.

     8.19 COMPLIANCE WITH LAWS, ETC. Each member of the Consolidated Group is in
compliance with the requirements of all applicable laws, rules, regulations and
orders of any Governmental Authority (including, without limitation, the
Occupational Safety and Health Act of 1970, as amended, ERISA and any
Environmental Laws), and each member of the Consolidated Group has, or will have
as of the Closing Date, in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
its properties or to the conduct of its businesses to the extent necessary to
reasonably ensure that non-compliance with such laws, ordinances or governmental
rules or regulations or failures to have in effect such licenses, permits,
franchises and other governmental authorizations do not, and could not
reasonably be expected to, in the aggregate, have a Material Adverse Effect.

                                      -33-
<PAGE>

     8.20 BROKERS. Other than as described in SCHEDULE 8.20, no broker, finder
or other Person performing a similar function has represented the Company or has
acted on behalf of the Company in connection with the transactions contemplated
hereby. The Company will indemnify and hold each Purchaser harmless from any
fees or commissions owed to any Person listed on SCHEDULE 8.20.

     9.   REPRESENTATIONS OF THE PURCHASERS.  Each Purchaser represents that:

          (i)    It is an Institutional Investor and is purchasing its
     Securities for its own account or for one or more separate accounts
     maintained by it or for the account of one or more pension or trust funds,
     in each case for investment and not with a view to the distribution thereof
     or with any present intention of distributing or selling any of its
     Securities, provided that the disposition of such Purchaser's property
     shall at all times be within its control, subject to compliance with
     applicable law. The Company acknowledges that a Purchaser's sale of all or
     a portion of its Securities to one or more Qualified Institutional Buyers
     in compliance with Rule 144A would not be a breach of this representation;

          (ii)   With respect to each source of funds to be used by it to pay
     the purchase price of its Securities (respectively, the "SOURCE"), at least
     one of the following statements is accurate as of the Closing Date:

               (a)  the Source is an "insurance company general account" within
          the meaning of DOL Prohibited Transaction Exemption ("PTE") 95-60
          (issued July 12, 1995) and there is no "employee benefit plan" (within
          the meaning of section 3(3) of ERISA or section 4975(e)(1) of the Code
          and treating as a single plan all plans maintained by the same
          employer or employee organization) with respect to which the amount of
          the general account reserves and liabilities for all contracts held by
          or on behalf of such plan exceed 10% of the total reserves and
          liabilities of such general account (exclusive of separate account
          liabilities) plus surplus, as set forth in the NAIC Annual Statement
          filed with the state of domicile of the Purchaser and, as a result,
          the purchase is within the terms of such exemption;

               (b)  the Source is either (i) an insurance company pooled
          separate account and the purchase is exempt in accordance with PTE 90-
          1 (issued January 29, 1990), or (ii) a bank collective investment
          fund, within the meaning of PTE 91-38 (issued July 21, 1991) and,
          except as such Purchaser has disclosed to the Company in writing
          pursuant to this CLAUSE (B), no employee benefit plan or group of
          plans maintained by the same employer or employee organization
          beneficially owns more than 10% of all assets allocated to such pooled
          separate account or collective investment fund and, as a result, the
          purchase is within the terms of one of such exemptions; or

               (c)  the Source constitutes assets of an "investment fund"
          (within the meaning of Part V of the QPAM Exemption) managed by a
          "qualified professional asset manager" or "QPAM" (within the meaning
          of Part V of the QPAM Exemption), no employee benefit plan's assets
          that are included in such investment fund, when combined with the
          assets of all other employee benefit

                                      -34-
<PAGE>

          plans established or maintained by the same employer or by an
          affiliate (within the meaning of section V(c)(1) of the QPAM
          Exemption) of such employer or by the same employee organization and
          managed by such QPAM, exceed 20% of the total client assets managed by
          such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
          are satisfied, neither the QPAM nor a person controlling or controlled
          by the QPAM (applying the definition of "control" in section V(e) of
          the QPAM Exemption) owns a 5% or more interest in the Company and (i)
          the identity of such QPAM and (ii) if applicable, the names of all
          employee benefit plans whose assets are included in such investment
          fund have been disclosed to the Company in writing pursuant to this
          clause (c); or

               (d)  the Source is a "governmental plan" as defined in Title I,
          section 3(32) of ERISA; or

               (e)  the Source is one or more plans or a separate account or
          trust fund comprised of one or more plans each of which has been
          identified to the Company in writing pursuant to this clause (e); or

               (f)  the Source does not include "plan assets" as defined in
          ERISA.

As used in this SECTION 9, the terms "employee benefit plan", "governmental
plan", "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in section 3 of ERISA.

     10.  DEFINITIONS. For the purposes of this Agreement, the following terms
shall have the respective meanings specified with respect thereto:

     "AFFILIATE" means and includes, at any time, with respect to any Person
each other Person (other than one of its Subsidiaries):

               (a)  that directly or indirectly through one or more
     intermediaries controls, or is controlled by, or is under common control
     with, such Person;

               (b)  that beneficially owns or holds ten percent (10%) or more of
     any class of the Voting Stock of such Person;

               (c)  ten percent (10%) or more of the Capital Stock (or in the
     case of a Person that is not a corporation, ten percent (10%) or more of
     the Equity Interest) of which is beneficially owned or held by such Person;
     or

               (d)  that is an officer or director of such Person;

at such time; provided, however, that none of the Purchasers nor any of their
Affiliates shall be deemed to be an "AFFILIATE," of the Company and no Person
holding any one or more of the Notes or Warrants shall be deemed to be an
"AFFILIATE" of the Company solely by virtue of the ownership of such securities.

As used in this definition "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 securities, by
contract or otherwise.

                                      -35-
<PAGE>

     "AGREEMENT" means this Securities Purchase Agreement as it may from time to
time be amended in accordance with SECTION 12.2.

     "APPROVED AUDITOR" means Deloitte & Touche, Arthur Andersen LLP, Ernst &
Young LLP, KPMG Peat Marwick, Grant Thornton LLP or PricewaterhouseCoopers or
such other firm of certified public accountants of national reputation
reasonably acceptable to the Required Holders.

     "BANK DEBT" means all liabilities, obligations and indebtedness of the
Consolidated Group and its successors and assigns under the Bank Loan Documents.

     "BANK LOAN AGREEMENT" means the Amended and Restated Loan and Security
Agreement dated April 12, 2001 by and among the Company, the other Borrowers (as
defined therein) and Congress Financial Corporation (New England) as amended,
modified and in effect from time to time as permitted by the terms of this
Agreement.

     "BANK LOAN DOCUMENTS" means the Bank Loan Agreement and any document,
instrument or agreement executed in connection therewith as amended, modified
and in effect from time to time as permitted by the terms of this Agreement.

     "BENEFICIALLY OWNS" has the meaning given in Rule 13d-3 of the SEC under
the Securities Act.

     "BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which the Federal Reserve is required or authorized to be closed in the
Commonwealth of Massachusetts.

     "CALLED PRINCIPAL" means with respect to any Note, the principal amount of
such Note which is to be prepaid pursuant to SECTION 4.1 or is required to be
prepaid pursuant to SECTION 4.4 or is declared to be immediately due and payable
pursuant to SECTION 7.2.

     "CAPITAL EXPENDITURES" means, for any period, the sum for the Consolidated
Group (determined on a consolidated basis without duplication in accordance with
GAAP) of the aggregate amount of expenditures (including the aggregate amount of
Capitalized Lease Obligations incurred during such period) made to acquire or
construct fixed assets, plant and equipment (including renewals, improvements
and replacements, but excluding repairs) during such period computed in
accordance with GAAP; provided that such term shall not include any such
expenditures in connection with any replacement or repair of Property affected
by a Casualty Event.

     "CAPITAL STOCK" means any class of preferred, common or other capital
stock, share capital or similar equity interest of a Person including, without
limitation, any partnership interest in any partnership or limited partnership
and any membership interest in any limited liability company.

     "CAPITALIZED LEASE" means any lease which is required to be capitalized on
the balance sheet of the lessee in accordance with GAAP, including Statement
Nos. 13 and 98 of the Financial Accounting Standards Board, or for which the
amount of the asset and liabilities thereunder as if so capitalized should be
disclosed in a note to such balance sheet.

     "CAPITALIZED LEASE OBLIGATION" means the amount of the liability reflecting
the aggregate discounted amount of future payments under all Capitalized Leases
calculated in

                                      -36-
<PAGE>

accordance with GAAP, including Statement Nos. 13 and 98 of the Financial
Accounting Standards Board.

     "CASUALTY EVENT" means, with respect to any Property of any Person, any
loss of or damage to, or any condemnation or other taking of, such Property for
which such Person or any of its Subsidiaries receives insurance proceeds, or
proceeds of a condemnation award or other compensation.

     "CHANGE OF CONTROL" means (i) the acquisition by any individual other than
Alan S. McKim, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of beneficial ownership of 50% or
more (on a fully diluted basis) of either (A) the then outstanding shares of
Common Stock, taking into account as outstanding for this purpose such shares
issuable upon the exercise of options or warrants, the conversion of convertible
shares or debt, and the exercise of any similar right to acquire shares or (B)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors; or (ii)
individuals who, as of the Closing Date, constitute the Board of Directors of
the Company (the "Incumbent Board") cease for any reason to constitute at least
a majority of the Board; provided that any individual becoming a director
subsequent to the Closing  Date whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; or (iii) consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Common Stock and Voting Securities of the Company
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50%, on a fully diluted basis, of the then outstanding
shares of common stock or interests and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation or other entity resulting from
such Business Combination in substantially the same proportions as their
ownership, immediately prior to such Business Combination.

     "CHANGE OF CONTROL NOTICE" has the meaning specified in SECTION 4.4.

     "CLOSING" and "CLOSING DATE" have the meanings specified in SECTION 2.2.

     "CODE" means the Internal Revenue Code of 1986, as amended from time to
time and the rules and regulations promulgated thereunder as from time to time
in effect.

     "COMPANY" has the meaning specified in the preamble to this Agreement.

     "CONFIDENTIAL INFORMATION" has the meaning specified in SECTION 12.6.

     "CONSOLIDATED GROUP" means, the Company and each of its Subsidiaries.

     "COVERED TAXES" has the meaning specified in SECTION 4.8.

     "DEBT" means, for any Person, without duplication: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, advance,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or

                                      -37-
<PAGE>

agreement, contingent or otherwise, to repurchase such Property from such
Person); (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses and deferred taxes
incurred and paid, in the ordinary course of business; (c) Capitalized Lease
Obligations of such Person; (d) obligations of such Person in respect of letters
of credit or similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Debt of others secured by a
Lien on the Property of such Person, whether or not the respective indebtedness
so secured has been assumed by such Person; (f) net liabilities in respect of
Interest Rate Protection Products; and (g) Debt of others Guaranteed by such
Person. The Debt of any Person shall include the Debt of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Debt provide that such Person is not liable therefor.

     "DEFAULT" means any occurrence or condition which with the giving of notice
or the passage of time, or both, and remaining uncured after the expiration of
any applicable grace period would be an Event of Default.

     "DEFAULT RATE" has the meaning specified in subsection (iii) of SECTION
1.3.

     "DISCOUNTED VALUE" means, with respect to the Called Principal of any Note,
the amount obtained by discounting all Remaining Scheduled Payments from their
respective scheduled due dates, in accordance with accepted financial practice
and at a discount factor (applied on a quarterly basis) equal to the Discount
Rate with respect to such Called Principal.

     "DISCOUNT RATE" means, with respect to the Called Principal of any Note
2.5%, plus the yield to maturity of the Called Principal implied by (a) (i) the
yield reported as of 10:00 A.M. (New York City time) on the date which is two
Business Days prior to the Settlement Date with respect to such Called
Principal, on the display designated as "PX-1" of the Bloomberg Financial
Markets Screen (or such other display as may replace PX-1 of the Bloomberg
Financial Markets Screen) for actively traded U.S. Treasury securities having a
maturity equal to the Remaining Life of such Called Principal as of such
Settlement Date, or (ii) if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series Yields reported for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Life of such Called Principal as of such Settlement Date.  Such
implied yield shall be determined, if necessary, by (x) converting U.S. Treasury
securities quotations to bond-equivalent yields in accordance with accepted
financial practice and (y) interpolating linearly between (1) the actively
traded U.S. Treasury security with the duration closest to and greater than the
Remaining Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Life.

     "DISPOSITION" means any sale, assignment, transfer or other disposition of
any property (whether now owned or hereafter acquired) by the Company or any
Subsidiary to any Person other than the Company or a Wholly-Owned Subsidiary
excluding (a) the granting of Liens pursuant to the Bank Loan Documents and (b)
any sale, assignment, transfer or other disposition of (i) any property sold or
disposed of in the ordinary course of business and on

                                      -38-
<PAGE>

ordinary business terms, (ii) any property no longer used or useful in the
business of the Company or any Subsidiary.

     "DOL" means the United States Department of Labor and any successor agency.

     "EBITDA" means, for any period, Net Income (or deficit) of the Consolidated
Group (determined on a consolidated basis without duplication in accordance with
GAAP) for such period  plus the sum of provision for such period for taxes,
Interest Expense, depreciation, amortization and any other non-cash income or
charges accrued for such period used in determining Net Income.

     "ELECTION NOTICE" has the meaning specified in SECTION 4.4.

     "ENVIRONMENTAL LAWS" means any and all Federal, state and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

     "EQUITY INTEREST" means as to any Person, any and all shares, interests,
participations, rights or other equivalents (however designated) of any Capital
Stock or other ownership of any profit interest, and any and all warrants,
rights, options, obligations or other equity securities of or in such Person,
and rights to acquire any of the foregoing, including, without limitation,
limited liability company, partnership and joint venture (whether general or
limited) interests and any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, such partnership or joint venture, but excluding
Funded Debt other than Debt that is convertible into, or exchangeable for, any
of the foregoing Equity Interests.

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder,
as from time to time, in effect.

     "ERISA AFFILIATE", for Plan purposes, means, with respect to any Person,
any trade or business, whether or not incorporated, which, is treated as a
single employer together with such Person under section 414 of the Code.

     "EVENT OF DEFAULT" has the meaning specified in SECTION 7.1.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time and the rules and regulations promulgated thereunder, as from time
to time in effect.

     "EXISTING DEBT" has the meaning specified in SECTION 6.1.

     "EXISTING SENIOR NOTES" means the 12.5% Senior Notes of the Company due May
15, 2001 in the aggregate principal amount of $50,000,000, issued under the
Indenture dated as of August 4, 1994 between the Company, certain Subsidiaries
of the Company and Shawmut Bank, N.A., as Trustee.

     "EXPENSES" has the meaning specified in SECTION 12.1.

                                      -39-
<PAGE>

     "FISCAL QUARTER" means the Company's fiscal quarters for financial
accounting purposes.

     "FISCAL YEAR" means the Company's fiscal year for financial accounting
purposes.

     "FIXED CHARGE COVERAGE RATIO" means, as at any date of measurement thereof,
the ratio of (a) (i) EBITDA for the period of four consecutive Fiscal Quarters
ending on, or most recently ended prior to, such date minus (ii) the aggregate
amount of all Capital Expenditures paid in cash during such period and not
financed with the proceeds of loans incurred under the Bank Loan Agreement or
other Debt for borrowed money minus (iii) the aggregate amount paid, or required
to be paid (without duplication), in cash in respect of income, franchise, real
estate and other like Taxes for such period (to the extent such Taxes have not
been deducted in the calculation of EBITDA) to (b) the sum for the Consolidated
Group (determined on a consolidated basis without duplication in accordance with
GAAP), of (i) all Interest Expense for such period plus (ii) all regularly
scheduled payments of principal in respect of Debt (including the term Bank Debt
and the principal component of any payments in respect of Capitalized Lease
Obligations) paid during such period.

     "FUNDED DEBT" means as to any Person all Debt for money borrowed.

     "GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.

     "GOVERNMENTAL AUTHORITY" means (a) the governments of (i) the United States
of America and its states and political subdivisions, and (ii) any other
jurisdiction in which the Company or any Subsidiary conducts all or any part of
its business, or which asserts jurisdiction over any properties of any member of
the Consolidated Group, and (b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government or jurisdiction.

     "GUARANTY", as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of such Person with respect to any Debt of
another, including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business) or discounted or sold with recourse by such Person,
or in respect of which such Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to advance to
or provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain the working capital, equity capital, net worth, solvency or any
balance sheet or other financial condition of the obligor of such obligation, or
to make payment for any securities, products, materials or supplies or for any
transportation or services without regard to the non-delivery or nonfurnishing
thereof, or that any agreements relating thereto will be complied with, or that
the holders of such obligation will be protected against loss in respect
thereof.  The amount of any Guaranty shall be deemed to be equal to the lower of
(a) the amount of the obligation guaranteed and (b) the maximum amount for which
such Person may be contingently liable pursuant to the terms of the instrument
evidencing such Guaranty, unless such guaranteed obligation and the amount for
which such Person may be liable are not stated or determinable, in which case
the amount of such Guaranty shall be the maximum reasonably anticipated
liability for which such Person is contingently liable in respect thereof as
determined

                                      -40-
<PAGE>

by the related Company in good faith (but in any event not less than the amount
which is, or would otherwise be required, in accordance with GAAP, to be
reflected in such Person's balance sheet or the notes thereto) as the amount of
such obligation. A Person shall have "GUARANTEED" an obligation if such Person
has entered into a Guaranty of such obligation.

     "HAZARDOUS MATERIALS", at any time, shall mean any substance: (a) the
presence of which at such time requires notification, investigation, monitoring
or remediation under any Environmental Law; (b) which at such time is defined as
a "hazardous waste", "hazardous material", "hazardous substance", "toxic
substance", "pollutant" or "contaminant" under any Environmental Law, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and any applicable local statutes
and the regulations promulgated thereunder; or (c) without limitation, which
contains gasoline, diesel fuel or other petroleum products, asbestos or
polychlorinated biphenyls.

     "HOLDER" means any Person at the time shown as the holder of a Note on the
registers referred to in SECTION 12.14.

     "HOME OFFICE" means, with respect to any Holder, the office of such Holder
specified as its Home Office on ANNEX 1, or such other office of such Holder as
such Holder may from time to time specify to the Company.

     "INSTITUTIONAL INVESTOR" means any bank, savings institution, trust
company, insurance company, investment company, pension or profit sharing trust
or other financial institution or institutional buyer within the meaning of
Section 402(b)(8) of the Massachusetts Uniform Securities Act; and an
"Accredited Investor" within the meaning of Rule 501(a)(1) of the Securities
Act, in each case, regardless of legal form.

     "INTEREST EXPENSE" means, for any period, the sum, without duplication, for
the Consolidated Group (determined on a consolidated basis without duplication
in accordance with GAAP), of the following: (a) all interest in respect of Debt
accrued or paid during such period (whether or not actually paid during such
period), but excluding capitalized debt acquisition costs (including fees and
expenses related to this Agreement or the Bank Loan Agreement) and the imputed
costs of the Warrants plus (b) the net amounts payable (or minus the net amounts
receivable) under Interest Rate Protection Products accrued during such period
(whether or not actually paid or received during such period) including, without
limitation, fees, but excluding reimbursement of legal fees and other similar
transaction costs and excluding payments required by reason of the early
termination of Interest Rate Protection Products in effect on the date hereof
plus (c) all fees, including letter of credit fees and expenses, incurred
hereunder during such period after the Closing Date.

     "INTEREST PAYMENT DATE" has the meaning specified in subsection (ii) of
SECTION 1.3.

     "INTEREST RATE PROTECTION PRODUCT" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.

     "INTELLECTUAL PROPERTY" means all patents, copyrights, trademarks, trade
names, service marks or other intellectual or industrial property rights.

                                      -41-
<PAGE>

     "INVESTMENT" means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of capital stock, bonds, notes,
debentures, partnership, limited liability company or other ownership interests
or other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale); (b) the making of any deposit with, or advance, loan or
other extension of credit to, any other Person (including the purchase of
Property from another Person subject to an understanding or agreement,
contingent or otherwise, to resell such Property to such Person, but excluding
any such advance, loan or extension of credit having a term not exceeding 180
days representing the purchase price of inventory or supplies sold by such
Person in the ordinary course of business); or (c) the entering into of any
Guarantee of, or other contingent obligation with respect to, Debt or other
liability of any other Person and (without duplication) any amount committed to
be advanced, lent or extended to such Person.  Notwithstanding the foregoing,
Capital Expenditures shall not be deemed "INVESTMENTS" for purposes hereof.

     "KNOWLEDGE" means, with respect to any Person, the actual knowledge of any
Senior Officer of such Person.

     "LIEN" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute, court decision or contract, and including,
without limitation, any mortgage, pledge, security interest, lease, encumbrance,
lien, purchase option, call or right, or charge of any kind (including any
agreement to give or permit any of the foregoing), any conditional sale or other
title retention agreement, any Capitalized Lease, and the filing of, or
agreement to give or permit the filing on its behalf, of any financing statement
under the Uniform Commercial Code or personal property security legislation of
any jurisdiction.

     "MAKE WHOLE AMOUNT" means:

          (i)    with respect to a prepayment of Notes upon a Change of Control
     pursuant to SECTION 4.4, an amount equal to 1% of the Called Principal of
     each such Note; or

          (ii)   with respect to any other prepayment:

               (a)  If the Settlement Date is on or before April 30, 2004, with
          respect to the Called Principal of any Note, an amount equal to the
          excess, if any, of (x) the Discounted Value over (y) the sum of (i)
          such Called Principal plus (ii) interest accrued and unpaid thereon,
          as of and due on the Settlement Date with respect to such Called
          Principal but in no event less than zero; or

               (b)  If the Settlement Date is after April 30, 2004 but on or
          before April 30, 2005, an amount equal to 8% of the Called Principal
          of each Note; or

               (c)  If the Settlement Date is after April 30, 2005 but before
          prior April 30, 2006, an amount equal to 5.34% of the Called Principal
          of each Note; or

               (d)  If the Settlement Date is after April 30, 2006 but prior to
          April 30, 2007, the amount equal to 2.66% of the Called Principal of
          any Note; or

                                      -42-
<PAGE>

               (e)  If the Settlement Date is on or after April 30, 2007, zero.

     "MATERIAL ADVERSE EFFECT" means:

               (a)  any material adverse effect on the Company's business,
          assets, liabilities, financial condition or results of operations;

               (b)  any material adverse effect on the Consolidated Group's
          business, assets, liabilities, financial condition or results of
          operations on, where appropriate, a consolidated basis in accordance
          with GAAP;

               (c)  any adverse effect, WHETHER OR NOT MATERIAL, on the binding
          nature, validity or enforceability of any Transaction Document or the
          obligations thereunder of any member of the Consolidated Group a party
          thereto; or

               (d)  any material adverse effect on the ability of any member of
          the Consolidated Group to perform its obligations under any
          Transaction Document.

     "MATURITY DATE" has the meaning specified in SECTION 4.3.

     "MULTIEMPLOYER PLAN" means any plan which is a "multiemployer plan" as such
term is defined in section 4001(a)(3) of ERISA.

     "NET INCOME" means, for any period, gross revenues of the Consolidated
Group less all operating and non-operating expenses (including current and
deferred Taxes on income, Interest Expense, amortization, depreciation and
current additions to reserves), but not including in gross revenues any gains
(net of expenses and Taxes applicable thereto) in excess of losses resulting
from Dispositions or Casualty Events, any earnings or losses attributable to any
other Person, any gains arising from transactions of a non-recurring and
material nature, any gains arising from the discontinuation of operations, any
gains resulting from the write-up of assets, any earnings of any other Person
acquired by the Consolidated Group through purchase, merger or combination or
otherwise, earned prior to acquisition, all determined in accordance with GAAP.

     "NORTHEAST CASUALTY" means Northeast Casualty Risk Retention Group, Inc., a
Vermont corporation.

     "NOTES" has the meaning specified in SECTION 1.1.

     "OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed in the name of such Person by any two of its Senior Officers.

     "OTHER TAXES" has the meaning specified in SECTION 4.8 ABOVE.

     "OUTSTANDING PREFERRED STOCK" means the 112,000 outstanding shares of the
Company's Series B Convertible Preferred Stock, on which dividends are payable
at an annual rate of $4.00 per share on a quarterly basis.

     "PBGC" means the Pension Benefit Guaranty Corporation or any other
Governmental Authority succeeding to any of its functions.

                                      -43-
<PAGE>

     "PERMITTED INVESTMENTS" means:

          (i)    direct obligations of, or obligations the principal of and
     interest on which are unconditionally guaranteed by, the United States of
     America (or by any agency thereof to the extent such obligations are backed
     by the full faith and credit of the United States of America), in each case
     maturing within one year from the date of acquisition thereof;

          (ii)   investments in commercial paper maturing within 270 days from
     the date of acquisition thereof and having, at such date of acquisition,
     the highest credit rating obtainable from Standard and Poor's Ratings
     Service or from Moody's Investors Service, Inc.;

          (iii)  investments in certificates of deposit, banker's acceptances
     and time deposits maturing within 180 days from the date of acquisition
     thereof issued or guaranteed by or placed with, and money market deposit
     accounts issued or offered by, any domestic office of any commercial bank
     organized under the laws of the United States of America or any State
     thereof which has a combined capital and surplus and undivided profits of
     not less than $250,000,000;

          (iv)   fully collateralized repurchase agreements with a term of not
     more than 30 days for securities described in clause (i) above and entered
     into with a financial institution satisfying the criteria described in
     clause (iii) above;

          (v)   advances, loans and extensions of credit to any director,
     officer or employee of the Company or any Subsidiary Guarantor, if the
     aggregate outstanding amount of all such advances, loans and extensions of
     credit (excluding travel advances in the ordinary course of business) does
     not at any time exceed $200,000; and

          (vi)   investments in money market mutual funds that are rated AAA by
     Standard & Poor's Rating Service; and

          (vii)  other Investments not to exceed $500,000 at any one time
outstanding; provided that no Investment under this clause (vii) shall consist
of an Equity Interest in the Company.

     "PERMITTED LIENS" means any Liens described in SECTION 6.2.

     "PERSON" means and includes an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust and any other form of
business organization (whether or not a legal entity), or any Governmental
Authorities.

     "PLAN" means an "employee pension benefit plan" (as defined in Section 3 of
ERISA) which is or within the preceding five years has been established or
maintained, or to which contributions are or have been made, by the Company or
any ERISA Affiliate, or for which the Consolidated Group or any ERISA Affiliate
may have any liability.

     "PRIORITY DEBT" means, without duplication, any Bank Debt, any Capitalized
Lease Obligations and any Debt secured by a Lien permitted under SECTION 6.2.2
or SECTION 6.2.8.

                                      -44-
<PAGE>

     "PROPERTY" means any interest of any kind in property or assets, whether
real, personal or mixed, and whether tangible or intangible.

     "PTE" has the meaning specified in subsection (ii) of SECTION 9.

     "PURCHASER" and "PURCHASERS" have the meaning specified in the preamble to
this Agreement.

     "QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the DOL.

     "QUALIFIED INSTITUTIONAL BUYER" means a qualified institutional buyer, as
defined in Rule 144A.

     "REFINANCING DEBT" means any Debt of the Company issued in exchange for, or
the net proceeds of which are used to refinance, renew, replace, defease or
refund the Bank Debt provided that (a) no violation of SECTION 6.14 shall have
occurred in connection with or as a result of the incurrence of such Refinancing
Debt and (b) after giving effect to the incurrence of such Refinancing Debt on a
pro forma basis, the financial covenants set forth in SECTION 6.10 would be
satisfied.

     "REFINANCING DEBT DOCUMENT" has the meaning specified in SECTION 6.14.

     "REGISTRATION RIGHTS AGREEMENT" has the meaning specified in SECTION 3.11.

     "REMAINING AVERAGE LIFE" means, with respect to any Called Principal, the
number of years (calculated to the nearest one-twelfth year) obtained by
dividing (i) such Called Principal into (ii) the sum of the products obtained by
multiplying (a) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

     "REMAINING SCHEDULED PAYMENTS" means, with respect to the Called Principal
of any Note, all scheduled cash payments of such Called Principal and interest
that would be due after the Settlement Date with respect to such Called
Principal, if no payment of Called Principal were made prior to its scheduled
due date, provided, that if such Settlement Date is not a date on which interest
payments are scheduled to be made, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest accrued to
such Settlement Date and required to be paid on such Settlement Date.

     "REQUIRED HOLDERS" means the Holder or Holders of more than 50% of the
aggregate principal amount of the Notes at the time outstanding.

     "RESTRICTED JUNIOR PAYMENTS" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of, or other
Equity Interest in, any member of the Consolidated Group now or hereafter
outstanding, except a dividend payable solely in shares of stock or other Equity
Interests of such member, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of, or other Equity Interest in, any member of
the Consolidated Group now or hereafter outstanding, (iii) any payment made to
retire, or to obtain

                                      -45-
<PAGE>

the surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of, or other Equity Interest in, any member of the
Consolidated Group now or hereafter outstanding, (iv) any payment or prepayment
of principal of, premium, if any, or interest on, or redemption purchase,
retirement, defeasance (including economic or legal defeasance), sinking fund or
similar payment with respect to, any Subordinated Debt, and (v) any payment made
to any Affiliates of any member of the Consolidated Group in respect of
management, consulting or other similar services provided to any member of the
Consolidated Group.

     "RULE 144A" means Rule 144A promulgated under the Securities Act and
including any successor rule thereto, as such rule may be amended from time to
time.

     "SEC" means the United States Securities and Exchange Commission, or any
Governmental Authority succeeding to the functions of such Commission in the
administration of the Securities Act and/or the Exchange Act.

     "SECURITIES" has the meaning specified in SECTION 1.1.

     "SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder, as from time to time
in effect.

     "SENIOR INDEBTEDNESS" has the meaning given therefor in the Subordination
Agreement.

     "SENIOR OFFICER" means, with respect to the Company, the chairman of the
board of directors, the president, chief executive officer, chief financial
officer, treasurer, or principal accounting officer of the Company.

     "SETTLEMENT DATE" means, with respect to any Note, the date on which such
Note is to be prepaid pursuant to SECTION 4.1 or SECTION 4.4, or is declared to
be immediately due and payable pursuant to SECTION 7.2.

     "SPECIAL COUNSEL" means the law firm of Sullivan & Worcester LLP or such
other firm of legal counsel as the Purchasers may from time to time designate as
their Special Counsel for the purposes of this Agreement or any matters related
hereto.

     "SOLVENT" and "SOLVENCY"  means with respect to any Person (i) the fair
value of the property of such Person exceeds its total liabilities (including,
without limitation, contingent liabilities), (ii) the present fair saleable
value of the assets of such Person is not less than the amount that will be
required to pay its probable liability on its debts as they become absolute and
matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond its ability to pay as such debts and
liabilities mature and (iv) such Person is not engaged, and is not about to
engage, in business or a transaction for which its property would constitute an
unreasonably small capital.

     "SUBORDINATED DEBT" means any Debt of the Company or any Subsidiary
incurred after the Closing Date that by its terms (or by the terms of the
instrument under which it is outstanding and to which appropriate reference is
made in the instrument evidencing such Subordinated Debt) is made subordinate
and junior in right of payment to the Company's or such Subsidiary payment
obligations under the Transaction Documents on terms and conditions acceptable
to the Required Holders.

                                      -46-
<PAGE>

     "SUBORDINATED INDEBTEDNESS" mean (i) the Debt of the Company or any
Subsidiary represented by the Notes and the Subsidiary Guaranties and (ii) any
Debt of the Company or any Subsidiary incurred after the Closing Date with the
consent of Congress Financial Corporation (New England) and otherwise permitted
under this Agreement that by its terms (or by the terms of the instrument under
which it is outstanding and to which appropriate reference is made in the
instrument evidencing such Subordinated Indebtedness) is made subordinate and
junior in right of payment to the Company's or such Subsidiary payment
obligations under the Bank Loan Documents on terms and conditions acceptable to
Congress Financial Corporation (New England).

     "SUBORDINATION AGREEMENT" means the Subordination Agreement dated as of
April 12, 2001 among the Company, the Subsidiary Guarantors, the Purchasers and
Congress Financial Corporation (New England), as it may be amended from time to
time in accordance with the terms thereof.

     "SUBSIDIARY" means as to any Person, any other Person in which the first
mentioned Person directly or indirectly through one or more of its other
Subsidiaries collectively owns sufficient voting interests to enable it to
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is directly or indirectly through one or more of its other
Subsidiaries, owned by the first mentioned Person (unless such partnership can
and does ordinarily take major business actions without the prior approval of
such Person.  Unless the context otherwise clearly requires, any reference to a
"SUBSIDIARY" is a reference to a Subsidiary of the Company.

     "SUBSIDIARY GUARANTY" and "SUBSIDIARY GUARANTIES" have the meanings
specified in SECTION 3.10.

     "SUBSIDIARY GUARANTOR" means any Subsidiary which is a party to a
Subsidiary Guarantee which is then in full force and effect.

     "TANGIBLE CAPITAL BASE" means, at any time an amount (determined on a
consolidated basis without duplication in accordance with GAAP) equal to (a) the
sum of (i) the book net worth of the Consolidated Group, plus (ii) the
outstanding principal amount of Subordinated Indebtedness plus (iii)  to the
extent deducted in determining book net worth obligations with respect to
letters of credit which are the functional equivalent of commercial surety or
fidelity bonds and not issued in connection with the borrowing of money, or are
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement following payment of such
letter of credit, minus (b) the total book value of all assets of the
Consolidated Group which would be treated as intangible assets under GAAP,
including without limitation, such items as goodwill and Intellectual Property
and rights (including rights under licenses) with respect to the foregoing.

     "TAX" and "TAXES" means any and all present or future taxes, assessments,
stamps, duties, fees, levies, imposts, deductions, withholdings or other
governmental charges of any nature whatsoever and any liabilities with respect
thereto, including any surcharge, penalties, additions to tax, fines or interest
thereon, now or hereafter imposed, levied, collected, withheld

                                      -47-
<PAGE>

or assessed by any government or taxing authority of any country or political
subdivision of any country, or any international taxing authority.

     "TOTAL LIABILITIES" means, as at any time of determination thereof, (a) the
aggregate amount of all Debt, liabilities and other obligation of the
Consolidated Group at such time minus (b) the aggregate principal amount of the
Notes outstanding at such time, and minus (c) to the extent included in clause
(a), obligations with respect to letters of credit which are the functional
equivalent of commercial surety or fidelity bonds and not issued in connection
with the borrowing of money, or are entered into in the ordinary course of
business of such Person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by such Person of a demand for
reimbursement following payment of such letter of credit.

     "TOTAL LIABILITIES TO TANGIBLE CAPITAL BASE RATIO" means, as at any time,
the ratio of (a) Total Liabilities at such time, to (b) the Tangible Capital
Base at such time.

     "TRADE PAYABLES" means amounts payable to suppliers of goods and services
in the ordinary course of a Person's business.

     "TRANSACTION DOCUMENTS" means this Agreement, the Notes, the Warrants, the
Warrant Agreement, the Registration Rights Agreement, and any Subsidiary
Guaranties.

     "TRANSFEREE" means any direct or indirect transferee of all or any part of
the Notes.

     "VOTING STOCK" means any securities of any class of a Person whose holders
are entitled under ordinary circumstances to vote for the election of directors
of such Person (or Persons performing similar functions) (irrespective of
whether at the time securities of any other class or classes shall have or might
have voting power by reason of the happening of any contingency).

     "WARRANT" has the meaning specified in SECTION 1.1.

     "WARRANT AGREEMENT" has the meaning specified in SECTION 3.11.

     "WARRANT SHARES" has the meaning specified in the Warrant Agreement.

     "WHOLLY-OWNED SUBSIDIARY" means any Subsidiary, one hundred percent (100%)
of all of the Equity Interests (except directors' qualifying shares) and Voting
Stock (except directors' qualifying shares) of which are owned by any one or
more of the Company and the Company's other Wholly-Owned Subsidiaries at such
time.

     11.  [INTENTIONALLY OMITTED]

     12.  MISCELLANEOUS.

     12.1 EXPENSES. Whether or not the transactions provided for hereby shall be
consummated, the Company agrees to pay on demand and upon receipt of an invoice
therefor, and save each Purchaser and its Transferees harmless against liability
for the payment of, all out-of-pocket expenses arising in connection with such
transactions and in connection with any subsequent modification of, or consent
under, the Transaction Documents, whether or not such transactions are
consummated or modification shall be effected or consent granted

                                      -48-
<PAGE>

("EXPENSES"), including (i) the reasonable fees and expenses of Special Counsel
and its agents and of any other special or local counsel or other special
advisers engaged by the Purchasers in connection with the transactions
contemplated by this Agreement, (ii) the costs of obtaining the private
placement numbers from Standard & Poor's Ratings Group for the Securities and
Common Units and (iii) the costs and expenses, including reasonable attorneys'
fees and the fees of any other special or financial advisers, incurred in
evaluating, monitoring or enforcing any rights under the Transaction Documents
or in responding to any subpoena or other legal process issued in connection
with the Transaction Documents or the transactions provided for hereby or
thereby or by reason of a Purchaser or any Transferee having acquired any of its
Securities (other than those issued solely as a result of (a) such Purchaser or
Transferee being engaged in business in a regulated industry or (b) such
Purchaser's or Transferee's actions or omissions in connection with a transfer
of a Security), including without limitation costs and expenses incurred in
connection with any bankruptcy or insolvency of any member of the Consolidated
Group or in connection with any workout or restructuring of any of the
transactions contemplated by the Transaction Documents. The obligations of the
Company under this SECTION 12.1, SECTION 4.8 and SECTION 5.10.2 shall survive
the transfer of any of its Securities or any interest therein by a Purchaser or
any Transferee and the payment of any Note.

     12.2 CONSENT TO AMENDMENTS.

          (i)    No Transaction Document may be amended, and the Company may not
     take any action herein prohibited, or omit to perform any act herein
     required to be performed by it, without the written consent of the Company
     and the Required Holders, except that:

               (a)  no decrease in the interest rate of, or Make Whole Amount
          payable on, the Notes or change to the mandatory repayment of the
          Notes as provided in SECTION 4.3;

               (b)  no amendment or waiver of the provisions of SECTION 7.2 or
          SECTION 7.3, or amendment or waiver of any defined term to the extent
          used therein; and

               (c)  no amendment or waiver of the definition of "REQUIRED
          HOLDERS" or other amendment of the percentage of Notes required to be
          held by Holders consenting to any action under this Agreement;

     may be made or granted without the written consent of all Holders affected
     thereby.

          (ii)   Any Holder may specify that any such written consent executed
     by it shall be effective only with respect to a portion of the Securities
     held by it (in which case it shall specify, by dollar amount, the aggregate
     principal amount of Securities with respect to which such consent shall be
     effective) and in the event of any such specifications, such Holder shall
     be deemed to have executed such written consent only with respect to the
     portion of Securities so specified.

          (iii)  Each Holder at the time or thereafter shall be bound by any
     amendment or waiver authorized by the Required Holders in accordance with
     this SECTION 12.2 whether or not its Securities are marked to reflect such
     amendment or waiver. No such amendment or waiver will extend to or affect
     any obligation, covenant, agreement,

                                      -49-
<PAGE>

     Default or Event of Default not expressly amended or waived or impair any
     right consequent thereon.

          (iv)   No course of dealing between any member of the Consolidated
     Group and any Holder nor any delay in exercising any rights under any
     Transaction Document shall operate as a waiver of any rights of any Holder.

          (v)    Any amendment or waiver made pursuant to this SECTION 12.2 by a
     Holder that has transferred or has agreed to transfer its Securities to any
     member of the Consolidated Group or any Affiliate and has provided or has
     agreed to provide such amendment or waiver as a condition to such transfer
     shall be void and of no force and effect except solely as to such Holder,
     and any amendments effected or waivers granted that would not have been or
     would not be so effected or granted but for such amendment or waiver (and
     the amendments or waivers of all other Holders that were acquired under the
     same or similar conditions) shall be void and of no force and effect,
     retroactive to the date such amendment or waiver initially took or takes
     effect, except solely as to such Holder.

     12.3 PERSONS DEEMED OWNERS; PARTICIPATIONS. The Company may treat the
Person at the time shown on the register referenced in SECTION 12.14 in whose
name any Security, is issued as the owner and holder of such Security for the
purpose of receiving payment on or in respect of such Security and for all other
purposes whatsoever. Subject to the preceding sentence, a Holder may from time
to time grant participations in all or any part of its Securities to any Person
on such terms and conditions as may be determined by such Holder in its sole and
absolute discretion, subject to its compliance with applicable law.

     12.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained in any Transaction Document or made in
any other writing by or on behalf of the Company in connection herewith shall
survive the execution and delivery of such Transaction Document or other
writing, the transfer by a Purchaser of any Securities or portion thereof or
interest therein and the payment of any Securities and may be relied upon by any
Transferee, regardless of any investigation made at any time by or on behalf of
the Purchasers or any Transferee. All representations and warranties contained
in any certificate or other instrument delivered by or on behalf of the Company
pursuant to any Transaction Document shall be deemed representations and
warranties of the Company under this Agreement and not of the individuals
executing such certificates or other instruments on behalf of the Company.
Subject to the preceding sentence, the Transaction Documents embody the entire
agreement and understanding between the Purchasers and the Company and supersede
all prior agreements and understandings relating to the subject matter hereof
and thereof.

     12.5 SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of such party
(including, without limitation, any Transferee) whether so expressed or not;
provided the Company may not delegate the performance of any of its obligations
hereunder.

     12.6 CONFIDENTIAL INFORMATION. For the purposes of this Section,
"CONFIDENTIAL INFORMATION" means information delivered to a Purchaser by or on
behalf of the Company in connection with the transactions contemplated by or
otherwise pursuant to this Agreement,

                                      -50-
<PAGE>

whether in the past, present or future, that is proprietary in nature and that
was clearly marked or labeled or otherwise adequately identified when received
by the Purchaser as being confidential information of the Company, provided that
such term does not include information that (a) was publicly known or otherwise
known to the Purchaser prior to the time of such disclosure or (b) subsequently
becomes publicly known through no act or omission by the Purchaser. Each
Purchaser will maintain the confidentiality of such Confidential Information in
accordance with the procedures adopted by it in good faith to protect
confidential information of third parties delivered to it. Notwithstanding the
foregoing, a Purchaser may deliver copies of any Confidential Information to (i)
such Purchaser's and its Affiliates' directors, officers, employees, and to its
agents and professional consultants, (ii) any other Purchaser, (iii) any Person
to whom such Purchaser offers to sell any of its Securities or any part thereof
or to whom such Purchaser sells or offers to sell a participation in all or any
part of its Securities, provided said Persons agree to be bound by the terms
hereof regarding Confidential Information, (iv) any federal or state regulatory
authority having jurisdiction over such Purchaser and which requires such
disclosure, (v) any Person from which a Purchaser offers to purchase any
security of any member of the Consolidated Group, (vi) the National Association
of Insurance Commissioners or any rating agency which generally requires access
to information about a Purchaser's investment portfolio or any similar
organization, (vii) Standard & Poor's Ratings Group (in connection with
obtaining a private placement numbers) or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (a) in compliance with
any law, rule, regulation or order applicable to such Purchaser, (b) in response
to any subpoena or other legal process, provided, however, that each Holder
agrees to use its reasonable best efforts to inform the Company of the service
upon it of such subpoena or legal process, and to reasonably cooperate with the
Company should the Company wish (at the Company' expense) to seek a protective
order or similar relief relating to such disclosure; or (c) at any time after
the occurrence of Event of Default to the extent that such Purchaser reasonably
determines disclosure is necessary in the enforcement of or for the protection
of its rights and remedies under the Transaction Documents. Each Holder, by its
acceptance of its Securities, will be deemed to have agreed to be bound by and
to be entitled to the benefits of this SECTION 12.6 as though it were a party to
this Agreement.

     12.7 NOTICES.

          (i)    All notices and other written communications provided for
     hereunder shall be given in writing and delivered in person or sent by
     recognized overnight delivery service (with charges prepaid) or by
     facsimile transmission, if the original of such facsimile transmission is
     sent on the same day by a recognized overnight delivery service (with
     charges prepaid); and

               (a)  if to a Purchaser or its nominee, addressed to such Person
          at the address or fax number specified for such communications to such
          Purchaser in ANNEX 1, or at such other address or fax number as such
          Person shall have specified to the Company in writing,

               (b)  if to any other Holder, addressed to such other Holder at
          such address or fax number as is specified for such Holder in the Note
          register referenced in SECTION 12.14, and

               (c)  if to the Company, or any other member of the Consolidated
          Group at the address or fax number specified in ANNEX 2 or at such
          other

                                      -51-
<PAGE>

          address or fax number as the Company shall have specified to each
          Holder in writing given in accordance with this SECTION 12.7.

          (ii)   Any communication addressed and delivered as herein provided
     shall be deemed to be received when actually delivered to the address of
     the addressee (whether or not delivery is accepted) or received by the
     telecopy machine of the recipient. Any communication not so addressed and
     delivered shall be ineffective.

          (iii)  Notwithstanding the foregoing provisions of this SECTION 12.7,
service of process in any suit, action or proceeding arising out of or relating
to this Agreement or any document, agreement or transaction contemplated hereby,
or any action or proceeding to execute or otherwise enforce any judgment in
respect of any breach hereunder or under any document or agreement contemplated
hereby, shall be delivered in the manner provided in SECTION 12.12.

     12.8  DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.

     12.9  SOLICITATION OF HOLDERS. The Company will provide each Holder with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such Holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent requested under any
Transaction Document. The Company will deliver executed or true and correct
copies of each such amendment, waiver or consent effected to each Holder
promptly following the date on which it is executed and delivered by, or
receives the consent or approval of, the Required Holders. Neither the Company
nor any Person acting on its behalf will directly or indirectly, pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee, expense (other than such Holder's Expenses) or otherwise, to any Holder for
or in connection with any consent by such Holder in its capacity as a Holder to
any waiver or amendment of any of the terms of the Transaction Documents unless
such remuneration is concurrently paid, on the same terms, ratably to all
Holders whether or not such Holder consented to the waiver or amendment.

     12.10 REPRODUCTION OF DOCUMENTS. Any Transaction Document and all related
documents, including (a) consents, waivers and modifications which may
subsequently be executed, (b) documents received by the Purchasers on the
purchase of the Securities (except the Notes) and (c) financial statements,
certificates and other information previously or subsequently furnished to the
Purchasers, may be reproduced by the Purchasers by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and the Purchasers may destroy any original document so reproduced. The
Company agrees and stipulates that any 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 a Purchaser in the
regular course of business, and to the extent not prohibited by applicable law,
that any enlargement, facsimile or further reproduction of the reproduction
shall likewise be admissible in evidence.

     12.11 GOVERNING LAW. THIS AGREEMENT IS TO BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF
THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT GIVING EFFECT TO ANY LAWS OR RULES
RELATING TO CONFLICTS OF LAWS THAT

                                      -52-
<PAGE>

WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
COMMONWEALTH OF MASSACHUSETTS).

     12.12 CONSENT TO JURISDICTION AND SERVICE. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE COMPANY HEREBY ABSOLUTELY AND IRREVOCABLY CONSENTS AND
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS AND OF ANY FEDERAL COURT LOCATED IN SAID JURISDICTION IN
CONNECTION WITH ANY ACTIONS OR PROCEEDINGS BROUGHT AGAINST IT BY ANY HOLDER
ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTION DOCUMENTS AND HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY HEREBY WAIVES AND
AGREES NOT TO ASSERT IN ANY SUCH ACTION OR PROCEEDING, IN EACH CASE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, (B) IT IS IMMUNE FROM
ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT
TO IT OR ITS PROPERTY, (C) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, OR (D) SUCH TRANSACTION DOCUMENT MAY NOT BE ENFORCED IN OR
BY ANY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY ABSOLUTELY AND IRREVOCABLY
WAIVES TRIAL BY JURY AND PERSONAL IN HAND SERVICE OF ANY SUMMONS, COMPLAINT,
DECLARATION OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT
THE SERVICE MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO IT AT ITS ADDRESS SET FORTH IN OR FURNISHED PURSUANT TO
THE PROVISIONS OF THIS AGREEMENT, OR BY ANY OTHER MANNER PROVIDED BY LAW.
ANYTHING HEREINBEFORE TO THE CONTRARY NOTWITHSTANDING, ANY HOLDER MAY SUE THE
COMPANY IN ANY OTHER APPROPRIATE JURISDICTION AND ANY PARTY MAY SUE ANY OTHER
PARTY ON A JUDGMENT RENDERED BY ANY COURT PURSUANT TO THE PROVISIONS OF THE
FIRST SENTENCE OF THIS SECTION 12.12 IN THE COURTS OF ANY COUNTRY, STATE OF THE
UNITED STATES OR PLACE WHERE SUCH OTHER PARTY OR ANY OF ITS PROPERTY OR ASSETS
MAY BE FOUND OR IN ANY OTHER APPROPRIATE JURISDICTION.

     12.13 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.

     12.14 REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES.

     12.14.1   REGISTRATION. The Notes are to be issued and are transferable in
whole or in part as registered securities without coupons in denominations of at
least $1,000,000, except as may be necessary to reflect any principal amount
less than $1,000,000, and may be exchanged for one or more Notes of any
authorized denomination and like class and aggregate outstanding principal
amount. The Company shall keep at its principal executive office registers in
which the Company shall record the registrations of the Notes and the Warrants
and the names and addresses of the Holders from time to time and all transfers
thereof. The Company shall provide any Holder who is a Purchaser or an
Institutional Investor

                                      -53-
<PAGE>

or who otherwise holds not less than 10% of the aggregate principal amount of
the Notes then outstanding, promptly upon request, a complete and correct copy
of the names and addresses of the then Holders.

    12.14.2    TRANSFER AND EXCHANGE. Upon surrender of a Note to the Company
for registration of transfer or exchange endorsed or accompanied by a written
instrument of transfer duly executed by the registered Holder or its attorney
duly authorized in writing and accompanied by the address for notices, the
Company shall at its expense (except as provided below), execute and deliver one
or more replacement Notes of like tenor and class and of a like aggregate
amount, registered in the name of such Transferee or Transferees. Each new Note
will bear interest from the date on which interest was last paid on the
surrendered Note or the date of issue of the surrendered Note if no interest has
yet 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 such
transfer. If a transfer of a Note is not made pursuant to an effective
registration statement under the Securities Act, the Company may require the
transferor to deliver, prior to such transfer, an opinion of counsel, which may
be counsel to such transferor, reasonably satisfactory to the Company, that such
Note may be sold without registration under the Securities Act.

     12.14.3   REPLACEMENT. Upon receipt of written notice from a Holder of the
loss, theft, destruction or mutilation of a Note and, in the case of any such
loss, theft or destruction, upon receipt of an indemnification agreement of such
Holder (and, in the case of a Holder which is not a Qualified Institutional
Buyer, with such security as may be reasonably requested by the Company)
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver a new
Note, at its expense, of like tenor and class, in lieu of the lost, stolen,
destroyed or mutilated Note, and each new Note will bear interest from the date
on which interest was last paid on such lost, stolen, destroyed or mutilated
Note or if no interest has yet been paid thereon, the date of issue of such
lost, stolen, destroyed or mutilated Note.

     12.15 COMPLIANCE BY SUBSIDIARIES. The Company as the equity holder of its
Subsidiaries, shall cause such meetings to be held, votes to be cast,
resolutions to be passed, by-laws to be made and confirmed, documents to be
executed and all other things and acts to be done to ensure that, at all times,
the provisions of this Agreement relating to such Subsidiaries, respectively,
are complied with.

     12.16 SEVERABILITY. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction because of
the conflict of such provision with any constitution or statute or rule of
public policy or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question invalid,
inoperative, illegal or unenforceable in any other jurisdiction or in any other
case or circumstance or of rendering any other provision or provisions herein
contained invalid, inoperative, illegal or unenforceable to the extent that such
other provisions are not themselves actually in conflict with such constitution,
statute or rule of public policy, but this Agreement shall be reformed and
construed in any such jurisdiction or case as if such invalid, inoperative,
illegal or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.

                                      -54-
<PAGE>

     12.17 TERMINATION. This Agreement and the rights of the Holders and the
obligations of the Company hereunder shall not terminate until each of the
Notes, including all principal, interest, including interest on overdue interest
and Make Whole Amount has been indefeasibly paid in full and all Expenses and
all other amounts owed to any Purchaser or any Holder pursuant to the terms of
any Transaction Document (other than the Warrants, Warrant Agreement, or the
Registration Rights Agreement) has been indefeasibly paid in full.

     12.18 CONSTRUCTION. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.

                        [Signatures Follow on Next Page]

                                      -55-
<PAGE>

     IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered by one of its duly authorized officers.

COMPANY:                      CLEAN HARBORS, INC.


                              By:  /s/ Stephen H. Moynihan
                                   --------------------------------
                                    Name:  Stephen H. Moynihan
                                    Title:  Senior Vice President



                Signature Page to Securities Purchase Agreement

                                      -56-
<PAGE>

PURCHASERS:                   JOHN HANCOCK LIFE INSURANCE
                               COMPANY


                              By:  /s/ Steven J. Blewitt
                                   --------------------------------
                                    Name: Steven J. Blewitt
                                    Title: Managing Director

                              JOHN HANCOCK VARIABLE LIFE
                                INSURANCE COMPANY

                              By:  /s/ Steven J. Blewitt
                                   --------------------------------
                                    Name: Steven J. Blewitt
                                    Title: Authorized Signatory

                              SIGNATURE 4 LIMITED
                              By:  John Hancock Life Insurance Company,
                                  as Portfolio Advisor

                              By:  /s/ Steven J. Blewitt
                                   --------------------------------
                                    Name: Steven J. Blewitt
                                    Title: Managing Director

                              SIGNATURE 5 L.P.
                              By:  John Hancock Life Insurance Company,
                                  as Portfolio Advisor

                              By:  /s/ Steven J. Blewitt
                                   --------------------------------
                                    Name: Steven J. Blewitt
                                    Title: Managing Director

                Signature Page to Securities Purchase Agreement

                                      -57-
<PAGE>

                              SPECIAL VALUE BOND FUND, LLC

                              By:  SVIM/MSM, LLC
                                  as Manager

                              By:  TENNENBAUM & CO., LLC
                                  as Managing Member of the Manager

                              By:   /s/ Michael E. Tennenbaum
                                    --------------------------------
                                    Name:  Michael E. Tennenbaum
                                    Title:  Member


                Signature Page to Securities Purchase Agreement

                                      -58-
<PAGE>

                              ARROW INVESTMENT PARTNERS
                              By:  Grandview Capital Management, LLC,
                                  Investment Manager

                              By:   /s/ Robert E. Sydow
                                    -------------------------------
                                    Name:  Robert E. Sydow
                                    Title:  President

                              BILL AND MELINDA GATES FOUNDATION
                              By:  Grandview Capital Management, LLC,
                                  Investment Manager

                              By:   /s/ Robert E. Sydow
                                    -------------------------------
                                    Name:  Robert E. Sydow
                                    Title:  President


                Signature Page to Securities Purchase Agreement

                                      -59-
<PAGE>

                   EXHIBITS, ANNEXES AND DISCLOSURE SCHEDULES

EXHIBITS
--------

  EXHIBIT A       Form of Note

  EXHIBIT B       Coverage of Opinion of Counsel to the Company

  EXHIBIT C       Form of Subsidiary Guaranty

  EXHIBIT D       Form of Registration Rights Agreement

  EXHIBIT E       Form of Warrant Agreement

  EXHIBIT F       Form of Bank Loan Agreement

ANNEXES
-------

  ANNEX 1         Purchasers Schedule

  ANNEX 2         Wiring Instructions, Company Address for Notices

DISCLOSURE SCHEDULES
--------------------

  Schedule 6.1  Existing Debt and Liens
  Schedule 8.1  Company and Subsidiary Information
  Schedule 8.2  Outstanding Rights
  Schedule 8.4  Litigation
  Schedule 8.7  Tax Matters
  Schedule 8.8  Restrictive Agreements
  Schedule 8.12  Consents
  Schedule 8.13  Environmental Matters
  Schedule 8.20  Brokers
<PAGE>

                               Table of Contents
                               -----------------

                                                                        Page
                                                                        ----

1.   AUTHORIZATION; RANKING...........................................     1

     1.1   AUTHORIZATION OF ISSUE OF THE NOTES AND WARRANTS...........     1
     1.2   RANKING....................................................     1
     1.3   INTEREST ON THE NOTES......................................     1

2.   PURCHASE AND SALE OF THE SECURITIES; CLOSING.....................     2

     2.1   PURCHASE AND SALE OF THE SECURITIES........................     2
     2.2   CLOSING....................................................     3
     2.3   CERTAIN AGREEMENTS OF THE COMPANY AND THE HOLDERS..........     3

3.   CONDITIONS OF CLOSING............................................     3

     3.1   ARTICLES OF ORGANIZATION AND PROCEEDINGS...................     3
     3.2   OPINION OF COMPANY COUNSEL.................................     4
     3.3   OPINION OF PURCHASERS' SPECIAL COUNSEL.....................     5
     3.4   REPRESENTATIONS AND WARRANTIES AND COMPLIANCE..............     5
     3.5   PURCHASE PERMITTED BY APPLICABLE LAWS......................     5
     3.6   PRIVATE PLACEMENT NUMBERS..................................     5
     3.7   SALE OF ALL SECURITIES.....................................     5
     3.8   CONSENT OF OTHER PERSONS...................................     5
     3.9   PAYMENT OF SPECIAL COUNSEL FEES............................     5
     3.10  GUARANTIES.................................................     5
     3.11  OTHER TRANSACTION DOCUMENTS................................     6
     3.12  BANK LOAN DOCUMENTS........................................     6
     3.13  EXISTING SENIOR NOTES......................................     6
     3.14  2000 FINANCIAL STATEMENTS..................................     6
     3.15  CLOSING FEE................................................     6

4.   PREPAYMENT AND REPAYMENT.........................................     6

     4.1   OPTIONAL PREPAYMENT OF NOTES AT ANY TIME...................     6
     4.2   NOTICE OF OPTIONAL PREPAYMENT..............................     6
     4.3   SCHEDULED REPAYMENT OF NOTES...............................     7
     4.4   PREPAYMENT OF NOTES UPON A CHANGE OF CONTROL...............     7
     4.5   PAYMENTS PRO RATA; APPLICATION OF PAYMENTS.................     7
     4.6   RETIREMENT OF NOTES........................................     8
     4.7   MANNER OF PAYMENT..........................................     8
     4.8   TAXES......................................................     9
     4.9   MAKE WHOLE AMOUNT..........................................    10

5.   AFFIRMATIVE COVENANTS............................................    11

     5.1   FINANCIAL AND OTHER REPORTING BY THE COMPANY...............    11
     5.2   INFORMATION REQUIRED BY RULE 144A..........................    13
     5.3   INSPECTION OF PROPERTY.....................................    14

                                       i
<PAGE>

     5.4   EXISTENCE, ETC.............................................    14
     5.5   PAYMENT OF TAXES AND CLAIMS................................    14
     5.6   COMPLIANCE WITH LAWS, ETC..................................    14
     5.7   MAINTENANCE OF PROPERTIES AND LEASES.......................    14
     5.8   INSURANCE..................................................    15
     5.9   USE OF PROCEEDS............................................    15
     5.10  ENVIRONMENTAL COMPLIANCE AND INDEMNIFICATION...............    15
     5.11  MAINTENANCE OF BOOKS AND RECORDS...........................    16
     5.12  SUBSIDIARY GUARANTIES......................................    16
     5.13  BOARD VISITATION RIGHTS....................................    16

6.   NEGATIVE COVENANTS...............................................    17

     6.1   INDEBTEDNESS...............................................    17
     6.2   LIENS......................................................    17
     6.3   CONTINGENT LIABILITIES.....................................    18
     6.4   FUNDAMENTAL CHANGES; ASSET SALES...........................    19
     6.5   INVESTMENTS; INTEREST RATE PROTECTION PRODUCTS.............    20
     6.6   RESTRICTED JUNIOR PAYMENTS.................................    20
     6.7   TRANSACTIONS WITH AFFILIATES...............................    20
     6.8   RESTRICTIVE AGREEMENTS.....................................    21
     6.9   SALE-LEASEBACK TRANSACTIONS; BILL-AND-HOLD SALES, ETC......    21
     6.10  CERTAIN FINANCIAL COVENANTS................................    21
     6.11  LINES OF BUSINESS..........................................    22
     6.12  OTHER INDEBTEDNESS.........................................    22
     6.13  MODIFICATIONS OF CERTAIN DOCUMENTS.........................    22
     6.14  AMENDMENTS TO SENIOR INDEBTEDNESS DOCUMENTS................    23
     6.15  COMPLIANCE WITH ERISA......................................    23

7.   EVENTS OF DEFAULT................................................    24

     7.1   EVENTS OF DEFAULT..........................................    24
     7.2   ACCELERATION ON EVENT OF DEFAULT...........................    26
     7.3   RESCISSION OF ACCELERATION.................................    26
     7.4   NOTICE OF ACCELERATION OR RESCISSION.......................    27
     7.5   OTHER REMEDIES, NO WAIVERS OR ELECTION OF REMEDIES.........    27

8.   REPRESENTATIONS AND WARRANTIES................................... 27

     8.1   ORGANIZATION, ETC.......................................... 27
     8.2   STOCK OWNERSHIP............................................ 28
     8.3   FINANCIAL STATEMENTS....................................... 28
     8.4   ACTIONS PENDING............................................ 29
     8.5   TITLE TO PROPERTIES........................................ 29
     8.6   AFFILIATES AND INVESTMENTS IN OTHERS....................... 29
     8.7   TAX RETURNS AND PAYMENTS................................... 29
     8.8   CONFLICTING AGREEMENTS AND OTHER MATTERS................... 30
     8.9   OFFERING OF SECURITIES..................................... 30
     8.10  REGULATION U, ETC.......................................... 30
     8.11  ERISA...................................................... 31

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     8.12  GOVERNMENTAL AND OTHER CONSENTS............................ 31
     8.13  ENVIRONMENTAL MATTERS...................................... 32
     8.14  LABOR RELATIONS............................................ 32
     8.15  FINANCIAL CONDITION........................................ 33
     8.16  DISCLOSURE................................................. 33
     8.17  STATUS UNDER CERTAIN FEDERAL STATUTES...................... 33
     8.18  BANK LOAN AGREEMENT; EXISTING DEBT......................... 33
     8.19  COMPLIANCE WITH LAWS, ETC.................................. 33
     8.20  BROKERS.................................................... 34

9.   REPRESENTATIONS OF THE PURCHASERS................................ 34

10.  DEFINITIONS...................................................... 35

11.  [INTENTIONALLY OMITTED].......................................... 48

12.  MISCELLANEOUS.................................................... 48
     12.1  EXPENSES................................................... 48
     12.2  CONSENT TO AMENDMENTS...................................... 49
     12.3  PERSONS DEEMED OWNERS; PARTICIPATIONS...................... 50
     12.4  SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
            ENTIRE AGREEMENT.......................................... 50
     12.5  SUCCESSORS AND ASSIGNS..................................... 50
     12.6  CONFIDENTIAL INFORMATION................................... 50
     12.7  NOTICES.................................................... 51
     12.8  DESCRIPTIVE HEADINGS....................................... 52
     12.9  SOLICITATION OF HOLDERS.................................... 52
     12.10 REPRODUCTION OF DOCUMENTS.................................. 52
     12.11 GOVERNING LAW.............................................. 52
     12.12 CONSENT TO JURISDICTION AND SERVICE........................ 52
     12.13 COUNTERPARTS............................................... 53
     12.14 REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES.. 53
     12.15 COMPLIANCE BY SUBSIDIARIES................................. 54
     12.16 SEVERABILITY............................................... 54
     12.17 TERMINATION................................................ 54
     12.18 CONSTRUCTION............................................... 54

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