<PAGE>   1
                                  Exhibit 10(w)

                           SENIOR EXECUTIVE AGREEMENT

      AGREEMENT dated as of October 17, 2000 between Hanover Foods Corporation
(the "Company") and William S. Gaugler, Jr. ("Executive").

                                   BACKGROUND

      Executive is employed by the Company in the position of Vice President
Human Resources of the Company. In consideration of Executive's past and present
services to the Company, Company desires to provide for the payment of
termination compensation to Executive upon the occurrence of certain
circumstances specified in Section 3 of this Agreement, but not under any other
circumstances.

      NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:

      4.    TERM AND TERMINATION. This Agreement will commence on the date
hereof and terminate on the earlier of the following dates (herein called the
"Term"): (a) ten years from the date hereof; (b) Executive's removal or
resignation from his position with the Company as stated above for any reason
whatsoever and whether with or without cause (unless Executive continues to be
employed by the Company or an affiliate in an equal or higher position) if such
resignation or removal occurs prior to a change of control as defined in Section
2 hereof; (c) the death or permanent disability of Executive, whether during or
after his employment by the Company or any affiliate; (d) the Executive's
reaching his 65th birthday; or (e) mutual written agreement of Executive and
Company.

      2.    CHANGE OF CONTROL. A change of control of the Company shall be
deemed to have occurred if, during the Term, John A. Warehime for any reason
ceases to hold the position of Chief Executive Officer of the Company or ceases
to have the powers and authority of the Chief Executive Officer of the Company.

      3.    TRIGGERING EVENTS.

      (a)   If, within twenty-four (24) months after the occurrence of a change
of control of the Company,

            (i)   Executive's base salary, responsibilities or duties are
reduced and Executive terminates his employment by voluntary resignation during
the Term and during continuance of any of the foregoing conditions (provided
such resignation gives at least one month written notice of intent to terminate
employment), or

            (ii)  Executive's employment is involuntarily terminated during the
Term by the Company for reasons other than the Executive's gross misconduct,
then

            Executive shall become entitled to receive the payments and benefits
specified in Section 4 of this Agreement.

      (b)   The date on which Executive's employment ceases as specified in
Section 3(a) is hereinafter referred to as the "Triggering Event."

      7.    PAYMENT AND BENEFITS.

      (a)   Commencing not later than thirty (30) days after the Triggering
Event, and subject to Executive's compliance with Section 7 of this Agreement,
the Company shall pay to Executive, in installments no less frequently than
monthly, during the two year period following the Triggering Event (but not
later than the last day of the Term of this Agreement), a monthly amount equal
to one-twelfth (1/12) of Executive's total cash compensation received from the
Company during the Company's fiscal year ended May 28, 2000 (including both base
annual salary and bonus, if any).
<PAGE>   2
      The foregoing payments shall be reduced, to the extent necessary, so that
the sum of payments made pursuant to this Section 4(a), when added to the total
cash compensation to which the Executive is then entitled by virtue of other
employment, will not excess, for any twelve (12) month period, the Executive's
total cash compensation received from the Company during the Company's fiscal
year ended May 28, 2000 (including both annual salary and bonus, if any).

      (b)   During the period that payments are due to Executive pursuant to
Section 4(a), and subject to Executive's compliance with Section 7 of this
Agreement, Executive shall be entitled to the health, life and disability
insurance benefits which are no less, in the aggregate, than the amount of the
benefits to which the Executive is entitled on the date of this Agreement.
Notwithstanding the foregoing, if the Executive obtains other full-time
employment, which employment provided equivalent health, life and disability
insurance benefits, the benefits described in this Section 4(b) shall cease.

      (c)   The Company may withhold from any payments or benefits due under
this Agreement all federal, state, city, or other taxes as shall be required
pursuant to any law or governmental regulation or ruling. In no event shall the
Company be obligated to make any payment or provide any benefits pursuant to
Section 4(a) or 4(b) hereof after the last day of the Term of this Agreement.

      (g)   In the event Executive become entitled to receive the payments or
benefits specified in this Agreement, he will be deemed to have waived the right
to receive any severance pay to which he might otherwise be entitled under the
present or any future severance benefit policy of the Company or any affiliate.

      5.    SOURCE OF PAYMENT. All payments provided under this Agreement shall
be paid in cash from the general funds of the Company and no special or separate
fund shall be required to be established. Executive shall have no right, title
or interest whatever in or to any investment which the Company may make to aid
the Company in meeting its obligations hereunder. Nothing contained in this
Agreement, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind or a fiduciary relationship between the
Company and Executive or any other person.

      9.    ASSIGNMENT OR OTHER ALIENATION.

      (a)   Neither this Agreement nor any right or interest hereunder shall be
assignable by Executive or his legal representatives without the Company's prior
written consent.

      (e)   Except as required by law, the right to receive payments under this
Agreement shall not be subject to anticipation, sale, encumbrance, charge, levy,
or similar process or assignment by operation of law.

      7.    COVENANTS. All payments to Executive under this Agreement shall be
subject to Executive's compliance with the provisions of this Section 7. If
Executive fails to comply with such provisions, the right of Executive and all
other persons to any future payments under this Agreement shall terminate and
the Company's obligations under this Agreement to make such payments and provide
such benefits shall cease.

      (d)   Executive shall not, directly or indirectly, at any time, during or
after his employment by the Company, disclose, use or knowingly permit the use
of any trade secrets, customer lists, or other proprietary information relating
to the Company or its affiliates except pursuant to the lawful order of any
judicial or administrative agency of government.

      (b)   For a period of two years after the Triggering Event, neither
Executive nor any employer or business associate of Executive shall enter into
any business arrangement with, or solicit for employment or employ in any
capacity, any person who was an employee of the Company or any of its affiliates
at any time with six months prior to Executive's Triggering Event, or attempt to
enter into any business arrangement with or employ any such person, or induce or
attempt to induce any such person to leave his or her employment with the
Company for any reason.
<PAGE>   3
      (c)   For a period of two years after the Triggering Event, Executive
shall not directly or indirectly own, manage, operate, join, control, or
participate in or be connected with (whether as an officer, employee, partner,
stockholder, consultant or in any other capacity) any individual proprietorship,
partnership, business trust, limited liability company, corporation or other
entity or business which is engaged principally or significantly in a business
which competes with any significant business of the Company or its affiliates.
This provision shall not apply, however, to Executive's acquiring or holding
less than 1% of the securities of any entity whose securities are listed on a
national securities exchange or traded on NASDAQ.

      (d)   Promptly upon commencing new employment, and thereafter, Executive
shall keep the Company advised of the cash compensation to which he is entitled
by virtue of such employment. Not later than February 15 of each year after the
Triggering Event, Executive shall provide to the Company (Attention: Chief
Financial Officer) copies of all W-2 forms relating to income paid to Executive
during the prior calendar year.

      8.    CONSOLIDATION, MERGER, OR SALE OF ASSETS. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with or
transferring all or substantially all of its assets to another corporation. In
that event, such other corporation shall assume this Agreement and all
obligations of the Company hereunder. Upon such a consolidation, merger, or
transfer of assets and assumption, the term "the Company" as used herein, shall
mean such other corporation and this Agreement shall continue in full force and
effect.

      9.    ACCELERATION. If the Company fails to pay the Executive any of the
amounts due to him under Section 4(a) hereof, thirty (30) days after having
received written notice from the Executive of such failure to pay, the Executive
shall have the right to accelerate future payments of all sums due the Executive
under Section 4(a) hereof, without discount.

      10.   REIMBURSEMENT. If the Company fails to pay the Executive any of the
amounts due to him under Section 4(a) hereof or fails to provide the Executive
with any of the benefits due to him under Section 4(b) hereof, thirty (30) days
after having received written notice from the Executive of such failure, the
Executive shall be entitled to full reimbursement from the Company for all costs
and expenses (including reasonable attorneys' fees) incurred by the Executive in
enforcing his rights under this Agreement, plus interest at the rate of 9% per
annum on the improperly withheld amounts or improperly withheld benefits due to
the Executive under Section 4(a) hereof or Section 4(b) hereof, respectively.

      14.   MISCELLANEOUS.

      (a)   This Agreement shall not limit or infringe upon the right of the
Company or any affiliate to terminate the employment of Executive at any time
for any reason whatsoever, not upon the right of Executive to terminate his
employment by the Company or any affiliate. Nothing contained herein shall
confer upon Executive the right to continue as an employee of the Company or any
affiliate.

      (b)   This Agreement contains the entire agreement between Executive and
Company regarding the subject matter hereof and supersedes any prior oral or
written understanding.

      (c)   This Agreement may not be amended or supplemented, not may any
provision be waived, except by an instrument in writing signed by the parties
hereto. This Agreement shall be binding upon and inure to the benefit of the
Executive and his personal representatives, executors, administrators and heirs;
provided, however, no payment shall be due hereunder after the death or
permanent disability of Executive.

      (d)   If any provision of this Agreement shall be held invalid in part,
such invalidity shall in no way affect the rest of such provisions not held so
invalid. The rest of such provision, together with all other provisions of this
Agreement, shall to the full extent consistent with law continue in full force
and effect.

      (e)   The headings of the Sections of this Agreement are included solely
for convenience or reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
<PAGE>   4
      (f)   This Agreement has been executed and delivered in the Commonwealth
of Pennsylvania and its validity, interpretation, performance, and enforcement
shall be governed by the internal laws of such Commonwealth, without regard to
any conflict of laws principles. The principle of construction that ambiguities
are construed against the draftsperson shall not apply to this document.

      (g)   Any dispute or disagreement between Executive and the Company with
respect to any portion of the Agreement or its validity, construction, meaning,
performance or Executive's rights hereunder shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association or its successor, as amended from time to time. However, prior to
submission to arbitration Executive will attempt to resolve any disputes or
disagreements with the Company over this option amicably and informally, in good
faith, for a period not to exceed two weeks. Thereafter, the dispute or
disagreement will be submitted to arbitration. At any time prior to a decision
from the arbitrator(s) being rendered, Executive and the Company may resolve the
dispute by settlement. Executive and the Company shall equally share the costs
charged by the American Arbitration Association or its successor, but Executive
and the Company shall otherwise be solely responsible for their own respective
counsel fees and expenses. The decision of the arbitrator(s) shall be made in
writing, setting forth the award, the reasons for the decision and award and
shall be binding and conclusive on Executive and the Company. Further, neither
Executive nor the Company shall appeal any such award. Judgment of a court of
competent jurisdiction may be entered upon the award and may be enforced as such
in accordance with the provisions of the award.

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



                                          HANOVER FOODS CORPORATION



/s/ William S. Gaugler, Jr. (SEAL)        By: /s/ John S. Warehime
---------------------------                   --------------------

William S. Gaugler, Jr.                   John A. Warehime, Chairman,