EXHIBIT 10.(l)
<PAGE>

                CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT
                ------------------------------------------------

                CONSENT AND FOURTH AMENDMENT, dated as of July 30, 2002 (this
"Consent"),  to the Credit  Agreement  referred to below among  AGWAY,  INC.,  a
 -------
Delaware  corporation,  FEED COMMODITIES  INTERNATIONAL  LLC, a Delaware limited
liability company, BRUBAKER AGRONOMIC CONSULTING SERVICE LLC, a Delaware limited
liability company,  AGWAY GENERAL AGENCY, INC., a New York corporation,  COUNTRY
BEST ADAMS, LLC, a Delaware limited liability company, COUNTRY BEST-DEBERRY LLC,
a Delaware  limited  liability  company,  AGWAY ENERGY  PRODUCTS LLC, a Delaware
limited  liability  company,   AGWAY  ENERGY   SERVICES-PA,   INC.,  a  Delaware
corporation,  and AGWAY  ENERGY  SERVICES,  INC.,  a  Delaware  corporation,  as
Borrowers (the  "Borrowers"),  THE OTHER CREDIT PARTIES  SIGNATORY  THERETO (the
                 ---------
"Credit  Parties"),  THE  LENDERS  SIGNATORY  THERETO  FROM  TIME TO  TIME  (the
 ---------------
"Lenders"), and GENERAL ELECTRIC CAPITAL CORPORATION, as Agent ("Agent") and as
 -------                                                         -----
a Lender.

                               W I T N E S S E T H
                               - - - - - - - - - -

                WHEREAS, Borrowers, the Credit Parties, the  Lenders  and  Agent
are parties to  that  certain  Credit  Agreement,  dated  as  of  March 28, 2001
(including all annexes, exhibits   and   schedules   thereto,   and as  amended,
supplemented  or otherwise modified from time to time, the "Credit Agreement");
                                                            ----------------

                WHEREAS, Agway, Inc. has entered into a Stock Purchase Agreement
with  United  Farm  Family Mutual Insurance Company dated as of June 14, 2002 in
the form annexed hereto  as   Exhibit  A  (the   "Stock   Purchase   Agreement")
                                                 ------------------------------
whereby  Agway,  Inc.  is,  among other  things, selling shares of capital stock
of Agway Insurance Company;

                WHEREAS,  the Agent and  Lenders have  agreed to consent  to the
sale  of  certain  Collateral and the  amendment of the Credit Agreement, in the
manner, and on the terms and conditions, provided for herein;

                NOW THEREFORE, in consideration of  the  premises  and for other
good  and valuable  consideration,  the  receipt,  adequacy and  sufficiency  of
which are hereby acknowledged, the parties hereto agree as follows:

                1.  Definitions.  Capitalized terms not otherwise defined herein
                    -----------
shall have the meanings ascribed to them in the  Credit  Agreement  or  Annex  A
                                                                        --------
thereto.
<PAGE>

                2. Consent.  As of the Consent  Effective  Date (as  hereinafter
                   ------
defined), Agent  and  Lenders  hereby consent to (i) the sale by Agway, Inc.  of
the "Purchased Shares", as such term is defined  in  Section 1.1  of  the  Stock
Purchase  Agreement  and  (ii)  the  sale  by Agway, Inc. or Related Persons (as
defined in the Stock Purchase  Agreement) of Agway,  Inc.  of  the "Agway,  Inc.
Assets," as such term is defined in Section 1.1 of the Stock Purchase Agreement,
provided that (i) the  "Agway,  Inc.  Assets"   shall  not  be   transferred  or
--------
conveyed  to  Agway  Insurance   Company  until Closing (as defined in the Stock
Purchase  Agreement); and (ii) the aggregate net proceeds from the sale shall be
applied  to  prepay  the  Loans  pursuant  to  Section 1.3(b)(ii)  of the Credit
                                               ------------------
Agreement.

               3.  Amendments.
                   ----------

                   (a) Annex A of the Credit Agreement is hereby  amended  as of
                       -------
the Consent Effective Date by:

                   (i) deleting the definition of "Commitments" and inserting in
lieu thereof:

               "`Commitments'"  means (a) as to any  Lender,  the  aggregate  of
                 ------------
               such  Lender's   Revolving   Loan  Commitment (including  without
               duplication the Swing Line Lender's Swing Line  Commitment  as  a
               subset of its Revolving Loan Commitment) as set forth on  Annex J
                                                                         -------
               to  the  Agreement or in the most  recent  Assignment   Agreement
               executed by such Lender and (b) as to all Lenders, the  aggregate
               of all Lenders' Revolving Loan Commitments   (including   without
               duplication  the Swing Line Lender's  Swing Line  Commitment as a
               subset  of  its  Revolving  Loan  Commitment),   which  aggregate
               commitment  shall  be One  Hundred  Twenty-Five  Million  Dollars
               ($125,000,000)  on the Consent  Effective Date (as defined in the
               Consent and Fourth Amendment to Credit Agreement dated as of July
               30, 2002), as to each of clauses (a) and (b), as such Commitments
               may be  reduced,  amortized  or  adjusted  from  time  to time in
               accordance with the Agreement."


                   (ii) deleting the definition of "Revolving  Loan  Commitment"
and inserting in lieu thereof:

               "'Revolving Loan Commitment' means (a)  as  to  any  Lender,  the
                ---------------------------
               aggregate  commitment  of such  Lender to make  Revolving  Credit
               Advances or incur  Letter of Credit  Obligations  as set forth on
               Annex  J to  the  Agreement  or in  the  most  recent  Assignment
               --------
               Agreement executed by such Lender and (b) as to all Lenders,  the
               aggregate  commitment  of all  Lenders to make  Revolving  Credit
<PAGE>

               Advances or incur Letter of Credit  Obligations,  which aggregate
               commitment  shall be One Hundred  Twenty-  Five  Million  Dollars
               ($125,000,000)  on the Consent  Effective Date (as defined in the
               Consent and Fourth Amendment to Credit Agreement dated as of July
               30, 2002),  as such amount may be adjusted,  if at all, from time
               to time in accordance with the Agreement."

                    (b) Annex J of the Credit Agreement is hereby amended as  of
                        -------
the Consent  Effective Date by deleting such Annex in its entirety and replacing
it  with  a new Annex J attached hereto as Exhibit B.
                -------                    ---------

                    (c) Section 1.1(a)(iii) of the Credit  Agreement  is  hereby
                        -------------------
ammended as of the Consent Effective Date by deleting the last sentence of  such
section  in its entirety and inserting in lieu thereof the following:

               "Except as otherwise  provided in Section 1.11(b),  the authority
                                                 ---------------
               of Agent to make  Overadvances is limited to an aggregate  amount
               not to exceed One  Million  Dollars  ($1,000,000)  at  any  time,
               shall  not  cause  the  aggregate  Revolving  Loan  to exceed the
               Maximum  Amount,  and may be revoked  prospectively  by a written
               notice to Agent signed by Revolving Lenders holding more than 50%
               of the Revolving Loan Commitments."

                    (d) Annex G of the Credit Agreement is hereby  amended as of
                        -------
the Consent  Effective  Date by deleting  section (h) thereunder in its entirety
and inserting in lieu thereof the following new section (h) to read as follows:

                   "(h)   Minimum Excess Availability.   Borrowers   and   their
                          ----------------------------
               Subsidiaries  (excluding all Telmark  Entities,  Agway  Insurance
               Company and all of their  respective  Subsidiaries)  at all times
               shall  have  Borrowing  Availability,   after  giving  effect  to
               Eligible  Accounts,   Eligible  Deferred  Accounts  and  Eligible
               Inventory of Borrowers  supporting  Revolving Credit Advances and
               all  Letter of Credit  Obligations  (on a pro forma  basis,  with
               trade  payables being paid in the ordinary  course,  and expenses
               and liabilities being paid in the ordinary course of business and
               without  acceleration  of sales) of at least Ten Million  Dollars
               ($10,000,000), provided however, upon closing and consummation of
                              -------- -------
               the Stock Purchase  Agreement between Agway, Inc. and United Farm
               Family  Mutual  Insurance  Company,  dated June 14, 2002 and if a
               Default or Event of Default has occurred and is continuing,  such
<PAGE>

               Borrowing  Availability shall be at least Fifteen Million Dollars
               ($15,000,000)."

                4. Representations and Warranties.  To induce Agent and Lenders
                   ------------------------------
to enter into this Consent, Borrowers hereby represent and warrent that:


                  (a) The execution,  delivery  and  performance by Borrowers of
this  Consent (i) are  within  Borrowers'  respective corporate powers, (ii) has
been duly authorized by all  necessary  corporate and  shareholder  action,  and
(iii)  is  not  in  contravention of any provision of any Borrower's charter  or
bylaws or equivalent organizational documents.

                  (b) This Consent has been duly executed and delivered by or on
behalf of Borrowers.

                  (c) The  Consent  constitutes  a  legal,   valid  and  binding
obligation of Borrowers, enforceable against each of them in accordance with its
terms.

                  (d) Except  for  those  expressly waived pursuant to the First
Amendment and Waiver to Credit  Agreement  dated as of September  14, 2001,  the
Second  Amendment and Waiver to Credit  Agreement  dated as of January 31, 2002,
the Third  Amendment and Waiver to Credit  Agreement  dated as of April 3, 2002,
and the Waiver under Credit  Agreement  dated as of May 13, 2002,  no Default or
Event of Default has occurred  and is  continuing  after  giving  effect to this
Consent.

                  (e) No action, claim or proceeding is now  pending or, to  the
knowledge  of  Borrowers,  threatened  against  Borrowers,  at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal,  state, or local government or of any agency or subdivision thereof, or
before any  arbitrator  or panel of  arbitrators,  which  challenges  Borrowers'
right,  power,  or  competence  to enter  into this  Consent  or, to the  extent
applicable,  perform any of their  obligations  under this  Consent,  the Credit
Agreement or any other Loan Document,  or the validity or enforceability of this
Consent,  the Credit  Agreement  or any other Loan  Document or an action  taken
under this  Consent,  the Credit  Agreement or any other Loan Document or except
for items on Disclosure Schedule (3.13) or notifications sent to Agent since the
             --------------------------
Closing Date,  which if determined  adversely,  is reasonably  likely to have or
result in a Material Adverse Effect after giving effect to this Consent.  Except
for items on Disclosure Schedule (3.13) or notifications sent to Agent since the
             --------------------------
Closing Date,  to the  knowledge of  Borrowers,  there does not exist a state of
facts which is reasonably likely to give rise to such proceedings.

                  (f)  The  representations  and  warranties  of  the  Borrowers
contained in the Credit Agreement and each other Loan Document shall be true and
correct on and as of the Consent  Effective Date (as  hereinafter  defined) with
the same effect as if such  representations  and warranties had been made on and
<PAGE>
as of such  date,  except  that any such  representation  or  warranty  which is
expressly made only as of a specified dated need be true only as of such date.

                5. No Other Consents/Waivers.  Except  as   expressly   provided
                   -------------------------
herein, (i) the Credit Agreement shall be unmodified and shall continue to be in
full force and effect in accordance  with its terms and (ii) this Consent  shall
not be deemed a waiver of any term or condition of any Loan  Document and  shall
not be deemed to prejudice any right or rights which the Agent or any Lender may
now have or may have in the future under or in connection with any Loan Document
or any of the instruments or agreements  referred to therein, as the same may be
amended from time to time. Except as otherwise provided for herein,  nothing set
forth herein shall be deemed to be a consent by Agent or Lenders with respect to
any sale or other disposition by Borrowers of any assets.

                6. Outstanding Indebtedness; Waiver of Claims. Each of Borrowers
                   ------------------------------------------
and other Credit  Parties  hereby  acknowledges  and agrees  that as of July 30,
2002  the  aggregate   outstanding  principal  amount  of  the Revolving Loan is
$47,276,378.81 and that such principal amount is payable pursuant to the  Credit
Agreement without  defense,  offset,  withholding,  counterclaim or deduction of
any kind.   Borrowers  and each other   Credit  Party hereby  waives,  releases,
remises and  forever discharges Agent, Lenders and each other Indemnified Person
from any and all claims, suits, actions, investigations,  proceedings or demands
arising out  of  or  in  connection  with  the  Credit  Agreement (collectively,
"Claims"), whether based  in contract, tort, implied or express warranty, strict
liability,  criminal  or civil  statute or common law of any kind or  character,
known or unknown, which any Borrower or any other Credit Party ever had, now has
or might  hereafter  have against  Agent or Lenders which  relates,  directly or
indirectly,  to any acts or omissions of Agent, Lenders or any other Indemnified
Person  on or prior to the  Consent  Effective  Date (as  hereinafter  defined),
provided, that no Borrower nor any other Credit Party waives any Claim solely to
--------
the extent such Claim relates to the Agent's or any Lender's gross negligence or
willful misconduct.

                7. Expenses.  Borrowers  hereby   reconfirm  their   obligations
                   --------
pursuant  to Sections  1.9 and 11.3 of the Credit Agreement to pay and reimburse
             -------------     ----
Agent and the Lenders for all reasonable costs and expenses (including,  without
limitation,  reasonable  fees  of  counsel)  incurred  in  connection  with  the
negotiation,  preparation,  execution and delivery of this Consent and all other
documents and instruments delivered in connection herewith.

                8. Effectiveness.   This  Consent  shall  become effective as of
                   -------------
July 30, 2002 (the "Consent Effective Date") only upon  satisfaction  in full in
the judgment of Agent of each of the following conditions:

                  (a) Consent. Agent shall have received six (6) original copies
                      -------
of this Consent  duly executed and delivered by Agent, the Requisite Lenders and
Borrowers.
<PAGE>

                  (b) Payment of Expenses. Borrowers shall have  paid  to  Agent
                      -------------------
all costs, fees and expenses owing in connection with this Consent and the other
Loan Documents and due to Agent (including, without limitation, reasonable legal
fees and expenses).

                  (c) Stock Purchase Agreement. The Agent shall have received  a
                      ------------------------
true and complete copy of the StockPurchase Agreement, substantially in the form
of Exhibit A hereto,  duly authorized and executed  together with all schedules,
exhibits,  amendments,  supplements,  modifications,  assignments  and all other
documents delivered pursuant thereto or in connection therewith.

                  (d) Representations and Warranties.  The  representations  and
                      ------------------------------
warranties of  or on behalf of the Borrowers in this Consent shall be  true  and
correct on and as of the Consent Effective Date.

                9. GOVERNING LAW.  THIS   CONSENT  SHALL  BE  GOVERNED  BY,  AND
                   -------------
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

               10. Counterparts.  This  Consent  may  be executed by the parties
                   ------------
hereto on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.

                            (SIGNATURE PAGE FOLLOWS)



<PAGE>


                  IN WITNESS WHEREOF,   the  parties  hereto  have  caused  this
Consent to be duly executed and delivered  as  of  the  day and year first above
written.

                          BORROWERS


                          AGWAY, INC.
                          FEED COMMODITIES INTERNATIONAL LLC
                          BRUBAKER AGRONOMIC CONSULTING SERVICE LLC
                          COUNTRY BEST-DEBERRY LLC
                          AGWAY ENERGY PRODUCTS LLC
                          AGWAY ENERGY SERVICES-PA, INC.
                          AGWAY ENERGY SERVICES, INC.
                          COUNTRY BEST ADAMS, LLC


                          By:       /s/ Karen J. Ohliger
                                    --------------------------------------------
                          Name:         Karen J. Ohliger
                                    --------------------------------------------
                          Title:        Treasurer
                                    --------------------------------------------


                          AGWAY GENERAL AGENCY, INC.

                          By:       /s/ Karen J. Ohliger
                                    --------------------------------------------
                          Name:         Karen J. Ohliger
                                    --------------------------------------------
                          Title:        Asst. Treasurer
                                    --------------------------------------------


                          LENDERS


                          COBANK, ACB

                          By:         /s/  K. E. Hide
                                    --------------------------------------------
                          Name:         K. E. Hide
                                    --------------------------------------------
                          Title:        Vice President
                                    --------------------------------------------


<PAGE>


                          COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEEN BANK B.A.,
                         "Rabobank Nederland" New York Branch


                          By:       /s/ Floyd Smith       /s/ Edward J. Peyser
                                    --------------------------------------------
                          Name:         Floyd Smith           Edward J. Peyser
                                    --------------------------------------------
                          Title:        Vice-President        Managing Director
                                    --------------------------------------------


                          GMAC BUSINESS CREDIT, LLC


                          By:       /s/ Charles D. Stephenson
                                    --------------------------------------------
                          Name:         Charles D. Stephenson
                                    --------------------------------------------
                          Title:        SVP
                                    --------------------------------------------


                          GENERAL ELECTRIC CAPITAL
                           CORPORATION, as Agent and Lender


                          By:       /s/ Pieter H. Smit
                                    --------------------------------------------
                          Name:         Pieter H. Smit
                                    --------------------------------------------
                          Title:    Its Duty Authorized Signatory




<PAGE>


                                    EXHIBIT A
                                       TO
                                     CONSENT

           See attached Stock Purchase Agreement dated June 14, 2002.



<PAGE>
                                                                       EXHIBIT B
                                                                       ---------



                 ANNEX J (from Annex A - Commitments definition)
                               --------------------------------
                                       to
                                CREDIT AGREEMENT
                                ----------------


                                            Lender(s)
                                            ---------
Revolving Loan Commitment
(including a Swing Line Commitment
of $10,000,000)
$53,571,428.57                              General Electric Capital Corporation

Revolving Loan Commitment
$37,142,857.14                              CoBank, ACB

Revolving Loan Commitment
$16,428,571.43                              Cooperatieve  Centrale   Raiffeisen-
                                            Boerenleenbank
                                            B.A., "Rabobank Nederland", New York
                                            Branch
Revolving Loan Commitment
$17,857,142.86                              GMAC Business Credit, LLC



<PAGE>
                                  EXHIBIT 10.(m)
<PAGE>


                 CONSENT AND FIFTH AMENDMENT TO CREDIT AGREEMENT
                 -----------------------------------------------

                  CONSENT AND FIFTH  AMENDMENT,  dated as of September  13, 2002
(this "Consent and Amendment"),  to the Credit Agreement referred to below among
       ---------------------
AGWAY,  INC., a Delaware  corporation,  FEED  COMMODITIES  INTERNATIONAL  LLC, a
Delaware limited liability company, BRUBAKER AGRONOMIC CONSULTING SERVICE LLC, a
Delaware  limited  liability  company,  AGWAY GENERAL  AGENCY,  INC., a New York
corporation,  COUNTRY BEST ADAMS,  LLC, a Delaware  limited  liability  company,
COUNTRY  BEST-DEBERRY  LLC, a Delaware limited liability  company,  AGWAY ENERGY
PRODUCTS LLC, a Delaware limited liability  company,  AGWAY ENERGY  SERVICES-PA,
INC.,  a Delaware  corporation,  and AGWAY  ENERGY  SERVICES,  INC.,  a Delaware
corporation, as Borrowers (the "Borrowers"),  THE OTHER CREDIT PARTIES SIGNATORY
                                ---------
THERETO (the "Credit Parties"),  THE LENDERS SIGNATORY THERETO FROM TIME TO TIME
              --------------
(the "Lenders"),  and GENERAL ELECTRIC CAPITAL  CORPORATION,  as Agent ("Agent")
      -------                                                           -------
and as a Lender.

                               W I T N E S S E T H
                               -------------------

                  WHEREAS,  Borrowers, the Credit Parties, the Lenders and Agent
are  parties  to that  certain  Credit  Agreement,  dated as of March  28,  2001
(including  all  annexes,  exhibits  and  schedules  thereto,  and  as  amended,
supplemented or otherwise  modified from time to time, the "Credit  Agreement");
and                                                         ------------------

                  WHEREAS,  the Agent and Lenders  have agreed to consent to the
sale of certain  Collateral  and the amendment of the Credit  Agreement,  in the
manner, and on the terms and conditions, provided for herein;

                  NOW THEREFORE,  in consideration of the premises and for other
good and valuable consideration,  the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

        1.   Definitions.  Capitalized  terms not otherwise defined herein shall
             -----------
have the meanings ascribed to them in the Credit Agreement or Annex A thereto.
                                                              -------

        2.  Consent.  As of the Consent Effective Date (as hereinafter defined),
            -------
Agent and Lenders  hereby  consent to the sale by Agway,  Inc. of the  "Acquired
Assets," as such term is defined in Section 1.1 of that certain  Asset  Purchase
Agreement,  dated as of September 10, 2002 by and between Agway, Inc., as seller
and Cenex Harvest  States  Cooperatives,  as buyer,  a copy of which is attached
hereto  as  Exhibit  A (the  "Asset  Purchase  Agreement"),  provided  that  the
aggregate  net  proceeds  from such sale  shall be  applied  to prepay the Loans
pursuant to Section 1.3(b)(ii) of the Credit Agreement.  Agent agrees to release
its Lien on the  Acquired  Assets in order to permit  Agway,  Inc. to effect the



<PAGE>

sale and  shall  execute  and  deliver  to  Borrowers,  at  Borrowers'  expense,
appropriate UCC-3 release statements and other releases as reasonably  requested
by Borrowers.

        3.       Amendment. Annex G of the Credit Agreement is hereby amended as
                 ---------  -------
of the Consent Effective Date by deleting section (h) thereunder in its entirety
and inserting in lieu thereof the following new section (h) to read as follows:

                  "(h)  Minimum   Excess   Availability.   Borrowers  and  their
                        -------------------------------
                  Subsidiaries (excluding all Telmark Entities,  Agway Insurance
                  Company and all of their respective Subsidiaries) at all times
                  shall have  Borrowing  Availability,  after  giving  effect to
                  Eligible  Accounts,  Eligible  Deferred  Accounts and Eligible
                  Inventory of Borrowers  supporting  Revolving  Credit Advances
                  and all Letter of Credit  Obligations  (on a pro forma  basis,
                  with trade  payables  being paid in the ordinary  course,  and
                  expenses and liabilities  being paid in the ordinary course of
                  business  and without  acceleration  of sales) of at least Ten
                  Million Dollars ($10,000,000),  provided however, upon closing
                  and  consummation  of the  Asset  Purchase  Agreement  between
                  Agway,  Inc.  and  Cenex  Harvest  States  Cooperatives  dated
                  September 10, 2002,  such Borrowing  Availability  shall be at
                  least Twenty Five Million Dollars ($25,000,000)."

        4.       Representations and Warranties.  To induce Agent and Lenders to
                 ------------------------------
enter into this Consent and Amendment,  Borrowers  hereby  represent and warrant
that:

                (a)   The  execution,  delivery and  performance by Borrowers of
this  Consent  and  Amendment  (i) are within  Borrowers'  respective  corporate
powers, (ii) has been duly authorized by all necessary corporate and shareholder
action,  and (iii) is not in  contravention  of any provision of any  Borrower's
charter or bylaws or equivalent organizational documents.

                (b)   This Consent  and  Amendment  has  been  duly executed and
delivered by or on behalf of Borrowers.

                (c)   The Consent and  Amendment constitutes  a legal, valid and
binding obligation of Borrowers.

                (d)   Except  for  those  expressly waived pursuant to the First
Amendment and Waiver to Credit  Agreement  dated as of September  14, 2001,  the
Second  Amendment and Waiver to Credit  Agreement  dated as of January 31, 2002,
the Third  Amendment and Waiver to Credit  Agreement  dated as of April 3, 2002,
and the Waiver under Credit  Agreement  dated as of May 13, 2002,  no Default or
Event of Default has occurred  and is  continuing  after  giving  effect to this


                                       2
<PAGE>

Consent and Amendment.

                (e)    No action,  claim or  proceeding  is now  pending  or, to
the knowledge of Borrowers,  threatened against Borrowers,  at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal,  state, or local government or of any agency or subdivision thereof, or
before any  arbitrator  or panel of  arbitrators,  which  challenges  Borrowers'
right,  power, or competence to enter into this Consent and Amendment or, to the
extent  applicable,  perform  any of their  obligations  under this  Consent and
Amendment,  the Credit Agreement or any other Loan Document,  or the validity or
enforceability of this Consent and Amendment,  the Credit Agreement or any other
Loan  Document or an action taken under this Consent and  Amendment,  the Credit
Agreement or any other Loan Document or except for items on Disclosure  Schedule
(3.13)  or  notifications  sent to  Agent  since  the  Closing  Date,  which  if
determined  adversely,  is  reasonably  likely to have or  result in a  Material
Adverse  Effect after giving  effect to this Consent and  Amendment.  Except for
items on Disclosure  Schedule  (3.13) or  notifications  sent to Agent since the
Closing Date,  to the  knowledge of  Borrowers,  there does not exist a state of
facts which is reasonably likely to give rise to such proceedings.

                (f)   The   representations  and  warranties  of  the  Borrowers
contained in the Credit Agreement and each other Loan Document shall be true and
correct on and as of the Consent  Effective Date (as  hereinafter  defined) with
the same effect as if such  representations  and warranties had been made on and
as of such  date,  except  that any such  representation  or  warranty  which is
expressly made only as of a specified dated need be true only as of such date.

        5.   No Other  Consents/Waivers. Except as  expressly  provided  herein,
             --------------------------
(i) the Credit  Agreement  shall be unmodified  and shall continue to be in full
force  and  effect in  accordance  with its  terms  and (ii)  this  Consent  and
Amendment  shall  not be deemed a waiver  of any term or  condition  of any Loan
Document  and shall not be deemed  to  prejudice  any right or rights  which the
Agent  or any  Lender  may  now  have  or may  have in the  future  under  or in
connection  with any  Loan  Document  or any of the  instruments  or  agreements
referred to  therein,  as the same may be amended  from time to time.  Except as
otherwise provided for herein,  nothing set forth herein shall be deemed to be a
consent by Agent or Lenders  with  respect to any sale or other  disposition  by
Borrowers of any assets.

        6.   Outstanding  Indebtedness;  Waiver  of  Claims.  Each of  Borrowers
             ----------------------------------------------
and other Credit Parties hereby acknowledges and agrees that as of September 13,
2002,  the  aggregate  outstanding  principal  amount of the  Revolving  Loan is
$24,549,025.68  and that such principal amount is payable pursuant to the Credit
Agreement without defense, offset, withholding, counterclaim or deduction of any
kind. Borrowers and each other Credit Party hereby waives, releases, remises and
forever discharges Agent, Lenders and each other Indemnified Person from any and


                                       3
<PAGE>

all claims, suits, actions,  investigations,  proceedings or demands arising out
of or in connection with the Credit Agreement (collectively,  "Claims"), whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law of any kind or character, known or unknown, which
any Borrower or any other Credit Party ever had, now has or might hereafter have
against Agent or Lenders which relates,  directly or indirectly,  to any acts or
omissions of Agent,  Lenders or any other Indemnified  Person on or prior to the
Consent Effective Date (as hereinafter defined),  provided, that no Borrower nor
any other Credit Party waives any Claim solely to the extent such Claim  relates
to the Agent's or any Lender's gross negligence or willful misconduct.

        7.   Expenses.  Borrowers  hereby  reconfirm their obligations  pursuant
             --------
to Sections 1.9 and 11.3 of the Credit  Agreement to pay and reimburse Agent and
the  Lenders  for  all  reasonable  costs  and  expenses   (including,   without
limitation,  reasonable  fees  of  counsel)  incurred  in  connection  with  the
negotiation,  preparation,  execution and delivery of this Consent and Amendment
and all other documents and instruments delivered in connection herewith.

        8    Effectiveness.  This Consent and  Amendment shall become effective
             -------------
as of September 13, 2002 (the "Consent  Effective Date") only upon  satisfaction
in full in the judgment of Agent of each of the following conditions:

             (a)    Consent  and  Amendment.  Agent  shall have received six (6)
                    -----------------------
original  copies of this Consent and  Amendment  duly  executed and delivered by
Agent, each Lender and Borrowers.

             (b)    Payment of Expenses.  Borrowers shall have paid to Agent all
                    -------------------
costs, fees and expenses owing in connection with this Consent and Amendment and
the  other  Loan  Documents  and due to Agent  (including,  without  limitation,
reasonable legal fees and expenses).

             (c)    Asset Purchase Agreement.  The  Agent  shall have received a
                    ------------------------
true and complete copy of the Asset  Purchase  Agreement,  substantially  in the
form of  Exhibit  A hereto,  duly  authorized  and  executed  together  with all
schedules, exhibits, amendments, supplements, modifications, assignments and all
other documents delivered pursuant thereto or in connection therewith.

             (d)    Representations and Warranties.  The  representations  and
                    ------------------------------
warranties of or on behalf of the Borrowers in this Consent and Amendment  shall
be true and correct on and as of the Consent Effective Date.

        9.   GOVERNING LAW. THIS CONSENT AND AMENDMENT SHALL BE GOVERNED BY, AND
             -------------
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

                                       4
<PAGE>

        10.  Counterparts.  This  Consent  and  Amendment may be executed by the
             ------------
parties  hereto  on  any  number  of  separate  counterparts  and  all  of  said
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.

                            (SIGNATURE PAGE FOLLOWS)



<PAGE>


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Consent and  Amendment to be duly  executed and delivered as of the day and year
first above written.

                          BORROWERS


                          AGWAY, INC.
                          FEED COMMODITIES INTERNATIONAL LLC
                          BRUBAKER AGRONOMIC CONSULTING SERVICE LLC
                          COUNTRY BEST-DEBERRY LLC
                          AGWAY ENERGY PRODUCTS LLC
                          AGWAY ENERGY SERVICES-PA, INC.
                          AGWAY ENERGY SERVICES, INC.
                          COUNTRY BEST ADAMS, LLC
                          AGWAY GENERAL AGENCY, INC.


                          By:         /s/ KAREN J. OHLIGER
                                    --------------------------------------------
                          Name:           Karen J. Ohliger
                                    --------------------------------------------
                          Title:          Treasurer
                                    --------------------------------------------





<PAGE>



                          LENDERS


                          COBANK, ACB

                          By:         /s/ KENNETH E. HIDE
                                    --------------------------------------------
                          Name:           Kenneth E. Hide
                                    --------------------------------------------
                          Title:          Vice President
                                    --------------------------------------------


                          COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEEN BANK B.A.,
                          "Rabobank Nederland" New York Branch


                          By:          /s/ W. JEFFREY VOLLACK
                                    --------------------------------------------
                          Name:            W. Jeffrey Vollack
                                    --------------------------------------------
                          Title:           Senior Credit Officer
                                    --------------------------------------------


                          GMAC BUSINESS CREDIT, LLC


                          By:           /s/ KATHLEEN WILLIAMS
                                    --------------------------------------------
                          Name:             Kathleen Williams
                                    --------------------------------------------
                          Title:            First Vice President
                                    --------------------------------------------


                          GENERAL ELECTRIC CAPITAL
                           CORPORATION, as Agent and Lender


                          By:           /s/ JAMES DESANTIS
                                    --------------------------------------------
                          Name:             James DeSantis
                                    --------------------------------------------
                          Title:    Its Duly Authorized Signatory




<PAGE>


                                    EXHIBIT A
                                       TO
                              CONSENT AND AMENDMENT

         See attached Asset Purchase Agreement dated September 10, 2002.


<PAGE>
                                  EXHIBIT 10.(n)

<PAGE>
[For 14 Directors]

                       DIRECTOR DEFERRED PAYMENT AGREEMENT


         AGREEMENT made this      day of                 ,  2001,  between AGWAY
                            -----        ---------------
INC., a Delaware  corporation,  with its  principal  office in DeWitt,  New York
(hereinafter called "AGWAY"), and                   residing at
                                  ----------------
--------------------------------------------------------------------------------
(hereinafter called "Director").

                                    RECITALS:

A.   AGWAY has established a deferred payment program for Directors.

B.   Director desires to participate in the program upon the following terms and
     conditions.

                                   WITNESSETH:

         For good and  valuable  consideration,  the  parties,  intending  to be
legally bound, hereby agree as follows:

         1.    Director hereby designates (check one)

                         % of retainer (or $        of retainer) only
               ---  ---                    -------
                         % of per diem and all other payments other than expense
               ---  ---
               reimbursements (or $         of  per  diem and all other payments
                                   --------
               other than expense reimbursements) only
                         % of both  retainer and per diem and all other payments
               ---  ---
               other than expense reimbursements (or $          of both retainer
                                                      ---------
               and per diem)

                                       -1-

<PAGE>



for the  period  beginning  January  1, 2002 and  ending  December  31,  2002 be
credited to Director's Reserve Account.

         2. AGWAY shall  maintain in its accounting  records a separate  account
(herein called "Director's Reserve Account") for each Director electing deferral
of any amount under this  Agreement and shall credit to the  Director's  Reserve
Account  the item or items  designated  by  Director  in  Section  1 above.  The
Director's  Reserve Account shall also be credited at the close of each calendar
quarter with an amount computed by applying the average cost-of-debt  percentage
as hereinafter defined to the total average accumulated credit of the Director's
Reserve Account. "Average cost-of-debt" as used in this Agreement shall mean the
average cost to AGWAY of the debt employed by AGWAY during each calendar quarter
in the conduct of AGWAY's  business,  and this  average  cost-of-  debt shall be
determined by the Treasurer of AGWAY.

         3. AGWAY and Director  hereby  agree that  payment from the  Director's
Reserve Account shall begin on the first January 1 or July 1 that follows the 15
month  anniversary  of the Director's  attainment of age fifty-five  (55) or the
date on which Director's  service as Director of AGWAY terminates,  whichever is
earlier.

This Agreement by the Director shall be irrevocable;  provided, however, that at
least  twelve (12)  months  prior to January 1 or July 1  described  above,  the
Director may request,  by notice in writing to Agway,  that the  commencement of
payments be deferred to a specified  January 1 or July 1 date later than that on
which commencement was previously  scheduled.  Whether to approve such a request
shall be within the  discretion  of the Chief  Financial  Officer  of AGWAY,  or
his/her  designee.  Approval  of  such a  request  shall  be in  writing.  After
approval,  Director shall have no right to payment at any date earlier than that
specified in the written  approval.  In any event,  payments  shall commence not
later than the January  following the calendar  year when  Director  reaches age
seventy (70).

                                       -2-

<PAGE>



AGWAY may impose a thirty (30) day waiting  period  before the first  payment is
made.

         4. Payment will be either (a) a lump sum payment of the entire  balance
in the Director's Reserve Account; or (b) in an amount determined by multiplying
the balance in the Director's  Reserve Account at the beginning of each calendar
year during which a payment is to be made by a fraction,  the numerator of which
is one (1) and the  denominator  of which will be the number of years  remaining
during  which the  Director's  Reserve  Account  will be paid to  Director.  The
payment  election  must  be  made at  least  twelve  (12)  months  prior  to the
commencement of payment in writing to the chief  financial  officer of AGWAY, or
his/her designee, to have the payments made:
                          (A) over 3 years;
                          (B) over 5 years;
                          (C) over 10 years;
                          (D) over 15 years; or
                          (E) over 20 years.

If a timely  election  is not made,  the entire  balance in  Director's  Reserve
Account will be paid in a single lump sum.

If the  initial  annual  payment  computed  for the  applicable  payment  period
described  above  would  be less  than ten  thousand  dollars  ($10,000),  then,
notwithstanding the prior provisions of this Section, AGWAY may make payment (at
the  sole  discretion  of  AGWAY)  either  in one  (1)  lump  sum  or in  annual
installments  over the longest period  resulting in an initial annual payment of
at least ten thousand dollars ($10,000).

         5.    Upon furnishing AGWAY with proper evidence of financial hardship,
Director  may  request  a  withdrawal  of  all  or  part  of  the balance in the


                                       -3-

<PAGE>



Director's  Reserve  Account.  Whether to approve such a request shall be within
the discretion of the Chief  Financial  Officer of AGWAY,  or his/her  designee.
Approval of such a request shall be in writing.

         6. In the  event of  Director's  death,  either  before  or  after  the
payments to Director have begun,  the amount  payable,  as provided in Section 4
above, shall be paid to the beneficiary or beneficiaries  designated by Director
in the most recent  notice in writing to AGWAY in  installments  computed in the
same  manner  as if  Director  was  still  living.  If no  beneficiary  has been
designated, the amount payable, as provided in Section 4 above, shall be paid in
installments  computed  in the same manner as if  Director  was still  living to
Director's  estate or, at the sole discretion of AGWAY, the remaining balance in
the Director's  Reserve Account may be paid in a lump sum to Director's  estate.
In the event that after  payments have  commenced to the  beneficiary  or to the
beneficiaries   designated  by  Director  the  sole   beneficiary  dies  or  all
beneficiaries die, then, any remaining balance in the Director's Reserve Account
will  be  paid  in a  lump  sum  to  the  sole  beneficiary's  estate  or to the
beneficiaries'  estates.  In the absence of clear  written  instructions  to the
contrary, a designation of multiple  beneficiaries will be deemed to provide for
payment to the designated  beneficiaries in equal shares, and for the payment to
Director's estate of the share of any beneficiary who predeceases  Director.  In
the event of Director's  death before the payments to Director  have begun,  the
payments  will  commence on the January 1 or July 1, next  following the date of
Director's death.

         7.       Director agrees that AGWAY's liability to make any payment as
provided in this Agreement shall be contingent upon Director's:

              (a)     being available to AGWAY for consultation and advice after
termination of service  as  a  director of AGWAY, unless Director is disabled or
deceased; and

                                       -4-

<PAGE>



              (b)     retaining  unencumbered any interest or benefit under this
Agreement.

                  If  Director  fails  to  fulfill  any  one or  more  of  these
contingencies,  AGWAY's  obligation  under this  Agreement  may be terminated by
AGWAY as to Director.

         8.  Director  also agrees that  AGWAY's  obligations  to make  deferred
payments  under this  Agreement  are merely  contractual;  and that AGWAY is the
outright  beneficial  owner of,  and does not hold for  Director  as  trustee or
otherwise,  the amounts credited to Director's  Reserve  Account;  and that such
amounts are subject to the rights of AGWAY's creditors in the same manner and to
the same extent as all assets owned by AGWAY.

         9. Neither Director nor Director's beneficiary/ies shall have the right
to encumber,  commute, borrow against, dispose of or assign the right to receive
payments under this Agreement.

         IN  WITNESS  WHEREOF,  AGWAY  and  Director  have  duly  executed  this
Agreement the day and year first above written.

                                      AGWAY INC.


                               By:
                                     -------------------------------------------
                                                   Secretary


                                     -------------------------------------------
                                                  (Director)

                                       -5-

<PAGE>


                                 * * * * * * * *

                         DESIGNATION OF BENEFICIARY/IES


Pursuant  to the  provisions  of  this  Deferred  Payment  Agreement,  I  hereby
designate as my beneficiary/ies hereunder:




--------------------------------------------------------------------------------
                            (Name of beneficiary/ies)


This  designation  is also  effective  with  respect  to any and all  amounts of
deferred  compensation accrued for my benefit under any and all Deferred Payment
Agreements executed by me in previous years.



                                         ---------------------------------------
                                                      (Director)

Date:               , 2001
     ---------------


                                       -6-

<PAGE>
                                  EXHIBIT 10.(o)
<PAGE>

[For 2 Board officers]

                       DIRECTOR DEFERRED PAYMENT AGREEMENT

         AGREEMENT made this      day of             , 2001, between AGWAY INC.,
                             ----       ------------
a  Delaware  corporation,   with  its  principal  office  in  DeWitt,  New  York
(hereinafter   called   "AGWAY"),   and                            residing   at
                                        -------------------------
                                                            (hereinafter  called
-----------------------------------------------------------
"Director").

                                    RECITALS:

     A.   AGWAY has established a deferred payment program for Directors.

     B.   Director  desires to  participate  in the program  upon the  following
          terms and conditions.

                                   WITNESSETH:

         For good and  valuable  consideration,  the  parties,  intending  to be
legally bound, hereby agree as follows:

         1. Director hereby  designates     % (or $         ) of annual retainer
                                        ----       ---------
for the  period  beginning  January  1, 2002 and  ending  December  31,  2002 be
credited to Director's Reserve Account.

         2. AGWAY shall  maintain in its accounting  records a separate  account
(herein called "Director's Reserve Account") for each Director electing deferral
of any amount under this  Agreement and shall credit to the  Director's  Reserve
Account the amount  designated  by Director in Section 1 above.  The  Director's
Reserve  Account  shall also be credited at the close of each  calendar  quarter
with an amount  computed by  applying  the average  cost-of-debt  percentage  as
hereinafter  defined to the total average  accumulated  credit of the Director's
Reserve Account. "Average cost-of-debt" as used in this Agreement shall mean

                                      - 1 -

<PAGE>



the average  cost to AGWAY of the debt  employed by AGWAY  during each  calendar
quarter in the conduct of AGWAY's business, and this average cost-of- debt shall
be determined by the Treasurer of AGWAY.

         3. AGWAY and Director  hereby  agree that  payment from the  Director's
Reserve Account shall begin on the first January 1 or July 1 that follows the 15
month  anniversary  of the Director's  attainment of age fifty-five  (55) or the
date on which Director's  service as Director of AGWAY terminates,  whichever is
earlier.

This Agreement by the Director shall be irrevocable;  provided, however, that at
least  twelve (12)  months  prior to January 1 or July 1  described  above,  the
Director may request,  by notice in writing to Agway,  that the  commencement of
payments be deferred to a specified  January 1 or July 1 date later than that on
which commencement was previously  scheduled.  Whether to approve such a request
shall be within the  discretion  of the Chief  Financial  Officer  of AGWAY,  or
his/her  designee.  Approval  of  such a  request  shall  be in  writing.  After
approval,  Director shall have no right to payment at any date earlier than that
specified in the written  approval.  In any event,  payments  shall commence not
later than the January  following the calendar  year when  Director  reaches age
seventy (70). AGWAY may impose a thirty (30) day waiting period before the first
payment is made.

         4. Payment will be either (a) a lump sum payment of the entire  balance
in the Director's Reserve Account; or (b) in an amount determined by multiplying
the balance in the Director's  Reserve Account at the beginning of each calendar
year during which a payment is to be made by a fraction,  the numerator of which
is one (1) and the  denominator  of which will be the number of years  remaining
during  which the  Director's  Reserve  Account  will be paid to  Director.  The
payment  election  must  be  made at  least  twelve  (12)  months  prior  to the
commencement of payment in writing to the chief  financial  officer of AGWAY, or
his/her designee, to have the payments made:

                                      - 2 -

<PAGE>



                                    (A) over 3 years;
                                    (B) over 5 years;
                                    (C) over 10 years;
                                    (D) over 15 years; or
                                    (E) over 20 years.

If a timely  election  is not made,  the entire  balance in  Director's  Reserve
Account will be paid in a single lump sum.

If the  initial  annual  payment  computed  for the  applicable  payment  period
described  above  would  be less  than ten  thousand  dollars  ($10,000),  then,
notwithstanding the prior provisions of this Section, AGWAY may make payment (at
the  sole  discretion  of  AGWAY)  either  in one  (1)  lump  sum  or in  annual
installments  over the longest period  resulting in an initial annual payment of
at least ten thousand dollars ($10,000).

         5. Upon furnishing  AGWAY with proper  evidence of financial  hardship,
Director  may  request  a  withdrawal  of all or  part  of  the  balance  in the
Director's  Reserve  Account.  Whether to approve such a request shall be within
the discretion of the Chief  Financial  Officer of AGWAY,  or his/her  designee.
Approval of such a request shall be in writing.

         6. In the  event of  Director's  death,  either  before  or  after  the
payments to Director have begun,  the amount  payable,  as provided in Section 4
above, shall be paid to the beneficiary or beneficiaries  designated by Director
in the most recent  notice in writing to AGWAY in  installments  computed in the
same  manner  as if  Director  was  still  living.  If no  beneficiary  has been
designated, the amount payable, as provided in Section 4 above, shall be paid in
installments  computed  in the same manner as if  Director  was still  living to
Director's  estate or, at the sole discretion of AGWAY, the remaining balance in
the Director's  Reserve Account may be paid in a lump sum to Director's  estate.
In the event that after payments

                                      - 3 -

<PAGE>



have commenced to the beneficiary or to the beneficiaries designated by Director
the sole beneficiary dies or all beneficiaries  die, then, any remaining balance
in the  Director's  Reserve  Account  will  be paid  in a lump  sum to the  sole
beneficiary's  estate or to the beneficiaries'  estates. In the absence of clear
written  instructions to the contrary,  a designation of multiple  beneficiaries
will be deemed to provide for payment to the designated  beneficiaries  in equal
shares, and for the payment to Director's estate of the share of any beneficiary
who predeceases  Director.  In the event of Director's death before the payments
to Director  have begun,  the payments will commence on the January 1 or July 1,
next following the date of Director's death.

         7.       Director agrees that AGWAY's liability to make any payment as
provided in this Agreement shall be contingent upon Director's:

                  (a)    being  available  to  AGWAY for consultation and advice
after termination of service as a director of AGWAY, unless Director is disabled
or deceased; and

                  (b)    retaining  unencumbered  any  interest or benefit under
this Agreement.

                  If  Director  fails  to  fulfill  any  one or  more  of  these
contingencies,  AGWAY's  obligation  under this  Agreement  may be terminated by
AGWAY as to Director.

         8.  Director  also agrees that  AGWAY's  obligations  to make  deferred
payments  under this  Agreement  are merely  contractual;  and that AGWAY is the
outright  beneficial  owner of,  and does not hold for  Director  as  trustee or
otherwise,  the amounts credited to Director's  Reserve  Account;  and that such
amounts are subject to the rights of AGWAY's creditors in the same manner and to
the same extent as all assets owned by AGWAY.

                                      - 4 -

<PAGE>



         9. Neither Director nor Director's beneficiary/ies shall have the right
to encumber,  commute, borrow against, dispose of or assign the right to receive
payments under this Agreement.

         IN  WITNESS  WHEREOF,  AGWAY  and  Director  have  duly  executed  this
Agreement the day and year first above written.


                                         AGWAY INC.

                                   By:
                                         ---------------------------------------
                                                      Secretary

                                         ---------------------------------------
                                                     (Director)




                                      - 5 -

<PAGE>


                                 * * * * * * * *

                         DESIGNATION OF BENEFICIARY/IES

Pursuant  to the  provisions  of  this  Deferred  Payment  Agreement,  I  hereby
designate as my beneficiary/ies hereunder:



--------------------------------------------------------------------------------
                            (Name of beneficiary/ies)


This  designation  is also  effective  with  respect  to any and all  amounts of
deferred  compensation accrued for my benefit under any and all Deferred Payment
Agreements executed by me in previous years.


                                             -----------------------------------
                                                        (Director)


Date:                 , 2001
     -----------------


                                      - 6 -
<PAGE>
                                  EXHIBIT 10.(p)
<PAGE>





Name: Don  Cardarelli      Position: President & CEO,  Agway Inc.
      ---------------                ----------------------------


                Incentive Plans For Period Beginning July 1, 2001
                -------------------------------------------------

1. Annual Incentive Plan for Fiscal 2002, Ending June 30, 2002

         EBITDA = $32.428M                                    15% Base Salary*
         Improve Agway Ops Leverage to 3.4 to 1               25% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         50% Base Salary*

         EBITDA = $34.428M                                    30% Base Salary*
         Improve Agway Ops Leverage to 3.3 to 1               45% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         75% Base Salary*

         EBITDA = $36.428M                                    40% Base Salary*
         Improve Agway Ops Leverage to 3.2 to 1               60% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                        100% Base Salary*
                       (*Base Salary As Of June 30, 2002)


         Definitions:
         *EBITDA Target                                       = $34.428M
         *EBITDA Budget                                       = $32.428M
         *Agway Ops Leverage Target - Debt/Equity             =  3.3 To 1
         *Agway Ops Leverage Budget - Debt/Equity             =  3.52 To 1
                       (*Based On Agway Operations Level)


2. Two Year Incentive Plan for Period Ending 6/30/03


         Improve Agway Ops Leverage To 3.1 to 1                75% Base Salary*
         Improve Agway Ops Leverage To 2.9 to 1               100% Base salary*
         Improve Agway Ops Leverage To 2.7 to 1               150% Base Salary*
         (Agway Operations Leverage Budget - Debt/Equity - 6/30/03 = 3.56  to 1)
                       (*Base Salary As Of June 30, 2003)


3. Consideration of up to 100% of the Base Salary may be given as  an additional
incentive payment, after the end of the current fiscal year, as a  result of the
evaluation of the CEO's performance during fiscal 2002.

                                        1
<PAGE>



4. Payout  Provisions

         (a) If EBITDA and  Leverage Targets are met at different levels for the
         purpose of annual  incentive calculation,  the payout is the sum of the
         two individual   payouts.  Example: If annual results for EBITDA equals
         Target at  $34.428M  (30%  Payout) and annual  leverage  result  equals
         maximum   payout level of 3.2 to 1 (60% Payout),  the total payout will
         be 90% of Base Salary.

         (b) All payouts will be in cash and shall be made in a lump  sum within
         90 days after the end of the term of the respective incentive plan.

         (c) EBITDA will be calculated after the accrual of the  expense for the
         incentive.

         (d) EBITDA financial  covenants under  Agway  Inc.'s  principal  credit
         agreements  in  effect  at the  time  of  each reporting period must be
         exceeded in order  for a  payout to be made  under the EBITDA incentive
         calculation contained in this agreement.


5. Conditions

          (a) If the employee voluntarily  terminates employment for good reason
          (as hereinafter defined) or if Agway terminates his employment without
          cause (as  hereinafter  defined)  during the plan  period,  he will be
          eligible for a payout under both plans.  The payout will be calculated
          on a pro-rated  basis  (using  completed  weeks of service  during the
          incentive  period)  representative  of the employee's period of active
          full time employment during the term of each such plan.

          (b) If the employee dies, retires (as hereinafter defined), or becomes
          permanently  disabled  to  such a  degree  that he is  prevented  from
          performing  the usual duties of his position,  he (or his estate) will
          be  eligible  for a  payout  under  both  plans.  The  payout  will be
          calculated  on a pro-rated  basis  (using  completed  weeks of service
          during the incentive  period)  representative of the employee's period
          of active full time employment during the term of each such plan.

          (c) If there is a change of control (as defined in the Indemnification
          Agreement between Agway Inc. and the employee) during the plan period,
          the  employee  will be  deemed  fully  vested in both the  annual  and
          long-term incentive plans. Fully vested means the payout will be fully
          earned without a reduction.

                                        2
<PAGE>


          (d) The payout for three  events,  5(a),  (b), and (c) above,  will be
          calculated based upon target  performance.  Upon the occurrence of one
          of these three  events (a),  (b) or (c) the  employee  (or his estate)
          will also receive a payout  equal to 200% of his base  salary.  Payout
          for these three events,  5(a),  (b), and (c) above and payment of base
          salary shall be made in a lump sum within 90 days after the occurrence
          of the event.

          (e) If the employee  voluntarily quits without good reason or if Agway
          terminates  his  employment for cause during an unexpired plan period,
          he will not be eligible for any part of any payout,  payments or other
          compensation  identified  in this  document  for the  applicable  plan
          period.

          (f)  Incentives  earned  under  this plan are taken into  account  for
          purposes  of Agway's  employee  benefit  plan  programs  to the extent
          provided by the terms of those programs in effect at the time payments
          are made.

          (g) Under any of the events  described in 5(a), (b) or (c) above,  (i)
          the  employee  will be deemed on leave status in order to receive full
          employee benefits at active employee  contribution rates for one year,
          and  (ii)  the  employee  will  receive  for one  year  following  his
          termination executive level career transition assistance services by a
          firm selected by the employee and paid for by Agway.

In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

                                        3
<PAGE>

For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring
without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)
a diminution in your  compensation  that is  implemented  in connection  with an
across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.

6.       Miscellaneous

(a)       The incentive plans are not a contract for continued employment and do
          not limit the right of Agway to terminate  your  employment.  You are,
          and shall remain, an employee at will.

(b)       Annual incentive plans targeted at 75% of Base Salary  and  multi-year
          incentive plans targeted at 100% of Base Salary with substantially the
          same  parameters  for  payment as set forth in Section 1 above will be
          initiated in each ensuing fiscal year.

(c)       All  payments under  the incentive plans are subject to income tax and
          employment tax withholding

                                        4
<PAGE>
                                  EXHIBIT 10.(q)
<PAGE>




Name: Don  Cardarelli      Position: President & CEO,  Agway Inc.
      ---------------                ----------------------------

                Incentive Plans For Period Beginning July 1, 2002
                -------------------------------------------------

1.   Annual Incentive Plan for Fiscal 2003, Ending June 30, 2003

         Part A:
         EBITDA = $21.44                             25% of Base Salary*
         EBITDA = $26.8M                             50% of Base Salary*
         EBITDA = $32.16                            100% of Base Salary*
                       (*Base Salary As Of June 30, 2003)
Note: EBITDA Consolidated Budget for Continuing Operations = $26.8M

         Part B:
         Consideration of up to 100% of  the  Base Salary  may  be  given  as an
         additional incentive payment, after the end of the current fiscal year,
         as a result of the evaluation  of  the  CEO's performance during fiscal
         2003.

2.   Two Year Incentive Plan for Period Ending 6/30/03

         Improve Agway Ops Leverage To 3.1 to 1      50% Base Salary*
         Improve Agway Ops Leverage To 2.9 to 1      75% Base Salary*
         Improve Agway Ops Leverage To 2.7 to 1     100% Base Salary*
     (Agway Operations Leverage Budget - Debt/Equity - 6/30/03 = 3.56 to 1)
                       (*Base Salary As Of June 30, 2003)

3.   Two Year Incentive Plan for Period Ending 6/30/04

        The payout will be  the  average  of  the payout received  for  the  two
        annual incentive plans ending June 30, 2003 and June 30, 2004.

4.   Consideration  will  be  given  for  additional  incentives  as a result of
     one-time events that financially benefit Agway and occur during the term of
     the plans.

5.   Due to the impact of the changes in the businesses that  will  occur during
     the term of the plan,  discretion  will  be  allowed  when  calculating the
     payout for items 1, 2, 3 and 4 above.

                                        1
<PAGE>

6.   Payout Provisions

         (a) Partial payouts for the annual incentive  component may be  made at
         the discretion of the Board of  Directors at  semi-annual periods or at
         the  accomplishment  of  a  specific  strategy approved by the Board of
         Directors.

         (b) All other payouts will  be  in cash and shall be made in a lump sum
         within 90 days after the end of  the  term  of the respective incentive
         plan.


7.  Conditions

         (a) If  the  employee voluntarily terminates employment for good reason
         (as  hereinafter defined) or if Agway terminates his employment without
         cause  (as  hereinafter  defined)  during the plan  period,  he will be
         eligible  for a payout under each plan.  The payout will be  calculated
         on a  pro-rated  basis  (using  completed  weeks of service  during the
         incentive   period)  representative  of the employee's period of active
         full time employment during the term of each such plan.

         (b) If  the employee dies, retires (as hereinafter defined), or becomes
         permanently  disabled   to  such a  degree  that he is  prevented  from
         performing   the usual duties of his position,  he (or his estate) will
         be  eligible   for a  payout  under  each  plan.  The  payout  will  be
         calculated   on a pro-rated  basis  (using  completed  weeks of service
         during  the incentive  period)  representative of the employee's period
         of  active full time employment during the term of each such plan.

         (c) If there is a change in control (as hereinafter defined) during the
         plan  period, the  employee  will be deemed fully vested in each annual
         and  multi-year  incentive plan. Fully  vested means the payout will be
         fully earned without a reduction.

         (d) The payout  for  three  events, 5(a), (b), and (c) above,  will  be
         calculated based upon target performance. Upon the occurrence of one of
         these  three  events (a), (b) or (c) the  employee (or his estate) will
         also receive a  payout  equal to 200%  of  his  base salary. Payout for
         these three events, 5(a), (b), and (c) above and payment of base salary
         shall be made in  a lump sum within 90 days after the occurrence of the
         event.

                                        2
<PAGE>
         (e) If the employee  voluntarily quits without good reason or  if Agway
         terminates his employment for cause during an unexpired plan period, he
         will not be eligible for any  part  of any  payout,  payments or  other
         compensation identified  in  this  document  for  the  applicable  plan
         period.

         (f) Incentives earned under  this  plan  are  taken  into  account  for
         purposes  of  Agway's  employee  benefit  plan  programs to  the extent
         provided by the terms of those programs in effect at the time  payments
         are made.

         (g) Under any of the  events  described  in 5(a), (b) or (c) above, (i)
         the employee will be  deemed  on  leave status in order to receive full
         employee benefits at active employee  contribution  rates for one year,
         and (ii)  the   employee  will  receive  for  one  year  following  his
         termination  executive level career transition assistance services by a
         firm selected by the employee and paid for by Agway.

In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring
without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)
a diminution in your  compensation  that is  implemented  in connection  with an

                                        3
<PAGE>

across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For  purposes of these  incentive  plans,  "change in control"  means any of the
following: (i) a person or entity or group of persons or entities independent of
Agway, Inc., acting in concert,  shall become the direct or indirect  beneficial
owner  (within the meaning of Rule 13d-3 of the Exchange  Act) of  securities of
the  Company  representing  twenty-five  percent  (25%) or more of the  combined
voting power of the issued and outstanding common stock of the Company;  or (ii)
the majority of the Company's  Board of Directors is no longer  comprised of the
incumbent  directors who constitute the Board of Directors on the effective date
of this  incentive  plan and any other  individual(s)  who  becomes  a  director
subsequent  to the  date  of this  incentive  plan  whose  initial  election  or
nomination  for  election as a director,  as the case may be, was approved by at
least a majority of the directors  who  comprised the incumbent  directors as of
the date of such election or nomination; or (iii) a sale of all or substantially
all of the assets of the  Company;  or (iv) the Board shall  approve any merger,
consolidation,  or like business  combination or  reorganization of the Company,
the  consummation of which would result in the occurrence of any event described
in clause (ii) above, and such transaction shall have been consummated.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.

8.   Miscellaneous

         (a) The incentive plans are not a contract for continued employment and
             do not limit  the right of Agway to terminate your employment.  You
             are, and shall remain, an employee at will.

         (b) Annual incentive plans  and   multi-year   incentive   plans   with
             substantially  the  same  parameters  for payment as set  forth  in
             this document will be initiated in each ensuing fiscal year.

                                        4
<PAGE>


         (c) All payments  under the incentive plans are subject to  income  tax
             and employment tax withholding.

                                        5
<PAGE>
                                  EXHIBIT 10.(r)
<PAGE>

Name: Mike Hopsicker
--------------------
Position: Executive Vice President, Agriculture and  Energy
-----------------------------------------------------------

Incentive Plans For Period Beginning July 1, 2001

1. Annual Incentive Plan for Fiscal 2002, Ending June 30, 2002

<TABLE>
<CAPTION>

Part (1) AEP Results
-------------------------------------------------------------------------------------------------------------------
                                                                                           Additional
                                                                                         for Achieving     Total
             EBITDA                                      Working Capital                      Both       Incentive
-------------------------------------------------------------------------------------------------------------------
<S>    <C>       <C>          <C>                  <C>              <C>            <C>             <C>       <C>
       29.48     100.0%       10.0%                58.22            100.0%         10.0%           5.0%      25.0%

       30.48     103.4%       13.4%                56.55             97.1%         13.4%           5.0%      31.8%

       31.48     106.8%       16.8%                54.88             94.3%         16.8%           5.0%      38.6%

       32.48     110.2%       20.0%                53.22             91.4%         20.0%          10.0%      50.0%

       33.48     113.6%       23.6%                51.55             88.6%         23.6%          10.0%      57.2%

       34.48     117.0%       27.0%                49.89             85.7%         27.0%          10.0%      64.0%

       35.48     120.4%       30.0%                48.22             82.8%         30.0%          15.0%      75.0%
</TABLE>


Definitions:
                  EBITDA Target                               =        $32.480M
                  EBITDA Budget                               =        $29.480M
                  *Average Working Capital Target (Net)       =        $53.217M
                  *Average Working Capital Budget (Net)       =        $58.217M
                (*12 Month Average Agway Energy Working Capital)

Part (2)

         Successful completion of necessary components of the  Agriculture  Plan
for submission  to  lender's at  the  end of the 3rd quarter of fiscal 2002 will
result in a payment of $150,000.

Part (3)

         The implementation of the beginning phases of the Agriculture plan will
result in a payment of $150,000 at the end of the 4th quarter of fiscal 2002.

2. Three Year Incentive Plan for Period Ending 6/30/04 - AEP Results

         Accumulative EBITDA = $95M                     50% Base Salary*
         Accumulative EBITDA = $100M                    75% Base Salary*
         Accumulative EBITDA = $105M                    100% Base Salary*
                       (*Base Salary As Of June 30, 2004)

                                        1
<PAGE>

         Definition:
               Accumulative EBITDA Target                  =        $100M
               Accumulative EBITDA Budget                  =        $91.420M


3. Consideration will be given for additional incentives as a result of one-time
events that financially benefit Agway and occur during the term of the plans.

4. Payout Provisions

     (a)      All payouts will be in cash and paid from Energy earnings. Payouts
              shall be made in a lump sum within 90 days  after the  end of  the
              term of the respective incentive plan.

     (b)      EBITDA will be calculated after the accrual of the expense for the
              incentive.

     (c)      EBITDA  financial  covenants  for  Agway Energy under Agway Inc.'s
              principal  credit  agreements  in  effect  at  the  time  of  each
              reporting period, both quarterly and annually, must be exceeded in
              order for a payout to be made under the annua incentive
              calculations contained in this agreement.

5.  Conditions

          (a) If the employee voluntarily  terminates employment for good reason
          (as hereinafter defined) or if Agway terminates his employment without
          cause (as  hereinafter  defined)  during the plan  period,  he will be
          eligible for a payout under both plans.  The payout will be calculated
          on a pro-rated  basis  (using  completed  weeks of service  during the
          incentive  period)  representative  of the employee's period of active
          full time employment during the term of each such plan.

          (b) If the employee dies, retires (as hereinafter defined), or becomes
          permanently  disabled  to  such a  degree  that he is  prevented  from
          performing  the usual duties of his position,  he (or his estate) will
          be  eligible  for a  payout  under  both  plans.  The  payout  will be
          calculated  on a pro-rated  basis  (using  completed  weeks of service
          during the incentive  period)  representative of the employee's period
          of active full time employment during the term of each such plan.
                                        2
<PAGE>

          (c) If there is a change of control (as defined in the Indemnification
          Agreement between Agway Inc. and the employee) during the plan period,
          the  employee  will be  deemed  fully  vested in both the  annual  and
          long-term incentive plans. Fully vested means the payout will be fully
          earned without a reduction.

          (d) The payout for three  events,  5(a),  (b), and (c) above,  will be
          calculated based upon target  performance.  Upon the occurrence of one
          of these three  events (a),  (b) or (c) the  employee  (or his estate)
          will also receive a payout  equal to 100% of his base  salary.  Payout
          for these three events,  5(a),  (b), and (c) above and payment of base
          salary shall be made in a lump sum within 90 days after the occurrence
          of the event.

          (e) If the employee  voluntarily quits without good reason or if Agway
          terminates  his  employment for cause during an unexpired plan period,
          he will not be eligible for any part of any payout,  payments or other
          compensation  identified  in this  document  for the  applicable  plan
          period.

          (f)  Incentives  earned  under  this plan are taken into  account  for
          purposes  of Agway's  employee  benefit  plan  programs  to the extent
          provided by the terms of those programs in effect at the time payments
          are made.

          (g) Under any of the events  described in 5(a), (b) or (c) above,  (i)
          the  employee  will be deemed on leave status in order to receive full
          employee benefits at active employee  contribution rates for one year,
          and  (ii)  the  employee  will  receive  for one  year  following  his
          termination executive level career transition assistance services by a
          firm selected by the employee and paid for by Agway.

In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating

                                        3
<PAGE>
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring
without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)
a diminution in your  compensation  that is  implemented  in connection  with an
across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.

6.      Miscellaneous

        (a) The incentive plans are not a contract for continued employment  and
            do not limit the right of  Agway  to  terminate your employment. You
            are, and shall remain, an employee at will.

        (b) The combination of base salary and  incentive  payments  for  fiscal
            2003 for Energy performance,   Feed   performance,    and   Agronomy
            performance/value attained, will provide a total compensation target
            of $1M for fiscal 2003.

        (c) All payments under the incentive plans are subject to income tax and
            employment tax withholding.

                                        4
<PAGE>
                                  EXHIBIT 10.(s)
<PAGE>
Name: Mike Hopsicker
--------------------

Position: Executive Vice President, Agriculture and  Energy
-----------------------------------------------------------

                Incentive Plans For Period Beginning July 1, 2002
                -------------------------------------------------

1.       Annual Incentive Plan for Fiscal 2003, Ending June 30, 2003

         Part A = Agway EBITDA:
         EBITDA = $21.44M                            12.5% of Base Salary*
         EBITDA = $26.8M                             25% of Base Salary*
         EBITDA = $32.16M                            50% of Base Salary*

         Part B = Agriculture EBITDA
         EBITDA = $5.0M                              12.5% of Base Salary*
         EBITDA = $6.34M                             25% of Base Salary*
         EBITDA = $7.75                              50% of Base Salary*

         Part C = Energy EBITDA
         EBITDA = $26.0M                             12.5% of Base Salary*
         EBITDA = $30.1M                             25% of Base Salary*
         EBITDA = $34.0M                             50% of Base Salary*
                       (*Base Salary As Of June 30, 2003)

         Agway EBITDA Budget =                                $26.8M
         Agriculture EBITDA Budget =                          $6.34M
         Energy EBITDA Budget =                               $30.1M

2.       Three Year Incentive Plan for Period Ending 6/30/04 - AEP Results

         Accumulative EBITDA = $95M 50% Base Salary** Accumulative EBITDA =
         $100M 75% Base Salary** Accumulative EBITDA = $105M 100% Base Salary**
                      (**Base Salary As Of June 30, 2004)

         Definition:
                  Accumulative EBITDA Target                  =        $100M
                  Accumulative EBITDA Budget                  =        $91.420M

3.      Three Year Incentive Plan for Period Ending 6/30/05

         The payout will be the average of the payout received for the three
         annual incentive plans ending June 30, 2003, June 30, 2004, and June
         30, 2005.
                                        1
<PAGE>

4.  Consideration  will  be  given  for  additional  incentives  as a  result of
    one-time events that financially benefit Agway and  occur during the term of
    the plans.

5.  Due to the impact of the changes in the businesses  that  will  occur during
    the term of the plan,  discretion  will  be  allowed  when  calculating  the
    payout for items 1, 2, 3 and 4 above.

6.  Payout Provisions
          All  payouts will be in cash and shall be made in a  lump  sum  within
          90 days after the end of the term of the respective incentive plan.

7.  Conditions

          (a) If the employee voluntarily  terminates employment for good reason
          (as hereinafter defined) or if Agway terminates his employment without
          cause (as  hereinafter  defined)  during the plan  period,  he will be
          eligible for a payout under each plan.  The payout will be  calculated
          on a pro-rated  basis  (using  completed  weeks of service  during the
          incentive  period)  representative  of the employee's period of active
          full time employment during the term of each such plan.

          (b) If the employee dies, retires (as hereinafter defined), or becomes
          permanently  disabled  to  such a  degree  that he is  prevented  from
          performing  the usual duties of his position,  he (or his estate) will
          be  eligible  for a  payout  under  each  plan.  The  payout  will  be
          calculated  on a pro-rated  basis  (using  completed  weeks of service
          during the incentive  period)  representative of the employee's period
          of active full time employment during the term of each such plan.

          (c) If there is a change in control (as  hereinafter  defined)  during
          the plan  period,  the  employee  will be deemed  fully vested in each
          annual and multi-year  incentive  plan.  Fully vested means the payout
          will be fully earned without a reduction.

          (d) The payout for three  events,  5(a),  (b), and (c) above,  will be
          calculated based upon target  performance.  Upon the occurrence of one
          of these three  events (a),  (b) or (c) the  employee  (or his estate)
          will also receive a payout  equal to 100% of his base  salary.  Payout
          for these three events,  5(a),  (b), and (c) above and payment of base
          salary shall be made in a lump sum within 90 days after the occurrence
          of the event.

                                        2
<PAGE>

          (e) If the employee  voluntarily quits without good reason or if Agway
          terminates  his  employment for cause during an unexpired plan period,
          he will not be eligible for any part of any payout,  payments or other
          compensation  identified  in this  document  for the  applicable  plan
          period.

          (f)  Incentives  earned  under  this plan are taken into  account  for
          purposes  of Agway's  employee  benefit  plan  programs  to the extent
          provided by the terms of those programs in effect at the time payments
          are made.

          (g) Under any of the events  described in 5(a), (b) or (c) above,  (i)
          the  employee  will be deemed on leave status in order to receive full
          employee benefits at active employee  contribution rates for one year,
          and  (ii)  the  employee  will  receive  for one  year  following  his
          termination executive level career transition assistance services by a
          firm selected by the employee and paid for by Agway.

In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring
without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)

                                        3
<PAGE>

a diminution in your  compensation  that is  implemented  in connection  with an
across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For  purposes of these  incentive  plans,  "change in control"  means any of the
following: (i) a person or entity or group of persons or entities independent of
Agway, Inc., acting in concert,  shall become the direct or indirect  beneficial
owner  (within the meaning of Rule 13d-3 of the Exchange  Act) of  securities of
the  Company  representing  twenty-five  percent  (25%) or more of the  combined
voting power of the issued and outstanding common stock of the Company;  or (ii)
the majority of the Company's  Board of Directors is no longer  comprised of the
incumbent  directors who constitute the Board of Directors on the effective date
of this  incentive  plan and any other  individual(s)  who  becomes  a  director
subsequent  to the  date  of this  incentive  plan  whose  initial  election  or
nomination  for  election as a director,  as the case may be, was approved by at
least a majority of the directors  who  comprised the incumbent  directors as of
the date of such election or nomination; or (iii) a sale of all or substantially
all of the assets of the  Company;  or (iv) the Board shall  approve any merger,
consolidation,  or like business  combination or  reorganization of the Company,
the  consummation of which would result in the occurrence of any event described
in clause (ii) above, and such transaction shall have been consummated.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.


8.  Miscellaneous

    (a)   The incentive plans are not a contract for continued employment and do
          not limit the right of Agway to terminate your employment. You are,
          and shall remain, an employee at will.

                                        4
<PAGE>

    (b)   Annual  incentive   plans   and   multi-year   incentive   plans  with
          substantially the same parameters for payment as  set  forth  in  this
          document will be initiated in each ensuing fiscal year.

    (c)   All payments under  the incentive plans  are subject to income tax and
          employment tax withholding.

                                        5
<PAGE>
                                 EXHIBIT 10.(t)
<PAGE>
                                     (logo)

             AGWAY INC. PO BOX 4933, SYRACUSE, NEW YORK 13221-4933
                                                      315-449-6127

DONALD P. CARDARELLI
PRESIDENT
AND CHIEF EXECUTIVE OFFICER

                                                         PERSONAL & CONFIDENTIAL

October 26, 2001


Dear Mike,

This letter  confirms  our  understanding  of your newest  responsibilities  and
compensation.

Effective today, your  responsibilities will include all areas of operations for
our Agriculture and Energy  businesses.  Your title is Executive Vice President,
Agriculture  & Energy and you will retain the title of  President,  Agway Energy
Products LLC. Your base compensation is $400,000 per year.

Your  fiscal  2002  incentive  arrangement  related  to Agway  Energy  Products'
performance for both short-term  incentive and long-term incentive payments will
remain in place.  In  addition,  for fiscal  2002 there will be two  payments of
$150,000  each.  The first will be for  successfully  completing  the  necessary
components of the Agriculture Plan that need to be submitted to our banks in our
3rd Quarter. The second payment will be made at year-end,  with 4th Quarter plan
execution underway.

We discussed the component of your arrangement related to potential  termination
and agreed that we need to confirm that the  language in your current  agreement
transfers  to your new  position  satisfactorily.  I have asked Jerry  Seeber to
review this.

Finally,  we agreed  that in  developing  your goals for fiscal  2003 for Energy
performance,  Feed performance,  Agronomy  performance/value  attained,  we will
target your total compensation at $1 million for that year.

Mike,  please see me if you have any  questions.  You know how pleased I am that
you are advancing  these important  business  initiatives on behalf of Agway. My
hope and belief is that I will continue to see you succeed and prosper.

Sincerely,


/s/ Donald P. Cardarelli
------------------------
    Donald P. Cardarelli
/pf


/s/ Michael R. Hopsicker
------------------------
    Michael R. Hopsicker
    Agway Inc.

bcc:    G. R. Seeber



<PAGE>
                                 EXHIBIT 10.(u)
<PAGE>

April 20, 2001 (VIA FEDERAL EXPRESS)


Roy Lubetkin
1470 Littlefield Court
Lake Forest, IL 60045

Dear Roy:

It  gives  me  pleasure to confirm our discussion today in which we committed to
the following:

1.   You will assume the position of President of the Country Products Group and
     be a Vice  President  of  Agway  Inc.  You  will  be  given  authority  and
     responsibility  to provide  executive  leadership  of the  businesses  that
     comprise that group,  including  full  accountability  for results and full
     authority  for  decision  making.  You will be expected  to meet  oversight
     responsibilities of the Corporate Center,  including  financial  reporting,
     leadership development, legal matters and communications.

2.   You will report directly to me.

3.   Your initial annual base salary will be $350,000, and will be subject to an
     annual  review and  adjustment  beginning in August 2002.  Your base salary
     amount in effect from time to time during your employment shall hereinafter
     be referred to as your "base  salary." Your base salary shall be payable in
     accordance with Agway's usual payroll payment  practices.  Your base salary
     is not subject to a decrease.

4.   You will be  eligible  for an  annual  bonus  payment  based  upon  meeting
     performance  objectives which will be established prior to the beginning of
     each fiscal year of Agway.  Your  performance  objectives will be driven by
     financial goals such as earnings,  cash flow and growth. You will receive a
     cash payout of 50% of your base salary upon  completion of a strategic plan
     for Produce and  Sunflower.  You will be eligible for an additional  50% if
     earnings targets,  which we will establish prior to the beginning of fiscal
     year 2002,  are met.  These  targets will be  developed on a sliding  scale
     basis. Upon the payout of the additional 50%, we will provide an additional
     pro-rated payout for the months of May and June 2001.

     For fiscal year 2003 and thereafter,  your annual bonus will be targeted at
     50% of your base salary;  additional  or lesser  amounts above or below the
     50% may be paid depending on results.

     Your annual  bonus will be payable in a single lump sum cash payment at the
     same time as other executives' annual bonuses are paid, except as otherwise
     provided in this letter agreement.

5.   A long term incentive plan driven by earnings and/or value creation will be
     in place at the  beginning of Fiscal Year 2002,  for a single lump sum cash
     payout at the end of Fiscal Year 2004. Your target will be 75% of your base
     salary.  Additional  or lesser  amounts  above or below the 75% may be paid
     depending on results. The benefits under this long term incentive plan will
     accrue  annually,  at a rate of one third per year.  A new three (3) Fiscal

<PAGE>
Roy Lubetkin
April 20, 2001
Page 2

     Year long term incentive plan with  substantially  the same  parameters for
     payout will be initiated in each ensuing Fiscal Year.

6.   You will receive  vacation for four weeks for each of the first three years
     and five weeks for each year thereafter.

7.   You will receive reimbursement of reasonable  relocation expenses which you
     incur which include:

a.   Real estate broker fees on your house in Lake Forest;
b.   Seller's closing costs on your house in Lake Forest;
c.   Normal closing costs, other than real estate broker fees, on a residence in
     the Syracuse area, excluding any mortgage points;
d.   Trip  expenses  between  Syracuse and Lake Forest as required until you and
     your family have relocated to the Syracuse  area;
e.   Travel, room and meal expenses for you and your family while house hunting;
f.   Temporary housing expenses until you complete the construction of and begin
     occupying a new new home, or purchase and begin  occupying an existing home
     in  Central  New  York,  as long as you are  also  paying  a  mortgage,  or
     apartment  rental expense or other housing  expense in Illinois;  and after
     you cease paying a mortgage,  apartment  rental or other housing expense in
     Illinois,  temporary  housing expenses shall continue for up to four months
     or until you occupy a new or existing  home in Central New York,  whichever
     occurs first;
g.   Cost of a  commercial  moving  company to transfer  your  household  goods,
     personal items and automobiles to Central New York and temporary automobile
     rental expenses until the delivery of your automobiles to Central New York;
h.   Cost of  storage  of your  household  effects  until  you  move  into  your
     permanent  residence in the Syracuse  area;
i.   We will gross up your income  to  cover  any  tax liability  you incur as a
     result of your relocation  expenses.

     Please  provide  us with  estimated  costs of the above  expenses  that you
     anticipate incurring.

     You will also receive an allowance of  $50,000  to  cover  other incidental
     relocation related expenses.

8.   You will be  eligible  to  participate  in all  compensation  and  employee
     benefit  plans or programs  and receive all benefits  and  perquisites  for
     which any senior executive of Agway is eligible, including, but not limited
     to, an annual  executive  physical and executive level long term disability
     insurance.  The effective  date for benefits  coverage,  including  medical
     coverage for yourself


<PAGE>
Roy Lubetkin
April 20, 2001
Page 3

     and your family,  will be May 1, 2001. There are no pre-existing  condition
     restrictions under our medical plan.

9.   Your start date will be April 30, 2001.

10.  Agway will reimburse you for all business  related  expenses that you incur
     in  connection  with  the  performance  of your  responsibilities  to Agway
     provided  that you  document  such  expenses  in  accordance  with  Agway's
     business expense reimbursement guidelines.

11.  Agway will indemnify you according to the terms of an Indemnity  Agreement,
     a copy of which is attached to this letter.

12.  You will be an employee at will.  However, it is agreed and understood that
     in the  event  at  any  time  Agway  (or  its  successor)  terminates  your
     employment without cause, you terminate your employment for good reason, or
     if you die or become  permanently  disabled  to such a degree  that you are
     prevented from performing the usual duties of your position,  Agway (or its
     successor)  will pay or provide you with the following  separation  pay and
     benefits  which  shall  be in lieu of any and all  benefits  under  Agway's
     Severance Pay Plan. At solely Agway's option, Agway shall have the right to
     purchase  life  insurance  and/or  disability  insurance on you in order to
     provide the  separation  pay and  benefits  payable to you (or your estate)
     under this letter as a result of your death or  disability  as described in
     this letter.

     a.  150% of your base salary;

     b.  annual bonus at target pro-rated to your date of termination;

     c.  accrued  long  term  incentive  at  target,  pro-rated  to your date of
         termination, however, in case of a change in control (as defined in the
         Indemnity Agreement) the long term incentive plan shall be deemed fully
         vested;

     d.  you will be deemed on leave status in order to  receive  full  employee
         employee benefits at active employee contribution  rates  for one year;

     e.  executive  level  career  transition  assistance  services  by  a  firm
         selected by you and paid for by Agway;

     f.  if  the foregoing  separation  pay and benefits  become  payable to you
         within   twenty-four months of your start date, Agway will also provide
         full  executive level relocation  expenses to the Chicagoland area on a
         grossed up basis.

     For purposes of this letter  agreement,  "cause" means  termination of your
     employment  by Agway  acting in good  faith due to your (i)  willful  gross
     misconduct or gross negligence with respect to your responsibilities  under
     this letter  agreement  including but not limited to  misappropriating  any
     funds or property of Agway,  committing any act involving fraud, failing to
     perform in all  material  respects  any duties  reasonably  required in the
     course of your  employment  (other than such  failure  resulting  from your
     incapacity due to illness) after we have notified you and you have

<PAGE>
Roy Lubetkin
April 20, 2001
Page 4

     failed to correct such failure within 10 days of such notice,  violating in
     any material respect any written policy of Agway or of your duty of loyalty
     owed to Agway,  or acting in any way that is materially  detrimental to the
     business reputation of Agway, (ii) conviction of, or a plea of guilty or no
     contest to, a felony or crime of moral turpitude, or (iii) willful repeated
     use of alcohol or drugs,  or your  untreated  alcoholism or drug abuse,  in
     each case impairing your ability to perform your executive responsibilities
     under this letter agreement.

     For purposes of this letter  agreement,  "good reason" means termination of
     employment  by you  acting  in  good  faith  due  to  any of the  following
     occurring  without your prior written  consent (i) any change in your title
     or reporting  relationship,  (ii) any diminution in your  responsibility or
     authority or the  assignment to you of duties which are  inconsistent  with
     responsibilities  normally  performed  by an  executive  at your  level  in
     similar  businesses,  (iii) any diminution in your compensation or benefits
     other than (a) a diminution in your  compensation  that is  implemented  in
     connection with an across the board reduction of executive  salaries of the
     Company or (b) a  modification  or  elimination  of any  benefit  plan that
     affects  other  employees  of  Agway or other  senior  executives  of Agway
     generally,  (iv) the requirement that you relocate outside of the Syracuse,
     NY  area,  or  (v)  the  requirement  that  you  sign  or  be  bound  by  a
     noncompetition agreement.

13.  All ongoing costs of your employment,  including base salary,  annual bonus
     payments,  long term incentive payouts,  and other benefits,  including but
     not  limited  to  insurance  premiums  or  other  costs  required  to  fund
     separation  pay and  benefits  available  to you or your  estate,  shall be
     accounted for as costs of the Country Products Group.

Sincerely,


/s/ Donald P. Cardarelli
------------------------
    Donald P. Cardarelli
    President & CEO


ACCEPTED AND AGREED:

/s/ Roy Lubetkin
----------------------
    Roy Lubetkin

April 21, 2001
----------------------
Date




<PAGE>
                                 EXHIBIT 10.(v)
<PAGE>
                               INDEMNITY AGREEMENT
                               -------------------

     This Indemnity Agreement  ("Agreement") is made as of April 30, 2001 by and
between AGWAY, INC., a Delaware  corporation (the "Company"),  and Roy Lubetkin,
1470 Littlefield Court, Lake Forest, IL 60045 ("Indemnitee").

                                    RECITALS

     WHEREAS,  highly  competent  persons  have become more  reluctant  to serve
publicly-held  corporations as directors or in other capacities  unless they are
provided with adequate protection through insurance or adequate  indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation.

     WHEREAS, the Board of Directors of the Company (the "Board") has determined
that,  in order to attract and retain  qualified  individuals,  the Company will
attempt  to  maintain  on an  ongoing  basis,  at its  sole  expense,  liability
insurance  to protect  persons  serving the Company  and its  subsidiaries  from
certain  liabilities.  Although  the  furnishing  of such  insurance  has been a
customary and widespread  practice among United  States-based  corporations  and
other business  enterprises,  the Company  believes  that,  given current market
conditions and trends,  such insurance may be available to it in the future only
at  higher  premiums  and with more  exclusions.  At the same  time,  directors,
officers,  and other persons in service to corporations or business  enterprises
are being  increasingly  subjected to expensive  and  time-consuming  litigation
relating to, among other  things,  matters  that  traditionally  would have been
brought only against the Company or business  enterprise  itself. The By-laws of
the  Company  require  indemnification  of the  officers  and  directors  of the
Company.  Indemnitee  may also be  entitled to  indemnification  pursuant to the
Delaware  General  Corporation Law ("DGCL").  The By-laws and the DGCL expressly
provide that the indemnification provisions set forth therein are not exclusive,
and thereby  contemplate  that contracts may be entered into between the Company
and members of the board of  directors,  officers and other persons with respect
to indemnification.

     WHEREAS,   the   uncertainties   relating   to   such   insurance   and  to
indemnification  have  increased the difficulty of attracting and retaining such
persons.

     WHEREAS,  the  Board  has  determined  that  the  increased  difficulty  in
attracting  and retaining  such persons is  detrimental to the best interests of
the  Company's  stockholders  and that the  Company  should  act to assure  such
persons that there will be increased certainty of such protection in the future.

     WHEREAS,   it  is  reasonable,   prudent  and  necessary  for  the  Company
contractually to obligate itself to indemnify, and to advance expenses on behalf
of, such persons to the fullest extent  permitted by applicable law so that they
will serve or continue to serve the Company  free from undue  concern  that they
will not be so indemnified.


                                       -1-

<PAGE>



     WHEREAS,  this  Agreement  is a  supplement  to and in  furtherance  of the
By-laws of the Company and any resolutions  adopted pursuant thereto,  and shall
not be deemed a substitute  therefor,  nor to diminish or abrogate any rights of
Indemnitee thereunder.

     WHEREAS,  Indemnitee  does not regard the  protection  available  under the
Company's  By-laws and insurance as adequate in the present  circumstances,  and
may  not be  willing  to  serve  as an  officer  or  director  without  adequate
protection,  and the  Company  desires  Indemnitee  to serve  in such  capacity.
Indemnitee  is willing  to serve,  continue  to serve and to take on  additional
service  for  or on  behalf  of  the  Company  on the  condition  that  he be so
indemnified.

     NOW,  THEREFORE,  in  consideration  of  the  premises  and  the  covenants
contained  herein,  the Company and  Indemnitee do hereby  covenant and agree as
follows:

     1.   SERVICES TO THE COMPANY. Indemnitee  will  serve or continue to serve,
at the  will  of  the  Company,  as an officer,  director or key employee of the
Company  for so long as  Indemnitee  is  duly  elected  or  appointed  or  until
Indemnitee tenders his or her resignation.

     2.   DEFINITIONS.   As used in this Agreement:

          (a)    A   "Change   in  Control" shall  be  deemed  to occur upon the
earliest  to  occur  after  the  date of  this Agreement of any of the following
events:

            (i)  Acquisition of Stock by Third Party.   Any  Person (as  defined
below) is or becomes  the  Beneficial  Owner (as  defined  below),  directly  or
indirectly,  of securities of the Company  representing fifteen percent (15%) or
more of the  combined  voting power of the  Company's  then  outstanding  Voting
Securities;

            (ii) Change in Board of Directors.  During  any  period  of  two (2)
consecutive  years (not  including  any period  prior to the  execution  of this
Agreement),  individuals  who at the  beginning  of such period  constitute  the
Board,  and any new  director  whose  election  by the Board or  nomination  for
election  by the  Company's  stockholders  was  approved  by a vote of at  least
two-thirds  of the directors  then still in office who either were  directors at
the  beginning of the period or whose  election or  nomination  for election was
previously so approved, cease for any reason to constitute a least a majority of
the members of the Board;

            (iii) Corporate Transactions.  The  effective  date  of  a merger or
consolidation  of the  Company  with any other  entity,  other  than a merger or
consolidation  which  would  result  in the  Voting  Securities  of the  Company
outstanding  immediately  prior to such merger or  consolidation  continuing  to
represent  (either by remaining  outstanding  or by being  converted into voting
securities of the  surviving  entity) more than 51% of the total voting power of
the voting securities of the surviving entity outstanding immediately after such
merger or  consolidation  and with the power to elect at least a majority of the
board of directors or other governing body of such surviving entity;



                                       -2-

<PAGE>



            (iv)  Liquidation.  The approval by the stockholders of the  Company
of a complete liquidation of the Company or an agreement or series of agreements
for the sale or  disposition by the Company of all or  substantially  all of the
Company's assets; or

            (v)   Other Events.  There occurs  any other  event of a nature that
would be  required  to  be  reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or a response to any similar item  on any  similar  schedule  or
form) promulgated  under the Exchange Act (as defined below), whether or not the
Company is then subject to such reporting requirement.

          (b)   Certain Definitions.  For  purposes   of   this  Agreement,  the
following terms shall have the following meanings:

            (i)   "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

            (ii)  "Person" shall have the meaning as set forth in Sections 13(d)
and 14(d) of  the Exchange Act; provided, however, that Person shall exclude (i)
the Company, (ii) any  trustee  or  other  fiduciary holding securities under an
employee benefit plan of the Company, and (iii)  any corporation owned, directly
or  indirectly,  by  the  stockholders of the Company in  substantially the same
proportions as their ownership of stock of the Company.

            (iii) "Beneficial Owner" shall have the meaning given to  such  term
in Rule 13d-3 under the Exchange Act.

            (iv)  "Corporate Status" describes the status of a person who  is or
was a director,  officer,  trustee, general partner, managing member, fiduciary,
employee or agent of  the  Company or of any other Enterprise (as defined below)
which such person is or was serving at the request of the Company.

            (v)   "Disinterested Director" means a director of the  Company  who
is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee.

            (vi)  "Enterprise" shall mean the Company and any other corporation,
limited liability company,  partnership,  joint venture, trust, employee benefit
plan or other enterprise of which Indemnitee is or was serving at the request of
the Company as a director,  officer,  trustee, general partner, managing member,
fiduciary, employee or agent.

            (vii) "Expenses" shall   include  all  reasonable  attorneys'  fees,
retainers,  court costs, transcript costs, fees of experts, witness fees, travel
expenses,  duplicating  costs,  printing and binding costs,  telephone  charges,
postage,  delivery  service  fees,  and all other  disbursements  or expenses in
connection  with  prosecuting,  defending,  preparing  to  prosecute  or defend,
investigating, being or preparing to be a witness in, or otherwise participating
in, a Proceeding.  Expenses also shall include  Expenses  incurred in connection
with any appeal resulting from any Proceeding,  including without limitation the
premium, security for, and other costs relating to any cost bond, supersedeas


                                       -3-

<PAGE>



bond,  or other  appeal bond or its  equivalent.  Expenses,  however,  shall not
include  amounts paid in  settlement by Indemnitee or the amount of judgments or
fines against Indemnitee.

            (viii) References to "other  enterprise"  shall   include   employee
benefit plans;  references to "fines" shall include any excise tax assessed with
respect to any employee  benefit plan;  references to "serving at the request of
the Company" shall include any service as a director, officer, employee or agent
of the Company which imposes duties on, or involves  services by, such director,
officer,  employee  or agent  with  respect to an  employee  benefit  plan,  its
participants  or  beneficiaries;  and a person  who acted in good faith and in a
manner he reasonably  believed to be in the best  interests of the  participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Company" as referred to in this
Agreement.

            (ix)  The  term   "Proceeding"   shall   include   any   threatened,
pending  or completed action,  suit,  arbitration,  alternate dispute resolution
mechanism, investigation,  inquiry,  administrative hearing or any other actual,
threatened or  completed   proceeding,  whether   brought  in the  right  of the
Company  or  otherwise  and  whether  of a civil,  criminal,  administrative  or
investigative nature, in which Indemnitee was, is or will be involved as a party
or  otherwise  by reason of the fact that  Indemnitee  is or was a  director  or
officer of the Company,  by reason of any action taken by him or of any inaction
on his part while acting as director or officer of the Company,  or by reason of
the fact that he is or was  serving at the request of the Company as a director,
officer, trustee, general partner, managing member, fiduciary, employee or agent
of any other Enterprise, in each case whether or not serving in such capacity at
the time any  liability  or  expense  is  incurred  for  which  indemnification,
reimbursement, or advancement of expenses can be provided under this Agreement.

            (x)   "Independent Counsel" means  a law firm, or a  member of a law
firm,  that is experienced in matters of corporation  law and neither  presently
is, nor in the past five years has been, retained to represent:  (i) the Company
or  Indemnitee  in any matter  material  to either  such party  (other than with
respect to matters  concerning the Indemnitee under this Agreement,  or of other
indemnitees under similar indemnification  agreements),  or (ii) any other party
to  the  Proceeding  giving  rise  to a  claim  for  indemnification  hereunder.
Notwithstanding the foregoing,  the term "Independent Counsel" shall not include
any person who,  under the  applicable  standards of  professional  conduct then
prevailing, would have a conflict of interest in representing either the Company
or  Indemnitee  in  an  action  to  determine  Indemnitee's  rights  under  this
Agreement.  The Company  agrees to pay the  reasonable  fees and expenses of the
Independent Counsel referred to above.

            (xi)  "Voting Securities" means  any securities of the Company which
vote generally in the election of directors.

            (xii) A "Potential Change in Control"  shall  be   deemed   to  have
occurred  if (i) the  Company  enters  into an  agreement  or  arrangement,  the
consummation  of which would  result in the  occurrence  of a Change in Control;
(ii) any Person (including the Company) publicly  announces an intention to take
or consider  taking  actions which if consummated  would  constitute a Change in
Control;  (iii) any Person, who is or becomes the Beneficial Owner,  directly or
indirectly, of securities


                                       -4-

<PAGE>



of the  Company  representing  5% or more of the  combined  voting  power of the
Company's then outstanding Voting Securities  increases his beneficial ownership
of such  securities by 5% or more over the percentage so owned by such person on
the date hereof;  or (iv) the Board adopts a resolution to the effect that,  for
purposes of this Agreement, a Potential Change of Control has occurred.

     3.   INDEMNITY IN THIRD-PARTY PROCEEDINGS. The  Company  shall   indemnify,
defend and hold harmless  Indemnitee in accordance  with the  provisions of this
Section 3 if  Indemnitee  was, is, or is  threatened to be made, a party to or a
participant  (as a  witness  or  otherwise)  in  any  Proceeding,  other  than a
Proceeding by or in the right of the Company to procure a judgment in its favor.
Pursuant  to this  Section  3,  Indemnitee  shall  be  indemnified  against  all
Expenses,  judgments, fines, penalties and amounts paid in settlement (including
all interest,  assessments  and other charges paid or payable in connection with
or in respect of such Expenses,  judgments, fines, penalties and amounts paid in
settlement)  actually and reasonably  incurred by Indemnitee or on his behalf in
connection  with such  Proceeding  or any  claim,  issue or matter  therein,  if
Indemnitee  acted in good faith and in a manner he reasonably  believed to be in
or not  opposed  to the best  interests  of the  Company  and,  in the case of a
criminal  Proceeding  had no  reasonable  cause to believe  that his conduct was
unlawful.

     4.   INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.        The
Company shall indemnify,  defend and hold harmless Indemnitee in accordance with
the  provisions of this Section 4 if Indemnitee  was, is, or is threatened to be
made, a party to or a participant  (as a witness or otherwise) in any Proceeding
by or in the right of the Company to procure a judgment  in its favor.  Pursuant
to this Section 4, Indemnitee shall be indemnified against all Expenses actually
and  reasonably  incurred  by him or on  his  behalf  in  connection  with  such
Proceeding or any claim,  issue or matter therein,  if Indemnitee  acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company.  No  indemnification  for Expenses shall be made under
this Section 4 in respect of any claim,  issue or matter as to which  Indemnitee
shall have been finally adjudged by a court to be liable to the Company , unless
and only to the extent that any court in which the Proceeding was brought or the
Delaware Court of Chancery shall determine upon  application  that,  despite the
adjudication  of  liability  but in view of all the  circumstances  of the case,
Indemnitee is fairly and reasonably entitled to indemnification.

     5.   INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL.  Notwithstanding  any other  provisions  of this  Agreement,  to the
extent that Indemnitee is a party to (or a participant in) and is successful, on
the merits or otherwise,  in any Proceeding or in defense of any claim, issue or
matter  therein,  in whole or in part,  the  Company  shall  indemnify  and hold
harmless Indemnitee against all Expenses actually and reasonably incurred by him
in  connection  therewith.  If  Indemnitee  is not  wholly  successful  in  such
Proceeding but is successful,  on the merits or otherwise, as to one or more but
less than all claims,  issues or matters in such  Proceeding,  the Company shall
indemnify, defend and hold harmless Indemnitee against all Expenses actually and
reasonably incurred by him or on his behalf in connection with each successfully
resolved claim,  issue or matter.  If the Indemnitee is not wholly successful in
such  Proceeding,  the Company also shall  indemnify,  defend and hold  harmless
Indemnitee against all Expenses  reasonably incurred in connection with a claim,
issue or matter related to any claim, issue, or matter on which the Indemnitee


                                       -5-

<PAGE>



was  successful.  For  purposes  of this  Section and  without  limitation,  the
termination  of any claim,  issue or matter in such a Proceeding  by  dismissal,
with or without prejudice,  shall be deemed to be a successful result as to such
claim, issue or matter.

     6.   INDEMNIFICATION  FOR  EXPENSES  OF A  WITNESS.   Notwithstanding   any
other provision of this  Agreement,  to the extent that Indemnitee is, by reason
of his Corporate  Status, a witness in any Proceeding to which Indemnitee is not
a party,  he shall be  indemnified,  defended  and  held  harmless  against  all
Expenses actually and reasonably  incurred by him or on his behalf in connection
therewith.

     7.   ADDITIONAL INDEMNIFICATION.

         (a)   Notwithstanding  any   limitation  in   Sections 3, 4, or 5,  the
Company shall indemnify,  defend and hold harmless Indemnitee if Indemnitee is a
party  to or  threatened  to be  made a party  to any  Proceeding  (including  a
Proceeding by or in the right of the Company to procure a judgment in its favor)
against all Expenses, judgments, fines, penalties and amounts paid in settlement
(including  all  interest,  assessments  and other  charges  paid or  payable in
connection with or in respect of such Expenses,  judgments, fines, penalties and
amounts paid in settlement)  actually and  reasonably  incurred by Indemnitee in
connection  with the  Proceeding.  No indemnity shall be made under this Section
7(a)  on  account  of  Indemnitee's   conduct  which  constitutes  a  breach  of
Indemnitee's  duty of loyalty to the Company or its stockholders or is an act or
omission not in good faith or which involves intentional misconduct or a knowing
violation of the law.

         (b) Notwithstanding any  limitation  in  Sections 3, 4, 5 or 7(a),  the
Company shall indemnify, defend and hold harmless Indemnitee if Indemnitee  is a
party  to  or  threatened  to  be  made  a  party to any Proceeding (including a
Proceeding by or in the right of the Company to procure a judgment in its favor)
against all Expenses, judgments, fines, penalties and amounts paid in settlement
(including  all  interest,  assessments  and other  charges  paid or  payable in
connection with or in respect of such Expenses,  judgments, fines, penalties and
amounts paid in settlement)  actually and  reasonably  incurred by Indemnitee in
connection with the Proceeding.

      8.  CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.

          (a) Whether or not  any  of  the  indemnification,  defense  and  hold
harmless rights provided in Sections 3, 4, 5, 7(a) and 7(b) hereof are available
in  respect  of  any  Proceeding  in  which  the  Company is jointly liable with
Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in
the  first  instance,  the  entire  amount of any judgment or settlement of such
Proceeding without requiring Indemnitee to contribute to such  payment, and  the
Company hereby waives and  relinquishes  any right of  contribution  it may have
against  Indemnitee.  The  Company  shall not enter into any  settlement  of any
Proceeding in which the Company is jointly  liable with  Indemnitee (or would be
if joined in such  Proceeding)  unless such  settlement  provides for a full and
final release of all claims asserted against Indemnitee.

          (b) Without  diminishing  or  impairing the obligations of the Company
set forth in the preceding subparagraph, if, for  any reason,  Indemnitee  shall
elect or be required to pay all or any portion of any judgment or settlement  in

                                       -6-

<PAGE>



any Proceeding in which the Company is jointly liable with  Indemnitee (or would
be if joined in such Proceeding),  the Company shall contribute to the amount of
expenses  (including  attorneys'  fees),  judgments,  fines and amounts  paid in
settlement  actually incurred and paid or payable by Indemnitee in proportion to
the relative  benefits  received by the Company and all  officers,  directors or
employees  of the Company  other than  Indemnitee  who are  jointly  liable with
Indemnitee  (or  would be if joined in such  Proceeding),  on the one hand,  and
Indemnitee,  on the other hand, from the transaction  from which such Proceeding
arose;  provided,  however,  that  the  proportion  determined  on the  basis of
relative  benefit  may,  to the extent  necessary  to conform to law, be further
adjusted by  reference to the  relative  fault of the Company and all  officers,
directors  or  employees of the Company  other than  Indemnitee  who are jointly
liable with  Indemnitee (or would be if joined in such  Proceeding),  on the one
hand,  and  Indemnitee,  on the other hand, in  connection  with the events that
resulted in such expenses,  judgments,  fines or amounts paid in settlement,  as
well as any other  equitable  considerations.  The relative fault of the Company
and all officers,  directors or employees of the Company  other than  Indemnitee
who  are  jointly  liable  with  Indemnitee  (or  would  be if  joined  in  such
Proceeding),  on the one  hand,  and  Indemnitee,  on the other  hand,  shall be
determined  by  reference  to,  among  other  things,  the degree to which their
actions  were  motivated by intent to gain  personal  profit or  advantage,  the
degree to which their liability is primary or secondary, and the degree to which
their conduct is active or passive.

          (c) The  Company  hereby agrees to fully indemnify,  defend  and  hold
harmless  Indemnitee  from any claims for  contribution  which may be brought by
officers, directors or employees of the Company other than Indemnitee who may be
jointly liable with Indemnitee.

      9.  EXCLUSIONS.   Notwithstanding any  provision  in  this  Agreement, the
Company shall not be  obligated  under this Agreement  to make any  indemnity in
connection with any claim made against Indemnitee:

          (a) for which payment has actually been  received by or  on behalf  of
Indemnitee under any insurance policy or other indemnity provision, except  with
respect to any excess beyond the amount actually  received  under any  insurance
policy or other indemnity provision; or

          (b) for an accounting of profits made from the purchase and  sale  (or
sale and purchase) by Indemnitee of securities of the Company within the meaning
of Section 16(b) of the Exchange Act or similar  provisions  of  state statutory
law or common law; or

          (c) except as otherwise provided in Sections 14(d)-(f)  hereof,  prior
to a Change in Control,  in connection  with any  Proceeding (or any part of any
Proceeding)  initiated by  Indemnitee,  including any Proceeding (or any part of
any  Proceeding)  initiated by Indemnitee  against the Company or its directors,
officers,  employees or other indemnitees,  unless (i) the Board of Directors of
the Company  authorized the Proceeding (or any part of any Proceeding)  prior to
its  initiation or (ii) the Company  provides the  indemnification,  in its sole
discretion, pursuant to the powers vested in the Company under applicable law.




                                       -7-

<PAGE>
      10. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.

         (a) Notwithstanding  any  provision of this Agreement to the  contrary,
the Company shall advance the expenses incurred by Indemnitee in connection with
any  Proceeding  within  ten (10) days  after the  receipt  by the  Company of a
statement or statements  requesting  such  advances  from time to time,  whether
prior  to or  after  final  disposition  of any  Proceeding.  Advances  shall be
unsecured  and  interest  free.   Advances  shall  be  made  without  regard  to
Indemnitee's  ability to repay the expenses and without  regard to  Indemnitee's
ultimate  entitlement  to  indemnification  under the other  provisions  of this
Agreement.  Advances  shall  include any and all  reasonable  Expenses  incurred
pursuing  an action to enforce  this right of  advancement,  including  Expenses
incurred  preparing  and  forwarding  statements  to the  Company to support the
advances  claimed.  The  Indemnitee  shall qualify for advances  solely upon the
execution  and  delivery to the  Company of an  undertaking  providing  that the
Indemnitee  undertakes  to repay the advance to the extent that it is ultimately
determined  that  Indemnitee is not entitled to be  indemnified  by the Company.
This  Section  10(a) shall not apply to any claim made by  Indemnitee  for which
indemnity is excluded pursuant to Section 9.

         (b)  The Company will be entitled to participate in the  Proceeding  at
its own expense.

         (c)  The Company shall not settle any action,  claim  or Proceeding (in
whole or in part) which would impose any Expense,  judgment,  fine,  penalty  or
limitation on the Indemnitee without the Indemnitee's prior written consent.

      11. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.

          (a) Within sixty (60) days after the actual receipt by  Indemnitee  of
notice that he or she is a party to or a participant (as a witness or otherwise)
in any Proceeding, Indemnitee shall submit  to  the  Company  a  written  notice
identifying the Proceeding. The omission by the Indemnitee to notify the Company
will not relieve the Company from any liability which it may have to  Indemnitee
(i) otherwise  than under this Agreement, and (ii) under this Agreement only  to
the  extent the Company can establish that such omission to notify  resulted  in
actual prejudice to the Company.

          (b) Indemnitee  shall  thereafter  deliver  to  the  Company a written
application to indemnify, defend and hold harmless Indemnitee in accordance with
this Agreement.  Such  application(s)  may be delivered from time to time and at
such time(s) as  Indemnitee  deems  appropriate  in his or her sole  discretion.
Following such a written  application  for  indemnification  by Indemnitee,  the
Indemnitee's  entitlement to  indemnification  shall be determined  according to
Section 12(a) of this Agreement.

      12. PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.

          (a) Upon written request by Indemnitee for indemnification pursuant to
Section 11(b), a determination, if required by applicable law,  with respect  to
Indemnitee's entitlement thereto shall be made in the specific case  by  one  of
the  following methods, which shall be at the election of Indemnitee:  (i) by  a
majority vote of the Disinterested Directors, even though less than a quorum  of
the Board; or (ii) by Independent Counsel in a written opinion to the Board ,  a
copy  of  which  shall  be  delivered to Indemnitee. If it is so determined that
Indemnitee is entitled to indemnification,


                                       -8-

<PAGE>



payment  to   Indemnitee   shall  be  made  within  ten  (10)  days  after  such
determination. Indemnitee shall reasonably cooperate with the person, persons or
entity making such  determination  with respect to  Indemnitee's  entitlement to
indemnification,  including  providing  to such  person,  persons or entity upon
reasonable  advance  request  any  documentation  or  information  which  is not
privileged  or  otherwise  protected  from  disclosure  and which is  reasonably
available to Indemnitee  and  reasonably  necessary to such  determination.  Any
costs or expenses  (including  attorneys'  fees and  disbursements)  incurred by
Indemnitee  in so  cooperating  with the person,  persons or entity  making such
determination  shall be borne by the Company  (irrespective of the determination
as to  Indemnitee's  entitlement  to  indemnification)  and the  Company  hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.

          (b) In the event the determination of entitlement  to  indemnification
is to be made by  Independent  Counsel  pursuant to Section  12(a)  hereof,  the
Independent  Counsel  shall be selected as provided in this Section  12(b).  The
Independent  Counsel shall be selected by Indemnitee  (unless  Indemnitee  shall
request that such selection be made by the Board of  Directors),  and Indemnitee
shall give  written  notice to the Company  advising  it of the  identity of the
Independent  Counsel so selected.  If the Independent Counsel is selected by the
Board of Directors, the Company shall give written notice to Indemnitee advising
him of the identity of the  Independent  Counsel so selected.  In either  event,
Indemnitee  or the Company,  as the case may be, may,  within 10 days after such
written notice of selection shall have been received,  deliver to the Company or
to  Indemnitee,  as the case  may be, a  written  objection  to such  selection;
provided,  however,  that such objection may be asserted only on the ground that
the  Independent   Counsel  so  selected  does  not  meet  the  requirements  of
"Independent  Counsel"  as  defined  in  Section  2 of this  Agreement,  and the
objection  shall  set  forth  with  particularity  the  factual  basis  of  such
assertion.  Absent a proper and timely  objection,  the person so selected shall
act  as  Independent   Counsel.  If  such  written  objection  is  so  made  and
substantiated,  the Independent Counsel so selected may not serve as Independent
Counsel  unless and until such  objection  is  withdrawn or a court of competent
jurisdiction  has determined that such objection is without merit. If, within 20
days after  submission by Indemnitee  of a written  request for  indemnification
pursuant  to  Section  11(a)  hereof,  no  Independent  Counsel  shall have been
selected and not objected to,  either the Company or  Indemnitee  may petition a
court of competent jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other's  selection of  Independent
Counsel and/or for the  appointment as Independent  Counsel of a person selected
by the  Court or by such  other  person as the Court  shall  designate,  and the
person  with  respect to whom all  objections  are so  resolved or the person so
appointed shall act as Independent  Counsel under Section 12(a) hereof. Upon the
due commencement of any judicial  proceeding or arbitration  pursuant to Section
14(a) of this Agreement, Independent Counsel shall be discharged and relieved of
any further responsibility in such capacity (subject to the applicable standards
of professional conduct then prevailing).

          (c) The  Company  agrees  to  pay  the reasonable fees and expenses of
 Independent Counsel.



                                       -9-

<PAGE>



      13. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.

          (a) In   making  a  determination  with  respect  to  entitlement  to
indemnification   hereunder,  the  person  or  persons  or  entity  making  such
determination shall presume that Indemnitee is entitled to indemnification under
this  Agreement if  Indemnitee  has submitted a request for  indemnification  in
accordance with Section 11(b) of this Agreement,  and the Company shall have the
burden of proof to overcome that  presumption  in connection  with the making by
any person, persons or entity of any determination contrary to that presumption.
Neither the failure of the Company  (including by its  directors or  independent
legal counsel) to have made a  determination  prior to the  commencement  of any
action  pursuant  to  this  Agreement  that  indemnification  is  proper  in the
circumstances because Indemnitee has met the applicable standard of conduct, nor
an  actual   determination  by  the  Company  (including  by  its  directors  or
independent legal counsel) that Indemnitee has not met such applicable  standard
of  conduct,  shall be a defense  to the  action or  create a  presumption  that
Indemnitee has not met the applicable standard of conduct.

          (b) If  the  person, persons  or  entity  empowered  or selected under
Section  12  of  this  Agreement  to determine whether Indemnitee is entitled to
indemnification  shall not have made a  determination  within  thirty  (30) days
after   receipt  by  the  Company  of  the  request   therefor,   the  requisite
determination  of  entitlement to  indemnification  shall be deemed to have been
made and  Indemnitee  shall be  entitled to such  indemnification,  absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact
necessary  to  make  Indemnitee's  statement  not  materially   misleading,   in
connection with the request for  indemnification,  or (ii) a prohibition of such
indemnification under applicable law; provided, however, that such 30-day period
may be extended for a reasonable time, not to exceed an additional  fifteen (15)
days, if the person,  persons or entity making the determination with respect to
entitlement to  indemnification  in good faith requires such additional time for
the  obtaining  or  evaluating  of  documentation  and/or  information  relating
thereto.

          (c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment,  order,  settlement or conviction,  or upon a plea of nolo
contendere or its equivalent,  shall not (except as otherwise expressly provided
in this  Agreement)  of  itself  adversely  affect  the right of  Indemnitee  to
indemnification  or create a  presumption  that  Indemnitee  did not act in good
faith and in a manner  which he  reasonably  believed to be in or not opposed to
the best  interests of the Company or, with respect to any criminal  Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.

          (d) Reliance as Safe Harbor. For purposes of any determination of good
faith,  Indemnitee  shall be deemed to have acted in good faith if  Indemnitee's
action is based on the records or books of account of the Enterprise,  including
financial  statements,  or on information supplied to Indemnitee by the officers
of the  Enterprise  in the  course of their  duties,  or on the  advice of legal
counsel for the Enterprise or on information or records given or reports made to
the Enterprise by an independent  certified public accountant or by an appraiser
or other expert selected by the Enterprise. The provisions of this Section 13(d)
shall  not  be  deemed  to be  exclusive  or to  limit  in  any  way  the  other
circumstances  in which  the  Indemnitee  may be deemed or found to have met the
applicable standard of conduct set forth in this Agreement.



                                      -10-

<PAGE>



         (e) Actions of Others. The knowledge and/or actions, or failure to act,
of any other director, officer, trustee, partner,  managing  member,  fiduciary,
agent or employee of the Enterprise shall not  be  imputed  to  Indemnitee   for
purposes of determining the right to indemnification under this Agreement.

      14. REMEDIES OF INDEMNITEE.

         (a) In the event that (i) a determination is made pursuant  to  Section
12 of this Agreement that  Indemnitee is not entitled to  indemnification  under
this  Agreement,  (ii)  advancement  of Expenses is not timely made  pursuant to
Section  10  of  this  Agreement,  (iii)  no  determination  of  entitlement  to
indemnification shall have been made pursuant to Section 12(a) of this Agreement
within 45 days after receipt by the Company of the request for  indemnification,
(iv) payment of  indemnification  is not made pursuant to Section 5 , 6, 7, 8 or
the last sentence of Section 12(a) of this Agreement  within ten (10) days after
receipt  by the  Company  of a  written  request  therefor,  or (v)  payment  of
indemnification  pursuant to Section 3 or 4 of this Agreement is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification, Indemnitee shall be entitled to an adjudication by the Delaware
Court (as defined  below) to such  indemnification  or  advancement of Expenses.
Alternatively, Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of
the American Arbitration Association.  The Company shall not oppose Indemnitee's
right to seek any such adjudication or award in arbitration.

         (b) In the event that a determination shall have been made  pursuant to
Section   12(a)  of  this   Agreement   that   Indemnitee  is  not  entitled  to
indemnification,  any judicial  proceeding or arbitration  commenced pursuant to
this  Section 14 shall be  conducted  in all  respects  as a de novo  trial,  or
arbitration,  on the merits and Indemnitee  shall not be prejudiced by reason of
that adverse determination.  In any judicial proceeding or arbitration commenced
pursuant  to this  Section  14 the  Company  shall  have the  burden of  proving
Indemnitee is not entitled to indemnification or advancement of Expenses, as the
case may be, and the Company may not refer to or  introduce  into  evidence  any
determination  pursuant to Section 12(a) of this Agreement adverse to Indemnitee
for any purpose.  If Indemnitee  commences a judicial  proceeding or arbitration
pursuant to this Section 14,  Indemnitee  shall not be required to reimburse the
Company for any advances  pursuant to Section 10 until a final  determination is
made with respect to Indemnitee's  entitlement to  indemnification  (as to which
all rights of appeal have been exhausted or lapsed).

         (c) If a determination shall have been made pursuant  to Section  12(a)
of  this Agreement that Indemnitee is entitled to indemnification,  the  Company
shall be bound by such determination in any judicial proceeding  or  arbitration
commenced pursuant to this Section 14, absent (i) a misstatement  by  Indemnitee
of a  material  fact,  or an  omission  of a  material  fact  necessary  to make
Indemnitee's statement not materially misleading, in connection with the request
for  indemnification,  or  (ii) a  prohibition  of  such  indemnification  under
applicable law.

         (d) In the event that Indemnitee, pursuant to this Section 14, seeks  a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover  damages  for  breach  of,  this  Agreement,  Indemnitee  shall be
entitled to recover from the Company, and shall be

                                      -11-

<PAGE>



indemnified by the Company against, any and all Expenses actually and reasonably
incurred by him in such judicial  adjudication  or  arbitration.  If it shall be
determined in said  judicial  adjudication  or  arbitration  that  Indemnitee is
entitled to receive part but not all of the  indemnification  or  advancement of
Expenses  sought,  the Indemnitee shall be entitled to recover from the Company,
and shall be indemnified by the Company against, any and all Expenses reasonably
incurred  by  Indemnitee  in  connection  with  such  judicial  adjudication  or
arbitration .

         (e) The Company shall  be  precluded  from  asserting  in  any judicial
proceeding  or  arbitration  commenced  pursuant  to this  Section  14 that  the
procedures  and  presumptions  of this  Agreement  are not  valid,  binding  and
enforceable  and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.

         (f) The Company shall indemnify, defend and hold harmless Indemnitee to
the fullest  extent  permitted by law against all Expenses  and, if requested by
Indemnitee,  shall  (within  ten (10) days after the  Company's  receipt of such
written  request)  advance such  Expenses to  Indemnitee,  which are incurred by
Indemnitee in connection with any judicial  proceeding or arbitration brought by
Indemnitee for (i)  indemnification or advances of Expenses by the Company under
the Agreement or any other  agreement or provision of the Company's  Certificate
of  Incorporation  or By-laws  now or  hereafter  in effect or (ii)  recovery or
advances under any insurance policy  maintained by any person for the benefit of
Indemnitee,  regardless  of whether  Indemnitee  ultimately  is determined to be
entitled to such indemnification, advance or insurance recovery, as the case may
be.

      15. ESTABLISHMENT OF TRUST. In the event of a Potential Change in Control,
the Company shall, upon written request by Indemnitee,  create a "Trust" for the
benefit of Indemnitee  and from time to time upon written  request of Indemnitee
shall fund such Trust in an amount  sufficient  to satisfy any and all  Expenses
reasonably  anticipated  at the time of each  such  request  to be  incurred  in
connection with investigating,  preparing for, participating in or defending any
Proceedings,  and any and all  judgments,  fines,  penalties and amounts paid in
settlement  (including  all  interest,  assessments  and other  charges  paid or
payable in connection with or in respect of such judgments,  fines penalties and
amounts paid in settlement) in connection with any and all Proceedings from time
to time actually paid or claimed, reasonably anticipated or proposed to be paid.
The  trustee of the Trust (the  "Trustee")  shall be a bank or trust  company or
other individual or entity chosen by the Indemnitee and approved by the Company.
Nothing in this Section 15 shall  relieve the Company of any of its  obligations
under  this  Agreement.  The  amount or  amounts  to be  deposited  in the Trust
pursuant  to  the  foregoing  funding  obligation  shall  be  determined  by the
Disinterested Directors. The terms of the Trust shall provide that upon a Change
in Control (i) the Trust shall not be revoked or the principal  thereof invaded,
without the written consent of the  Indemnitee,  (ii) the Trustee shall advance,
within two business days of a request by the  Indemnitee  and upon the execution
and  delivery to the Company of an  undertaking  providing  that the  Indemnitee
undertakes to repay the advance to the extent that it is  ultimately  determined
that  Indemnitee is not entitled to be indemnified  by the Company,  any and all
Expenses to the  Indemnitee,  (iii) the Trust shall continue to be funded by the
Company in accordance  with the funding  obligations  set forth above,  (iv) the
Trustee  shall  promptly  pay  to the  Indemnitee  all  amounts  for  which  the
Indemnitee  shall be entitled to  indemnification  pursuant to this Agreement or
otherwise,  and (v) all  unexpended  funds in such  Trust  shall  revert  to the


                                      -12-

<PAGE>


Company upon a final determination by the Disinterested  Directors,  Independent
Counsel  or a court of  competent  jurisdiction,  as the  case may be,  that the
Indemnitee has been fully indemnified under the terms of this Agreement.

      16. SECURITY. Notwithstanding anything herein to the contrary, to the
extent requested by the Indemnitee and approved by the Board of Directors of the
Company, the Company may at any time and from time to time provide security to
the Indemnitee for the Company's obligations hereunder through an irrevocable
bank line of credit, funded trust or other collateral. Any such security, once
provided to the Indemnitee, may not be revoked or released without the prior
written consent of the Indemnitee.

      17. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS;  INSURANCE; SUBROGATION.

          (a) The  rights  of  indemnification  and  to  receive  advancement of
Expenses as  provided by this  Agreement  shall not be deemed  exclusive  of any
other rights to which  Indemnitee may at any time be entitled  under  applicable
law, the Company's  Certificate  of  Incorporation,  the Company's By- laws, any
agreement, a vote of stockholders or a resolution of directors, or otherwise. No
amendment,  alteration or repeal of this  Agreement or of any  provision  hereof
shall limit or restrict any right of Indemnitee  under this Agreement in respect
of any action taken or omitted by such Indemnitee in his Corporate  Status prior
to such amendment, alteration or repeal. To the extent that a change in Delaware
law, whether by statute or judicial decision, permits greater indemnification or
advancement of Expenses than would be afforded currently under the Company's By-
laws and this Agreement,  it is the intent of the parties hereto that Indemnitee
shall enjoy by this  Agreement the greater  benefits so afforded by such change.
No right or remedy  herein  conferred  is intended to be  exclusive of any other
right or remedy,  and every other right and remedy  shall be  cumulative  and in
addition to every other right and remedy  given  hereunder  or now or  hereafter
existing at law or in equity or  otherwise.  The  assertion or employment of any
right or remedy  hereunder,  or  otherwise,  shall not  prevent  the  concurrent
assertion or employment of any other right or remedy.

          (b) To the extent that the Company maintains an  insurance  policy  or
policies  providing  liability  insurance  for  directors,  officers,  trustees,
partners, managing members, fiduciaries,  employees, or agents of the Company or
of any other  Enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its or
their  terms  to the  maximum  extent  of the  coverage  available  for any such
director,  officer, trustee,  partner,  managing member, fiduciary,  employee or
agent under such policy or policies. If, at the time the Company receives notice
from  any  source  of a  Proceeding  as to  which  Indemnitee  is a  party  or a
participant  (as a witness or  otherwise),  the Company has director and officer
liability  insurance  in effect,  the Company  shall give prompt  notice of such
Proceeding to the insurers in accordance  with the  procedures  set forth in the
respective  policies.  The  Company  shall  thereafter  take  all  necessary  or
desirable action to cause such insurers to pay, on behalf of the Indemnitee, all
amounts  payable as a result of such  Proceeding in accordance with the terms of
such policies.

          (c) In the event of any  payment  under  this  Agreement, the  Company
shall be  subrogated  to the  extent  of such  payment  to all of the  rights of
recovery  of  Indemnitee,  who shall  execute all papers  required  and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.


                                      -13-

<PAGE>



         (d) The Company shall not be liable under this Agreement to  make  any
payment of amounts otherwise indemnifiable (or for which advancement is provided
hereunder) hereunder if and to the extent that Indemnitee has otherwise actually
received  such  payment  under any  insurance  policy,  contract,  agreement  or
otherwise.

         (e) The Company's obligation to indemnify or advance Expenses here
under to  Indemnitee  who is or was  serving at the  request of the Company as a
director,  officer, trustee,  partner,  managing member, fiduciary,  employee or
agent of any other  Enterprise  shall be reduced by any  amount  Indemnitee  has
actually  received as  indemnification  or  advancement  of  expenses  from such
Enterprise.

      18. DURATION OF AGREEMENT.  This  Agreement  shall  continue  until    and
terminate  upon the later of: (a) ten (10) years after the date that  Indemnitee
shall  have  ceased to serve as a director  or  officer  of the  Company or as a
director,  officer, trustee,  partner,  managing member, fiduciary,  employee or
agent of any other  corporation,  partnership,  joint venture,  trust,  employee
benefit plan or other enterprise  which Indemnitee  served at the request of the
Company;  or (b) one (1) year  after the  final  termination  of any  Proceeding
(including  any  rights of appeal  thereto)  then  pending  in  respect of which
Indemnitee  is granted  rights of  indemnification  or  advancement  of Expenses
hereunder and of any proceeding  commenced by Indemnitee  pursuant to Section 14
of this  Agreement  relating  thereto  (including  any  rights  of appeal of any
Section 14 Proceeding).

      19. SEVERABILITY. If any provision or provisions of this  Agreement  shall
be held to be invalid,  illegal or unenforceable for any reason whatsoever:  (a)
the validity,  legality and  enforceability of the remaining  provisions of this
Agreement (including without limitation,  each portion of any Section, paragraph
or sentence of this Agreement  containing any such provision held to be invalid,
illegal or unenforceable,  that is not itself invalid, illegal or unenforceable)
shall  not  in any  way  be  affected  or  impaired  thereby  and  shall  remain
enforceable  to the fullest  extent  permitted  by law;  (b) such  provision  or
provisions  shall be deemed  reformed  to the  extent  necessary  to  conform to
applicable  law and to give the  maximum  effect to the  intent  of the  parties
hereto; and (c) to the fullest extent possible, the provisions of this Agreement
(including,  without  limitation,  each  portion of any  Section,  paragraph  or
sentence of this  Agreement  containing  any such  provision held to be invalid,
illegal or unenforceable,  that is not itself invalid, illegal or unenforceable)
shall be construed so as to give effect to the intent manifested thereby.

      20. ENFORCEMENT AND BINDING EFFECT.

         (a) The Company expressly confirms and agrees that it has  entered into
this Agreement and assumed the obligations imposed on  it  hereby  in  order  to
induce  Indemnitee to  serve  as  a  director or officer of the Company, and the
Company acknowledges that Indemnitee is relying upon this Agreement  in  serving
as a director or officer of the Company.

         (b) This Agreement constitutes the entire agreement between the parties
hereto  with  respect to the  subject  matter  hereof and  supersedes  all prior
agreements and  understandings,  oral, written and implied,  between the parties
hereto with respect to the subject matter hereof.


                                      -14-

<PAGE>



         (c) The indemnification and advancement  of  expenses  provided  by, or
granted  pursuant to this Agreement  shall be binding upon and be enforceable by
the  parties  hereto and their  respective  successors,  shall  continue as to a
person  who has  ceased  to be a  director,  officer,  employee  or agent of the
Company or of any other Enterprise at the Company's request,  and shall inure to
the benefit of the heirs, executors and administrators of such a person.

         (d) The Company shall require and cause  any  successor (whether direct
or   indirect   by   purchase,   merger,    consolidation   or   otherwise)   to
all,substantially  all or a substantial  part, of the business  and/or assets of
the Company,  by written  agreement in form and  substance  satisfactory  to the
Indemnitee,  expressly to assume and agree to perform this Agreement in the same
manner and to the same extent  that the Company  would be required to perform if
no such succession had taken place.

         (e) The parties hereto agree that Indemnitee may enforce this Agreement
by  seeking  specific  performance  hereof,  without  any  necessity  of showing
irreparable  harm or posting a bond, which  requirements are hereby waived,  and
that by seeking  specific  performance,  Indemnitee  shall not be precluded from
seeking or obtaining any other relief to which he may be entitled.

      21 . MODIFICATION AND WAIVER. No supplement, modification or amendment  of
this  Agreement  shall be binding  unless  executed  in  writing by the  parties
hereto.  No waiver of any of the provisions of this Agreement shall be deemed or
shall  constitute a waiver of any other  provisions of this  Agreement nor shall
any waiver constitute a continuing waiver.

      22. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the Company
in writing upon being served with any summons,  citation,  subpoena,  complaint,
indictment,  information or other document  relating to any Proceeding or matter
which may be subject to  indemnification  or  advancement  of  Expenses  covered
hereunder.  The failure of Indemnitee to so notify the Company shall not relieve
the Company of any  obligation  which it may have to the  Indemnitee  under this
Agreement or otherwise.

      23. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) if delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (b) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:

          (a) If to Indemnitee , at the address indicated on the  signature page
of this Agreement, or such other address as Indemnitee shall  provide in writing
to the Company.

          (b) If to the Company to:

                                   Agway, Inc.
                                   333 Butternut Drive
                                   DeWitt, NY 13214

                                   Attention: General Counsel


                                      -15-

<PAGE>



or  to any other address as may have been furnished  to Indemnitee in writing by
the Company.

      24. CONTRIBUTION. To the fullest extent permissible under applicable  law,
if the  indemnification  provided  for  in  this  Agreement  is  unavailable  to
Indemnitee  for any reason  whatsoever,  the  Company,  in lieu of  indemnifying
Indemnitee,  shall contribute to the amount incurred by Indemnitee,  whether for
judgments,  fines,  penalties,  excise  taxes,  amounts  paid  or to be  paid in
settlement  and/or for  Expenses,  in connection  with any claim  relating to an
indemnifiable  event under this Agreement,  in such proportion as is deemed fair
and reasonable in light of all of the  circumstances of such Proceeding in order
to reflect (i) the relative benefits received by the Company and Indemnitee as a
result of the event(s) and/or  transaction(s)  giving cause to such  Proceeding;
and/or (ii) the  relative  fault of the Company  (and its  directors,  officers,
employees and agents) and  Indemnitee in  connection  with such event(s)  and/or
transaction(s).

      25. APPLICABLE LAW AND CONSENT TO JURISDICTION. This   Agreement  and  the
legal  relations  among the parties  shall be  governed  by, and  construed  and
enforced in accordance  with, the laws of the State of Delaware,  without regard
to its conflict of laws rules. Except with respect to any arbitration  commenced
by  Indemnitee  pursuant  to Section  13(a) of this  Agreement,  the Company and
Indemnitee hereby irrevocably and  unconditionally  (i) agree that any action or
proceeding  arising out of or in connection with this Agreement shall be brought
only in the Chancery Court of the State of Delaware (the "Delaware Court"),  and
not in any other state or federal  court in the United  States of America or any
court in any other country, (ii) consent to submit to the exclusive jurisdiction
of the Delaware Court for purposes of any action or proceeding arising out of or
in connection  with this Agreement,  (iii) appoint,  to the extent such party is
not a resident of the State of Delaware,  irrevocably  RL&F Service  Corp.,  One
Rodney Square, 10th Floor, 10th and King Streets, Wilmington,  Delaware 19801 as
its agent in the State of Delaware as such party's agent for acceptance of legal
process in connection with any such action or proceeding against such party with
the same legal force and validity as if served upon such party personally within
the State of  Delaware,  (iv) waive any  objection to the laying of venue of any
such action or proceeding in the Delaware Court, and (v) waive, and agree not to
plead or to make,  any claim that any such action or  proceeding  brought in the
Delaware Court has been brought in an improper or inconvenient forum.

      26. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or  more
counterparts,  each of which shall for all  purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.  Only one
such counterpart signed by the party against whom enforceability is sought needs
to be produced to evidence the existence of this Agreement.



                                      -16-

<PAGE>
      27. MISCELLANEOUS.  Use of  the  masculine  pronoun  shall  be  deemed  to
include usage of the feminine pronoun where appropriate.  The  headings  of  the
paragraphs of this Agreement are inserted for convenience  only and shall not be
deemed to constitute  part  of  this  Agreement  or  to  affect the construction
thereof.
      IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the day and year first above written.

AGWAY, INC.                                INDEMNITEE



By: /s/ Donald P. Cardarelli                /s/ Roy Lubetkin
   -----------------------------           -------------------------------------
        DONALD P. CARDARELLI               ROY LUBETKIN
      Chief Executive Officer              1470 Littlefield Court
                                           Lake Forest, IL 60045





                                      -17-


<PAGE>
                                 EXHIBIT 10.(w)
<PAGE>


Name: Roy Lubetkin                               Position: President, CPG
-------------------------------------------------------------------------

Incentive Plans For Period Beginning July 1, 2001

I. Annual Incentive Plan (AIP) for Fiscal Year 2002, ending June 30, 2002

Part (1)
        o  Target payout is 50% of base salary as of June 30, 2002
        o  Performance metrics as per *FY02 Annual Incentive Plan Scale:
                                       --------------------------------
        o  EBITDA and ROI (EBIT/Average Total Investment)
        o  Weighted 50/50
        o  Scale:  see attached scale ranging from 0 to 150% of target payout
        o  To earn the EBITDA portion of the AIP, the Credit Covenant threshold
           must be achieved (75% of Budget) for the covenant periods as follows:
             o  12/23/00 to 9/30/01        $(6.3MM)
             o  12/23/00 to 12/31/01       $(5.3MM)
             o  4/1/01 to 3/31/02          $(3.7MM)
             o  7/1/01 to 6/30/02          $ 2.9MM
             o
        o  EBITDA  will  be calculated after the accrual of the expense for  the
           incentive
        o  Cash payment made in lump sum by September 30, 2002

Part (2)
        o Earn  50% of June 30, 2001 base  salary upon  completion  of strategic
          plan for the Produce and Sunflower businesses ($175,000)
        o Cash payment made in lump sum within 90 days of completion of plan

Part (3)
        o Pro-rated payout  at  target (50% of  June 30, 2001  base  salary) for
          months of May and June, 2001 ($29,167)
        o Cash   payment   made  in  lump   sum  at  same  time  as Part (1), by
          September 30, 2002

                                        1
<PAGE>

*FY02 Annual Incentive Plan Scale
---------------------------------

EBITDA:  Budget = $3.916 million
         Target = $4.416 million

         EBITDA Earned             % of Target Bonus Payout
         -------------             ------------------------
         Less than $3.916MM                   0
         $3.916MM                            50
         $4.416MM                           100
         $5.000MM                           150



ROI %: Target = Budget = .6% = EBIT/Average Total Investment = $278M/$45,233M

                  ROI                       % of Target Bonus Payout
                  ---                       ------------------------
                  Less than .3%                        0
                  .3%                                 50
                  .6%                                100
                  1.6%                               150


Sample Calculation (weighting of EBITDA and ROI is 50/50)

Example:
        o  EBITDA is $4.6MM and ROI is 1.7%
        o  Target incentive is $175,000 (50% of base salary on June 30, 2002)
        o  Calculation:
           o  .5(1.0 * 175,000) + .5(1.5 * 175,000) = $218,750
           o  If an EBITDA covenant threshold was not met, then the payout would
              just be the ROI part of the bonus or $131,250 in this example.


                                        2
<PAGE>




II. Three Year Incentive Plan for Period Ending 6/30/04

         Accumulative EBITDA = $21.261M                 50% Base Salary*
         Accumulative EBITDA = $24M                     75% Base Salary*
         Accumulative EBITDA = $26M                    100% Base Salary*
                       (*Base Salary As Of June 30, 2004)

     Definition:
                  Accumulative EBITDA Target                  =  $24M
                  Accumulative EBITDA Budget                  =  $21.261M

III.  Consideration will be given for additional incentives as a result of  one-
time events that financially  benefit  Agway  and  occur  during the term of the
plans.

     Payout Provisions

          (a)  Incentives  earned  under  this plan are taken into  account  for
               purposes of Agway's  employee benefit plan programs to the extent
               provided  by the  terms of those  programs  in effect at the time
               payments are made.

          (b)  Payouts  shall be made in a lump sum within 90 days after the end
               of the term of the respective incentive plan.

          (c)  EBITDA will be calculated after the accrual of  the  expense  for
               the incentive.

          (d)  For  purposes  of these  incentive plans, "base salary" means the
               employees annual salary before bonuses or other incentives.

V.  Conditions
         This  plan  is  subject  to the terms of the employment letter from Don
         Cardarelli dated April 20,  2001. This plan shall not be interpreted to
         provide  any  duplication  of  payments  required  under the employment
         letter.


                                        3



<PAGE>
                                 EXHIBIT 10.(x)
<PAGE>

Name: Roy Lubetkin                               Position: President, CPG
-------------------------------------------------------------------------

                Incentive Plans For Period Beginning July 1, 2002

1.  Annual Incentive Plan for Fiscal 2003, Ending June 30, 2003
         Part A = Agway EBITDA:
         EBITDA = $21.44                             12.5% of Base Salary*
         EBITDA = $26.8M                             25% of Base Salary*
         EBITDA = $32.16                             50% of Base Salary*

         Part B = CPG EBITDA:
         EBITDA = Break Even                         12.5% of Base Salary*
         EBITDA = $.5M                               25% of Base Salary*
         EBITDA = $1.0M                              50% of Base Salary*
                       (*Base Salary As Of June 30, 2003)
                           Note:
                               Agway EBITDA Budget = $26.8M
                               CPG EBITDA Budget = ($.61M)

2.  Three Year Incentive Plan for Period Ending 6/30/04

         Accumulative EBITDA = $21.261M              50% Base Salary**
         Accumulative EBITDA = $24M                  75% Base Salary**
         Accumulative EBITDA = $26M                  100% Base Salary**
                       (**Base Salary As Of June 30, 2004)

    Definition:
                  Accumulative EBITDA Target                  =        $24M
                  Accumulative EBITDA Budget                  =        $21.261M

3.  Three Year Incentive Plan for Period Ending 6/30/05

      The payout will be the average  of  the  payout  received  for  the  three
      annual   incentive  plans  ending June 30, 2002, June 30, 2003,  and  June
      30. 2004

4.   Consideration  will  be  given  for  additional  incentives  as a result of
     one-time events that financially benefit Agway and occur during the term of
     the plans.

5.   Due to the impact of the changes in the businesses that  will  occur during
     the term of  the  plan,  discretion  will  be allowed when  calculating the
     payout for items 1, 2, 3 and 4 above.

                                        1
<PAGE>

6.   Payout Provisions

        (a)   Incentives  earned  under  this  plan  are  taken into account for
              purposes of Agway's employee  benefit  plan programs to the extent
              provided  by  the  terms  of  those programs in effect at the time
              payments are made.

        (b)   Payouts shall be made in a lump sum within 90 days after  the  end
              of the term of the respective incentive plan.

        (c)   EBITDA will be calculated after the accrual of the expense for the
              incentive.

        (d)   For purposes  of  these  incentive  plans, "base salary" means the
              employees annual salary before bonuses or other incentives.

V.  Conditions
        This plan is  subject  to  the  terms  of the employment letter from Don
        Cardarelli  dated April 20, 2001. This  plan shall not be interpreted to
        provide  any  duplication  of  payments  required  under  the employment
        letter.
                                        2
<PAGE>
                                 EXHIBIT 10.(y)
<PAGE>


Name: Dan Edinger                       Position: President, Telmark
--------------------------------------------------------------------

Incentive Plans For Period Beginning July 1, 2001
-------------------------------------------------

1. Annual Incentive Plan for Fiscal 2002, Ending June 30, 2002

         EBT = $21.5M                                         10% Base Salary*
         Currency 96.5%                                       10% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         25% Base Salary*

         EBT = $22.0M                                         20% Base Salary*
         Currency 97.0%                                       20% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         50% Base Salary

         EBT = $22.5M                                         30% Base Salary*
         Currency 97.5%                                       30% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         75% Base Salary*
                       (*Base Salary As of June 30, 2002)

         Definitions:
                  EBT Target                                  =        $22.0M
                  EBT Budget                                  =        $21.5M
                 *Total Portfolio Currency Target             =        97.0%
                 *Total Portfolio Currency Budget             =        97.0%
           (*Currency As Calculated in the Fiscal 2002 Telmark Budget)

2. Three Year Incentive Plan for Period Ending 6/30/04

         Accumulative 3 Year EBT = $68.25M                    50% Base Salary*

         Accumulative 3 Year EBT = $70.25M                    75% Base Salary*

         Accumulative 3 year EBT = $72.25M                    100% Base Salary*
                       (*Base salary As of June 30, 2004)

         Definitions
                  Accumulative EBT Target                       =      $70.25M
                  Accumulative EBT Budget                       =      $68.25M

3. Consideration will be given for additional incentives as a result of one-time
events that financially benefit Agway and occur during the term of the plans.

                                        1

<PAGE>


4. Payout Provisions

          (a) If EBT and  currency  targets  are met at  different  levels,  the
          payout is the sum of the two individual  payouts.  Example:  If annual
          plan results for EBT equals Target at $22.0M (20% Payout) and currency
          96.5% (10% Payout), the total payout will be 30% of Base Salary.

          (b) All  payouts  will be in cash  and  paid  from  Telmark  earnings.
          Payouts  shall be made in a lump sum  within 90 days  after the end of
          the term of the respective incentive plan.

          (c) EBT will be  calculated  after the  accrual of the expense for the
          incentive.

5.  Conditions

          (a) If the employee voluntarily  terminates employment for good reason
          (as hereinafter defined) or if Agway terminates his employment without
          cause (as  hereinafter  defined)  during the plan  period,  he will be
          eligible for a payout under both plans.  The payout will be calculated
          on a pro-rated  basis  (using  completed  weeks of service  during the
          incentive  period)  representative  of the employee's period of active
          full time employment during the term of each such plan.


          (b) If the employee dies, retires (as hereinafter defined), or becomes
          permanently  disabled  to  such a  degree  that he is  prevented  from
          performing  the usual duties of his position,  he (or his estate) will
          be  eligible  for a  payout  under  both  plans.  The  payout  will be
          calculated  on a pro-rated  basis  (using  completed  weeks of service
          during the incentive  period)  representative of the employee's period
          of active full time employment during the term of each such plan.

          (c) If there is a change of control (as defined in the Indemnification
          Agreement between Agway Inc. and the employee) during the plan period,
          the  employee  will be  deemed  fully  vested in both the  annual  and
          long-term incentive plans. Fully vested means the payout will be fully
          earned without a reduction.

          (d) The payout for three  events,  5(a),  (b), and (c) above,  will be
          calculated based upon target  performance.  Upon the occurrence of one

                                        2
<PAGE>

          of these three  events (a),  (b) or (c) the  employee  (or his estate)
          will also receive a payout  equal to 100% of his base  salary.  Payout
          for these three events,  5(a),  (b), and (c) above and payment of base
          salary shall be made in a lump sum within 90 days after the occurrence
          of the event.

          (e) If the employee  voluntarily quits without good reason or if Agway
          terminates  his  employment for cause during an unexpired plan period,
          he will not be eligible for any part of any payout,  payments or other
          compensation  identified  in this  document  for the  applicable  plan
          period.

          (f)  Incentives  earned  under  this plan are taken into  account  for
          purposes  of Agway's  employee  benefit  plan  programs  to the extent
          provided by the terms of those programs in effect at the time payments
          are made.

          (g) Under any of the events  described in 5(a), (b) or (c) above,  (i)
          the  employee  will be deemed on leave status in order to receive full
          employee benefits at active employee  contribution rates for one year,
          and  (ii)  the  employee  will  receive  for one  year  following  his
          termination executive level career transition assistance services by a
          firm selected by the employee and paid for by Agway.

In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring

                                        3
<PAGE>

without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)
a diminution in your  compensation  that is  implemented  in connection  with an
across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.

6. Miscellaneous

   (a)    The incentive plans are not a contract for continued employment and do
          not  limit  the  right of Agway to terminate your employment. You are,
          and shall remain, an employee at will.

   (b)    Annual  incentive  plans targeted at 50% of Base Salary and multi-year
          incentive plans  targeted at 75% of Base Salary with substantially the
          same parameters  for  payment as  set forth in Section 1 above will be
          initiated in each ensuing fiscal year.

   (c)    All payments under the incentive plans are  subject  to income tax and
          employment tax withholding.

                                        4
<PAGE>
                                 EXHIBIT 10.(z)
<PAGE>

Name: Dan Edinger                       Position: President, Telmark
--------------------------------------------------------------------

Incentive Plans For Period Beginning July 1, 2002
-------------------------------------------------

1.  Annual Incentive Plan for Fiscal 2003, Ending June 30, 2003

         EBT = $24.0M                                         10% Base Salary*
         Currency 96.5%                                       10% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         25% Base Salary*

         EBT = $24.5M                                         20% Base Salary*
         Currency 97.0%                                       20% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         50% Base Salary

         EBT = $25.0M                                         30% Base Salary*
         Currency 97.5%                                       30% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         75% Base Salary*
                       (*Base Salary As of June 30, 2003)

         Definitions:
                  EBT Target                                  =        $24.5M
                  EBT Budget                                  =        $24.0M
                 *Total Portfolio Currency Target             =        97.0%
                 *Total Portfolio Currency Budget             =        97.0%
           (*Currency As Calculated in the Fiscal 2002 Telmark Budget)

2.  Three Year Incentive Plan for Period Ending 6/30/04

         Accumulative 3 Year EBT = $68.25M           50% Base Salary*

         Accumulative 3 Year EBT = $70.25M           75% Base Salary*

         Accumulative 3 year EBT = $72.25M           100% Base Salary*
                       (*Base salary As of June 30, 2004)

         Definitions
                  Accumulative EBT Target                     =        $70.25M
                  Accumulative EBT Budget                     =        $68.25M

3.  Three Year Incentive Plan for Period Ending 6/30/05

          The payout  will be the average of the payout  received  for the three
          annual  incentive  plans ending June 30, 2003, June 30, 2004, and June
          30, 2005.

                                        1
<PAGE>

4.  Consideration  will  be  given for additional incentives as a result of one-
time events that financially benefit Agway and  occur  during  the  term  of the
plans.

5.  Payout Provisions

          (a) If EBT and  currency  targets  are met at  different  levels,  the
          payout is the sum of the two individual  payouts.  Example:  If annual
          plan results for EBT equals Target at $24.5M (20% Payout) and currency
          96.5% (10% Payout), the total payout will be 30% of Base Salary.

          (b) All  payouts  will be in cash  and  paid  from  Telmark  earnings.
          Payouts  shall be made in a lump sum  within 90 days  after the end of
          the term of the respective incentive plan.

          (c) EBT will be  calculated  after the  accrual of the expense for the
          incentive.

6.  Conditions

          (a) If the employee voluntarily  terminates employment for good reason
          (as hereinafter defined) or if Agway terminates his employment without
          cause (as  hereinafter  defined)  during the plan  period,  he will be
          eligible for a payout under each plan.  The payout will be  calculated
          on a pro-rated  basis  (using  completed  weeks of service  during the
          incentive  period)  representative  of the employee's period of active
          full time employment during the term of each such plan.

          (b) If the employee dies, retires (as hereinafter defined), or becomes
          permanently  disabled  to  such a  degree  that he is  prevented  from
          performing  the usual duties of his position,  he (or his estate) will
          be  eligible  for a  payout  under  each  plan.  The  payout  will  be
          calculated  on a pro-rated  basis  (using  completed  weeks of service
          during the incentive  period)  representative of the employee's period
          of active full time employment during the term of each such plan.

          (c) If there is a change in control (as  hereinafter  defined)  during
          the plan  period,  the  employee  will be deemed  fully vested in each
          annual and multi-year  incentive  plan.  Fully vested means the payout
          will be fully earned without a reduction.

                                        2
<PAGE>


          (d) The payout for three  events,  5(a),  (b), and (c) above,  will be
          calculated based upon target  performance.  Upon the occurrence of one
          of these three  events (a),  (b) or (c) the  employee  (or his estate)
          will also receive a payout  equal to 100% of his base  salary.  Payout
          for these three events,  5(a),  (b), and (c) above and payment of base
          salary shall be made in a lump sum within 90 days after the occurrence
          of the event.

          (e) If the employee  voluntarily quits without good reason or if Agway
          terminates  his  employment for cause during an unexpired plan period,
          he will not be eligible for any part of any payout,  payments or other
          compensation  identified  in this  document  for the  applicable  plan
          period.

          (f)  Incentives  earned  under  this plan are taken into  account  for
          purposes  of Agway's  employee  benefit  plan  programs  to the extent
          provided by the terms of those programs in effect at the time payments
          are made.

          (g) Under any of the events  described in 5(a), (b) or (c) above,  (i)
          the  employee  will be deemed on leave status in order to receive full
          employee benefits at active employee  contribution rates for one year,
          and  (ii)  the  employee  will  receive  for one  year  following  his
          termination executive level career transition assistance services by a
          firm selected by the employee and paid for by Agway.


In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

                                        3
<PAGE>

For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring
without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)
a diminution in your  compensation  that is  implemented  in connection  with an
across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For  purposes of these  incentive  plans,  "change in control"  means any of the
following: (i) a person or entity or group of persons or entities independent of
Agway, Inc., acting in concert,  shall become the direct or indirect  beneficial
owner  (within the meaning of Rule 13d-3 of the Exchange  Act) of  securities of
the  Company  representing  twenty-five  percent  (25%) or more of the  combined
voting power of the issued and outstanding common stock of the Company;  or (ii)
the majority of the Company's  Board of Directors is no longer  comprised of the
incumbent  directors who constitute the Board of Directors on the effective date
of this  incentive  plan and any other  individual(s)  who  becomes  a  director
subsequent  to the  date  of this  incentive  plan  whose  initial  election  or
nomination  for  election as a director,  as the case may be, was approved by at
least a majority of the directors  who  comprised the incumbent  directors as of
the date of such election or nomination; or (iii) a sale of all or substantially
all of the assets of the  Company;  or (iv) the Board shall  approve any merger,
consolidation,  or like business  combination or  reorganization of the Company,
the  consummation of which would result in the occurrence of any event described
in clause (ii) above, and such transaction shall have been consummated.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.

                                        4
<PAGE>

7.  Miscellaneous

    (a) The incentive plans are not a contract for continued employment  and  do
        not limit the right of Agway to terminate your employment. You are,  and
        shall remain, an employee at will.

    (b) Annual incentive plans and multi-year incentive plans with substantially
        the same parameters for payment as set forth  in this document  will  be
        initiated in each ensuing fiscal year.

    (c) All  payments  under  the incentive plans are subject to income tax  and
        employment tax withholding.

    (d) The amounts payable under this plan are obligations of Telmark LLC.



<PAGE>
                                EXHIBIT 10.(aa)
<PAGE>
                                                                CONFIDENTIAL
September 26, 2002                                              ------------


To:           D. J. Edinger

From:         D. P. Cardarelli

Re:           INCENTIVE
              ---------

Dan,  please refer to the following  regarding the  components of your incentive
compensation  that may be  payable  in the event of  Agway's  "sale of  Telmark"
during  Agway's  fiscal year ending June 30, 2003.  This letter  supercedes  and
replaces  the  November  30, 2001 memo from Jerry Seeber to you and the July 19,
2002 memo from me to you.

     1.   If you  voluntarily  leave Agway at the end of the closing of any sale
          of Telmark during the fiscal year ending June 30, 2003, whether or not
          to join the acquirer,  under your Executive  Incentive Plan for Period
          Beginning  July 1, 2002,  you will be  considered  to have  terminated
          employment  for "good reason."  Therefore,  you will be eligible for a
          payout of one times your base  salary and a payout of both your annual
          and multi-year incentives at target, each, pro-rated for time in plan.

          In addition,  Telmark will also provide a retention  incentive  ("stay
          pay") for you to stay as President of Telmark during the period ending
          September 30, 2003 (or earlier date if  employment  is terminated  for
          "good reason") of $230,022. You will receive 50% of the stay pay as of
          March 31, 2003 and the  remaining 50% as of September 30, 2003. In the
          event of a sale of Telmark before September 30, 2003, you will receive
          100% of the stay pay, less any stay pay payments previously received.

     2.   In addition to any  payments  that may be made to you pursuant to your
          Executive  Incentive Plan and for stay pay,  Telmark will also provide
          an incentive for any sale of Telmark through  September 30, 2003. This
          incentive is provided in recognition of the added responsibilities you
          have  assumed and will  assume to prepare  for and  complete a sale of
          Telmark.

          This component will provide you with an incentive/bonus  payment equal
          to the difference between (a) $985,000,  and (b) the amount payable to
          you pursuant to paragraph 1. In other words,  if the closing of a sale
          of Telmark  occurs on or before  September 30, 2003, and if you remain
          as President of Telmark  through the closing date,  you will receive a
          combined  amount  equal to  $985,000,  a portion of which will be paid
          pursuant to your Executive Incentive Plan, a portion for stay pay, and
          the balance of which will be paid as an incentive/bonus  for a sale of
          Telmark.  This  payment  would be made  regardless  of the actual sale
          price.



<PAGE>


                                      - 2 -


     3.   Your right to the incentive/bonus payment described above, however, is
          subject to the following added conditions:

          a.   No amount will be payable pursuant to paragraph 2 if  the closing
               date of the sale of Telmark does not occur on or before September
               30, 2003.

          b.   No  amount  will  be  payable  pursuant  to  paragraph  2 if  you
               voluntarily  terminate your employment  prior to the closing of a
               sale of Telmark or if you  continue  your  employment  with Agway
               after the closing of a sale of Telmark.

          c.   The  amount  payable  pursuant  to  paragraphs  1  and  2  is  an
               obligation of Telmark LLC.

          d.   This letter is not  intended  as a  duplication  of amounts  that
               would otherwise be payable to you under your Executive  Incentive
               Plan.  The  provisions  of your  Executive  Incentive  Plan shall
               remain in force and effect.

          e.   In  order to avoid  the  application  of  Internal  Revenue  Code
               Sections  280G and 4999 to any payments  that may be made to you,
               in no event will you be  entitled  to  payments  pursuant to this
               memo,  your  Executive  Incentive  Plan, or otherwise  that would
               result in the  application  of the  non-deduction  and excise tax
               consequences  imposed by Internal  Revenue Code Sections 280G and
               4999.  Payments  to you  pursuant to this memo will be limited to
               the extent necessary to avoid any such application.

     4.   "Sale  of  Telmark"  means a sale of  Agway's  ownership  interest  in
          Telmark,  a sale of  substantially  all of the  assets of Telmark or a
          transfer of  substantially  all of the employees of Telmark to another
          party,  such other party to be administering  substantially all of the
          assets of Telmark.

Dan,  as  evidence of receipt and  acceptance  of the  contents of this  letter,
please sign and return one copy of this letter. Thank you.



/s/ Donald P. Cardarelli
--------------------------------
    Donald P. Cardarelli
    President and CEO
    Agway Inc.


/s/ Daniel J. Edinger
--------------------------------                    Date:   September 26 , 2002
    Daniel J. Edinger                                     ----------------------
    President
    Telmark LLC


/pf

cc:    S. H. Hoefer

<PAGE>
                                EXHIBIT 10.(ab)
<PAGE>

Name's:
-------
Jerry Seeber
------------

Positions:
----------
         Chief  Financial  Officer, & Chief Administration Officer
         ---------------------------------------------------------


                Incentive Plans For Period Beginning July 1, 2001
                -------------------------------------------------

1. Annual Incentive Plan for Fiscal 2002, Ending June 30, 2002

         EBITDA = $32.428M                                    10% Base Salary*
         Improve Agway Ops Leverage to 3.4 to 1               20% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         35% Base Salary*

         EBITDA = $34.428M                                    15% Base Salary*
         Improve Agway Ops Leverage to 3.3 to 1               25% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         50% Base Salary*

         EBITDA = $36.428M                                    30% Base Salary*
         Improve Agway Ops Leverage to 3.2 to 1               45% Base Salary*
         ---------------------------------------------------------------------
         Incentive for Meeting Both =                         75% Base Salary*
                       (*Base Salary As Of June 30, 2002)

         Definitions:
         *EBITDA Target                                       = $34.428M
         *EBITDA Budget                                       = $32.428M
         *Agway Ops Leverage Target - Debt/Equity             = 3.3 To 1
         *Agway Ops Leverage Budget - Debt/Equity             = 3.52 To 1
                       (*Based On Agway Operations Level)


2. Two Year Incentive Plan for Period Ending 6/30/03

           Improve Agway Ops Leverage To 3.1 to 1          50% Base Salary*
           Improve Agway Ops Leverage To 2.9 to 1          75% Base Salary*
           Improve Agway Ops Leverage To 2.7 to 1          100% Base Salary*
        (Agway Operations Leverage Budget - Debt/Equity - 6/30/03 = 3.56 to 1)
                       (*Base Salary As Of June 30, 2003)

3. Consideration will be given for additional incentives as a result of one-time
events that financially benefit Agway and occur during the term of the plans.

                                        1
<PAGE>


4. Payout Provisions

     (a) If EBITDA and Leverage Targets are met  at  different  levels  for  the
         purposeof annual incentive calculation,  the payout is the sum of the
         two  individual  payouts.  Example: If annual results for EBITDA equals
         Target  at $34.428M  (15%  Payout) and annual  leverage  result  equals
         maximum   payout level of 3.2 to 1 (45% Payout),  the total payout will
         be 60% of Base Salary.

     (b) All payouts will be in cash and shall be made in a lump sum  within  90
         days after the end of the term of the respective incentive plan.

     (c) EBITDA  will  be  calculated  after  the accrual of the expense for the
         incentive.

     (d) EBITDA  financial   covenants  under  Agway  Inc.'s   principal  credit
         agreements   in  effect  at the  time of each  reporting  period,  both
         quarterly and  annually,  must be exceeded in order for a payout  to be
         made  under  the  EBITDA  incentive  calculations  contained  in   this
         agreement.

5. Conditions

         (a) If the employee voluntarily terminates employment  for good  reason
         (as hereinafter defined) or if Agway  terminates his employment without
         cause (as  hereinafter  defined)  during  the plan  period,  he will be
         eligible for a  payout under both plans.  The payout will be calculated
         on a pro-rated   basis  (using  completed  weeks of service  during the
         incentive   period)  representative  of the employee's period of active
         full  time employment during the term of each such plan.

         (b) If the employee dies, retires (as hereinafter defined),  or becomes
         permanently   disabled  to  such a  degree  that he is  prevented  from
         performing  the  usual duties of his position,  he (or his estate) will
         be  eligible   for a  payout  under  both  plans.  The  payout  will be
         calculated   on a pro-rated  basis  (using  completed  weeks of service
         during  the incentive  period)  representative of the employee's period
         of  active full time employment during the term of each such plan.

         (c) If there is a change of control (as defined in the Indemnification
         Agreement between  Agway Inc. and the employee) during the plan period,
         the  employee  will  be deemed fully  vested in  both  the  annual  and
         long-term incentive plans. Fully vested means the payout  will be fully
         earned without a reduction.

                                        2
<PAGE>

         (d) The payout  for  three  events,  5(a), (b),  and (c) above, will be
         calculated based upon target performance. Upon the occurrence of one of
         these three events (a), (b) or (c) the  employee  (or his  estate) will
         also receive a  payout  equal  to  100% of  his base salary. Payout for
         these three events, 5(a), (b), and (c) above and payment of base salary
         shall be made  in a lump sum within 90 days after the occurrence of the
         event.

         (e) If the employee  voluntarily  quits without good reason or if Agway
         terminates his employment for cause during an unexpired plan period, he
         will  not be eligible for any part  of any  payout, payments  or  other
         compensation identified  in  this  document  for  the  applicable  plan
         period.

         (f) Incentives earned  under  this  plan  are  taken  into  account for
         purposes   of Agway's  employee  benefit  plan  programs  to the extent
         provided  by the terms of those programs in effect at the time payments
         are made.

         (g)  Under any of the events  described in 5(a), (b) or (c) above,  (i)
         the   employee  will be deemed on leave status in order to receive full
         employee benefits at active employee  contribution rates for one year,
         and   (ii)  the  employee  will  receive  for one  year  following  his
         termination  executive level career transition assistance services by a
         firm selected  by the employee and paid for by Agway.

In these incentive plans, "you" and "your" refer to and mean the employee.

For  purposes  of these  incentive  plans,  "cause"  means  termination  of your
employment  by  Agway  acting  in good  faith  due to  your  (i)  willful  gross
misconduct or gross negligence with respect to your responsibilities,  including
but not limited to misappropriating  any funds or property of Agway,  committing
any act involving fraud,  failing to perform in all material respects any duties
reasonably  required in the course of your  employment  (other than such failure
resulting from your  incapacity due to illness) after Agway has notified you and
you have failed to correct such failure within 10 days of such notice, violating
in any material  respect any written  policy of Agway or of your duty of loyalty
owed to  Agway,  or  acting  in any way that is  materially  detrimental  to the
business  reputation  of Agway,  (ii)  conviction  of, or a plea of guilty or no
contest to, a felony or crime of moral turpitude,  or (iii) willful repeated use
of alcohol or drugs,  or your untreated  alcoholism or drug abuse,  in each case
impairing your ability to perform your executive responsibilities.

                                        3
<PAGE>


For purposes of these  incentive  plans,  "good  reason"  means  termination  of
employment  by you  acting in good faith due to any of the  following  occurring
without your prior consent (i) any adverse change in your title or any change in
your  reporting  relationship,  (ii) any  diminution in your  responsibility  or
authority  or the  assignment  to you of  duties  which  are  inconsistent  with
responsibilities  normally  performed  by an  executive at your level in similar
businesses, (iii) any diminution in your compensation or benefits other than (a)
a diminution in your  compensation  that is  implemented  in connection  with an
across  the board  reduction  of  executive  salaries  of the  Company  or (b) a
modification  or elimination of any benefit plan that affects other employees of
Agway or other senior  executives of Agway generally,  (iv) the requirement that
you relocate  outside of the Syracuse,  NY area, or (v) the requirement that you
sign or be bound by a written noncompetition agreement.

For purposes of these  incentive  plans,  "retire" means attaining the age of 59
1/2 and having at least 3 years of continuous  active full-time  employment with
Agway immediately prior to the date of retirement.

For purposes of these incentive plans, "Base Salary" means the employee's annual
salary at the time of the event or indicated  determination  date before bonuses
or other incentives.

6.       Miscellaneous

         (a) The incentive plans are not a contract for continued employment and
             do  not  limit the right of Agway to terminate your employment. You
             are, and shall remain, an employee at will.

         (b) Annual  incentive  plans  targeted at 50% of Base Salary and multi-
             year incentive  plans  targeted  at  75%  of   Base   Salary   with
             substantially  the  same  parameters  for  payment  as set forth in
             Section 1 above will be initiated in each ensuing fiscal year.

         (c) All payments under the incentive plans are subject  to  income  tax
             and employment tax withholding.




                                        4

<PAGE>
                                EXHIBIT 10.(ac)
<PAGE>
                                     (logo)
             AGWAY INC. PO BOX 4933, SYRACUSE, NEW YORK 13221-4933
                                                      315-449-6127


Donald P. Cardarelli
President
and Chief Executive Officer



January 14, 2002


To:      G. R. Seeber

Re:      Incentive

Jerry,  please refer to the following regarding the components of your incentive
compensation  that  will be  payable  in the  event  of  Agway's  sale of  Agway
Insurance Company:

1.   If you  voluntarily  leave  Agway at the time of the closing of any sale of
     Agway Insurance  Company,  whether or not to join the acquirer,  under your
     Executive  Incentive  Plans for Period  Beginning July 1, 2001, you will be
     considered to have terminated employment for "good reason." Therefore,  you
     will be eligible for a payout of one times your base salary and a payout of
     both your annual and  multi-year  incentives at target,  each pro-rated for
     time in plan. An example of your payout if closing were to occur on May 31,
     02, follows:

         Closing for an Agway Insurance Company Sale Occurs 5/31/02
<TABLE>

         <S>                                                                         <C>
         Base Salary                                                                 $338,000

         Annual incentive pro-rated at target for period 5/31/02-6/30/02
                           (50% salary target x 11 months/12 months)                  154,917

         Multi-year incentive pro-rated at target for period 5/31/02-6/30/03
                           (75% salary target x 11 months/24 months)                  116,188
                                                                                      -------

                                                              Total                  $609,105
</TABLE>
     The  foregoing  is only an example of the cash  payment that may be made to
     you pursuant to your Executive Incentive Plans for Period Beginning July 1,
     2001.  (This  is not  intended  as a  duplication  of  amounts  that  would
     otherwise  be  payable  to you under that  plan.)  The  provisions  of your
     Executive Incentive Plan shall remain in full force and effect.

2.   In  addition  to any  payments  that  may be made to you  pursuant  to your
     Executive   Incentive   Plan,   Agway  will  also  provide  an   additional
     incentive/bonus  for you to stay as  President of Agway  Insurance  Company
     through any sale of Agway Insurance Company. This section is in recognition
     of the added  responsibilities  you have assumed and will assume to prepare
     for and complete a sale of Agway Insurance Company.

     Specifically  this  component  will  provide  you  with an  incentive/bonus
     payment equal to 2% of the gross sale price that Agway receives from such a
     sales  transaction  or one times  your  current  base  salary of  $338,000,
     whichever is greater. This payment would be made within 30 days of closing.




<PAGE>



                                      - 2 -



3.   Your right to the  incentive/bonus  payment  described above,  however,  is
     subject to the following added conditions:

         a.   No amount will be payable  pursuant to paragraph 2, if the closing
              of the sale of Agway Insurance Company does not occur on or before
              December 31, 2002;  however,  if a definitive  agreement  has been
              executed by all parties by December 31, 2002,  and such  agreement
              sets  forth a  required  closing  date of no later  than March 31,
              2003,  then you  will  still be  entitled  to the  incentive/bonus
              payment under paragraph 2 of this letter;

         b.   No  amount  will  be  payable  pursuant  to  paragraph  2,  if you
              voluntarily  terminate your  employment  prior to the closing of a
              sale  of  Agway  Insurance  Company,   or  if  you  continue  your
              employment  with  Agway  after  the  closing  of a sale  of  Agway
              Insurance Company; and

         c.   In  order  to avoid  the  application  of  Internal  Revenue  Code
              Sections 280G and 4999 to any payments that may be made to you, in
              no event will you be entitled  to payments  pursuant to this memo,
              your Executive  Incentive  Plan, or otherwise that would result in
              the application of the non- deduction and excise tax  consequences
              imposed by Internal Revenue Code Sections 280G and 4999.  Payments
              to you  pursuant  to this  memo  will  be  limited  to the  extent
              necessary to avoid any such application.

Jerry, we appreciate the many contributions you have made to Agway over the past
32 years.  I  sincerely  hope the above  meets with your  approval  and wish you
continued success in the future.





                                         /s/  Donald P. Cardarelli
                                         -------------------------
                                              DONALD P. CARDARELLI

/pf



<PAGE>
                                EXHIBIT 10.(ad)
<PAGE>









================================================================================


                            STOCK PURCHASE AGREEMENT

                                     Between

                                   AGWAY, INC.

                                       and

                            UNITED FARM FAMILY MUTUAL
                                INSURANCE COMPANY



                              DATED: June 14, 2002


================================================================================



<PAGE>


                                TABLE OF CONTENTS
                                -----------------
<TABLE>
<CAPTION>

                                                                                    Page
                                                                                    ----


<S>                                                                                <C>
BACKGROUND......................................................................    1

TERMS...........................................................................    1

ARTICLE 1 - DEFINITIONS; GENERAL PROVISIONS.....................................    1
         1.1      Definitions...................................................    1
         1.2      General Provisions............................................    8

ARTICLE 2 - PURCHASE AND SALE OF SHARES.........................................    8
         2.1      Purchase and Sale of Shares...................................    8
         2.2      Purchase Price................................................    8
         2.3      Payment of Purchase Price.....................................    9
         2.4      Escrow Deposit................................................    9
         2.5      Eligible Claims Adjustment....................................    9

ARTICLE 3 - RELATED TRANSACTIONS................................................    9
         3.1      Transfers By Seller...........................................    9
         3.2      Transfer and Payment..........................................    9
         3.3      Transfers by Company..........................................    9
         3.4      Endorsement Agreement.........................................   10
         3.5      Transition Service Agreement..................................   10
         3.6      Employment Agreement and Non-Competition and
                  Confidentiality Agreement.....................................   10
         3.7      Covenant Not To Compete.......................................   10
         3.8      Change of Name................................................   10
         3.9      Employees.....................................................   10

ARTICLE 4 - CLOSING.............................................................   11
         4.1      Closing.......................................................   11
         4.2      Closing Deliveries............................................   11

ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF SELLER............................   13
         5.1      Organization; Good Standing, Licenses.........................   13
         5.2      Capitalization................................................   13
         5.3      Authority; No Conflict........................................   14
         5.4      Financial Statements..........................................   15
         5.5      No Material Adverse Change....................................   15
         5.6      Title To Assets; Encumbrances.................................   15
         5.7      Taxes.........................................................   16
         5.8      Employee Benefits.............................................   17
         5.9      Legal and Regulatory Compliance...............................   17
         5.10     Legal Proceedings and Contingent Liabilities; Orders..........   18

</TABLE>

<PAGE>
<TABLE>
<S>                                                                                <C>
         5.11     Absence of Certain Changes and Events.........................   18
         5.12     Contracts.....................................................   19
         5.13     Insurance; Reinsurance........................................   20
         5.14     Employees and Agents..........................................   21
         5.15     Labor Matters.................................................   22
         5.16     Intellectual Property.........................................   23
         5.17     Relationships With Related Persons............................   23
         5.18     Powers of Attorney and Suretyships............................   23
         5.19     Warranties....................................................   23
         5.20     Brokers or Finders............................................   23
         5.21     Exclusivity of Representations................................   23
         5.22     Disclosure....................................................   24

ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................   24
         6.1      Organization and Good Standing................................   24
         6.2      Authority; No Conflict........................................   24
         6.3      Certain Proceedings...........................................   24
         6.4      Brokers or Finders............................................   24
         6.5      Investment Representations....................................   25
         6.6      Financial and Regulatory Matters..............................   25
         6.7      Purchaser's Business Decision.................................   25

ARTICLE 7 - DUE DILIGENCE; UPDATES TO SCHEDULES.................................   25
         7.1      Completion; Verification......................................   25
         7.2      Notice of Breach..............................................   25
         7.3      Updates to Schedules..........................................   26

ARTICLE 8 - COVENANTS OF SELLER.................................................   26
         8.1      Operation of the Business of Company..........................   26
         8.2      No Negotiation................................................   27
         8.3      Consents......................................................   27
         8.4      Cooperation...................................................   27

ARTICLE 9 - COVENANTS OF PURCHASER..............................................   28
         9.1      Consents......................................................   28
         9.2      Cooperation...................................................   28

ARTICLE 10 - CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE............   28
         10.1     Accuracy of Representations...................................   28
         10.2     Performance...................................................   28
         10.3     Consents......................................................   29
         10.4     No Proceedings; No Material Adverse Change....................   29
         10.5     Agreements with Mr. Seeber....................................   29

ARTICLE 11 - CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE...............   29
         11.1     Accuracy of Representations...................................   29

</TABLE>

<PAGE>
<TABLE>
<S>                                                                                <C>
         11.2     Purchaser's Performance.......................................   29
         11.3     Consents......................................................   30
         11.4     No Proceedings................................................   30

ARTICLE 12 - TERMINATION........................................................   30
         12.1     Termination Events; Opportunity to Cure.......................   30
         12.2     Effect of Termination.........................................   31

ARTICLE 13 - INDEMNIFICATION; REMEDIES..........................................   32
         13.1     Survival......................................................   32
         13.2     Indemnification By Seller.....................................   32
         13.3     Indemnification By Purchaser..................................   32
         13.4     Time Limitations..............................................   33
         13.5     Limitations on Amount of Liability............................   33
         13.6     Procedure for Indemnification - Third Party Claims............   33
         13.7     Exclusive Remedies............................................   34
         13.8     Certain Exclusions............................................   34

ARTICLE 14 - TAX MATTERS........................................................   34
         14.1     Tax Returns...................................................   34
         14.2     Cooperation - Tax Matters.....................................   35
         14.3     Records.......................................................   36
         14.4     Audits........................................................   36
         14.5     Indemnity.....................................................   37
         14.6     Purchase Price Allocation.....................................   37
         14.7     Section 338(h)(10) Election...................................   37
         14.8     Transfer and Similar Taxes....................................   39
         14.9     Refunds.......................................................   39
         14.10    Tax Sharing Arrangement.......................................   39
         14.11    Conflicts.....................................................   39

ARTICLE 15 - GENERAL PROVISIONS.................................................   39
         15.1     Expenses......................................................   39
         15.2     Public Announcements..........................................   39
         15.3     Confidentiality...............................................   39
         15.4     Notices.......................................................   40
         15.5     Jurisdiction; Service of Process..............................   41
         15.6     Further Assurances............................................   41
         15.7     Books and Records.............................................   41
         15.8     Waiver........................................................   42
         15.9     Entire Agreement and Modification.............................   42
         15.10    Assignments, Successors, and No Third-Party Rights............   42
         15.11    Severability..................................................   42
         15.12    Section Headings, Construction................................   42
         15.13    Time of Essence...............................................   43
         15.14    Governing Law.................................................   43
         15.15    Counterparts..................................................   43
</TABLE>
EXHIBITS
--------

Exhibit A                  -       Covenant Not To Compete
Exhibit B                  -       Escrow Agreement
Exhibit C                  -       Endorsement Agreement
Exhibit D                  -       Transition Services Agreement
Exhibit E-1                -       Closing Certificate of Seller
Exhibit E-2                -       Closing Certificate of Purchaser
Exhibit F                  -       Opinion of Counsel to Seller
Exhibit G-1                -       Opinion of Counsel to Purchaser
Exhibit G-2                -       Opinion of Local Counsel to Purchaser
Exhibit H                  -       Financial Statements





<PAGE>

                            STOCK PURCHASE AGREEMENT
                            ------------------------

         This STOCK PURCHASE  AGREEMENT (the "Agreement") is made and entered as
of June    ,  2002 by and  between  AGWAY,  INC.,  an  agricultural  cooperative
        ---
incorporated under the laws of the State of Delaware  ("Seller") and UNITED FARM
FAMILY  MUTUAL  INSURANCE  COMPANY,  an Indiana  mutual  property  and  casualty
insurance company (d/b/a Indiana Farm Bureau Insurance "Purchaser").

                                   BACKGROUND
                                   ----------

         A. Seller owns all of the issued and outstanding capital stock of AGWAY
INSURANCE  COMPANY,  a New York  property  and casualty  insurance  company (the
"Company").

         B. Company is a licensed  insurance company under the laws of the State
of New York and sixteen other  jurisdictions.  In connection with the foregoing,
Company  conducts  the business of a licensed  property  and casualty  insurance
company  including,  underwriting,  marketing  and  administering  property  and
casualty insurance policies (the "Business").

         C.  Purchaser  desires  to  purchase  Company  and  its  Business  and,
accordingly,  the  Purchaser  is willing to purchase  from the  Seller,  and the
Seller is willing to sell to the  Purchaser,  all of the issued and  outstanding
shares of capital stock of Company on the terms and conditions set forth in this
Agreement.

                                      TERMS
                                      -----

         NOW,  THEREFORE,  in  consideration  of the  premises and of the mutual
covenants,  agreements,  representations,  and  warranties  set  forth  in  this
Agreement,  and for other  good and  valuable  consideration,  the  receipt  and
sufficiency of which hereby are acknowledged,  the parties, each intending to be
legally bound, hereby agree as follows:

                                    ARTICLE 1
                                    ---------

                         DEFINITIONS; GENERAL PROVISIONS
                         -------------------------------

                  1.1  Definitions.  For  purposes  of  this  Agreement  and the
                       -----------
attached Exhibits and the Schedules, the following terms shall have the meanings
specified or referred to in this Section, unless the context otherwise requires:

                           "ADSP" - is defined in Section 14.7(b).

                           "Agway, Inc. Assets" - certain assets used by Company
in its Business that are owned by Seller or Seller's Related Persons (other than
Company) and that are to be  transferred  to Purchaser at Closing as provided in
Section 3.1.

                           "Allocation  Agreement" - the agreement  described in
Section 14.7(b).

                                       1
<PAGE>

                           "Balance  Sheet" - the  statutory  balance  sheets of
Company  as of  December  31,  2001,  copies of which  will be  included  in the
Financial Statements.

                           "Balance Sheet Date" - December 31, 2001.

                           "Breach" - a "Breach" of a representation,  warranty,
covenant, obligation or other provision of this Agreement will be deemed to have
occurred if there is or has been any  material  inaccuracy  in, or breach of, or
any material  failure to perform or comply with, the  representation,  warranty,
covenant, obligation or other provision.

                           "Business"   -  the   business   as  defined  in  the
Background to this Agreement.

                           "Closing" - the  consummation  of the purchase of the
Purchased  Shares,  payment of the Purchase  Price and execution and delivery of
documents  as set forth in  Article  4 of this  Agreement.  Except as  otherwise
expressly  provided in this  Agreement or in any document  contemplated  in this
Agreement,  all  matters  at the  Closing  shall  be  considered  to take  place
simultaneously  and no delivery of any documents  shall be deemed complete until
all transactions and deliveries of documents are completed.

                           "Closing  Date" - the date  and time as of which  the
Closing actually takes place.

                           "Code"  - the  Internal  Revenue  Code  of  1986,  as
amended,  or any  successor  law.

                           "Company"  - Agway  Insurance  Company,  a  New  York
property and casualty insurance company.

                           "Company  Common  Stock" - the  authorized  capital
stock of Company  consisting of two hundred sixty-five thousand (265,000) shares
of $20 par, capital stock.

                           "Company  Employee"  - at any  specified  time,  each
person directly employed by Company.

                           "Computation" - the computation  described in Section
14.7(b).
                           "Consent"  -  any  approval,  consent,  ratification,
waiver,  or other  authorization  or  release,  including,  but not  limited to,
shareholder  approval,  board of director approval,  third party consent and any
Governmental Authorization.

                           "Contemplated  Transactions" - the sale and  purchase
of the Purchased Shares and the consummation of the Related  Transactions  under
this Agreement.

                           "Contract"  -  any  agreement  or  contract  (whether
written  or oral)  that is legally binding.

                                       2
<PAGE>

                          "Covenant Not To Compete" - An agreement among Seller,
the  Company  and  Purchaser  in the form of  Exhibit  A to be  entered  into at
Closing.                                       ---------




                           "Damages"  -  collectively, all claims,  Liabilities,
obligations,  losses,  damages,  deficiencies,  assessments,  judgments,  costs,
expenses (including,  without limitation,  reasonable  attorneys' fees and costs
and  expenses  incurred  in  investigating,   preparing,  defending  against  or
prosecuting  any  litigation  or claim,  action,  suit,  or other  Proceeding or
demand),  with  respect  to which the Seller or the  Purchaser  is  entitled  to
receive  indemnification  pursuant to the  provisions of Sections 13.2 and 13.3,
respectively;  provided,  however,  that (i) in no event shall "Damages" include
punitive damages or lost profits or other  incidental or  consequential  damages
and (ii) in the event that the loss,  claim or other Liability that gave rise to
the right to receive  indemnification (A) is covered by insurance  maintained by
or for the benefit of the party entitled to receive  indemnification or that was
heretofore  or is  hereafter  maintained  by  Company,  or (B)  results in a Tax
Benefit  to the party  entitled  to receive  indemnification,  the amount of any
"Damages" that such party would otherwise be entitled to receive will be reduced
by the amount of any such insurance proceeds or Tax Benefit.

                           "Disclosure  Schedules"  - Schedules  referenced  in
Articles 3 and 5 to be delivered to Purchaser by Seller,  and Schedule 6.2(c) to
be delivered to Seller by Purchaser,  simultaneously with, and pursuant to, this
Agreement.

                           "Eligible  Claims" - claims  with  respect to assumed
reinsurance  written  by the  Company  prior to 1980  that were  unreserved,  or
inadequately reserved, as of December 31, 2001.

                           "Employee Benefit Plans" - collectively,  all "plans"
(as  defined  in ERISA  Section  3(3))  (i) of which  Company  is or was a "Plan
Sponsor"  (as  defined  in ERISA  Section  3(16)(B))  or (ii) to  which  Company
otherwise  contributes or has  contributed  or (iii) in which Company  employees
otherwise participate or have participated.

                           "Employment  Agreement" - an employment  agreement to
be entered into among  Purchaser, Company and Gerald R. Seeber.

                           "Encumbrance" - any mortgage, easement, right of way,
charge, claim, community property interest, condition, equitable interest, lien,
option,  pledge,  security  interest,  right of first refusal or  restriction or
adverse claim of any kind,  including any restriction on use, voting,  transfer,
receipt of income, or exercise of any other attribute of ownership, or any other
encumbrance or exception to title of any kind.

                           "Endorsement Agreement" - An agreement between Seller
and  Company  in the form of Exhibit C to be entered into at Closing.

                           "Environmental,  Health and Safety Liabilities" -
collectively,  any Liabilities  arising from or under any  Environmental  Law or
Occupational Safety and Health
Law.

                                       3
<PAGE>

                           "ERISA" - the  Employee  Retirement  Income  Security
Act of 1974, as amended,  or any successor law, and regulations and rules issued
pursuant to that act or to any successor law.

                           "ERISA   Affiliate"  - means  (a)  any   corporation
included with Company or Seller in a controlled group of corporations within the
meaning of Section 414(b) of the Code; (b) any trade or business (whether or not
incorporated)  which is under common  control with Company or Seller  within the
meaning of Section 414(c) of the Code; (c) any member of any affiliated  service
group of which  Company  or Seller is a member  within  the  meaning  of Section
414(m) of the Code; or (d) any other person or entity treated as an affiliate of
any of Company or Seller under Section 414(o) of the Code.

                           "Escrow Agent" - JPMorgan Chase

                           "Escrow  Agreement" - an agreement  among the parties
and the Escrow Agent in the form of Exhibit B to be entered at Closing.
   ---------

                           "Escrow  Deposit" - the amount  to  be  deposited  by
Purchaser  with the Escrow Agent as provided in Section 2.4.

                           "Financial Statements" - collectively,  (i) Company's
audited  statutory  statements of admitted assets, liabilities and surplus as of
December  31,  1999,  2000 and 2001,  and the related  statutory  statements  of
income,  changes in surplus, and cash flows for the years then ended,  including
the notes thereto, prepared by  PricewaterhouseCoopers,  LLP, and (ii) Company's
internally  prepared balance sheets and related interim statutory  statements of
income,  changes in surplus and cash flows for the period from December 31, 2001
to May 31,  2002.  Copies of the audited  Financial  Statements  are attached as
Exhibit H.

                           "GAAP" - at any particular time,  generally  accepted
accounting  principles as in effect in the United States at such time; provided,
however,  that,  if it is or was  permissible  to use more than one principle at
such time in respect of a particular  accounting  matter,  "GAAP" shall refer to
the principle which is or was then employed by Company.

                           "Governmental  Authorization" - any Consent,  license
or permit issued, granted or given by or under the authority of any Governmental
Body or pursuant to any Legal Requirement.

                           "Governmental  Body"  -  any  federal,  state, local,
municipal, foreign or other governmental or quasi-governmental entity, including
an arbitrator, or authority of any nature.

                           "Income  Tax" - any Tax  measured  in  whole  or part
by gross  income,  adjusted  gross  income,  or net  income,  as such  terms are
understood for federal Tax purposes.

                           "Indiana Commissioner" - Commissioner of the Indiana
Department.

                           "Indiana Department" - the Indiana  Department of
Insurance.

                                       4
<PAGE>

                           "Independent Firm" - is defined in Section 14.1(a).

                           "Intellectual   Property"  -  all  software,   trade
secrets,   patents,  trademarks, copyrights, and any applications therefor in or
to which Company has any right or claim.

                           "IRS" - the Internal Revenue Service or  a  successor
agency  performing  similar functions.

                           "Knowledge" -  an  individual  will be deemed to have
"Knowledge" of a particular fact or matter if the individual is  actually  aware
of the  fact  or  matter, or a reasonable individual in a similar capacity would
have knowledge of the fact or matter. A Person other than an individual shall be
deemed  to  have "Knowledge" of  a  particular fact or matter  if any individual
serving as an officer or director  (or in any similar  capacity)  of such Person
has  Knowledge  of the fact or  matter,  or a  reasonable  Person  in a  similar
capacity would have knowledge of the fact or matter.

                           "Leases" - collectively, leases for Personal Property
to which Company is a party.

                           "Legal  Requirement"  - any  United  States  federal,
state  or local  law,  ordinance, principle of common law, regulation or statute
as in effect on the date hereof.

                           "Liabilities"  - Any debts,  obligations,  duties or
liabilities  of any nature  which would be required to be disclosed on a balance
sheet prepared in accordance with SAP or GAAP.

                           "Material  Adverse  Effect" or  "Material  Adverse
Change" - any change or effect with  respect to  Company,  other than losses and
claims from  insurance  policies,  which is materially  adverse to its licenses,
permits,  certificates  of  authority  or,  taken as a whole,  to its  Business,
operations, assets, or financial condition.

                           "New York Superintendent" - the Superintendent of the
New York Department.

                           "New York Department" - the  New York State Insurance
Department.

                           "Occupational  Safety  and  Health  Law" - any  Legal
Requirement  or  governmental  program  designed to provide  safe and  healthful
working conditions, and to reduce occupational safety and health hazards.

                           "Order" - any  award, decision, injunction, judgment,
order, ruling,  subpoena,  or verdict entered,  issued, made, or rendered by any
court, administrative agency, or other Governmental Body.

                           "Owned  Tangible  Personal  Property" - is defined in
Section 5.6(b).

                                       5
<PAGE>

                           "Person" - any individual,  corporation,  general  or
limited partnership,  limited liability company,  joint venture,  estate, trust,
association, organization, or other entity or Governmental Body.

                           "Personal Property" - is defined in Section 5.6(c).

                           "Plans" - any plan defined in Section 5.8(b).

                           "Proceeding"  -  any action, claim, dispute,  demand,
arbitration,  audit, hearing, investigation, litigation, or suit (whether civil,
criminal,   administrative,   investigative  or  informal)  commenced,  brought,
conducted, or heard by or before, or otherwise involving, any Governmental Body.

                          "Purchase Price" - the consideration for the Purchased
Shares  payable by Purchaser pursuant to Section 2.2.

                           "Purchased Shares" - collectively, 265,000 issued and
outstanding  shares of Company Common Stock.

                           "Related  Person" - (1) with respect to a Person that
is an individual shall mean: (i) each other member of the individual's immediate
family; (ii) any Person that is directly or  indirectly  controlled  by any  one
or  more members of the individual's  immediate family; or (iii) any Person with
respect to which one or more members of the individual's immediate family serves
as a director,  officer,  partner, or trustee (or in a similar capacity); or (2)
with respect to a specified  Person other than an individual shall mean: (i) any
Person  that  directly  or  indirectly  controls,   is  directly  or  indirectly
controlled  by, or is directly  or  indirectly  under  common  control  with the
specified  Person;  and (ii) each Person  that  serves as a  director,  officer,
partner, or trustee of the specified Person (or in a similar capacity).

                           As  used  in  this  definition,   "control,"  or  any
derivation thereof, shall mean possession,  directly or indirectly, of the power
to direct or cause the direction of management or policies  (whether through the
ownership of securities  or of  partnership  or other  ownership  interests,  by
contract or otherwise),  provided,  that, in any event,  any Person that owns or
holds,  directly  or  indirectly,  ten  percent  (10%)  or  more  of the  voting
securities  or ten  percent  (10%) or more of the  partnership  or other  equity
interests of any other Person  (other than as a limited  partner of such Person)
will be deemed to control that corporation or other Person.

                           "Related  Transactions" - the  transactions  required
under Article 3.

                           "Representative"  - with  respect  to  a   particular
Person  shall  include  any  director,  officer,  employee,  agent,  consultant,
advisor,  or other  representative  of such  Person,  including  legal  counsel,
accountants and financial advisors.

                           "SAP"  - statutory  accounting  practices  prescribed
or permitted by the Insurance  Department of the State of New York, as described
in Note 1 to the Audited Financial Statements.

                                       6
<PAGE>

                           "Schedules" - means all of the  Disclosure  Schedules
delivered by Seller to Purchaser,  and Schedule 6.2(c) to be delivered to Seller
                                       --------------
by Purchaser, contemporaneously with the execution of this Agreement.

                           "Section 338(h)(10) Election" - is defined in Section
14.7

                           "Section 338 Forms" - is defined in Section 14.7(a).

                           "Share Purchase Price" - is defined in Section 14.6.

                          "Tax" - any tax of any kind, levy, assessment, tariff,
duty,  impost,  charge or fee,  including,  without  limitation,  income,  gross
receipts, franchise, ad valorem, value added, excise, real or personal property,
asset,  sales,  use,  license,   payroll,   transaction,   capital,  net  worth,
withholding,   estimated,   social  security,  utility,  workers'  compensation,
severance, production, unemployment compensation,  occupation, premium, windfall
profits,  transfer and gains taxes or other taxes or similar governmental charge
or  assessment  of any kind  imposed,  assessed  or  collected  by or under  the
authority of any Governmental Body,  together with any interest,  additions,  or
penalties with respect  thereto and any interest in respect of such additions or
penalties.

                           "Tax Audit" - is defined in Section 14.4.

                           "Tax  Benefit" - with respect to Damages,  the amount
of actual Tax savings realized by the party entitled to receive  indemnification
for such Damages in the taxable year in which such Damages are incurred.

                           "Tax  Return" - any   return,  report,  statement,
declaration,  estimate,  form  or  other  document  (including  any  related  or
supporting information) filed with or submitted to, or required to be filed with
or submitted to, any  Governmental  Body in connection  with the  determination,
assessment, collection, reporting, or payment of any Tax.

                           "Tax Sharing  Arrangement" - any written or unwritten
agreement or  arrangement  to which the Company is a party for the allocation or
payment of Tax  Liabilities  or payment  for any  increase  or  decrease  of Tax
Liabilities or payment with respect to a combined,  consolidated  or unitary Tax
Return that includes Company.

                           "Threatened"  - a Proceeding, claim, dispute or other
matter will be deemed to have been  "Threatened"  if any demand or statement has
been made in writing or any notice has been given in writing.

                           "Transfer Taxes" - all sales, transfer, recording, ad
valorem,  privilege,  documentary,  registration,  conveyance,  excise, license,
gains, stamps, duties or similar Taxes.

                           "Transferred  Books  and  Records"  - is  defined  in
Section 15.7.

                                       7
<PAGE>

                          "Transition Services Agreement" - an Agreement between
Seller and Company in the form of Exhibit D to be entered into at Closing.
                                  ---------

                           "Updated Schedules" - is defined in Section 7.3.

                  1.2      General Provisions.
                           ------------------

                           (a)   Unless  expressly  provided  otherwise  in this
Agreement,  or unless the context requires otherwise:

                                    (i)     all  accounting  terms used in  this
         Agreement  shall have the meanings or interpretation  given  to them in
         accordance with SAP or GAAP, as the context may require;

                                   (ii)    the singular shall mean  the  plural,
         the  plural  shall  mean the singular,  and the use of any gender shall
         include all genders; and all references to any particular party defined
         herein shall be deemed to refer  to  each  and  every  Person   defined
         herein  as  such  party individually, and to all of them, collectively,
         jointly  and  severally,  as  though  each  were  named  wherever  the
         applicable defined term is used;

                                  (iii)   all  references to  "Sections"   shall
         be deemed to refer to the provisions of this Agreement, all  references
         to "Exhibits"  shall be deemed to refer to Exhibits to this Agreement;

                                  (iv)    all  references  to  time herein shall
         mean Eastern Standard  Time or Eastern Daylight Time, as then in effect
         in Syracuse, New York; and
                                  (vi)    all    references    to   sections,
         subsections,   paragraphs  or other provisions of any Legal Requirement
         that consists of a law, ordinance, regulation, statute or treaty, shall
         be deemed  to  include  successor,  amended, renumbered and replacement
         provisions thereof.

                                    ARTICLE 2
                                    ---------

                          PURCHASE AND SALE OF SHARES
                          ---------------------------

                  2.1 Purchase and Sale of Shares.  On the terms and  conditions
                      ---------------------------
set forth in this  Agreement,  at the Closing  Purchaser  will purchase from the
Seller,  and the Seller will sell,  assign,  transfer  and deliver to  Purchaser
(free and clear of all Encumbrances), all of the Purchased Shares.

                  2.2 Purchase Price. Subject to possible adjustment as provided
                      ---------------
in Section 2.5, the  consideration to be paid by the Purchaser to the Seller for
all  Purchased  Shares shall be an amount equal to  Twenty-One  Million  Dollars
($21,000,000.00),  which amount shall  include the Five Hundred  Fifty  Thousand
Dollar ($550,000) Escrow Deposit described in Section 2.4.

                                       8
<PAGE>

                  2.3 Payment of Purchase Price.  The Purchase  Price,  less the
                      -------------------------
Escrow  Deposit,  shall be paid by Purchaser at the Closing by wire  transfer of
immediately  available  funds to an account to be  designated  at least two days
before the Closing Date by Seller.

                  2.4 Escrow Deposit. Subject to possible adjustment as provided
                      --------------
in Section  2.5, at or prior to Closing  Purchaser  shall  deliver to the Escrow
Agent Five Hundred Fifty Thousand Dollars  ($550,000) (the "Escrow  Deposit") to
be held in escrow and disbursed as provided in the Escrow Agreement.

                  2.5 Eligible  Claims  Adjustment.  The Purchase  Price and the
                      ----------------------------
amount of the Escrow Deposit shall be reduced by the amount, if any, of Eligible
Claims paid by Company  prior to the Closing,  provided that the total amount of
any such reduction shall not exceed $550,000. Eligible Claims paid after Closing
shall be paid from the Escrow Deposit without further adjustment.

                                    ARTICLE 3
                                    ---------

                              RELATED TRANSACTIONS
                              --------------------

                  3.1      Transfers  By  Seller.  Certain  assets  used  by
                           ---------------------
Company in its business are owned by Seller or Related  Persons of Seller (other
than  Company).  At or prior to the  Closing,  Seller  will cause the  following
assets to be transferred and conveyed to the Company:

                           (a)   Fixed  Assets.  The fixed assets  listed on
                                 -------------
Schedule  3.1(a) of the  Disclosure Schedules.

                           (b)   Trademarks. The registered service marks listed
                                 ----------
on Schedule  3.1(b) to the Disclosure Schedules.

                           (c)   Information Technology.  The  computer hardware
                                 ----------------------
and software listed on Schedule 3.1(c) of the Disclosure Schedules.
------

                           Hereafter, the assets described in  Sections  3.1(a),
(b) and (c) are  referred  to collectively as the "Agway, Inc. Assets."

                  3.2    Transfer and Payment . Seller shall transfer,  or cause
                         --------------------
to be  transferred,  good and marketable  title to the Agway,  Inc.  Assets,  to
Company,  free and  clear  of all  Encumbrances,  but  subject  to the  software
licenses listed in Schedule 3.1(c) of the Disclosure Schedules.  All Agway, Inc.
Assets  shall be  transferred  to the  Company  "as is" except  that Agway shall
assign to the Company its rights  under any third party  warranties  relating to
the Agway, Inc. Assets.

                  3.3   Transfers by Company. Prior to the Closing, Company will
                        --------------------
assign and  transfer  to Seller all rights  (including  the right to use) in the
name "Agway,"  including all trade names and marks,  registered or unregistered,
that include the name "Agway," provided, however, that Company shall be entitled
to use the name "Agway" in identifying  itself as "successor to Agway  Insurance
Company" or "formerly known as Agway Insurance Company" and similar  identifying


                                       9
<PAGE>

phrases for a period of one year,  under the terms and subject to the conditions
set forth in the Endorsement Agreement.

                  3.4   Endorsement  Agreement.  - At the  Closing,  Seller  and
                        ----------------------
Company  shall  enter  into an Endorsement Agreement in the form of Exhibit C.


                  3.5      Transition  Service  Agreement. - At Closing,  Seller
                           ------------------------------
and  Company  shall enter into a  Transition  Service  Agreement  in the form of
Exhibit D.


                  3.6    Employment    Agreement   and    Non-Competition    and
                        -------------------------------------------------------
Confidentiality  Agreement. - At the Closing,  Purchaser,  Company and Company's
--------------------------
current President, Gerald R. Seeber, will enter into an Employment Agreement and
a Non-Competition and  Confidentiality  Agreement on terms to be agreed upon for
the continuation of Mr. Seeber's employment by Company following Closing.

                  3.7    Covenant Not To Compete. At Closing, Seller and Company
                         -----------------------
shall enter into a Covenant Not To Compete in the form of Exhibit A.


                  3.8   Change of Name. - Effective as of the Closing, Company's
                        --------------
charter shall be amended  pursuant to Section 1206 of the New York Insurance Law
to change its  corporate  name to a new name to be selected by  Purchaser  which
will not contain the word "Agway."

                  3.9      Employees.
                           ---------

                           (a)  Effective as of the Closing  Date,  Seller shall
cause the Company to  terminate  the  employment  of such  Company  Employees as
Purchaser  shall  specify  in a notice  delivered  to  Seller  within 60 days of
signing this Agreement (the "Terminated Company Employees").  Subject to Article
13, Purchaser shall  indemnify,  defend and hold Seller harmless from any claims
or  Proceedings  by  the  Terminated   Company  Employees   asserting  that  the
termination of their  employment  pursuant to this Section 3.9(a)  constituted a
wrongful termination in violation of applicable law, provided, however, that the
foregoing  covenant shall not extend to claims or Proceedings  seeking benefits,
rights or remedies  (including,  without limitation,  severance and other fringe
benefits)  under any of the Plans.  Any suit or Proceeding as to which Purchaser
is  obligated  to indemnify  Seller  pursuant to this  Section  3.9(a) shall not
constitute a Material Adverse Change for purposes of this Agreement.

                           (b)   Seller shall coordinate the termination of each
Terminated  Company  Employee  with  Purchaser  and  shall  allow  Purchaser  to
participate in such termination  process to the extent  Purchaser  desires to do
so.  Seller  shall be solely  responsible  for and shall  provide all  severance
benefits and other fringe benefits Company  Employees are eligible for under the
Plans,  including without limitation vacation pay earned or accrued but not used
by all Company  Employees on or prior to the Closing Date.  In addition,  Seller
shall be solely  responsible  for and shall provide all accrued  benefits and/or
contributions under the Plans.

                                       10
<PAGE>


                           (c)   Except  as  set  forth  on  Schedule 3.9 of the
Disclosure Schedules, effective as of the Closing Date, Seller shall, and to the
extent necessary or appropriate shall cause the Company to, terminate the active
participation of all Company  Employees in the Plans such that Company Employees
shall not accrue additional benefits under the Plans after the Closing Date.

                           (d)   Effective as of the Closing Date,  Seller shall
and,  to the  extent  necessary  or  appropriate  shall  cause the  Company  to,
terminate the Company's participation in all Plans.

                                    ARTICLE 4
                                    ---------

                                     CLOSING
                                     -------

                  4.1    Closing. Unless otherwise agreed, the Closing will take
                         -------
place at the offices of Bond,  Schoeneck & King,  LLP in  Syracuse,  New York at
10:00 a.m. on the date that is ten (10) business days following the satisfaction
(or waiver) of all conditions to Closing.

                  4.2    Closing Deliveries.  At the Closing:
                         ------------------

                         (a)   The  Seller  will  deliver,  or   cause  to  be
delivered, to Purchaser:

                               (i)     the   original   stock   certificates
         representing all of the Purchased Shares  accompanied  by duly executed
         stock transfer powers endorsed in blank;

                               (ii)    the  minute  book,  stock  records,  and
         corporate seal of Company;

                               (iii)   certified  copies of  resolutions   duly
         adopted  by  the  board  of directors of Seller approving the execution
         and delivery of this Agreement and the consummation of the Contemplated
         Transactions;

                               (iv)   certificates contemplated by Section 10.1,
         10.2, 10.3 and 10.4;

                               (v)    a certificate of compliance  issued by the
         New  York  Department  and  the insurance regulatory authority for each
         other jurisdiction in which Company is conducting Business;

                               (vi)   copies  of the  certificate  of  authority
         of  Company  for  each  state or other jurisdiction in which Company is
         conducting Business;

                               (vii)   the  Covenant  Not  To  Compete  executed
         by Seller;

                               (viii)  the Escrow Agreement executed by Seller;

                               (ix)    the  Endorsement  Agreement  executed  by
         Seller;

                                       11
<PAGE>

                               (x)    the Transition Services Agreement executed
         by Seller;

                               (xi)    a  closing  certificate  executed  by the
         Seller in  substantially  the form attached as Exhibit E-1;
                                                        -----------

                               (xii)   resignations,   effective   as   of   the
         Closing  Date,  of  all of the directors and  officers of Company  with
         the exception of Gerald R. Seeber and any Vice President(s), designated
         by  Purchaser, who  will  continue  employment  with  Company after the
         Closing Date;

                               (xiii)  documents  reasonably   satisfactory   to
         Purchaser evidencing the transfer and conveyance  of  the  Agway,  Inc.
         Assets to the Company by Seller;

                               (xiv)   an  opinion  letter  of  Bond,  Schoeneck
         & King,  LLP,  counsel  to the Seller and Company, in the form attached
         as Exhibit F;
            ---------

                               (xv)    all other certificates,  instruments  and
         documents to be delivered by the Seller and/or Company pursuant to this
         Agreement.

                      (b)      Purchaser will deliver, or cause to be delivered,
         to the Seller:

                               (i)     the Purchase  Price payable in the manner
         described in Section 2.3;

                               (ii)    certified   copies  of  resolutions  duly
         adopted  or  consented  to  by  the  board  of  directors  of Purchaser
         approving the execution and delivery by Purchaser of this Agreement and
         the consummation of the Contemplated Transactions;

                              (iii)  certificates contemplated by Sections 11.1,
         11.2., 11.3 and 11.4;

                              (iv)    the  Covenant Not  To Compete  executed by
         Company;

                              (v)    the Escrow Agreement executed by Purchaser;

                              (vi)    the  Endorsement  Agreement  executed  by
         Company;

                              (vii)   the Transition Services Agreement executed
         by Company; and

                              (viii)  a   closing   certificate   executed  by
         Purchaser in substantially the form attached as Exhibit E-2;
                                                         -----------

                              (ix)    opinion  letters of counsel to  Purchaser,
         Sommer & Barnard,  P.C. and Hinman  Straub  P.C., in  substantially the
         form attached as Exhibit G-1 and Exhibit G-2; and
                          -----------     -----------

                                       12
<PAGE>

                              (x)    all  other  certificates,  instruments  and
         documents to be delivered by Purchaser pursuant to this Agreement.

                                    ARTICLE 5
                                    ---------

                    REPRESENTATIONS AND WARRANTIES OF SELLER
                    ----------------------------------------

                  Seller represents and warrants to Purchaser as follows:

                  5.1      Organization; Good Standing, Licenses.
                           -------------------------------------

                           (a)   Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,  and with
all  requisite  power to enter  into and  perform  its  obligations  under  this
Agreement.

                           (b)   Company  is   a  corporation   duly  organized,
validly existing,  and in good standing under the laws of the State of New York,
with full corporate power and authority to (i) conduct its Business as it is now
being  conducted,  (ii) own its  properties  and assets,  and (iii)  perform its
obligations under all material Contracts to which it is a party. Company is duly
qualified to do Business as a foreign  corporation and is in good standing under
the  laws of each  state or other  jurisdiction  and  where  the  nature  of its
business or the property  owned or leased by it makes  qualification  necessary,
which  states  and  jurisdictions  are  set  forth  on  Schedule  5.1(b)  of the
Disclosure Schedules.

                           (c)   Company is duly licensed to  sell  property and
casualty  insurance  in the  states  and  jurisdictions  listed on the  attached
Schedule  5.1(c) of the  Disclosure  Schedules,  which  Schedule  also lists the
product   lines   Company  is  licensed  to  sell  in  the  listed   states  and
jurisdictions.

                           (d)   Company  keeps and  maintains  books,  accounts
and records that accurately account in all material respects for and reflect the
assets, properties, liabilities, obligations, affairs and results of the conduct
and operation of its Business.  The minute books of Company  contain an accurate
and complete record in all material respects of all meetings and consents of its
shareholder(s)  and board of  directors,  and of the  issuance of the issued and
outstanding  Company  Common  Stock.  Those books and records,  and all records,
deeds,  agreements and other documents relating to the affairs of Company are in
the control of Company  and in the  possession  of the Company or Iron  Mountain
Records Management, Syracuse, New York.

                           (e)   Company   has  no  subsidiaries  and   has  no
ownership interest in any joint venture, partnership,  limited liability company
or similar business organization.

                  5.2      Capitalization.
                           --------------

                           (a)   Company's authorized  capitalization   consists
of two hundred  sixty-five  thousand  (265,000) shares of $20 par, common stock,
all of which are issued and outstanding.

                                       13
<PAGE>

                           (b)   Seller  is  the  beneficial and record owner of
the Purchased  Shares,  which are free and clear of all Encumbrances.

                           (c)   Subject to the receipt of any required Consents
set forth on Schedule  5.3(c) and Schedule  6.2(c) of the Disclosure  Schedules,
             ----------------
Seller has complete and unrestricted power to sell, assign, and deliver good and
marketable title to the Purchased Shares to Purchaser.

                           (d)   The   Purchased  Shares  are  duly  authorized,
validly  issued,  fully paid, and nonassessable and constitute all of the issued
and  outstanding  shares of capital stock of Company.  There are no  outstanding
options,  warrants  or other  rights  or  agreements,  including  conversion  or
preemption  rights or rights of first  refusal,  for the issuance of  additional
shares of stock by Company.

                  5.3      Authority; No Conflict.
                           ----------------------

                           (a)   This  Agreement  has  been duly approved by the
Board of Directors of Seller.  This Agreement  constitutes the legal, valid, and
binding  obligation of Seller,  and is enforceable  against Seller in accordance
with its terms.

                           (b)   The  consummation   of  the   Contemplated
Transactions  will  not,  directly  or indirectly:

                                 (i)   conflict  with, or result in a  violation
     of,  any  provision  of the  certificate of incorporation, by laws or other
     organizational documents of Seller or Company;

                                 (ii)   subject  to the receipt of the  Consents
     set forth on  Schedule  5.3(c)  and  Schedule  6.2(c)  of  the  Disclosure
     Schedules,  contravene,  conflict with,  or result in a material  violation
     of any existing license or other Governmental Authorization held by  Seller
     or  Company, or give any Governmental  Body or other Person  the  right  to
     challenge   the Contemplated Transactions or  to  exercise  any  remedy  or
     obtain  any relief  under  any  Legal  Requirement  or  any  Order to which
     Seller or Company  are  subject,  or  give  any Governmental Body the right
     to  revoke,  withdraw,   suspend  or  terminate  any  Governmental
     Authorization held by Seller or Company.

                                 (iii)   subject to the receipt of the  Consents
     set  forth  on  Schedule  5.3(c) and  Schedule  6.2(c)  of  the  Disclosure
     Schedules,  contravene,  conflict with,  or result in a violation or breach
     of any  provision of, or give  any Person the right to declare a default or
     exercise any remedy under, or to accelerate  the  maturity  or  performance
     of,  or to cancel or terminate, any material Contract to which Company is a
     party; or

                                 (iv)    result  in  the  imposition or creation
     of any  Encumbrance  upon or with respect  to any of the property or assets
     of Company or the Purchased Shares.

                           (c)   Except as set forth in  Schedule  5.3(c) of the
Disclosure Schedules, to the Knowledge of Seller, neither Seller nor Company is,
or will be, required to give any notice to or obtain any


                                       14
<PAGE>

     Consent  from any  Person or  Governmental  Body  in  connection  with  the
     Contemplated Transactions.

                  5.4      Financial Statements.
                           --------------------

                           (a)   The  audited  Financial  Statements (i) present
fairly, in all material respects,  the admitted assets,  liabilities and surplus
of Company as of their respective dates, of and for the years referred to in the
Financial  Statements,  in  accordance  with  SAP,  and  the  related  statutory
statements  of income,  changes in surplus and cash flows,  and (ii) reflect the
consistent  application  of SAP  throughout  the  periods  involved,  except  as
disclosed  in the  audited  Financial  Statements.  The  unaudited  monthly  and
quarterly Financial Statements (i) present fairly, in all material respects, the
admitted assets,  liabilities,  and surplus of Company and the related statutory
statements  of  income  (monthly  statements)  and,  in the  case  of  quarterly
statements,  changes in surplus and cash flows,  as of their  respective  dates,
subject to normal recurring  year-end  adjustments the effect of which will not,
individually  or in the aggregate,  be materially  adverse,  and, in the case of
quarterly statements,  (ii) reflect the consistent application of SAP throughout
the periods involved.

                  5.5      No Material  Adverse  Change. Except as disclosed  in
                           ----------------------------
Schedules,  since the Balance Sheet Date there has not been any Material Adverse
Change.

                  5.6      Title To Assets; Encumbrances.
                           -----------------------------

                           (a)   The  Company  does  not  own  or lease any real
property  and as of the  Closing, will not lease any Personal Property.

                           (b)   The  Company  has  good  and  marketable  title
to  all  machines,  furniture, equipment  and other tangible  personal  property
used  exclusively  by Company in its  Business and located on the third floor of
Seller's headquarters  building,  333 Butternut Drive, Dewitt, New York 13214 as
of Closing.  Hereafter, these assets are referred to as "Owned Tangible Personal
Property." All of the Owned Tangible Personal Property are owned by Company free
and clear of all Liabilities or Encumbrances.

                           (c)   Except  as  disclosed  in  Schedule  5.6 of the
                                                            ------------
Disclosure Schedules,  Company has good and marketable title to, or right to use
by valid enforceable Lease or Contract, all other properties and assets (whether
real,  personal,  tangible,  intangible or otherwise) Company purports to own or
which Company has exclusive  use of in its Business.  All of such  properties or
assets and such Owned Tangible Personal Property are referred to collectively as
"Personal Property."

                           (d)   Seller  and its Related  Persons  have good and
marketable  title to the Agway, Inc.  Assets  to  be  transferred  to  Purchaser
pursuant to Article 3 of this Agreement (subject to the software licenses listed
on  Schedule  3.1(c))  (of the  Disclosure  Schedules),  free  and  clear of all
Liabilities  or  Encumbrances  except  as  listed  in  Schedule  3.1(c)  of  the
Disclosure  Schedules,  which Liabilities or Encumbrances  shall be satisfied or
released prior to the Closing.

                                       15
<PAGE>

                           (e)   With  respect  to  each  Lease of the  Personal
Property  (i) Company has a valid leasehold interest in such Personal  Property,
(ii) such Lease is in full force and effect in accordance with its terms,  (iii)
all rents and other monetary amounts that have become due and payable thereunder
have been paid in full, (iv) no waiver, indulgence, extension or postponement of
any  obligations  thereunder  has been granted by any party  thereto,  (v) there
exists no default or breach (or an event  that,  with notice or lapse of time or
both,  would  constitute  a default or breach)  under such  Lease,  and (vi) the
transactions  contemplated  by this  Agreement  will not constitute a default or
breach, or cause the termination or any modification, of such Lease.

                  5.7      Taxes.
                           -----

                           (a)   Except as set forth in Schedule  5.7(a)  of the
                                                        ----------------
Disclosure Schedules, all material Tax Returns that were required to be filed by
or on behalf  of  Company  have  been  prepared  and  filed in  accordance  with
applicable Legal Requirements  (taking into account any valid extensions of time
for filing).  All such Tax Returns were true and correct in all material aspects
and there is no unresolved audit, claim,  adjustment,  or deficiency proposed or
assessed  concerning any Tax Liability relating to Company.  All Tax Liabilities
that have become due  pursuant  to any such Tax  Returns and any tax  assessment
relating to Company have been paid,  or provision  has been made for the payment
thereof, except those Tax Liabilities, if any, listed in such Schedule 5.7(a) of
the Disclosure  Schedules  that are being  contested in good faith and for which
adequate reserves  (determined in accordance with SAP) have been provided in the
Financial  Statements.  Any positions  taken on such Tax Returns that could give
rise to a substantial  understatement of federal income Tax to Seller or Company
within  the  meaning  of  Section  6662(d)  of the  Code  either  were  based on
"substantial  authority" or were  "adequately  disclosed"  and had a "reasonable
basis," in each case within the meaning of Section 6662(d)(2)(B) of the Code. No
claim has ever been made by any jurisdiction  where no Tax Return has been filed
by or on behalf of  Company  that  Company  is or may be  subject to Tax by such
jurisdiction.

                           (b)   There  are  no  agreements,  waivers  or  other
arrangements  providing  for the extension of time with respect to the filing of
any Tax Return,  the payment of any Tax Liability,  or the assessment of any Tax
Liability with respect to Company. Except as set forth in Schedule 5.7(b) of the
Disclosure  Schedules,  there are no Tax Sharing  Arrangements.  Company has not
made,  is not  obligated  to  make,  and  is not a  party  to any  agreement  or
arrangement  under which it might become obligated to make any "excess parachute
payments"  within the meaning of Section  280G of the Code.  No consent has been
given to the  application  of  Section  341(f)  of the Code (or any  predecessor
provision) to Company. No closing agreement pursuant to Section 7121 of the Code
(or any  predecessor  provision) or any similar  provision of state or local law
has been entered into by or with respect to Company.  No adjustment  pursuant to
Section 481 of the Code (or any predecessor  provision) or any similar provision
of state or local law has been agreed to by or on behalf of Company,  nor is any
such  adjustment  required to be made, by reason of any change in any accounting
method by Company,  nor has any application for any such change been made to any
Tax Governmental  Body.  Neither the IRS nor any other Tax Governmental Body has
proposed  any such  change  or  adjustment  of  accounting  method.  All  ceding
commissions and expenses,  if any, paid or accrued by Company in connection with
any reinsurance arrangement or contract or transaction have been capitalized and
amortized over the life or lives of such reinsurance  arrangement or contract in


                                       16
<PAGE>

accordance   with   applicable  Tax  law.   Company  has  never  been  either  a
"distributing  corporation"  or a  "controlled  corporation"  in  a  transaction
described  in  Section  355 of the  Code.  Except  for the  affiliated  group of
corporations of which Seller is the parent and Company is a member.  Company has
never been a member of any affiliated,  consolidated,  combined or unitary group
or participated in any other arrangement whereby any income, revenues, receipts,
gain or loss of Company was  determined  or taken into  account for Tax purposes
with reference to or in conjunction with any other Person, nor does Company have
any Liability for Taxes for any other Person, except for the affiliated group of
corporations  of which  Seller is the  parent  and  Company  is a member,  under
Treasury  Regulation Section  1.1502-6(a) (or any similar provision of any other
provision of state,  local, or foreign law). Company is not and has never been a
United States real property  holding  corporation  within the meaning of Section
897(c)(2) of the Code.

                  5.8      Employee Benefits.
                           -----------------

                           (a)   Except  as set forth on Schedule  5.8(b) of the
                                                         ----------------
Disclosure Schedules,  neither Company nor any ERISA Affiliate maintains, or has
ever  maintained  or  contributed  to, or been  required  to  contribute  to any
Employee Benefit Plan covered by Title IV of ERISA or any Multiemployer Plan (as
defined in ERISA Section 3(37)(A)).

                           (b)   Company Employees  participate in various plans
sponsored by Seller, including those listed on Schedule 5.8(b) of the Disclosure
Schedules,  which is a true and complete list of each Employee  Benefit Plan and
each  pension,  retirement,  profit  sharing,  deferred  compensation,  or other
similar plan,  arrangement  or agreement;  each medical,  dental or other health
insurance plan; each life or disability insurance plan; each severance plan; and
each  sick-time,  paid-time-off,  vacation  pay and  other  personnel  policy or
payroll  practice,  which  provides  benefits  to  Company  Employees  ("Current
Plans").  Seller  may also  have  sponsored  Employee  Benefit  Plans,  pension,
retirement,  profit  sharing,  deferred  compensation  and other similar  plans;
medical,  dental or other health insurance plans;  life or disability  insurance
plans;  severance  plans; and sick-time,  paid-time-off,  vacation pay and other
personnel policy or payroll practices for former Company  Employees,  such plans
and the Current Plans hereinafter referred to collectively as "Plans".

                           (c)   All  Plans have  been  administered  and are in
compliance with their  individual terms and with applicable law, so that neither
Company nor Purchaser shall be subject to any Damages or Liability  attributable
to any period  prior to the Closing  Date that could  reasonably  be expected to
have a Material Adverse Effect.

                           (d)   Seller  has  made,  or  will  make on or  after
the Closing Date, all Plan  contributions  required and  attributable to service
performed by participants in the Plans on or before the Closing Date.

                           (e)   Seller shall  be responsible for the payment of
claims by Company  Employees for welfare and severance  benefits under the Plans
to the extent the claims arise from losses that occur, or from covered  expenses
that are incurred, on or before the Closing Date.

                  5.9    Legal and Regulatory Compliance. To the  Knowledge  of
                         -------------------------------
Seller,  Company  operates  the  Business  in  substantial  compliance  with all
applicable   federal  and  state  statutes  and  all  Legal   Requirements   and


                                       17
<PAGE>

Governmental  Authorizations.  Within  the past five years from the date of this
Agreement,  neither  Seller nor  Company  has  received  any  written  notice of
noncompliance  by  the  Company  with  any  applicable  Legal   Requirements  or
Governmental  Authorizations  where failure to be in compliance could reasonably
be expected to have a Material Adverse Effect.

                  5.10     Legal Proceedings and Contingent Liabilities; Orders.
                           ----------------------------------------------------

                           (a)   Except  as  set  forth  in Schedule 5.10 of the
                                                           -------------
Disclosure Schedules,  and for (i) claim files or Proceedings relating to claims
for policy  benefits  under  insurance  policies  issued by Company and (ii) for
Eligible Claims as defined in the Escrow Agreement:

                                 (1)   there is no pending  Proceeding  that has
         been  commenced by or against Company;

                                 (2)   no   Proceeding  is  pending  or,  to the
         Knowledge of Seller  Threatened,  that  challenges,  or that would have
         the  effect  of   preventing  or  rendering  illegal  the  Contemplated
         Transactions;

                                 (3)   to  the   Knowledge  of  Seller,   no
         Proceeding  of  the  type  described  in  Section  5.10(a)(1)  has been
         Threatened; and

                                 (4)   to  the  Knowledge   of  Seller,  Company
         has  no  material  contingent liabilities.

                           (b)   There is no material Order to which the Company
or any of its  property or assets, or the Agway, Inc. Assets, is subject.

                  5.11     Absence  of Certain  Changes  and  Events.  Since the
                           -----------------------------------------
Balance Sheet Date,  Company has  conducted its Business in the ordinary  course
and  except as set  forth in  Schedule  5.11 of the  Disclosure  Schedules,  the
Company has not:

                           (a)   suffered  any  damage,  destruction  or  loss,
whether or not covered by insurance, which has a Material Adverse Effect;

                           (b)   suffered  or  experienced  any Material Adverse
Change;

                           (c)   issued   or  agreed  to  issue  any  additional
securities;

                           (d)   declared,  set  aside  or  paid any dividend or
other  distribution  in respect of its capital  stock,  made  or  agreed  to any
redemption,  purchase  or  other acquisition  of any shares of its capital stock
or subdivided,  consolidated  or otherwise  recapitalized,  its capital stock or
authorized any of the foregoing;

                           (e)   transferred,  sold, conveyed or disposed of any
of its assets other than in the ordinary course of business and consistent with
past practices; or

                                       18
<PAGE>

                           (f)   encumbered  any  of  its assets or incurred any
indebtedness or other liabilities (contingent or absolute), other than unsecured
debts and liabilities incurred in the ordinary course of business and consistent
with past practices;

                           (g)   suffered  any  change  in  the  status  of  any
certificate of authority;

                           (h)   other than in the ordinary  course of business,
changed  any  products,  policy  provisions,  licenses,   permits,  reinsurance,
operations,   properties,   pricing,  underwriting,   investment  or  accounting
practices or methods of Company;

                           (i)   been  involved in any Proceeding  with  respect
to  the  merger,  consolidation,  supervision,  rehabilitation,  conservation,
liquidation or reorganization of Company;

                           (j)   implemented any change in a Plan (as defined in
Section 5.8(b)), ;

                           (k)    experienced   any   change  in  any  terms  or
provisions of any license or other  Contract  related to  Intellectual  Property
listed on  Schedule  5.12 of the  Disclosure  Schedules  in  response to Section
5.12(a)(iv),  other than in the ordinary course of business,  or experienced any
change in any terms or provisions of any other Contracts listed on Schedule 5.12
and/or Schedule 5.13(a) of the Disclosure Schedules; or

                           (l)   other than in the ordinary course of  business,
implemented any change in compensation, fees, commissions or other benefits paid
or payable by Company to any employees,  officers,  directors,  agents, managing
general agents, brokers, or third-party administrators.

                  5.12    Contracts.  (a) Except for Contracts of insurance  and
                          ---------
reinsurance, Schedule 5.12 of the Disclosure Schedules sets forth a complete and
accurate list of, and Seller has made available to Purchaser for its review true
and complete copies, including all amendments, of:

                         (i)     all loan or credit agreements, lines of credit,
         letters  of   credit,  promissory   notes,  land  or conditional  sales
         contracts,  other  title  retention  agreements, security  agreements,
         mortgages, deeds of trusts, indentures, bonds,  guaranties of the debts
         or  obligations  of  a  third party, or other contracts,  agreements or
         instruments  pursuant  to  which  Company  is indebted or liable to any
         person for  borrowed money or for the deferred  purchase price  of  any
         property,   capitalized   leases  pursuant  to   which  Company  leases
         Personal  Property,  and pledge agreements to which Company is a party;

                        (ii)    each  Contract  that  involves  performance  of
        services or delivery of goods or materials by or to Company of an amount
         or value in excess of Fifty  Thousand  Dollars  ($50,000) per year;

                        (iii)   each Contract that was not  entered  into in the
        ordinary  course of business and that involves expenditures or  receipts
        of Company in excess of Fifty  Thousand  Dollars ($50,000) per year;

                                       19
<PAGE>

                        (iv)    each licensing  agreement or other Contract with
        respect to any of the Intellectual Property;

                        (v)     each employment Contract or consulting agreement
        between Company and any employee, group of employees, or other Person;

                        (vi)    each Contract containing covenants  that purport
        to restrict, in any  material  respect,  Company's  business activity or
        limit, in any material respect, the freedom  of Company to engage in any
        line of business or to compete with any Person;

                        (vii)   each Contract for capital expenditures in excess
        of Fifty  Thousand Dollars ($50,000) to which Company is a party;

                        (viii)  each material  Contract  entered into by Company
        for, or regarding,  the sale or distribution  of insurance  products, by
        any broker,  agent or other  Representative of Company,  and  each agent
        incentive plan, which will be  outstanding  or  otherwise  in  effect at
        the Closing Date, together  with the name and  address  of each  broker,
        agent or other Representative  of Company that is engaged in the sale or
        distribution of insurance products sold by Company; and

                        (ix)    each Lease.

With respect to contracts referenced in Section 5.12(a)(viii), it is agreed that
Schedule 5.12 of the Disclosure  Schedules may list Company's  standard contract
forms together with a list of brokers,  agents, and other  Representatives as of
May 7, 2002,  rather than a list of each  individual  Contract.  For purposes of
Closing,  this  list  shall be  updated  to the end of the  quarter  immediately
preceding the Closing.

                       (b)   To  the  Knowledge  of  Seller,  but  without
investigation or review of individual agency contracts, except as set  forth  in
Schedule  5.12 of the  Disclosure Schedules,  each  Contract or Lease identified
in Schedule 5.12 of the Disclosure Schedules  is in full force and effect and is
valid and enforceable in accordance with its terms.

               5.13     Insurance; Reinsurance.
                        ----------------------

                        (a)   Schedule 5.13(a) of the Disclosure Schedules  sets
forth an  accurate  and  complete  list of all insurance  policies of any nature
whatsoever  maintained by Company,  or on its behalf,  as an insured at any time
during  the three  year  prior to the date of this  Agreement  and the annual or
other  premiums  payable  from time to time for each such  policy.  There are no
outstanding requirements or recommendations of any insurance company that issued
any such policy or of any  Governmental  Body that  requires or  recommends  any
changes in the  conduct of the  Business  of, or any repairs or other work to be
done on or with respect to any of the properties or assets of, Company.

                           (b)   Schedule  5.13(b) of  the Disclosure  Schedules
                                 ----------------
contains an accurate and  complete  list  of  all  forms of insurance  policies,
contracts and  endorsements   currently issued.  Company has provided  Purchaser


                                       20
<PAGE>

with an accurate and complete  copy of each  such form.  Each such form has been
filed or  approved  by all appropriate Governmental  Bodies  and  complies  with
all  applicable   laws,   rules  and regulations.

                           (c)   Since  January 1, 1997 Company has not been the
ceding company in an assumption reinsurance transaction or any other transaction
pursuant to which  another  person or entity  assumed,  or  purported to assume,
direct or primary  liability for any insurance  policies and/or contracts issued
or assumed by Company.

                           (d)   Except as disclosed in Schedule  5.13(d) of the
                                                        -----------------
Disclosure Schedules,  Company is not a party to any joint venture,  partnership
or similar  arrangement  with respect to the sale,  distribution or marketing of
any insurance products.

                  5.14     Employees and Agents.
                           --------------------

                           (a)   Schedule  5.14(a)  of the Disclosure  Schedules
is a true,  accurate and complete list containing the name and current position,
of each  person  who is a  Company  Employee  on the date of this  Agreement.  A
separate schedule listing the compensation,  including incentive plans, for each
Company Employee has been provided to Purchaser.

                           (b)   All Company Employees are employees-at-will.

                           (c)   Schedule  5.14(c) of  the Disclosure  Schedules
                                 ----------------
contains an accurate and complete list of all managing  general  agents,  agents
and brokers which, are currently  engaged by Company to offer,  sell, or solicit
the offer or sale of, any insurance  policies or contracts,  or other  insurance
products, together with the premium volume realized by Company from each of such
managing general agents,  agents and brokers during each of the years 1999, 2000
and 2001, and the three months ended March 31, 2002.  There have previously been
delivered to the  Purchaser  sample copies of  contracts,  agreements  and other
arrangements between Company and such managing general agents, agents or brokers
which  are  currently  in  effect  or  under  which  Company  has any  remaining
obligations or liabilities,  including sample commission  schedules thereto.  No
such  contract,   agreement  or  arrangement  includes  any  covenant  regarding
exclusivity for the benefit of any managing general agent, agent or broker.

                           (d)   Except  as  set  forth in  Schedule  5.14(d) of
                                                            -----------------
the Disclosure Schedules,  since  December 31, 1999, no engagement by Company of
any managing general agent, agent or broker to offer, sell, or solicit the offer
or sale of, any insurance  policies or contracts,  or other insurance  products,
has been  terminated  or cancelled  nor is the  engagement  of any such managing
general agent,  agent or broker in the process of being  terminated  pursuant to
the  applicable  agency  contract or agreement.  Except as disclosed on Schedule
5.14(d) of the Disclosure  Schedules,  there are no disputes between Company and
any managing general agents, agents or brokers.

                           (e)   To  the  Knowledge  of  Company,  each managing
general  agent,  agent  and  broker of  Company  (i) is and has  been  duly  and
properly licensed by all applicable  Governmental Bodies, (ii) has engaged in no
conduct which could subject Company to any sanctions by any Governmental Body or
to any Liability (other than express  liabilities under insurance  contracts and


                                       21
<PAGE>

policies), and (iii) has engaged in no conduct which could subject such managing
general agent, agent or broker to sanctions by any Governmental Body.

                           (f)   Except  as  set forth in Schedule 5.14(f),  the
                                                          ----------------
Company  does  not  provide,  is not  obligated  to  provide,  and  has  made no
commitment to provide, any compensation, fringe benefits, retirement benefits or
other benefits which are not expressly provided for in the contracts, agreements
and other arrangements referred to in Section 5.14(c) or 5.8(b).

                           (g)   The  Company   has  not  contracted   with  any
third party to provide  claims  management  services  relating to claims arising
under insurance contracts issued or assumed by the Company.

                  5.15     Labor Matters.
                           -------------

                           (a)   The  Company  is  not  a  party  to  any  labor
Contract, and no strike, slowdown, picketing, work stoppage,  labor  arbitration
or Proceeding in respect of the grievance of any Company  Employee is pending or
Threatened,  and no labor organizational activity or other labor dispute against
or affecting the Company, is pending or, to the Knowledge of Seller, Threatened;

                           (b)   all  salaries,  wages  and  other  compensation
(including bonuses,  commissions and overtime),  sick leave,  severance  pay and
vacation  benefits  for all Company Employees  for all periods  through the date
of this Agreement have been paid in the ordinary  course of business or the cost
thereof has been accrued in the Financial Statements;

                           (c)   Company  has  maintained  and  continues  to
maintain,  true,  accurate and complete payroll,  personnel and time records for
purposes of compliance with all federal and state minimum wage and overtime laws
and right to work laws, including, without limitation, adequate documentation of
the applicability of exemptions under such laws;

                           (d)   to  the  Knowledge  of  Seller,  Company  is in
substantial  compliance  with all Legal  Requirements relating to (i) employment
and Company Employees,  (ii) terms and conditions of employment, (iii) wages and
hours and (iv) Occupational Safety and Health; and

                           (e)   except  as set forth in Schedule 5.15(e) of the
                                                         ----------------
Disclosure  Schedules,  there are no pending or Threatened,  and during the last
five  years have not been any,  formal  employment-related  Proceedings  against
Company,  including, but not limited to, violations of the Age Discrimination in
Employment  Act of 1967,  the  Americans  With  Disabilities  Act of  1990,  the
Rehabilitation  Act of 1973, the Family and Medical Leave Act of 1993, the Civil
Rights Act of 1866 and 1964, the Employee  Retirement  Income  Security Act, the
Occupational  Safety  and Health  Act,  and any other  employment-related  Legal
Requirements.

                                       22
<PAGE>

                  5.16     Intellectual Property.
                           ---------------------

                           Schedule  5.16 of  the   Disclosure  Schedules  sets
                           --------------
forth a  complete  and  accurate  list of all  Intellectual  Property  owned  by
Company,  and all  Contracts to which  Company is a party or by which Company is
bound that  relate to  Intellectual  Property or similar  proprietary  rights of
other Persons that are licensed by Company. Except for the Intellectual Property
set forth on Schedule 5.16 of the Disclosure Schedules, Company does not use any
Intellectual  Property  in the conduct of the  Business.  Except as set forth in
Schedule 5.16(a) of the Disclosure Schedules,  (a) there are no outstanding and,
to the Knowledge of Seller, no Threatened disputes or disagreements with respect
to any  Intellectual  Property  and (b) Company has not and does not infringe on
the intellectual property rights of any Person.

                  5.17     Relationships  With  Related  Persons.  Except as set
                           -------------------------------------
forth  in  Schedule  5.17 of the Disclosure Schedules:

                           (a)   no   Related   Person  of  Company   has  any
interest  in the  assets  of  Company reflected in the Financial Statements; and

                           (b)   no Related  Person of Company is a party to any
material  Contract with, or has any material claim or right against, Company.

                  5.18    Powers  of  Attorney  and   Suretyships. Except as set
forth  in  Schedule  5.18  of  the Disclosure Schedules,  Company has no general
or  special  powers of  attorney  outstanding  (whether  as  grantor  or grantee
thereof) and has no obligation or liability (whether actual, accrued, contingent
or otherwise) as guarantor, surety, co-signor, endorser, co-maker, indemnitor or
otherwise in respect of the obligation of any person, corporation,  partnership,
joint venture, association,  organization or other entity, except as endorser or
maker of checks endorsed or made in the ordinary course of business.

                  5.19    Warranties.  Company does not  provide any warranties
                          ----------
(written,  oral or  otherwise)  with respect to any services or products that it
provides.

                  5.20    Brokers or Finders.  Except for  compensation  owed to
                          ------------------
Capital   Formation   Group  of  Rochester,   L.P.   which  shall  be  the  sole
responsibility  of Seller,  neither  the Seller nor  Company  has  incurred  any
obligation or Liability for brokerage or finders' fees or agents' commissions or
other similar  payments in connection  with this  Agreement or the  Contemplated
Transactions.

                  5.21    Exclusivity  of  Representations.  The representations
                          --------------------------------
and  warranties  made by  Seller  in this  Article  5 are in  lieu  of,  and are
exclusive of, all other  representations  and  warranties  by Seller  including,
without  limitation,  any  implied  warranties.   Seller  hereby  disclaims  any
representations or warranties, express or implied, not set forth in this Article
or in any document to be delivered by Seller at Closing.

                                       23
<PAGE>

                  5.22    Disclosure.  No  representations or warranty by Seller
                          ----------
to Purchaser  contained  in this  Agreement,  and no statement  contained in the
Disclosure  Schedules  or any  certificate  furnished  by  Seller  to  Purchaser
pursuant to the provisions hereof, contains or will contain any untrue statement
of material  fact or omits or will omit to state a material  fact  necessary  in
order to make the statements herein or therein not misleading.

                                    ARTICLE 6
                                    ---------

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER
                   -------------------------------------------

                  Purchaser represents and warrants to Seller as follows:

                  6.1    Organization  and  Good  Standing.  Purchaser  is  a
                         ------------------------------
corporation duly organized,  and validly existing under the laws of the State of
Indiana,  and with all requisite power to enter into and perform its obligations
under this Agreement.

                  6.2     Authority; No Conflict.
                          ----------------------

                          (a)   This  Agreement  has  been  duly approved by the
Board of Directors of Purchaser.  This Agreement  constitutes the legal,  valid,
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms.

                          (b)   Neither   Purchaser's   execution  and  delivery
of this Agreement nor the performance by Purchaser of its obligations under this
Agreement will directly or indirectly:

                                (i)    conflict with,  or result in a  violation
         of, any provision  of the certificate of incorporation, bylaws or other
         organizational documents of Purchaser;

                                (ii)   subject to the receipt  of  any  required
         consents,   result  in a violation of any Legal Requirement or Order to
         which Purchaser may be subject; or

                                (iii)  subject to the receipt  of  any  required
         consents,   result  in  a  violation of any Contract to which Purchaser
         is a party or by which Purchaser may be bound.

                          (c)   Except  as  set  forth in Schedule 6.2(c) of the
Disclosure  Schedules, Purchaser is not required to give any notice to or obtain
any  Consent  from  any  Person  or  Governmental  Body  in  connection with the
Contemplated Transactions.

                  6.3    Certain  Proceedings.  There  is  no pending Proceeding
                         --------------------
that has been commenced against  Purchaser and that challenges,  or may have the
effect of preventing,  delaying,  making illegal, or otherwise interfering with,
the Contemplated Transactions. To the Knowledge of Purchaser, no such Proceeding
has been Threatened.

                  6.4    Brokers or Finders.  Purchaser  has  not  incurred  any
                         -------------------
obligation or Liability for brokerage or finders' fees or agents' commissions or
other similar  payments in connection  with this Agreement and the  Contemplated


                                       24
<PAGE>

Transactions  for  which  the  Seller  will  directly  or  indirectly  have  any
Liability.

                  6.5    Investment   Representations.  Purchaser  is  acquiring
                         ----------------------------
the Purchased  Shares as an investment,  and not with a view to, or for, sale or
transfer  in  connection  with  any  distribution  thereof,  or for any  sale or
transfer thereof.

                  6.6    Financial and Regulatory  Matters.   Purchaser  has the
                         ---------------------------------
financial   capacity  to  perform  all  of  its  obligations   relating  to  the
Contemplated  Transactions,  and Purchaser has no knowledge of any reason why it
will be unable to obtain any required Governmental Authorization.


                  6.7    Forward-Looking Statements. Purchaser acknowledges that
it has made its decision as to the future  prospects  and  profitability  of the
Company  after Closing based on, among other  things,  the  representations  and
warranties of Seller set forth in this  Agreement and  Purchaser's  own business
review and  judgment,  but not in reliance on any  projections,  predictions  or
similar forward-looking statements by the Seller or anyone acting on its behalf.

                                    ARTICLE 7
                                    ---------

                       DUE DILIGENCE; UPDATES TO SCHEDULES
                       -----------------------------------

                  7.1    Completion;  Verification. Prior to entering  into this
                         -------------------------
Agreement,  Purchaser was provided the  opportunity to perform its due diligence
investigation  concerning  Company,  including  the  opportunity  to review such
books, records and documents of Company, and to interview Company management and
personnel  of Seller and  Company,  as  Purchaser  deemed  necessary.  Purchaser
confirms that it has completed its due diligence. Hereafter, Purchaser's further
due  diligence  shall be limited  to  verifying  and  confirming  the  continued
accuracy of the representations and warranties of the Seller, and the compliance
of Seller with its covenants,  as set forth in this  Agreement.  Purchaser shall
coordinate  any further  due  diligence  through  Gerald R.  Seeber.  During any
examination  by  Purchaser  pursuant  to the  provisions  of this  Section  7.1,
Purchaser shall not disrupt or adversely  affect any aspect of the operations of
Company or the morale of Company's employees.

                  7.2   Notice of Breach. Purchaser acknowledges that one of the
                        ----------------
purposes of due diligence is to permit Purchaser to conduct  examinations of the
Business,  property  and  assets of the  Company  so as to enable  Purchaser  to
independently  verify whether the  representations  and  warranties  made by the
Seller pursuant to Article 5 are accurate and correct in all material  respects.
Accordingly,  if during the course of  Purchaser's  due  diligence  an  officer,
manager, accountant or attorney acting for or on behalf of Purchaser,  discovers
a fact or  circumstance  which  causes  or would  cause a  reasonable  person to
believe that a Breach of any of the representations and warranties of Seller set
forth in Article 5 exists or will result, Purchaser shall provide written notice
thereof to Seller (i) describing, in detail, the extent and nature of the Breach
and (ii) stating, if such is the case, its intention to terminate this Agreement
in the event  that  Seller is unable  to  remedy  Breach  within a  commercially


                                       25
<PAGE>

reasonable  time. The failure to give this notice by Purchaser shall be deemed a
waiver by Purchaser of the Breach.  If, following any such notice,  Seller fails
to  remedy  the  Breach,  or to  otherwise  hold  Purchaser  harmless  from  the
consequences of the Breach,  within a commercially  reasonable  time,  Purchaser
shall have the option to either waive the Breach and close without further claim
against Seller, or to terminate this Agreement in accordance with Article 12.

                  7.3   Updates to  Schedules. Promptly following the receipt of
                        ---------------------
all  Consents,  Seller  shall  update  any and all of the  Disclosure  Schedules
provided  pursuant to Articles 3 or 5 hereof to reflect each and every change to
each Schedule occurring or arising after the date of this Agreement and prior to
the Closing Date that would make any Schedule incomplete or inaccurate or which,
if in existence or having occurred as of or prior to the date of this Agreement,
would have been required to be set forth or described in any Disclosure Schedule
to this  Agreement  (collectively,  the  "Updated  Schedules").  If any  Updated
Schedule  discloses  a  fact  or  circumstance  relating  to  the  Company  that
constitutes  a Materially  Adverse  Change that is  unacceptable  to  Purchaser,
Purchaser  shall notify Seller of its intention to terminate  this  Agreement by
reason of the Materially Adverse Change unless an appropriate adjustment is made
as hereafter  provided.  In that event,  Seller and Purchaser shall negotiate in
good faith  regarding an  appropriate  adjustment of the Purchase Price or other
modification  of this Agreement in light of the Materially  Adverse  Change.  If
Seller and  Purchaser  are unable to agree on such  modification  or  adjustment
within thirty (30) days following Purchaser's notice, Purchaser may either elect
to  Close  notwithstanding  the  Materially  Adverse  Change  or  Purchaser  may
terminate this Agreement by written notice to Seller.

                                    ARTICLE 8
                                    ---------

                               COVENANTS OF SELLER
                               -------------------

             8.1      Operation of the Business of Company.
                      ------------------------------------

                      (a)   Between the date of this  Agreement and the  Closing
Date, unless otherwise agreed in writing by Purchaser, Seller will cause Company
to:

                            (i)   except   as  otherwise  allowed  or  required
         pursuant to the terms of this  Agreement, conduct  business only in the
         ordinary course and consistent with past practices;

                           (ii)   use   commercially   reasonable   efforts  to
         preserve  intact the current  business  organization  of Company,  keep
         available the services of the current officers,  employees,  and agents
         of Company,  and maintain the relations and good will with all material
         customers,  employees,  agents,  and others  having  material  business
         relationships  with Company;  it being recognized,  however,  that  the
         announcement of the proposed sale of Company may  in and of itself have
         some adverse  affects on Company's personnel and business organization;

                          (iii)   maintain  liability,  property   and  casualty
         insurance  coverage  comparable  to  coverage  provided  for  other
         subsidiaries of Seller;

                          (iv)    continue to prepare  Financial  Statements in
         accordance   with  SAP  and  in  the  ordinary  course,  and to furnish
         Purchaser  with copies of these  Financial  Statements  promptly  after
         they are completed;

                                       26
<PAGE>

                          (v)     continue  to  file all  required  Tax  Returns
        when due  (including  any extensions  for  filing)  and to pay all Taxes
        when due  except to the  extent  that such Taxes are being  contested in
        good faith;

                          (vi)    refrain   from   incurring   any   long-term
        indebtedness for borrowed money;

                          (vii)   consummate   the  Related  Transactions   with
        Seller  under  Article 3 of  this Agreement;

                          (viii)  except as otherwise  provided in Section  3.3,
        refrain from selling or  transferring  any  properties or assets unless
        (A)  properties  or  assets  are  disposed of in the ordinary  course of
        business,   or  (B)  properties  or assets are replaced by properties or
        assets substantially similar in value; and

                          (ix)    use  commercially  reasonable  efforts  not to
        do,  or  allow  to  be  done,  anything  which would cause a breach of a
        representation, warranty or covenant by Seller.

                    (b)   From the date of this  Agreement  through the Closing
Date,  Seller shall not cause or permit  Company to pay any  dividends or redeem
any Company Common Stock.

             8.2    No  Negotiation.  Until   such   time,   if   any,  as  this
                    ---------------
Agreement  is  terminated  pursuant to Article 11,  Seller will not, nor will it
cause or permit Company or any of their respective  Representatives to, directly
or indirectly  negotiate  with any Person other than  Purchaser  concerning  any
transaction  involving  the sale of Company or all or  substantially  all of the
property or assets of Company,  or of any Company  common stock,  or any merger,
consolidation, business combination, or similar transaction involving Company.

             8.3    Consents.
                    --------

                    (a)   As  promptly  as  practicable  after  the date of this
Agreement, Seller will cause Company and any of Seller's Related Parties to make
all filings  which are required to be made by Company in  accordance  with Legal
Requirements in order to consummate the  Contemplated  Transactions.  Any filing
fees incurred in connection with any filings  required under Legal  Requirements
shall be shared equally by Seller and Purchaser.

                    (b)   If any material  Contract to which  Company is a party
requires the Consent of any Person that is a party  thereto to the  Contemplated
Transactions,  the Seller will cause Company to use its commercially  reasonable
best efforts, with Purchaser's cooperation,  to obtain the written Consent prior
to Closing.

            8.4     Cooperation.  Between  the  date  of this  Agreement and the
                    -----------
Closing Date,  Seller will,  and will cause Company and each other Related Party
of Seller to,  cooperate with Purchaser and its Related  Parties with respect to


                                       27
<PAGE>

all  filings  that any of them are  required  by Legal  Requirements  to make in
connection with the Contemplated Transactions.

                                    ARTICLE 9
                                    ---------

                             COVENANTS OF PURCHASER
                             ----------------------

             9.1     Consents.
                     --------

                     (a)   As  promptly  as practicable  after the date of this
Agreement,  Purchaser  will, and will cause each of its Related Persons to, make
all filings required by Legal  Requirements to be made by them to consummate the
Contemplated  Transactions including all filings to obtain required Governmental
Authorizations. Any filing fees incurred in connection with any filings required
under Legal Requirements shall be shared equally by Seller and Purchaser.

                     (b)  If any material Contract to which Purchaser is a party
requires the Consent of any Person that is a party  thereto to the  Contemplated
Transactions, the Purchaser will use its commercially reasonable best efforts to
obtain the written Consent prior to Closing.

             9.2    Cooperation.  Between  the  date  of this  Agreement and the
                    -----------
Closing Date,  Purchaser  will,  and will cause each Related Person of Purchaser
to, (a)  cooperate  with Company and the Seller with respect to all filings that
Seller and/or Company are required by Legal  Requirements  to make in connection
with the Contemplated Transactions,  and (b) cooperate with Company in obtaining
all of the necessary Consents.

                                   ARTICLE 10
                                   ----------

             CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
             -------------------------------------------------------

                  The  obligation of Purchaser to pay the Purchase  Price and to
take the other  actions  required  to be taken by  Purchaser  at the  Closing is
subject  to the  satisfaction,  at or  prior  to the  Closing,  of  each  of the
following  conditions  (any of which may be waived by Purchaser,  in whole or in
part):

             10.1    Accuracy  of  Representations.  All  of the representations
                     -----------------------------
and  warranties  of the  Seller  set  forth in this  Agreement  shall  have been
accurate in all material respects as of the date of this Agreement, and shall be
accurate as of the Closing  Date as if made on the Closing  Date,  except to the
extent that the  representations  and  warranties are untrue or inaccurate as of
the  Closing  Date  because of (a)  changes  caused by  actions or  transactions
approved in writing by Purchaser, or (b) events or changes occurring between the
date of this  Agreement and Closing Date that do not, in the  aggregate,  have a
Material  Adverse  Effect on the Business and assets of the Company,  taken as a
whole.

            10.2    Performance.  The  following  shall  be  true, and Purchaser
                    -----------
shall receive a certificate of an officer of Seller to the effect that:

                                       28
<PAGE>

                    (a)   all  of the covenants and  obligations  that Seller is
required to perform or to comply with pursuant to this  Agreement at or prior to
the Closing  shall have been duly  performed  and complied  with in all material
respects;

                    (b)   Seller shall  have  delivered,  or caused the delivery
of, each of the documents  required to be delivered  pursuant to Section 4.2(a);
and

                    (c)   all Encumbrances  on the Agway, Inc. Assets,  Personal
Property and other assets of Company shall have been released and discharged.

             10.3   Consents.   Each   of   the   Consents   and    Governmental
                    --------
Authorizations  identified or referred to in Schedules  5.3(c) and 6.2(c) of the
Disclosure Schedules, including, without limitation, any Consents required under
agreements with Seller's and/or Company's lenders,  shall have been obtained and
be in full force and effect and Purchaser shall receive a certificate of officer
to that effect.

             10.4    No Proceedings;  No  Material Adverse Change. No Proceeding
                     --------------
(a) involving any challenge to, or seeking Damages or other relief in connection
with,  the  Contemplated  Transactions,  or (b) that  would  have the  effect of
preventing,   materially  delaying,  making  illegal,  or  otherwise  materially
interfering with the Contemplated Transactions,  shall be pending or threatened.
There shall have been no Material  Adverse  Change with respect to Company since
December 31, 2001 and Purchaser  shall receive a certificate  of officer to that
effect.

             10.5    Agreements with Mr. Seeber. Mr. Seeber shall have  executed
                     --------------------------
and delivered an Employment  Agreement and a Non-Competition and Confidentiality
Agreement in form and substance acceptable to Purchaser.

                                   ARTICLE 11
                                   ----------

              CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
              ----------------------------------------------------

                  The  obligation  of Seller to take the actions  required to be
taken by the Seller at the Closing is subject to the  satisfaction,  at or prior
to the Closing, of each of the following  conditions (any of which may be waived
by Seller, in whole or in part):

             11.1   Accuracy  of   Representations.   All of the representations
                    ------------------------------
and  warranties of Purchaser in this  Agreement  shall have been accurate in all
material  respects as of the date of this  Agreement and shall be accurate as of
the  Closing  Date as if made on the  Closing  Date and Seller  shall  receive a
certificate of officer to that effect.

             11.2  Purchaser's  Performance.  The  following  shall be true, and
                   ------------------------
Seller  shall  receive a certificate of officer to the effect that:

                   (a)   Purchaser shall have paid the  Purchase  Price and made
the Escrow  Deposit as provided in Sections 2.3 and 2.4 and shall have performed


                                       29
<PAGE>

and complied in all material  respects with all other  covenants and obligations
that  Purchaser  is  required  to perform  or to comply  with  pursuant  to this
Agreement at or prior to Closing; and

                  (b)   Purchaser   shall   have   delivered,   or   caused  the
delivery of, each of the  documents  or other items  required to be delivered by
Purchaser pursuant to Section 4.2(b) including, without limitation, the delivery
of the Purchase Price.

           11.3   Consents.   Each  of  the  Consents  and   Governmental
                  --------
Authorizations  identified  or referred to in Schedule  5.3(c) and 6.2(c) of the
Disclosure  Schedules  must have  been  obtained  and must be in full  force and
effect and Seller shall receive a certificate of officer to that effect.

           11.4   No Proceedings. No  Proceeding  (a)  involving  any  challenge
                  --------------
to, or seeking  Damages or other relief in  connection  with,  the  Contemplated
Transactions,  or (b) that  would  have the  effect  of  preventing,  materially
delaying,   making  illegal,  or  otherwise  materially   interfering  with  the
Contemplated  Transactions,  shall be pending  or  threatened  and Seller  shall
receive a certificate of officer to that effect.

                                   ARTICLE 12
                                   ----------

                                   TERMINATION
                                   -----------

            12.1   Termination Events; Opportunity to Cure.
                   ---------------------------------------

                   (a)   Subject  to Section 12.1(b),  this Agreement may be
terminated on written notice:

                        (i)     by either party, in the event of a Breach by the
         other  party  of  its  obligations  under  this Agreement which remains
         uncured after notice; or

                        (ii)    by    Purchaser,  if any of the  conditions  in
         Article 10 have not been satisfied  in all material respects  as of the
         Closing  Date,  or if  satisfaction  of  a  condition  is  or   becomes
         impossible (other  than through the failure of Purchaser to comply with
         its  obligations under this Agreement) and Purchaser has not waived the
         condition on or before the Closing Date; or

                        (iii)   by  Seller, if any of the conditions in  Article
         11 have not been satisfied in all material respects  as of the  Closing
         Date,  or if satisfaction  of  a  condition  is or  becomes  impossible
         (other  than  through  the  failure  of  Seller  to  comply  with  its
         obligations  under  this  Agreement)  and  Seller  has  not waived such
         condition  on or before the Closing Date; or

                        (iv)    by mutual consent of Purchaser and Seller; or

                        (v)     by Seller or Purchaser,  if the Closing does not
         occur by  December 31, 2002, provided,  however,  that the December 31,
         2002 termination date will be  automatically   extended   for  up to 90


                                       30
<PAGE>

         days  if  on  December  31,  2002  any  of  the  required  Governmental
         Authorizations have not been obtained, but are being pursued diligently
         and all other conditions to the Closing are satisfied; or

                         (vi)    by  either party, if  any   Governmental   Body
         issues   a   final,   nonappealable  order prohibiting the Contemplated
         Transactions; or

                         (vii)   By Purchaser, if an Updated  Schedule  confirms
         that a Material  Adverse  Change  has  occurred  by reason  other  than
         a Breach by  Seller,  and Purchaser  and Seller,  having  followed  the
         procedures set forth in Section 7.3, have failed  to  reach   agreement
         in  an  appropriate adjustment or modification as therein provided.

                    (b)   The foregoing not  withstanding,  this Agreement shall
not be terminated under Section 12.1(a)(i),  (ii) or (iii) if the noncompliance,
nonperformance  or breach can be cured or  eliminated  in which  event the party
wishing to terminate  shall not terminate  unless and until (i) it has given the
other party written notice that  noncompliance,  nonperformance  or a breach has
occurred, specifying the nature thereof and the action required to cure and (ii)
such  noncompliance,  nonperformance  or breach  shall  not have  been  cured or
eliminated,  or the party giving the notice shall not have  otherwise  been held
harmless from the consequences of the  noncompliance,  nonperformance or breach,
within thirty (30) days of the receipt of such notice.

           12.2     Effect of Termination.
                    ---------------------

                    (a)   Subject to the limitations of Article 13, in the event
of a termination of this Agreement by the Seller pursuant to Section  12.1(a)(i)
or (iii), if termination  resulted from a breach of a representation,  warranty,
or covenant by  Purchaser,  Purchaser  shall be liable to Seller for all Damages
incurred or suffered by Seller as a result thereof.

                    (b)   Subject  to  the  limitations   contained  in  Article
13, in the event of  termination  of this  Agreement  by  Purchaser  pursuant to
Section  12.1(a)(i)  or (ii),  if the  termination  resulted  from a Breach of a
representation,  warranty  or  covenant  by  Seller,  Seller  shall be liable to
Purchaser for all Damages incurred or suffered by Purchaser as a result thereof.

                    (c)   Except  as  otherwise  provided  in  Sections  12.2(a)
or (b), in the event of termination of this Agreement as provided for in Section
12.1, this Agreement shall forthwith  become null and void and there shall be no
liability or  obligation on the part of any party  hereto,  or their  respective
officers or directors  except to the extent provided in Section 12.2(a) and (b).
Further,  Purchaser  shall  return to Seller all copies of all  information  and
documents  furnished  to  Purchaser  by Seller or Company and shall  destroy all
memoranda, notes, extracts and reproductions relating thereto.


                                       31
<PAGE>

                                   ARTICLE 13
                                   ----------

                            INDEMNIFICATION; REMEDIES
                            -------------------------

           13.1    Survival.  All (i) covenants  and  obligations of the parties
                   --------
under this  Agreement and (ii) all  representations  and warranties of Purchaser
under Sections 6.1, 6.2 and 6.3, and of Seller under Sections  5.1(a),  (b), (c)
and (e), 5.2, 5.3 and  5.10(a)(2),  of this Agreement  shall survive the Closing
indefinitely. The representations and warranties of Seller under Section 5.7 and
5.8 shall  survive  the  Closing  for a period of time  equal to the  applicable
statute of limitations  for each  applicable Tax Return or claim under ERISA, as
the  case  may  be,  including  any  extension  or  waiver  of such  statute  of
limitations.  All other  representations  and warranties of Seller and Purchaser
under this  Agreement  will  survive the  Closing for a period of eighteen  (18)
months.

           13.2    Indemnification  By  Seller.  Seller  will,  subject  to  the
                   ---------------------------
limitations  set forth in  Sections  13.4 and 13.5,  indemnify,  defend and hold
Purchaser  harmless from and against any Damages arising  directly or indirectly
from  any of the  following,  regardless  of  whether  the  claim  arises  under
contract, breach of warranty, tort or other legal theory:

                           (i)    any Breach of any representation  or  warranty
         made by Seller in this Agreement, the Schedules, or any supplements to
         the Schedules;

                           (ii)   any Breach by  Seller of any of its  covenants
         or  obligations  under this Agreement; or

                           (iii)   any  claim  by  any  Person  for brokerage or
         finder's  fees or  commissions or similar  payments  that remain unpaid
         after  the  Closing  and  which  are  based  upon  any  agreement  or
         understanding  alleged to have been made by any Person with Seller  (or
         any Person acting  on its  behalf)  in connection with the Contemplated
         Transactions.

                  13.3   Indemnification  By Purchaser.  Purchaser will, subject
to the  limitations set forth in Sections 13.4 and 13.5,  indemnify,  defend and
hold Seller harmless from and against any Damages arising directly or indirectly
from  any of the  following,  regardless  of  whether  the  claim  arises  under
contract, breach of warranty, tort or other legal theory:

                           (i)    any Breach of any representation  or  warranty
         made by  Purchaser  in this  Agreement  or  in any  Schedule  delivered
         by  Purchaser  pursuant  to or in  connection  with  this Agreement;

                           (ii)  any Breach by Purchaser of any of its covenants
         or  obligations  under this Agreement; or

                          (iii)  any  claim  by  any  Person  for  brokerage  or
         finder's  fees or  commissions or similar  payments  that remain unpaid
         after  the  Closing  and  which  are  based  upon  any  agreement  or
         understanding  alleged to have been made by such Person with  Purchaser
        (or any Person acting on its behalf) in connection with the Contemplated
         Transactions.

                                       32
<PAGE>

                  13.4   Time  Limitations.  Neither  Seller nor Purchaser shall
                         -----------------
have any Liability under or in connection with, this Agreement  pursuant to this
Article 13 or otherwise,  unless the party seeking indemnification gives written
notice of its  indemnity  claim,  specifying  the factual basis of that claim in
reasonable  detail,  prior to the expiration of the applicable  survival  period
specified in Section 13.1.

                  13.5   Limitations  on Amount  of  Liability.  Notwithstanding
                         -------------------------------------
anything to the contrary contained in this Agreement, no claim for indemnity may
be asserted by  Purchaser  unless and until the  aggregate  amount of all claims
which  would be  indemnifiable  but for the  application  of this  Section  13.5
exceeds Two Hundred Thousand Dollars  ($200,000) (the "Basket") and then only to
the extent of the  excess;  provided,  however,  the  Basket  shall not apply to
claims  based on a breach  of any  representation  or  warranty  under  Sections
5.1(a),  (b), (c) and (e), 5.2, 5.3, 5.7, 5.8,  5.10(a)(2)  and/or any Breach of
Article 14 or Sections  3.9(b),  (c) or (d). The maximum  amount of Damages that
Seller shall,  in the aggregate,  be required to pay to Purchaser for any Breach
of a representation  or warranty by Seller under Sections  5.1(a),  (b), (c) and
(e), 5.2, 5.3, 5.7, 5.8,  5.10(a)(2) and/or any Breach of Article 14 or Sections
3.9(b),  (c) or (d) of this Agreement shall be Twenty-One  Million Dollars,  but
the maximum amount of Damages that Seller shall,  in the aggregate,  be required
to pay to Purchaser  pursuant to any other  provision of this Agreement shall be
Three Million  Dollars.  The maximum amount of Damages that Purchaser  shall, in
the  aggregate,  be required to pay to Seller  pursuant to any provision of this
Agreement shall be Three Million Dollars.

                  13.6     Procedure for Indemnification - Third Party Claims.
                           --------------------------------------------------

                           (a)   Promptly  after  receipt by a party entitled to
indemnification under Sections 13.2 or 13.3 of notice of the commencement of any
Proceeding  against it, the  indemnified  party shall,  if a claim is to be made
against an  indemnifying  party,  give notice to the  indemnifying  party of the
commencement of the claim.

                           (b)   If any Proceeding referred to in  Section  13.6
(a) is  brought  against  an  indemnified  party  and  it  gives  notice  to the
indemnifying party of the commencement of the Proceeding, the indemnifying party
shall,  upon written notice given within thirty (30) days after the  indemnified
party's notice is given, be entitled to assume the defense of the Proceeding. If
the  indemnifying  party  elects to assume  the  defense  of a  Proceeding,  the
indemnified  party shall turn the Proceeding over to the indemnifying  party who
shall, at its own expense,  assume the contest and the  indemnified  party shall
have the right (but not the obligation) to participate,  at its own expense,  in
the defense  thereof by counsel of its own choice,  and shall cooperate with and
assist the indemnifying party as reasonably  requested by the indemnifying party
in  connection  with the defense or contest,  but the  indemnifying  party shall
retain  control  thereof and have final  authority to  determine  all matters in
connection  therewith.  Notwithstanding  the foregoing,  the indemnifying  party
shall have the right to control the defense,  litigation  and  settlement of the
action only if the  indemnifying  party has agreed in writing to be  responsible
for all costs, expenses,  judgments and liabilities connected with the claim and
provided the indemnified  party with a bond,  letter of credit or other evidence
satisfactory  to  the  indemnified  party,  in  its  sole  discretion,   of  the
indemnifying party's ability to satisfy these obligations.

                                       33
<PAGE>

                  13.7    Exclusive  Remedies. Subject to Section 13.8, the sole
                          -------------------
and  exclusive  remedy of Seller and Purchaser for any and all claims or Damages
relating to or arising out of or in connection  with this Agreement  shall be an
action for  indemnity  pursuant to this  Section 13 which shall be governed  and
limited by this Section 13.7, whether any such claim is made in contract, breach
of warranty,  tort or otherwise,  provided,  however, that any provision in this
Agreement to the contrary notwithstanding, Purchaser's sole and exclusive remedy
for Damages or losses relating to assumed reinsurance obligations of the Company
shall be pursuant to the Escrow Agreement.

                  13.8     Certain  Exclusions. Article 13 does not apply to the
                           -------------------
Covenant Not To Compete,  the  Endorsement  Agreement,  the Transition  Services
Agreement,  the Employment Agreement and the Non-Competition and Confidentiality
Agreement.

                                   ARTICLE 14
                                   ----------

                                   TAX MATTERS
                                   -----------

                  14.1     Tax Returns.
                           -----------

                           (a)   Seller  shall  prepare or cause to be  prepared
(at its own cost and expense and in a manner  consistent with past practice) all
Income Tax  Returns  required to be filed by or on behalf of Company for taxable
years or periods ending on or before the Closing Date. Seller shall, on a timely
basis,  file such Tax Returns  and pay the  amounts  shown as due thereon to the
appropriate  Governmental Body. Subject to the foregoing,  the income of Company
for the taxable year of Seller that includes the Closing shall be determined for
the period up to and  including the Closing Date by closing the books of Company
as of the end of the Closing Date or by any other reasonable method agreed to by
Seller and Purchaser, except that (i) exemptions, allowances, or deductions that
are  calculated  on an annual  basis (such as  deductions  for  depreciation  or
amortization)  shall be apportioned on a time basis and (ii) such  determination
shall  be  consistent  with  the  principles  of  Treasury   Regulation  Section
1.1502-76.  Company  will  furnish Tax  information  to Seller for  inclusion in
Seller's federal  consolidated Income Tax Return in accordance with the parties'
past custom and practice,  and Purchaser  will provide (or cause to be provided)
to Seller no later  than 120 days  prior to the due date  (with  extensions)  of
Seller's Tax Return for the taxable year  including the Closing all  information
and calculations  relating to the proper  determination of the income of Company
for such period.  If, within 60 days of Seller's receipt of such information and
calculations,   Seller  does  not  object  to  Purchaser's  determination,   the
determination  shall  be  final  and  shall be used by  Seller,  Purchaser,  and
Company. If Seller objects in writing to such determination within such 60 days,
Purchaser  and Seller shall  negotiate in good faith to resolve any dispute.  If
Seller and Purchaser shall not have agreed to the proper determination within 10
days after Seller's  objection,  any disputed aspects of the determination shall
be resolved by a mutually  agreeable "big four" public accounting firm that does
not  serve  either  Seller  or  Purchaser  (the  "Independent  Firm") as soon as
practicable,  but in no event  later  than 20 days  prior to the due date  (with
extensions) of Seller's Tax Return.  The decision of the Independent  Firm shall
be final,  and the costs,  expenses,  and fees of the Independent  Firm shall be
borne equally by Seller and  Purchaser.  Neither  Seller nor Purchaser (or their
respective   affiliates)   shall  file  any  Income  Tax  Return  prior  to,  or


                                       34
<PAGE>

inconsistent  with,  the  determination  of the proper income of Company for the
pre-Closing period pursuant to this Section 14.1(a).

                           (b)   Seller additionally  shall  prepare or cause to
be prepared  (at its own cost and expense and in a manner  consistent  with past
practice)  all Tax Returns of,  including or relating to Company  required to be
filed on or before the Closing Date.  Seller shall, on a timely basis, file such
Tax Returns (or cause such Tax Returns to be filed) and pay the amounts shown as
due thereon (or cause such amounts to be paid) to the  appropriate  Governmental
Body.

                           (c)   Purchaser shall prepare or cause to be prepared
(at its own cost and  expense)  all other Tax  Returns of Company  for all other
taxable periods and,  subject to Section  14.5(b),  pay the amounts shown as due
thereon to the appropriate  Governmental  Body. For any taxable period beginning
before and ending on or after the  Closing  Date,  the Taxes of Company  for the
period  ending on the Closing Date shall be  determined  by closing the books of
Company  as of the end of the  Closing  Date or by any other  reasonable  method
agreed to by Seller and Purchaser,  except that (i) exemptions,  allowances,  or
deductions that are calculated on an annual basis shall be apportioned on a time
basis, (ii) all property Taxes, guaranty fund assessments, or other Taxes (other
than  Income,  premium,  franchise,  or  similar  Taxes) as to which the lien or
assessment  date occurs on or before the Closing Date shall be attributed to the
pre-Closing  period and shall be the liability of Seller, and (iii) all property
Taxes,  guaranty fund assessments,  or other Taxes (other than Income,  premium,
franchise,  or similar  Taxes) as to which the lien or  assessment  date  occurs
after the Closing Date shall not be  attributed  to the  pre-Closing  period and
shall not be the liability of Seller.  The  determination of such Taxes shall be
made by following  procedures  consistent (to the extent possible) with those in
Section  14.1(a).  Any  dispute  between  Seller  and  Purchaser  regarding  the
computation  or  determination  of Taxes  under this  Section  14.1(c)  shall be
resolved by the Independent Firm in a manner consistent with Section 14.1(a).

                           (d)   Except as required by law,  no  position  shall
be taken on any Tax Return (including any amended Tax Return) filed by Seller or
Company on or after the date  hereof by or on behalf of  Company  for any period
ending on or before the Closing Date that would  adversely  affect  Purchaser or
Company  after the Closing  unless  Seller  shall  indemnify  and hold  harmless
Purchaser  from such adverse  effect,  provided that Seller and Company may take
positions  consistent  with their  historic  positions and past practices on Tax
matters. Except as required by law, no position shall be taken on any Tax Return
(including  any amended  Tax Return)  filed by  Purchaser  or Company  after the
Closing  Date by or on behalf of Company for any period  beginning  on or before
the Closing Date and ending after the Closing Date that would  adversely  affect
Seller unless  Purchaser  shall  indemnify  and hold  harmless  Seller from such
adverse  effect,   provided  that  Purchaser  and  Company  may  take  positions
consistent with Seller's and Company's  historic positions and past practices on
Tax matters.

                  14.2     Cooperation - Tax Matters.
                           -------------------------

                           (a)  As soon  as  practicable  from  and  after  the
Closing Date, but in any event within 30 days after any request,  and subject to
Section 14.1, Seller or Purchaser shall provide each other with such cooperation
and  shall  deliver  such   information  and  data  concerning  the  pre-Closing
operations of Company and make available such knowledgeable  employees as Seller
or Purchaser may reasonably  request,  including  providing the  information and


                                       35
<PAGE>

data  required  by  Seller's  or   Purchaser's   customary  Tax  and  accounting
questionnaires,  in order to enable Seller or Purchaser to complete and file all
Tax Returns  which they may be required to file with  respect to the  operations
and business of Company  through the Closing Date or to respond to audits by any
taxing  authorities  with  respect to such  operations  and  otherwise to enable
Seller or  Purchaser  to  satisfy  their  internal  accounting,  Tax,  and other
legitimate requirements.  Such cooperation and information shall include without
limitation  provisions  of powers of  attorney  for the  purpose of signing  Tax
Returns and  defending  audits and  promptly  forwarding  copies of  appropriate
notices and forms of other  communications  received  from or sent to any taxing
authority  which  relate  to  Company,  and  providing  copies  of all  relevant
documents  relating to rulings or other  determinations  by any taxing authority
and records  concerning  the ownership and Tax basis of property,  which Seller,
Purchaser or Company,  may possess,  but shall not require  Seller or any of its
affiliates  to  disclose  or  provide  copies  of Tax  Returns  or  accompanying
schedules and related workpapers (or portions thereof) except to the extent they
relate to Company.  Seller and Purchaser shall make their  respective  employees
and facilities  available on a mutually  convenient basis during normal business
hours to provide explanation of any documents or information provided hereunder.

                           (b)   Subject to Section  14.1,  Purchaser and Seller
shall  cooperate in the  preparation of all Tax Returns  relating in whole or in
part to Tax periods  ending on or before or including  the Closing Date that are
required to be filed after such date. Such cooperation shall include, but not be
limited to, furnishing such information within such party's possession requested
by the party filing such Tax Returns as is relevant to their preparation. In the
case of any state, local or foreign joint,  consolidated,  combined,  unitary or
similar Tax Returns, such cooperation shall also relate to any other Tax periods
in which one party could reasonably require the assistance of the other party in
obtaining  any  necessary  information,  but  shall  not  require  Seller or its
affiliates  to  disclose  or  provide  copies  of Tax  Returns  or  accompanying
schedules and related workpapers (or portions thereof) except to the extent they
relate to Company.

                  14.3   Records. For a period of ten (10)  years or, if longer,
                         -------
the  applicable  statute of  limitations  period  (including  any  extensions or
waivers  thereof)  after the  Closing  Date,  Purchaser  shall,  and shall cause
Company to,  retain all Tax  Returns,  and other  books and  records  (including
computer  files) of, or with respect to the  activities  of, Company for all Tax
periods or portions thereof ending on or prior to the Closing Date.  Thereafter,
Purchaser  shall not dispose of any such Tax Returns,  books,  or records except
after providing  Seller with reasonable  notice and, if Seller so requests,  the
opportunity to take possession of such Tax Returns,  books, or records solely at
Seller's cost and expense. Furthermore,  Purchaser agrees to abide by all record
retention  agreements  entered  into with any taxing  authority  with respect to
Company with  respect to books and records  applicable  to periods  prior to the
Closing Date.

                  14.4   Audits.  Seller  shall  have  the  right,  at  its  own
                         ------
expense,  to control  any audit or  examination  by any taxing  authority  ("Tax
Audit"), to initiate any claim for refund, and to contest,  resolve,  and defend
against any assessment,  notice of deficiency,  or other  adjustment or proposed
adjustment  relating  to any and all Income  Taxes for any Tax period or portion
thereof  ending on or before the Closing Date.  Seller shall have the right,  at
its own  expense,  to control any Tax Audits,  to initiate any claim for refund,
and  to  contest,  resolve,  and  defend  against  any  assessment,   notice  of
deficiency,  or other adjustment or proposed  adjustment relating to any and all


                                       36
<PAGE>

other Taxes  payable with  respect to Tax Returns  filed or required to be filed
(taking  into  account  extensions)  prior to the Closing  Date with  respect to
Company.  Seller shall have the right, at its own expense, to participate in any
other Tax Audit or contest or defense of any  assessment,  notice of deficiency,
or other  adjustment  or proposed  adjustment  relating to Company to the extent
that Seller  would have any  obligation  to indemnify  Company or Purchaser  for
additional Taxes of Company or Purchaser pursuant to this Agreement.

                  14.5   Indemnity.   If  Purchaser  fails  to  provide  any
                         ---------
information  reasonably  requested by Seller,  or if Seller fails to provide any
information  reasonably  requested by  Purchaser,  pursuant to Sections 14.2 and
14.3, or if either Purchaser or Seller breaches any covenant in this Article 14,
then   Purchaser  or  Seller,   as  the  case  may  be,   shall  be   obligated,
notwithstanding  any other provision of this  Agreement,  to indemnify the other
party and shall so indemnify the other party and its  respective  affiliates and
hold the other party and its respective affiliates harmless from and against any
and all costs, claims or damages,  including,  without limitation,  all Taxes or
deficiencies  thereof,  payable as a result of such  failure  or breach.  Seller
shall indemnify and hold Purchaser and Company harmless from:

                         (a)   any Tax Liability imposed on Company as a  member
of the  affiliated  group of  corporations  of which Seller is the parent and of
which Company is a member arising under Treasury Regulation  1.1502-6(a) (or any
similar provision of any other provision of state, local, or foreign law); and

                         (b)   any Tax Liability  of or with  respect to Company
for any taxable  year or period that ends on or before the Closing Date and, for
any taxable  year or period  beginning  on or before the Closing Date and ending
after the Closing Date,  for the portion of such Tax Liability that is allocable
under  Section 14.1 to the portion of such year or period  ending on the Closing
Date.

                  Notwithstanding  anything to the  contrary in this Article 14,
Seller  shall have no  liability  to  Purchaser  or Company for any Taxes to the
extent of any reserves or accruals for such Taxes on the Balance Sheet.

                  14.6  Purchase  Price  Allocation.  Notwithstanding  Article 2
                        ---------------------------
hereof, for Tax purposes $300,000 of the Purchase Price will be allocated to the
Covenant  Not to  Compete  and  the  remainder  of the  Purchase  Price  will be
allocated to the Purchased Shares  following the transfers  described in Section
3.1 (the "Share Purchase Price").

                  14.7   Section 338(h)(10) Election. Seller and Purchaser shall
                         ---------------------------
join in  making  an  election  under  Section  338(h)(10)  of the Code  (and any
corresponding  election  under state,  local or foreign tax law) with respect to
the purchase and sale of the stock of Company  hereunder (a "Section  338(h)(10)
Election").

                                       37
<PAGE>

                         (a)   With respect to Company, Seller,  Purchaser,  and
Company  shall  execute  any  documents,  statements,  and other  forms that are
required to be submitted to any taxing  authority in  connection  with a Section
338 Election  (the  "Section 338 Forms") no later than 15 days prior to the date
such Section 338 Forms are required to be filed. Seller,  Purchaser, and Company
shall cause the Section 338 Forms to be duly  executed by an  authorized  person
for Seller, Purchaser, or Company, as the case may be, and shall duly and timely
file the Section 338 Forms in accordance  with applicable Tax laws and the terms
of this Agreement.  Seller and Purchaser shall report the purchase of the shares
of stock of Company  consistent  with the Section 338 Election and shall take no
position contrary thereto unless and to the extent required to do so pursuant to
applicable law.

                         (b)   Seller  and  Purchaser  agree,   as  soon  as
practicable  after the Closing Date, but no later than 60 days after the Closing
Date, to enter into an agreement  (the  "Allocation  Agreement") to allocate the
Share  Purchase  Price and the  liabilities  of Company to the assets of Company
pursuant to the Section 338 Election for all applicable Tax purposes,  including
the computation of the Aggregate  Deemed Sale Price (as defined under applicable
Treasury  Regulations  under the Code and similar state or local tax provisions)
("ADSP") for the assets of Company.  (The amount of the  liabilities  taken into
account for this purpose  shall,  in the case of any insurance  liabilities,  be
equal to Company's  corresponding  Tax  reserves,  and, in the case of any other
liabilities, be equal to the amount of Company's liabilities that would properly
be taken into  account in tax basis  under  general  principles  of tax law that
would  apply  upon  an   acquisition  of  the  assets  of  Company  (other  than
insurance-in-force)   for   consideration   that  included   discharge  of  such
liabilities.) The determination and allocation of ADSP (and the treatment of any
deemed reinsurance  transaction stemming from the Section 338 Election) shall be
made in accordance  with Section 338(b) of the Code and any applicable  Treasury
Regulations  and,  except to the extent  required by applicable law, in a manner
consistent with Proposed Treasury  Regulations  Section 1.338-11 and all related
Proposed  Treasury  Regulations.  Purchaser  initially shall prepare a statement
setting forth a proposed  computation and allocation of ADSP (the "Computation")
and shall  submit the  Computation  to Seller,  along with copies of  applicable
supporting  documents  used to prepare  the  Computation,  no later than 30 days
after  the  Closing  Date.  If,  within  30  days  of  Seller's  receipt  of the
Computation,  Seller shall not have objected in writing to the Computation,  the
Computation shall become the Allocation Agreement.  If Seller objects in writing
to the Computation within such 30 days,  Purchaser and Seller shall negotiate in
good faith to resolve the  Computation,  and if so  resolved,  such  Computation
shall become the  Allocation  Agreement.  If Purchaser and Seller shall not have
agreed to the  Computation  and adopted an Allocation  Agreement  within 30 days
after Seller's  objection,  Seller and Purchaser  shall appoint the  Independent
Firm to resolve any disputed aspects of the Allocation  Agreement or Computation
within 35 days of Seller's  objection.  The  Independent  Firm shall resolve any
disputed  aspects  of  the  Allocation  Agreement  or  Computation  as  soon  as
practicable  but in no event  later than 30 days prior to the earlier of (i) the
last date on which the  Section 338 Forms must be filed or (ii) the last date on
which either  Purchaser or Seller  (whichever is earlier) must file a Tax Return
relating  to  the  transactions   contemplated   herein.  The  decision  of  the
Independent  Firm  shall be  final,  and the  costs,  expenses,  and fees of the
Independent  Firm shall be borne  equally by  Purchaser  and Seller.  Seller and
Purchaser (i) shall be bound by such  allocation for purposes of determining any
Taxes,  (ii) shall  prepare and file all Tax Returns to be filed with any taxing
authority in a manner consistent with such allocation,  and (iii) shall not take
a position  before any  taxing  authority  or  otherwise  (including  in any Tax
Return)  inconsistent  with the  Allocation  Agreement  unless and to the extent
required to do so pursuant to applicable law. In the event any taxing  authority
disputes the Allocation  Agreement,  the party receiving  notice of such dispute
shall promptly notify the other party of such dispute,  and Seller and Purchaser
shall  cooperate  in good  faith in  responding  to such  challenge  in order to
preserve the effectiveness of such allocation.

                                       38
<PAGE>

                  14.8   Transfer and Similar Taxes. All Transfer  Taxes arising
                         --------------------------
out of, in connection with or attributable to the transactions effected pursuant
to this Agreement shall be borne and paid by Purchaser.  Purchaser shall prepare
and timely file all relevant Tax Returns required to be filed in respect of such
Transfer Taxes and timely pay the Transfer Taxes shown on such Tax Returns.  For
the avoidance of doubt, Seller shall be responsible for and shall pay all Income
Taxes relating to the sale of the Purchased Shares.

                  14.9   Refunds. Any refund of Taxes  received by Seller or any
                         -------
amounts  credited  against  Taxes that relate to any  taxable  period of Company
ending after the Closing  Date shall be for the account of Purchaser  and Seller
shall pay over the amount of such refund or credit  within 30 days after receipt
or entitlement thereto.  Notwithstanding the foregoing, with respect to a refund
or credit  pertaining  to a taxable  year or period  beginning  on or before and
ending after the Closing,  such refund or credit  shall be  apportioned  between
Seller and Purchaser based on the Tax allocation provided in Section 14.1.

                  14.10   Tax Sharing  Arrangement.  Any Tax Sharing Arrangement
                          ------------------------
shall be terminated  effective as of the Closing Date.

                  14.11  Conflicts.  In the  event of a  conflict  between  this
                         ---------
Article 14 and Article 13 (including any claim for  indemnification  relating to
Taxes  that  could be made under both this  Article  14 and  Article  13),  this
Article 14 shall govern and control.

                                   ARTICLE 15
                                   ----------

                               GENERAL PROVISIONS
                               ------------------

                  15.1    Expenses.  Except  as  otherwise expressly provided in
                          --------
this Agreement,  each party to this Agreement will bear its respective  expenses
incurred  in  connection  with  the  preparation,  negotiation,  execution,  and
performance of this Agreement and the Contemplated  Transactions,  including all
fees and expenses of agents, Representatives, counsel, and accountants.

                  15.2   Public Announcements.  Any  public  announcement  or
                         --------------------
similar   publicity  with  respect  to  this   Agreement  or  the   Contemplated
Transactions  will be issued,  at such time and in such manner as Purchaser  and
Seller shall  mutually  determine,  provided  that  following  execution of this
Agreement  and  consultation  with  Purchaser,   Seller  and  Company  may  make
appropriate  announcements to their employees,  agents, and customers,  and each
party  may  make   announcements  and  filings  required  by  law  or  otherwise
contemplated by this Agreement.

                  15.3    Confidentiality.   Between  the date of this Agreement
                          ---------------
and the Closing Date, Purchaser and Seller will maintain in confidence, and will
cause their Related Persons and  Representatives to maintain in confidence,  any
confidential or proprietary  written,  oral, or other information  obtained from
the other party or its Related  Persons or  Representatives  in connection  with
this Agreement or the Contemplated  Transactions,  unless (a) the information is
already  known to the party or to others not bound by a duty of  confidentiality
or the information becomes publicly available through no fault of the party, (b)
the use of the  information  is necessary or appropriate in making any filing or
obtaining  any  Consent  or  approval  required  for  the  consummation  of  the


                                       39
<PAGE>

Contemplated  Transactions,  or (c) the furnishing or use of the  information is
required by or necessary or appropriate in connection  with a Legal  Requirement
or Proceeding. If the Contemplated  Transactions is not consummated,  each party
will return or destroy as much of the written information as the other party may
reasonably request,  and the  confidentiality  provisions set forth in the first
sentence of this Section 15.3 shall remain in effect.

                  15.4    Notices.  All notices, consents,  waivers,  and  other
                          -------
communications  under this  Agreement  must be in writing  and will be deemed to
have been duly given (a) when  delivered by hand (with written  confirmation  of
receipt),  (b) when  deposited in the mails,  if sent via certified  mail,  with
return  receipt  requested,  (c) when  received by the  addressee,  if sent by a
nationally  recognized  overnight delivery service (receipt  requested),  or (d)
upon receipt of confirmation of a successful transmission, if sent via facsimile
or other similar  transmission,  in each case to the  appropriate  addresses set
forth below (or to such other  addresses  as a party may  designate by notice to
the other party):

                  If to Seller:       By mail or facsimile:
                                      Agway, Inc.
                                      P.O. Box 4933
                                      Syracuse, New York 13221-4933
                                      Attention: Peter J. O'Neill
                                      Senior Vice President
                                      Facsimile: (315) 449-6568

                                      By delivery service:
                                      333 Butternut Drive
                                      DeWitt, New York 13214

                  with a copy to:     By mail or facsimile:
                                      Nels G. Magnuson, Esq.
                                      Deputy General Counsel
                                      Agway, Inc.
                                      P.O. Box 4933
                                      Syracuse, New York 13221-4933
                                      Facsimile: (315) 449-6253

                                      By delivery service:
                                      333 Butternut Drive
                                      DeWitt, New York 13214

                  and to:             Wallace J. McDonald, Esq.
                                      Bond, Schoeneck & King, LLP
                                      One Lincoln Center
                                      Syracuse, New York 13202
                                      Facsimile:(315) 422-3598

                                       40
<PAGE>

                  If to Purchaser:    Lynn B. Jongleux, Esq.
                                      Farm Bureau Insurance Companies
                                      225 S. East Street
                                      Indianapolis, IN 46202
                                      Facsimile: 317-692-7955

                  with a copy to:     Eric R. Johnson, Esq.
                                      Sommer & Barnard, PC
                                      4000 Bank One Tower
                                      111 Monument Circle
                                      Indianapolis, IN  46204
                                      Facsimile:  (317) 236-9802


                  15.5  Jurisdiction;  Service of Process.  Any suit,  action or
                        ------------
other  Proceeding  seeking to enforce any  provision of, or based upon any right
arising out of, in connection  with,  or in any way relating to, this  Agreement
shall be brought only in the Supreme Court sitting in Onondaga County,  New York
or the United States District Court for the Northern  District of New York. Each
party hereby  irrevocably  consents and submits to the jurisdiction and venue of
these courts and irrevocably  waives any objection which it may now or hereafter
have to the  laying of the venue of any suit,  action or  Proceeding  brought in
these courts and any claim that the suit,  action or Proceeding has been brought
in an inconvenient forum.

                  15.6   Further Assurances. Each of the parties hereto will use
                         ------------------
commercially reasonable,  good faith efforts (a) to furnish upon request to each
other such  further  information,  (b) to execute and deliver to each other such
other  documents,  and (c) to do,  or cause to be done,  all  things  necessary,
proper or advisable under applicable  Legal  Requirements to consummate and make
effective the sale of the Purchased Shares and the Related Transactions pursuant
to this Agreement,  including without limitation using  commercially  reasonable
efforts to ensure  satisfaction  of the  conditions  precedent  to each  party's
obligations hereunder. Neither of the parties hereto will, without prior written
consent of the other party,  take any action which would  reasonably be expected
to  prevent  or  materially  impede,  interfere  with or delay the  transactions
contemplated by this Agreement.  From time to time on or after the Closing Date,
Seller will, at its own expense, execute and deliver such documents to Purchaser
as  Purchaser  may  reasonably  request  in  order to more  effectively  vest in
Purchaser, Seller's title to the Purchased Shares and the Agway, Inc. Assets.

                  15.7     Books and Records.
                           -----------------

                           (a)  Unless otherwise  agreed  to  by  the   parties
hereto,  at the  Closing all books and records of the Company  shall be  located
in the Company's offices or, with respect to books and records  located in  off-
site storage  facilities,  shall,  within ninety (90) days following Closing, be
transferred at Purchaser's sole expense to an account established in the name of
Purchaser  and/or  the  Company,  whether  at the same  location  or such  other
location  as may be  identified  by  Purchaser  (all  such  books  and  records,
regardless of location,  referred to collectively as the "Transferred  Books and
Records").  To the extent that any Transferred Books and Records relating to the
operation of the businesses of the Company prior to Closing are expected in good
faith to be reasonably  required by Seller following Closing for purposes of the
preparation  or  examination  of  Tax  Returns,  regulatory  filings,  financial


                                       41
<PAGE>

statements,  the conduct of any litigation or regulatory  dispute  resolution or
relating to  obligations  arising under this  Agreement,  Seller may, at its own
expense, make and retain copies of any such Transferred Books and Records.

                           (b)   Following  the Closing  Date,  and for a period
of 10 years from the Closing Date,  Purchaser shall, and shall cause the Company
to, (i) allow Seller,  upon reasonable  prior notice and during regular business
hours,  through  its  employees  and  representatives,  the right,  at  Seller's
expense, to examine and make copies of the Transferred Books and Records for any
reasonable business purpose, and (ii) maintain the Transferred Books and Records
for  Seller's  examination  and  copying.  Access to the  Transferred  Books and
Records shall be at Seller's  expense and may not  unreasonably  interfere  with
Purchaser's or the Company's or any successor company's business operations.

                  15.8   Waiver. The rights and  remedies of the parties to this
                         ------
Agreement are cumulative and not alternative.  Neither the failure nor any delay
by any party in exercising any right,  power,  or privilege under this Agreement
or the documents  referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power,  or privilege will preclude any other or further  exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.

                  15.9   Entire Agreement  and   Modification.   This  Agreement
                         ------------------------------------
supersedes  all  prior   negotiations,   understandings,   representations   and
agreements  between  the  parties  with  respect  to  its  subject  matter,  and
constitutes  a complete and  exclusive  statement of the terms of the  agreement
between  the  parties.  This  Agreement  may not be amended  except by a written
agreement executed by the party to be charged with the amendment.

                  15.10   Assignments, Successors,  and No  Third-Party  Rights.
                          -----------------------------------------------------
Neither  party may assign any of its rights  under this  Agreement  without  the
prior consent of the other party except that Purchaser may assign its rights and
obligations under this Agreement to any wholly-owned  subsidiary of Purchaser so
long as Purchaser  remains  liable for the  performance  of all  obligations  of
Purchaser  under  this  Agreement.  Subject  to  the  preceding  sentence,  this
Agreement  will  apply to, be  binding in all  respects  upon,  and inure to the
benefit  of  the  successors  and  permitted  assigns  of the  parties.  Nothing
expressed or referred to in this  Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable  right,  remedy,
or claim  under or with  respect  to this  Agreement  or any  provision  of this
Agreement.  This  Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.

                  15.11   Severability.  If  any  provision of this Agreement is
                          ------------
held invalid or unenforceable by any court of competent jurisdiction,  the other
provisions of this Agreement will remain in full force and effect. Any provision
of this  Agreement  held  invalid or  unenforceable  only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.

                  15.12   Section  Headings,  Construction.  The  headings  of
                          --------------------------------
Articles and Sections in this  Agreement are provided for  convenience  only and
will not affect its construction or interpretation.  Unless otherwise  expressly


                                       42
<PAGE>

provided, the word "including" does not limit the preceding words or terms.

                  15.13   Time  of Essence. With  regard  to all  dates and time
                          ----------------
periods set forth or referred to in this Agreement, time is of the essence.

                  15.14    Governing Law. This Agreement will be governed by and
                           -------------
construed  under  the  laws of the  State  of New  York  without  regard  to its
principles pertaining to conflict of laws.

                  15.15    Counterparts.   This Agreement may be executed in one
                           ------------
or more  counterparts,  each of which will be deemed to be an  original  copy of
this  Agreement  and all of  which,  when  taken  together,  will be  deemed  to
constitute one and the same agreement.

         [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]


<PAGE>



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

                                   "PURCHASER"

                                    UNITED FARM FAMILY MUTUAL
                                    INSURANCE COMPANY


                                    By  /s/ DONALD B. VILLWOCK
                                       ---------------------------
                                           Donald B. Villwock
                                           President and CEO


                                   "SELLER"

                                    AGWAY, INC.


                                    By: /s/ PETER J. O'NEILL
                                       ---------------------------
                                            Peter J. O'Neill
                                          Senior Vice President





<PAGE>
                            STOCK PURCHASE AGREEMENT
                             BETWEEN AGWAY INC. AND
                            UNITED FARM FAMILY MUTUAL
                      INSURANCE COMPANY DATED JUNE 14, 2002
--------------------------------------------------------------------------------


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

Exhibit A         -        Covenant Not To Compete
Exhibit B         -        Escrow Agreement
Exhibit C         -        Endorsement Agreement
Exhibit D         -        Transition Services Agreement
Exhibit E-1       -        Closing Certificate of Seller
Exhibit E-2       -        Closing Certificate of Purchaser
Exhibit F         -        Opinion of Counsel to Seller
Exhibit G-1       -        Opinion of Counsel to Purchaser
Exhibit G-2       -        Opinion of Local Counsel to Purchaser
Exhibit H         -        Financial Statements


<PAGE>
                                EXHIBIT 10.(ae)
<PAGE>




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







                            ASSET PURCHASE AGREEMENT


                                 BY AND BETWEEN


                                   AGWAY, INC.


                                       AND


                        Cenex Harvest States Cooperatives







                         DATED AS OF SEPTEMBER 10, 2002






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




<PAGE>





                            ASSET PURCHASE AGREEMENT
                            ------------------------


         This ASSET  PURCHASE  AGREEMENT,  dated as of the 10th day of September
2002, by and between CENEX HARVEST STATES COOPERATIVES,  a Minnesota corporation
("the Purchaser"), and AGWAY, INC., a Delaware corporation (the "Seller"). Terms
used  herein and not  otherwise  defined  shall have the  meanings  set forth in
Section 12.3 hereof.

         This Asset  Purchase  Agreement is entered  into  pursuant to which the
Purchaser will acquire  substantially  all of the assets primarily used by or in
connection with the Seller's sunflower seed processing business, and its related
soybean  roasting,  hulled  millet and other grain  businesses  conducted at the
Seller's Grandin, North Dakota facility (the "Business").

         NOW, THEREFORE, in consideration of the representations and warranties,
covenants and agreements,  and subject to the conditions,  contained herein, the
Seller and the Purchaser hereby agree as follows:


                                    ARTICLE I

                               PURCHASE OF ASSETS
                               ------------------

                  1.1 Purchase and Sale of Acquired Assets. Subject to the terms
                      ------------------------------------
         and conditions of this  Agreement,  the Seller agrees to sell,  assign,
         convey and  transfer  to the  Purchaser,  and the  Purchaser  agrees to
         purchase,  at the Closing,  the goodwill of the Business and all of the
         following  assets  used by or in  connection  with  the  Business  (the
         "Acquired Assets"):

                  (a)      the real  property  (land  and  buildings)  listed in
                           Section 1.1(a) of the Disclosure  Schedule (the "Real
                           ------------------------------------------       ----
                           Property")  and the  real  estate  leases  listed  in
                           --------
                           Section 1.1(b) of the Disclosure  Schedule (the "Real
                           ------------------------------------------       ----
                           Estate Leases");
                           -------------

                  (b)      all inventory exclusively relating to the Business;

                  (c)      all Assigned Receivables;

                  (d)      all Assigned Contracts;

                  (e)      all  prepaid expenses  to the extent relating  to the
                           Business;

                  (f)      the  machinery,  equipment  and  vehicles  listed  in
                           Section 1.1(f) of the Disclosure Schedule;
                           ------------------------------------------



                  (g)      all  customer  lists  and  business records primarily
                           relating to the Business;

                  (h)      the trademarks and registrations  therefor  listed in
                           Section 1.1(h)  of  the  Disclosure  Schedule and all
                           ---------------------------------------------
         Proprietary Rights owned by the Seller (other than trademarks,  service
         marks, domain names, corporate names, trade names or other  indications


                                       2
<PAGE>

         of origin)  that exclusively relate to the Business, including, without
         limitation, all sunflower seed genetic  material, hybrid, inbred parent
         lines and experimental genetic material owned by the Seller and used in
         the Business; and

                  (i)      all Proprietary Rights   owned  by  the  Seller  that
         exclusively  relate  to the  website  found at  WWW.AGWAYSUNFLOWER.COM;
                                                         -----------------------
         provided,  however,  that (i) the Purchaser shall delete all references
         --------   -------
         contained  on such  website to the  Seller's  ownership of the Business
         within thirty (30) days after closing;  (ii) the Purchaser  shall add a
         link from  WWW.AGWAYSUNFLOWER.COM  to  WWW.AGWAY.COM  in a manner  that
                    ----------------------      -------------
         clearly  indicates to consumers that the two companies and two websites
         are owned by different  entities;  (iii) the  Purchaser  shall  clearly
         indicate  on the  first  page  of its  website  that  it is  using  the
         WWW.AGWAYSUNFLOWER.COM  domain name under license from Agway;  and (iv)
         ----------------------
         the Purchaser shall bear all costs associated with the transfer of such
         website to the  Purchaser's  server (or any other server  designated by
         Purchaser),  which transfer shall be accomplished  within five (5) days
         after Closing.

         1.1.1  Notwithstanding  anything  contained  in this  Agreement  to the
 contrary,  the parties  expressly  acknowledge  and agree that the Seller shall
 retain, and the Acquired Assets shall not include,  any of the following assets
 (the "Excluded Assets"):

                  (a)      all of the Seller's cash or cash equivalents;

                  (b)      all Excluded Receivables;

                  (c)      all Contracts not constituting Assigned Contracts;

                  (d)      all rights of the Seller under this Agreement and all
         agreements,  instruments  and certificates executed  in connection with
         this Agreement;

                  (e)      all records  prepared in connection  with the sale of
         the Business,  including  analyses relating to the Business;

                  (f)      all rights of the Seller under insurance policies;

                  (g)      all rights, Claims and  causes of action relating  to
         any of the Excluded  Liabilities  or  the  Excluded  Assets,  including
         rights,  Claims and causes of action  under  Contracts  included in the
         Excluded Assets and insurance policies relating thereto;

                  (h)      all rights, Claims and causes of  action, asserted or
         unasserted,  of any kind or nature  arising  prior to the Closing Date,
         including,  without limitation, all rights, Claims and causes of action
         arising  prior to the  Closing  Date under  Contracts  included  in the
         Acquired Assets,  excluding  accounts  receivable  described in Section
         1.1(c);

                  (i)      all right,  title or  interest  in or to the name and
         mark  relating  to  AGWAY,  FEATHERED  FRIEND (as  used and  registered
         in the United  States) and the other trademarks, domain names and other
         indications  of  origin  listed  on  Annexes  A  and B to  the  License


                                       3
<PAGE>

         Agreement  (in logo type  design or any other  style or design  and any
         name,  mark or indication  of origin  derived  therefrom  including any
         abbreviations  thereof),  except to the  limited  extent the  Purchaser
         acquires  an express  license to use such  names,  trademarks  or other
         indications of origin pursuant to the License Agreement;

                  (j)     all rights to, or claims available to or being pursued
         by the Seller for, refunds of or credits against  Taxes  (including all
         investment tax credits, research credits and credits for prepayments of
         Income Taxes) attributable to the Business or the Acquired Assets;

                  (k)     any  Tax  Return  relating  to  the  Business  or  the
         Acquired  Assets,  and  records  and  work  papers  used in preparation
         thereof;

                  (l)     all prepaid expenses or deposits associated  with  any
         of the  Excluded  Assets  or Excluded Liabilities;

                  (m)    the corporate charter, article of organization, bylaws,
         qualifications   to  conduct   business   as  a  foreign   corporation,
         arrangements with registered agents relating to foreign qualifications,
         taxpayer and other identification  numbers,  seals, minute books, stock
         transfer books, blank stock certificates,  and other documents relating
         to the organization, maintenance, and existence of the Seller; and

                  (n)     all records  and  reports  maintained  by  the  Seller
         pertaining   exclusively   to  other   Excluded   Assets   or  Excluded
         Liabilities.

         1.1.2    (a)     Nothing contained in this Agreement shall be construed
as an attempt to agree to assign any Assigned  Contract which is  non-assignable
without the consent of any other party  thereto,  unless such consent shall have
been given. The Seller and the Purchaser shall use their commercially reasonable
efforts to obtain all consents necessary to effect such assignment, effective as
of the Closing,  prior to the Closing,  it being  understood that the failure to
obtain such  consents  shall not reduce the Purchase  Price or relieve any party
from its obligation to consummate at the Closing the  transactions  contemplated
by this  Agreement.  To the  extent  they are  unsuccessful  in  obtaining  such
consents by Closing,  the Seller and the Purchaser  shall continue their efforts
to obtain such consent(s) after the Closing,  and pending the ultimate obtaining
of such  approvals,  or if such approvals are  impossible to obtain,  the Seller
shall take all such commercially reasonable action as may be necessary or proper
in order to enable the Seller and the  Purchaser to arrange for  performance  by
the Purchaser in accordance with Section 1.1.2(b).  Notwithstanding  anything to
the contrary in this Agreement,  nothing in this Section 1.1.2 shall require the
Seller or the Purchaser to expend any material  sum,  make a material  financial
commitment  or grant or agree to any material  concession to any third Person to
obtain any such consent.

                  (b)     To  the  extent that any such consents and waivers are
not obtained,  or until the  impediments to such  assignment  are resolved,  the
Seller  shall  use all  reasonable  efforts  (without  the  expenditure,  in the
aggregate, of any material sum) to the extent permitted by Law to (i) provide to
the  Purchaser,  at the  request  of the  Purchaser,  the  benefits  of any such


                                       4
<PAGE>

Assigned Contracts, (ii) cooperate in any lawful arrangement designed to provide
such benefits to the Purchaser and (iii) enforce,  at the request of and for the
account  of the  Purchaser,  any  rights  of the  Seller  arising  from any such
Assigned  Contracts  against any third  Person  including  the right to elect to
terminate in accordance with the terms thereof upon the advice of the Purchaser.
To the extent that the  Purchaser is provided the  benefits  (including  payment
rights) of any Assigned Contracts referred to herein (whether from the Seller or
otherwise),  (i) the Purchaser shall perform for the benefit of any third Person
the obligations of the Seller  thereunder or in connection  therewith,  and (ii)
the Purchaser  agrees to pay,  perform and discharge,  and,  pursuant to Section
11.3,  indemnify  the Seller  against  and hold the Seller  harmless  from,  all
obligations  and  liabilities  of the Seller  relating  to such  performance  or
failure to perform, and in the event of a failure of such indemnity,  the Seller
shall cease to be  obligated  under this  Agreement  in respect of the  Assigned
Contracts which are the subject of such failure.

         1.1.3    Promptly after the execution of this  Agreement and continuing
until the Closing Date,  representatives  of the Seller and the Purchaser  shall
jointly review, applying a reasonable analysis of applicable credit factors, the
accounts  receivable  that relate  exclusively  to the Business but that are not
described in clauses (i) and (ii) of the  definition of "Assigned  Receivables."
Each such  account  receivable  as to which  the  parties  agree,  based on such
review,  that such  account  receivable  does not entail a  substantial  risk of
uncollectibility shall constitute an Assigned Receivable and shall be identified
as such on a schedule signed at the Closing Date by such  representatives.  Each
such account receivable as to which the parties disagree,  based on such review,
whether such account receivable  entails a substantial risk of  uncollectibility
shall  constitute an Assigned  Receivable  but shall also  constitute a Puttable
Receivable and shall be identified as such on a separate  schedule signed at the
Closing Date by such representatives.

         1.2.    Assumed Liabilities.  At  the  Closing,  except as described in
                 -------------------
this Section 1.2, the Purchaser shall assume and agree to pay, satisfy,  perform
and  discharge  as the same  shall  become due (i) all  accounts  payable to the
extent they relate to the Business and are listed on a schedule  prepared by the
Seller and  delivered to the Purchaser  prior to the Closing Date,  and (ii) all
liabilities  resulting  from or arising out of the  operation of the Business by
the Purchaser,  or the Purchaser's  ownership,  operation or use of the Acquired
Assets,  or the actions or omissions of the Purchaser,  its Affiliates,  agents,
contractors or  subcontractors in connection  therewith,  following the Closing,
including but not limited to liabilities  under Assigned  Contracts and the Real
Estate  Leases,  in each case  arising  after  the  Closing  Date (the  "Assumed
Liabilities"),  pursuant to an Assumption Agreement substantially in the form of
Exhibit 1.2 hereto.

         Notwithstanding  anything  contained in this Agreement to the contrary,
the Purchaser  shall not assume or otherwise be  responsible at any time for any
liability,  obligation,  debt or  commitment of the Seller,  including,  but not
limited to, any  liabilities,  obligations,  debts or  commitments of the Seller
incident to,  arising out of or incurred with respect to this  Agreement and the
transactions  contemplated hereby,  other than the Assumed Liabilities.  Without
limiting  the  foregoing,  the  following  liabilities  shall be retained by the
Seller (the "Excluded Liabilities"):

         (a)    any liability of the Seller for Income Taxes attributable to the
         Business or the Acquired Assets for Pre-Closing Tax Periods,  including
         (A) any liability  for Income Taxes of the Seller  pursuant to Treasury
         Regulation  ss.1.1502-6(a) or any comparable  provision of state, local


                                       5
<PAGE>

         or  foreign  law and (B)  Income  Taxes  resulting  from  the  sale and
         transfer from the Seller to the Purchaser of the Acquired Assets; and

         (b)    all liabilities in  respect  of any  claim,  lawsuit,  action or
         proceeding  to the extent such  claim,  lawsuit,  action or  proceeding
         directly pertains to any Excluded Asset or Excluded Liability.

         1.3.   Method  of  Conveyance.  The  sale,  transfer,   conveyance  and
                ----------------------
assignment  by the Seller of the Acquired  Assets to the Purchaser in accordance
with  Section 1.1 hereof shall be effected on the Closing Date at the Closing by
the Seller's  execution and delivery to the Purchaser of instruments of transfer
including:  (a) special  warranty  deeds to the Real Property in the form of the
special  warranty deed attached hereto as Exhibit 1.3(a),  (b) a bill of sale in
the form  attached  hereto  as  Exhibit  1.3(b)  (the  "Bill of  Sale"),  (c) an
assignment of the Seller's leases included in the Acquired Assets in the form of
Exhibit  1.3(c)  attached  hereto  (the  "Assignment  of Lease"),  (d)  transfer
documents  for  the  certificates  of  title  for all of the  Seller's  vehicles
included in the Acquired  Assets,  and (e)  assignments  of  trademarks  for the
trademarks included in the Acquired Assets. At the Closing,  all of the Acquired
Assets shall be transferred by the Seller to the Purchaser free and clear of any
and all Liens, other than Permitted Liens.

         1.4    Purchase Price.  In  consideration  for  the  conveyance  of the
                --------------
Acquired Assets and in reliance on the representations and warranties, covenants
and  agreements of the Seller  contained  herein and the documents  contemplated
hereby, the Purchaser agrees to assume the Assumed  Liabilities and shall pay to
the Seller at Closing an amount equal to the sum of $8,500,000  plus the Closing
Date Net Current Asset Value,  or if the Closing Date Net Current Asset Value is
negative,  minus the absolute  value of the Closing Date Net Current Asset Value
(such  amount,  plus or minus any  adjustments  pursuant  to  Section  1.6,  the
"Purchase Price").

         1.5    Current Asset Valuation.  (a)  During  the two days prior to the
                -----------------------
Closing Date,  representatives  of the Seller and the Purchaser  shall conduct a
physical count of the inventory  included in the Acquired Assets for purposes of
determining the quantities and types thereof,  and shall use their  commercially
reasonable  efforts  to  complete  and  agree  upon such  determination  and the
calculation  of the Closing  Date  Inventory  Value  prior to the Closing  Date.
Unless  they are  unable to reach such  agreement,  such  representatives  shall
jointly sign a certificate  setting forth such agreed valuation,  which shall be
final and  binding on, and shall be  nonappealable  by, the parties and shall be
the Closing Date Inventory Value for all purposes of this Agreement. If they are
unable to reach such  agreement  prior to the Closing  Date,  the  Closing  Date
Inventory  Value  shall be deemed to be the amount  equal to (i) 90% of the book
value of all  inventory of the Business as set forth on the balance sheet of the
Business, prepared in accordance with GAAP as of the most recent month-end prior
to the Closing Date minus (ii) $118,000,  solely for purposes of determining the
amount of Purchase  Price to be paid at Closing,  and the  provisions of Section
1.6(a)  through (c) shall apply for purposes of  determining  the final  Closing
Date Inventory Value.

                (b)    During   the   two   days  prior  to  the  Closing  Date,
representatives  of the  Seller and the  Purchaser  shall  review  the  accounts
receivable  included in the Acquired Assets and the accounts payable included in
the Assumed Liabilities,  and shall use their commercially reasonable efforts to
complete and agree upon the Closing Date Receivables  Value and the Closing Date


                                       6
<PAGE>

Payables  Value.   Unless  they  are  unable  to  reach  such  agreement,   such
representatives  shall  jointly  sign a  certificate  setting  forth such agreed
valuation,  which shall be final and binding on, and shall be nonappealable  by,
the parties and shall be the Closing Date Receivables Value and the Closing Date
Payables Value,  respectively,  subject to the provisions of Section 1.6(d).  If
such  representatives  are unable to reach such agreement as to the Closing Date
Receivables  Value prior to the Closing Date, the Closing Date Receivables Value
shall be deemed to be the book value of the accounts  receivable of the Business
described in Section  1.1(c) as set forth on the balance  sheet of the Business,
prepared in accordance  with GAAP as of the most recent  month-end  prior to the
Closing Date, solely for purposes of determining the amount of Purchase Price to
be paid at Closing, and the provisions of Section 1.6(a) through (c) shall apply
for purposes of determining  the final Closing Date  Receivables  Value. If such
representatives  are  unable to reach  such  agreement  as to the  Closing  Date
Payables  Value prior to the Closing Date, the Closing Date Payables Value shall
be deemed to be the book value of the  accounts  payable of the  Business as set
forth on the balance sheet of the Business,  prepared in accordance with GAAP as
of the most recent  month-end prior to the Closing Date,  solely for purposes of
determining  the  amount  of  Purchase  Price  to be  paid at  Closing,  and the
provisions of Section 1.6(a) through (c) shall apply for purposes of determining
the final Closing Date Payables Value.

         1.6      Purchase Price Adjustments.
                  --------------------------

                  (a)   Post-Closing   Purchase   Price   Adjustment.   If   the
representatives of the parties are unable to agree on the Closing Date Inventory
Value, the Closing Date Receivables  Value or the Closing Date Payables Value in
accordance  with Section 1.5,  then,  as soon as  practicable  but no later than
fifteen (15) business days after the Closing Date,  the Purchaser  shall prepare
and deliver to the Seller a balance  sheet which shall be prepared in accordance
with GAAP applied  consistently with the preparation of the Financial Statements
(the  "Closing  Date  Balance  Sheet") and a  calculation  of the  Closing  Date
Inventory Value, the Closing Date Receivables Value or the Closing Date Payables
Value (whichever items are in dispute) and a calculation of the Closing Date Net
Current Asset Value,  in each case, as of the opening of business on the Closing
Date.  The Seller  shall have the right to dispute the  calculation  of any such
disputed item and make any proposed  adjustments  thereto as provided in Section
1.6(b).

                           (i)  If  it  is  determined  there is a Current Asset
                  Value Shortfall, the difference shall be paid to the Purchaser
                  on the Settlement Date; or

                           (ii) If it is  determined  there is a  Current  Asset
                  Value Surplus,  the difference  shall be paid to the Seller on
                  the Settlement Date.

                           (iii) In the event a Current Asset Value Shortfall is
                  not paid to the Purchaser on the  Settlement  Date (unless due
                  to the fault of the  Purchaser),  the Seller shall also pay to
                  the  Purchaser  interest  on the amount of the  Current  Asset
                  Value  Shortfall  at a rate of nine  percent  (9%) per  annum,
                  which  shall  accrue from the  Settlement  Date to the date of
                  actual payment.  In the event a Current Asset Value Surplus is
                  not paid to the Seller on the  Settlement  Date (unless due to


                                       7
<PAGE>

                  the fault of the Seller),  the Purchaser shall also pay to the
                  Seller  interest  on the  amount of the  Current  Asset  Value
                  Surplus at a rate of nine percent (9%) per annum,  which shall
                  accrue from the Settlement Date to the date of actual payment.

                  (b)    Dispute  Resolution  Procedures. The  Seller shall have
until  fifteen (15) business days after the delivery of the Closing Date Balance
Sheet and accompanying  calculations to review such calculations and propose any
adjustments  thereto. All adjustments proposed by the Seller shall be set out in
detail  in a written  statement  delivered  to the  Purchaser  (the  "Adjustment
Statement")  and shall be  incorporated  into the Closing Date Net Current Asset
Value calculation, unless the Purchaser shall object in writing to such proposed
adjustments  (the  proposed  adjustment  or  adjustments  to which the Purchaser
objects  are  referred  to  herein  as  the  "Contested   Adjustments"  and  the
Purchaser's  objection notice is referred to herein as the "Contested Adjustment
Notice")  within  fifteen  (15)  business  days of delivery by the Seller to the
Purchaser of the  Adjustment  Statement.  If the Purchaser  delivers a Contested
Adjustment  Notice  to the  Seller,  the  Purchaser  and the  Seller  shall  use
reasonable efforts to resolve their dispute regarding the Contested Adjustments,
but if a final resolution thereof is not obtained within ten (10) days after the
Purchaser delivers to the Seller said Contested Adjustment Notice, the Purchaser
and the  Seller  shall  promptly  retain  a  nationally  recognized  independent
accounting   firm   acceptable  to  both  the  Seller  and  the  Purchaser  (the
"Independent  Accountant")  to resolve any  remaining  disputes  concerning  the
Contested  Adjustments.  Either  the  Seller or the  Purchaser  may  retain  the
Independent Accountant upon the expiration of such ten-day period.

                  If the Independent Accountant is retained, then (i) the Seller
and the Purchaser shall each submit to the Independent Accountant in writing not
later than fifteen (15) days after the Independent  Accountant is retained their
respective  positions with respect to the Contested  Adjustments,  together with
such  supporting  documentation  as they deem  necessary  or as the  Independent
Accountant  requests,  and (ii) the Independent  Accountant shall, within thirty
(30) days after receiving the positions of both the Seller and the Purchaser and
all  supplementary   supporting   documentation  requested  by  the  Independent
Accountant, render its decision as to the Contested Adjustments,  which decision
shall be final  and  binding  on,  and  nonappealable  by,  the  Seller  and the
Purchaser.  The fees and expenses of the Independent  Accountant shall be shared
equally  by the  Seller  and the  Purchaser.  The  decision  of the  Independent
Accountant  shall  also  include a  certificate  of the  Independent  Accountant
setting forth the final  calculation of the Closing Date Net Current Asset Value
(the  "Settlement  Amount  Certificate"),  which shall  include all  adjustments
proposed  by the Seller not  disputed  by the  Purchaser  and those  adjustments
accepted or made by the decision of the Independent  Accountant in resolving the
Contested Adjustments.

                  (c)     There   shall   be   a  "Settlement  Date"   after the
calculation of  the  Closing Date  Net Current Asset Value  which shall mean the
following,  as applicable:

                           (i)    If the Seller  has  not  timely  delivered  an
                  Adjustment Statement to the Purchaser,  twenty (20) days after
                  the date the Seller  receives  the  Closing  Date Net  Current
                  Asset Value calculation;

                                       8
<PAGE>

                           (ii)   If  the  Seller   has   timely   delivered  an
                  Adjustment   Statement  and   the  Purchaser  has  not  timely
                  delivered a Contested Adjustment Notice, twenty (20)days after
                  the  date the Purchaser receives the Adjustment Statement;

                           (iii)  If the  Seller  and  the  Purchaser  have  any
                  disputes  regarding  Contested  Adjustments  and they  resolve
                  those disputes, five business days after such resolution;

                           (iv)   Five  business  days  after  the   Independent
                  Accountant  delivers  the  Settlement  Amount  Certificate, if
                  applicable; or

                           (v)    Such other date as shall be agreed between the
                  Seller and the Purchaser.

                 (d)     Real  and  personal  property  Taxes  relating  to  the
Acquired  Assets,  utility charges, rentals  and similar charges relating to the
Business  that  are  unpaid  as  of  the  Closing  Date  and  that  cover or are
attributable  to  periods  that straddle the  Closing  Date,  including  but not
limited  to any such  charges  that are reflected   on invoices  received  after
the Closing Date and that were not taken into account in the  calculation of the
Closing Date Payables  Value pursuant to Section 1.5, shall be pro rated between
the parties on a per diem basis as of the Closing  Date,  and the parties  shall
make such  payments  to one  another as shall be  appropriate  to  reflect  such
proration  or, to the extent such amounts are  determined  prior to the Closing,
shall be adjustments reflected on the closing statement.  Any dispute under this
provision  shall be resolved by the  Independent  Accountant  within thirty (30)
days of the submission of such dispute.


                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF THE SELLER
                  --------------------------------------------

         The Seller  hereby  makes,  as of the date hereof and as of the Closing
Date, the following  representations and warranties to the Purchaser,  except as
otherwise set forth in a written disclosure schedule (the "Disclosure Schedule")
delivered by the Seller to the  Purchaser  prior to the date hereof and attached
hereto,  and which contains schedules numbered to correspond to various sections
of  this   Article  II  and  which  sets  forth   certain   exceptions   to  the
representations  and  warranties  contained in this Article II and certain other
information  called for by this  Agreement.  Unless  otherwise  specified,  each
reference  in this  Agreement  to any  numbered  schedule is a reference to that
numbered schedule that is included in the Disclosure Schedule.

         2.1   Corporate Organization,  Etc.  The Seller is a  corporation  duly
               ----------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of  incorporation  with full corporate power and authority to carry
on its business as it is now being  conducted and to own,  operate and lease its
properties and assets.

         2.2   Authorization, Etc.  The Seller has full power and  authority  to
               -------------
enter  into  this  Agreement  and  the  agreements  contemplated  hereby  and to
consummate  the  transactions  contemplated  hereby and thereby.  The execution,
delivery  and  performance  of this  Agreement  and  all  other  agreements  and


                                       9
<PAGE>

transactions  contemplated  hereby  have  been duly  authorized  by the Board of
Directors  of the  Seller  and no other  corporate  proceedings  on its part are
necessary to authorize this Agreement and the transactions  contemplated hereby.
This Agreement and all other agreements  contemplated  hereby to be entered into
by the Seller each  constitutes  a legal,  valid and binding  obligation  of the
Seller enforceable against the Seller in accordance with its terms.

         2.3   No Violation. The execution,  delivery  and  performance  by  the
               ------------
Seller  of  this  Agreement,  and  all  other  agreements  contemplated  hereby,
and the  fulfillment  of and  compliance  with the  respective  terms hereof and
thereof  by the  Seller,  do not and will not (a)  conflict  with or result in a
breach of the terms,  conditions or provisions  of, (b)  constitute a default or
event of default under (with due notice,  lapse of time or both),  (c) result in
the  creation of any Lien upon the  Acquired  Assets  pursuant  to, (d) give any
third  party the right to  accelerate  any  obligation  under,  (e)  result in a
violation of, or (f) require any authorization,  consent, approval, exemption or
other  action  by,  notice to, or filing  with any  Authority  pursuant  to, the
charter  or  bylaws of the  Seller or any  applicable  Law  (including,  without
limitation,  approvals  pursuant  to the  Hart-Scott-Rodino  Act),  Order or any
Contract  to which the  Seller or its  properties  or the  Acquired  Assets  are
subject.  The  Seller  has  complied  with all  applicable  Laws and  Orders  in
connection  with the execution,  delivery and  performance of this Agreement and
the transactions contemplated hereby.

         2.4   Financial Statements. Set forth as Section 2.4 of the  Disclosure
               --------------------
Schedule are the  historical  unaudited  financial  statements  (the  "Financial
Statements") of the Business for fiscal years 1998,  1999,  2000, 2001 and 2002.
All such financial  statements  were prepared in accordance with GAAP and fairly
represent in all material  respects the  consolidated  financial  condition  and
operating  profit of the Business as of the respective dates thereof and for the
respective  periods  covered thereby through and including the period ended June
30, 2002 (the "Balance Sheet Date").

         2.5   Employees.  Section  2.5  of the Disclosure Schedule sets forth a
               ---------
list of all key  Business  Employees  (meaning  those  earning more than $40,000
annually)  of the Seller.  The Seller is in  compliance  with all Laws or Orders
affecting  employment and employment  practices applicable to the Seller and the
Business  Employees,  including terms and conditions of employment and wages and
hours. The Seller has no collective  bargaining agreements and, since January 1,
2000, there have been no strikes,  work stoppages nor any demands for collective
bargaining by any union or labor organization,  in each case with respect to the
Business  Employees.  There is no dispute or controversy with any union or other
organization of the Business Employees and no arbitration proceedings pending or
to the  Knowledge of the Seller  threatened  involving a dispute or  controversy
affecting the Business Employees.

         2.6   Absence  of  Certain Changes. Since the Balance Sheet Date, there
               ----------------------------
has not been any (a)  Material  Adverse Change  in  the  Business;  (b)  damage,
destruction  or loss,  whether  covered by insurance  or not,  having a Material
Adverse Effect on the Business;  (c) increase in the compensation  payable to or
to become  payable by the Seller to any Business  Employee or any adoption of or
increase  in any bonus,  insurance,  pension  or other  employee  benefit  plan,
payment or arrangement  made to, for or with any Business  Employee in each case
other  than in the  ordinary  course of  business  or as may be  required  under
existing  agreements;  (d) entry into any material  Contract not in the ordinary


                                       10
<PAGE>

course of business; (e) change by the Seller in accounting methods or principles
with respect to the Business;  (f) failure to promptly pay and discharge current
liabilities  of the Business;  or (g) Lien placed on any of the Acquired  Assets
other than Permitted Liens.

         2.7      Contracts.
                  ---------

                  (a) With respect to the Business, the Seller is not a party to
any  written or oral:  (i)  Contract  relating  to the  mortgaging,  pledging or
otherwise  placing a Lien on any of the  Acquired  Assets other than a Permitted
Lien and the Senior Lender Liens;  (ii)  Guarantee or Contract for the borrowing
of money that will be an Assumed Liability; (iii) Contract pursuant to which the
Seller is (and the  Purchaser  will become) the lessor of, or any third party is
permitted  to  hold  or  operate,  any  property,  real or  personal,  owned  or
controlled  by the  Seller  with  respect  to the  Business;  (iv)  Contract  or
non-competition  provision in any Contract  prohibiting  or  restricting it from
freely engaging in the Business  except for the  restrictions  and  prohibitions
specified in the License Agreement;  (v) Contract for the purchase,  acquisition
or supply of inventory and other property and assets  primarily  relating to the
Business,  whether for resale or otherwise, in excess of $20,000; (vi) Contracts
with  independent  agents,  brokers,  dealers or distributors  which provide for
annual payments in excess of $20,000; (vii) employment or consulting; (viii) any
other Contract which involves a consideration in excess of $20,000 annually that
is an Assumed Liability, excluding any purchase orders in the ordinary course of
business  (the   foregoing  be  referred  to   collectively   as  the  "Material
Contracts").

                  (b)   With  respect to the Business,  the Seller has performed
in  all material respects all obligations  required to be performed by it under,
and is not in default in any respect under or in breach of nor in receipt of any
Claim of default or breach under, any Material  Contract;  no event has occurred
which with the passage of time or the giving of notice or both would result in a
default,  breach or event of  non-compliance  by the Seller  under any  Material
Contract;  and  the  Seller  does  not  have  any  Knowledge  of any  breach  or
anticipated breach by the other parties to any Material Contract.

                  (c)   The Seller  has  delivered  to the  Purchaser  true  and
complete  copies of all the Contracts  and documents  listed in the schedules to
this Agreement.

         2.8      Title and Related Matters.
                  -------------------------

                  (a)   The  Seller  has  good  and  marketable  title  to  all
Acquired  Assets,  free and clear of all Liens,  except (i) Permitted  Liens and
(ii) the Senior Lender Liens.  Section 2.8(b) of the Disclosure  Schedule hereto
sets forth a complete  and accurate  list of all leased  assets that have annual
rental payments in excess of $20,000.  At the Closing,  the Seller shall deliver
good and marketable title to all of the Acquired  Assets,  free and clear of all
Liens except for the Permitted Liens.

                  (b)   All  the leases that are part of the Acquired Assets are
in full force and effect.  The Seller has not  received  any notice of any,  and
there exists no event of default or event which  constitutes or would constitute
(with  notice or lapse of time or both) a default by the  Seller or any,  to the
Seller's Knowledge, other Person under any lease. All rent and other amounts due


                                       11
<PAGE>

and payable with respect to the leases that are part of the Acquired Assets have
been paid through the date of this  Agreement and all rent and other amounts due
and payable with respect to the leases that are part of the Acquired Assets that
are due and payable on or prior to the Closing Date will have been paid prior to
the Closing Date.

                  (c)   The buildings,   structures  and  improvements  or  real
property included within the Acquired Assets (collectively,  the "Improvements")
comply in all  material  respects  with all  applicable  restrictions,  building
ordinances  and zoning  ordinances and all Laws.  The  Improvements  are in good
operating  condition  and  repair,  ordinary  wear  and tear  excepted,  and are
adequate and suitable for the purposes for which they are presently  being used.
The real  property  included  in the  Acquired  Assets  and its  continued  use,
occupancy  and  operation as  currently  used,  occupied  and operated  does not
constitute  a  nonconforming  use  under  any Law or  Order  affecting  the real
property  (other than  possible set back  violations,  none of which will have a
Material  Adverse  Effect or the continued  use,  occupancy and operation of the
real property  included in the Acquired Assets as currently  used,  occupied and
operated),  and the continued  existence,  use,  occupancy and operation of each
Improvement,   and  the  right  and  ability  to  repair  and/or   rebuild  such
Improvements  in the event of casualty,  is not dependent on any special Permit,
exception, approval or variance.

                  (d)   There has not been since the Balance Sheet Date and will
not be prior to the Closing Date, any sale,  lease, or any other  disposition or
distribution by the Seller of any of the Acquired Assets, now or hereafter owned
by it,  except for (i) sales of inventory  in the  ordinary  course of business,
(ii) sales or retirement of equipment no longer useful in the Business and (iii)
transactions  consented to by the  Purchaser.  After the Closing,  the Purchaser
will own, or have the unrestricted  right to use, all properties and assets that
are primarily used in connection with the Business  subject to restrictions  set
forth in the License Agreement.

         2.9   Litigation.  There  is no Claim pending or, to the best Knowledge
               ----------
of the Seller,  threatened  against the Seller which,  if adversely  determined,
would have a Material  Adverse  Effect on the  Business,  nor is there any Order
outstanding  against the Seller having,  or which,  insofar as can be reasonably
foreseen, in the future may have, a Material Adverse Effect on the Business.

         2.10   Tax Matters. The Seller has filed on a timely basis all material
                -----------
Tax Returns  that were  required to be filed with respect to the Business or the
Acquired  Assets pursuant to applicable law, and all such Tax Returns were true,
correct and  complete in all  material  respects.  The Seller has paid,  or made
provision  for the payment of, all material  Taxes that have become due pursuant
to those Tax Returns and that are  attributable  to the Seller,  the Business or
the Acquired Assets.

         2.11   Compliance with Law and Applicable Government Laws. The Business
                --------------------------------------------------
has not been, and is not being, operated in material violation of all applicable
Laws and applicable Orders,  including, but not limited to, all Laws relating to
the  safe  conduct  of  business,  quality  and  labeling,  antitrust,  consumer
protection, equal opportunity, discrimination, health, sanitation, fire, zoning,
building  and  occupational  safety.  There  are no  Claims  pending,  or to the
Knowledge  of the Seller  threatened,  nor has the Seller  received  any written
notice, regarding any violations of any Laws or Orders enforced by any Authority


                                       12
<PAGE>

claiming  jurisdiction  over the Seller  including any requirement of OSHA. This
Section  shall  not  apply  to  Tax  matters,   employee   benefit   matters  or
environmental  matters, which are instead the subject of Sections 2.10, 2.12 and
2.14, respectively.

         2.12     ERISA and Related Matters.
                  -------------------------

         (a)   Section 2.12(a) of the Disclosure  Schedule  contains  a complete
and accurate  list of  all the  Seller Plans and other benefit obligations  with
respect to the Business.

         (b)   The Seller has made available to the Purchaser:

               (i)    all documents that set forth the terms of each Seller Plan
or  other  benefit  obligation  and of any  related  trust,  including  (A) plan
descriptions  and  summary  plan  descriptions  of Plans for which the Seller is
required  to  prepare  and  distribute  plan   descriptions   and  summary  plan
descriptions,  and (B) summaries and descriptions  furnished to participants and
beneficiaries  regarding  plans or other  benefit  obligations  for which a plan
description or summary plan description is not required;

               (ii)   the most  recent  actuarial  report  with  respect  to any
Seller Title IV Plan;

               (iii)  the  Form 5500 filed  for the most  recent  Plan year with
respect to each Seller Plan, including all schedules thereto and the opinions of
independent accountants; and

               (iv)   with   respect   to  Pension  Plans,   the   most   recent
determination  letter for each Plan of the Seller.

         (c)   (i)    Each  Seller  Plan  intended  to be  qualified  under Code
Section 401(a) has or has applied for a current favorable  determination  letter
from the Internal Revenue Service indicating that the Plan is so qualified, none
of such Plans has been subject to any  assertion by any  governmental  Authority
that it is not qualified, and nothing has occurred with respect to the operation
of any such Plan  which is  reasonably  likely to cause  the  imposition  of any
material  liability  against the Business or the Purchaser  under ERISA or other
applicable  laws other than the Code. With respect to all other Seller Plans and
other benefits  obligations  with respect to the Business,  nothing has occurred
which is reasonably  likely to cause the  imposition  of any material  liability
against the Business or the Purchaser under ERISA, the Code, or other applicable
laws. Without limiting the foregoing:

                        (A)    No  transaction  prohibited  by ERISA Section 406
                 and no "prohibited transaction" under Code Section 4975(c) have
                 occurred  with  respect  to  any Seller Plan that is reasonably
                 likely to result in a  material  liability  to the  Business or
                 the Purchaser.

                         (B)   All contributions  required with respect   to any
                 Seller  Plan  have been paid to the  applicable  Seller Plan or
                 trust when  due, and the Seller has no liability to the Pension
                 Benefit Guaranty Corporation with respect to any Plan.



                                       13
<PAGE>

                         (C)   All  contributions  and payments made or  accrued
                 with respect to all Seller  Plans and other benefit obligations
                 are  deductible  under  Code  Section  162  or Section  404. No
                 amount, or any  asset of  any Seller Plan, is subject to tax as
                 unrelated business taxable income.

                 (ii)   Other than  routine  claims for  benefits  submitted  by
participants or beneficiaries,  no Claim against, or legal proceeding  involving
any Seller Plan or other benefit obligation that would have any Material Adverse
Effect  to  the  Business  or the  Purchaser  is  pending  or,  to the  Seller's
Knowledge, is threatened.

                 (iii)  Neither the Seller nor any ERISA  Affiliate  contributes
to or otherwise  participates in any Multi-Employer  Plan and neither the Seller
nor any  ERISA  Affiliate  has been  notified  of  withdrawal  liability  by any
Multi-Employer Plan.

                  (iv)  The Seller has complied  in  all material  respects with
the  provisions of ERISA Section 601 et seq. and Code Section 4980B.

                  (v)   No  payment  that  is  owed  or  may  become  due to any
Business Employee or any director,  officer, employee, or agent of the Seller as
a result of  the consummation of transactions  contemplated  hereby will be non-
deductible to the Purchaser or subject to Tax under Code Section 280G or Section
4999; nor will the Purchaser be required to "gross up" or  otherwise  compensate
any such person because of the imposition of any excise tax on a payment to such
person.

                  (vi)  The consummation of transactions contemplated hereby and
hereunder  will not  result in the  payment,  vesting,  or  acceleration  of any
benefit.

         2.13     Intellectual Property.
                  ---------------------

                  (a)   The Seller owns or has a license or has the right to use
the  Proprietary  Rights listed on Section  2.13(a) of the Disclosure  Schedule;
each such item of Proprietary Rights listed on Section 2.13(a) of the Disclosure
Schedule has been duly registered  with,  filed in, or issued by the appropriate
Authority,  to the  extent  required;  and each such  registration,  filing  and
issuance  remains in full force and effect.  To the Knowledge of the Seller,  no
Claim  adverse  to the  interests  of the  Seller in the  Proprietary  Rights or
Contracts listed in Section 2.13(a) of the Disclosure  Schedule has been made in
litigation.

                  (b)   To the Knowledge of the Seller,  (i) no other Person has
any rights to any of the Proprietary Rights owned or used by the Seller that are
listed  on  Section  2.13(a)  of the  Disclosure  Schedule  except  pursuant  to
agreements or licenses specified in Section 2.13(b) of the Disclosure  Schedule,
(ii) no other  Person is  infringing,  violating  or  misappropriating  any such
Proprietary  Right,  and  (iii)  no such  Proprietary  Right is  subject  to any
outstanding Order or Claim.

                                       14
<PAGE>

          2.14    Environmental Matters.
                  ---------------------

                  (a)   Neither the  Business  nor  the  operation  thereof  has
violated any material  applicable  Environmental  Law and no condition exists or
Occurrence has occurred which, with notice or the passage of time or both, would
constitute a violation of any material Environmental Law;

                  (b)  the Seller is in possession of all material Environmental
Permits  required  under any  applicable  Environmental  Law for the  conduct or
operation  of the  Business  (or any part  thereof),  and the  Seller is in full
compliance  with  all of the  requirements  and  limitations  included  in  such
Environmental Permits;

                  (c)   the Seller has not received any written  notice from any
Authority or any private Person that the Business or the operation of any of its
facilities  is in violation of any  material  Environmental  Law or any material
Environmental Permit; and

                  (d)   the Seller is not the subject of any  material  Federal,
state, local, or private Claim involving a demand for damages or other potential
liability  with  respect  to a  violation  of  Environmental  Laws  relating  to
operations or the condition of any facilities or property (including  underlying
groundwater) owned, leased, or operated by the Seller in the Business.

         2.15      Dealings with Affiliates.  Section  2.15  of  the  Disclosure
                   ------------------------
Schedule hereto sets forth a complete and accurate list,  including the parties,
of all oral or written  Contracts  included  in the  Acquired  Assets or Assumed
Liabilities to which any one or more Affiliates of the Seller is also a party.

         2.16      Insurance.  The Seller currently has, and through the Closing
                   ---------
Date  will  have, Policies in  full force  and effect that provide for coverages
that are usual and customary as to amount and scope in the Business.

         2.17    Accounts Receivable; Inventories. With respect to the Business,
                 -------------------
the accounts receivable of the Seller reflected in the Financial  Statements and
such  additional  accounts  receivable  as are included in the  Acquired  Assets
(except to the extent reserved against in the Financial  Statements) are or will
be valid, genuine and subsisting, and arise or will arise out of bona fide sales
and deliveries of goods, performance of services or other business transactions.
The  inventories  reflected  on the  Financial  Statements  and  included in the
Acquired Assets do not include any items which are not usable or saleable in the
ordinary course of business of the Seller.

          2.18    Brokerage. There are  no  claims  for  brokerage  commissions,
                  ---------
finders'  fees or  similar  compensation  in  connection  with the  transactions
contemplated  by this Agreement  based on any  arrangement or agreement  binding
upon the Seller that would be an Assumed Liability.

         2.19     Customers  and  Suppliers.  With  respect  to the Business, no
                  -------------------------
material  supplier of the Business has advised the Seller in writing  within the
past year that it will  stop,  or  decrease  the rate of,  supplying  materials,
products,  or  services  to the Seller  (other than by reason of changes in crop
yields)  and no  material  customer  of the  Business  has advised the Seller in
writing  within the past year that it will stop, or decrease the rate of, buying
materials,  products or services from the Seller.  With respect to the Business,
Section  2.19 of the  Disclosure  Schedule  hereto  sets  forth a  complete  and


                                       15
<PAGE>

accurate  list of (a) each  customer  that  accounted  for  more  than 5% of the
revenues  of the  Business  during the last full  fiscal  year and the amount of
revenues  accounted  for by such  customer  during each such period and (b) each
supplier  that is the sole supplier of any  significant  product or component to
the Business.

         2.20    Permits.  The Permits listed on Section 2.20 of the  Disclosure
                 -------
Schedule  hereto are the only material  Permits that are required for the Seller
to conduct the  Business  as  presently  conducted.  Each such Permit is in full
force and effect and, to the best of the Knowledge of the Seller,  no suspension
or  cancellation  of any such  Permit  is  threatened  and there is no basis for
believing that such Permit will not be renewable upon expiration.

         2.21    Utilities. The Improvements  primarily used in the Business has
                 ---------
sufficient power, fuel oil, natural gas and water supplies and adequate sewerage
and waste  disposal  systems for the  operation  of the  Business  as  presently
conducted, and, to the Seller's Knowledge, all such supplies and systems will be
available after the Closing to the Purchaser. All such systems are in compliance
with all federal,  state and local  environmental and other Laws in all material
respects.

         2.22    Sufficiency of Assets.  The  Acquired  Assets  are  all  of the
                 ---------------------
material assets used by the Seller to conduct the  Business  and are  sufficient
for  the  continued  conduct of the Business after the Closing in  substantially
the same manner as conducted prior to Closing.

         2.23    Mycogen  Agreement.  The  Business is currently not  processing
                 ------------------
any seed and the business  plan of the  Business  does  not  contemplate  future
processing of seed under that certain License and Supply Agreement,  dated as of
May 10,  1995,  including  all  addenda  thereto,  by and between the Seller and
Mycogen Plant Sciences, a Delaware corporation.

         2.24    No Other Representations or Warranties.
                 --------------------------------------
Except for representations and warranties  contained in this Article II, neither
the Seller nor any other Person makes any representation or warranty whatsoever,
express or implied, on behalf of the Seller.


                                   ARTICLE III

                 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
                 -----------------------------------------------

         The  Purchaser  represents  and warrants to the Seller as follows as of
the date hereof and as of the Closing Date:

         3.1   Corporate Organization,  Etc. The Purchaser is a corporation duly
               ----------------------------
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of  incorporation  with full corporate power and authority to carry
on its business as it is now being  conducted and to own,  operate and lease its
properties and assets.

         3.2   Authorization, Etc. The  Purchaser has full  corporate  power and
               ------------------
authority  to  enter  into  this  Agreement  and to carry  out the  transactions
contemplated  hereby and thereby.  The Board of Directors of the  Purchaser  has
duly authorized the execution, delivery and performance of this Agreement and to
consummate  the  transactions   contemplated  hereby,  and  no  other  corporate


                                       16
<PAGE>

proceedings  on their part are  necessary to authorize  this  Agreement  and the
transactions  contemplated  hereby and thereby.  This Agreement  constitutes the
legal,  valid and binding  obligation of the Purchaser  enforceable  against the
Purchaser in accordance with its terms.

         3.3   No  Violation. The execution,  delivery  and  performance  by the
               -------------
Purchaser of this Agreement,  and all other agreements  contemplated hereby, and
the fulfillment of and compliance  with the respective  terms hereof and thereof
by the Purchaser, do not and will not (a) conflict with or result in a breach of
the terms,  conditions  or  provisions  of, (b) result in a violation of, or (c)
require any authorization,  consent, approval,  exemption or other action by, or
notice to, or filing  with any court or  Authority  pursuant  to, the charter or
bylaws  of the  Purchaser  or,  to the  best  knowledge  of the  Purchaser,  any
applicable Law, Order or any contract to which the Purchaser,  or its properties
are  subject.  The  Purchaser  will  comply in all  material  respects  with all
applicable  Laws and  Orders in  connection  with its  execution,  delivery  and
performance of this Agreement and the transactions contemplated hereby.

         3.4   Certain Proceedings. There is no pending proceeding that has been
               -------------------
commenced  against  the  Purchaser  that  challenges,  or may have the effect of
preventing,  delaying,  making illegal or otherwise interfering with, any of the
transactions  contemplated by this Agreement.  To the Purchaser's knowledge,  no
such proceeding has been commenced or threatened.

         3.5   Financing. The  Purchaser  has  (through  cash  on hand, existing
               ---------
credit  arrangements  or otherwise) as of the date hereof,  and will have at the
Closing, sufficient funds to pay the Purchase Price, any expenses to be incurred
by the Purchaser in connection with this Agreement and all other amounts payable
by the  Purchaser  at the  Closing  and to  perform  its  obligations  hereunder
following the Closing and to provide adequate working capital to the Business.

         3.6   Brokers or Finders.  The  Purchaser  and  its officers and agents
               ------------------
have incurred no obligation or liability, contingent or otherwise, for brokerage
or finders' fees or agents'  commissions or other similar  payment in connection
with this Agreement.


                                   ARTICLE IV

                             COVENANTS OF THE SELLER
                             -----------------------

         Until the Closing Date, except as otherwise consented to or approved by
the Purchaser in writing,  the Seller agrees that, with respect to the Business,
it shall act, or refrain from acting where required hereinafter,  to comply with
the following:

         4.1   Regular Course of Business. The Seller shall operate the Business
               --------------------------
diligently and in good faith, consistent with past management practices, use its
commercially  reasonable  efforts  to  maintain  all  of its  properties  of the
Business in customary  repair,  order and  condition,  reasonable  wear and tear
excepted;  maintain  (except for expiration due to lapse of time) all leases and
Contracts in effect without change except as expressly  provided herein;  comply
in all material  respects with the provisions of all Laws and Orders  applicable


                                       17
<PAGE>

to the Seller and the conduct of the Business;  and maintain  insurance coverage
up to the Closing Date consistent with the terms set forth in Section 2.16.

         4.2   Certain  Prohibited Transactions. Until the Closing Date, without
               --------------------------------
obtaining the prior written  consent of the Purchaser,  the Seller shall not and
shall not commit or agree to, other than in the ordinary  course of business and
consistent  with past  practices,  (i)  increase  the salary or  benefits of any
Business  Employee or commit to pay any bonuses or other cash or property to any
Business Employee,  (ii) cancel, release, waive or compromise any debt, Claim or
right in its favor having a value in excess of $5,000  other than in  connection
with returns for credit or replacement in the ordinary course of business, (iii)
incur or assume any Indebtedness,  (iv) make any loans or advances to any Person
that would be an Assumed  Liability,  or (v) sell or otherwise transfer or grant
any Liens (other than  Permitted  Liens and Senior  Lender Liens) on or right to
acquire  any of the  assets  or other  property  primarily  owned or used in the
Business.

         4.3      Access and Disclosure.
                  ---------------------

                  (a)  The Seller shall afford to the Purchaser and its counsel,
accountants,  agents  and other  authorized  representatives  reasonable  access
during business hours to the Business's plants, properties, books and records in
order  that the  Purchaser  may have full  opportunity  to make such  reasonable
investigations  as it shall desire to make of the affairs of the  Business;  and
the Seller  shall cause its  officers,  employees  and  auditors to furnish such
additional  financial and operating data and other  information  relating to the
Business as the Purchaser shall from time to time reasonably request.

                  (b)  From time to time prior to the Closing  Date,  the Seller
shall  promptly  supplement  or amend  information  previously  delivered to the
Purchaser with respect to any matter  hereafter  arising  which,  if existing or
occurring  at the date of this  Agreement,  would have been  required  to be set
forth or disclosed in the Disclosure Schedule.

         4.4   Fulfillment of  Conditions   Precedent.   The  Seller  shall  use
               --------------------------------------
commercially  reasonable  efforts to obtain by  September  16, 2002 (or, if such
date  is not  practicable,  as soon  thereafter  as is  practicable)  and at its
expense all such waivers, Permits,  consents,  approvals or other authorizations
from third parties and Authorities  required on its part in connection with, and
to do all things as may be necessary or desirable to fulfill the  conditions to,
the consummation of the transactions contemplated by this Agreement.

         4.5    License Agreement.  The  Seller  shall enter into and deliver at
                -----------------
Closing the License Agreement in substantially the form of Exhibit 7.7 hereto.
                                                           -----------

         4.6    Employees; Employee Benefit Matters.  The Seller shall cooperate
                -----------------------------------
with the Purchaser in connection  with the Purchaser  satisfying its obligations
under  Section 5.4 below.  The Seller shall retain the  liability for payment of
the completion of business  transaction  and  performance  incentives  under the
terms  of the  individual  retention  incentive  agreements  listed  in  Section
2.12(c)(vi) of the Disclosure Schedule.

                                       18
<PAGE>

         4.7    Non-Competition.  For  a  period  of  three  (3)  years from the
                ---------------
Closing, the Seller shall not, and shall cause each of its  Subsidiaries not to,
directly  or indirectly,  engage in any business that is in competition with the
Business. Notwithstanding anything to the  contrary  contained  in this  Section
4.7, the Purchaser hereby agrees that the foregoing covenant shall not be deemed
breached as a result of (i) the  ownership by the Seller or any Affiliate of the
Seller of less than an aggregate of 5% of any class of capital stock of a person
engaged,  directly or indirectly,  in a business that is in competition with the
Business or less than 10% in value of any instrument of indebtedness of a Person
engaged,  directly or indirectly,  in a business that is in competition with the
Business, (ii) the retention and conduct by the Seller of seed businesses, other
than sunflower seed businesses,  and animal food businesses other than bird food
businesses,  (iii)  any  action  taken by the  Seller  or any of its  Affiliates
pursuant to this Agreement or the License Agreement, or (iv) any action taken by
the Seller of any of its  Affiliates  or by any third party at the  direction of
the Seller in connection with  discharging  its obligations  under any Contracts
guarantees  (including  guarantees of performance under contacts or Agreements),
assumption  of  obligations,  letters of credit or other  similar  arrangements,
including  surety and  performance  bonds, in effect at the Closing Date and not
included in the Assumed Liabilities.  Notwithstanding the foregoing,  the Seller
may  enter  into  a  merger,  acquisition,   joint  venture  or  other  business
combination  with another entity so long as (a) the objective of the transaction
is not to serve the  sunflower  seed market and (b) serving the  sunflower  seed
market  is not a primary  element  of the other  entity's  business  or, if that
service  is  such  an  element,  the  Seller  and  its  personnel  will  have no
involvement with that element of the combined business.

         4.8      Telmark Lease.  At Closing, the Seller will prepay any amounts
                  -------------
owing under the Telmark Lease.


                                    ARTICLE V

                           COVENANTS OF THE PURCHASER
                           --------------------------

         The Purchaser hereby covenants and agrees with the Seller that:

         5.1   Fulfillment of  Conditions  Precedent.  The  Purchaser  shall use
               -------------------------------------
commercially reasonable efforts to obtain by September 16, 2002 (or if such date
is not practicable, as soon thereafter as is practicable) and at its expense all
such waivers,  Permits,  consents,  approvals or other authorizations from third
parties and Authorities  required on its part in connection  with, and to do all
things as may be  necessary  or  desirable  to fulfill  the  conditions  to, the
consummation of the transactions contemplated by this Agreement

         5.2   Confidentiality.  The Purchaser  confirms and agrees  that,  with
               ---------------
respect to any information  directly or indirectly  furnished by or on behalf of
the Seller,  whether before, on or after the date of hereof, the Purchaser shall
continue  to be bound by the terms of that  certain  Confidentiality  Agreement,
dated as of May 9, 2002,  by and between the  Purchaser and the Seller until the
Closing.

                                       19
<PAGE>

         5.3    License Agreement.  The  Purchaser  shall enter into and deliver
                -----------------
at  Closing  the  License  Agreement  in  substantially  the form of Exhibit 7.7
hereto.
                             -----------

         5.4    Employees; Employee Benefit  Matters.
                ------------------------------------
                (a)  With  respect to each Business  Employee who is employed in
connection with the Business  immediately before the Closing Date, including any
employee who is absent from work by reason of  vacation,  the  Purchaser  agrees
that as of and  immediately  after the Closing Date, the Purchaser  shall employ
such Business Employee in a position that is reasonably  comparable to that held
with the Seller as disclosed to the Purchaser in the Data Book Information dated
July  2002 and that  does not  result in a  significant  change in  compensation
(excluding any retention or other bonus plan  payments) or work  location.  With
respect to each Business Employee who is absent from work on the Closing Date by
reason  of  approved  leave  of  absence,  short-term  disability,  or  workers'
compensation,  the  Purchaser  agrees that when each such  Business  Employee is
available to return to work, fit for duty, within one (1) year after the Closing
Date the Purchaser  shall offer to employ such  Business  Employee in a position
that is  reasonably  comparable to that held with the Seller as disclosed to the
Purchaser in the Data Book Information  dated July 2002 and that does not result
in a significant change in compensation  (excluding any retention or other bonus
plan payments) or work location. The Purchaser shall indemnify and hold harmless
the Seller and be responsible for any Claims made by any Business  Employees for
severance or other benefits based on separation,  for any Claims based on breach
of contract,  and for any other Claims arising out of or in connection  with the
employment,  or the  suspension or  termination of employment of, any employees,
other than any claims related to the Seller's actions before the Closing Date or
based solely on the transactions contemplated by this Agreement.

                (b)   On and after the Closing Date, the Purchaser  shall credit
to each Business  Employee the service of such employee with the Seller  through
the Closing  Date to the same extent as if such service had been  performed  for
the  Purchaser  (i)  for  all  purposes  in  connection  with  determining  such
employee's  eligibility for and vesting in all Plans, programs, and arrangements
for which such employee is otherwise eligible,  including but not limited to, as
applicable, the Purchaser's Pension Plan, 401(k) Plan, severance, and sick days,
and (ii) for purposes of determining the amount of such employee's benefit under
the Purchaser's severance plan. For purposes of the Purchaser's vacation policy,
the Purchaser  shall credit each Business  Employee with no less than the number
of years of service  necessary to ensure that (i) each Business Employee has the
same number of annual  vacation  days for 2002 (taking into account days used by
each  Business  Employee  while  employed by the Seller)  under the  Purchaser's
vacation policy as under the Seller's  vacation  policy,  and (ii) each Business
Employee does not require a greater number of years of service to reach the next
higher  increment of vacation days under the  Purchaser's  vacation  policy than
would have been required under the Seller's vacation policy.  Vacation earned by
Business  Employees  in 2001 to be taken in 2002,  and which is unused as of the
Closing Date,  shall be assumed by the Purchaser  provided  that: (i) the Seller
shall pay the Purchaser an amount equal to the value of such unused  vacation on
the Closing  Date,  and (ii) the Purchaser  shall pay any Business  Employee who
terminates  employment  with Purchaser in 2002 for any reason an amount equal to
the value of such Business  Employee's  unused  vacation for 2002. The Purchaser


                                       20
<PAGE>

shall have no  obligation  to pay to any Business  Employees any of the value of
any  vacation  accrued  in 2002  that  is not  available  for use in that  year.
Furthermore,  the  Purchaser  shall  waive or cause to be waived,  except to the
extent  such  waiver is  prohibited  by  applicable  Law,  any  waiting  period,
probationary period, pre-existing condition exclusion,  evidence of insurability
requirement,  or similar condition with respect to initial  participation  under
any Plan,  program,  or arrangement of the Purchaser to provide health coverage,
life insurance,  disability  benefits,  or other similar  welfare  benefits with
respect to each Business Employee who has satisfied the comparable  requirements
under the Seller's comparable Plans before the Closing Date.

Notwithstanding the foregoing,  the Business Employees employed by the Purchaser
shall not be eligible for medical  benefits with the Purchaser  until October 1,
2002.  On and after the Closing Date and until  September  30, 2002,  the Seller
shall continue to provide medical  coverage under the Agway Inc.  Medical/Dental
Plan to Business Employees who were participating in such plan as of the Closing
Date.

                (c)   Except as otherwise  specifically provided in this Section
5.4, the Seller shall retain liability for all salary and other compensation and
benefits of any kind due to any Business  Employee  arising out of employment by
the Seller before the Closing Date, and the Purchaser shall assume liability for
all salary and other  compensation  and  benefits of any kind earned on or after
the Closing  Date by any  Business  Employee  arising out of  employment  by the
Purchaser.

         5.5   Signage.  Upon  expiration  of  its  right  to  use  any  name or
               -------
trademark pursuant to the License Agreement, the Purchaser shall discontinue the
use of such name or trademark on any stationery, purchase order forms, packaging
or other  similar  paper  goods or  supplies,  or  advertising  and  promotional
materials,  product,  training and service literature and materials, or computer
programs or like materials and shall remove all signage  containing such name or
trademark.


                                   ARTICLE VI

                                OTHER AGREEMENTS
                                ----------------

         The parties further agree as follows:

         6.1   Agreement to Defend. In the event any action, suit, proceeding or
               -------------------
investigation  of the nature  specified  in Section 7.5 or Section 8.3 hereof is
commenced, whether before or after the Closing Date, the parties hereto agree to
cooperate and use their  commercially  reasonable  efforts to defend against and
respond thereto.

         6.2   Cooperation.  Subject  to  the  terms  and  conditions  of  this
               -----------
Agreement, the parties hereto shall use commercially reasonable efforts to take,
or cause to be taken,  all  action,  and to do, or cause to be done,  all things
necessary,  proper or advisable  under  applicable Laws and Orders to consummate
and make effective, by September 16, 2002, (or, if such date is not practicable,
as soon  thereafter as is  practicable)  the  transactions  contemplated by this
Agreement,  and to cooperate  with each other in connection  with the foregoing,
including  without  limitation  using all  reasonable  efforts (a) to obtain all


                                       21
<PAGE>

necessary  waivers,   consents,   and  approvals  from  other  parties  to  loan
agreements,  leases,  mortgages and other Contracts, (b) to obtain all necessary
Permits,  consents,  approvals and authorizations as are required to be obtained
under any Law, (c) to lift or rescind any  injunction  or  restraining  order or
other Order  adversely  affecting the ability of the parties to  consummate  the
transactions  contemplated hereby, (d) to effect all necessary registrations and
filings and  submissions of  information  requested by  Authorities,  and (e) to
fulfill all conditions to the  obligations of the parties under this  Agreement.
Each of the Purchaser and the Seller further  covenants and agrees that it shall
use its commercially reasonable efforts to prevent, with respect to a threatened
or pending preliminary or permanent injunction or other Law or Order, the entry,
enactment or promulgation thereof, as the case may be.

         6.3   Deliveries After Closing.   From  time to time after the Closing,
               ------------------------
at the Purchaser's request and without further consideration from the Purchaser,
the Seller shall execute and deliver such other  instruments  of conveyance  and
transfer and take such other action as the Purchaser  reasonably  may require to
convey,  transfer  to and  vest in the  Purchaser  and to put the  Purchaser  in
possession of the Acquired Assets.

         6.4   Public Announcements. Neither  the  Seller nor the Purchaser, nor
               --------------------
any Affiliate, representative or shareholder of  either of such  persons,  shall
disclose any of the terms of this Agreement to any third party without the other
party's  prior  written  consent.  The  form,  content  and  timing of all press
releases,  public  announcements  or publicity  statements  with respect to this
Agreement  and  transactions  contemplated  hereby shall be subject to the prior
approval  of both the  Seller and the  Purchaser,  which  approval  shall not be
unreasonably  withheld.  No press releases,  public  announcements  or publicity
statements  shall  be  released  by  either  party  without  such  prior  mutual
agreement.  The  provisions of this Section 6.4 shall be subject to any contrary
requirement  of any Law or Order,  including,  without  limitation,  the federal
securities laws of the United States.

         6.5.     Allocation; Tax Matters.
                  -----------------------

         (a)    The  Seller  and  the  Purchaser  agree  to  use   commercially
reasonable efforts  to enter  into an  agreement  (the  "Allocation  Agreement")
as soon as  practicable  (but in any  event no later  than  150 days  after  the
Closing Date) to allocate the Purchase Price, the Assumed  Liabilities,  and all
other  capitalizable  costs among the Acquired Assets and the Seller's agreement
under Section 4.7 for all applicable Tax purposes,  including Code Section 1060.
The  Purchaser  shall  initially  prepare a statement  setting  forth a proposed
computation and allocation of the aggregate purchase price (the  "Computation"),
and submit it to the Seller no later than 60 days after the  Closing  Date.  If,
within 30 days of the Seller's receipt of the Computation,  the Seller shall not
have objected in writing to such  Computation,  the Computation shall become the
Allocation  Agreement.  If such objection shall be made within such period,  and
within 60 days after the Seller's  receipt of the Computation the Seller and the
Purchaser have not adopted an Allocation Agreement,  any disputed aspects of the
Allocation Agreement shall be resolved within 90 days of the Seller's receipt of
the Computation by the Independent Accountant,  which shall resolve such dispute
pursuant to, first, the terms of this Agreement and, second,  the application of
applicable Tax laws to the relevant facts.

                                       22
<PAGE>

         (b)  After the Closing, from time to time, the Purchaser and the Seller
shall  agree  upon  revisions  to  the  Allocation   Agreement  to  reflect  any
adjustments  to the  consideration.  The Purchaser and the Seller shall file and
cause to be filed all Tax  Returns and execute  such other  documents  as may be
required by any Taxing  Authority,  in a manner  consistent  with the Allocation
Agreement,  as it may be revised  from time to time.  The Seller  shall  prepare
Internal  Revenue  Service Form 8594 (or any  successor  form)  pursuant to Code
Section 1060 relating to the  transactions  contemplated by this Agreement based
on the Allocation Agreement, as it may be revised from time to time, and deliver
such form to the  Purchaser.  The  Purchaser and the Seller shall file, or cause
the filing of,  such form and each  comparable  form with each  relevant  Taxing
Authority. Any dispute under this provision shall be resolved by the Independent
Accountant within 30 days of the submission of such dispute.

         (c)   Irrespective of Article  XI or any other  provision  hereof,  the
Purchaser  shall bear and be liable for, and shall indemnify the Seller against,
all title  insurance  premiums,  and sales and use Taxes  incurred in connection
with the  transactions  contemplated  hereby.  Irrespective of Article XI or any
other  provision  hereof,  the Seller  shall bear and be liable  for,  and shall
indemnify the  Purchaser  against  abstracting  and title  insurance  commitment
costs, all transfer,  documentary,  registration,  stamp,  value-added and other
similar Taxes  (including  all  applicable  real estate  transfer Taxes and real
property gains Taxes), incurred in connection with the transactions contemplated
hereby. The Seller and the Purchaser shall cooperate in timely making and filing
all Tax Returns as may be required to comply with the provisions of any Tax laws
applicable  to the transfer of the Acquired  Assets,  and each of the Seller and
the Purchaser shall timely pay any Taxes for which it is responsible  under this
Section 6.5(c) or, in the case of any such Taxes paid by the other party hereto,
timely  indemnify  such other party  against such Taxes.  Any dispute under this
provision shall be resolved by the Independent  Accountant within 30 days of the
submission of such dispute.

         (d)   At the Closing, the Seller shall  deliver to the  Purchaser  duly
executed certificates  certifying that the transactions  contemplated hereby are
exempt from withholding under Section 1445 of the Code.

         (e)   The Seller shall timely  file or cause to be filed (i) the United
States consolidated  federal income Tax Returns of the Seller and (ii) all other
Tax Returns with respect to the Acquired  Assets or the income or  operations of
the Business  required to be filed (including any extensions) on or prior to the
Closing Date or with respect to any Pre-Closing Tax Period. The Seller shall pay
or cause to be paid all Taxes due on or with  respect to such Tax Returns or the
taxable periods or events covered  thereby.  The Purchaser shall prepare all Tax
Returns with respect to the Acquired  Assets or the income and operations of the
Business due after the Closing Date except for Tax Returns due with respect to a
Pre-Closing  Tax  Period;  provided  that if such Tax  Returns  cover a Straddle
Period and the Seller is liable for any Taxes  shown as due on such Tax  Returns
pursuant to the terms of this Section  6.5(e),  the Purchaser  shall submit such
Tax  Returns to the Seller for review and comment no later than thirty (30) days
prior  to the  date  such  Tax  Returns  are  required  to be  filed  (including
extensions).  Notwithstanding  anything  to the  contrary  in Section  1.2,  the
Purchaser shall timely pay all Taxes shown as due on such Tax Returns. Except to
the extent paid or adjusted on the closing statement pursuant to Section 1.6(d),
the Seller  shall remit to the  Purchaser at least two (2) days prior to the due


                                       23
<PAGE>

date of any Tax Returns relating to any Straddle Period relating to the Acquired
Assets its pro rata  share  (calculated  on a per diem  basis as of the  Closing
Date) of any Taxes  shown as due on such Tax  Returns.  Any  dispute  under this
provision shall be resolved by the Independent  Accountant within 30 days of the
submission of such dispute.

         (f)   The  Seller  and  the Purchaser shall each provide the other with
such  assistance  as may be reasonably  requested  (including  making  employees
reasonably available to provide information or testimony) in connection with the
preparation of any Tax Return or the  determination  of liability for Taxes with
respect to the Acquired  Assets or the income or operations of the Business,  in
each case as contemplated by this Agreement.

         (g)   Any decision of the Independent Accountant under this Section 6.5
shall be final, and the costs,  expenses and fees of the Independent  Accountant
shall be borne equally by the Seller and the Purchaser.

         (h)   The obligations of the parties pursuant to this Section 6.5 shall
survive indefinitely.

         6.6.  Certain Information.  After the Closing,  upon reasonable written
               -------------------
notice,  the  Purchaser and the Seller shall furnish or cause to be furnished to
each other and their respective  accountants,  counsel and other representatives
access,  during normal business hours, to such  information  (including  records
pertinent to the Business), personnel and assistance relating to the Business as
is reasonably  necessary for financial  reporting and  accounting  matters,  the
preparation  and  filing of any  returns,  reports or forms or the  defense  of,
prosecution of, or response required under, or pursuant to, any lawsuit,  action
or proceeding (including any proceeding involving the Seller, the Purchaser, any
Excluded Assets, any Excluded Liabilities,  or any environmental matters related
to the  Acquired  Assets) or in order to enable the parties to comply or monitor
compliance (including with respect to Purchaser's  obligations in respect of the
Assumed Liabilities) with their respective obligations under this Agreement. The
Purchaser  and the Seller  shall also  furnish or cause to be  furnished to each
other and  their  respective  accountants,  counsel  and  other  representatives
access,  during  normal  business  hours,  to such  information  for  any  other
reasonable business purpose.

         6.7    Collection  of  Excluded  Accounts  Receivable;  Reassignment of
                ----------------------------------------------------------------
Puttable Receivables.
--------------------

                (a)   For  a  period of 180 days  after the  Closing  Date,  the
Purchaser shall assist the Seller,  without  charge,  in the  collection  of all
Excluded Receivables,  and shall use commercially reasonable efforts to  collect
all Puttable Receivables,  provided that in either case the Purchaser  shall not
be required to initiate any legal proceedings or incur any  expenses for outside
attorneys or collection agencies in connection with such collection.

                (b)   The  Purchaser  shall  apply  all  collections on Assigned
Receivables  and  Excluded  Receivables  from a  given  customer  to the  oldest
outstanding  invoice  to that  customer,  unless (i) the  customer  specifically
directs  application  to a different  invoice or (ii) the  customer is disputing
such oldest  invoice and  application of the payment to the oldest invoice would
be inconsistent with the position of the customer in such dispute. The Purchaser
will hold for the Seller all  collections  received by it in respect of Excluded


                                       24
<PAGE>

Receivables pursuant to this Section 6.7, and shall pay such collections over to
the Purchaser within three (3) business days after receipt,  whether or not such
collections are received during the 180-day period after the Closing Date.

                (c)   On  the date that is 180 days after the Closing Date,  the
Purchaser  may,  by  notice to the Seller,  require the Seller to repurchase the
uncollected  portion of all Puttable  Receivables  at a purchase price equal the
uncollected  balance  thereof  plus  interest  at 9 percent  per annum  from the
Closing  Date to the date of purchase.  The Seller shall effect such  repurchase
within ten (10) days of receipt of such notice.

         6.8   Transitional Home  Office.   The  Seller  shall  provide  to  the
               -------------------------
Purchaser,  for the benefit of Pamela Collins,  her current office furniture (or
comparable)  and  desktop  computer.  In  addition,  the  Seller  shall keep her
existing  telephone line and number active for a period of up to sixty (60) days
from the Closing.


                                   ARTICLE VII

                 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
                 ----------------------------------------------

         Each and every  obligation of the Purchaser  under this Agreement shall
be subject to the  satisfaction,  on or before the Closing  Date, of each of the
following conditions unless waived in writing by the Purchaser:

         7.1   Representations and Warranties; Performance.  The representations
               -------------------------------------------
and  warranties of the Seller set forth in this  Agreement  (determined  without
regard to any materiality  qualification or exception in any  representation  or
warranty)  shall  be true and  correct  in all  respects  as of the date of this
Agreement and, except for those made as of a particular  date, as of the Closing
as though made at and as of the Closing,  except in each case for such  failures
or  representations  and  warranties to be true and correct (i) as the result of
changes  permitted  or  contemplated  by this  Agreement or (ii) that would not,
individually  or in the  aggregate,  reasonably  be  expected to have a Material
Adverse  Effect.  The Purchaser  shall have received a certificate  signed by an
authorized officer of the Seller to such effect certifying to the foregoing.

         7.2      Consent of Senior Lenders.  The Seller shall have obtained the
                  -------------------------
consent  of the  Senior  Lenders to the sale of the  Business  to the  Purchaser
pursuant to this Agreement and the release of the Senior Lender Liens.

         7.3      Opinion  of  the  Seller's  Counsel.  The Purchaser shall have
                  -----------------------------------
received an opinion of the Seller's  counsel,  dated the  Closing  Date,  in the
form of Exhibit 7.3 hereto.

         7.4      No Material Adverse Change.  There shall have been no Material
                  --------------------------
Adverse Change since the date of this Agreement.

         7.5      No   Proceeding or Litigation. No  preliminary  or   permanent
                  ------------------------------
injunction or other Order issued by a court of competent  jurisdiction or by any
Authority,  or any Law or Order promulgated or enacted by any Authority shall be


                                       25
<PAGE>

in effect, which would prevent the consummation of the transactions contemplated
hereby.

         7.6     Secretary's Certificate. The Purchaser  shall  have  received a
                 -----------------------
certificate, by the secretary of the Seller, as to the charter and bylaws of the
Seller,  the  resolutions  adopted by the  directors of the Seller in connection
with this Agreement and the incumbency of certain officers of the Seller.

         7.7     License Agreement.  The  Seller shall have executed the License
                 -----------------
Agreement in substantially the form of Exhibit 7.7 hereto.
        -----------

         7.8     Other  Documents. The Seller shall have furnished the Purchaser
                 ----------------
with such other and further documents and certificates,  including  certificates
of the Seller's officers and others,  as the Purchaser shall reasonably  request
to evidence compliance with the conditions set forth in this Agreement.

         7.9     Title Policies. The Purchaser shall have  received from Chicago
                 --------------
Title  Insurance  Company (the "Title  Company"),  at the Seller's sole cost and
expense,  a commitment for an owner's title insurance  policy (ALTA Owner's Form
1992)  to be  issued  to the  Purchaser  with  respect  to each  parcel  of Real
Property,  together  with  endorsements  reasonably  requested by the  Purchaser
(including,  without limitation,  access, zoning, comprehensive,  and contiguity
endorsements to the extent available in the State),  in an amount  determined by
the Purchaser and approved by Title  Company,  insuring the Purchaser and issued
as of the  Closing  Date by the Title  Company,  showing the  Purchaser  to have
marketable  title to each such  parcel of Real  Property,  in each case free and
clear of all Liens except for the  Permitted  Liens.  The Seller shall be solely
liable for payment of all title insurance  charges and fees excluding  premiums,
inclusive of any additional  premiums  attributable to requested and/or required
endorsements.  The Purchaser shall be solely responsible for all title insurance
premiums.  The  Seller  shall  have  delivered  to the Title  Company an Owner's
Affidavit for each parcel of Real Property in form and substance satisfactory to
the Seller and the Title Company.


                                  ARTICLE VIII

                   CONDITIONS TO THE OBLIGATIONS OF THE SELLER
                   -------------------------------------------

         Each and every  obligation of the Seller under this Agreement  shall be
subject to the  satisfaction,  on or before  the  Closing  Date,  of each of the
following conditions unless waived in writing by the Seller:

         8.1   Representations and Warranties; Performance.  The representations
               -------------------------------------------
and warranties of the Purchaser set forth in this Agreement  (determined without
regard to any materiality  qualification or exception in any  representation  or
warranty)  shall be true and correct in all material  respects as of the date of
this  Agreement  and,  except for those made as of a particular  date, as of the
Closing as though  made at and as of the  Closing,  except in each case for such
failures or representations  and warranties to be true and correct as the result
of changes  permitted or contemplated  by this Agreement.  The Seller shall have


                                       26
<PAGE>

received a  certificate  signed by an  authorized  officer of the Seller to such
effect certifying to the foregoing.

         8.2   Consent of Senior Lenders.  The  Seller  shall  have obtained the
               -------------------------
consent  of  the  Senior  Lenders  to the sale of the Business to the  Purchaser
pursuant to this  Agreement  and the release of the Senior Lender Liens.

         8.3    No  Proceeding  or  Litigation.  No  preliminary  or  permanent
                -------------------------------
injunction or other Order issued by a court of competent  jurisdiction or by any
Authority, or any Law or executive order promulgated or enacted by any Authority
shall be in effect,  which would prevent the  consummation  of the  transactions
contemplated hereby.

         8.4    Secretary's   Certificate. The  Seller  shall  have  received  a
                -------------------------
certificate by the assistant  secretary of the Purchaser,  as to the charter and
bylaws  of the  Purchaser,  the  resolutions  adopted  by the  directors  of the
Purchaser in  connection  with this  Agreement,  and the  incumbency  of certain
officers of the Purchaser.

         8.5    License Agreement. The Purchaser shall have executed the License
                -----------------
Agreement in substantially the form of Exhibit 7.7 hereto.


         8.6     Opinion  of  the  Purchaser's  Counsel.  The  Seller shall have
                 --------------------------------------
received an opinion of the Purchaser's  counsel  dated the Closing  Date, in the
form of Exhibit 8.6 hereto.

         8.7     Other  Documents. The Purchaser shall have furnished the Seller
                 ----------------
with such other and further documents and certificates,  including  certificates
of the Purchaser's  officers and others, as the Seller shall reasonably  request
to evidence compliance with the conditions set forth in the Agreement.


                                   ARTICLE IX

                                     CLOSING
                                     -------

         9.1    Closing.  Unless this Agreement  shall have been  terminated  or
                -------
abandoned  pursuant  to the  provisions  of  Article X hereof,  a closing of the
transactions  contemplated  by this Agreement (the  "Closing")  shall be held on
September 16, 2002, or, if later, the date that is three (3) business days after
the satisfaction or waiver of the conditions precedent set forth in Articles VII
and VIII, or on such other date as the parties may agree. The Closing shall take
place in the offices of  Sutherland  Asbill & Brennan,  LLP,  1275  Pennsylvania
Avenue, N.W., Washington, DC 20004.


                                       27
<PAGE>

                                    ARTICLE X

                           TERMINATION AND ABANDONMENT
                           ---------------------------

         10.1     Methods of Termination.   This Agreement may be terminated and
                  ----------------------
the transactions here in contemplated may be abandoned at any time:

                  (a)      by mutual consent of the Purchaser and the Seller; or

                  (b) by the  Purchaser  or the Seller if this  Agreement is not
consummated   on  or  before   September   30,  2002;   provided  that  if  such
non-consummation  of this Agreement  results from a breach or default by a party
with respect to its  respective  obligations  under this  Agreement on or before
such date, such party may not terminate this Agreement  pursuant to this Section
10.1(b),  and the other party to this  Agreement  may at its option  enforce its
rights against such breaching or defaulting  party and seek any remedies against
such party, in either case as provided hereunder and by applicable Law.

         10.2     Procedure Upon and Effects of Termination.
                  -----------------------------------------

                 (a) In the event of  termination  and  abandonment  pursuant to
Section 10.1 hereof,  and subject to the proviso  contained in Section  10.1(b),
this Agreement shall terminate and shall be abandoned, without further action by
any of the parties hereto.  If this Agreement is terminated as provided  herein,
each party shall  redeliver all documents and other  material of any other party
relating to the  transactions  contemplated  hereby,  whether obtained before or
after the execution hereof, to the party furnishing the same.

                  (b) In the event of a termination of this  Agreement  pursuant
to Section  10.1,  this  Agreement  shall become null and void and of no further
force or effect,  and no Person shall have any liability in respect hereof or of
the transactions contemplated hereby, except (i) with respect to any willful and
material breach of any covenant contained in this Agreement by such Person prior
to  such  termination  and  (ii)  that  the  provisions  of the  Confidentiality
Agreement  and the  provisions of Section 12.14 and ARTICLE X shall survive such
termination and shall remain in full force and effect.


                                   ARTICLE XI

                            INDEMNIFICATION; REMEDIES
                            -------------------------

         11.1.    Survival.  Subject to Section 11.5 below, all representations,
                  --------
warranties,  covenants,  and  obligations  in this  Agreement  will  survive the
Closing.

         11.2.  Indemnification and Payment of Damages by the Seller. The Seller
                ----------------------------------------------------
will  indemnify and hold  harmless the  Purchaser  and its officers,  directors,
stockholders,  controlling persons, and Affiliates (collectively, the "Purchaser
Indemnified Persons") for, and will pay to the Purchaser Indemnified Persons the
amount of, any loss,  liability,  claim, damage or expense (including reasonable
costs of investigation and defense and reasonable  attorneys' fees),  whether or


                                       28
<PAGE>

not involving a third-party claim (collectively,  "Damages"),  arising from: (a)
any  breach  of any  representation  or  warranty  made  by the  Seller  in this
Agreement  or in any  certificate  delivered  by the  Seller  pursuant  to  this
Agreement,  (b) any breach by the Seller of any  covenant or  obligation  of the
Seller in this Agreement,  (c) any claim by any Person for brokerage or finder's
fees  or   commissions   or  similar   payments  based  upon  any  agreement  or
understanding  alleged to have been made by any such  Person with the Seller (or
any Person acting on their behalf) in  connection  with any of the  transactions
contemplated by this Agreement, or (d) any Excluded Liabilities.

         11.3.  Indemnification  and  Payment of Damages By the  Purchaser.  The
                ----------------------------------------------------------
Purchaser  will  indemnify  and  hold  harmless  the  Seller  and its  officers,
directors, stockholders,  controlling persons, and affiliates (collectively, the
"Seller  Indemnified  Persons"  and,  together  with the  Purchaser  Indemnified
Persons,  "Indemnified Persons"), and will pay to the Seller Indemnified Persons
the amount of any Damages arising from: (a) any breach of any  representation or
warranty made by the Purchaser in this Agreement or in any certificate delivered
by the Purchaser pursuant to this Agreement,  (b) any breach by the Purchaser of
any covenant or obligation of the Purchaser in this Agreement,  (c) any claim by
any Person for brokerage or finder's  fees or  commissions  or similar  payments
based  upon any  agreement  or  understanding  alleged to have been made by such
Person with the  Purchaser  (or any Person  acting on its behalf) in  connection
with any of the  transactions  contemplated by this  Agreement,  (d) any Assumed
Liabilities, or (e) the operation of the Business or the Acquired Assets, or any
actions or omissions of the Purchaser,  its Affiliates,  agents,  contractors or
subcontractors in connection therewith, after the Closing.

         11.4.    Exclusive Remedy. If the Closing occurs, the remedies provided
                  ----------------
in Sections 11.2 and  11.3  will  be  the exclusive  remedies  available  to the
Purchaser,  the Seller, and all other Indemnified  Persons.  Notwithstanding any
provision of this Article XI or any other provision of this Agreement, any issue
or matter  relating to  indemnification  for Taxes or Damages  relating  thereto
shall be governed solely by Section 6.5.

         11.5.   Time Limitations. If the Closing occurs, neither the Seller nor
                 ----------------
the Purchaser will have any liability (for  indemnification  or otherwise)  with
respect to any  representation or warranty,  or any covenant or obligation to be
performed and complied with on or prior to the Closing Date, unless on or before
the date that is two (2) years from the Closing Date, except for indemnity for a
breach of the representations and warranties  contained in sections 2.8(a), 2.11
and 2.14 in which case such  period  shall be seven (7) years  from the  Closing
Date, the Purchaser or the Seller,  as the case may be,  notifies the other of a
claim  specifying  the factual basis of that claim in  reasonable  detail to the
extent then known by the person providing such notice.

         11.6.  Limitations  on Amount - the  Seller.  The  Seller  will have no
                ------------------------------------
liability  (for  indemnification  or  otherwise)  with  respect  to the  matters
described  in clause  (a) of  Section  11.2 or, to the  extent  relating  to any
failure to perform  or comply  prior to the  Closing  Date  (determined  without
regard to any materiality  qualification or exception in any  representation  or
warranty),  clause  (b) of  Section  11.2  until the total of all  Damages  with
respect to such matters  exceeds  $100,000 and then only for the amount by which
such Damages  exceed  $100,000;  provided,  however,  this Section 11.6 will not
apply to any intentional breach by the Seller of any covenant or obligation, and
the Seller will be liable for all Damages  with  respect to such  breaches;  and


                                       29
<PAGE>

provided  further,  that in no event shall the Seller's  obligations  under this
Article XI exceed $8,500,000.

         11.7.   Limitation on Amount- the Purchaser. The Purchaser will have no
                 -----------------------------------
liability  (for  indemnification  or  otherwise)  with  respect  to the  matters
described  in clause  (a) of  Section  11.3 or, to the  extent  relating  to any
failure to perform or comply  prior to the Closing  Date,  clause (b) of Section
11.3  until  the total of all  Damages  with  respect  to such  matters  exceeds
$100,000,  and then only for the amount by which such Damages exceeds  $100,000;
provided,  however,  that this  Section  11.7 will not apply to any  intentional
breach by the Purchaser of any covenant or obligation, and the Purchaser will be
liable for all Damages with respect to such breaches; and provided further, that
in no event  shall the  Purchaser's  obligations  under  this  Article XI exceed
$8,500,000.

         11.8.   Procedure for Indemnification - Third Party Claims.
                 --------------------------------------------------
                (a)   Promptly  after  receipt  by  an  Indemnified Person under
Section 11.2 or Section  11.3 of notice of the  commencement  of any  Proceeding
against it, such  Indemnified  Person will,  if a claim is to be made against an
indemnifying party under such Section,  give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
Indemnified   Person,   except  to  the  extent  that  the  indemnifying   party
demonstrates  that the defense of such action is prejudiced  by the  Indemnified
Person's failure to give such notice.

                  (b)  If any  Proceeding  referred  to in  Section  11.8(a)  is
brought  against an Indemnified  Person and it gives notice to the  indemnifying
party of the  commencement  of such  Proceeding,  the  indemnifying  party will,
unless the claim involves  Taxes,  be entitled to participate in such Proceeding
and (unless the  indemnifying  party is also a party to such  Proceeding and the
Indemnified Person determines in good faith that joint  representation  would be
inappropriate),  to assume the defense of such Proceeding. After notice from the
indemnifying  party to the  Indemnified  Person of its  election  to assume  the
defense of such  Proceeding,  the  indemnifying  party  will not,  as long as it
diligently conducts such defense, be liable to the Indemnified Person under this
Article XI for any fees of other  counsel or any other  expenses with respect to
the  defense  of such  Proceeding,  in each case  subsequently  incurred  by the
Indemnified Person in connection with the defense of such Proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a Proceeding,  (i) it will be  conclusively  established for purposes of this
Agreement  that the claims made in that  Proceeding  are within the scope of and
subject to indemnification;  (ii) no compromise or settlement of such claims may
be effected by the indemnifying  party without the Indemnified  Person's consent
unless (A) there is no finding or admission of any violation of any Law or Order
or any  violation  of the rights of any Person and no effect on any other claims
that  may be made  against  the  Indemnified  Person,  and (B) the  sole  relief
provided is monetary  damages that are paid in full by the  indemnifying  party;
and (iii) the  Indemnified  Person will have no  liability  with  respect to any
compromise or settlement of such claims effected without its consent.  If notice
is given to an indemnifying  party of the commencement of any Proceeding and the
indemnifying  party does not,  within ten days  after the  Indemnified  Person's
notice is given, give notice to the Indemnified Person of its election to assume
the  defense of such  Proceeding,  the  indemnifying  party will be bound by any
determination made in such Proceeding;  provided,  however, that the Indemnified


                                       30
<PAGE>

Person may not, without the written consent of the indemnifying  party,  consent
to any compromise or settlement of the Proceeding.

         11.9.    Procedure for Indemnification - Other Claims.    A   claim for
                  ---------------------------------------------
indemnification  for  any  matter  not involving  a  third-party  claim  may  be
asserted by notice to the party from whom indemnification is sought.


                                   ARTICLE XII

                            MISCELLANEOUS PROVISIONS
                           --------------------------

         12.1     Amendment and Modification.  Subject to  applicable  Law, this
                  --------------------------
Agreement may be amended, modified and supplemented only by written agreement of
the parties hereto.

         12.2    Waiver of Compliance; Consents. Any failure of any party hereto
                 ------------------------------
to comply with any  obligation, covenant, agreement or  condition  herein may be
waived in writing by the other  parties  hereto,  but such  waiver or failure to
insist upon strict  compliance  with such  obligation,  covenant,  agreement  or
condition  shall not  operate as a waiver of, or estoppel  with  respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing.

         12.3     Certain Definitions.
                  -------------------

                  "Adjustment  Statement"  shall have the  meaning  set forth in
                   ---------------------
Section 1.5(b).

                  "Affiliate"  means, with regard to any Person, (a) any Person,
                   ---------
directly or  indirectly,  controlled by, under common control of, or controlling
such Person, (b) any Person, directly or indirectly, in which such Person holds,
of  record  or  beneficially,  five  percent  or more of the  equity  or  voting
securities,  (c) any Person that holds, of record or beneficially,  five percent
or more of the equity or voting securities of such Person,  (d) any Person that,
through Contract,  relationship or otherwise,  exerts a substantial influence on
the management of such Person's affairs,  (e) any Person that, through Contract,
relationship  or otherwise,  is influenced  substantially  in the  management of
their  affairs  by  such  Person,  or (f)  any  director,  officer,  partner  or
individual holding a similar position in respect of such Person.

                  "Allocation  Agreement"  shall have the  meaning  set forth in
                   ---------------------
Section 6.5(a).

                  "Assigned  Contract"  means (i) all Contracts in effect on the
                   ------------------
Closing Date relating to the purchase or sale of  inventory,  (ii) all Contracts
listed on Schedule 1.1(d) of the Disclosure Schedule, and (iii) all Contracts in
effect on the Closing Date and entered  into in the ordinary  course of business
consistent  with past  practice and  providing for payments by the Seller of not
more than $25,000 per annum,  provided that the  Contracts  included in Assigned
Contracts  pursuant  to this clause  (iii) may not  provide for  payments by the
Seller in excess of $100,000 in the aggregate; provided that notwithstanding the
foregoing,  "Assigned  Contract"  shall  not  include  the  Contracts  listed on
Schedule 1.1(d)(i) of the Disclosure Schedule.

                                       31
<PAGE>

                  "Assigned   Receivables"   means  (i)  all   grower   accounts
                  -----------------------
receivable  exclusively  relating to the Business and secured by Liens, (ii) all
other accounts  receivable  exclusively  relating to the Business that are as of
the Closing  Date not past due as  determined  in  accordance  with the contract
terms giving rise to such account  receivable and (iii) all accounts  receivable
exclusively  relating to the Business  that are not  described in the  preceding
clause (i) or (ii) but that are designated as Assigned  Receivables  pursuant to
Section 1.1.3.

                  "Authority"  means  any  federal,   state,  local  or  foreign
                   ---------
governmental,  regulatory or administrative  body,  agency,  commission,  board,
arbitrator  or  authority,  any court or  judicial  authority,  and any  public,
private or  industry  regulatory  authority,  whether  international,  national,
federal, state or local.

                  "Balance  Sheet  Date"  shall have the meaning as set forth in
                   --------------------
Section 2.4.

                  "Business"  shall  have  the  meaning  as  set  forth  in  the
                   --------
Recitals.

                  "Business  Employee" means each employee who performs  service
                   -------------------
primarily in the Business as an employee of the Seller,  including  any employee
who is  absent  from  work by reason of  vacation,  approved  leave of  absence,
short-term disability, or workers' compensation.

                   "Claim"  means any  action,  claim,  lawsuit,  demand,  suit,
                    -----
inquiry, hearing, investigation,  notice of a violation, litigation, proceeding,
arbitration,  appeals or other dispute, whether civil, criminal,  administrative
or otherwise.

                  "Closing" shall have the meaning set forth in Section 9.1.
                   -------
                  "Closing Date" means the date the Closing occurs.
                   ------------
                  "Closing Date Balance  Sheet" shall have the meaning set forth
                   ---------------------------
in Section 1.5(a).

                  "Closing Date Inventory  Value" means the book value as of the
                   -----------------------------
opening  of  business  on the  Closing  Date of the  inventory  included  in the
Acquired Assets,  determined in accordance with GAAP applied  consistently  with
the preparation of the Financial Statements, minus $118,000.

                  "Closing  Date Net Current  Asset  Value" means the sum of the
                   ---------------------------------------
Closing Date  Inventory  Value and the Closing Date  Receivables  Value less the
Closing Date Payables Value.

                  "Closing Date  Payables  Value" means the book value as of the
                   -----------------------------
opening of business on the Closing Date of the accounts  payable included in the
Assumed  Liabilities,  determined in accordance  with GAAP applied  consistently
with the preparation of the Financial Statements.

                  "Closing  Date  Receivables  Value" means the book value as of
                   ---------------------------------
the opening of business on the Closing Date of the accounts  receivable included
in the Acquired Assets,  determined in accordance with GAAP applied consistently
with the preparation of the Financial Statements.

                                       32
<PAGE>

                  "Code"  means the Internal  Revenue Code of 1986,  as amended,
                   ----
and the Laws thereunder.

                  "Computation"  shall  have the  meaning  set forth in  Section
                   -----------
6.5(a).

                  "Contested  Adjustments"  shall have the  meaning set forth in
                   ----------------------
Section 1.5(b).

                  "Contested Adjustment Notice" shall have the meaning set forth
                   ---------------------------
                  in Section 1.5(b).

                "Contract" means any agreement, contract, commitment, instrument
                 --------
or other binding  arrangement or  understanding,  whether written or oral, which
primarily relates to the Business.

                 "Current  Asset Value Shortfall"  means the amount,  if any, by
                  ------------------------------
which the final  Closing Date Net Current  Asset Value  determined in accordance
with Section 1.6 (if applicable) is less than the amount of the Closing Date Net
Current  Asset  Value  utilized in the  determination  of the amount of Purchase
Price payable at Closing in accordance with Section 1.5.

                  "Current  Asset Value  Surplus"  means the amount,  if any, by
                   -----------------------------
which the Closing Date Net Current Asset Value  determined  in  accordance  with
Section 1.6 (if  applicaple)  exceeds the amount of the Closing Date Net Current
Asset  Value  utilized  in the  determination  of the amount of  Purchase  Price
payable at Closing in accordance with Section 1.5.

                  "Damages" shall have the meaning set forth in Section 11.2.
                   -------
                  "Disclosure  Schedule" shall have the meaning  provided in the
                   --------------------
lead-in to Article II.

                  "Environmental  Claims"  means  any  and  all  administrative,
                   ----------------------
regulatory or judicial actions, suits, demands,  demand letters,  claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any  way  to  any  Environmental  Law  or  any  permit  issued  under  any  such
Environmental Law (for purposes of this definition, "Claims") including, without
limitation  (i) any and  all of the  foregoing  by  governmental  or  regulatory
authorities  for  enforcement,  cleanup,  removal,  response,  remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all  of the  foregoing,  by  any  third  party  seeking  damages,  contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous  Materials  or  arising  from  alleged  injury  or threat of injury to
health, safety or the environment.

                  "Environmental Law" means any Law, Order, settlement agreement
                   -----------------
or Authority  requirement,  which relates to or otherwise  imposes  liability or
standards of conduct concerning mining or reclamation of mined land, discharges,
emissions,  releases or threatened releases of noises,  odors or any pollutants,
contaminants or hazardous or toxic wastes,  substances or materials,  whether as
matter or energy, into ambient air, water, or land, or otherwise relating to the
manufacture,  processing,  generation,  distribution,  use, treatment,  storage,
disposal,  cleanup,  transport  or  handling  of  pollutants,  contaminants,  or
hazardous wastes, substances or materials,  including (but not limited to and as
may be amended)  the  Comprehensive  Environmental  Response,  Compensation  and


                                       33
<PAGE>

Liability  Act, the Superfund  Amendments  and  Reauthorization  Act of 1986, as
amended,  the Hazardous Material  Transportation Act, the Resource  Conservation
and  Recovery  Act of 1976,  as amended,  the Toxic  Substances  Control Act, as
amended, the Federal Water Pollution Control Act, the Clean Water Act, the Clean
Air Act, the Occupational Safety and Health Act, any so-called  "Superlien" law,
all as now or  hereafter  amended  or  supplemented,  and the  Laws  promulgated
thereunder, and any other similar Federal, state or local statutes.

                  "Environmental Permit" means Permits, certificates, approvals,
                  ---------------------
licenses and other  authorizations  relating to or required by Environmental Law
and necessary or desirable for the Business.

                  "ERISA" means the Employee  Retirement  Income Security Act of
                   -----
1974 or any successor law, and  regulations and rules issued pursuant to the Act
or any successor law.

                  "ERISA Affiliate" means any trade or business,  whether or not
                   ---------------
incorporated,  that together with the Seller would be deemed a "single employer"
within the meaning of Section 4001(b)(i) of ERISA.

                  "Excluded  Receivables" means all accounts receivable relating
                   ---------------------
exclusively to the Business that are not Assigned Receivables.

                  "Financial  Statements" shall have the meaning as set forth in
                   ---------------------
Section 2.4.

                  "GAAP"  means  generally   accepted   accounting   principles,
                   ----
consistently applied, as in existence at the date hereof.

                  "Guarantee" means any guarantee or other contingent  liability
                   ---------
(other than any  endorsement for collection or deposit in the ordinary course of
business), direct or indirect with respect to any obligations of another Person,
through an  agreement  or  otherwise,  including,  without  limitation,  (a) any
endorsement or discount with recourse or undertaking substantially equivalent to
or  having  economic  effect  similar  to a  guarantee  in  respect  of any such
obligations and (b) any Contract (i) to purchase,  or to advance or supply funds
for the payment or purchase of, any such obligations,  (ii) to purchase, sell or
lease property,  products, materials or supplies, or transportation or services,
in respect of enabling such other Person to pay any such obligation or to assure
the owner thereof  against loss regardless of the delivery or nondelivery of the
property, products, materials or supplies or transportation or services or (iii)
to make any loan, advance or capital  contribution to or other investment in, or
to otherwise  provide  funds to or for, such other Person in respect of enabling
such Person to satisfy an  obligation  (including  any liability for a dividend,
stock  liquidation  payment or expense) or to assure a minimum  equity,  working
capital or other balance sheet condition in respect of any such obligation.

                  "Hazardous  Materials"  means (i) any  petroleum  or petroleum
                   --------------------
products,  radioactive  materials,  asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain  dielectric fluid containing levels of  polychlorinated  biphenyls,  and
radon gas; (ii) any chemicals, materials or substances defined as or included in
the  definition  of  "hazardous   substances,"  "hazardous  wastes,"  "hazardous
materials,"  "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances,"  "toxic  pollutants,"  or  words  of  similar  import,   under  any
applicable  Environmental  Law;  and  (iii)  any  other  chemical,  material  or
substance,  exposure  to  which  is  prohibited,  limited  or  regulated  by any
governmental authority.

                                       34
<PAGE>

                  "Improvements"  shall  have the  meaning  set forth in Section
                   ------------
2.14(c).

                  "Income  Tax" means any Tax on or  determined  by reference to
                   -----------
gross or net income and all interest,  fines and penalties  imposed with respect
to any such Tax.

                  "Indebtedness" with respect to any Person means any obligation
                   ------------
of such  Person for  borrowed  money,  but in any event  shall  include  (a) any
obligation or liabilities  incurred for all or any part of the purchase price of
property or other assets or for the cost of property or other assets constructed
or of  improvements  thereto,  other than accounts  payable  included in current
liabilities and incurred in respect of property purchased in the ordinary course
of  business,  (whether or not such Person has assumed or become  liable for the
payment of such obligation) (whether accrued, absolute, contingent, unliquidated
or  otherwise,  known or unknown,  whether due or to become  due),  (b) the face
amount of all  letters of credit  issued for the  account of such Person and all
drafts  drawn  thereunder,  (c)  capitalized  lease  obligations,  and  (d)  all
Guarantees of such Person.

                  "Indemnified  Persons"  shall  have the  meaning  set forth in
                   --------------------
Section 11.3.

                  "Independent  Accountant"  shall have the meaning set forth in
                   -----------------------
Section 1.6(b).

                  "Knowledge"  means, with respect to a particular fact or other
                   ---------
matter,  actual awareness of such fact or other matter on the part of one of the
individuals named in Section 12.2(a) of the Disclosure Schedule.

                  "Law" means,  as to any Person,  any foreign or United  States
                   ---
federal, state or local law, statute, code, ordinance,  regulation, order, writ,
injunction,   decision,   directive,   judgment   or  decree  (or   judicial  or
administrative  interpretations  thereof  having  the force of law which are not
subject to appeal or challenge)  applicable to such Person and to the businesses
and assets thereof.

                  "Liability  Policies"  means  insurance  Contracts or policies
                   -------------------
applicable to the Seller and the Subsidiaries  including workers'  compensation,
general  liability,  property or other insurance policy that relate to liability
or excess  liability  insurance  including  the name of the insurer,  the types,
dates and amounts of coverages, and any material coverage exclusions.

                  "License  Agreement"  means  that  certain  license  agreement
                  --------------------
entered  into by the Seller and the  Purchaser  pursuant to Sections 4.5 and 5.3
hereof, by which the Seller grants the Purchaser certain trademark rights.

                  "Lien" means any security interest,  lien,  mortgage,  pledge,
                  ------
hypothecation,  encumbrance, Claim, easement, charge, restriction on transfer or
otherwise, or interest of another Person of any kind or nature.

                                       35
<PAGE>

                  "Material Adverse Change"  means  any  developments or changes
                   -----------------------
which would have a Material Adverse Effect.

                  "Material  Adverse Effect" means any  circumstances,  state of
                   ------------------------
facts or matters which might  reasonably be expected to have a material  adverse
effect in respect of the Business'  operations,  properties,  assets,  condition
(financial or otherwise) or results.

                  "Material  Contract"  shall  have  the  meaning  set  forth in
                   -------------------
Section 2.7.

                  "Multi-Employer  Plan"  shall  have the  meaning  set forth in
                   --------------------
Section 3(37)(A) of ERISA.

                   "Occurrence"  means any  accident,  happening  or event which
                    -----------
occurs or has  occurred at any time prior to the Closing  Date that is caused or
allegedly caused by any hazard,  defect,  action or inaction including,  without
limitation,  any  failure  or  alleged  failure to warn or any breach or alleged
breach of express or implied  warranties  or  representations  with respect to a
product  manufactured,  shipped, sold or delivered by or on behalf of the Seller
which results or is alleged to have resulted in injury or death to any person or
damage to or destruction of property  (including damage to or destruction of the
product itself) or other consequential damages, at any time.

                  "Order" means any decree, order, judgment,  injunction,  rule,
                   -----
ruling, voting right or consent of or by an Authority.

                  "Pension  Plan"  shall have the  meaning  set forth in Section
                   -------------
3(2)(A) of ERISA.

                  "Permits"   means  all   permits,   licenses,   registrations,
                   -------
certificates,  Orders or approvals from any Authority or other Person (including
without  limitation  those  relating to the  occupancy or use of owned or leased
real  property)  issued  to or  held by the  Seller  primarily  relating  to the
Business.

                  "Permitted  Liens"  means  (i) Liens for Taxes not yet due and
                   ----------------
payable,  (ii) such  imperfections or irregularities of title or Liens as do not
materially  detract from or interfere  with the present use of the properties or
assets subject thereto or affected  thereby,  otherwise  impair present business
operations  at  such  properties,  or do not  detract  from  the  value  of such
properties  and  assets,  (iii) the rights of  customers  of the  Business  with
respect to inventory or work in progress under orders or Contracts  entered into
by the Seller in the ordinary  course of business,  and (iv) Liens  disclosed in
Section 12.2(b) of the Disclosure Schedule.

                  "Person" means any  corporation,  limited  liability  company,
                   -------
partnership, joint venture, organization, entity, Authority or natural person.

                  "Plan"  shall have the  meaning  set forth in Section  3(3) of
                   ----
ERISA.

                  "Policies"  means all  insurance  policies that insure (i) the
                   --------
properties, plant and equipment of the Business for loss or damage, and (ii) the
Seller or its officers, directors,  employees or agents against any liabilities,


                                       36
<PAGE>

losses or damages (or lost  profits) with respect to the Business for any reason
or purpose.

                  "Pre-Closing Tax Period" means any taxable period ending on or
                   ----------------------
before the Closing Date.

                  "Proceeding" means any action,  arbitration,  audit,  hearing,
                   ----------
investigation,  litigation,  or suit (whether civil,  criminal,  administrative,
investigative,  or  informal)  commenced,  brought,  conducted,  or  heard by or
before, or otherwise involving, any governmental Authority or arbitrator.

                  "Property"  means any real  property  and  improvements  owned
                   --------
(directly,  indirectly, or beneficially),  leased, used, operated or occupied by
the Seller and/or its Subsidiaries.

                  "Proprietary   Rights"   means   all   (i)   patents,   patent
                   --------------------
applications,    patent    disclosures    and    all    related    continuation,
continuation-in-part,   divisional,  reissue,  reexamination,   utility,  model,
certificate of invention and design patents, patent applications,  registrations
and applications for registrations, (ii) trademarks, service marks, trade dress,
logos,  trade names and corporate names and  registrations  and applications for
registration  thereof,  (iii) copyrights and  registrations and applications for
registration  thereof,  (iv) mask works and  registrations  and applications for
registration thereof, (v) computer software, data and documentation,  (vi) trade
secrets  and   confidential   business   information,   whether   patentable  or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production  processes  and  techniques,  research and  development  information,
copyrightable  works,  financial,  marketing and business data, pricing and cost
information,  business and marketing  plans and customer and supplier  lists and
information, (vii) other proprietary rights relating to any of the foregoing and
(viii) copies and tangible embodiments thereof.

                  "Purchase  Price"  shall have the meaning set forth in Section
                  ----------------
1.4.

                  "Purchaser  Indemnified  Person"  shall have the  meaning  set
                   -------------------------------
forth in Section 11.2.

                  "Puttable Receivables" means accounts receivable identified as
                   -------------------
such in accordance with Section 1.1.3.

                  "Real  Property"  shall have the  meaning set forth in Section
                   --------------
1.1(a).

                  "Seller  Indemnified  Person" shall have the meaning set forth
                   ---------------------------
in Section 11.3.

                  "Senior  Lenders"  means the lenders which are parties to that
                   ---------------
certain Credit  Agreement,  dated as of March 28, 2001, by and among the Seller,
such lenders and the other parties listed therein.

                  "Senior  Lender Liens" means the liens granted in favor of the
                   --------------------
lenders pursuant to that certain Credit  Agreement,  dated as of March 28, 2001,
by and among the Seller, such lenders and the other parties listed therein.

                                       37
<PAGE>

                  "Settlement  Amount  Certificate"  shall have the  meaning set
                   -------------------------------
forth in Section 1.5(b).

                  "Settlement  Date" shall have the meaning set forth in Section
                   ----------------
1.5(c).

                  "Straddle  Period"  means any taxable  period  beginning on or
                   -----------------
before the Closing Date and ending after the Closing Date.

                  "Subsidiary"  means any  Person in which the Seller has (i) an
                   ----------
ownership interest, (ii) advanced funds or provided financial  accommodations to
which, in each case, is secured by an ownership  interest in or has an option to
acquire an ownership interest in such Person.

                  "Tax  Returns"  means  federal,  state,  foreign and local Tax
                   ------------
reports, returns, information returns and other documents.

                  "Taxes" means any and all taxes,  including without limitation
                   -----
income, gross receipts, net proceeds, alternative or add-on minimum, ad valorem,
value added,  turnover,  sales, use,  property,  personal property (tangible and
intangible),  stamp, leasing,  lease, user, excise, duty,  franchise,  transfer,
license,  withholding,  payroll,  employment,  foreign,  fuel,  excess  profits,
occupational and interest equalization,  windfall profits,  severance, and other
taxes and governmental  charges of any kind whatsoever  (including  interest and
penalties thereon).

                  "Taxing  Authorities" means the United States Internal Revenue
                   -------------------
Service and any other federal,  state,  or local authority that has the right to
administer, collect, impose or assess Taxes.

                  "Telmark  Lease" refers to the transfer of all rights of Fleet
                   --------------
Capital  Corporation  as lessor to Telmark LLC pursuant to that  certain  Master
Lease  Agreement (and any amendments  thereto)  entered into on June 25, 1997 by
and between the Seller and Fleet Capital Corporation.

                 "Title IV Plans" means all Pension  Plans that are subject to
                  ---------------
Title IV of ERISA,  29 U.S.C.  Section 1301 et seq.,  other than  Multi-Employer
Plans.

                  "Title  Company"  shall have the  meaning set forth in Section
                   ---------------
7.11.

         12.4    Notices.  All  notices,   requests,   demands  and  other
                 --------
communications  required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when  delivered  by hand or mailed,  first  class
certified mail with postage paid or by overnight receipted courier service or by
facsimile (with proof of receipt):

                  (a)      If to the Seller, to:

                                   Agway Inc.
                                   333 Butternut Drive
                                   Dewitt, NY  13215
                                   Attn:  Christopher W. Fox, Esq.
                                   ----
                                   General Counsel
                                   Facsimile:  (315) 449-6253
                                   ---------

                                       38
<PAGE>


         or to such  other  Person or address  as the  Seller  shall  furnish by
notice to the Purchaser in writing.

                  (b)      If to the Purchaser, to:

                                    Cenex Harvest States Cooperatives
                                    5500 Cenex Drive
                                    Inver Grove Heights, MN 55077
                                    Attn:  David Swenson
                                              Legal Department
                                    Facsimile: (651) 306-6932
                                    ---------

         or to such other Person or address as the  Purchaser  shall  furnish by
notice to the Seller in writing.

         12.5  Assignment. This Agreement and all of the provisions hereof shall
               ----------
be  binding  upon and  inure to the  benefit  of the  parties  hereto  and their
respective  successors and permitted assigns, but neither this Agreement nor any
of the rights,  interests or obligations  hereunder  shall be assigned by any of
the parties hereto without the prior written consent of the other parties.

         12.6   Governing Law.  The Agreement  shall be governed by the internal
                -------------
laws of the State of New York as to all  matters,  including  but not limited to
matters of validity, construction, effect and performance.

         12.7  Counterparts.  This  Agreement  may be  executed  in two or  more
               ------------
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

         12.8   Headings.  The article and section  headings  contained  in this
                --------
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

         12.9   Entire Agreement;  No Third Party Beneficiaries. This Agreement,
                ----------------
including the schedules and exhibits hereto and the documents,  certificates and
instruments referred to herein,  embodies the entire agreement and understanding
of the  parties  hereto in  respect  of the  transactions  contemplated  by this
Agreement and  supersedes  all prior  agreements,  representations,  warranties,
promises, covenants,  arrangements,  communications and understandings,  oral or
written,   express  or  implied,  between  the  parties  with  respect  to  such
transactions.  There are no agreements,  representations,  warranties, promises,
covenants,  arrangements or  understandings  between the parties with respect to
such  transactions,  other than those expressly set forth or referred to herein.
Except as provided in Article XI, this  Agreement is not intended to confer upon
any Person  other than the parties  hereto and their  successors  and  permitted
assigns any rights or remedies hereunder.

                                       39
<PAGE>

         12.10   Binding  Effect. This Agreement shall not be construed so as to
                 ---------------
confer any right or benefit upon any Person other than the  signatories  to this
Agreement and each of their respective successors and permitted assigns.

         12.11   Injunctive Relief. The parties hereto agree  that  in the event
                 -----------------
of a breach of any provision of this Agreement prior to the  consummation of the
Closing,  the  aggrieved  party or parties may be without an adequate  remedy at
law. The parties therefore agree that in the event of a breach of any provision
of this Agreement prior to the consummation of the Closing,  the aggrieved party
or parties may elect to  institute  and  prosecute  proceedings  in any court of
competent  jurisdiction  to  enforce  specific  performance  or  to  enjoin  the
continuing breach of such provision,  as well as to obtain damages for breach of
this  Agreement.  By seeking or obtaining any such relief,  the aggrieved  party
shall not be precluded  from  seeking or obtaining  any other relief to which it
may be entitled.

         12.12   Delays or Omissions.  No  delay  or  omission  to  exercise any
                 -------------------
right, power or remedy accruing to any party hereto,  upon any breach or default
of any other party under this Agreement,  shall impair any such right,  power or
remedy of such party nor shall it be construed to be a waiver of any such breach
or  default,  or an  acquiescence  therein,  or of or in any  similar  breach or
default  thereafter  occurring;  nor shall any  waiver of any  single  breach or
default  be deemed a waiver  of any  other  breach  or  default  theretofore  or
thereafter  occurring.  Any waiver,  permit,  consent or approval of any kind or
character  on the part of any party  hereto of any breach or default  under this
Agreement,  or any  waiver  on  the  part  of any  party  of any  provisions  or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.

         12.13   Severability.  Unless  otherwise  provided  herein,  if  any
                 ------------
provision of this  Agreement  shall be invalid,  illegal or  unenforceable,  the
validity,  legality and enforceability of the remaining  provisions shall not in
any way be affected or impaired thereby.

         12.14    Expenses.  The Purchaser shall  bear its own  legal  fees with
                  --------
respect to this Agreement and the transactions  contemplated  hereby. The Seller
shall  bear  its  own  legal  fees  with  respect  to  this  Agreement  and  the
transactions contemplated hereby.

         The  covenants  contained  in this  Section  12.14  shall  survive  the
termination of this Agreement.

         12.15    Waiver of Jury Trial.  EACH OF THE PARTIES  HERETO  KNOWINGLY,
                  --------------------
VOLUNTARILY AND  INTENTIONALLY  WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY  LITIGATION  BASED  HEREON,  OR ARISING OUT OF,  UNDER,  OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY EXHIBIT HERETO, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING OR  STATEMENTS  (WHETHER  VERBAL OR  WRITTEN)  RELATING TO THE
FOREGOING.  THIS  PROVISION IS A MATERIAL  INDUCEMENT  FOR THE PARTIES HERETO TO
ENTER INTO THIS AGREEMENT.

                                      * * *

<PAGE>


         IN WITNESS WHEREOF,  the parties hereto have made and entered into this
Asset Purchase Agreement the date first hereinabove set forth.

                                   AGWAY, INC.



                                   By:  /s/ Roy Lubetkin
                                       -----------------------------------------
                                            Vice President, Agway Inc.
                                   Title: --------------------------------------


                                   CENEX HARVEST STATES COOPERATIVES



                                   By:  /s/  David Swenson
                                      ------------------------------------------

                                   Title:    Senior Vice President
                                         ---------------------------------------



<PAGE>









<TABLE>
<CAPTION>

                                 Schedule 1.1(h)
                                 ---------------



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

                                                              Application/
                                                              Registration                        Product
      Trademarks, Trade and Domain Names                      Number
-------------------------------------------------------      -------------------     --------------------------------
-------------------------------------------------------      -------------------     --------------------------------
<S>                                                           <C>                     <C>
Backyard Banquet For Birds(R)- US                             1,690,408               Bird Food

Birdsnack(R)- Canada                                          396,081                 Bird Food

Birdsnack(R)- Ireland                                         B152561                 Bird Food

Chirp(R)- US                                                  829,193                 Wild Bird Food & Sunflower Seed

Feathered Friend(R)- Canada                                   381,569                 Bird Food

Feathered Friend(R)- United Kingdom                           B1 506 709              Bird Food

Feathered Friend(R)& Design - Canada                          381,153                 Bird Food & Bird Feeders

Finch Delight(R)- Canada                                      399,213                 Bird Food

Finch Delight(R)- United Kingdom                              B1 509 678              Bird Food

Flyers' Choice(R)- Canada                                     400,894                 Bird Food

Flyers' Choice(R)- Ireland                                    149423                  Bird Food

Flyers' Choice(R)- United Kingdom                             B1 509 680              Bird Food

Royal Hybrid(TM)                                            --------------            Hybrid Sunflower Planting Seed

Royal Wing(R)- US                                             1,597,724               Bird Food

Royal Wing(R)& Design - US                                    1,596,719               Bird Food

Sunflower  (a d/b/a of  Agway,  Inc.)
registered  in North  Dakota                                  15675700

BIRDFOOD.COM                                                                          Informational Website

WOODLAND FRIENDS                                             -------------            Block of Wildlife Food

</TABLE>

<PAGE>


                            ASSET PURCHASE AGREEMENT
                          BY AND BETWEEN AGWAY INC. AND
                        CENEX HARVEST STATES COOPERATIVES
                            DATED SEPTEMBER 16, 2002
--------------------------------------------------------------------------------


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

1.       Seller's Secretary's Certificate
         a.       Certificate of Incorporation
         b.       Bylaws
         c.       Resolutions of the Board of Directors

2.       Seller's Officer's Certificate
3.       Good Standing Certificate
4.       Bill of Sale and Assignment
5.       Legal Opinion of the Seller's Counsel, Sutherland Asbill & Brennan LLP

6.       Buyer's Secretary's Certificate
         a.       Articles of Incorporation
         b.       Bylaws
         c.       Resolutions of the Board of Directors

7.       Buyer's Officer's Certificate
8.       Good Standing Certificate
9.       Assumption Agreement
10.      Legal Opinion of the Purchaser's Counsel, David A. Kastelic
11.      License Agreement
12.      Assignment of Leases
13.      Side Letter
14.      Closing Settlement Statement
15.      Special Warranty Deeds
16.      Title Commitment
17.      Owner's Affidavit
18.      Settlement Statement
19.      Release of Real Estate Financial Statements
20.      Termination of Mortgage
21.      Notice of Release of Security Interest in Trademarks and Domain Names
22.      Release of Security Interest of Certain Pledge Indebtedness
23.      Termination of Fleet Financing Statements
24.      Termination of GECC Personal Property Financing Statements
25.      Release of Assignment of Rents
26.      Consent of the Senior Lenders of the Seller