<PAGE>   1
                                                                   EXHIBIT 10(h)


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

                            FLOWERS INDUSTRIES, INC.

                                  $100,000,000

                     6.80% Senior Notes due January 5, 2008

                                   $20,000,000

                     6.99% Senior Notes due January 5, 2011

                                   $5,000,000

                     7.08% Senior Notes due January 5, 2016

                                    ---------

                             NOTE PURCHASE AGREEMENT

                                    ---------


                             Dated December 20, 1995

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


<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                                         Page
-------                                                                                                         ----
<S>      <C>                                                                                                    <C>
1.       AUTHORIZATION OF NOTES.................................................................................  1

2.       SALE AND PURCHASE OF NOTES.............................................................................  2

3.       CLOSING................................................................................................  2

4.       CONDITIONS TO CLOSING..................................................................................  2
         4.1.       Representations and Warranties..............................................................  2
         4.2.       Performance; No Default.....................................................................  3
         4.3.       Compliance Certificates.....................................................................  3
         4.4.       Opinions of Counsel.........................................................................  3
         4.5.       Purchase Permitted By Applicable Law, etc...................................................  3
         4.6.       Sale of Other Notes.........................................................................  4
         4.7.       Payment of Special Counsel Fees.............................................................  4
         4.8.       Private Placement Number....................................................................  4
         4.9.       Changes in Corporate Structure..............................................................  4
         4.10.      Proceedings and Documents...................................................................  4

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................  4
         5.1.       Organization; Power and Authority...........................................................  5
         5.2.       Authorization, etc..........................................................................  5
         5.3.       Disclosure..................................................................................  5
         5.4.       Organization and Ownership of Shares of Subsidiaries........................................  5
         5.5.       Financial Statements........................................................................  6
         5.6.       Compliance with Laws, Other Instruments, etc................................................  6
         5.7.       Governmental Authorizations, etc............................................................  6
         5.8.       Litigation; Observance of Statutes and Orders...............................................  7
         5.9.       Taxes.......................................................................................  7
         5.10.      Title to Property; Leases...................................................................  7
         5.11.      Licenses, Permits, etc......................................................................  7
         5.12.      Compliance with ERISA.......................................................................  8
         5.13.      Private Offering by the Company.............................................................  8
         5.14.      Use of Proceeds; Margin Regulations.........................................................  9
         5.15.      Existing Indebtedness.......................................................................  9
         5.16.      Foreign Assets Control Regulations, etc.....................................................  9
         5.17.      Status under Certain Statutes............................................................... 10
         5.18.      Restrictive Agreements...................................................................... 10
</TABLE>



<PAGE>   3


<TABLE>
<S>      <C>                                                                                                     <C>
6.       REPRESENTATIONS OF THE PURCHASER....................................................................... 10

         6.1.       Purchase for Investment..................................................................... 10
         6.2.       Source of Funds............................................................................. 10

7.       INFORMATION AS TO COMPANY.............................................................................. 12
         7.1.       Financial and Business Information.......................................................... 12
         7.2.       Officer's Certificate....................................................................... 15
         7.3.       Inspection.................................................................................. 15

8.       PREPAYMENT OF THE NOTES................................................................................ 16
         8.1.       Required Prepayments........................................................................ 16
         8.2.       Optional Prepayments with Make-Whole Amount................................................. 16
         8.3.       Allocation of Partial Prepayments........................................................... 17
         8.4.       Maturity; Surrender, etc.................................................................... 17
         8.5.       Purchase of Notes........................................................................... 17
         8.6.       Make-Whole Amount........................................................................... 17

9.       AFFIRMATIVE COVENANTS.................................................................................. 19
         9.1.       Compliance with Law......................................................................... 19
         9.2.       Insurance................................................................................... 19
         9.3.       Maintenance of Properties................................................................... 19
         9.4.       Payment of Taxes............................................................................ 20
         9.5.       Corporate Existence, etc.................................................................... 20

10.      NEGATIVE COVENANTS..................................................................................... 20
         10.1.      Transactions with Affiliates................................................................ 20
         10.2.      Merger, Consolidation, etc.................................................................. 20
         10.3.      Consolidated Total Debt..................................................................... 21
         10.4.      Restricted Payments......................................................................... 21
         10.5.      Subsidiary Borrowings....................................................................... 21
         10.6.      Mortgages and Liens......................................................................... 22
         10.7.      Sale of Assets.............................................................................. 23
         10.8.      Nature of Business.......................................................................... 23
         10.9       Restrictive Agreements...................................................................... 23

11.      EVENTS OF DEFAULT...................................................................................... 24

12.      REMEDIES ON DEFAULT, ETC............................................................................... 26
         12.1.      Acceleration................................................................................ 26
         12.2.      Other Remedies.............................................................................. 26
         12.3.      Rescission.................................................................................. 27
         12.4.      No Waivers or Election of Remedies, Expenses, etc........................................... 27
</TABLE>



<PAGE>   4


<TABLE>
<S>      <C>                                                                                                     <C>
13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.......................................................... 27

         13.1.      Registration of Notes....................................................................... 27
         13.2.      Transfer and Exchange of Notes.............................................................. 28
         13.3.      Replacement of Notes........................................................................ 28

14.      PAYMENTS ON NOTES...................................................................................... 29
         14.1.      Place of Payment............................................................................ 29
         14.2.      Home Office Payment......................................................................... 29

15.      EXPENSES, ETC.......................................................................................... 29
         15.1.      Transaction Expenses........................................................................ 29
         15.2.      Survival.................................................................................... 30

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE

         AGREEMENT.............................................................................................. 30

17.      AMENDMENT AND WAIVER................................................................................... 30
         17.1.      Requirements................................................................................ 30
         17.2.      Solicitation of Holders of Notes............................................................ 30
         17.3.      Binding Effect, etc......................................................................... 31
         17.4.      Notes held by Company, etc.................................................................. 31

18.      NOTICES................................................................................................ 31

19.      REPRODUCTION OF DOCUMENTS.............................................................................. 32

20.      CONFIDENTIAL INFORMATION............................................................................... 32

21.      SUBSTITUTION OF PURCHASER.............................................................................. 33

22.      MISCELLANEOUS.......................................................................................... 34
         22.1.      Successors and Assigns...................................................................... 34
         22.2.      Payments Due on Non-Business Days........................................................... 34
         22.3.      Severability................................................................................ 34
         22.4.      Construction................................................................................ 34
         22.5.      Counterparts................................................................................ 34
         22.6.      Governing Law............................................................................... 35
</TABLE>

      SCHEDULE A                --   INFORMATION RELATING TO PURCHASERS OF NOTES
                                     DUE JANUARY 5, 2008

      SCHEDULE B                --   INFORMATION RELATING TO PURCHASERS OF NOTES
                                     DUE JANUARY 5, 2011


<PAGE>   5


      SCHEDULE C          --   INFORMATION RELATING TO PURCHASERS OF
                               NOTES DUE JANUARY 5, 2016

      SCHEDULE D          --   DEFINED TERMS

      SCHEDULE 4.9        --   Changes in Corporate Structure

      SCHEDULE 5.3        --   Disclosure Materials

      SCHEDULE 5.4        --   Subsidiaries of the Company and
                               Ownership of Subsidiary Stock

      SCHEDULE 5.5        --   Financial Statements

      SCHEDULE 5.8        --   Certain Litigation

      SCHEDULE 5.11       --   Patents, etc.

      SCHEDULE 5.14       --   Use of Proceeds

      SCHEDULE 5.15       --   Existing Indebtedness

      EXHIBIT 1(A)        --   Form of 6.80% Senior Note due January 5, 2008

      EXHIBIT 1(B)        --   Form of 6.99% Senior Note due January 5, 2011

      EXHIBIT 1(C)        --   Form of 7.08% Senior Note due January 5, 2016

      EXHIBIT 4.4(a)      --   Form of Opinion of General Counsel of the Company

      EXHIBIT 4.4(b)      --   Form of Opinion of Special Counsel to the Company

      EXHIBIT 4.4(c)      --   Form of Opinion of Special Counsel
                               for the Purchasers

<PAGE>   6


                     6.80% Senior Notes due January 5, 2008

                     6.99% Senior Notes due January 5, 2011

                     7.08% Senior Notes due January 5, 2016

                                                               December 20, 1995

TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A, SCHEDULE B

AND SCHEDULE C:

Ladies and Gentlemen:

                  FLOWERS INDUSTRIES, INC., a Georgia corporation (the
"COMPANY"), agrees with you as follows:

1.       AUTHORIZATION OF NOTES.

                  The Company will authorize the issue and sale of $100,000,000
aggregate principal amount of its 6.80% Senior Notes due January 5, 2008,
$20,000,000 aggregate principal amount of its 6.99% Senior Notes due January 5,
2011 and $5,000,000 aggregate principal amount of its 7.08% Senior Notes due
January 5, 2016 (collectively, the "NOTES", such term to include any such notes
issued in substitution therefor pursuant to Section 13 of this Agreement). The
Notes shall be substantially in the form set out in Exhibits 1(A), 1(B) and
1(C), with such changes therefrom, if any, as may be approved by you and the
Company. Certain capitalized terms used in this Agreement are defined in
Schedule D; references to a "Schedule" or an "Exhibit" are, unless otherwise
specified, to a Schedule or an Exhibit attached to this Agreement.

<PAGE>   7

2.       SALE AND PURCHASE OF NOTES.

                  Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and each of the other purchasers named in
Schedule A, Schedule B and Schedule C (the "OTHER PURCHASERS") and you and the
Other Purchasers will purchase from the Company, at the Closing provided for in
Section 3, Notes in the principal amount specified opposite your name and the
names of the respective Other Purchasers in Schedule A, Schedule B and/or
Schedule C at the purchase price of 100% of the principal amount thereof. The
obligations of you and the Other Purchasers hereunder are several and not joint
obligations and you shall have no obligation and no liability to any Person for
the performance or non-performance by any Other Purchaser hereunder.

3.       CLOSING.

                  The sale and purchase of the Notes to be purchased by you and
the Other Purchasers shall occur at the offices of Jones, Day, Reavis & Pogue,
3500 SunTrust Plaza, 303 Peachtree Street, N.E., Atlanta, Georgia 30308, at
10:00 a.m., Eastern Standard Time, at a closing on either December 20, 1995 or
January 5, 1996 as specified opposite your name and the name of each Other
Purchaser in Schedule A, Schedule B and Schedule C (as so set forth with respect
to each Note Purchaser, the "Closing"). At the Closing the Company will deliver
to you the Notes to be purchased by you in the form of a single Note (or such
greater number of Notes in denominations of at least $500,000 as you may
request) dated the date of the Closing and regis tered in your name (or in the
name of your nominee), against delivery by you to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 6890-066623 at Wachovia Bank of North Carolina, N.A.,
Winston-Salem, North Carolina, ABA Routing #0531-0049-4, for further credit to
Flowers Industries, Inc., Attn: Gay Winters. If at the Closing the Company shall
fail to tender such Notes to you as provided above in this Section 3, or any of
the conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.

4.       CONDITIONS TO CLOSING.

                  Your obligation to purchase and pay for the Notes to be sold
to you at the Closing is subject to the fulfillment to your satisfaction, prior
to or at the Closing, of the following conditions:

4.1.     REPRESENTATIONS AND WARRANTIES.

                  The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.

                                        2

<PAGE>   8

4.2.     PERFORMANCE; NO DEFAULT.

                  The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14) no Default or Event of Default shall have
occurred and be continuing.

4.3.     COMPLIANCE CERTIFICATES.

                  (a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1, 4.2, 4.7, 4.8 and 4.9 have been fulfilled
and certifying as to the sale of the Notes pursuant to Section 4.6 which on or
prior to such date have been sold by the Company pursuant to the terms hereof.

                  (b) Secretary's Certificate. The Company shall have delivered
to you a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and the Agreements.

4.4.     OPINIONS OF COUNSEL.

                  You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Stephen R. Avera,
Assistant General Counsel for the Company, covering the matters set forth in
Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request; (b) from
Jones, Day, Reavis & Pogue, special counsel to the Company, covering the matters
set forth in Exhibit 4.4(b) (and the Company hereby instructs its counsel to
deliver such opinion to you); and (c) from Alston & Bird, your special counsel
in connection with such transactions, substantially in the form set forth in
Exhibit 4.4(c) and covering such other matters incident to such transactions as
you may reasonably request.

4.5.     PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

                  On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insur ance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.

                                        3

<PAGE>   9

4.6.     SALE OF OTHER NOTES.

                  The Company shall sell to the Other Purchasers and the Other
Purchasers shall purchase the Notes to be purchased by them at the Closing as
specified in Schedule A, Schedule B and Schedule C.

4.7.     PAYMENT OF SPECIAL COUNSEL FEES.

                  Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Closing the reasonable fees, charges and
disbursements actually incurred by you in relation to your special counsel
referred to in Section 4.4, to the extent reflected in a statement of such
counsel rendered to the Company at least one Business Day prior to the Closing.

4.8.     PRIVATE PLACEMENT NUMBER.

                  A Private Placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) shall have been obtained for
the Notes.

4.9.     CHANGES IN CORPORATE STRUCTURE.

                  Except as specified in Schedule 4.9, the Company shall not
have changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 5.5.

4.10.    PROCEEDINGS AND DOCUMENTS.

                  All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and your special
counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company represents and warrants to you that:

                                        4

<PAGE>   10

5.1.     ORGANIZATION; POWER AND AUTHORITY.

                  The Company is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and authority to
own or hold under lease the properties it pur ports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Notes and to perform the provisions hereof and
thereof.

5.2.     AUTHORIZATION, ETC.

                  This Agreement and the Notes have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each Note will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

5.3.     DISCLOSURE.

                  The Company, through its agent, SunTrust Capital Markets, has
delivered to you and each Other Purchaser a copy of a Private Placement Offering
Memorandum, dated November 6, 1995, (the "MEMORANDUM"), relating to the
transactions contemplated hereby. Except as dis closed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
identified in Schedule 5.3 and the financial statements listed in Schedule 5.5,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since July 1, 1995, there has been
no change in the financial condition, operations, business or properties of the
Company or any of its Subsidiaries except changes that individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.

5.4.     ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES.

                  (a) Schedule 5.4 is (except as noted therein) a complete and
correct list of the Company's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the percentage
of shares of each class of its capital stock or similar equity interests
outstanding owned by the Company and each other Subsidiary.

                                        5

<PAGE>   11

                  (b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Sub sidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).

                  (c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Sub sidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.

5.5.     FINANCIAL STATEMENTS.

                  The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

5.6.     COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

                  The execution, delivery and performance by the Company of this
Agreement and the Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other Material agreement or instrument to which the Company or
any Subsidiary is bound or by which the Company or any Subsidiary or any of
their respective properties may be bound or affected, (ii) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental Authority
applicable to the Company or any Subsidiary or (iii) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Company or any Subsidiary.

5.7.     GOVERNMENTAL AUTHORIZATIONS, ETC.

                  No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this Agreement or
the Notes.

                                        6

<PAGE>   12

5.8.     LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.

                  (a) Except as disclosed in Schedule 5.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any property of the
Company or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect.

                  (b) Neither the Company nor any Subsidiary is in default under
any order, judg ment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.

5.9.     TAXES.

                  The Company and its Subsidiaries have filed all income tax
returns that are required to have been filed in any jurisdiction, and have paid
all taxes shown to be due and payable on such returns and all other taxes and
assessments payable by them, to the extent such taxes and assess ments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (i) the amount of which is not individually or in the
aggregate Material or (ii) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined by the
Internal Revenue Service and paid for all fiscal years up to and including the
fiscal year ended June 30, 1990.

5.10.    TITLE TO PROPERTY; LEASES.

                  The Company and its Subsidiaries have good and sufficient
title to their respective Material properties, including all such properties
reflected in the most recent audited balance sheet referred to in Section 5.5 or
purported to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement, except for those
defects in title and Liens that, individually or in the aggregate, would not
have a Material Adverse Effect. All Material leases are valid and subsisting and
are in full force and effect in all material respects.

5.11.    LICENSES, PERMITS, ETC.

                  Except as disclosed in Schedule 5.11, the Company and its
Subsidiaries own or possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that are Material, without known conflict with the rights of others,
except for those conflicts that, individually or in the aggregate, would not
have a Material Adverse Effect.

                                        7

<PAGE>   13

5.12.    COMPLIANCE WITH ERISA.

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

                  (b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities by more than $600,000 in the
case of any single Plan and by more than $1,000,000 in the aggregate for all
Plans. The term "BENEFIT LIABILITIES" has the meaning specified in section 4001
of ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the meaning
specified in section 3 of ERISA.

                  (c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.

                  (d) The expected postretirement benefit obligation (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by section
4980B of the Code) of the Company and its Subsidiaries is not Material.

                  (e) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection with
which a tax could be imposed pursuant to section 4975(c)(1)(A)- (D) of the Code.
The representation by the Company in the first sentence of this Section 5.12(e)
is made in reliance upon and subject to the accuracy of your representation in
Section 6.2 as to the sources of the funds to be used to pay the purchase price
of the Notes to be purchased by you.

5.13.    PRIVATE OFFERING BY THE COMPANY.

                  Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise

                                        8

<PAGE>   14

approached or negotiated in respect thereof with, any person other than you, the
Other Purchasers and not more than 50 other Institutional Investors, each of
which has been offered the Notes at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes to the registration requirements
of Section 5 of the Securities Act.

5.14.    USE OF PROCEEDS; MARGIN REGULATIONS.

                  The Company will apply the proceeds of the sale of the Notes
as set forth in Schedule 5.14. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 3% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 3% of the
value of such assets. As used in this Section, the terms "MARGIN STOCK" and
"PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said
Regulation G.

5.15.    EXISTING INDEBTEDNESS.

                  Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of September 23, 1995, and all outstanding Indebtedness in
excess of $1,000,000 in the aggregate, of the Company and its Subsidiaries
incurred from September 23, 1995 to the date hereof, excluding any Indebtedness
relating to borrowings or re-borrowings under any revolving line of credit
disclosed on Schedule 5.15. Since September 23, 1995 there has been no Material
change in the amounts, interest rates, sinking funds, instalment payments or
maturities of the Indebtedness of the Company or its Subsidiaries. Neither the
Company nor any Subsidiary is in default and no waiver of default is currently
in effect, in the payment of any principal or interest on any Indebtedness of
the Company or such Subsidiary, and no event or condition exists with respect to
any Indebtedness of the Company or any Subsidiary the outstanding principal
amount of which exceeds $2,000,000 that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.

5.16.    FOREIGN ASSETS CONTROL REGULATIONS, ETC.

                  Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

                                        9

<PAGE>   15

5.17.    STATUS UNDER CERTAIN STATUTES.

                  Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as
amended, or the Federal Power Act, as amended.

5.18.    RESTRICTIVE AGREEMENTS.

                  The Company is not a party to any agreement, indenture, lease
or other document or instrument which, in any way, prohibits or restricts the
right or ability of the Company to amend, supplement or otherwise modify the
terms and provisions of this Agreement or any of the Notes.

6.       REPRESENTATIONS OF THE PURCHASER.

6.1.     PURCHASE FOR INVESTMENT.

                  You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, provided that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provi sions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.

6.2.     SOURCE OF FUNDS.

                  You represent that at least one of the following statements is
an accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:

                  (a) if you are an insurance company and if the Source includes
         assets allocated to any separate account maintained by you, the Source
         does not include assets allocated to any separate account maintained by
         you in which any employee benefit plan (or its related trust) has any
         interest, other than a separate account that is maintained solely in
         connection with your fixed contractual obligations under which the
         amounts payable, or credited, to such plan and to any participant or
         beneficiary of such plan (including any annuitant) are not affected in
         any manner by the investment performance of the separate account; or

                  (b) the Source is either (i) an insurance company pooled
         separate account, within the meaning of Prohibited Transaction
         Exemption ("PTE") 90-1 (issued January 29, 1990), or (ii) a bank
         collective investment fund, within the meaning of the PTE 91-38 (issued
         July 12, 1991) and, except as you have disclosed to the Company in
         writing pursuant to this

                                       10

<PAGE>   16

         paragraph (b), no employee benefit plan or group of plans maintained by
         the same employer or employee organization beneficially owns more than
         10% of all assets allocated to such pooled separate account or
         collective investment fund; or

                  (c) the Source constitutes assets of an "investment fund"
         (within the meaning of Part V of the QPAM Exemption) managed by a
         "qualified professional asset manager" or "QPAM" (within the meaning of
         Part V of the QPAM Exemption), no employee benefit plan's assets that
         are included in such investment fund, when combined with the assets of
         all other employee benefit plans established or maintained by the same
         employer or by an affiliate (within the meaning of Section V(c)(1) of
         the QPAM Exemption) of such employer or by the same employee
         organization and managed by such QPAM, exceed 20% of the total client
         assets managed by such QPAM, the conditions of Part I(c) and (g) of the
         QPAM Exemption are satisfied, neither the QPAM nor a person controlling
         or controlled by the QPAM (applying the definition of "control" in
         Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
         Company and (i) the identity of such QPAM and (ii) the names of all
         employee benefit plans whose assets are included in such in vestment
         fund have been disclosed to the Company in writing pursuant to this
         paragraph (c); or

                  (d) the Source is a governmental plan; or

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

                  (f) the Source does not include assets of any employee benefit
         plan, other than a plan exempt from the coverage of ERISA; or

                  (g) the Source consists of funds from your "insurance company
         general account" as defined in Department of Labor Prohibited
         Transaction Exemption 95-60 (60 FR 35925, July 12, 1995) provided that
         there is no "employee benefit plan" (as defined in Section 3(3) of
         ERISA and Section 4975(e)(1) of the Code, treating as a single plan all
         plans maintained by the same employer or employee organization) with
         respect to which the amount of the general account reserves and
         liabilities of all contracts held by or on behalf of such plan exceed
         ten percent (10%) of the total reserves and liabilities of such general
         account (exclusive of separate account liabilities) plus surplus, as
         set forth in the National Association of Insurance Commissioners Annual
         Statement filed with your state of domicile, provided further that you
         are relying on the Company's representations set forth in Section
         5.12(e) above in making such representation.

As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.

                                       11

<PAGE>   17

7.       INFORMATION AS TO COMPANY.

7.1.     FINANCIAL AND BUSINESS INFORMATION.

                  The Company shall deliver to each holder of Notes that is an
Institutional Investor:

                  (a) Quarterly Statements -- within 60 days after the end of
         each quarterly fiscal period in each fiscal year of the Company (other
         than the last quarterly fiscal period of each such fiscal year),
         duplicate copies of,

                      (i)  a consolidated balance sheet of the Company and its
                  Subsidiaries as at the end of such quarter, and

                      (ii) consolidated statements of income, changes in
                  shareholders' equity and cash flows of the Company and its
                  Subsidiaries, for such quarter and (in the case of the second
                  and third quarters) for the portion of the fiscal year ending
                  with such quarter,

         setting forth in each case in comparative form the figures for the
         corresponding periods in the previous fiscal year, all in reasonable
         detail, prepared in accordance with GAAP applicable to quarterly
         financial statements generally, and certified by a Senior Financial
         Officer as fairly presenting, in all material respects, the financial
         position of the companies being reported on and their results of
         operations and cash flows, subject to changes resulting from year-end
         adjustments, provided that delivery within the time period specified
         above of copies of the Company's Quarterly Report on Form 10-Q prepared
         in compliance with the requirements therefor and filed with the
         Securities and Exchange Commission shall be deemed to satisfy the
         requirements of this Section 7.1(a);

                  (b) Annual Statements -- within 105 days after the end of each
         fiscal year of the Company, duplicate copies of,

                      (i)  a consolidated balance sheet of the Company and its
                  Subsidiaries, as at the end of such year, and

                      (ii) consolidated statements of income, changes in
                  shareholders' equity and cash flows of the Company and its
                  Subsidiaries, for such year,

         setting forth in each case in comparative form the figures for the
         previous fiscal year, all in reasonable detail, prepared in accordance
         with GAAP, and accompanied by an opinion thereon of independent
         certified public accountants of recognized national standing, which
         opinion shall state that such financial statements present fairly, in
         all material respects, the financial position of the companies being
         reported upon and their results of operations and cash flows and have
         been prepared in conformity with GAAP, and that the examination of such
         accountants in connection with such financial statements has been made
         in accordance with generally accepted auditing standards, and that such
         audit provides a reasonable basis

                                       12

<PAGE>   18

         for such opinion in the circumstances, provided that the delivery
         within the time period specified above of the Company's Annual Report
         on Form 10-K for such fiscal year (together with the Company's annual
         report to shareholders, if any, prepared pursuant to Rule 14a-3 under
         the Exchange Act) prepared in accordance with the requirements therefor
         and filed with the Securities and Exchange Commission shall be deemed
         to satisfy the requirements of this Section 7.1(b);

                  (c) SEC and Other Reports -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Subsidiary to public
         securities holders generally, and (ii) each regular or periodic report,
         each registration statement (other than registration statements on Form
         S-8 or its equivalent) that shall have become effective (without
         exhibits except as expressly requested by such holder), and each final
         prospectus and all amendments thereto (other than in connection with
         any employee benefit plan) filed by the Company or any Subsidiary with
         the Securities and Exchange Commission;

                  (d) Notice of Default or Event of Default -- promptly, and in
         any event within five days after a Responsible Officer becoming aware
         of the existence of any Default or Event of Default, a written notice
         specifying the nature and period of existence thereof and what action
         the Company is taking or proposes to take with respect thereto;

                  (e) ERISA Matters -- promptly, and in any event within five
         days after a Responsible Officer becoming aware of any of the
         following, a written notice setting forth the nature thereof and the
         action, if any, that the Company or an ERISA Affiliate proposes to take
         with respect thereto:

                      (i)   with respect to any Plan, any reportable event, as
                  defined in sec tion 4043(b) of ERISA and the regulations
                  thereunder, for which notice thereof has not been waived
                  pursuant to such regulations as in effect on the date hereof;
                  or

                      (ii)  the taking by the PBGC of steps to institute, or the
                  receipt of written notice by the PBGC of its intention to
                  institute proceedings under section 4042 of ERISA for the
                  termination of, or the appointment of a trustee to administer,
                  any Plan, or the receipt by the Company or any ERISA Affiliate
                  of a notice from a Multiemployer Plan that such action has
                  been taken by the PBGC with respect to such Multiemployer
                  Plan; or

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

                                       13

<PAGE>   19

                  (f) Requested Information -- with reasonable promptness, such
         other data and information relating to the business, operations,
         affairs, financial condition, assets or properties of the Company or
         any of its Subsidiaries or relating to the ability of the Company to
         perform its obligations hereunder and under the Notes as from time to
         time may be reasonably requested by any such holder of Notes.

                  (g) Promptly after obtaining knowledge of any of the
         following, the Company will provide each Purchaser with written notice
         in reasonable detail of:

                      (i)   any pending or threatened action against the Company
                  or any of its Subsidiaries or any real property owned or
                  operated by the Company or any of its Subsidiaries under any
                  Environmental Law, if such pending or threatened action would
                  result in a Material Adverse Effect;

                      (ii)  any condition or occurrence on any real property
                  owned or operated by the Company or any of its Subsidiaries
                  that (x) results in noncompliance by the Company or any of its
                  Subsidiaries with any Environmental Law or (y) could
                  reasonably be anticipated to form the basis of a claim under
                  any Environmental Law against the Company or any of its
                  Subsidiaries or any such real property, if such condition or
                  occurrence results in a Material Adverse Effect;

                      (iii) any condition or occurrence on any real property
                  owned or operated by the Company or any of its Subsidiaries
                  that could reasonably be anticipated to cause such real
                  property to be subject to any restrictions on the ownership,
                  occupancy, use or transferability by the Company or its
                  Subsidiary, as the case may be, of its interest in such real
                  property under any Environmental Law, if such condition or
                  occurrence results in a Material Adverse Effect; and

                      (iv)  the taking of any removal or remedial action in
                  response to the actual or alleged presence of any Hazardous
                  Material on any real property owned or operated by the Company
                  or any of its Subsidiaries, if such taking results in a
                  Material Adverse Effect.

                  (h) The Company will promptly (and in any event within five
         Business Day's after a Responsible Officer has knowledge thereof) give
         notice to each Purchaser of:

                      (i)   any Material litigation or any proceeding before or 
                  by a Government Authority of the type described in Section 
                  5.8; and

                      (ii)  any circumstance that has had or reasonably
                  threatens a Material Adverse Effect;

                      provided however, that in the case of both (i) and (ii)
                  above such litigation or proceeding or circumstance shall have
                  been reasonably determined by the Company in and of itself to
                  require public disclosure.

                                       14

<PAGE>   20

7.2.     OFFICER'S CERTIFICATE.

                  Each set of financial statements delivered to a holder of
Notes pursuant to Section 7.1(a) or Section 7.1(b) hereof shall be accompanied
by a certificate of a Senior Financial Officer setting forth:

                  (a) Covenant Compliance -- (i) the information (including
         detailed calculations) required in order to establish whether the
         Company was in compliance with the requirements of Section 10.3 through
         Section 10.5, inclusive, during the quarterly or annual period covered
         by the statements then being furnished (including with respect to each
         such Section, where applicable, the calculations of the maximum or
         minimum amount, ratio or percentage, as the case may be, permissible
         under the terms of such Sections, and the calculation of the amount,
         ratio or percentage then in existence); (ii) a statement that the
         Company was in compliance with the requirements of Sections 10.6 and
         10.7 during the quarterly or annual period covered by the statements
         then being furnished; and (iii) information relating to any sale,
         lease, transfer or other disposition of assets covered by the
         provisions of Section 10.7 hereof but only if such transaction requires
         the filing of Form 8-K with the Securities and Exchange Commission and
         in that case sending the holders of the Notes a copy of such Form 8-K
         contemporaneously with filing shall be deemed satisfactory notice as to
         Section 10.7; and

                  (b) Event of Default -- a statement that such officer has
         reviewed the relevant terms hereof and has made, or caused to be made,
         under his or her supervision, a review of the transactions and
         conditions of the Company and its Subsidiaries from the beginning of
         the quarterly or annual period covered by the statements then being
         furnished to the date of the certificate and that such review shall not
         have disclosed the existence during such period of any condition or
         event that constitutes a Default or an Event of Default or, if any such
         condition or event existed or exists specifying the nature and period
         of existence thereof and what action the Company shall have taken or
         proposes to take with respect thereto.

7.3.     INSPECTION.

                  The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:

                  (a) No Default -- if no Default or Event of Default then
         exists, at the expense of such holder and upon reasonable prior notice
         to the Company, to visit the principal executive office of the Company,
         to discuss the affairs, finances and accounts of the Company and its
         Subsidiaries with the Company's officers, and, with the consent of the
         Company (which consent will not be unreasonably withheld) to visit the
         other offices and properties of the Company and each Subsidiary, all at
         such reasonable times and as often as may be reasonably requested in
         writing; and

                                       15

<PAGE>   21

               (b) Default -- if a Default or Event of Default then exists, at
         the expense of the Company to visit and inspect any of the offices or
         properties of the Company or any Subsidiary, to examine all their
         respective books of account, records, reports and other papers, to make
         copies and extracts therefrom, and to discuss their respective affairs,
         finances and accounts with their respective officers and independent
         public accountants (and by this provision the Company authorizes said
         accountants to discuss the affairs, finances and accounts of the
         Company and its Subsidiaries), all at such times and as often as may be
         requested.

8.       PREPAYMENT OF THE NOTES.

8.1.     REQUIRED PREPAYMENTS.

         (a) On January 5, 2004 and on each July 5 and January 5 thereafter to
and including July 5, 2007, the Company will prepay $11,111,100 principal amount
of the Notes due January 5, 2008, and on January 5, 2008 shall make a final
payment of the total amount then outstanding; (b) on January 5, 2011, the
Company will pay $20,000,000 of principal amount of the Notes due on such
maturity date (or such lesser principal amount as shall then be outstanding);
and (c) on January 5, 2016, the Company will pay $5,000,000 of principal amount
of the Notes due on such maturity date (or such lesser principal amount as shall
then be outstanding), each at par and without payment of the Make-Whole Amount
or any premium, provided that upon any partial prepayment of the Notes pursuant
to Section 8.2 or purchase of the Notes permitted by Section 8.5, the principal
amount of each required prepayment of the Notes becoming due under this Section
8.1 on and after the date of such prepayment or purchase shall be reduced in the
same proportion as the aggregate unpaid principal amount of the Notes is reduced
as a result of such prepayment or purchase.

8.2.     OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

               The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes, in an
amount not less than $5,000,000, at 100% of the principal amount so prepaid,
plus the Make-Whole Amount determined for the prepayment date with respect to
such principal amount. The Company will give each holder of Notes written notice
of each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment which date shall
be a Business Day. Each such notice shall specify such date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal amount
of each Note held by such holder to be prepaid (determined in accordance with
Section 8.3), and the interest to be due and payable on the prepayment date with
respect to such principal amount being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole Amount
due in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment, the Company shall deliver to each
holder of Notes a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified prepayment date.

                                       16

<PAGE>   22

8.3.     ALLOCATION OF PARTIAL PREPAYMENTS.

                  In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.

8.4.     MATURITY; SURRENDER, ETC.

                  In the case of each prepayment of Notes pursuant to this
Section 8, the principal amount to be prepaid on each Note shall mature and
become due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the applicable
Make-Whole Amount, if any. From and after such date, unless the Company shall
fail to pay such principal amount when so due and payable, together with the
interest and Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be reissued, and no Note
shall be issued in lieu of any prepaid principal amount of any Note.

8.5.     PURCHASE OF NOTES.

                  The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except (a) upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes or (b) pursuant to an
offer to purchase made by the Company or an Affiliate pro rata to the holders of
all Notes at the time outstanding upon the same terms and conditions. Any such
offer shall provide each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall remain open for at
least 30 Business Days. If the holders of more than 66 2/3% of the principal
amount of the Notes then outstanding accept such offer, the Company shall
promptly notify the remaining holders of such fact and the expiration date for
the acceptance by holders of Notes of such offer shall be extended by the number
of days necessary to give each such remaining holder at least 15 Business Days
from its receipt of such notice to accept such offer. At the expiration of such
period, any holder not accepting such offer shall retain all Notes then held by
it, and the terms of such retained Notes, including the scheduled amortization
thereof, shall be unaffected by the declined offer. The Company will promptly
cancel all Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this Agreement and
no Notes may be issued in substitution or exchange for any such Notes.

8.6.     MAKE-WHOLE AMOUNT.

                  The term "MAKE-WHOLE AMOUNT" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:

                                       17

<PAGE>   23

                  "CALLED PRINCIPAL" means, with respect to any Note, the
         principal of such Note that is to be prepaid pursuant to Section 8.2 or
         has become or is declared to be immediately due and payable pursuant to
         Section 12.1, as the context requires.

                  "DISCOUNTED VALUE" means, with respect to the Called Principal
         of any Note, the amount obtained by discounting all Remaining Scheduled
         Payments with respect to such Called Principal from their respective
         scheduled due dates to the Settlement Date with respect to such Called
         Principal, in accordance with accepted financial practice and at a
         discount factor (applied on the same periodic basis as that on which
         interest on the Notes is payable) equal to the Reinvestment Yield with
         respect to such Called Principal.

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, 0.5% over the yield to maturity implied by (i)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as "Page 678" on the
         Telerate Access Service (or such other display as may replace Page 678
         on Telerate Access Service) for ac tively traded U.S. Treasury
         securities having a maturity equal to the Remaining Average Life of
         such Called Principal as of such Settlement Date, or (ii) if such
         yields are not reported as of such time or the yields reported as of
         such time are not ascertainable, the Treasury Constant Maturity Series
         Yields reported, for the latest day for which such yields have been so
         reported as of the second Business Day preceding the Settlement Date
         with respect to such Called Principal, in Federal Reserve Statistical
         Release H.15 (519) (or any comparable successor publication) for
         actively traded U.S. Treasury securities having a constant maturity
         equal to the Remaining Average Life of such Called Principal as of such
         Settlement Date. Such implied yield will be determined, if necessary,
         with respect to (i) or (ii), as the case may be, by (a) converting U.S.
         Treasury bill quotations to bond-equiva lent yields in accordance with
         accepted financial practice and (b) interpolating linearly between (1)
         the actively traded U.S. Treasury security with the maturity closest to
         and greater than the Remaining Average Life and (2) the actively traded
         U.S. Treasury security with the maturity closest to and less than the
         Remaining Average Life.

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

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

                                       18

<PAGE>   24

         by the amount of interest accrued to such Settlement Date and required
         to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2 or has become or is declared to be immediately
         due and payable pursuant to Section 12.1, as the context requires.

9.       AFFIRMATIVE COVENANTS.

                  The Company covenants that so long as any of the Notes are
outstanding:

9.1.     COMPLIANCE WITH LAW.

                  The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, Environmental Laws, and
will obtain and maintain in effect all licenses, certifi cates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.

9.2.     INSURANCE.

                  The Company will and will cause each of its Subsidiaries to
maintain insurance with respect to their respective properties and businesses
against such casualties and contingencies, of such types, on such terms and in
such amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary in the
case of entities of established reputations engaged in the same or a similar
business and similarly situated.

9.3.     MAINTENANCE OF PROPERTIES.

                  The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
would not, individually or in the aggregate, have a Material Adverse Effect.

                                       19

<PAGE>   25

9.4.     PAYMENT OF TAXES.

                  The Company will and will cause each of its Subsidiaries to
file all income tax or similar tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
payable by any of them, to the extent such taxes and assessments have become due
and payable and before they have become delinquent, provided that neither the
Company nor any Subsidiary need pay any such tax or assessment if (i) the
amount, applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate proceedings, and
the Company or a Subsidiary has established adequate reserves therefor in accor
dance with GAAP on the books of the Company or such Subsidiary or (ii) the
nonpayment of all such taxes and assessments in the aggregate would not
reasonably be expected to have a Material Adverse Effect.

9.5.     CORPORATE EXISTENCE, ETC.

                  The Company will at all times preserve and keep in full force
and effect its corporate existence. Subject to Sections 10.2 and 10.7, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged into the Company
or a Subsidiary) and all rights and franchises of the Company and its
Subsidiaries unless, in the good faith judgment of the Company, the termination
of or failure to preserve and keep in full force and effect such corporate
existence, right or franchise would not, individually or in the aggregate, have
a Material Adverse Effect.

10.      NEGATIVE COVENANTS.

                  The Company covenants that so long as any of the Notes are
outstanding:

10.1.    TRANSACTIONS WITH AFFILIATES.

                  The Company will not and will not permit any Subsidiary to
enter into directly or indirectly any Material transaction or Material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate (other than the Company or another Subsidiary), except upon fair and
reasonable terms no less favorable to the Company or such Subsidiary than would
be obtainable in a comparable arm's-length transaction with a Person not an
Affiliate.

10.2.    MERGER, CONSOLIDATION, ETC.

                  The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:

                                       20

<PAGE>   26

                  (a) the successor formed by such consolidation or the survivor
         of such merger or the Person that acquires by conveyance, transfer or
         lease substantially all of the assets of the Company as an entirety, as
         the case may be, shall be a solvent corporation organized and existing
         under the laws of the United States or any State thereof (including the
         District of Columbia), and, if the Company is not such successor
         corporation, (i) the Board of Directors of the Company shall have
         approved such consolidation, merger, conveyance, transfer or lease, and
         (ii) such corporation shall have executed and delivered to each holder
         of any Notes its assumption of the due and punctual performance and
         observance of each covenant and condition of this Agreement, and the
         Notes; and

                  (b) immediately after giving effect to such transaction, no
         Default or Event of Default shall have occurred and be continuing.

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.2 from its liability under this Agreement or the Notes. This
Section 10.2 shall not in any way be deemed to apply to any consolidation or
merger, or conveyance, transfer or lease of substantially all the assets of, any
Subsidiary of the Company with or into the Company (providing the Company is the
survivor of such consolidation or merger, or the grantee or lessee of such
conveyance, transfer or lease) or any other Subsidiary of the Company.

10.3.    CONSOLIDATED TOTAL DEBT.

                  The Company shall not allow at any time Consolidated Total
Debt to exceed 65% of Total Capitalization.

10.4.    RESTRICTED PAYMENTS.

                  The Company shall not and shall not permit any Subsidiary to
make a Restricted Payment unless the aggregate amount of such payments made
after July 1, 1995 would not exceed the sum of (i) $140,000,000 plus (ii) 75% of
cumulative Consolidated Net Income since July 1, 1995 (less 100% of Consolidated
Net Income for such period if Consolidated Net Income is a loss) plus (iii) the
net cash proceeds received by the Company from the issuance or sale of capital
stock other than redeemable capital stock after the closing date and provided
that no Default or Event of Default currently exists or no such payment would
trigger a Default or Event of Default.

10.5.    SUBSIDIARY BORROWINGS.

                  The Company shall not permit any Subsidiary to become liable
for any Indebtedness, whether secured or unsecured, except (a) such of the
foregoing as is owed to the Company or another wholly-owned Subsidiary, (b)
Indebtedness or obligations secured by Liens permitted by Section 10.6 hereof,
(c) Indebtedness or obligations of a Subsidiary outstanding at the time such
Subsidiary becomes a Subsidiary, provided that (i) such Indebtedness shall not
have been incurred in contemplation of such Subsidiary becoming a Subsidiary,
and (ii) immediately

                                       21

<PAGE>   27

after such Subsidiary becomes a Subsidiary, no Default or Event of Default shall
exist, and provided further that such Indebtedness may not be extended, renewed,
or refunded except as otherwise permitted by this Agreement, and (d) other
Indebtedness not to exceed, when combined with the total of the Indebtedness
secured by all Liens permitted by Section 10.6(j), without duplication, 30% of
Consolidated Net Worth.

10.6.    MORTGAGES AND LIENS.

                  The Company shall not, without equally and ratably securing
the Notes thereby, and shall not permit any Subsidiary to, create, assume or
incur any Lien, except for:

                  (a)   Liens existing as of the date hereof and listed on
         Schedule 10.6;

                  (b) any Lien on any real or personal property acquired,
         constructed, renovated or improved by the Company after the date hereof
         to secure or provide for all or a portion of the purchase price of such
         property or a portion of the Indebtedness incurred in connection with
         such construction, renovation or improvement on such property,
         including principal and accrued or capitalized interest computed in
         accordance with GAAP, which Lien attaches concurrently with or within
         12 months after such acquisition or the completion of such
         construction, renovation or improvement; provided, however, in no event
         may the amount of the Indebtedness secured by such Lien exceed the
         purchase price of such property or the cost of such construction,
         renovation or improvement (including accrued or capitalized interest
         thereon through the date of completion) computed in accordance with
         GAAP;

                  (c) Liens securing Indebtedness of the Company to any
         wholly-owned Subsidiary or of any wholly-owned Subsidiary to the
         Company or to any other wholly-owned Subsidiary;

                  (d) any Lien on any property of a Subsidiary existing at the
         time it becomes a Subsidiary or at the time it is merged or
         consolidated with or into the Company or a Subsidiary;

                  (e) Liens for taxes, assessments or governmental charges not
         then due and delinquent or the validity of which is being contested in
         good faith and for which an adequate reserve has been established in
         accordance with GAAP;

                  (f) Liens arising in connection with court proceedings
         securing a principal amount not in excess of 15% of the Total Assets of
         the Company and its Subsidiaries on a consolidated basis, provided the
         execution of such Liens is effectively stayed and such Liens are
         contested in good faith;

                  (g) Liens, pledges or deposits in connection with workers
         compensation, unemployment insurance, ERISA or social security
         requirements;

                                       22

<PAGE>   28

                  (h) Liens arising in or incidental to the ordinary course of
         its business, including (i) statutory liens of landlords, carriers,
         warehousemen, mechanics, materialmen or suppliers, (ii) zoning
         restrictions and easements, rights of way, licenses, covenants and
         other restrictions affecting the use of real property which do not
         materially impair the use or value of such real property, and (iii)
         deposits and/or liens to secure performance of bids, trade contracts,
         leases and statutory obligations;

                  (i) grants of security and rights of setoff in deposit or
         credit accounts, including demand, savings, passbook, share draft or
         like accounts, certificates of deposit, money market accounts, items
         held for collection or deposit, commercial paper, negotiable
         instruments and similar accounts and instruments held at banks or
         financial institutions to secure the payment or reimbursement under
         overdraft, acceptance and similar facilities and rights of setoff,
         banker's lien and other similar rights arising solely by operation of
         law;

                  (j) Liens incurred in connection with the borrowing of money
         not permitted by (b) through (i) above, provided that immediately
         thereafter the Indebtedness secured by Liens incurred pursuant to this
         subsection, when combined with the total of the Indebtedness permitted
         by Section 10.5(d), without duplication, would not exceed 30% of
         Consolidated Net Worth; and

                  (k) any Lien resulting from renewing, extending or refunding
         any Indebtedness or obligation permitted hereunder or any Lien
         permitted by Section 10.5, provided that the principal amount of the
         Indebtedness or other obligation secured thereby is not increased and
         the Lien is not extended to any other property.

10.7.    SALE OF ASSETS.

                  Neither the Company nor any of its Subsidiaries shall sell,
lease, transfer or otherwise dispose of any assets during any single fiscal year
having an aggregate book value greater than 15% of Total Assets of the Company
and its Subsidiaries taken as a whole, measured as of the immediately preceding
fiscal year end. Nothing in this Section shall be interpreted to restrict the
Company's ability to dispose of (i) vehicles, (ii) delivery routes, (iii) assets
obtained through acquisitions of businesses or assets on or after the date
hereof, provided that proceeds of any such disposition shall be reinvested in
the Company by reducing Indebtedness or by investing in operating assets, and
(iv) obsolete, under-performing or non-core assets, disposition of which, in
management's judgment, would enhance the Company's operations and profitability.

10.8.    NATURE OF BUSINESS.

                  Neither the Company nor any Subsidiary shall engage in any
business if, as a result, the general nature of the business then engaged in by
the Company and its Subsidiaries, taken as a whole, would be materially changed.

                                       23

<PAGE>   29

10.9     RESTRICTIVE AGREEMENTS.

                  The Company will not enter into any agreement, indenture,
         lease or other document or instrument which, in any way, prohibits or
         restricts the right or ability of the Company to amend, supplement or
         otherwise modify the terms and provisions of this Agreement or any of
         the Notes.

11.      EVENTS OF DEFAULT.

                  An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:

                  (a) the Company defaults in the payment of any principal or
         Make-Whole Amount, if any, on any Note when the same becomes due and
         payable, whether at maturity or at a date fixed for prepayment or by
         declaration or otherwise; or

                  (b) the Company defaults in the payment of any interest on any
         Note for more than five Business Days after the same becomes due and
         payable; or

                  (c) the Company defaults in the performance of or compliance
         with any term contained in Section 10.2, 10.3, 10.4, 10.5, 10.7, 10.8
         or 7.1(d); or

                  (d) the Company defaults in the performance of or compliance
         with any term contained herein (other than those referred to in
         paragraphs (a), (b) and (c) of this Section 11) and such default is not
         remedied within 30 days after the earlier of (i) a Responsible Officer
         obtaining actual knowledge of such default and (ii) the Company
         receiving written notice of such default from any holder of a Note (any
         such written notice to be identified as a "notice of default" and to
         refer specifically to this paragraph (d) of Section 11); or

                  (e) any representation or warranty made in writing by or on
         behalf of the Company or by any officer of the Company in this
         Agreement or in any writing furnished in connection with the
         transactions contemplated hereby proves to have been false or incorrect
         in any material respect on the date as of which made; or

                  (f) (i) the Company or any Significant Subsidiary is in
         default (as principal or as guarantor or other surety) in the payment
         of any principal of or premium or Make-Whole Amount or interest on any
         Indebtedness in an aggregate principal amount of at least $10,000,000
         beyond any period of grace provided with respect thereto, or (ii) the
         Company or any Significant Subsidiary is in default in the performance
         of or compliance with any term of any document evidencing or relating
         to any Indebtedness in an aggregate principal amount of at least
         $10,000,000 or of any mortgage, indenture or other agreement relating
         thereto or any other condition exists, and as a consequence of such
         default or condition such Indebtedness has become, or has been declared
         due and payable before its stated maturity or before its regularly
         scheduled dates of payment; or

                                       24

<PAGE>   30

                  (g) the Company or any Significant Subsidiary (i) is generally
         not paying, or admits in writing its inability to pay, its debts as
         they become due, (ii) files, or consents by answer or otherwise to the
         filing against it of, a petition for relief or reorganization or
         arrangement or any other petition in bankruptcy, for liquidation or to
         take advantage of any bankruptcy, insolvency, reorganization,
         moratorium or other similar law of any jurisdic tion, (iii) makes an
         assignment for the benefit of its creditors, (iv) consents to the ap
         pointment of a custodian, receiver, trustee or other officer with
         similar powers with respect to it or with respect to any substantial
         part of its property, (v) is adjudicated as insolvent or to be
         liquidated, or (vi) takes corporate action for the purpose of any of
         the foregoing; or

                  (h) a court or governmental authority of competent
         jurisdiction enters an order appointing, without consent by the Company
         or any of its Significant Subsidiaries, a custodian, receiver, trustee
         or other officer with similar powers with respect to it or with respect
         to any substantial part of its property, or constituting an order for
         relief or approv ing a petition for relief or reorganization or any
         other petition in bankruptcy or for liquida tion or to take advantage
         of any bankruptcy or insolvency law of any jurisdiction, or ordering
         the dissolution, winding-up or liquidation of the Company or any of its
         Significant Subsidiaries, or any such petition shall be filed against
         the Company or any of its Significant Subsidiaries and such petition
         shall not be dismissed within 60 days; or

                  (i) a final judgment or judgments for the payment of money
         aggregating in excess of $20,000,000 are rendered against one or more
         of the Company and its Significant Subsidiaries and which judgments are
         not, within 60 days after entry thereof, bonded, dis charged or stayed
         pending appeal, or are not discharged within 60 days after the
         expiration of such stay; or

                  (j) if (i) any Plan shall fail to satisfy the minimum funding
         standards of ERISA or the Code for any plan year or part thereof or a
         waiver of such standards or extension of any amortization period is
         sought or granted under section 412 of the Code, (ii) a notice of
         intent to terminate any Plan shall have been or is reasonably expected
         to be filed with the PBGC or the PBGC shall have instituted proceedings
         under ERISA section 4042 to terminate or appoint a trustee to
         administer any Plan or the PBGC shall have notified the Company or any
         ERISA Affiliate that a Plan may become a subject of any such
         proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed $10,000,000, (iv) the Company or any ERISA Affiliate shall have
         incurred or is reasonably expected to incur any liability pursuant to
         Title I or IV of ERISA or the penalty or excise tax provisions of the
         Code relating to employee benefit plans, (v) the Company or any ERISA
         Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or
         any Subsidiary establishes or amends any employee welfare benefit plan
         that provides post-employment welfare benefits in a manner that would
         increase the liability of the Company or any Subsidiary thereunder; and
         any such event or events described in clauses (i) through (vi) above,
         either individually or together with any

                                       25

<PAGE>   31

         other such event or events, would reasonably be expected to have a
         Materially Adverse Effect.

As used in Section 11(j), the terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE
WELFARE BENEFIT PLAN" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

12.      REMEDIES ON DEFAULT, ETC.

12.1.    ACCELERATION.

                  (a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

                  (b) If any Event of Default described in paragraph (a) or (b)
of Section 11 has occurred and is continuing, any holder or holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.

                  (c) If any other Event of Default has occurred and is
continuing, any holder or holders of more than 66 2/3% in principal amount of
the Notes at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes then out standing to be
immediately due and payable.

                  Upon any Notes becoming due and payable under this Section
12.1, whether automatically or by declaration, such Notes will forthwith mature
and the entire unpaid principal amount of such Notes, plus (x) all accrued and
unpaid interest thereon and (y) any Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide com
pensation for the deprivation of such right under such circumstances.

12.2.    OTHER REMEDIES.

                  If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an

                                       26

<PAGE>   32

injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

12.3.    RESCISSION.

                  At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the holders of not less than 66
2/3% in principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 17, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.

12.4.    NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

                  No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 15,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.

13.      REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1.    REGISTRATION OF NOTES.

                  The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

                                       27

<PAGE>   33

13.2.    TRANSFER AND EXCHANGE OF NOTES.

                  Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1(A),
Exhibit 1(B) or Exhibit 1(C). Each such new Note shall be dated and bear
interest from the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall have been
paid thereon. The Company may require payment of a sum sufficient to cover any
stamp tax or governmental charge imposed in respect of any such transfer of
Notes. Notes shall not be transferred in denominations of less than $500,000,
provided that if necessary to enable the registration of transfer by a holder of
its entire holding of Notes, one Note may be in a denomination of less than
$500,000. Any transferee, by its acceptance of a Note registered in its name (or
the name of its nominee), shall be deemed to have made the representations set
forth in Sections 6.1 and 6.2.

13.3.    REPLACEMENT OF NOTES.

                  Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and such
loss, theft, destruction or mutilation), and

                  (a) in the case of loss, theft or destruction, of indemnity
         reasonably satisfactory to it (provided that if the holder of such Note
         is, or is a nominee for, an original Purchaser or another holder of a
         Note with a minimum Net Worth of at least $5,000,000, such Person's own
         unsecured agreement of indemnity shall be deemed to be satisfactory),
         or

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

the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

                                       28

<PAGE>   34

14.      PAYMENTS ON NOTES.

14.1.    PLACE OF PAYMENT.

                  Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
to you and the Other Purchasers at your respective principal offices. The holder
of a Note may at any time, by written notice to the Company as provided in
Section 18, change the place of payment of its Note(s).

14.2.    HOME OFFICE PAYMENT.

                  So long as you or your nominee shall be the holder of any
Note, and not withstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note for
principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, Schedule B or
Schedule C, or by such other method or at such other address as you shall have
from time to time specified to the Company in writing for such purpose, without
the presentation or surrender of such Note or the making of any notation
thereon, except that upon written request of the Company made concurrently with
or reasonably promptly after payment or prepayment in full of any Note, you
shall surrender such Note for cancellation, reasonably promptly after any such
request, to the Company at its principal executive office or at the place of
payment most re cently designated by the Company pursuant to Section 14.1. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or sur render
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.2.

15.      EXPENSES, ETC.

15.1.    TRANSACTION EXPENSES.

                  Whether or not the transactions contemplated hereby are
consummated, the Company will pay all reasonable costs and expenses (including
reasonable attorneys' fees of a special outside counsel and, if reasonably
required, local or other counsel) actually incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and in con
nection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a holder of any Note, and (b)
the costs and expenses, including financial advisors' fees, incurred in
connection with the insolvency or bankruptcy of the Company or any Subsidiary or
in connection with any work-out or restructuring

                                       29

<PAGE>   35

of the transactions contemplated hereby and by the Notes. The Company will pay,
and will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).

15.2.    SURVIVAL.

                  The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.

16.      SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

                  All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the Notes, the purchase
or transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agree ment and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.

17.      AMENDMENT AND WAIVER.

17.1.    REQUIREMENTS.

                  This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing and (b) no such amendment or waiver may, without the written consent
of the Company and the holder of each Note at the time outstanding affected
thereby, (i) subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any prepayment or payment of princi pal
of, or reduce the rate or change the time of payment or method of computation of
interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage
of the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) a mend any of Sections 8,
11(a), 11(b), 12, 17 or 20.

17.2.    SOLICITATION OF HOLDERS OF NOTES.

                  (a) Solicitation. The Company will provide each holder of the
Notes (irre spective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and

                                       30

<PAGE>   36

considered decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite holders of
Notes.

                  (b) Payment. The Company will not directly or indirectly pay
or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder of
Notes as consideration for or as an inducement to the entering into by any
holder of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security or inducement
is concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.

17.3.    BINDING EFFECT, ETC.

                  Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As used
herein, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.

17.4.    NOTES HELD BY COMPANY, ETC.

                  Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement or the Notes, or have directed the taking of any
action provided herein or in the Notes to be taken upon the direction of the
holders of a specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the Company or any of
its Affiliates shall be deemed not to be outstanding.

18.      NOTICES.

                  All notices and communications provided for hereunder shall be
in writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recog nized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with re turn receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:

                                       31

<PAGE>   37

                  (i)   if to you or your nominee, to you or it at the address
         specified for such communications in Schedule A, Schedule B or
         Schedule C, or at such other address as you or it shall have specified
         to the Company in writing,

                  (ii)  if to any other holder of any Note, to such holder at
         the address specified for such communications in Schedule A, Schedule B
         or Schedule C or at such address as such other holder shall have 
         specified to the Company in writing, or

                  (iii) if to the Company, to the Company at its address set
         forth at the beginning hereof to the attention of C. Martin Wood III,
         Senior Vice President and Chief Financial Officer, or at such other
         address as the Company shall have specified to the holder of each Note
         in writing.

Notices under this Section 18 will be deemed given only when actually received.

19.      REPRODUCTION OF DOCUMENTS.

                  This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.

20.      CONFIDENTIAL INFORMATION.

                  For the purposes of this Section 20, "CONFIDENTIAL
INFORMATION" means information delivered to you by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by
you as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to you prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary or (d) constitutes financial statements delivered
to you under Section 7.1 that are otherwise publicly available. You will
maintain the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to

                                       32

<PAGE>   38

protect confidential information of third parties delivered to you, provided
that you may deliver or disclose Confidential Information to (i) your directors,
officers, employees, agents, attorneys and affiliates, (to the extent such
disclosure reasonably relates to the administration of the invest ment
represented by your Notes), (ii) your financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you sell or offer
to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from which you offer to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to you, (x) in response to any
subpoena or other legal process, (y) in connection with any litigation to which
you are a party or (z) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will enter into an
agreement with the Company embodying the provisions of this Section 20.

21.      SUBSTITUTION OF PURCHASER.

                  You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be signed by
both you and such Affiliate, shall contain such Affiliate's agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of
the accuracy with respect to it of the representations set forth in Section 6.
Upon receipt of such notice, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so substituted as
a purchaser hereunder and such Affiliate thereafter transfers to you all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "you" is used in this Agreement (other than in this
Section 21), such word shall no longer be deemed to refer to such Affiliate, but
shall refer to you, and you shall have all the rights of an original holder of
the Notes under this Agreement.

                                       33

<PAGE>   39

22.      MISCELLANEOUS.

22.1.    SUCCESSORS AND ASSIGNS.

                  All covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.

22.2.    PAYMENTS DUE ON NON-BUSINESS DAYS.

                  Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.

22.3.    SEVERABILITY.

                  Any provision of this Agreement that is prohibited or
unenforceable in any jurisdic tion shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

22.4.    CONSTRUCTION.

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

22.5.    COUNTERPARTS.

                  This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.

                                       34

<PAGE>   40

22.6.    GOVERNING LAW.

                  This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State
of Georgia excluding choice-of-law principles of the law of such State that
would require the application of the laws of a jurisdiction other than such
State.

                                    * * * * *


                  If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this Agreement and return
it to the Company, whereupon the foregoing shall become a binding agreement
between you and the Company.

                                          Very truly yours,

                                          FLOWERS INDUSTRIES, INC.

                                          By:/s/ C. Martin Wood III
                                             -----------------------------------
                                             C. Martin Wood III
                                             Senior Vice President and
                                             Chief Financial Officer

                                       35

<PAGE>   41

The foregoing is hereby
agreed to as of the
date thereof.

ALLIED LIFE INSURANCE COMPANY

By: Lincoln Investment Management, Inc., its
    Attorney-In-Fact

By: /s/  David C. Patch
    -------------------------------------------
     Name:  David C. Patch
     Title:  Vice President

THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY

By: Lincoln Investment Management, Inc., its
    Attorney-in-fact

By: /s/  David C. Patch
    -------------------------------------------
    Name:  David C. Patch
    Title:  Vice President

LINCOLN-SECURITY LIFE INSURANCE COMPANY

By: Lincoln Investment Management, Inc., its
    Attorney-in-Fact

By: /s/  David C. Patch
    -------------------------------------------
    Name:  David C. Patch
    Title:  Vice President

SECURITY-CONNECTICUT LIFE INSURANCE
COMPANY

By: Lincoln Investment Management, Inc.,
    its Attorney-in-Fact

By: /s/  David C. Patch
    -------------------------------------------
    Name:  David C. Patch
    Title:  Vice President

                                       36

<PAGE>   42

AMERICAN GENERAL LIFE INSURANCE COMPANY


By:/s/  Julia S. Tucker
    -------------------------------------------
   Name:  Julia S. Tucker
   Title:  Investment Officer

THE VARIABLE ANNUITY LIFE INSURANCE COMPANY


By:/s/  Julia S. Tucker
    -------------------------------------------
   Name:  Julia S. Tucker
   Title:  Investment Officer


CUNA MUTUAL INSURANCE SOCIETY
By: Century Investment Management Co.


By:/s/  Donald Heltner
    -------------------------------------------
   Name:  Donald Heltner
   Title:  Vice President


EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU


By:/s/  James W. Pruden
    -------------------------------------------
   Name:  James W. Pruden
   Title:  Attorney-in-fact


MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY


By:/s/  Bruce E. Gaudette
    -------------------------------------------
   Name:  Bruce E. Gaudette
   Title:  Vice President

                                       37

<PAGE>   43

METROPOLITAN LIFE INSURANCE COMPANY


By:/s/  Michael J. Koeg
   -------------------------------------------------
   Name:  Michael J. Koeg
   Title:


METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY


By:
   -------------------------------------------------
   Name:  Bill Megevick
   Title:


NATIONWIDE LIFE INSURANCE COMPANY

By:/s/  Michael D. Groseclose
   -------------------------------------------------
   Name:  Michael D. Groseclose
   Title:  Associate Vice President
           Corporate Fixed-Income Securities


NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT OH


By:/s/  Michael D. Groseclose
   -------------------------------------------------
   Name:  Michael D. Groseclose
   Title:  Associate Vice President
           Corporate Fixed-Income Securities


UNITED OF OMAHA LIFE INSURANCE
COMPANY


By:/s/  Marvin D. Andersen
   -------------------------------------------------
   Name:  Marvin D. Andersen
   Title:  First Vice President


                                       38

<PAGE>   44

                                                                    SCHEDULE A-1

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of          Closing
Name and Address of Purchaser                                 Notes to be Purchased         Date
-----------------------------                                 ---------------------        -------
<S>                                                           <C>                          <C>
ALLIED LIFE INSURANCE COMPANY "A"                                  $1,000,000              12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Harris Trust & Savings, Chicago, IL
                  ABA #1: 071 000 288
                  Attention: Trust Collections
                  DDA Account #: 109-211-3
                           Further credit: Allied Life "A"
                           Account No.: 23-97588
                  with sufficient information to identify
                  the source and application of such funds

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                  Harris Trust & Savings
                  111 W. Monroe Street; Chicago, IL 60690
                  Attn: Private Placements
                  For Acct: See above account name

  (3)             All other communications:

                  Lincoln Investment Management, Inc.
                  200 East Berry St.; Renaissance Square
                  Fort Wayne, IN 46802
                  Attn: Investments/Private Placements
</TABLE>

                                  Schedule A-1

<PAGE>   45

                                                                    SCHEDULE A-2


                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of      Closing
Name and Address of Purchaser                                 Notes to be Purchased     Date
-----------------------------                                 ---------------------    -------
<S>                                                           <C>                      <C>
ALLIED LIFE INSURANCE COMPANY "B"                                  $1,000,000           12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Harris Trust & Savings, Chicago, IL
                  ABA #1: 071 000 288
                  Attention: Trust Collections
                  DDA Account #: 109-211-3
                           Further credit: Allied Life "B"
                           Account No.: 23-97589
                  with sufficient information to identify
                  the source and application of such funds

  (2)             All notices of payments and written confirmations of such wire
                  transfers:

                  Harris Trust & Savings
                  111 W. Monroe Street; Chicago, IL 60690
                  Attn: Private Placements
                  For Acct: See above account name

  (3)             All other communications:

                  Lincoln Investment Management, Inc.
                  200 East Berry St.; Renaissance Square

                  Fort Wayne, IN 46802
                  Attn: Investments/Private Placements

  (4)             Nominee: Harny & Co
</TABLE>

                                  Schedule A-2

<PAGE>   46

                                                                    SCHEDULE A-3



                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                                              
         Closing                                           Principal Amount of
Name and Address of Purchaser                              Notes to be Purchased
-----------------------------                              ---------------------
          Date
         -----
<S>                                                        <C>
CUNA MUTUAL INSURANCE SOCIETY                                     $5,000,000
         1/5/96

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  The Chase Manhattan Bank, NA 
                  ABA 021000021 
                  A/C = 900-9-002206
                  A/C = 473-63300 
                  BNF = Funds Pending-DNI/ABS 
                  BBK = Chase Manhattan Bank/SSTO 

                  with sufficient information 
                  to identify the source and 
                  application of such funds.

  (2)             All notices of payments and written 
                  confirmations of such wire transfers:

                  CUNA Mutual Group
                  Attn: Investment Accounting, GG-12
                  P.O. Box 391, Madison, WI 53701

  (3)             All other communications:
                  CUNA Mutual Group, Securities Mgmt. Dept.
                  5910 Mineral Point Road, Madison WI 53705
                  Attn: Private Placements
                  Fax # (608) 238-2316

  (4)             Nominee:  Atwell & Co.
</TABLE>


                                  Schedule A-3


<PAGE>   47


                                                                    SCHEDULE A-4

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU                                                          $5,000,000            1/5/96

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Morgan Guaranty Trust Company of NY 
                  ABA #021-000-238 JOURNAL #999-99-024 
                  F/A/O Employers Life Custody A/C #50135 
                  Attn: Custody Service Dept.
                  PPN# 343496 A@ 4
                  Security Descrip: 6.80% Senior Notes
                  due January 5, 2008

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                  Employers Life Insurance Company of Wausau
                  2000 Westwood Drive,  Wausau WI 54401

  (3)             All other communications:

                  Employers Life Insurance Company of Wausau
                  One Nationwide Plaza (1-33-07)
                  Columbus, OH 43215-2220
                  Attn: Corporate Fixed-Income Securities
</TABLE>


                                  Schedule A-4


<PAGE>   48


                                                                    SCHEDULE A-5

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY (GAN)                                                    $1,000,000              12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Bankers Trust Company, New York, NY
                  ABA # 021001033
                  Private Placement Processing
                  Account #: 99-911-145
                    Further credit: The Lincoln National
                      Life Insurance Company (GAN)
                  Custody Account No.: 98152
                    (On Wire Ref: Sec Name/Rate/Mat/
                    PPN/P=S / I=S)

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:
                    Bankers Trust Company
                    Attn: Private Placement Unit
                    P. O. Box 998; Bowling Green Station
                    New York, NY  10274

  (3)             All other communications:
                    Lincoln Investment Management, Inc.
                    200 East Berry Street; Renaissance Square
                    Fort Wayne, IN  46802
                    Attention: Investments/Private Placements
</TABLE>


                                  Schedule A-5


<PAGE>   49


                                                                    SCHEDULE A-6

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY (IOB)                                                   $1,000,000               12/20/95

  (1)             All payments by wire transfer of
                  immediately available funds to:

                  Bankers Trust Company, New York, NY
                  ABA # 021001033
                  Private Placement Processing
                  Account #: 99-911-145
                    Further credit: The Lincoln National
                      Life Insurance Company (IOB)
                  Custody Account No.: 98201
                    (On Wire Ref: Sec Name/Rate/Mat/
                    PPN/P=S / I=S)

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:
                    Bankers Trust Company
                    Attn: Private Placement Unit
                    P. O. Box 998; Bowling Green Station
                    New York, NY  10274

  (3)             All other communications:
                    Lincoln Investment Management, Inc.
                    200 East Berry Street; Renaissance Square
                    Fort Wayne, IN  46802
                    Attention: Investments/Private Placements
</TABLE>


                                  Schedule A-6


<PAGE>   50


                                                                    SCHEDULE A-7

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY (CRP)                                                    $1,000,000                12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Bankers Trust Company, New York, NY
                  ABA # 021001033
                  Private Placement Processing
                  Account #: 99-911-145
                    Further credit: The Lincoln National
                      Life Insurance Company (CRP)
                  Custody Account No.: 98231
                    (On Wire Ref: Sec Name/Rate/Mat/
                    PPN/P=S / I=S)

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:
                    Bankers Trust Company
                    Attn: Private Placement Unit
                    P. O. Box 998; Bowling Green Station
                    New York, NY  10274

  (3)             All other communications:
                    Lincoln Investment Management, Inc.
                    200 East Berry Street; Renaissance Square
                    Fort Wayne, IN  46802
                    Attention: Investments/Private Placements
</TABLE>


                                  Schedule A-7


<PAGE>   51


                                                                   SCHEDULE A-8

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY (IND)                                                        $3,000,000          12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Bankers Trust Company, New York, NY
                  ABA # 021001033
                  Private Placement Processing
                  Account #: 99-911-145
                    Further credit: The Lincoln National
                      Life Insurance Company (IND)
                  Custody Account No.: 98126
                    (On Wire Ref: Sec Name/Rate/Mat/
                    PPN/P=S / I=S)

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                    Bankers Trust Company
                    Attn: Private Placement Unit
                    P. O. Box 998; Bowling Green Station
                    New York, NY  10274

  (3)             All other communications:

                    Lincoln Investment Management, Inc.
                    200 East Berry Street; Renaissance Square
                    Fort Wayne, IN  46802
                    Attention: Investments/Private Placements
</TABLE>


                                  Schedule A-8


<PAGE>   52


                                                                   SCHEDULE A-9

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------      ----
<S>                                                           <C>                       <C>
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY (IDP)                                                       $3,000,000           12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Bankers Trust Company, New York, NY
                  ABA # 021001033
                  Private Placement Processing
                  Account #: 99-911-145
                    Further credit: The Lincoln National
                      Life Insurance Company (IDP)
                  Custody Account No.: 98131
                    (On Wire Ref: Sec Name/Rate/Mat/
                    PPN/P=S / I=S)

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                    Bankers Trust Company
                    Attn: Private Placement Unit
                    P. O. Box 998; Bowling Green Station
                    New York, NY  10274

  (3)             All other communications:
                    Lincoln Investment Management, Inc.
                    200 East Berry Street; Renaissance Square
                    Fort Wayne, IN  46802
                    Attention: Investments/Private Placements
</TABLE>


                                  Schedule A-9


<PAGE>   53


                                                                   SCHEDULE A-10

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY (IAL)                                                    $7,000,000              12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Bankers Trust Company, New York, NY
                  ABA # 021001033
                  Private Placement Processing
                  Account #: 99-911-145
                    Further credit: The Lincoln National
                      Life Insurance Company (IAL)
                    Account No.: 98194
                    (On Wire Ref: Sec Name/Rate/Mat/
                    PPN/P=S / I=S)

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                    Bankers Trust Company
                    Attn: Private Placement Unit
                    P. O. Box 998; Bowling Green Station
                    New York, NY  10274

  (3)             All other communications:

                    Lincoln Investment Management, Inc.
                    200 East Berry Street; Renaissance Square
                    Fort Wayne, IN  46802
                    Attention: Investments/Private Placements
</TABLE>


                                  Schedule A-10


<PAGE>   54


                                                                   SCHEDULE A-11

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008


<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
LINCOLN-SECURITY LIFE INSURANCE
COMPANY                                                            $1,000,000           12/20/95

  (1)             All payments by wire transfer
                  of immediately available funds to:
                  Chase Manhattan Bank, N.A., New York, NY
                  ABA #: 021000021
                  Lincoln-Security Life
                    Ins. Co. (New York) (Universal)
                  For Account No.:G04847
                  (Ref: Sec. Name/Rate/Maturity/
                   PPN/P=S/I=S)

  (2)             All notices of payments and written 
                  confirmations of such wire transfers:
                  Lincoln-Security Life Insurance
                  Company (New York)
                  c/o Security-Connecticut Life
                  Insurance Company
                  20 Security Drive
                  Avon, CT  06002
                  Att:  Jodi Dean

  (3)             All other communications:
                  Lincoln Investment Management, Inc.
                  200 East Berry Street: Renaissance Square
                  Fort Wayne, IN  46802
                  Att:  Investments/Private Placements
</TABLE>


                                  Schedule A-11


<PAGE>   55


                                                                   SCHEDULE A-12

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY                                                           $7,000,000            12/20/95

  (1)             All payments by wire transfer of
                  immediately available funds to:

                  Chase Manhattan Bank, N.A.
                  4 Chase MetroTech Center
                  New York, NY  10081
                  ABA # 021000021
                  For MassMutual IFM Traditional
                  Account No. 910-1388131
                  Re: 6.80% Senior Notes due Jan. 5, 2008
                  with sufficient information
                  to identify the source and
                  application of such funds.

  (2)             All notices of payments and written
                  confirmations of such wire transfers:
                  Massachusetts Mutual Life Insurance Company
                  Securities Custody and Collection Dept.
                  (413) 744-3878

  (3)             All other communications:
                  Massachusetts Mutual Life Insurance Company
                  1295 State Street
                  Springfield, MA  01111
                  Attn:  Securities Investment Division (General)
                  Securities Custody and Collection
                  Department, F381 (Payment and Corporate
                    Action Notices)
</TABLE>


                                  Schedule A-12


<PAGE>   56


                                                                   SCHEDULE A-13

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                      <C>
MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY                                                           $3,000,000           12/20/95

  (1)             All payments by wire transfer of
                  immediately available funds to:

                  Chase Manhattan Bank, N.A.
                  4 Chase MetroTech Center
                  New York, NY  10081
                  ABA # 021000021
                  For IFM Non-Traditional
                  Account No. 910-2509073
                  Re: 6.80% Senior Notes due Jan. 5, 2008
                  with sufficient information
                  to identify the source and
                  application of such funds.

  (2)             All notices of payments and written
                  confirmations of such wire transfers:
                  Massachusetts Mutual Life Insurance Company
                  Securities Custody and Collection Dept.
                  (413) 744-3878

  (3)             All other communications:
                  Massachusetts Mutual Life Insurance Company
                  1295 State Street
                  Springfield, MA  01111
                  Attn:  Securities Investment Division (General)
                  Securities Custody and Collection
                  Department, F381 (Payment and Corporate
                    Action Notices)
</TABLE>


                                  Schedule A-13


<PAGE>   57


                                                                   SCHEDULE A-14

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
METROPOLITAN LIFE INSURANCE
COMPANY                                                             $20,000,000          12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  The Chase Manhattan Bank, N.A.
                  Metropolitan Branch
                  33 East 23rd Street, New York, NY 10010
                  ABA #.: 021000021
                  Account No.: 002-2-410591

                  with sufficient information
                  to identify the source and
                  application of such funds and PPN.

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                  Metropolitan Life Insurance Company
                  One Madison Avenue
                  New York, NY  10021
                  Attn:  Treasurer
                  Telecopy No. 212-578-3910

  (3)             All other communications:
                  Metropolitan Life Insurance Company
                  One Madison Avenue
                  New York, NY  10021
                  Att:  Treasurer
</TABLE>


                                  Schedule A-14


<PAGE>   58


                                                                   SCHEDULE A-15

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
METROPOLITAN PROPERTY AND
CASUALTY INSURANCE COMPANY                                         $10,000,000           12/20/95

  (1)    All payments by wire transfer of
         immediately available funds to:
         The Chase Manhattan Bank, N.A.
         Metropolitan Branch
         33 East 23rd Street, New York, NY 10010
         ABA No.: 021000021
         Account #: 002-1-025432
         with sufficient information to identify
         the source and application of such funds and PPN.

  (2)    All notices of payments and written
         confirmations of such wire transfers:
         Metropolitan Property and Casualty
           Insurance Company
         700 Quaker Lane
         Warwick, Rhode Island 02886
         Attn:  Treasurer

  (3)    All other communications:
         Metropolitan Property and Casualty
           Insurance Company
         700 Quaker Lane, Warwick, Rhode Island 02886
         Attn:  Treasurer
         Telecopy No.: 212-578-3910
         (c/o Metropolitan Life Insurance Company
         with a copy to:
         Metropolitan Life Insurance Company
         One Madison Avenue
         New York, NY  10021
</TABLE>


                                  Schedule A-15


<PAGE>   59


                                                                   SCHEDULE A-16

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
NATIONWIDE LIFE INSURANCE
COMPANY                                                             $19,000,000          1/5/96

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Morgan Guaranty Trust Company of New York
                  ABA #021-000-238
                  Journal #999-99-024
                  F/A/O Nationwide Life Insurance
                    Company Custody A/C #71615
                  Attn: Custody Service Dept.
                  PPN #313496 A@ 4
                  Security Descrip:  6.80% Senior Notes
                    due January 5, 2008

  (2)             All notices of payments and
                  written confirmations of such
                  wire transfers:

                  Nationwide Life Insurance Company
                  One Nationwide Plaza (1-32-09)
                  Columbus, Ohio 43215-2220
                  Att:  Corporate Money Management

  (3)             All other communications:

                  Nationwide Life Insurance Company
                  One Nationwide Plaza (1-33-07)
                  Columbus, Ohio 43215-2220
                  Att:  Corporate Fixed-Income Securities
</TABLE>


                                  Schedule A-16


<PAGE>   60


                                                                   SCHEDULE A-17

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
NATIONWIDE LIFE INSURANCE
COMPANY SEPARATE ACCOUNT OH                                        $1,000,000            1/5/96

  (1)             All payments by wire transfer of
                  immediately available funds to:
                  Morgan Guaranty Trust Company of New York
                  ABA #021-000-238
                  Journal #999-99-024
                  F/A/O Nationwide Life Insurance Company
                  Separate Acct. OH Custody A/C #74605
                  Attn:  Custody Service Dept.
                  PPN# 343496
                  6.80% Senior Note Due January 5, 2008 with 
                  sufficient information to identify the source
                  and application of such funds.

  (2)             All notices of payments and written 
                  confirmations of such wire transfers:
                  Nationwide Life Insurance Company
                    Separate Account OH
                  One Nationwide Plaza (1-32-09)
                  Columbus, Ohio 43115-2220
                  Att:  Corporate Money Management

  (3)             All other communications:
                  Nationwide Life Insurance Company
                    Separate Account OH
                  One Nationwide Plaze (1-33-07)
                  Columbus, Ohio 43215-2220
                  Att:  Corporate Fixed-Income Securities
</TABLE>


                                  Schedule A-17


<PAGE>   61


                                                                   SCHEDULE A-18

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
SECURITY-CONNECTICUT LIFE
INSURANCE COMPANY                                                    $1,000,000          12/20/95

  (1)             All payments by wire trans-
                  fer of immediately available
                  funds to:

                  Shawmut Bank Connecticut, N.A.
                  777 Main Street, Hartford, CT  06115
                  ABA Routing #:  011900445
                  For Acct of: Sec-Conn Life (Univ Life)
                  Account #: 0156196
                  (Ref: Security/Rate/Maturity/PPN/P=S/I=S)

  (2)             All notices of payments and written 
                  confirmations of such wire transfers:

                  Security-Connecticut Life Insurance Company
                  20 Security Drive
                  Avon, CT  06001
                  Att:  Jodi Dean

  (3)             All other communications:

                  Lincoln Investment Management, Inc.
                  200 East Berry Street, Renaissance Square
                  Fort Wayne, IN  46802
                  Att:  Investment/Private Placements
</TABLE>


                                  Schedule A-18


<PAGE>   62


                                                                   SCHEDULE A-19

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2008

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY                                                 $10,000,000           1/5/96

  (1)    All payments by wire transfer of immediately 
         available funds to:
         ABA #011000028
         State Street Bank and Trust Company
         Boston, MA  02101
         Re:  The Variable Annuity Life
           Insurance Company
         AC-0125-821-9
         OBI=PPN # and description of payment, Fund Number 
         PA 54 with sufficient information to identify the 
         source and application of such funds.
  (2)    All notices of payments and written
         confirmations of such wire transfers:
         The Variable Annuity Life Insurance
          Company and PA 54
         c/o State Street Bank and Trust Company
         Insurance Services Custody (AH2)
         1776 Heritage Drive
         North Quincy, MA  02171
         Facsimile Number: (6;17) 985-4923
  (3)    All other communications:
         The Variable Annuity Life Insurance Company
         c/o American General Corporation
         Att:  Investment Research Dept., A37-01
         P. O. Box 3247
         Houston, Texas 77253-3247
         Overnight Mail Address:  2929 Allen Parkway
                             Houston, TX 77019-2155
         Facsimile No. (713) 831-1366
</TABLE>


                                  Schedule A-19


<PAGE>   63


                                                                    SCHEDULE B-1

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2011

<TABLE>
<CAPTION>
                                                                   Principal Amount of       Closing
Name and Address of Purchaser                                      Notes to be Purchased      Date
-----------------------------                                      ---------------------     -------
<S>                                                                <C>                       <C>
AMERICAN GENERAL LIFE INSURANCE
COMPANY                                                                 $2,000,000            1/5/96

  (1)             All payments by wire transfer of
                  immediately available funds to:
                  ABA #011000028
                  State Street Bank and Trust Company
                  Boston, MA  02101
                  Re:  American General Life Insurance 
                  Company AC-0125-880-5
                  OBI=PPN # and description of payment Fund 
                  Number PA40 with sufficient information 
                  to identify the source and application of 
                  such funds.
  (2)             All notices of payments and written 
                  confirmations of such wire transfers:
                  American General Life Insurance
                    Company and PA 40
                  c/o State Street Bank and Trust Company
                  Insurance Services Custody (AH2)
                  1776 Heritage Drive
                  North Quincy, MA  02171
                  Facsimile Number: (617) 985-4923
  (3)             All other communications:
                  American General Life Insurance Company
                  c/o American General Corporation
                  Attn:  Investment Research Dept. A37-01
                  P. O. Box 3247, Houston, Texas 77253-3247
                  Overnight Mail Address:2929 Allen Parkway
                                         Houston, TX  77019-2155
                  Facsimile Number: (713) 831-1366
</TABLE>


                                  Schedule B-1


<PAGE>   64


                                                                    SCHEDULE B-2

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2011

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY                                                 $18,000,000             1/5/96

  (1)    All payments by wire transfer of 
         immediately available funds to:
         ABA #011000028
         State Street Bank and Trust Company
         Boston, MA  02101
         Re:  The Variable Annuity Life Insurancy Company
         AC-0125-821-9
         OBI=PPN # and description of payment Fund Number 
         PA 54 with sufficient information to identify the 
         source and application of such funds.

  (2)    All notices of payments and written
         confirmations of such wire transfers:
         The Variable Annuity Life Insurance
           Company and PA 54
         c/o State Street Bank and Trust Company
         Insurance Services Custody (AH2)
         1776 Heritage Drive
         North Quincy, MA  02171
         Facsimile Number:  (617) 985-4923

  (3)    All other communications:
         The Variable Annuity Life Insurance Company
         c/o American General Corporation
         Attn:  Investment Research Dept. A37-01
         P. O. Box 3247, Houston, Texas  72253-3247
         Overnight Mail Address:  2929 Allen Parkway
                             Houston, TX 77019-2155
         Facsimile No.: (713) 831-1366
</TABLE>


                                  Schedule B-2


<PAGE>   65


                                                                    SCHEDULE C-1

                       INFORMATION RELATING TO PURCHASERS
                          OF NOTES DUE JANUARY 5, 2016

<TABLE>
<CAPTION>
                                                              Principal Amount of       Closing
Name and Address of Purchaser                                 Notes to be Purchased      Date
-----------------------------                                 ---------------------     -------
<S>                                                           <C>                       <C>
UNITED OF OMAHA LIFE
INSURANCE COMPANY                                                $5,000,000              12/20/95

  (1)             All payments by wire transfer of
                  immediately available funds to:

                  FirsTier Bank - Omaha 
                  17th & Farnam Street 
                  Omaha, NE 68102 
                  ABA # 1040-00029 
                  Account # 144-7-076

                  with sufficient information
                  to identify the source and
                  application of such funds.

  (2)             All notices of payments and written 
                  confirmations of such wire transfers:

                  United of Omaha Life Insurance Company
                  Att:  Investment Division/
                        Securities Accounting
                  Mutual of Omaha Plaza
                  Omaha, NE  68175-0001

  (3)             All other communications:

                  United of Omaha Life Insurance Company
                  Att:  Investment Division/
                        Securities Accounting
                  Mutual of Omaha Plaza
                  Omaha, NE  68175-0001

  (4)             Nominee:  Harny & Co
</TABLE>


                                  Schedule C-1


<PAGE>   66


                                                                      SCHEDULE D

                                  DEFINED TERMS

                  As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:

                  "AFFILIATE" means, at any time, and with respect to any
Person, any other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person. As used in this definition, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a reference to an
Affiliate of the Company.

                  "BUSINESS DAY" means (a) for the purposes of Section 8.6 only,
any day other than a Saturday, a Sunday or a day on which commercial banks in
New York City are required or authorized to be closed, and (b) for the purposes
of any other provision of this Agreement, any day other than a Saturday, a
Sunday or a day on which commercial banks in Atlanta, Georgia are required or
authorized to be closed.

                  "CAPITALIZED LEASE" means any lease which is required to be
capitalized on the balance sheet of the lessee pursuant to GAAP but shall
exclude any lease which at the time of its incurrence was an operating lease for
purposes of GAAP as in effect at such time.

                  "CLOSING" is defined in Section 3.

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

                  "COMPANY" means Flowers Industries, Inc., a Georgia
corporation.

                  "CONFIDENTIAL INFORMATION" is defined in Section 20.

                  "CONSOLIDATED NET INCOME" shall mean the net income and net
losses of the Company and its Subsidiaries on a consolidated basis as defined
according to GAAP after excluding the sum of (i) any undistributed net income of
a Subsidiary to the extent that a distribution is prohibited by agreement,
judgment or regulation, (ii) extraordinary gains or losses,

                                        1

                                   Schedule D

<PAGE>   67

                                                                      SCHEDULE D

and (iii) the earnings (or losses) of any Person acquired prior to the date of
its consolidation into the Company.

                  "CONSOLIDATED NET WORTH" means the Net Worth of the Company
and its Subsidiaries determined on a consolidated basis in accordance with GAAP.

                  "CONSOLIDATED TOTAL DEBT" means the aggregate of all
Indebtedness of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP, excluding, however, any Convertible Redeemable
Capital Stock or Convertible Subordinated Debt if the current market value of an
equity security into which such Convertible Redeemable Capital Stock or
Convertible Subordinated Debt is convertible is greater than the conversion
price for such security.

                  "CONVERTIBLE REDEEMABLE CAPITAL STOCK" shall mean any capital
stock that by its terms (or by the terms of any agreement by which or equity
security into which it is convertible or for which it is exchangeable or any
other agreement) or upon the happening of any event matures or is or will become
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, or is
exchangeable for or convertible into an equity security of the Company.

                  "CONVERTIBLE SUBORDINATED DEBT" means any Indebtedness of the
Company (i) which is and remains subordinated in right of payment to the
obligations of the Company on the Notes and (ii) which by its terms is
exchangeable for or convertible into an equity security of the Company.

                  "DEFAULT" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of notice or
both, become an Event of Default.

                  "DEFAULT RATE" means that rate of interest that is the greater
of (i) 2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2% over the rate of interest publicly announced
by The Chase Manhattan Bank, N.A. in New York, New York as its "base" or "prime"
rate.

                  "ENVIRONMENTAL LAWS" means any and all Federal, state, local,
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but

                                        2

                                   Schedule D

<PAGE>   68

                                                                      SCHEDULE D

not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

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

                  "ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code.

                  "EVENT OF DEFAULT" is defined in Section 11.

                  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

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

                  "GOVERNMENTAL AUTHORITY"  means

                  (a)      the government of

                           (i)  the United States of America or any State or
                  other political subdivision thereof, or

                           (ii) any jurisdiction in which the Company or any
                  Subsidiary conducts all or any part of its business, or which
                  asserts jurisdiction over any properties of the Company or any
                  Subsidiary, or

                  (b)      any entity exercising executive, legislative, 
         judicial, regulatory or adminis trative functions of, or pertaining 
         to, any such government.

                  "GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any Indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:

                                        3

                                   Schedule D

<PAGE>   69

                                                                      SCHEDULE D

                  (a) to purchase such Indebtedness or obligation or any
         property constituting security therefor;

                  (b) to advance or supply funds (i) for the purchase or payment
         of such Indebt edness or obligation, or (ii) to maintain any working
         capital or other balance sheet condition or any income statement
         condition of any other Person or otherwise to advance or make available
         funds for the purchase or payment of such Indebtedness or obligation;

                  (c) to lease properties or to purchase properties or services
         primarily for the purpose of assuring the owner of such Indebtedness or
         obligation of the ability of any other Person to make payment of the
         Indebtedness or obligation; or

                  (d) otherwise to assure the owner of such Indebtedness or
         obligation against loss in respect thereof.

In any computation of the Indebtedness or other liabilities of the obligor under
any Guaranty, the Indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

                  "HAZARDOUS MATERIALS" shall mean, collectively, any
polychlorinated biphenyls, petroleum or petroleum derived substance, friable
asbestos, and any toxic or otherwise hazardous waste, material or substance,
including, without limitation, all substances with respect to which liability or
standards of conduct may be imposed pursuant to any Environmental Law.

                  "HOLDER" means, with respect to any Note, the Person in whose
name such Note is registered in the register maintained by the Company pursuant
to Section 13.1.

                  "INDEBTEDNESS" with respect to any Person means, at any time,
without duplication,

                  (a) its liabilities for borrowed money and its redemption
         obligations in respect of mandatorily redeemable Preferred Stock;

                  (b) its liabilities for the deferred purchase price of
         property acquired by such Person (excluding accounts payable arising in
         the ordinary course of business but including all liabilities created
         or arising under any conditional sale or other title retention
         agreement with respect to any such property);

                                        4

                                   Schedule D

<PAGE>   70

                                                                      SCHEDULE D

                  (c) all liabilities appearing on its balance sheet in
         accordance with GAAP in respect of Capitalized Leases;

                  (d) all liabilities for borrowed money secured by any Lien
         with respect to any property owned by such Person (whether or not it
         has assumed or otherwise become liable for such liabilities);

                  (e) all its liabilities in respect of letters of credit or
         instruments serving a similar function issued or accepted for its
         account by banks and other financial institutions (whether or not
         representing obligations for borrowed money);

                  (f) Swaps of such Person; and

                  (g) any Guaranty of such Person with respect to liabilities of
         a type described in any of clauses (a) through (f) hereof.

                  "INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 5% of the aggregate principal
amount of the Notes then outstanding, and (c) any bank, trust company, savings
and loan association or other financial institution, any pension plan, any
investment company, any insurance company, any broker or dealer, or any other
similar financial institution or entity, regardless of legal form.

                  "LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest or title
of any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capitalized Lease,
upon or with respect to any property or asset of such Person (including in the
case of stock, stockholder agreements, voting trust agreements and all similar
arrangements).

                  "MAKE-WHOLE AMOUNT" is defined in Section 8.6.

                  "MATERIAL" means material in relation to the business,
operations, affairs, financial condition, assets, or properties of the Company
and its Subsidiaries taken as a whole.

                  "MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the business, operations, affairs, financial condition, assets or properties
of the Company and its Subsidiaries

                                        5

                                   Schedule D

<PAGE>   71

                                                                      SCHEDULE D

taken as a whole, or (b) the ability of the Company to perform its obligations
under this Agreement and the Notes, or (c) the validity or enforceability of
this Agreement or the Notes.

                  "MEMORANDUM" is defined in Section 5.3.

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

                  "NET WORTH" of any Person means the Total Assets of such
Person less all liabilities of such Person which would be shown as liabilities
on a balance sheet of such Person as of such time prepared in accordance with
GAAP.

                  "NOTES" is defined in Section 1.

                  "OFFICER'S CERTIFICATE" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.

                  "OTHER PURCHASERS" is defined in Section 2.

                  "PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA or any successor thereto.

                  "PERSON" means an individual, corporation, limited liability
company, association, partnership, trust, joint venture, unincorporated
organization, or a government or agency or political subdivision thereof.

                  "PLAN" means an "employee benefit plan" (as defined in section
3(3) of ERISA) that is or, within the preceding five years, has been established
or maintained, or to which contributions are or, within the preceding five
years, have been made or were required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA Affiliate may have
any liability.

                  "PREFERRED STOCK" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of such
corporation as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such corporation.

                                        6

                                   Schedule D

<PAGE>   72

                                                                      SCHEDULE D

                  "PROPERTY" or "PROPERTIES" means, unless otherwise
specifically limited, real or personal property of any kind, tangible or
intangible, choate or inchoate.

                  "QPAM EXEMPTION" means Prohibited Transaction Class Exemption
84-14 issued by the United States Department of Labor.

                  "REQUIRED HOLDERS" means, at any time, the holders of at least
66 2/3% in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Com pany or any of its Affiliates).

                  "RESPONSIBLE OFFICER" means any Senior Financial Officer and
any other officer of the Company with responsibility for the administration of
the relevant portion of this agreement.

                  "RESTRICTED PAYMENT" means any dividend, distribution or
payment in respect of the capital stock of the Company or any Subsidiary,
whether in cash or property (other than of capital stock or other equity
interests of a Subsidiary owned legally and beneficially by the Company or
another Subsidiary), including, without limitation, any distribution resulting
in the acquisition by the Company of securities which would constitute treasury
stock. If a Restricted Payment is made with property other than cash, such
property shall be valued at the greater of its book value or its fair market
value, in either case determined as of the time such payment is made.

                  "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.

                  "SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.

                  "SIGNIFICANT SUBSIDIARY" means at any time any Subsidiary that
would at such time constitute a "significant subsidiary" (as such term is
defined in Regulation S-X of the Securities and Exchange Commission as in effect
on the date of the Closing) of the Company.

                  "SUBSIDIARY" means, as to any Person, any corporation,
association or other business entity in which such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient
equity or voting interests to enable it or them (as a group) ordinarily, in the
absence of contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership or joint
venture if more than a 50% interest in the profits or capital thereof is owned
by such Person or one or more of its Subsidiaries or such Person and one or more
of its Subsidiaries (unless such partnership can and

                                        7

                                   Schedule D

<PAGE>   73

                                                                      SCHEDULE D

does ordinarily take major business actions without the prior approval of such
Person or one or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "Sub sidiary" is a reference to a Subsidiary of the
Company.

                  "SWAPS" means, with respect to any Person, payment obligations
with respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of such Person,
based on the assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating to such
Swap provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous payment of
amounts by and to such Person, then in each such case, the amount of such
obligation shall be the net amount so determined.

                  "TOTAL ASSETS" means, with respect to any Person at any time,
the total assets of such Person as set forth or reflected on the most recent
consolidated balance sheet of such Person, prepared in accordance with GAAP.

                  "TOTAL CAPITALIZATION" means the sum of (i) Consolidated Total
Debt and (ii) Consolidated Net Worth.

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

                                        8

                                   Schedule D

<PAGE>   74

                                                                    EXHIBIT 1(A)

                                 [FORM OF NOTE]

                            FLOWERS INDUSTRIES, INC.

                      6.80% SENIOR NOTE DUE JANUARY 5, 2008

No. [_____]                                                              [Date]
$[_______]                                                           PPN 343496

                  FOR VALUE RECEIVED, the undersigned, FLOWERS INDUSTRIES, INC.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Georgia, hereby promises to pay to[______________________],
or registered assigns, the principal sum of[___________________________] DOLLARS
on January 5, 2008, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.80% per
annum from the date hereof, payable semiannually, on the 5th day of January and
July in each year, commencing with the earlier to occur of the January 5 or the
July 5 next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 8.80% or (ii) 2% over the
rate of interest publicly announced by The Chase Manhattan Bank, N.A. from time
to time in New York, New York as its "base" or "prime" rate.

                  Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at the principal office of the holder of this Note, at the
address for payment indicated on Schedule A attached to the Note Purchase
Agreement referred to below, or at such other place as the holder of this Note
shall have designated by written notice to the Company as provided in the Note
Purchase Agreement referred to below.

                  This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to that certain Note Purchase Agreement, dated
December 20, 1995 (as from time to time amended, the "Note Purchase Agreement"),
by and among the Company and the respective

                                        1

                                  Exhibit 1(A)

<PAGE>   75

Purchasers named therein and is entitled to the benefits thereof. Each holder of
this Note will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement.

                  This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

                  The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional pre payment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.

                  If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

                  This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Georgia.

                                          FLOWERS INDUSTRIES, INC.

                                          By
                                            -------------------------
                                            C. Martin Wood III
                                            Senior Vice President and
                                            Chief Financial Officer

                                        2

                                  Exhibit 1(A)


<PAGE>   76


                                                                    EXHIBIT 1(B)


                                 [FORM OF NOTE]

                            FLOWERS INDUSTRIES, INC.

                      6.99% SENIOR NOTE DUE JANUARY 5, 2011

No. [_____]                                                               [Date]
$[_______]                                                            PPN 343496

                  FOR VALUE RECEIVED, the undersigned, FLOWERS INDUSTRIES, INC.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Georgia, hereby promises to pay to[______________________],
or registered assigns, the principal sum of [__________________________] DOLLARS
on January 5, 2011, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 6.99% per
annum from the date hereof, payable semiannually on the 5th day of January and
July in each year, commencing with the earlier to occur of the January 5 or the
July 5 next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make- Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 8.99% or (ii) 2% over the
rate of interest publicly announced by The Chase Manhattan Bank, N.A. from time
to time in New York, New York as its "base" or "prime" rate.

                  Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at the principal office of the holder of this Note, at the
address for payment indicated on Schedule B attached to the Note Purchase
Agreement referred to below, or at such other place as the holder of this Note
shall have designated by written notice to the Company as provided in the Note
Purchase Agreement referred to below.

                  This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to that certain Note Purchase Agreements, dated
December 20, 1995 (as from time to time amended, the "Note Purchase Agreement"),
by and among the Company and the respective

                                        1

                                  Exhibit 1(B)


<PAGE>   77


Purchasers named therein and is entitled to the benefits thereof. Each holder of
this Note will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement.

                  This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

                  The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional pre payment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.

                  If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

                  This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Georgia.

                              FLOWERS INDUSTRIES, INC.

                              By
                                 -------------------------
                                 C. Martin Wood III
                                 Senior Vice President and
                                 Chief Financial Officer



                                        2

                                  Exhibit 1(B)


<PAGE>   78

                                                                    EXHIBIT 1(C)


                                 [FORM OF NOTE]


                            FLOWERS INDUSTRIES, INC.

                      7.08% SENIOR NOTE DUE JANUARY 5, 2016

No. [_____]                                                               [Date]
$[_______]                                                            PPN 343496

                  FOR VALUE RECEIVED, the undersigned, FLOWERS INDUSTRIES, INC.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Georgia, hereby promises to pay to [_____________________],
or registered assigns, the principal sum of [__________________________] DOLLARS
on January 5, 2016, with interest (computed on the basis of a 360-day year of
twelve 30-day months) (a) on the unpaid balance thereof at the rate of 7.08% per
annum from the date hereof, payable semiannually on the 5th day of January and
July in each year, commencing with the earlier to occur of the January 5 or the
July 5 next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) to the extent permitted by law on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make- Whole Amount (as defined in the
Note Purchase Agreements referred to below), payable semiannually as aforesaid
(or, at the option of the registered holder hereof, on demand), at a rate per
annum from time to time equal to the greater of (i) 9.08% or (ii) 2% over the
rate of interest publicly announced by The Chase Manhattan Bank from time to
time in New York, New York as its "base" or "prime" rate.

                  Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money of the United
States of America at the principal office of the holder of this Note at the
address for payment indicated on Schedule C attached to the Note Purchase
Agreement referred to below, or at such other place as the holder of this note
shall have designated by written notice to the Company as provided in the Note
Purchase Agreement referred to below.

                  This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant that certain Note Purchase Agreement, dated as of
December 20, 1995 (as from time to time amended, the "Note Purchase Agreement"),
the Company and the respective Purchasers

                                        1

                                  Exhibit 1(C)

<PAGE>   79


named therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement.

                  This Note is a registered Note and, as provided in the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly executed,
by the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company will not be affected by any notice to
the contrary.

                  The Company will make required prepayments of principal on the
dates and in the amounts specified in the Note Purchase Agreement. This Note is
also subject to optional pre payment, in whole or from time to time in part, at
the times and on the terms specified in the Note Purchase Agreement, but not
otherwise.

                  If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal of this Note may be declared
or otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.

                  This Note shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of
Georgia.

                            FLOWERS INDUSTRIES, INC.


                            By
                               -------------------------
                               C. Martin Wood III
                               Senior Vice President and
                               Chief Financial Officer


                                        2

                                  Exhibit 1(C)

<PAGE>   80

                                                                  EXHIBIT 4.4(a)

           FORM OF OPINION OF ASSISTANT GENERAL COUNSEL OF THE COMPANY

                            Matters To Be Covered In
               Opinion of Assistant General Counsel To the Company


            1. Each of the Company and its Significant Subsidiaries being duly
incorpo rated, validly existing and in good standing and having requisite
corporate power and authority to issue and sell the Notes and to execute and
deliver the documents.

            2. Each of the Company and its Significant Subsidiaries being duly
qualified and in good standing as a foreign corporation in appropriate
jurisdictions.

            3. Due authorization and execution of the documents and such
documents being legal, valid, binding and enforceable.

            4. No conflicts with charter documents, laws or other material
agreements.

            5. All consents required to issue and sell the Notes and to execute
and deliver the documents having been obtained.

            6. No litigation questioning validity of documents.



                                 Exhibit 4.4(a)


<PAGE>   81


                                                                  EXHIBIT 4.4(b)


                FORM OF OPINION OF SPECIAL COUNSEL OF THE COMPANY

                            Matters To Be Covered In
                    Opinion of Special Counsel To the Company

            1. Based upon certain representations, the Notes not requiring
registration under the Securities Act of 1933, as amended; no need to qualify an
indenture under the Trust Indenture Act of 1939, as amended.

            2. No violation of Regulations G, T or X of the Federal Reserve
Board.

            3. Company not an "investment company", or a company "controlled" by
an "investment company", under the Investment Company Act of 1940, as amended.

            4. Enforceability of all documents.


                                 Exhibit 4.4(b)

<PAGE>   82

                                                                  EXHIBIT 4.4(c)

                       FORM OF OPINION OF SPECIAL COUNSEL
                                TO THE PURCHASERS

                    [TO BE PROVIDED ON A CASE BY CASE BASIS]



                                 Exhibit 4.4(c)

<PAGE>   83

                   SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT

         THIS SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT made this 12th day of
March, 1998, by and among Flowers Industries, Inc., a Georgia corporation (the
"Company") and each of the holders (the "Holders") of the Notes (as defined in
that certain Note Purchase Agreement dated December 20, 1995 by and among the
Company and each of the Purchasers (the "Note Purchase Agreement"). Capitalized
terms not otherwise defined in this Second Amendment to Note Purchase Agreement
shall have the meaning given them in the Note Purchase Agreement;

                              W I T N E S S E T H:

         WHEREAS, the Company and the Holders have entered into the Note 
Purchase Agreement;

         WHEREAS, the parties hereto amended the Note Purchase Agreement to
amend the ratio of Consolidated Total Debt to Total Capitalization;

         WHEREAS, the parties hereto desire to amend the Note Purchase Agreement
to (i) exclude Keebler Foods Company, a Delaware corporation, and its
subsidiaries ("Keebler") from the definition of Subsidiary, (ii) define the
nature of permitted investments in Keebler and (iii) define the minimum
consolidated net worth of the Company;

         WHEREAS, pursuant to Section 17.1 of the Note Purchase Agreement, the
Note Purchase Agreement may be amended with the written consent of the Company
and the Required Holders;

         NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, agreements, representations, warranties and covenants hereinafter set
forth, and the sum of ten dollars and other good and valuable consideration, the
receipt and sufficiency of which is hereby specifically agreed to and
acknowledged, the Note Purchase Agreement is hereby amended as follows:

         1. Section 10.1 of the Note Purchase Agreement is hereby amended by
adding at the end of said section a new sentence, reading as follows:

            "Solely for the purposes of this Section 10.1 and notwithstanding
any contrary provision in this Agreement, Keebler shall be deemed to be a
Subsidiary of the Company."

<PAGE>   84

         2. The Note Purchase Agreement is hereby amended by adding a new
section 10.10 immediately following Section 10.9 of the Note Purchase Agreement,
reading as follows:

         "10.10            INVESTMENT IN KEEBLER.

            Neither the Company nor any of its Subsidiaries shall make any
Investment in Keebler except for Permitted Keebler Investments."

         3. The Note Purchase Agreement is hereby amended by adding a new
section 10.11 immediately following Section 10.10 of the Note Purchase
Agreement, reading as follows:

         "10.11            MINIMUM CONSOLIDATED NET WORTH

         The Consolidated Net Worth of the Company will at no time be less than:

         (A) prior to the date of the first public issuance of capital stock of
the Company (other than in connection with any employee benefit plan) occurring
after the date hereof (the "Next Public Offering"), the greater of (i) 85% of
Consolidated Net Worth as of the end of the fiscal quarter of the Company ending
September 20, 1997, plus the sum of (x) 50% of the cumulative net proceeds of
capital stock received during any period after the date hereof, plus (y) 50% of
any equity resulting from a conversion of Indebtedness during any period after
the date hereof, less (z) any amount of equity repurchased during any period
after the date hereof, calculated quarterly at the end of each fiscal quarter of
the Company; and (ii) $200,000,000; and

         (B) from and after the date of the Next Public Offering, the greater of
(i) 85% of Consolidated Net Worth as of the end of the fiscal quarter of the
Company most recently ended, adjusted to give effect on a proforma basis to the
Next Public Offering, plus the sum of (x) 50% of the cumulative net proceeds of
capital stock received during any period after the Next Public Offering, plus
(y) 50% of any equity resulting from a conversion of Indebtedness during any
period after the Next Public Offering, less (z) any amount of equity repurchased
during any period after the Next Public Offering, calculated quarterly at the
end of each fiscal quarter of the Company; and (ii) $450,000,000.

         4. Section 11(c) of the Note Purchase Agreement is hereby amended by
replacing the phrase "10.8 or 7.1(d)" with the phrase "10.8, 10.10, 10.11 or
7.1(d)".

         5. Schedule D of the Note Purchase Agreement is hereby amended by
adding a new definition of Investment immediately following the definition of
Institutional Investor, reading as follows:

            "Investment" means any investment in any Person, whether by means of
         purchase or acquisition of obligations or securities of such Person,
         capital contribution to such Person, loan or advance to such Person,
         making of a time deposit with such Person, guaranty or assumption of
         any obligation of such Person or otherwise."


                                        2

<PAGE>   85

         6.  Schedule D of the Note Purchase Agreement is hereby amended by
adding a new definition of Permitted Keebler Investments immediately following
the definition of PBGC, reading as follows:

             "Permitted Keebler Investments" means: (i) the Keebler Acquisition;
         and (ii) provided that the Keebler Acquisition has been consummated,
         additional shares of common capital stock in Keebler Foods Company, a
         Delaware corporation ("Keebler") acquired from time to time (a) from
         third parties in the open market, (b) from Bermore, Limited and Artal
         Luxembourg S.A. in private transactions, (c) from management of Keebler
         in private transactions and/or (d) from Keebler as part of an offering
         of stock by Keebler (whether public or private), but in the case of
         this clause (d), only to the extent necessary for the Company to
         maintain ownership of at least 51% of the common capital stock of
         Keebler, on a fully diluted basis."

         7.  The definition of "Subsidiary" in Schedule D of the Note Purchase
Agreement is hereby amended by adding at the end of said definition a new
sentence, reading as follows:

             "Notwithstanding any provision (other than Section 10.1) in this
         Agreement to the contrary, Subsidiary shall not include an Unrestricted
         Subsidiary."

         8.  Schedule D of the Note Purchase Agreement is hereby amended by
adding a new definition of Unrestricted Subsidiary immediately following the
definition of Total Capitalization, reading as follows:

             ""Unrestricted Subsidiary" means Keebler and its subsidiaries,
         immediately following the acquisition by the Company from Artal
         Luxembourg S.A. and Bermore Limited a sufficient number of shares of
         common capital stock of Keebler, such that the Company will own
         approximately 51% of the common capital stock of Keebler, on a fully
         diluted basis (the "Keebler Acquisition"), and thereafter for so long
         as Keebler is a Subsidiary and "Unrestricted Subsidiaries" means,
         collectively, Keebler and its Subsidiaries."

         9.  Except to the extent expressly amended herein, all terms and
conditions of the Note Purchase Agreement are hereby affirmed and shall remain
in full force and effect.

         10. The Company hereby represents to the Holders that as of the date
hereof no Default or Event of Default exists under the Note Purchase Agreement.

         11. This Second Amendment to Note Purchase 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.


                                        3


<PAGE>   86

         IN WITNESS WHEREOF, each party hereto has executed or caused this
Second Amendment to Note Purchase Agreement to be executed on its behalf, all on
the day and year first above written.

                                    FLOWERS INDUSTRIES, INC.
                                    "Company"

                                    By:  /s/  C.M. Wood III
                                         -------------------------------------
                                         Name:  C.M. Wood III
                                         Title: Senior Vice President


                                        4


<PAGE>   87

                               SCHEDULE OF HOLDERS

ALLIED LIFE INSURANCE COMPANY
By:      Lincoln Investment Management, Inc.,
         Its Attorney-In-Fact

       By:  /s/  J. Steven Staggs
            ------------------------------------
            Name:  J. Steven Staggs
            Title:  Vice President


THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY


By:    Lincoln Investment Management, Inc., its
       Attorney-in-fact

       By:  /s/  J. Steven Staggs
            ------------------------------------
            Name:  J. Steven Staggs
            Title:  Vice President


RELIASTAR LIFE INSURANCE COMPANY OF NEW YORK successor by merger to
LINCOLN-SECURITY LIFE INSURANCE COMPANY


       By:  /s/  James V. Wittich
            ------------------------------------
            Name:  James V. Wittich
            Title:  Vice President, Investments


SECURITY-CONNECTICUT LIFE INSURANCE
COMPANY


       By:  /s/  James V. Wittich
            ------------------------------------
            Name:  James V. Wittich
            Title:  Assistant Treasurer



                                        5

<PAGE>   88


AMERICAN GENERAL LIFE INSURANCE
COMPANY and THE VARIABLE ANNUITY
LIFE INSURANCE COMPANY

By:    /s/  Peter V. Tuters
       -----------------------------------------
       Name:  Peter V. Tuters
       Title: Vice President and
              Chief Investment Officer


CUNA MUTUAL INSURANCE SOCIETY
By:    CIMCO Inc.


       By:    /s/  Mark Prusha
              ----------------------------------
              Name:  Mark Prusha
              Title:  Senior Investment Officer

EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU


By:    /s/  Charles S. Bath
       -----------------------------------------
       Name:  Charles S. Bath
       Title:  Attorney-in-Fact


MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY


By:    /s/  Lawrence D. Stillman
       -----------------------------------------
       Name:  Lawrence D. Stillman
       Title:  Managing Director


                                        6

<PAGE>   89


METROPOLITAN LIFE INSURANCE COMPANY


By:    /s/  Gerald P. Marcus
       -----------------------------------
       Name:  Gerald P. Marcus
       Title:  Director

METROPOLITAN PROPERTY AND CASUALTY
INSURANCE COMPANY

By:    /s/  James A. Wiviott
       -----------------------------------
       Name:  James A. Wiviott
       Title:  Authorized Signatory


NATIONWIDE LIFE INSURANCE COMPANY

By:    /s/  Charles S. Bath
       -----------------------------------
       Name:  Charles S. Bath
       Title:  Vice President
                Equity Securities

NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT OH

By:    /s/  Charles S. Bath
       -----------------------------------
       Name:  Charles S. Bath
       Title:  Vice President
                Equity Services

UNITED OF OMAHA LIFE INSURANCE
COMPANY

By:    /s/  Curtis R. Caldwell
       -----------------------------------
       Name:  Curtis R. Caldwell
       Title:  First Vice President


                                        7

<PAGE>   90


                   FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT

         THIS FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT made this 23rd day of
January, 1998, by and among Flowers Industries, Inc., a Georgia corporation (the
"Company") and each of the holders (the "Holders") of the Notes (as defined in
that certain Note Purchase Agreement dated December 20, 1995 by and among the
Company and each of the Purchasers (the "Note Purchase Agreement"). Capitalized
terms not otherwise defined in this First Amendment to Note Purchase Agreement
shall have the meaning given them in the Note Purchase Agreement;

                              W I T N E S S E T H:

         WHEREAS, the Company and the Holders have entered into the Note 
Purchase Agreement;

         WHEREAS, the parties hereto desire to amend the Note Purchase Agreement
to amend the ratio of Consolidated Total Debt to Total Capitalization;

         WHEREAS, pursuant to Section 17.1 of the Note Purchase Agreement, the
Note Purchase Agreement may be amended with the written consent of the Company
and the Required Holders;

         NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, agreements, representations, warranties and covenants hereinafter set
forth, and the sum of ten dollars and other good and valuable consideration, the
receipt and sufficiency of which is hereby specifically agreed to and
acknowledged, the Note Purchase Agreement is hereby amended as follows:

         1. Section 10.3 of the Note Purchase Agreement is hereby amended by
deleting from such Section "65%" and substituting in lieu thereof "75%".

         2. The foregoing amendment shall remain in effect until the earlier of
(i) the closing of a public offering of common stock by the Company or (ii)
December 31, 1998.

         3. Except to the extent expressly amended herein, all terms and
conditions of the Note Purchase Agreement are hereby affirmed and shall remain
in full force and effect.

         4. The Company hereby represents to the Holders that as of the date
hereof no Default or Event of Default exists under the Note Purchase Agreement;

         5. This First Amendment to Note Purchase 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.



<PAGE>   91



         IN WITNESS WHEREOF, each party hereto has executed or caused this First
Amendment to Note Purchase Agreement to be executed on its behalf, all on the
day and year first above written.

                                    FLOWERS INDUSTRIES, INC.
                                    "Company"

                                    By:    /s/ C. M. Wood III
                                           ------------------------------------
                                           Name: C. M. Wood III
                                           Title: Senior Vice President



                                        2


<PAGE>   92



                               SCHEDULE OF HOLDERS

ALLIED LIFE INSURANCE COMPANY


By:    Lincoln Investment Management, Inc.,
       Its Attorney-In-Fact


       By:    /s/ J. Steven Staggs
              ----------------------------------
              Name: J. Steven Staggs
              Title: Vice President


THE LINCOLN NATIONAL LIFE INSURANCE
COMPANY

By:    Lincoln Investment Management, Inc., its
       Attorney-in-fact

       By:    /s/ J. Steven Staggs
              ----------------------------------
              Name: J. Steven Staggs
              Title: Vice President


LINCOLN-SECURITY LIFE INSURANCE COMPANY
By:    Lincoln Investment Management, Inc., its
       Attorney-in-Fact

       By:    /s/ James V. Wittich
              ----------------------------------
              Name: James V. Wittich
              Title: Vice President, Investments


SECURITY-CONNECTICUT LIFE INSURANCE
COMPANY

By:    Lincoln Investment Management, Inc.,
       its Attorney-in-Fact

       By:    /s/ James V. Wittich
              ----------------------------------
              Name: James V. Wittich
              Title: Assistant Treasurer



                                        3


<PAGE>   93



AMERICAN GENERAL LIFE INSURANCE
COMPANY and THE VARIABLE ANNUITY
LIFE INSURANCE COMPANY

By:    /s/ Julia S. Tucker
       ----------------------------------------------------
       Name: Julia S. Tucker
       Title: Investment Officer

CUNA MUTUAL INSURANCE SOCIETY

By:    CIMCO INC.

       By:    /s/ Donald Heltner
              ---------------------------------------------
              Name: Donald Heltner
              Title: Vice President

EMPLOYERS LIFE INSURANCE COMPANY
OF WAUSAU


By:    /s/ Edwin P. McCausland, Jr.
       ----------------------------------------------------
       Name: Edwin P. McCausland, Jr.
       Title: Vice President, Fixed-Income Securities


MASSACHUSETTS MUTUAL LIFE INSURANCE
COMPANY


By:    /s/ Walter T. Dwyer
       ----------------------------------------------------
       Name: Walter T. Dwyer
       Title: Managing Director


                                        4


<PAGE>   94


METROPOLITAN LIFE INSURANCE COMPANY

By:    /s/ Gerald P. Marcus
       ----------------------------------------------------
       Name: Gerald P. Marcus
       Title:  Director


METROPOLITAN PROPERTY AND CASUALTY
INSURANCE COMPANY


By:    /s/ James A. Wiviott
       ----------------------------------------------------
       Name:  James A. Wiviott
       Title:  Authorized Signatory


NATIONWIDE LIFE INSURANCE COMPANY


By:    /s/ Edwin P. McCausland, Jr.
       ----------------------------------------------------
       Name: Edwin P. McCausland, Jr.
       Title:  Vice President, Fixed-Income Securities


NATIONWIDE LIFE INSURANCE COMPANY
SEPARATE ACCOUNT OH


By:    /s/ Edwin P. McCausland, Jr.
       ----------------------------------------------------
       Name: Edwin P. McCausland, Jr.
       Title: Vice President, Fixed-Income Securities


UNITED OF OMAHA LIFE INSURANCE
COMPANY


By:    /s/ Curtis R. Caldwell
       ----------------------------------------------------
       Name: Curtis R. Caldwell
       Title: First Vice President



                                        5