<PAGE>   1
                                                                   EXHIBIT 10.1












                               FRESH AMERICA CORP.




                       AMENDED AND RESTATED NOTE AGREEMENT
                   WITH RESPECT TO NOTE AGREEMENT DATED AS OF
                                   MAY 4, 1998





                           DATED AS OF APRIL 15, 2000




            $20,000,000 12% SENIOR SUBORDINATED NOTES DUE MAY 1, 2007


<PAGE>   2


<TABLE>
<S>                                                                                                              <C>
1.    PAYMENTS....................................................................................................2

   1.1   INTEREST PAYMENT.........................................................................................2
   1.2   REQUIRED PRINCIPAL PAYMENTS..............................................................................2
   1.3   OPTIONAL PRINCIPAL PAYMENTS..............................................................................2
   1.4   OFFER TO PAY UPON CHANGE IN CONTROL......................................................................3
   1.5   DELIVERY OF NOTES IN PAYMENT OF WARRANT PURCHASE PRICE...................................................6
   1.6   PAYMENTS AMONG NOTEHOLDERS...............................................................................6
   1.7   NOTATION OF NOTES ON PAYMENT.............................................................................6
   1.8   NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES.....................................................7
   1.9   MANNER OF PAYMENTS.......................................................................................7

2.    REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES...............................................................8

   2.1   REGISTRATION OF NOTES....................................................................................8
   2.2   EXCHANGE OF NOTES........................................................................................8
   2.3   REPLACEMENT OF NOTES.....................................................................................9
   2.4   ISSUANCE TAXES..........................................................................................10

3.    GENERAL COVENANTS..........................................................................................10

   3.1   PAYMENT OF TAXES AND CLAIMS.............................................................................10
   3.2   MAINTENANCE OF PROPERTIES; CORPORATE EXISTENCE; ETC.....................................................10
   3.3   PAYMENT OF NOTES AND MAINTENANCE OF OFFICE..............................................................11
   3.4   PENSION PLANS...........................................................................................12
   3.5   PRIVATE OFFERING........................................................................................13

4.    NEGATIVE AND FINANCIAL COVENANTS...........................................................................13

   4.1   MERGERS AND CONSOLIDATIONS..............................................................................13
   4.2   DISPOSITION OF ASSETS, RESTRICTED SUBSIDIARY STOCK......................................................14
   4.3   LIENS...................................................................................................18
   4.4   NET WORTH...............................................................................................22
   4.5   FIXED CHARGE COVERAGE...................................................................................22
   4.6   TOTAL DEBT..............................................................................................23
   4.7   SENIOR DEBT.............................................................................................23
   4.8   RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS..........................................................23
   4.9   SENIORITY TO FUTURE SUBORDINATED DEBT...................................................................25
   4.10  DESIGNATION OF SUBSIDIARIES.............................................................................25
   4.11  LINE OF BUSINESS........................................................................................26
   4.12  TRANSACTIONS WITH AFFILIATES............................................................................27
   4.13  SUBSIDIARY GUARANTEES...................................................................................27
   4.14  CURRENT RATIO...........................................................................................28

5.    REPORTING COVENANTS........................................................................................28

   5.1   FINANCIAL AND BUSINESS INFORMATION......................................................................28
   5.2   OFFICER'S CERTIFICATES..................................................................................32
   5.3   ACCOUNTANTS' CERTIFICATES...............................................................................32
   5.4   INSPECTION..............................................................................................33

6.    EVENTS OF DEFAULT..........................................................................................33
</TABLE>


                                       i
<PAGE>   3


<TABLE>
<S>                                                                                                              <C>
   6.1   EVENTS OF DEFAULT.......................................................................................33
   6.2   DEFAULT REMEDIES........................................................................................36
   6.3   ANNULMENT OF ACCELERATION OF NOTES......................................................................38

7.    SUBORDINATION..............................................................................................39

   7.1   GENERAL.................................................................................................39
   7.2   INSOLVENCY..............................................................................................39
   7.3   PROOFS OF CLAIM.........................................................................................39
   7.4   ACCELERATION OF SENIOR DEBT.............................................................................40
   7.5   PAYMENT DEFAULT IN RESPECT OF SENIOR DEBT...............................................................40
   7.6   SIGNIFICANT NONPAYMENT DEFAULT IN RESPECT OF SENIOR DEBT................................................41
   7.7   STANDSTILL..............................................................................................42
   7.8   TURNOVER OF PAYMENTS....................................................................................42
   7.9   SUBORDINATION UNAFFECTED BY CERTAIN EVENTS..............................................................43
   7.10  WAIVER AND CONSENT......................................................................................44
   7.11  REINSTATEMENT OF SUBORDINATION..........................................................................44
   7.12  OBLIGATIONS NOT IMPAIRED................................................................................44
   7.13  PAYMENT OF SENIOR DEBT; SUBROGATION.....................................................................45
   7.14  RELIANCE OF HOLDERS OF SENIOR DEBT......................................................................45
   7.15  IDENTITY OF HOLDERS OF SENIOR DEBT......................................................................45
   7.16  AMENDMENTS TO SENIOR CREDIT FACILITY....................................................................46

8.    INTERPRETATION OF THIS AGREEMENT...........................................................................46

   8.1   TERMS DEFINED...........................................................................................46
   8.2   ACCOUNTING PRINCIPLES...................................................................................78
   8.3   DIRECTLY OR INDIRECTLY..................................................................................79
   8.4   SECTION HEADINGS AND TABLE OF CONTENTS AND CONSTRUCTION.................................................79
   8.5   GOVERNING LAW...........................................................................................79
   8.6   GENERAL INTEREST PROVISIONS.............................................................................79

9.    MISCELLANEOUS..............................................................................................81

   9.1   COMMUNICATIONS..........................................................................................81
   9.2   REPRODUCTION OF DOCUMENTS...............................................................................82
   9.3   SURVIVAL; ENTIRE AGREEMENT..............................................................................82
   9.4   SUCCESSORS AND ASSIGNS..................................................................................83
   9.5   AMENDMENT AND WAIVER....................................................................................83
   9.6   EXPENSES................................................................................................85
   9.7   WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC......................................................86
   9.8   EXECUTION IN COUNTERPART................................................................................87
</TABLE>

Annex 1        - Addresses of Purchasers; Payment Information
Annex 2        - Address of Company
Annex 3        - Senior Credit Agreement Definitions
Attachment A   - Form of Amended and Restated Note


                                       ii
<PAGE>   4


                       AMENDED AND RESTATED NOTE AGREEMENT
                   WITH RESPECT TO NOTE AGREEMENT DATED AS OF
                                   MAY 4, 1998


     AMENDED AND RESTATED NOTE AGREEMENT, dated as of April 15, 2000, with
respect to the Note Agreement dated as of May 4, 1998, among FRESH AMERICA
CORP., a Texas corporation (together with its successors and assigns, the
"Company"), and JOHN HANCOCK LIFE INSURANCE COMPANY, JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY and SIGNATURE 1A (CAYMAN), LTD. (together with their
respective successors and assigns, the "HOLDERS").

                                    RECITALS

     WHEREAS, pursuant to the Initial Securities Purchase Agreement, the Holders
purchased from the Company, and the Company sold to the Holders, Twenty Million
Dollars ($20,000,000) in aggregate principal amount of the Initial Notes due May
4, 2003; and

     WHEREAS, pursuant to the Securities Purchase Agreement, certain of the
Holders have agreed to purchase from the Company, and the Company has agreed to
sell to such Holders, 50,000 shares of Cumulative Preferred Stock and _____
Series B Warrants; and

     WHEREAS, each Holder was a Purchaser under the Initial Securities Purchase
Agreement, and each Purchaser under the Initial Securities Purchase Agreement is
a Holder; and

     WHEREAS, as a condition to the purchase and sale of the Cumulative
Preferred Stock and the Series B Warrants, the Company has requested and the
Holders have agreed to amend and restate the Initial Note Agreement on the terms
and in the manner set forth herein.

     WHEREAS, by their execution and delivery hereof, the Company and the
Holders are entering into this Agreement to amend and restate the Initial Note
Agreement and to govern the terms of the Notes;

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein,


<PAGE>   5


     (a) the Initial Note Agreement is hereby amended and restated as set forth
herein;

     (b) the Initial Notes are hereby, and are hereby deemed to be, amended and
restated in the form of Note set forth in Attachment A hereto, and each Holder
may now or hereafter exchange any or all of the Initial Notes held by it for new
amended and restated Notes in the form of Attachment A, each such new Note to be
of a principal amount equal to the outstanding principal amount of the Initial
Note delivered in exchange, provided however, that the failure of a Holder to so
exchange any Initial Note for a new Note shall have no effect or consequence
hereunder, and each such Initial Note shall be deemed to be, and shall be
treated for all purposes hereunder, as being a new Note in the form of
Attachment A); and

     (c) the parties to this Agreement hereby agree as provided in the various
Sections of this Agreement.

1. PAYMENTS

     1.1  INTEREST PAYMENT

     Interest on the Notes shall be computed and paid in the manner and on the
dates provided in the Notes.

     1.2  REQUIRED PRINCIPAL PAYMENTS

         There shall be no required principal prepayments with respect to the
Notes. The entire principal of the Notes outstanding on May 1, 2007, together
with interest accrued thereon, shall become due and payable on such date.

     1.3  OPTIONAL PRINCIPAL PAYMENTS

          (a) OPTIONAL PRINCIPAL PAYMENTS WITH PREPAYMENT COMPENSATION AMOUNT.
     The Company may pay the principal amount of the Notes in whole or in part,
     on any date in a minimum aggregate amount of Five Hundred Thousand Dollars
     ($500,000), or in any higher integral multiples of One Hundred Thousand
     Dollars ($100,000) (or, if the aggregate outstanding principal amount of
     the Notes is less than Five Hundred Thousand Dollars ($500,000) at such
     time, then such principal amount), together with:


                                       2
<PAGE>   6


               (i) an amount equal to the Prepayment Compensation Amount due at
          such time in respect of the principal amount of the Notes being so
          paid; and

               (ii) interest on such principal amount then being paid accrued to
          the payment date.

          (b) NOTICE OF OPTIONAL PAYMENT. The Company will give notice of any
     optional payment of the Notes pursuant to this Section 1.3 to each holder
     of Notes not less than thirty (30) days nor more than sixty (60) days
     before the specified payment date, stating:

               (i) the specified payment date;

               (ii) that such payment is to be made pursuant to this Section
          1.3;

               (iii) the principal amount of each Note to be paid on such date;

               (iv) the interest to be paid on each such Note, accrued to the
          specified payment date; and

               (v) the calculation (with details) of an estimated Prepayment
          Compensation Amount, if any (calculated as if the date of such notice
          was the date of payment), due in connection with such payment.

          (c) Notice of payment having been so given, the aggregate principal
     amount of the Notes to be paid stated in such notice, together with the
     Prepayment Compensation Amount determined as of the specified payment date,
     if any, and interest thereon accrued to the specified payment date, shall
     become due and payable on the specified payment date. Two (2) Business Days
     prior to the making of such payment, the Company shall deliver to each
     holder of Notes by facsimile transmission (confirmed by nationwide
     overnight courier) a certificate of a Senior Financial Officer specifying
     the details of the calculation of the Prepayment Compensation Amount as of
     the specified payment date, and including a copy of the source of interest
     rate information used in the calculation thereof.

     1.4 OFFER TO PAY UPON CHANGE IN CONTROL

          (a) NOTICE OF CHANGE IN CONTROL NOTICE EVENT. In the event of the
     obtaining of knowledge of a Change in Control Notice Event by any Senior
     Officer (including, without limitation, via the receipt of notice of a
     Change in


                                       3
<PAGE>   7


     Control Notice Event from any holder of Notes), the Company will, within
     five (5) Business Days after the occurrence of such event, give notice of
     such Change in Control Notice Event to each holder of Notes. Each such
     notice shall:

               (i) be dated the date of the sending of such notice;

               (ii) be executed by a Senior Officer;

               (iii) refer to this Section 1.4; and

               (iv) specify, in reasonable detail, the nature and date of the
          Change in Control Notice Event.

          (b) OFFER IN RESPECT OF A CHANGE IN CONTROL. In the event of a Change
     in Control, the Company will, within five (5) Business Days after the
     occurrence of such event (or, in the case of any Change in Control the
     consummation or finalization of which would involve any action of the
     Company, at least twenty (20) days prior to such Change in Control), give
     notice of such Change in Control to each holder of Notes. Such notice shall
     contain an irrevocable separate offer to each holder of Notes to pay all,
     but not less than all, of the principal of, and interest and Prepayment
     Compensation Amount, if any, on the Notes held by such holder on a date
     (the "CHANGE IN CONTROL PAYMENT DATE") specified in such notice that is not
     less than twenty (20) days and not more than thirty (30) days after the
     date of such notice. Each such notice shall:

               (i) be dated the date of the sending of such notice;

               (ii) be executed by a Senior Officer;

               (iii) specify, in reasonable detail, the nature and date of the
          Change in Control;

               (iv) specify the Change in Control Payment Date;

               (v) specify the principal amount of each Note outstanding;

               (vi) specify the interest that would be due on each Note offered
          to be paid, accrued to the Change in Control Payment Date; and


                                       4
<PAGE>   8


               (vii) the calculation (with details) of an estimated Prepayment
          Compensation Amount, if any (calculated as if the date of such notice
          was the date of payment), due in connection with such payment.

          (c) ACCEPTANCE, REJECTION. Each holder of Notes shall have the option
     to accept or reject such offered payment. In order to reject such offered
     payment, a holder of Notes shall cause a notice of such rejection to be
     delivered to the Company at least five (5) days prior to the Change in
     Control Payment Date. A failure to reject in writing such written offer of
     payment as provided in this Section 1.4(c), or a written acceptance of such
     offered prepayment, shall be deemed to constitute an acceptance of such
     offer.

          (d) DEFERRAL OF OBLIGATION TO PURCHASE. The obligation of the Company
     to purchase Notes pursuant to the offers required by Section 1.4(b) and
     accepted or deemed accepted in accordance with Section 1.4(c) is subject to
     the occurrence of the Change in Control in respect of which such offers and
     acceptances shall have been made. In the event that such Change in Control
     does not occur prior to the Change in Control Payment Date in respect
     thereof, such purchase shall be deferred until and shall be made on the
     date on which such Change in Control occurs or, if the Company determines
     that efforts to effect such Change in Control have ceased or have been
     abandoned, then such offer, acceptances and obligation to purchase shall be
     deemed to have been rescinded. The Company shall keep each holder of Notes
     reasonably and timely informed of:

               (i) any such deferral of the date of purchase;

               (ii) the date on which such Change in Control and the purchase
          are expected to occur; and

               (iii) any determination by the Company that efforts to effect
          such Change in Control have ceased or been abandoned.

               (iv) PAYMENT. The offered payment shall be made at one hundred
          percent (100%) of the principal amount of the Notes to be prepaid,
          together with interest and Prepayment Compensation Amount, if any, on
          such Notes, accrued to and determined as of the Change in Control
          Payment Date. Two (2) Business Days prior to the making of such
          payment, the Company shall deliver to each holder of Notes by
          facsimile transmission a certificate of a Senior Financial Officer
          specifying the details of the calculation of the Prepayment
          Compensation Amount as of


                                       5
<PAGE>   9


          the specified payment date, and including a copy of the source of
          interest rate information used in such calculation.

     1.5 DELIVERY OF NOTES IN PAYMENT OF WARRANT PURCHASE PRICE

     The Warrant Agreement provides that a holder of Warrants may tender Notes
in partial or complete payment of the purchase price for the shares of Common
Stock issued upon exercise of the Warrants. Promptly following the receipt of
any Note so tendered, the Company shall promptly cancel and retire such
surrendered Note (and no such Note shall be reissued), and shall issue to the
holder thereof a new Note in the principal amount of such tendered Note
remaining after deduction of the principal amount thereof applied to payment of
the purchase price for the shares of Common Stock. For purposes of Rule 144
under the Securities Act, 17 C.F.R. Section 230.144, the Company and you agree
that a tender of Notes in payment of the exercise price in respect of the
Warrants shall not be deemed a prepayment of the Notes, but rather a conversion
of such Notes, pursuant to the terms of the Warrant Agreement and the Warrants,
into Common Stock.

     1.6 PAYMENTS AMONG NOTEHOLDERS

     If at the time any payment of the principal of the Notes made pursuant to
Section 1.2 or Section 1.3 is due there is more than one Note outstanding, the
aggregate principal amount of each such required or optional partial payment of
the Notes shall be allocated among the Notes at the time outstanding pro rata in
proportion to the respective unpaid principal amounts of all such outstanding
Notes.

     1.7 NOTATION OF NOTES ON PAYMENT

     Upon any partial payment of a Note, the holder of such Note may (but shall
not be required to), at its option:

          (a) surrender such Note to the Company pursuant to Section 2.2 in
     exchange for a new Note in a principal amount equal to the principal amount
     remaining unpaid on the surrendered Note;

          (b) make such Note available to the Company for notation thereon of
     the portion of the principal so paid; or

          (c) mark such Note with a notation thereon of the portion of the
     principal so paid.


                                       6
<PAGE>   10


In case the entire principal amount of any Note is paid, such Note shall be
surrendered to the Company for cancellation and shall not be reissued, and no
Note shall be issued in lieu of the paid principal amount of any Note.

     1.8 NO OTHER PAYMENTS OF PRINCIPAL; ACQUISITION OF NOTES

     Except for payments of principal made in accordance with this Section 1.8,
the Company may not make any payment of principal in respect of the Notes. The
Company will not, and will not permit any Subsidiary or any Affiliate to,
directly or indirectly, acquire or make any offer to acquire any Notes unless:

          (a) the Company or such Subsidiary or Affiliate shall have offered in
     writing to acquire Notes, pro rata, from all holders of the Notes upon the
     same terms and at the same price, which price shall be clearly disclosed;

          (b) such offer will remain open for at least ten (10) Business Days
     from the date the offer is received by each holder of Notes;

          (c) the Company will provide each holder of Notes with a calculation
     of the estimated Prepayment Compensation Amount that would be due if the
     Company were to pay, in accordance with Section 1.3, the amount of Notes in
     respect of which such offer is being made; and

          (d) the Company will promptly provide each holder of Notes with such
     other information regarding such offer (including, without limitation, if
     requested, a list of all holders of Notes indicating the amount of the
     holdings of each and whether such holder shall have accepted or rejected
     such offer, as of the most recent practicable time) as such holder shall
     reasonably request. In the event that the Company acquires any Notes, such
     Notes will thereafter be cancelled and no Notes will be issued in
     substitution therefor.

     1.9 MANNER OF PAYMENTS

          (a) MANNER OF PAYMENT. The Company shall pay all amounts payable with
     respect to each Note (without any presentment of such Notes and without any
     notation of such payment being made thereon) by crediting, by federal funds
     bank wire transfer, the account of the holder thereof in any bank in the
     United States of America as may be designated in writing by such holder, or
     in such other manner as may be reasonably directed or to such other address
     in the United States of America as may be reasonably designated in writing
     by such holder. Annex 1 shall be deemed to constitute notice, direction or
     designation (as appropriate) by the Holder to the Company with respect to


                                       7
<PAGE>   11


     payments to be made to the Holder as aforesaid. In the absence of such
     written direction, all amounts payable with respect to each Note shall be
     paid by check mailed and addressed to the registered holder of such Note at
     the address shown in the register maintained by the Company pursuant to
     Section 2.1.

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

          (c) PAYMENTS, WHEN RECEIVED. Any payment to be made to the holders of
     Notes hereunder or under the Notes shall be deemed to have been made on the
     Business Day such payment actually becomes available at such holder's bank
     prior to the close of business of such bank, provided that interest for one
     day at the non-default interest rate of the Notes shall be due on the
     amount of any such payment that actually becomes available to such holder
     at such holder's bank after 12:00 noon (local time of such bank).

2. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES

     2.1 REGISTRATION OF NOTES.

     The Company will keep at its office, maintained pursuant to Section 3.3, a
register for the registration and transfer of Notes. The name and address of
each holder of one or more Notes, each transfer thereof made in accordance with
Section 2.2 and the name and address of each transferee of one or more Notes
shall be registered in such register. 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, other than in accordance with Section 2.2.

     2.2 EXCHANGE OF NOTES.

          (a) EXCHANGE OF NOTES. Upon surrender of any Note at the office of the
     Company maintained pursuant to Section 3.3, duly endorsed or accompanied by
     a written instrument of transfer duly executed by the registered holder of
     such Note or such holder's attorney duly authorized in writing, the


                                       8
<PAGE>   12


     Company will execute and deliver, at the Company's expense (except as
     provided in Section 2.2(b)), a new Note or Notes in exchange therefor, in
     an aggregate principal amount equal to the unpaid principal amount of the
     surrendered Note. Each such new Note shall be registered in the name of
     such Person as such holder may request and shall be substantially in the
     form of Attachment A. 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. Each such new Note shall carry the same rights to unpaid
     interest and interest to accrue that were carried by the Note so exchanged
     or transferred. Notes shall not be transferred in denominations of less
     than Five Hundred Thousand Dollars ($500,000), provided that a holder of
     Notes may transfer its entire holding of Notes regardless of the principal
     amount of such holder's Notes.

          (b) COSTS. The Company will pay the cost of delivering to or from such
     holder's home office or custodian bank from or to the Company, the
     surrendered Note and any Note issued in substitution or replacement for the
     surrendered Note. 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.

     2.3 REPLACEMENT OF NOTES.

     Upon receipt by the Company from the registered holder of a Note of
evidence reasonably satisfactory to the Company of 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 loss,
theft, destruction or mutilation), and:

          (a) in the case of loss, theft or destruction, of indemnity reasonably
     satisfactory to the Company; provided, however, that if the holder of such
     Note is a Holder, an institutional investor or a nominee either, the
     unsecured agreement of indemnity of such Holder or institutional investor
     (but not of any nominee therefor) shall be deemed to be satisfactory; or

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

the Company at its own expense will execute and deliver, in lieu thereof, a
replacement 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.


                                       9
<PAGE>   13


     2.4 ISSUANCE TAXES.

     The Company will pay all taxes (if any) due (but not, in any event, income
taxes) in connection with and as the result of the initial issuance and sale of
the Notes, the amendment and restatement contemplated hereby and in connection
with any modification, waiver or amendment of this Agreement or the Notes and
shall save each holder of Notes harmless without limitation as to time against
any and all liabilities with respect to all such taxes.

3. GENERAL COVENANTS

     The Company covenants that on and after the Closing Date and so long as any
of the Notes shall be outstanding:

     3.1 PAYMENT OF TAXES AND CLAIMS.

     The Company will, and will cause each Restricted Subsidiary to, pay before
they become delinquent:

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

          (b) all claims or demands of materialmen, mechanics, carriers,
     warehousemen, vendors, landlords, growers or suppliers of agricultural
     products and other like Persons that, if unpaid, might result in the
     creation of a statutory, regulatory or common law Lien (other than a Lien
     expressly permitted pursuant to Section 4.3(a)(ii)(D)) upon its Property;

provided, that items of the foregoing description need not be paid so long as
such items are being actively contested in good faith and by appropriate
proceedings and reasonable book reserves in accordance with GAAP have been
established and maintained with respect thereto.

     3.2 MAINTENANCE OF PROPERTIES; CORPORATE EXISTENCE; ETC.

     The Company shall, and will cause each Restricted Subsidiary to:

          (a) PROPERTY - maintain its Property in good condition, ordinary wear
     and tear and obsolescence excepted, and make all necessary renewals,
     replacements, additions, betterments and improvements thereto; provided,
     however, that this Section 3.2(a) shall not prevent the Company or any
     Restricted Subsidiary from discontinuing the operation or the maintenance
     of


                                       10
<PAGE>   14


     any of its Properties if such discontinuance is desirable in the conduct of
     its business and such discontinuance could not reasonably be expected to
     have a Material Adverse Effect;

          (b) INSURANCE - maintain, with financially sound and reputable
     insurers, insurance with respect to its Property and business against such
     casualties and contingencies, of such types and in such amounts as is
     customary in the case of corporations of established reputations engaged in
     the same or a similar business and similarly situated;

          (c) FINANCIAL RECORDS - keep proper books of record and account, in
     which full and correct entries shall be made of all dealings and
     transactions of or in relation to the Properties and business thereof, and
     which will permit the production of financial statements in accordance with
     GAAP;

          (d) CORPORATE EXISTENCE AND RIGHTS - do or cause to be done all things
     necessary to preserve and keep in full force and effect its corporate
     existence, corporate rights (charter and statutory) and corporate
     franchises, except as permitted by Section 4.1; and

          (e) COMPLIANCE WITH LAW - comply with all laws, ordinances and
     governmental rules and regulations to which it is subject (including,
     without limitation, any environmental protection law) and obtain all
     licenses, certificates, permits, franchises and other governmental
     authorizations necessary to the ownership of its Properties and the conduct
     of its business except for such violations and failures to obtain that, in
     the aggregate, could not reasonably be expected to have a Material Adverse
     Effect.

     3.3 PAYMENT OF NOTES AND MAINTENANCE OF OFFICE.

     The Company will punctually pay, or cause to be paid, the principal of and
interest (and Prepayment Compensation Amount, if any) on, the Notes, as and when
the same shall become due according to the terms hereof and of the Notes, and
will maintain an office at the address of the Company provided in Annex 2 where
notices, presentations and demands in respect hereof or the Notes may be made
upon it. Such office will be maintained at such address until such time as the
Company notifies the holders of the Notes of any change of location of such
office, which will in any event be located within the United States of America.


                                       11
<PAGE>   15


     3.4 PENSION PLANS.

          (a) COMPLIANCE. The Company will, and will cause each ERISA Affiliate
     to, at all times with respect to each Pension Plan, comply with all
     applicable provisions of ERISA and the IRC, except for such failures to
     comply that, in the aggregate, could not reasonably be expected to have a
     Material Adverse Effect.

          (b) PROHIBITED ACTIONS. The Company will not, and will not permit any
     ERISA Affiliate to:

               (i) engage in any "prohibited transaction" (as such term is
          defined in section 406 of ERISA or section 4975 of the IRC) or
          "reportable event" (as such term is defined in section 4043 of ERISA)
          that could result in the imposition of a tax or penalty;

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

               (iii) terminate any Plan in a manner that could result in the
          imposition of a Lien on the Property of the Company or any Restricted
          Subsidiary pursuant to section 4068 of ERISA or the creation of any
          liability under section 4062 of ERISA;

               (iv) fail to make any payment required by section 515 of ERISA;

               (v) incur any withdrawal liability under Title IV of ERISA with
          respect to any Multiemployer Plan or any liability as a result of the
          termination of any Multiemployer Plan; or

               (vi) incur any liability or suffer the existence of any Lien on
          the Property of the Company or any ERISA Affiliate, in either case
          pursuant to Title I or Title IV of ERISA or pursuant to the penalty or
          excise tax or security provisions of the IRC;

if the aggregate amount of the taxes, penalties, funding deficiencies, interest,
amounts secured by Liens, and other liabilities in respect of any of the
foregoing at any time could reasonably be expected to have a Material Adverse
Effect.

          (c) FOREIGN PENSION PLANS. The Company will, and will cause each
     Restricted Subsidiary to, at all times, comply in all material respects
     with all


                                       12
<PAGE>   16


     laws, regulations and orders applicable to the establishment, operation,
     administration and maintenance of all Foreign Pension Plans, and pay when
     due all premiums, contributions and any other amounts required by
     applicable Foreign Pension Plan documents or applicable laws, except where
     the failure to comply with such laws, regulations and orders, and to make
     such payments, in the aggregate for all such failures, could not reasonably
     be expected to have a Material Adverse Effect.

     3.5 PRIVATE OFFERING.

     The Company will not, and will not permit any Person acting on its behalf
to, offer the Notes or any part thereof or any similar securities for issue or
sale to, or solicit any offer to acquire any of the same from, any Person so as
to bring the issuance and sale of the Notes within the provisions of section 5
of the Securities Act.

4. NEGATIVE AND FINANCIAL COVENANTS

     4.1 MERGERS AND CONSOLIDATIONS.

     The Company will not, nor will it permit any Restricted Subsidiary to,
merge with or into or consolidate with any other Person, permit any other Person
to merge or consolidate with or into it or sell all or substantially all of its
Property to any other Person; provided, however, that the foregoing restriction
does not apply to the merger or consolidation of the Company with or into
another corporation or sale of all or substantially all of the Property of the
Company to any other Person if:

          (a) the corporation that results from such merger or consolidation or
     to which all or substantially all of the Property of the Company is sold
     (the "SURVIVING CORPORATION") is organized under the laws of, and conducts
     substantially all of its business and has substantially all of its
     Properties within, the United States of America or any jurisdiction or
     jurisdictions thereof;

          (b) the Surviving Corporation (if not the Company) expressly assumes
     the due and punctual payment of the principal of and Prepayment
     Compensation Amount, if any, and interest on all of the Notes, according to
     their tenor, and the due and punctual performance and observance of all the
     covenants in the Notes, this Agreement and each other Financing Document to
     be performed or observed by the Company, pursuant to such assumption
     agreements and instruments in such forms as shall be approved by the
     Required Holders, and the Company causes to be delivered to each holder of
     Notes an opinion, satisfactory in form and substance to the Required
     Holders, of


                                       13
<PAGE>   17


     independent counsel to the effect that such agreements and instruments are
     enforceable in accordance with their terms; and

          (c) immediately prior to, and immediately after the consummation of
     the transaction, and after giving effect thereto:

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

               (ii) the Surviving Corporation would be permitted by the
          provisions of Section 4.6 to incur at least One Dollar ($1.00) of
          additional Adjusted Debt, and of Section 4.7 to incur at least One
          Dollar ($1.00) of additional Senior Debt, assuming that the financial
          ratios set forth in Section 4.6 and Section 4.7 were recalculated on a
          Pro Forma Adjusted Basis as of the last day of the fiscal quarter of
          the Surviving Corporation then most recently ended.

Notwithstanding the foregoing, a Restricted Subsidiary may merge with or into,
or consolidate with, or Transfer all or substantially all of its Property to:

          (A) the Company so long as the Company is the Surviving Corporation;

          (B) a Wholly-Owned Restricted Subsidiary, so long as such Wholly-Owned
     Restricted Subsidiary is the Surviving Corporation; and

          (C) any Person other than the Company or a Restricted Subsidiary so
     long as such Transfer complies in all respects with Section 4.2.

     4.2 DISPOSITION OF ASSETS, RESTRICTED SUBSIDIARY STOCK.

          (a) DISPOSITION OF ASSETS. The Company will not, and will not permit
     any Restricted Subsidiary to Transfer any Property except:

               (i) Transfers of inventory and of other Property no longer
          necessary for the operation of, and that are individually and in the
          aggregate immaterial to, the business of the Company and the
          Restricted Subsidiaries, in each case in the ordinary course of
          business of the Company or such Restricted Subsidiary;

               (ii) Transfers from the Company to a Wholly-Owned Restricted
          Subsidiary;


                                       14
<PAGE>   18


               (iii) Transfers from a Restricted Subsidiary to the Company or a
          Wholly-Owned Restricted Subsidiary;

               (iv) Transfers for Acceptable Consideration arising solely out of
          Sale-Leaseback Transactions, so long as:

                        (A) the Property is both Transferred and concurrently or
                   thereafter leased by the Company or a Restricted Subsidiary
                   as lessee, in each case within one hundred eighty (180) days
                   after the construction of such Property or the initial
                   acquisition thereof by the Company or a Restricted
                   Subsidiary;

                        (B) within one hundred eighty (180) days after the
                   Transfer involved in such Sale-Leaseback Transaction, the
                   proceeds of such Transfer, net of reasonable and ordinary
                   transaction costs, expenses and income tax on any gain
                   related to such Transfer incurred and actually paid in
                   connection with such Transfer, are applied by the Company or
                   such Restricted Subsidiary to:

                              (I) purchase Tangible Property ; or

                              (II) pay, on or prior to its scheduled maturity,
                         an amount of Debt of the Company or any Restricted
                         Subsidiary (other than Debt owing to an Affiliate or
                         Debt subordinate to the Subordinated Notes); and

                        (C) immediately before and after the consummation of the
                   Transfer, and after giving effect thereto, no Default or
                   Event of Default would exist;

               (v) any other Transfer at any time of any Property (other than in
          connection with Sale-Leaseback Transactions) to a Person for an
          Acceptable Consideration if:

                        (A) the sum of:

                              (I) the book value of such Property at the time of
                         Transfer; plus

                              (II) the aggregate book value of all other
                         Property Transferred (other than in Excluded Transfers)
                         after the Fiscal Year End Date immediately preceding
                         the date of such Transfer;


                                       15
<PAGE>   19


                    would be less than fifteen percent (15%) of Consolidated
                    Total Assets measured as of the Fiscal Year End Date
                    immediately preceding the date of such Transfer;

                        (B) the sum of:

                              (I) the book value of such Property at the time of
                         Transfer; plus

                              (II) the aggregate book value of all other
                         Property Transferred (other than in Excluded Transfers)
                         since the Closing Date;

                    would be less than forty percent (40%) of Consolidated Total
                    Assets measured as of the most recent Fiscal Year End Date;
                    and

                        (C) immediately before and after the consummation of the
                   Transfer, and after giving effect thereto, no Default or
                   Event of Default would exist;

          and

               (vi) any other Transfer of Property (other than in a
          Sale-Leaseback Transaction), but solely to the extent that, within one
          hundred eighty (180) days after such Transfer, the proceeds of such
          Transfer, net of reasonable and ordinary transaction costs, expenses
          and income tax on any gain related to such Transfer incurred and
          actually paid in connection with such Transfer, are applied by the
          Company or such Restricted Subsidiary to:

                        (A) purchase Tangible Property; or

                        (B) pay, on or prior to its scheduled maturity, an
                   amount of Debt of the Company or any Restricted Subsidiary
                   (other than Debt owing to an Affiliate or Debt subordinate to
                   the Subordinated Notes).

          (b) DISPOSITION OF RESTRICTED SUBSIDIARY STOCK. The Company will not,
     and will not permit any Restricted Subsidiary to, sell or otherwise dispose


                                       16
<PAGE>   20


     of any shares of the stock or Rights of a Restricted Subsidiary (such stock
     and Rights herein called "RESTRICTED SUBSIDIARY STOCK"), nor will any
     Restricted Subsidiary issue, sell or otherwise dispose of any shares of, or
     Rights to purchase shares of, its own Restricted Subsidiary Stock;
     provided, however, that the foregoing restrictions do not apply to:

               (i) Transfers by the Company or a Restricted Subsidiary of shares
          of Restricted Subsidiary Stock to the Company or a Wholly-Owned
          Restricted Subsidiary;

               (ii) the issuance by a Restricted Subsidiary of shares of its own
          Restricted Subsidiary Stock to the Company or a Wholly-Owned
          Restricted Subsidiary;

               (iii) the issuance by a Restricted Subsidiary of shares of its
          own Restricted Subsidiary Stock to directors, Management or
          Affiliates; provided, however, that at no time shall the total number
          of shares of such Restricted Subsidiary Stock issued to or held by
          Management and Affiliates as a group (including shares underlying
          Rights) exceed twenty-five percent (25%) of the total number of shares
          of such Restricted Subsidiary Stock outstanding following any such
          issuance; and

               (iv) the Transfer of all of the Restricted Subsidiary Stock of a
          Restricted Subsidiary owned by the Company and its other Restricted
          Subsidiaries if:

                        (A) such Transfer satisfies the requirements of Section
                   4.2(a)(v) or Section 4.2(a)(vi) or both;

                        (B) in connection with such Transfer, the entire
                   Investment (whether represented by stock, Debt, claims or
                   otherwise) of the Company and its other Restricted
                   Subsidiaries in such Restricted Subsidiary is Transferred to
                   a Person other than the Company or a Restricted Subsidiary
                   not being simultaneously disposed of; and

                        (C) the Restricted Subsidiary being disposed of has no
                   continuing Investment in any other Restricted Subsidiary not
                   being simultaneously disposed of or in the Company.

     For purposes of determining the book value of assets constituting
     Restricted Subsidiary Stock being Transferred as provided in clause (b)(iv)
     above, such


                                       17
<PAGE>   21


     book value shall be deemed to be the aggregate book value of the net assets
     of the Restricted Subsidiary that shall have issued such Restricted
     Subsidiary Stock.

          (c) RESTRICTED SUBSIDIARY MERGERS AND CONSOLIDATIONS. A merger or
     consolidation of a Restricted Subsidiary in which a Person other than the
     Company or a Wholly-Owned Restricted Subsidiary shall be the Surviving
     Corporation shall be deemed to be a disposition of the Restricted
     Subsidiary Stock of such Restricted Subsidiary and shall be subject to
     Section 4.2(b).

     4.3 LIENS.

          (a) NEGATIVE PLEDGE. The Company will not, and will not permit any
     Restricted Subsidiary to, cause or permit, or agree or consent to cause or
     permit in the future (upon the happening of a contingency or otherwise),
     any of their Property, whether now owned or hereafter acquired, at any time
     to be subject to a Lien except:

               (i) CLOSING DATE AND SENIOR DEBT LIENS -

                        (A) Liens in existence on the Closing Date and described
                   in PART 2.1(c) OF ANNEX 3; and

                        (B) Liens securing Senior Debt arising under the terms
                   of an Acceptable Revolving Credit Facility;

               (ii) ORDINARY COURSE BUSINESS LIENS -

                        (A) PERFORMANCE BONDS - Liens incurred or deposits made
                   in the ordinary course of business to secure the performance
                   of letters of credit, bids, tenders, sales contracts, leases,
                   statutory obligations, surety and performance bonds (of a
                   type other than set forth in Section 4.3(a)(iii)) and other
                   similar obligations not incurred in connection with the
                   borrowing of money, the obtaining of advances or the payment
                   of the deferred purchase price of Property;

                        (B) REAL ESTATE - Liens in the nature of reservations,
                   exceptions, encroachments, easements, rights-of-way,
                   covenants, conditions, restrictions, leases and other similar
                   title exceptions or encumbrances affecting real property;
                   provided, however, that such exceptions and encumbrances do
                   not in the aggregate


                                       18
<PAGE>   22


                    materially detract from the value of said Properties or
                    materially interfere with the use of such Properties in the
                    ordinary conduct of the business of the Company and the
                    Subsidiaries;

                        (C) TAXES, WORKERS' COMPENSATION, ETC. -

                              (I) Liens securing taxes, assessments or
                         governmental charges which are either not yet due or
                         payable or which are being actively contested in good
                         faith and by appropriate proceedings, or

                              (II) pledges or deposits securing obligations
                         under worker's compensation, unemployment compensation
                         laws or similar legislation to secure public or
                         statutory obligations of the Company or any Restricted
                         Subsidiary; or

                              (III) levies or the claims or demands of
                         materialmen, mechanics, carriers, ware-housemen,
                         vendors, landlords and other like Persons;

                   provided, however, that the payment thereof is not required
                   by Section 3.1 and that adequate reserves have been made
                   against such claims; and

                        (D) PACA - any Lien (including any Lien arising out of
                   any constructive trust) arising under PACA which is asserted,
                   perfected or imposed by any growers or suppliers to the
                   Company or any Restricted Subsidiary of agricultural
                   products, so long as no creditors of the Company or any of
                   the Restricted Subsidiaries have asserted their rights under
                   PACA that, in the aggregate, exceed Five Hundred Thousand
                   Dollars ($500,000);

               (iii) JUDICIAL LIENS - Liens arising from judicial attachments
          and judgments, securing appeal bonds or supersedeas bonds, and arising
          in connection with court proceedings (including, without limitation,
          surety bonds and letters of credit or any other instrument serving a
          similar purpose); provided, however, that the execution or other
          enforcement of such Liens is effectively stayed, that the claims
          secured thereby are being actively contested in good faith and by
          appropriate proceedings, that adequate reserves have been made against
          such claims and that the aggregate amount so secured will not at any
          time exceed Five Million Dollars ($5,000,000);


                                       19
<PAGE>   23


               (iv) INTERGROUP LIENS - Liens on Property of a Restricted
          Subsidiary; provided, however, that such Liens secure only obligations
          owing to the Company;

               (v) PURCHASE MONEY LIENS - any Lien on Property acquired or owned
          by the Company or any Restricted Subsidiary or leased by the Company
          or any Restricted Subsidiary as lessee under any Capital Lease which
          secures Debt (including Debt in respect of a Capital Lease) incurred
          to pay all or a portion of the related purchase price or costs of
          construction, extension or improvement of such Property, so long as:

                        (A) that such purchase price or costs of construction,
                   extension or improvement shall not exceed the Fair Market
                   Value of such Property, extension or improvement, as the case
                   may be, determined at the time of the creation of such Lien;

                        (B) such Lien is created contemporaneously with, or
                   within one hundred eighty (180) days of, such acquisition,
                   construction, extension or improvement;

                        (C) such Lien encumbers only Property so purchased,
                   acquired, constructed, extended or improved after the Closing
                   Date;

                        (D) such Lien is not, after the creation thereof,
                   extended to any other Property; and

                        (E) immediately prior to the incurrence of, and after
                   giving effect to the incurrence of, all Debt secured by the
                   Liens referred to in such clauses, no Default or Event of
                   Default exists or would exist;

               (vi) ACQUISITION LIENS - any Lien (including, without limitation,
          any Lien arising out of a Capital Lease) existing on Property at the
          time of acquisition thereof by the Company or any Restricted
          Subsidiary (whether or not the Debt secured thereby is assumed by the
          Company or any Restricted Subsidiary), or existing on the Property of,
          the Debt of or the Capital Stock of any Person (other than an
          Unrestricted Subsidiary) at the time such Person became a Restricted
          Subsidiary (whether by means of the acquisition of all or
          substantially all of the Property of such


                                       20
<PAGE>   24


          Person, of the Capital Stock thereof or otherwise) or merges or
          consolidates with the Company or any Restricted Subsidiary, so long
          as:

                        (A) the aggregate principal amount of Debt secured
                   thereby does not exceed the acquisition cost of such
                   Property, the consideration paid for the acquisition of such
                   Person or the consideration paid in connection with such
                   merger or consolidation, as the case may be, as determined at
                   the date of the acquisition, merger or consolidation;

                        (B) such Lien shall not extend to or cover any Property
                   other than the Property subject to such Lien at the time of
                   any such acquisition; and

                        (C) immediately after, and after giving effect to, such
                   acquisition, merger or consolidation, and the assumption of
                   all such Liens no Default or Event of Default exists or would
                   exist; and

               (vii) OTHER LIENS - Liens securing Debt of the Company or any
          Restricted Subsidiary and not otherwise permitted by clauses (i)
          through (vi), inclusive, of this Section 4.3(a) so long as,
          immediately prior to, and immediately after giving effect to the
          incurrence of such Debt:

                        (A) no Default or Event of Default exists or would
                   exist; and

                        (B) it would be permitted by the provisions of Section
                   4.6 to incur at least One Dollar ($1.00) of additional
                   Adjusted Debt, and, to the extent that such Liens secure
                   Senior Debt, of Section 4.7 to incur at least One Dollar
                   ($1.00) of additional Senior Debt, assuming that the
                   financial ratios set forth in Section 4.6 and Section 4.7
                   were recalculated on a Pro Forma Basis as of the last day of
                   the fiscal quarter of the Company then most recently ended.

          (b) EQUAL AND RATABLE LIEN; EQUITABLE LIEN. In case any Property shall
     be subjected to a Lien in violation of Section 4.3(a), the Company will
     forthwith make or cause to be made, to the fullest extent permitted by
     applicable law, provision whereby the Notes will be secured equally and
     ratably as to such Property with all other obligations secured thereby
     pursuant to such agreements and instruments as shall be approved by the
     Required Holders, and the Company will promptly cause to be delivered to
     each holder of a Note an opinion of independent counsel satisfactory to the
     Required Holders to the effect


                                       21
<PAGE>   25


     that such agreements and instruments are enforceable in accordance with
     their terms, and in any event the Notes shall have the benefit, to the full
     extent that, and with such priority as, the holders of Notes may be
     entitled under applicable law, of an equitable Lien on such Property (and
     any proceeds thereof) securing the Notes. Such violation of Section 4.3(a)
     will constitute an Event of Default hereunder, whether or not any such
     provision is made or any equitable Lien is created pursuant to this Section
     4.3(b).

          (c) CONSTRUCTION. Nothing in this Section 4.3 shall be construed to
     permit the incurrence or existence of any Debt not otherwise permitted by
     this Agreement. Nothing in this Agreement that permits the incurrence or
     existence of any Debt shall be construed to permit the incurrence or
     existence of a Lien securing such Debt unless such Lien is permitted by
     Section 4.3(a).

     4.4 NET WORTH.

     The Company will not at any time permit Consolidated Net Worth to be less
than an amount equal to the sum of:

          (a) Twenty-Four Million Dollars ($24,000,000); plus

          (b) one hundred percent (100%) of the principal amount of any Debt of
     the Company, other than Senior Debt, that is converted into Capital Stock
     of the Company; plus

          (c) for each fiscal year of the Company ending after the Restatement
     Date, an amount equal to the greater of:

               (i) Zero Dollars ($0); and

               (ii) fifty percent (50%) of Consolidated Net Company Income
          determined in respect of such fiscal year.

     4.5 FIXED CHARGE COVERAGE.

     The Company will not, at any time on or after March 31, 2001, permit the
Pro Forma Combined Fixed Charge Coverage Ratio for a period consisting of any
four (4) out of the five (5) then most recently ended full consecutive fiscal
quarters of the Company, measured as at the end of the most recently ended
fiscal quarter of the Company, to be less than 1.25 to 1.0.


                                       22
<PAGE>   26


     4.6 TOTAL DEBT.

     The Company will not at any time permit the ratio of Consolidated Adjusted
Debt at such time to Pro Forma Combined EBITDA, as determined in respect of the
then most recently ended period of four (4) full consecutive fiscal quarters of
the Company, to exceed:

          (a) 4.5 to 1.0 at any time from the Closing Date through and including
     December 31, 2001; or

          (b) 4.0 to 1.0 at any time following December 31, 2001.

     4.7 SENIOR DEBT.

     The Company will not at any time permit the ratio of Consolidated Senior
Debt at such time to Pro Forma Combined EBITDA, as determined in respect of the
then most recently ended period of four (4) full consecutive fiscal quarters of
the Company, to exceed:

          (a) 3.0 to 1.0 at any time from the Closing Date through and including
     February 1, 2001; or

          (b) 2.5 to 1.0 at any time following February 1, 2001.

     4.8 RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.

          (a) LIMIT ON RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. Except as
     permitted by Section 4.8(b), the Company will not, nor will it permit any
     Restricted Subsidiary to, at any time, declare or make or incur any
     liability to declare or make any Restricted Payment or make or authorize,
     or permit any Restricted Subsidiary to make or authorize, any Restricted
     Investment unless, immediately after and after giving effect to the
     proposed Restricted Payment or Restricted Investment:

               (i) the sum of

                        (A) the aggregate amount of Restricted Investments
                   (valued in each case at acquisition cost) made during the
                   period commencing on the Closing Date and ending on the date
                   of, and after giving effect to, such proposed Restricted
                   Payment or Restricted Investment; plus


                                       23
<PAGE>   27


                        (B) the aggregate amount of Restricted Payments made
                   during the period commencing on the Closing Date and ending
                   on the date of, and after giving effect to, such proposed
                   Restricted Payment or Restricted Investment;

     would not exceed an amount equal to the sum of:

                              (I) Five Hundred Thousand Dollars ($500,000); plus

                              (II) fifty percent (50%) of Consolidated Net
                         Company Income in respect of the period beginning on
                         January 2, 2000 and ending on the last day of the
                         fiscal quarter of the Company then most recently ended
                         (or minus one hundred percent (100%) of Consolidated
                         Net Company Income for such period if Consolidated Net
                         Company Income for such period is a loss); plus

                              (III) the aggregate amount of net cash proceeds
                         received by the Company from the sale of any Specified
                         Stock made after the Closing Date; plus

                              (IV) the aggregate amount of net cash proceeds
                         received after the Closing Date by the Company or any
                         Subsidiary from the sale or liquidation, or as a result
                         of the final maturity, of any Restricted Investment
                         made after the Closing Date; plus

                              (V) the aggregate principal amount of any Debt
                         (including the Notes) cancelled in exchange for or
                         converted into any Specified Stock after the Closing
                         Date; and

               (ii) no Default or an Event of Default would exist.

          (b) CUMULATIVE PREFERRED STOCK DIVIDENDS PERMITTED. Notwithstanding
     the provisions of Section 4.8(a), the Company may make payments of cash
     dividends to the holders of the Cumulative Preferred Stock which are
     required by the terms of such Cumulative Preferred Stock. For the purpose
     of making computations under Section 4.8(a), payments of cash dividends in
     respect of the Cumulative Preferred Stock shall in each case be excluded.


                                       24
<PAGE>   28


          (c) OTHER MATTERS. For the purpose of making computations under
     Section 4.8(a), Restricted Investments made solely by issuance of Specified
     Stock of the Company shall in each case be excluded. Any Person that
     becomes a Restricted Subsidiary after the Closing Date shall be deemed to
     have made, at the time it becomes a Restricted Subsidiary, all Restricted
     Investments of such Person existing immediately after it becomes a
     Restricted Subsidiary.

     4.9 SENIORITY TO FUTURE SUBORDINATED DEBT.

     The Company shall not incur, create, assume or Guaranty any Debt which is
subordinated in right of payment to any other Debt of the Company unless such
Debt is also subordinated in right of payment, on the same terms, to the
obligations of the Company in respect of the Notes and this Agreement. The
Company shall not incur, create, assume or Guaranty any Debt owing to any
Subsidiary or any Affiliate unless such Debt is subordinated in right of
payment, on terms acceptable to the Required Holders, to the obligations of the
Company in respect of the Notes and this Agreement.

     4.10 DESIGNATION OF SUBSIDIARIES.

          (a) RIGHT OF DESIGNATION. Subject to the following sentence, each of
     the Subsidiaries listed on Annex 3 shall be a Restricted Subsidiary so long
     as it shall continue to satisfy the requirements of the definition of
     Restricted Subsidiary. Subject to the satisfaction of the requirements of
     Section 4.10(b), the Company shall have the right to designate as a
     Restricted Subsidiary any Subsidiary which, following such designation,
     would meet the definition of a "Restricted Subsidiary," and to designate
     any Restricted Subsidiary as an Unrestricted Subsidiary, by delivering to
     each holder of Notes a writing, signed by a Senior Officer, so designating
     such Subsidiary. Any Subsidiary not designated as a Restricted Subsidiary
     shall be deemed to be an Unrestricted Subsidiary.

          (b) DESIGNATION CRITERIA.

               (i) No Subsidiary shall at any time after the Closing Date be
          designated as a Restricted Subsidiary unless:

                       (A) such Subsidiary at such time meets all of the
                   requirements of being a Restricted Subsidiary as set forth in
                   the definition thereof (other than clause (a) of such
                   definition);


                                       25
<PAGE>   29


                       (B) immediately before and after, and after giving effect
                   to such designation, no Default or Event of Default exists or
                   would exist; and

                       (C) such Subsidiary shall not previously have been
                   designated as a Restricted Subsidiary on more than one (1)
                   other occasion.

               (ii) No Restricted Subsidiary shall at any time after the Closing
          Date be designated as an Unrestricted Subsidiary unless:

                       (A) immediately after, and after giving effect to such
                   designation, no Default or Event of Default exists or would
                   exist; and

                       (B) immediately prior to such designation, such
                   Restricted Subsidiary being so designated does not own,
                   directly or indirectly, any Capital Stock of any Restricted
                   Subsidiary not being simultaneously designated as an
                   Unrestricted Subsidiary.

          (c) CONSEQUENCE OF DESIGNATION. By designating a Subsidiary as an
     Unrestricted Subsidiary, the Company shall be deemed to have made an
     Investment in such Subsidiary in an amount equal to the Fair Market Value
     of its Investment in such Subsidiary on the date of such designation.

          (d) EFFECTIVENESS. Any designation under this Section 4.10 that
     satisfies all of the conditions set forth in this Section 4.10 shall become
     effective, for purposes of this Agreement, on the day that notice thereof
     shall have been delivered by the Company to each holder of Notes in
     accordance with Section 9.1.

     4.11 LINE OF BUSINESS.

     The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business if, as a result, the general nature of the business in
which the Company and the Restricted Subsidiaries, taken as a whole, would then
be engaged would be substantially changed from the general nature of the
business in which the Company and the Restricted Subsidiaries, taken as a whole,
are engaged on the Closing Date as described in the Annual Report on Form 10-K
of the Company for the fiscal year ended January 1, 1999.


                                       26
<PAGE>   30


     4.12 TRANSACTIONS WITH AFFILIATES.

     The Company will not, and will not permit any Restricted Subsidiary to,
enter into any transaction, including, without limitation, the purchase, sale,
lease or exchange of Property or the rendering of any service, with any
Affiliate, except for:

          (a) relocation loans (including, without limitation, short-term bridge
     financing in connection with the purchase of a principal residence) to any
     executive or employee of the Company or any Restricted Subsidiary not
     exceeding at any time Five Hundred Thousand Dollars ($500,000);

          (b) other loans, advances and other extensions of credit to any
     executive, officer, director or stockholder (or any relative of any of the
     foregoing) not exceeding at any time the sum of:

               (i) Three Hundred Thousand Dollars ($300,000) in the aggregate at
          any time outstanding; plus

               (ii) one percent (1%) of Consolidated Net Company Income in
          respect of the period beginning on the first day of the fiscal quarter
          of the Company commencing after the Closing Date and ending on the
          last day of the fiscal quarter of the Company then most recently ended
          (or minus one percent (1%) of Consolidated Net Company Income for such
          period if Consolidated Net Company Income for such period is a loss);
          and

          (c) transactions in the ordinary course of and pursuant to the
     reasonable requirements of the Company's or such Restricted Subsidiary's
     business and upon fair and reasonable terms no less favorable to the
     Company or such Restricted Subsidiary than would obtain in a comparable
     arm's-length transaction with a Person not an Affiliate.

     4.13 SUBSIDIARY GUARANTEES.

         The Company will not at any time permit any Subsidiary to incur,
create, assume, Guaranty or otherwise become liable in respect of any Debt in
respect of any Senior Credit Facility (whether as primary obligor, guarantor,
surety or otherwise) after the Closing Date unless such Subsidiary, upon or
prior to such incurrence, creation, assumption, Guaranty or otherwise becoming
liable in respect of any such Debt, shall enter into an unconditional
subordinated Guaranty (as amended and restated on the Restatement Date and as
further amended from time to time, the "SUBSIDIARY GUARANTEE") in favor of the
holders of the Notes in substantially the form of Exhibit 4.5(c) to the
Securities Purchase Agreement. The Company will cause


                                       27
<PAGE>   31


each Subsidiary which entered into a Subsidiary Guarantee on the Closing Date,
and each Subsidiary subsequently entering into a Subsidiary Guarantee pursuant
to this Section 4.13, to maintain such Subsidiary Guarantee for so long as such
Subsidiary remains liable in respect of any such Debt.

     4.14 CURRENT RATIO

     The Company will not at any time permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.15 to 1.0.

5. REPORTING COVENANTS

     5.1 FINANCIAL AND BUSINESS INFORMATION.

     The Company shall deliver to each holder of Notes:

          (a) QUARTERLY FINANCIAL STATEMENTS - as soon as practicable 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), and
     in any event within fifty (50) days thereafter:

               (i) a consolidated balance sheet as at the end of such quarter;
          and

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

     for the Company and the Restricted Subsidiaries, setting forth in each
     case, in comparative form, the financial statements 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 as complete and correct by a Senior Financial
     Officer, and accompanied by the certificate required by Section 5.2;
     provided, that delivery of copies of the Company's Quarterly Report on Form
     10-Q filed with the SEC within the time period specified above shall be
     deemed to satisfy the requirements of this Section 5.1(a) so long as such
     Quarterly Report contains or is accompanied by the information specified in
     this Section 5.1(a);

          (b) ANNUAL FINANCIAL STATEMENTS - as soon as practicable after the end
     of each fiscal year of the Company, and in any event within one hundred
     twenty (120) days thereafter:


                                       28
<PAGE>   32


               (i) a consolidated balance sheet as at the end of such year; and

               (ii) consolidated statements of income, changes in shareholders'
          equity and cash flows for such year;

     for the Company and the Restricted Subsidiaries, setting forth, in
     comparative form, the financial statement for the previous fiscal year, all
     in reasonable detail, prepared in accordance with GAAP, and accompanied by:

                       (A) an audit report thereon of independent certified
                   public accountants of recognized national standing, which
                   report shall state without qualification (including, without
                   limitation, qualifications related to the scope of the audit,
                   the compliance of the audit with generally accepted auditing
                   standards, or the ability of the Company or a material
                   subsidiary thereof to continue as a going concern), that such
                   financial statements have been prepared and are in conformity
                   with GAAP; and

                       (B) the certificates required by Section 5.2 and Section
                   5.3;

provided, that delivery of the Company's Annual Report on Form 10-K for such
fiscal year filed with the SEC within the time period specified above shall be
deemed to satisfy the requirements of this Section 5.1(b) so long as such Annual
Report contains or is accompanied by the reports and other information otherwise
specified in this Section 5.1(b);

          (c) SEC AND OTHER REPORTS - promptly upon their becoming available,
     and in any event within fifteen (15) days thereafter:

               (i) each financial statement, report, notice or proxy statement
          sent by the Company to stockholders generally;

               (ii) each regular or periodic report (including, without
          limitation, each Form 10-K, Form 10-Q and Form 8-K), any registration
          statement which shall have become effective, and each final prospectus
          and all amendments thereto filed by the Company or any Restricted
          Subsidiary with the SEC; and

               (iii) all press releases and other statements made available by
          the Company or any Restricted Subsidiary to the public concerning
          material developments in the business of the Company or the Restricted
          Subsidiaries;


                                       29
<PAGE>   33


          (d) NOTICE OF DEFAULT OR EVENT OF DEFAULT - within two (2) Business
     Days of becoming aware:

               (i) of the existence of any condition or event which constitutes
          a Default or an Event of Default; or

               (ii) that the holder of any Note, any lender or creditor in
          respect of a Senior Credit Facility or any holder of any other Debt in
          a principal amount of Two Hundred Fifty Thousand Dollars ($250,000) or
          more, shall have given notice or taken any other action with respect
          to a claimed Default, Event of Default or default or event of default;

     a notice specifying the nature of the claimed Default, Event of Default or
     default or event of default and the notice given or action taken (if any)
     by such holder and what action the Company is taking or proposes to take
     with respect thereto;

          (e) ERISA -

               (i) within two (2) Business Days of becoming aware of the
          occurrence of any "reportable event" (as such term is defined in
          section 4043 of ERISA) for which notice thereof has not been waived
          pursuant to regulations of the DOL or "prohibited transaction" (as
          such term is defined in section 406 of ERISA or section 4975 of the
          IRC) in connection with any Plan or any trust created thereunder, a
          notice specifying the nature thereof, what action the Company is
          taking or proposes to take with respect thereto, and, when known, any
          action taken by the Internal Revenue Service, the DOL or the PBGC with
          respect thereto; and

               (ii) prompt notice of and, where applicable, a description of:

                       (A) any notice from the PBGC in respect of the
                   commencement of any proceedings pursuant to section 4042 of
                   ERISA to terminate any Plan or for the appointment of a
                   trustee to administer any Plan, and any distress termination
                   notice delivered to the PBGC under section 4041 of ERISA in
                   respect of any Plan, and any determination of the PBGC in
                   respect thereof;

                       (B) the placement of any Multiemployer Plan in
                   reorganization status under Title IV of ERISA, any
                   Multiemployer


                                       30
<PAGE>   34


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

                       (C) the occurrence of any event, transaction or condition
                   that could result in the incurrence of any liability of the
                   Company or any ERISA Affiliate or the imposition of a Lien on
                   the Property of the Company or any ERISA Affiliate, in either
                   case pursuant to Title I or Title IV of ERISA or pursuant to
                   the penalty or excise tax or security provisions of the IRC;

provided, however, that the Company shall not be required to deliver any such
notice at any time when the aggregate amount of the actual or potential
liability of the Company and the Restricted Subsidiaries in respect of all such
events at such time could not reasonably be expected to have a Material Adverse
Effect;

          (f) AUDITOR'S REPORTS - each report or, upon the request of any holder
     of Notes, any management letter submitted to the Company or any Restricted
     Subsidiary by independent accountants in connection with any annual,
     interim or special audit made of the books of the Company or any
     Subsidiary;

          (g) ACTIONS, PROCEEDINGS - promptly after the commencement of any
     action or proceeding relating to the Company or any Subsidiary in any court
     or before any governmental authority or arbitration board or tribunal as to
     which there is a reasonable possibility of an adverse determination and
     that, if adversely determined, is reasonably likely to have a Material
     Adverse Effect, a notice specifying the nature and period of existence
     thereof and what action the Company is taking or proposes to take with
     respect thereto;

          (h) OTHER CREDITORS - promptly upon the reasonable request of any
     holder of Notes, copies of any statement, report or certificate furnished
     to any holder of Debt to the extent that the information contained in such
     statement, report or certificate has not already been delivered to each
     holder of Notes;

          (i) RULE 144A - promptly upon the request of any holder of Notes,
     information required to permit the holder to comply with 17
     C.F.R. Section 230.144A, as amended from time to time, in connection with a
     transfer of any Note; and


                                       31
<PAGE>   35


          (j) REQUESTED INFORMATION - with reasonable promptness, such other
     data and information as from time to time may be reasonably requested by
     any holder of Notes.

     5.2 OFFICER'S CERTIFICATES.

     Each set of financial statements delivered to each holder of Notes pursuant
to Section 5.1(a) or Section 5.1(b) shall be accompanied by a certificate of a
Senior Financial Officer, setting forth:

          (a) COVENANT COMPLIANCE - the financial information (including
     detailed calculations) required in order to establish whether the Company
     was in compliance with the requirements of Section 4 (in each case where
     such Section imposes numerical financial requirements) as of the end of the
     period covered by the financial statements then being furnished (including
     with respect to 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 Section, and the calculation of the
     amount, ratio or percentage then in existence); and

          (b) EVENT OF DEFAULT - a statement that the signer has reviewed the
     relevant terms hereof and has made, or caused to be made, under his or her
     supervision or authority, a review of the transactions and conditions of
     the Company and the Subsidiaries from the beginning of the accounting
     period covered by the income statements being delivered therewith 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.

     5.3 ACCOUNTANTS' CERTIFICATES.

     Each set of annual financial statements delivered pursuant to Section
5.1(b) shall be accompanied by a certificate of the accountants who were engaged
to audit such financial statements, stating that they have reviewed Section
4.2(a)(v)(A), Section 4.2(a)(v)(B) and Section 4.4 through Section 4.8(a)(i),
inclusive, and the corresponding definitions of financial terms used therein and
defined in Section 8.1, and stating further, whether, in making their audit,
such accountants have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if such accountants are aware
that any such condition or event then exists, specifying the nature and period
of existence thereof.


                                       32
<PAGE>   36


     5.4 INSPECTION.

     The Company will permit the representatives of each holder of Notes to
visit and inspect any of the Properties of the Company or any of the Restricted
Subsidiaries, 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,
employees and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the finances and affairs of the Company
and the Restricted Subsidiaries) all at such reasonable times, upon such
reasonable notice and as often as may be reasonably requested. At all times
during which there exists a Default or Event of Default, expenses incurred by
the holders of the Notes in connection with this Section 5.4 shall be paid in
accordance with Section 9.6 and otherwise such expenses will be borne by such
holder.

6. EVENTS OF DEFAULT

     6.1 EVENTS OF DEFAULT.

     An "EVENT OF DEFAULT" exists at any time if any of the following both
occurs and is continuing thereafter for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):

          (a) PAYMENTS ON NOTES -

               (i) PRINCIPAL OR PREPAYMENT COMPENSATION AMOUNT PAYMENTS - the
          Company fails to make any payment of principal or Prepayment
          Compensation Amount on any Note on or before the date such payment is
          due; or

               (ii) INTEREST PAYMENTS - the Company fails to make any payment of
          interest on any Note on or before five (5) Business Days after the
          date such payment is due;

          (b) OTHER DEFAULTS -

               (i) NEGATIVE AND FINANCIAL COVENANT DEFAULTS - the Company or any
          Restricted Subsidiary fails to comply with any provision of Section 4;


                                       33
<PAGE>   37


               (ii) OTHER DEFAULTS - the Company or any Restricted Subsidiary
          fails to comply with any other provision hereof, and such failure
          continues for more than thirty (30) days after such failure shall
          first become known to any Senior Officer;

     provided, however, that the failure of the Company or any Restricted
     Subsidiary to comply with the provisions of Section 4.6 or Section 4.7
     during the period commencing on April 15, 2000 and ending on April 1, 2001
     shall not constitute a Default or Event of Default unless the Company or
     any Restricted Subsidiary incurs any Debt (other than Senior Debt) during
     such period;

          (c) WARRANTIES OR REPRESENTATIONS - any warranty, representation or
     other statement by or on behalf of the Company contained in the Initial
     Securities Purchase Agreement or the Securities Purchase Agreement or any
     other Financing Document, in any written amendment, supplement,
     modification or waiver with respect to any Financing Document or in any
     instrument furnished in compliance herewith or in reference hereto, shall
     have been false or misleading in any material respect when made;

          (d) ACCELERATION OF DEBT -

               (i) the Company or any Restricted Subsidiary fails to make, when
          due, at maturity or otherwise, any payment or payments in an amount
          aggregating in excess of Two Million Dollars ($2,000,000) in respect
          of any Debt; or

               (ii) any event shall occur or any condition shall exist in
          respect of Debt, or under any agreement securing or relating to such
          Debt:

                       (A) as a result of which the maturity of such Debt, or a
                   portion thereof, is accelerated; or

                       (B) that requires the Company or any Restricted
                   Subsidiary to repurchase such Debt from the holders thereof;

provided that the aggregate amount of all obligations in respect of all such
Debt exceeds at such time Two Million Dollars ($2,000,000);


                                       34
<PAGE>   38


          (e) INSOLVENCY -

               (i) INVOLUNTARY BANKRUPTCY PROCEEDINGS -

                       (A) a receiver, liquidator, custodian or trustee of the
                   Company or any Restricted Subsidiary, or of all or any
                   substantial part of the Property of either, is appointed by
                   court order and such order remains in effect for more than
                   sixty (60) days; or an order for relief is entered with
                   respect to the Company or any Restricted Subsidiary, or the
                   Company or any Restricted Subsidiary is adjudicated a
                   bankrupt or insolvent;

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

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

               (ii) VOLUNTARY PETITIONS - the Company or any Restricted
          Subsidiary- files a voluntary petition in bankruptcy or seeks relief
          under any provision of any bankruptcy, reorganization, arrangement,
          insolvency, readjustment of debt, dissolution or liquidation law of
          any jurisdiction, whether now or hereafter in effect, or consents to
          the filing of any petition against it under any such law; or

               (iii) ASSIGNMENTS FOR BENEFIT OF CREDITORS, ETC. - the Company or
          a Restricted Subsidiary makes an assignment for the benefit of its
          creditors, or admits in writing its inability, or fails, to pay its
          debts generally as they become due, or consents to the appointment of
          a receiver, liquidator or trustee of the Company or a Restricted
          Subsidiary or of all or a substantial part of its Property;

          (f) UNDISCHARGED FINAL JUDGMENTS - a final, non-appealable judgment or
     final, non-appealable judgments for the payment of money aggregating more
     than Two Million Dollars ($2,000,000) in excess of all applicable insurance
     coverage which has not been contested by the relevant insurer or insurers
     is or are outstanding against one or more of the Company


                                       35
<PAGE>   39


     and the Restricted Subsidiaries and any one of such judgments shall have
     been outstanding for more than sixty (60) days from the date of its entry
     and shall not have been discharged in full or stayed; or

          (g) SUBSIDIARY GUARANTY - any Subsidiary Guaranty shall cease to be in
     full force and effect or shall be declared by a court or other Governmental
     Authority of competent jurisdiction to be void, voidable or unenforceable
     against any Subsidiary Guarantor; the validity or enforceability of any
     Subsidiary Guaranty against any Subsidiary Guarantor shall be contested by
     such Subsidiary Guarantor, the Company or any Affiliate; or any Subsidiary
     Guarantor, the Company or any Affiliate shall deny that such Subsidiary
     Guarantor has any further liability or obligation under any Subsidiary
     Guaranty.

     6.2 DEFAULT REMEDIES.

          (a) ACCELERATION OF MATURITY OF NOTES.

               (i) ACCELERATION ON EVENT OF DEFAULT.

                       (A) AUTOMATIC. If any Event of Default specified in
                   Section 6.1(e) shall exist, all of the Notes at the time
                   outstanding shall automatically become immediately due and
                   payable together with interest accrued thereon and, to the
                   extent permitted by law, the Prepayment Compensation Amount
                   at such time with respect to the principal amount of such
                   Notes, without presentment, demand, protest or notice of any
                   kind, all of which are hereby expressly waived.

                       (B) BY ACTION OF HOLDERS. Subject to Section 7.7, if any
                   Event of Default shall exist, the Required Holders may
                   exercise any right, power or Remedy permitted to such holder
                   or holders by law, and shall have, in particular, without
                   limiting the generality of the foregoing, the right to
                   declare the entire principal of, and all interest accrued on,
                   all the Notes then outstanding to be, and such Notes shall
                   thereupon become, forthwith due and payable, without any
                   presentment, demand, protest or other notice of any kind, all
                   of which are hereby expressly waived, and the Company shall
                   forthwith pay to the holder or holders of all the Notes then
                   outstanding the entire principal of, and interest accrued on,
                   the Notes and, to the extent permitted by law, the Prepayment


                                       36
<PAGE>   40


                   Compensation Amount at such time with respect to such
                   principal amount of such Notes.

               (ii) ACCELERATION ON PAYMENT DEFAULT. Subject to Section 7.7,
          during the existence of an Event of Default described in Section
          6.1(a), and irrespective of whether the Notes then outstanding shall
          have become due and payable pursuant to Section 6.2(a)(i)(B), any
          holder of Notes who or which shall have not consented to any waiver
          with respect to such Event of Default may, at his or its option, by
          notice in writing to the Company, declare the Notes then held by such
          holder to be, and such Notes shall thereupon become, forthwith due and
          payable together with all interest accrued thereon, without any
          presentment, demand, protest or other notice of any kind, all of which
          are hereby expressly waived, and the Company shall forthwith pay to
          such holder the entire principal of and interest accrued on such Notes
          and, to the extent permitted by law, the Prepayment Compensation
          Amount at such time with respect to such principal amount of such
          Notes.

          (b) VALUABLE RIGHTS. The Company acknowledges, and the parties hereto
     agree, that the right of each holder to maintain its investment in the
     Notes free from repayment by the Company (except as herein specifically
     provided for) is a valuable right and that the provision for payment of a
     Prepayment Compensation 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 compensation for the deprivation of such right under
     such circumstances.

          (c) OTHER REMEDIES. During the existence of an Event of Default and
     irrespective of whether the Notes then outstanding shall become due and
     payable pursuant to Section 6.2(a), and irrespective of whether any holder
     of Notes then outstanding shall otherwise have pursued or be pursuing any
     other rights or Remedies, subject to Section 7.7, any holder of Notes may
     proceed to protect and enforce its rights hereunder and under such Notes by
     exercising such Remedies as are available to such holder in respect thereof
     under applicable law, either by suit in equity or by action at law, or
     both, whether for specific performance of any agreement contained herein or
     in aid of the exercise of any power granted herein; provided, however, that
     the maturity of such holder's Notes may be accelerated only in accordance
     with Section 6.2(a).

          (d) NONWAIVER; REMEDIES CUMULATIVE. No course of dealing on the part
     of any holder of Notes nor any delay or failure on the part of any holder
     of Notes to exercise any right shall operate as a waiver of such right or
     otherwise


                                       37
<PAGE>   41


     prejudice such holder's rights, powers and Remedies. All rights and
     Remedies of each holder of Notes hereunder and under applicable law are
     cumulative to, and not exclusive of, any other rights or Remedies any such
     holder of Notes would otherwise have.

          (e) SUBORDINATION. The rights of the holders of the Notes to receive
     payments in respect of this Agreement and the Notes, and to exercise any
     Remedies, solely as between the holders of the Notes and the holders of the
     Senior Debt, shall be subject in all respects to the provisions of Section
     7; provided, however, that all such rights shall remain unconditional and
     absolute as between the holders of the Notes and the Company.

     6.3 ANNULMENT OF ACCELERATION OF NOTES.

     If a declaration is made pursuant to Section 6.2(a)(i)(B), then and in
every such case, the holders of sixty-six and two-thirds percent (66 and 2/3%)
in principal amount of the Notes at the time outstanding (exclusive of Notes
then owned by any one or more of the Company, any Restricted Subsidiary or any
Affiliate) may, by written instrument filed with the Company, rescind and annul
such declaration, and the consequences thereof; provided, however, that at the
time such declaration is annulled and rescinded:

          (a) no judgment or decree shall have been entered for the payment of
     any moneys due on or pursuant hereto or the Notes;

          (b) all arrears of interest upon all of the Notes and all of the other
     sums payable hereunder and under the Notes (except any principal of, or
     interest or Prepayment Compensation Amount on, the Notes which shall have
     become due and payable by reason of such declaration under Section
     6.2(a)(i)(B)) shall have been duly paid; and

          (c) each and every other Default and Event of Default shall have been
     waived pursuant to Section 9.5 or otherwise made good or cured;

and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.


                                       38
<PAGE>   42


7. SUBORDINATION

     7.1 GENERAL.

     The Subordinated Debt is subordinate and junior in right of payment to all
Senior Debt to the extent provided in this Section 7.

     7.2 INSOLVENCY.

     In the event of:

          (a) any insolvency, bankruptcy, receivership, liquidation,
     reorganization, readjustment, composition or other similar proceeding
     relating to the Company, its creditors or its Property;

          (b) any proceeding for the liquidation, dissolution or other
     winding-up of the Company, voluntary or involuntary, whether or not
     involving insolvency or bankruptcy proceedings;

          (c) any assignment by the Company for the benefit of creditors; or

          (d) any other marshalling of the assets of the Company;

all Senior Debt shall first be paid in full, in cash or cash equivalents, before
any payment or distribution, whether in cash, Securities or other Property,
shall be made to any holder of any Subordinated Debt on account of any
Subordinated Debt. Any payment or distribution, whether in cash, Securities or
other Property (other than Securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Section 7 with respect to
Subordinated Debt, to the payment of all Senior Debt at the time outstanding and
to any Securities issued in respect thereof under any such plan of
reorganization or readjustment), which would otherwise (but for this Section 7)
be payable or deliverable in respect of Subordinated Debt shall be paid or
delivered directly to the holders of Senior Debt in accordance with the
priorities then existing among such holders until all Senior Debt shall have
been paid in full, in cash or cash equivalents.

     7.3 PROOFS OF CLAIM.

     If any holder of Subordinated Debt does not file a proper claim or proof of
debt therefor prior to ten (10) days before the expiration of the time to file
such claim or


                                       39
<PAGE>   43


proof, then the Senior Agent is hereby authorized and empowered (but not
obligated) as the agent and attorney-in-fact for such holder for the specific
and limited purpose set forth in this paragraph, to file such claim or proof for
or on behalf of such holder; provided, however, that the Senior Agent shall
have, prior to taking any such action, given fifteen (15) days prior written
notice (which notice may be given up to sixty (60) days prior to the expiration
of the time to file such claim) to such holder of Subordinated Debt that they
intend to file such claim or proof of debt. In no event may the Senior Agent or
any holder of the Senior Debt vote any claim on behalf of any holder of the
Subordinated Debt, and such agency and appointment of attorney-in-fact shall not
extend to any such right to vote any such claim.

     7.4 ACCELERATION OF SENIOR DEBT.

     In the event that the holders of any Senior Debt, or any trustee or agent
acting on behalf of any such holders, accelerate the maturity of such Senior
Debt or demand that the Company repurchase the same, then, and in each such
case, no direct or indirect payment (in cash, Property or Securities or by
set-off or otherwise) shall be made or agreed to be made on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in respect
of any redemption, retirement, purchase, prepayment or other acquisition or
payment of any Subordinated Debt until such time as such Senior Debt has been
paid in full in cash or cash equivalents. The Company shall give prompt written
notice to each holder of Subordinated Debt of its knowledge of the acceleration
of the maturity of any Senior Debt.

     7.5 PAYMENT DEFAULT IN RESPECT OF SENIOR DEBT.

     If: the Company shall default in the payment of any principal of or
premium, if any, or interest on any Senior Debt (a "SENIOR PAYMENT DEFAULT")
when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or otherwise; and

          (a) the Company receives from the Senior Agent written notice (a
     "PAYMENT DEFAULT NOTICE") of the happening of such Senior Payment Default
     stating that such notice is a payment blockage notice pursuant to this
     Section 7.5;

then no direct or indirect payment (in cash, Property or Securities or by
set-off or otherwise) shall be made or agreed to be made on account of any
Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in respect
of any redemption, retirement, purchase, prepayment or other acquisition or
payment of any Subordinated Debt unless and until such Senior Payment Default
shall have been cured or waived or otherwise shall have ceased to exist.


                                       40
<PAGE>   44


     The Company shall give prompt written notice to each holder of Subordinated
Debt of its receipt of any Payment Default Notice under this Section 7.5.

     7.6 SIGNIFICANT NONPAYMENT DEFAULT IN RESPECT OF SENIOR DEBT.

     If:

          (a) any Significant Nonpayment Default shall have occurred; and

          (b) the Company receives from the Senior Agent written notice (a
     "NONPAYMENT DEFAULT NOTICE") of the happening of such Significant
     Nonpayment Default, stating that such notice is a payment blockage notice
     pursuant to Section 7.6 of this Agreement;

then no direct or indirect payment (in cash, property or Securities or by
set-off or otherwise) shall be made or agreed to be made for or on account of
any Subordinated Debt, or as a sinking fund for any Subordinated Debt, or in
respect of any redemption, retirement, repurchase, prepayment, purchase or other
acquisition or payment of any Subordinated Debt, for a period (each, a "PAYMENT
BLOCKAGE PERIOD") commencing on the date the Nonpayment Default Notice is
delivered to the Company and ending on the Payment Blockage Period Termination
Date; provided, however, that:

               (i) only one such Payment Blockage Period may arise in any period
          of three hundred sixty (360) consecutive days;

               (ii) no more than three (3) Payment Blockage Periods may be
          instituted pursuant to this Section 7.6; and

               (iii) no Payment Blockage Period may be imposed as a result of
          any Significant Nonpayment Default which served as the basis for or
          was continuing during a previous Payment Blockage Period.

     All payments in respect of Subordinated Debt postponed during any Payment
Blockage Period shall be immediately due and payable upon the termination
thereof (together with such additional interest as is provided for herein and in
the Notes for late payment of principal, Prepayment Compensation Amount and
interest).

     The Company shall give prompt written notice to each holder of Subordinated
Debt of its receipt of any Nonpayment Default Notice under this Section 7.6.


                                       41
<PAGE>   45


     7.7 STANDSTILL.

     Notwithstanding anything contained in this Agreement or any other Financing
Document to the contrary, for so long as any amount is outstanding under a
Senior Credit Facility, no holder of any Subordinated Debt may exercise any
Remedies in respect thereof (and no acceleration or purported acceleration
pursuant to Section 6.2(a)(i)(B) or Section 6.2(a)(ii) shall become effective)
during any period (a "STANDSTILL PERIOD") commencing on the first date the
holders of the Subordinated Debt, but for the provisions of this Section 7,
would have been entitled to accelerate the maturity of the Subordinated Debt
pursuant to Section 6.2(a)(i)(B) or Section 6.2(a)(ii) and ending upon the
earliest of:

          (a) the date which is:

               (i) if any Event of Default described in Section 6.1(a) has
          occurred and is continuing, ninety (90) days; and

               (ii) if no Event of Default described in Section 6.1(a) has
          occurred or is continuing, one hundred twenty (120) days;

     in each case, after the commencement of such Standstill Period;

          (b) the date that any holder of any Senior Debt commences the exercise
     of any Remedies in respect of such Debt; and

          (c) the first date upon which any of the Events of Default described
     in Section 6.1(e) shall have occurred and be continuing beyond any period
     of grace specified therein; and, in such event, the automatic acceleration
     of the Notes contemplated in respect of such Event of Default pursuant to
     Section 6.2(a)(i)(A) shall occur immediately upon the termination of the
     Standstill Period.

     7.8 TURNOVER OF PAYMENTS

     If:

          (a) any payment or distribution shall be paid to or collected or
     received by any holders of Subordinated Debt in contravention of any of the
     terms of this Section 7; and


                                       42
<PAGE>   46


          (b) the Senior Agent shall have notified the holders of Subordinated
     Debt of the facts by reason of which such payment or collection or receipt
     so contravenes this Section 7 or constituted a Significant Nonpayment
     Default;

then such holders of Subordinated Debt will deliver such payment or
distribution, to the extent necessary to pay all such Senior Debt in full, in
cash or cash equivalents, to the Senior Agent, on behalf of the holders of the
Senior Debt, and, until so delivered, the same shall be held in trust by such
holders of Subordinated Debt as the property of the holders of such Senior Debt.
If any amount is delivered to the Senior Agent pursuant to this Section 7.8,
whether or not such amounts have been applied to the payment of Senior Debt, and
the outstanding Senior Debt shall thereafter be paid in full, in cash or cash
equivalents, by the Company or otherwise other than pursuant to this Section
7.8, the holders of Senior Debt shall return to such holders of Subordinated
Debt an amount equal to the amount delivered to such holders of Senior Debt
pursuant to this Section 7.8, so long as after the return of such amounts the
Senior Debt shall remain paid in full, in cash or cash equivalents.

     7.9 SUBORDINATION UNAFFECTED BY CERTAIN EVENTS.

     The rights set forth in this Section 7 of the holders of the Senior Debt as
against each holder of Subordinated Debt shall remain in full force and effect
without regard to, and shall not be impaired by:

          (a) any act or failure to act on the part of the Company;

          (b) any change in the manner, place or terms of payment of, or any
     extension or indulgence in respect of, any payment or prepayment of the
     Senior Debt or any part thereof or in respect of any other amount payable
     to any holder of Senior Debt;

          (c) any amendment, modification, restatement, renewal, refinancing or
     waiver of, or addition or supplement to, or deletion from, or compromise,
     release, consent or other action in respect of, any of the terms of any
     Senior Debt or any other agreement relating to any Senior Debt, other than
     such as would cause all or any portion of such Debt to fail to meet the
     definition of "Senior Debt;"

          (d) any sale, exchange, release or other dealing with any Property
     which is the subject of any Lien securing any Senior Debt, or any failure
     or delay in the perfection of any such Lien;


                                       43
<PAGE>   47


          (e) any release of any Person liable in any manner (including, without
     limitation, by virtue of any Guaranty) for the payment or collection of the
     Senior Debt;

          (f) any exercise or non-exercise by any holder of Senior Debt of any
     right, power, privilege or remedy under or in respect of any Senior Debt or
     Subordinated Debt or any waiver of any such right, power, privilege or
     remedy or any default in respect of any Senior Debt or the Subordinated
     Debt, any dealing with or action against any collateral security therefor
     or any receipt by any holder of Senior Debt of any security, or any failure
     by any holder of Senior Debt to perfect a security interest in, or any
     release by any such holder of Senior Debt of, any security for the payment
     of any Senior Debt;

          (g) any merger or consolidation of the Company or any of its
     Subsidiaries into or with any of its Subsidiaries or into or with any
     Person, or any Transfer of any or all of the Property of the Company or any
     of its Subsidiaries to any other Person; or

          (h) the absence of any notice to, or knowledge of, any holder of
     Subordinated Debt of the existence or occurrence of any of the matters or
     events set forth in the foregoing clauses (a) through (g).

     7.10 WAIVER AND CONSENT.

     Each holder of Subordinated Debt waives any and all notices of the
acceptance of the provisions of this Section 7 or of the creation, renewal,
extension or accrual, now or at any time in the future, of any Senior Debt.

     7.11 REINSTATEMENT OF SUBORDINATION.

     The obligations of each holder of Subordinated Debt under the provisions
set forth in this Section 7 shall continue to be effective, or be reinstated, as
the case may be, as to any payment in respect of any Senior Debt that is
rescinded or must otherwise be returned by the holder of such Senior Debt upon
the occurrence or as a result of any bankruptcy or judicial proceeding, all as
though such payment had not been made.

     7.12 OBLIGATIONS NOT IMPAIRED.

     Nothing contained in this Section 7 shall impair, as between the Company
and any holder of Subordinated Debt, the obligation of the Company to pay to
such holder the principal thereof and Prepayment Compensation Amount, if any,
and interest thereon as and when the same shall become due and payable in
accordance with the


                                       44
<PAGE>   48


terms thereof and to comply with each and every provision of the Notes and this
Agreement or prevent any holder of any Subordinated Debt from exercising all
rights, powers and remedies otherwise permitted by applicable law or under this
Agreement, all subject to the rights of the holders of the Senior Debt to
receive cash, Securities or other Property otherwise payable or deliverable to
the holders of Subordinated Debt.

     7.13 PAYMENT OF SENIOR DEBT; SUBROGATION.

     Upon the payment in full of all Senior Debt, the holders of Subordinated
Debt shall be subrogated to all rights of any holder of Senior Debt to receive
any further payments or distributions applicable to the Senior Debt until the
Subordinated Debt shall have been paid in full, and such payments or
distributions received by the holders of Subordinated Debt by reason of such
subrogation, of cash, Securities or other Property which otherwise would be paid
or distributed to the holders of Senior Debt, shall, as between the Company and
its creditors other than the holders of Senior Debt, on the one hand, and the
holders of Subordinated Debt, on the other hand, be deemed to be a payment by
the Company on account of Senior Debt and not on account of Subordinated Debt.

     7.14 RELIANCE OF HOLDERS OF SENIOR DEBT.

     Each holder of Subordinated Debt by its acceptance thereof shall be deemed
to acknowledge and agree that the foregoing subordination provisions are, and
are intended to be, an inducement to and a consideration of each holder of any
Senior Debt, whether such Senior Debt was created or acquired before or after
the creation of Subordinated Debt, to acquire and hold, or to continue to hold,
such Senior Debt, and such holder of Senior Debt shall be deemed conclusively to
have relied on such subordination provisions in acquiring and holding, or in
continuing to hold, such Senior Debt. Each such holder of Senior Debt is
intended to be, and is, a third party beneficiary of this Section 7. Each holder
of Subordinated Debt acknowledges and agrees that the provisions set forth in
this Section 7 shall be enforceable against such Persons by the holders of the
Senior Debt. Notwithstanding anything contained in this Agreement or any other
Financing Document to the contrary, none of the provisions of this Section 7
(including, without limitation, this Section 7.14) may, directly or indirectly,
be amended, modified, supplemented or waived without the prior written consent
of the Senior Agent, on behalf of the holders of the Senior Debt.

     7.15 IDENTITY OF HOLDERS OF SENIOR DEBT.

     Upon the request of any holder of Subordinated Debt, the Company shall
deliver to such holder a list of all holders of Senior Debt outstanding at such
time, providing the name and address of each such holder of Senior Debt and the
principal amount of


                                       45
<PAGE>   49


Senior Debt held by each such holder; provided, however, that, if any holder of
Senior Debt shall have appointed an agent or other representative with respect
to the Senior Debt held by it, the Company may provide the name and address of
such agent or representative in lieu of the name and address of such holder of
Senior Debt.

     7.16 AMENDMENTS TO SENIOR CREDIT FACILITY.

     Notwithstanding the other provisions of this Section 7, no amendment to or
refinancing, replacement or refunding of the Senior Debt or any agreement or
instrument related thereto shall be effective as to the holders of the
Subordinated Debt or be entitled to the benefits of this Section 7 without the
consent of each holder of Notes to the extent that such amendment, refinancing,
replacement or refunding would directly prohibit the Company or any Subsidiary
from making scheduled or required payments in respect of the Subordinated Debt
in any manner which is not specifically set forth in the Senior Credit
Agreement, as in effect on the Closing Date. The holders of the Senior Debt may
restrict the right of the Company to make, or prohibit the Company from making,
optional prepayments of the Notes in accordance with the provisions of Section
1.3 or Section 1.4 or other optional repurchases of the Notes.

8. INTERPRETATION OF THIS AGREEMENT

     8.1 TERMS DEFINED.

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

     ACCEPTABLE CONSIDERATION - means, with respect to any Transfer of any
Property of the Company or any Restricted Subsidiary, cash consideration,
promissory notes or such other consideration (or any combination of the
foregoing) as is, in each case for the Fair Market Value thereof and in each
case in which the value of the Property so Transferred is equal to or greater
than One Million Dollars ($1,000,000), determined by the Board of Directors, in
its good faith opinion, to be in the best interests of the Company and to
reflect the Fair Market Value of such Property.

     ACCEPTABLE REVOLVING CREDIT FACILITY - means and includes a revolving
credit agreement or similar agreement:

          (a) pursuant to which the lender commits to permit the Company,
     subject to the conditions therein, to obtain from time to time thereunder
     loans or advances of cash, letters of credit or bankers acceptances and
     periodically repay the same; and


                                       46
<PAGE>   50


          (b) the obligations under which are not, by its terms or the terms of
     any ancillary agreement, expressed to be subordinated in right of payment
     to any other Debt of the Company or any Subsidiary; and

          (c) the obligations under which are not owing to the Company, any
     Affiliate or any Subsidiary.

     ACQUIRED BUSINESS - means and includes, in connection with any computation
of Pro Forma Combined Income Available for Fixed Charges, Pro Forma Combined
EBITDA or Pro Forma Combined Fixed Charges for any period, any Person (other
than an Unrestricted Subsidiary) all the Capital Stock of which or substantially
all of the Property of which was acquired by the Company or a Restricted
Subsidiary, or which shall have merged into or consolidated with the Company
(with the Company being the Surviving Corporation) or which shall have merged
with or into or consolidated with a Restricted Subsidiary with the result that
the Surviving Corporation became a Restricted Subsidiary, in each case, during
such period, if, but only if:

          (a) Consolidated EBITDA, Consolidated Rental Expense and Consolidated
     Fixed Charges and for such acquired Persons for such Period can be
     determined on a basis reasonably acceptable to the holders of Notes for
     such period, and Consolidated Debt and Consolidated Senior Debt for such
     acquired Persons can be determined on a basis reasonably acceptable to the
     holders of Notes as at the relevant time of determination; and

          (b) concurrently with any such determination, the Company shall have
     delivered to the holders of the Notes audited financial statements (to the
     extent available) and other financial information prepared in accordance
     with GAAP and reasonably satisfactory to the holders of the Notes with
     respect to such acquired Person, which financial statements and information
     demonstrates the basis for such determination to an extent reasonably
     satisfactory to the holders of the Notes.

     ADJUSTED DEBT - with respect to any Person, means, without duplication, the
liabilities of such Person with respect to:

          (a) BORROWED MONEY - borrowed money;

          (b) SECURED LIABILITIES - borrowed money secured by any Lien existing
     on Property owned by such Person (whether or not such liabilities have been
     assumed);


                                       47
<PAGE>   51


          (c) CAPITAL LEASES - Capital Leases of such Person; and

          (d) GUARANTEES - any Guaranty of such Person of any obligation or
     liability of another Person of obligations of the type listed in clause (a)
     through clause (c) of this definition of Adjusted Debt.

Adjusted Debt shall not include letters of credit, surety bonds or similar
instruments.

     AFFILIATE - means and includes, at any time, each Person (other than a
Restricted Subsidiary):

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

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

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

          (d) that is an officer or director of the Company or that is an
     Initial Manager Affiliate;

at such time; provided, however, that none of the Holders nor any affiliate of
any Holder shall be deemed to be an "Affiliate," and no Person holding any one
or more of the Notes or Warrants shall be deemed to be an "Affiliate" solely by
virtue of the ownership of such securities. As used in this definition:

          control - means the possession, directly or indirectly, of the power
     to direct or cause the direction of the management and policies of a
     Person, whether through the ownership of voting securities, by contract or
     otherwise.

     AGREEMENT, THIS - and references thereto shall mean this Note Agreement as
it may from time to time be amended or supplemented.

     ANNEX 3 - means Annex 3 to the Securities Purchase Agreement.

     APPLICABLE INTEREST LAW - means any present or future law (including,
without limitation, the laws of the State of New York and the United States of


                                       48
<PAGE>   52


America) which has application to the interest and other charges pursuant to
this Agreement and the Notes.

     BANK OF AMERICA - means Bank of America Texas, N.A.

     BOARD OF DIRECTORS - means, at any time, the board of directors of the
Company or any committee thereof that, in the instance, shall have the lawful
power to exercise the power and authority of such board of directors.

     BORROWING BASE - means:

          (a) for so long as the Senior Credit Agreement (as amended, renewed or
     extended) remains in effect, the "Adjusted Borrowing Base," as defined in
     the Senior Credit Agreement, as in effect on the date hereof, and as set
     forth on Annex 3 hereto; provided, however, that if clause (b) of the
     definition of "Adjusted Borrowing Base" in the Senior Credit Agreement is
     amended (including, without limitation, in connection with a renewal or
     extension of the Senior Credit Facility) to remove the PACA Adjustment
     deduction from the "Borrowing Base" (as defined in the Senior Credit
     Agreement as in contained therein, then such amendment shall be given
     effect for purposes of calculating the Borrowing Base; and

          (b) thereafter, any substantially similar formulation contained in any
     other Acceptable Revolving Credit Facility at such time, so long as:

               (i) if such formulation contains a PACA Adjustment, such
          formulation would yield an amount no higher than the amount calculated
          in accordance with the definition of "Adjusted Borrowing Base" as set
          forth in the Senior Credit Agreement, as in effect on the date hereof;
          and

               (ii) if such formulation does not contain a PACA Adjustment, such
          formulation would yield an amount no higher than the amount calculated
          in accordance with the definition of "Adjusted Borrowing Base" as set
          forth in the Senior Credit Agreement, as in effect on the date hereof
          but assuming that such definition did not contain a PACA Adjustment;

and, in either case, which formulation is provided to each holder of the Notes
in writing disclosing that the Company intends to use such formulation as the
"Borrowing Base."


                                       49