Document:

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                                BOWNE & CO, INC.

                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective as of January 1, 1999
Revised as of March 12, 2000

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                                BOWNE & CO. INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                                  INTRODUCTION
                                  ------------

Bowne & Co., Inc. (the "Company") has adopted the Bowne & Co., Inc. Supplemental
Executive Retirement Plan (the "SERP") effective as of January 1, 1999 to
provide additional retirement income and death benefit protection to certain
highly-compensated employees of the Company in recognition of their contribution
to the Company in carrying out their senior management responsibilities. The
terms and conditions of participation and benefits under the SERP are set out in
this document.

All benefits payable under this Plan, which is intended to constitute a
nonqualified, unfunded deferred compensation plan for a select group of
management employees under Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), shall be paid out of the general assets of
the Company. The Company may establish and fund a trust in order to aid in
providing benefits due under the Plan.

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                               BOWNE & CO., INC.
                     SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

                             ARTICLE 1. DEFINITIONS
                             ----------------------

1.01 "ACTUARIAL EQUIVALENT" shall mean the equivalent value when computed on the
     basis of the average of the mortality rates for males and females (50/50
     blend) under the 1983-GAM Mortality Table and an interest rate of five (5)
     percent per year, compounded annually and with respect to a lump sum
     determined under Section 3.06 the IRS Interest Rate."

1.02 "ADMINISTRATIVE COMMITTEE" shall mean the Corporation's Compensation
     Committee of the Board of Directors, any successor or substitute committee
     thereto or, during any period of time when no such committee is in
     existence, the Corporation's entire Board of Directors.

1.03 "AFFILIATED COMPANY" shall mean any company not participating in the Plan
     which is a member of a controlled group of corporations (as defined in
     Section 414(b) of the Code) which also includes as a member the Company;
     any trade or business under common control (as defined in Section 414(c) of
     the Code) with the Company; any organization (whether or not incorporated)
     which is a member of an affiliated service group (as defined in Section
     414(m) of the Code) which includes the Company; and any other entity
     required to be aggregated with the Company pursuant to regulations under
     Section 414(o) of the Code.

1.04 "ANNUAL BONUS" shall mean the amount, if any, awarded to an Eligible
     Employee under the Company's annual bonus program.

1.05 "AVERAGE FINAL COMPENSATION" shall mean the average of the annual
     Compensation of an Eligible Employee during the five (5) calendar years in
     the last ten (10) years of his or her

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     employment immediately preceding the date of his or her termination of
     employment with the Company and all Affiliated Companies, or the date he or
     she ceases to be an Eligible Employee, if earlier, which affords the
     highest such average; provided, however, if a Member has less than five
     years of employment with the Company or an Affiliated Company on his or her
     termination date if such date is after the occurrence of a Change of
     Control Event, or his or her date of death or the date he or she becomes
     entitled to a disability Benefit under Section 3.05, the determination of
     such Member's Average Final Compensation shall be based on his or her
     Compensation during all of his or her years of employment with the Company
     and all Affiliated Companies. In determining a Member's Average Final
     Compensation, Annual Bonuses shall be applied to the calendar year in which
     the services relating to the bonus have been rendered.

1.06 "BENEFICIARY" shall mean the person or persons designated by a Member as a
     beneficiary in a time and manner determined by the Administrative
     Committee. If the Member fails to designate a Beneficiary or if the
     Beneficiary predeceases the Member, the Member's spouse shall be the
     Beneficiary or if no spouse survives the Member, the Member's estate shall
     be the Beneficiary. A Member may change his or her designated Beneficiary
     in a time and manner determined by the Administrative Committee.

1.07 "BENEFIT COMMENCEMENT DATE" shall mean the first of the month in which an
     amount is due on behalf of a Retiree in accordance with the provisions of
     Section 3.02, 3.04, or 3.05, whichever is applicable.

1.08 "BENEFIT(S)" shall mean the payments payable under Article 3 of this Plan.

1.09 "BOARD OF DIRECTORS" shall mean the Board of Directors of Bowne & Co., Inc.

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1.10 "CHANGE OF CONTROL EVENT" shall mean any of the following:

 (a) a change is proposed by the stockholders of the Corporation as to the
     number of members, or incumbent membership, of the Corporation's Board of
     Directors such that the incumbent members of said Board of Directors
     immediately prior to such change would no longer constitute at least a
     majority of the Board of Directors after such change and such proposal is
     enacted; or the Board of Directors as constituted immediately prior to any
     action by the Corporation's stockholders with respect to such proposal
     determines that such proposal, if enacted, would constitute a change in
     control of the Corporation, and such proposal is enacted;

 (b) any determination is made by the Board of Directors of the Corporation that
     there has been a change in the control of the Corporation because a person
     (as such term is used in Section 13(d) of the Securities Exchange of 1934,
     as amended (the "Exchange Act")), together with such person's affiliates
     (as such term is defined in Rule 12b-2 of the General Rules and Regulations
     under the Exchange Act), has become, and was not on the Effective Date, the
     beneficial owner (as such term is defined in Rule 13d-3 of the General
     Rules and Regulations under the Exchange Act), directly or indirectly, of
     10% or more of the voting power of the Corporation's then outstanding
     securities;

 (c) any person (other than any employee stock ownership trust or similar entity
     created by the Corporation for the benefit of its employees), together with
     its affiliates, has become, at any date after the Effective Date, the
     beneficial owner, directly or indirectly, of 33% or more of the voting
     power of the Corporation's then outstanding securities entitled generally
     to vote for the election of the Corporation's directors; or

 (d) the approval by the stockholders of the Corporation of the merger or
     consolidation of the Corporation with any other corporation, unless the
     incumbent members of the Board of Directors

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     of the Corporation as constituted immediately prior to such merger or
     consolidation shall constitute at least a majority of the directors of the
     surviving parent (as such term is defined in Rule 12b-2 of the General
     Rules and Regulations under the Exchange Act) of such corporation.

     Any determination of the occurrence of any Change of Control Event made in
     good faith by the Board of Directors of the Corporation, on the basis of
     information available at the time to it, shall be conclusive and binding
     for all purposes.

1.11 "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
     to time.

1.12 "COMPANY" shall mean Bowne & Co., Inc. or any successor by merger, purchase
     or otherwise, with respect to its employees and such affiliated companies
     authorized by the Board of Directors, on such terms and conditions as the
     Board of Directors may determine, to participate in the Plan.

1.13 "COMPENSATION" shall mean the annual base salary paid during a calendar
     year to an Eligible Employee for services rendered to the Company and the
     full Annual Bonus accrued for services rendered to the Company during such
     calendar year including the portion of the Annual Bonus paid pursuant to a
     deferred compensation plan maintained by the Company, determined prior to
     any salary reduction made pursuant to a "qualified cash or deferred
     arrangement" (as defined under Section 401(k) of the Code), or pursuant to
     a "cafeteria plan" (as defined under Section 125 of the Code). No other
     remuneration, including but not limited to Long-Term Incentive awards or
     bonuses, stock options, performance bonuses or sign-on bonuses, will be
     used to determine Compensation under the Plan, except to the extent
     otherwise deemed Compensation for purposes of the Plan under the preceding
     sentence.

1.14 "CORPORATION" shall mean Bowne & Co., Inc., a Delaware corporation.

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1.15 "CREDITED SERVICE" shall mean with respect to an Eligible Employee service
     rendered with the Company, counting completed months as one-twelfth of a
     year of Credited Service In addition to the foregoing, an Eligible Employee
     may, subject to the approval of the Chief Executive Officer of the
     Corporation be granted additional years of Credited Service to a maximum of
     fifteen (15) years for purposes of determining the amount of certain
     Benefits under the Plan. Only years of service with a prior employer (
     service with a prior employer shall include service with a partnership or
     periods of self-employment that meet the other requirements of this section
     and are approved by the Chief Executive Officer of the Corporation) for
     which the Eligible Employee will receive pension benefits paid by the prior
     employer shall be eligible to be considered as additional years of Credited
     Service under the Plan. The number of years of Credited Service so granted,
     if any, for each Eligible Employee shall be set forth in Appendix A. The
     months and years of Credited Service granted for service with a prior
     employer and the benefit offset set forth in Appendix A related to the
     prior service credit will be reduced proportionately under uniform rules
     established by the Administrative Committee as completed months of Credited
     Service are earned for employment with the Company so as to provide that
     the Member's total accumulated years of Credited Service under this Section
     1.15 shall not exceed twenty (20).

1.16 "EFFECTIVE DATE" shall mean January 1, 1999.

1.17 "ELIGIBLE EMPLOYEE" shall mean an employee who occupies a position of
     senior management with the Company who has been approved by the Board of
     Directors or the Chief Executive Officer of the Corporation and who is
     listed on Appendix A, as amended from time to time. Notwithstanding the
     foregoing and any other Plan provision to the contrary, an employee who is
     a party to a supplement executive retirement contract ("SERC") and who has
     been approved by the Board of Directors or the Chief Executive Officer of
     the Corporation shall not become a Plan

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     Member until he or she has executed, in a form satisfactory to the
     Company's counsel, a written agreement terminating all of the obligations
     of the Company under the SERC and canceling any entitlement thereunder in
     respect of such employee.

1.18 "IRS INTEREST RATE" shall mean the annual rate of interest on 30-year
     Treasury Securities published by the Commissioner of Internal Revenue in
     the first full calendar month preceding the calendar quarter in which
     payment under the Plan is scheduled to begin.

1.19 "MEMBER" shall mean any person included in the membership of the Plan as
     provided in Article 2.

1.20 "NORMAL RETIREMENT DATE" shall mean the first day of the calendar month
     coincident with or next following the earlier of the date an Eligible
     Employee (i) attains age 62 and completes at least five (5) years of
     employment with the Company or any Affiliated Company, or (ii) completes
     thirty (30) years of employment with the Company or any Affiliated Company.

1.21 "PENSION PLAN" shall mean the Bowne Pension Plan, as amended from time to
     time.

1.22 "PLAN" shall mean the Bowne & Co., Inc. Supplemental Executive Retirement
     Plan, as amended from time to time.

1.23 "RETIREE" shall mean (a) a Member who retires on or after his or her Normal
     Retirement Date, (b) a Member who retires under the provisions of Section
     3.04(a), (c) a Member who terminates employment with the Company and all
     Affiliated Companies and is entitled to a Benefit under the provisions of
     Section 3.04(b) or Section 3.04(c), or (d) a Member who receives a Benefit
     under the provisions of Section 3.05.

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                              ARTICLE 2. MEMBERSHIP
                              ---------------------

2.01 Eligibility

 (a) Every Eligible Employee in the employ of the Company on January 1, 1999
     shall, subject to the provisions of Section 1.17, become a Member of the
     Plan on the Effective Date.

 (b) Every other employee of the Company shall become a Member of the Plan on
     the first day of the calendar month coincident with or next following the
     date he or she becomes an Eligible Employee.

2.02 Termination of Membership

     An Eligible Employee's membership under the Plan shall terminate on the
     later of the date he or she terminates employment with the Company and all
     Affiliated Companies or ceases to accrue Credited Service under the
     provisions of Section 3.05, unless at that time the Member is a Retiree
     entitled to a Benefit hereunder. A Retiree's membership under the Plan
     shall terminate as of the date he or she is no longer entitled to a
     Benefit under the Plan.

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                    ARTICLE 3. AMOUNT OF PAYMENT OF BENEFITS
                    ----------------------------------------

3.01 Payment of Benefit

     Except as otherwise provided in Sections 3.06, 3.07, and 3.10 hereof,
     Benefits shall be payable by the Company only with respect to a Member who
     becomes a Retiree, subject to the provisions of Sections 3.09 and 4.07.
     Such Benefits shall be payable from the general assets of the Company or
     from any trust the Company may establish for such purposes, or both, in
     the form described in 3.03.

3.02 Amount of Benefit

     The annual amount of the Benefit payable in the form of a life annuity for
     the life of the Member who becomes a Retiree commencing on his or her
     Normal Retirement Date shall be equal to

     (a) 2.5 percent of the Member's Average Final Compensation multiplied by
         the number of his or her year of Credited Service up to a maximum of
         twenty (20) years

                                      minus

     (b) the sum of (i) the annual amount of pension which is or would be
         payable to the Member pursuant to the provisions of the Pension Plan
         in the form of a single life annuity determined as of his or her date
         of termination of employment with the Company and all Affiliated
         Companies and (ii) the portion of the annual amount of pension which
         is or would be payable to the Member from another employer's,
         partnership's or self-employed sponsored plan, as set forth in
         Appendix A and adjusted as provided in Section 1.15, attributable to
         service which is recognized as Credited Service for purpose of this
         Section 3.02, assuming the benefit described in clause (i) above
         commenced on the later of (1) the Member's Normal Retirement Date
         under this Plan or (2) his or her date of termination of employment,
         adjusted if necessary as provided below.

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     For purposes of this Section 3.02, if any benefit amount described in
     clause (b)(ii) above is payable in a form other than a single life annuity,
     such benefit amount shall be converted to a single life annuity of
     Actuarial Equivalent value.

3.03 Form of Payment

 (a) Unless a Retiree has made a valid election under paragraph (b) below of an
     optional form of benefit, as provided herein, Benefits payable hereunder to
     a Retiree shall be paid in the form of a single life annuity.

 (b) A Member may elect, in writing, to convert, the Benefit otherwise payable
     to him or her, into the form of (i) a Ten-Year Certain and Life Annuity, as
     described in Section 5.02 of the Pension Plan, (ii) a joint and survivor
     annuity, as described in Section 5.02 of the Pension Plan, or (iii) annual
     installments over a three-year period payable as of the first of the month
     following the Member's Benefit Commencement Date and on the next two
     anniversaries thereof; provided that the Member makes and submits to the
     Administration Committee an election of such optional form at the later of
     (a) the time the Member first joins the Plan or (b) if after the time the
     Member first joins the Plan then at least one calendar year prior to the
     date on which he or she becomes a Retiree. A Member or Retiree prior to
     commencing benefits who fails to elect an optional form of benefit payment
     in a timely manner or revokes the election at least one calendar year prior
     to the date on which he or she becomes a Retiree shall receive his or her
     Benefit in accordance with paragraph (a) of this Section 3.03 of the Plan.

 (c) A Benefit which is payable in any form other than an annuity over the life
     of a Member shall be the Actuarial Equivalent of the Benefit payable as a
     life annuity over the Member's life; provided, however, in determining the
     amount under clause (iii) of Section 3.03(b), Actuarial Equivalent

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     shall be determined on the basis of the IRS Interest Rate in lieu of the
     interest rate otherwise used in the determination of Actuarial Equivalent.

3.04 Termination of Employment Before Normal Retirement Date

 (a) A Member who has not reached his or her Normal Retirement Date but who has
     reached his or her 55th birthday and completed at least five (5) years of
     employment with the Company or any Affiliated Company may terminate
     employment with the Company and all Affiliated Companies and, with the
     consent of the Company, receive, subject to the provisions of Section 3.09
     and 4.07, a Benefit commencing on the first day of the month following such
     termination of employment; provided, however, the Company may not withhold
     such consent for more than twelve (12) months from the date the
     Administrative Committee receives the Member's written request to terminate
     employment with the Company and all Affiliated Companies. Upon the Member's
     termination of employment with the Company and all Affiliated Companies in
     accordance with the provisions of this paragraph (a), his or her Benefit
     shall be equal to (i) the difference between (A) the amount determined
     under the provisions of Section 3.02(a) on the basis of his or her Average
     Final Compensation and Credited Service as of his or her termination of
     employment and (B) the amount determined under clause (ii) of Section
     3.02(b), and the difference is reduced by 5% for each year and 1/12 of 5%
     for each month of a fractional year by which the date the Retiree's Benefit
     begins precedes the first day of the month coincident with or next
     following the 62nd anniversary of his or her birth, MINUS (ii) the annual
     amount of pension which is or would be payable to the Member pursuant to
     the provisions of the Pension Plan in the form of a single life annuity
     determined as of his or her termination of employment assuming said
     benefits commenced on the date the Retiree's Benefit begins.

 (b) A Member who has not reached his or her Normal Retirement Date but who
     terminates employment with the

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     Company and all Affiliated Companies, without the consent of the Company,
     after completing five (5) or more years of employment with the Company or
     any Affiliated Company and after reaching his or her 55th birthday shall
     receive, subject to the provisions of Sections 3.09 and 4.07, a Benefit
     commencing on the first day of the month coincident with or next following
     his or her 62nd birthday. The Benefit payable pursuant to the provisions of
     this Section 3.04(b) shall be equal to the Member's Benefit determined
     pursuant to the provisions of Section 3.02 on the basis of his or her
     Average Final Compensation and Credited Service as of his or her date of
     termination of employment.

 (c) A Member who has not reached his or her Normal Retirement Date but who
     terminates employment with the Company and all Affiliated Companies after
     completing five (5) or more years of employment with the Company or any
     Affiliated Company and prior to reaching his or her 55th birthday shall
     receive, subject to the provisions of Sections 3.09 and 4.07, a Benefit
     commencing on the first day of the month coincident with or next following
     his or her 62nd birthday. The Benefit payable pursuant to the provisions of
     this Section 3.04(c) shall be equal to (i) the Member's Benefit determined
     pursuant to the provisions of Section 3.02(a) on the basis of his or her
     Average Final Compensation and Credited Service (rendered solely with the
     Company) as of his or her date of termination of employment MINUS (ii) the
     amount determined under clause (i) of Section 3.02(b). It is the intent
     that in the event a Member terminates employment before age 55 that the
     Member's Benefit payable under this paragraph (c) shall be determined
     solely on the basis of the Credited Service the Member earned while
     employed by the Company and disregarding any service rendered with a prior
     employer and any related offset as set forth in Appendix A.

3.05 Disability Benefit

     An Eligible Employee who has not reached his or her Normal Retirement Date
     and who ceases to be employed by the Company and all Affiliated Companies
     on account of Permanent Disability

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     (as defined under the Pension Plan) after completing five (5) or more years
     of employment with the Company or any Affiliated Company shall continue to
     be credited with Credited Service until the earlier of (i) the date he or
     she reaches his or her Normal Retirement Date or (ii) the date Benefit
     payments commence under this Section 3.05. Upon reaching his or her Normal
     Retirement Date, such disabled Eligible Employee shall receive a Benefit
     equal to an amount determined under Section 3.02, based on his or her
     Average Final Compensation at the time he or she ceased employment on
     account of said disability and his or her Credited Service based on Section
     1.15 and the preceding provisions of this Section 3.05. Notwithstanding the
     foregoing, such disabled Eligible Employee may elect to commence payment of
     his or her Benefit prior to his or her Normal Retirement Date as of the
     first day of any month following his or her attainment of age 55. In that
     event, such disabled Eligible Employee shall be entitled to a Benefit in an
     amount determined under Section 3.04(a) based on his or her Average Final
     Compensation at the time he or she ceased employment on account of said
     disability and his or her Credited Service as of the date he or she
     commences payment hereunder determined pursuant to the provisions of
     Section 1.15 and the preceding provisions of this Section 3.05.

3.06 Pre-Retirement Death Benefit

 (a) If an Eligible Employee dies while actively employed by the Company or
     while accruing Credited Service under the provisions of Section 3.05, a
     death benefit shall be payable to his or her Beneficiary as hereinafter
     provided. Such death Benefit shall be equal to fifty percent (50%) of the
     Member's Average Final Compensation determined as of his or her date of
     death reduced by (i) the amount payable on his or her behalf under the
     Pension Plan. Such Benefit shall be payable each year for a ten-year period
     to the Member's designated Beneficiary commencing as soon as practicable
     after the Member's date of death. In the event the Member's Beneficiary
     does

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     not survive the ten-year period, a lump sum of Actuarial Equivalent value
     to the remaining payments shall be paid to the estate of the Beneficiary.

 (b) In the event the Beneficiary is the Member's estate, the Benefit otherwise
     payable under this Section 3.06(b), shall be converted into a single lump
     sum amount of Actuarial Equivalent value. Such lump sum payment shall be
     made as soon as administratively practicable following the Member's date of
     death.

 (c) If a Retiree who is entitled to a Benefit under the provisions of
     Section 3.04 (b) or Section 3.04(c) dies prior to the date said benefit
     commences, a death benefit shall be payable to his or her Beneficiary as
     herein provided. Such death benefit shall be in the form of a lump sum
     payment and shall be the equal to the Actuarial Equivalent value of the
     Benefit the Retiree would have been entitled on the first day of the month
     coincident with or next following his or her 62nd birthday. Such lump sum
     payment shall be made as soon as administratively practicable following the
     Retiree's date of death.

3.07 Restoration of Service

     If a Retiree is restored to employment with the Company or an Affiliated
     Company, the payments under the Plan shall be discontinued. Upon
     subsequent retirement or termination of employment with the Company or any
     Affiliated Company, the Retiree's Benefit shall be recomputed in
     accordance with the provisions of this Article 3, as applicable, and shall
     again become payable to such Member in accordance with the provisions of
     the Plan. The amount determined in the preceding sentence shall be offset
     by the actuarial value of the benefits he or she received from the Plan.

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3.08 Change of Beneficiary After Retirement

     In the event a Benefit commences to be paid under this Article 3 to a
     Retiree in a form other than an annuity for the life of the Retiree only,
     the Retiree may, at any time, upon written notice to the Administrative
     Committee, change the Beneficiary under this Plan to anyone. Unless
     required by applicable law, in the event of a change of Beneficiary
     hereunder, no consent of the Beneficiary previously designated will be
     required. However payments under this Plan to any Beneficiary named by the
     Retiree shall be payable in the same amount and for the same duration as
     the benefits that would have been payable to the person named as
     Beneficiary by the Retiree when his or her benefits under the Plan
     commenced to be paid.

     Such designation shall remain in force until revoked by the Retiree by
     filing a new beneficiary form with the Administrative Committee.

3.09 Non-competition

     A Member or Retiree shall not:

     (a)  disclose any confidential information or trade secrets derived from
          the Company or any Affiliated Company to a competitor of the Company
          or any Affiliated Company;
     (b)  disclose to any person information which, whether or not derived from
          the Company or any Affiliated Company, would be beneficial to a
          competitor of the Company or any Affiliated Company;
     (c)  make investments in the aggregate of more than one percent (1%) of the
          capital of a competing business either in the form of a stock
          purchase, contribution to capital, loan or any other form, or any
          combination of the foregoing;
     (d)  render or give advice or assistance to a competing business whether as
          a consultant or otherwise;

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     (e)  become an officer or director of a corporation or member of a
          partnership or trustee of a trust which conducts, by itself or through
          one or more subsidiaries, a competing business or become an employee
          of such corporation, partnership, trust, or business.

     If any of the above shall occur, all Benefits which the Retiree has
     previously received must be repaid to the Company and all benefits which
     would otherwise be payable under the Plan to him or her shall be forfeited
     in their entirety, and the Company shall have no further obligations
     hereunder.

     The foregoing non-competition provisions shall apply to lines of business
     in which the Company or any Affiliated Company is engaged during the term
     of the Member's employment or at the time of the termination of the
     Member's employment, and shall not apply to new lines of business engaged
     in by the Company or any Affiliated Company subsequent to the termination
     of the Member's employment.

3.10 Change of Control Provisions

 (a) Notwithstanding any provisions of this Plan to the contrary, in the event a
     Change of Control Event occurs

     (i)  the requirement that Members must complete five (5) or more years of
          service shall be waived for all Members employed by the Company on the
          date a Change of Control event occurs.

     (ii) a Member who terminates employment with the Company and all
          Affiliated Companies within two years and six months of the date on
          which a Change of Control Event first occurs after reaching his or her
          55th birthday shall be entitled to retire, without consent of the
          Company, and receive a Benefit determined under the provisions of
          Section 3.04(a).

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     (iii) The Benefit payable pursuant to Section 3.04 (c), if applicable,
           shall be calculated by using all Credited Service, including any
           additional years of service with a prior employer if previously
           granted by the Chief Executive Officer pursuant to Section 1.15.

 (b) Upon the occurrence of a Change of Control Event (i) all Retirees then
     receiving or then entitled to receive a Benefit under the Plan, and (ii)
     all Beneficiaries in receipt of a Benefit under the Plan shall
     automatically receive, in a single lump sum payment, the Actuarial
     Equivalent value of any Benefit payments remaining due as of the date the
     Change of Control Event first occurs. The amount of such lump sum payment
     shall be calculated on the basis of the Mortality Table set forth in
     Section 1.01 and the IRS Interest Rate. Such lump sum payment shall be made
     as soon as practicable on or following the Change of Control Event. In the
     event the Retiree dies after such Change of Control Event occurs but before
     receiving such lump sum payment, such lump sum payment shall be made to his
     or her Beneficiary. In the event a Beneficiary receiving benefits at the
     time the Change of Control Event first occurs dies prior to receiving the
     lump sum payment due under the provisions of this Section 3.10(b), such
     lump sum payment shall be made to the Beneficiary's estate. For purposes of
     this paragraph (b) and determining the annual rate of interest under
     Section 1.17, payments are scheduled to begin as of the date the Change of
     Control Event first occurs.

(c)  If a Member who was employed by the Company or an Affiliated Company on the
     date a Change of Control first occurs terminates employment with the
     Company and all Affiliated Companies for any reason within two years and
     six months of the date a Change of Control Event first occurs, such Member
     shall automatically receive in a single lump sum payment, the Actuarial
     Equivalent value of the Benefit accrued by said Member under the Plan as of
     termination of employment. The amount of such lump sum payment shall be
     calculated on the basis of the

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     Mortality Table set forth in Section 1.01 and the IRS Interest Rate. Such
     lump sum payment shall be made as soon as possible on or following his or
     her termination of employment. In the event such Member dies after his or
     her termination of employment but before receiving payment, the lump sum
     payment shall be made to his or her Beneficiary. The calculation of the
     lump sum payment hereunder shall be based on the Member's Benefit as if it
     were paid in the form of a single life annuity to the Member commencing on
     the Member's Benefit Commencement Date; provided, however, if the Member
     terminates employment prior to reaching his or her 55th birthday, the
     calculation of the lump sum payment shall be based on the Member's Benefit
     as if it were paid in the form of a single life annuity to the Member
     commencing on his or her Normal Retirement Date.

<PAGE>   20
                                                                         Page 18

                          ARTICLE 4. GENERAL PROVISIONS
                          -----------------------------

4.01 Administration

     The administration of the Plan, the exclusive power to interpret it, and
     the responsibility for carrying out its provisions are vested in the
     Administrative Committee. The Administrative Committee shall have full
     discretionary authority to interpret the Plan and resolve all matters
     arising in connection with the Plan. The Administrative Committee may
     adopt procedural rules and may employ and rely on such legal counsel,
     actuaries, accountants and agents as it may deem advisable to assist in
     the administration of the Plan. Decisions of the Administrative Committee
     shall be conclusive and binding on all persons. The expenses of the
     Administrative Committee attributable to the administration of this Plan
     shall be paid directly by the Company.

4.02 Funding

 (a) All amounts payable in accordance with this Plan shall constitute a general
     unsecured obligation of the Company. Such amounts, as well as any
     administrative costs relating to the Plan, shall be paid out of the general
     assets of the Company, unless the provisions of paragraph (b) below are
     applicable.

 (b) The Board of Directors may, for administrative reasons, establish a grantor
     trust for the benefit of Eligible Employees in the Plan. The assets of said
     trust will be held separate and apart from other Company funds and shall be
     used exclusively for the purposes set forth in the Plan and the applicable
     trust agreement, subject to the following conditions:

     (i)  the creation of said trust shall not cause the Plan to be other than
          "unfunded" for purposes of Title I of ERISA;

     (ii) the Company shall be treated as the "grantor" of said trust for
          purposes of Section 671 and 677 of the Internal Revenue Code; and

<PAGE>   21
                                                                         Page 19

     (iii) said trust agreement shall provide that its assets may be used to
           satisfy claims of the Company's general creditors, provided that the
           rights of such general creditors are enforceable under federal and
           state law.

4.03 No Contract of Employment

     The establishment of the Plan shall not be construed as conferring any
     legal rights upon any person for a continuation of employment, nor shall it
     interfere with the rights of the Company to discharge any employee and to
     treat him or her without regard to the effect which such treatment might
     have upon him or her as an Eligible Employee in the Plan.

4.04 Competency

     If the Administrative Committee shall find that any person to whom any
     amount is or was payable hereunder is unable to care for his or her affairs
     because of illness or accident, or has died, then the Company, if it so
     elects, may direct that any payment due his or her estate (unless a prior
     claim therefore has been made by a duly appointed legal representative) or
     any part thereof be paid or applied for the benefit of such person or for
     the benefit of his or her spouse, children or other dependents, an
     institution maintaining or having custody of such person, any other person
     deemed by the Administrative Committee to be a proper recipient on behalf
     of such person otherwise entitled to payment, or any of them, in such
     manner and proportion as the Company may deem proper. Any such payment
     shall be in complete discharge of the liability of the Company therefor.

4.05 Withholding Taxes

     The Company shall have the right to deduct from each payment to be made
     under the Plan any required withholding taxes.

<PAGE>   22
                                                                         Page 20

4.06 Nonalienation

     Except insofar as may otherwise be required by law, no amount payable at
     any time under the Plan shall be subject in any manner to alienation by
     anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment,
     charge or encumbrance of any kind nor in any manner be subject to the debts
     or liabilities of any person and any attempt to so alienate or subject any
     such amount, whether presently or thereafter payable, shall be void. If any
     person shall attempt to, or shall, alienate, sell, transfer, assign,
     pledge, attach, charge or otherwise encumber any amount payable under the
     Plan, or any part thereof, or if by reason of his bankruptcy or other event
     happening at any such time such amount would be made subject to his debts
     or liabilities or would otherwise not be enjoyed by him, then the
     Administrative Committee, if it so elects, may direct that such amount be
     withheld and that the same or any part thereof be paid or applied to or for
     the benefit of such person, his spouse, children or other dependents, or
     any of them, in such manner and proportion as the Administrative Committee
     may deem proper.

4.07 Forfeiture for Cause

     In the event that an Eligible Employee, Member, or Retiree shall at any
     time be convicted of a crime involving dishonesty or fraud on the part of
     such Eligible Employee, Member, or Retiree in his or her relationship with
     the Company, an Affiliated Company, or a customer of the Company or an
     Affiliated Company, all Benefits that would otherwise be payable to him or
     her under the Plan shall be forfeited. If a Retiree shall at any time be
     under indictment for any such crime any Benefit amounts payable to such
     Retiree shall be suspended pending conviction, dismissal or an acquittal in
     respect thereof. If the Retiree is not convicted, the suspended amounts
     shall be paid to him or her (with interest accruing at the IRS Interest
     Rate in effect on the date of suspension) within thirty days after the date
     of the dismissal or acquittal.

<PAGE>   23
                                                                         Page 21

4.08 Mergers/Transfers

     This Plan shall be binding upon and inure to the benefit of the Company and
     its successors and assignees and the Eligible Employee, his or her
     designees and his or her estate. Nothing in this Plan shall preclude the
     Company from consolidating or merging into or with, or transferring all or
     substantially all of its assets to, another corporation which assumes this
     Plan and all obligations of the Company hereunder. Upon such a
     consolidation, merger or transfer of assets and assumption, the term
     "Company" shall refer to such other corporation and this Plan shall
     continue in full force and effect.

4.09 Calculations

     Whenever, under this Plan, it is necessary to determine whether one
     benefit is less than, equal to, or larger than another, whether or not
     such benefits are provided under this Plan, such determination shall
     be made by the Company's independent consulting actuary.

4.10 Elections

     All elections, designations, requests, notices, instructions, and other
     communications from an Eligible Employee, Member, Retiree, or other person
     to the Administrative Committee required or permitted under the Plan shall
     be in such form as is prescribed from time to time by the Administrative
     Committee, shall be mailed by first-class mail or delivered to the Senior
     Vice President of Human Resources unless otherwise specified by the
     Administrative Committee, and shall be deemed to have been given and
     delivered only upon actual receipt thereof by the Senior Vice President of
     Human Resources or other designee.

<PAGE>   24
                                                                         Page 22

4.11 Acceleration of Payment

     Notwithstanding any other provision of the Plan to the contrary, the
     Company shall make payments hereunder to a Retiree or Beneficiary before
     such payments are otherwise due if the Administrative Committee determines,
     based on a change in the tax or revenue laws of the United States of
     America, a published ruling or similar announcement issued by the Internal
     Revenue Service, a regulation issued by the Secretary of the Treasury or
     his delegate, a decision by a court of competent jurisdiction involving an
     Eligible Employee, Retiree or Beneficiary, or a closing agreement made
     under Code Section 7121 that is approved by the Internal Revenue Service
     and involves an Eligible Employee, Retiree or Beneficiary, that an Eligible
     Employee, Retiree or Beneficiary has recognized or will recognize income
     for federal income tax purposes with respect to amounts that are or will be
     payable to him under the Plan before they are paid to him or her.

4.12 Construction

 (a) The Plan is intended to constitute an unfunded deferred compensation
     arrangement for a select group of management or highly-compensated
     employees and, therefore, exempt from the requirements of Sections 201, 301
     and 401 of ERISA. All rights hereunder shall be governed by and construed
     in accordance with the laws of the State of New York and, except to the
     extent otherwise herein provided, in accordance with the provisions of the
     Pension Plan.

 (b) The captions preceding the sections and articles hereof have been inserted
     solely as a matter of convenience and in no way define or limit the scope
     or intent of any provisions of the Plan.

4.13 Insurance Products

     The Company may require each Eligible Employee to assist it in obtaining
     life insurance policies on the lives of each Eligible Employee, which
     policies would be owned by, and be payable to, the

<PAGE>   25
                                                                         Page 23

     Company. The Eligible Employee may be required to complete an application
     for life insurance, furnish underwriting information including medical
     examinations by a life insurance company-approved examiner, and authorize
     release of medical history to the life insurance company's underwriter, as
     designated by the Company. An Eligible Employee shall have no right or
     interest in such policies or the proceeds thereof.

4.14 Nature of Obligation

     No Eligible Employee, Member, Retiree, or Beneficiary shall have any
     interest in any specific asset of the Company or any Affiliated Company as
     a result of the Plan. Nothing contained herein shall be deemed to create a
     trust of any kind of any fiduciary relationship between the Company (or any
     Affiliated Company) and any Eligible Employee, Member, Retiree, or
     Beneficiary. Any right to receive any Benefit under the Plan shall only be
     the right of a general unsecured creditor.

4.15 Claims Procedure

 (a) Submission of Claims

     Claims for benefits under the Plan shall be submitted in writing to the
     Administrative Committee or to an individual designated by the
     Administrative Committee for this purpose.

 (b) Exhaustion of Remedy

     No claimant shall institute any action or proceeding in any state or
     federal court of law or equity or before any administrative tribunal or
     arbitrator for a claim for benefits under the Plan until the claimant has
     first exhausted the procedures promulgated by the Administrative Committee
     for review of claims.

<PAGE>   26
                                                                         Page 24

                       ARTICLE 5. AMENDMENT OR TERMINATION
                       -----------------------------------

Except as otherwise provided below, the Corporation, by action of its Board of
Directors, reserves the right to modify or to amend, in whole or in part, or to
terminate this Plan at any time. Notwithstanding the foregoing, the Chief
Executive Officer of the Corporation may amend Section 3.04 of the Plan, as he
deems necessary, to reduce the reduction for early commencement with respect to
an Eligible Employee who terminates employment with the Company's approval,
prior to his or her Normal Retirement Date. However, no modification, amendment
or termination of the Plan shall reduce the Benefit being paid to a Retiree or
Beneficiary as of the date of any such amendment or termination. In respect of
any Member who is not a Retiree, no modification or amendment shall materially
adversely affect such Member, unless such Member consents to such modification
or amendment in writing, and if the Plan is terminated by the Company, each
Member shall have an immediate nonforfeitable right to a Benefit calculated
under Article 3 of the Plan, with the amount determined under Section 3.02(a)
based on such Member's Credited Service and Average Final Compensation to the
date of such Plan termination. For purposes of applying the offset of the
Member's benefit under the Pension Plan, the amounts of said pension shall be
computed under the provisions of the Plan as though the date of Plan termination
was the Member's date of termination of employment. Any action to modify, amend
or terminate the Plan by the Board of Directors shall be taken in such manner as
may be permitted under the by-laws of the Corporation.

Notwithstanding the foregoing provisions of this Article 5, however, upon the
occurrence of a Change of Control Event and at all times thereafter, the
Corporation shall not discontinue, terminate, suspend, or amend the Plan, in
whole or in part, in any manner that would adversely affect the right of any (i)
Member, Retiree or beneficiary to receive the Benefits provided under the Plan
or (ii) any Member to earn future Credited Service pursuant to the on the date
immediately prior to the date a Change of Control Event occurs; provided,
nothing in this Article 5 should be construed to be a guaranty of continued
employment.<PAGE>   1

                                                                     Exhibit 4.1

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

                               WARRANT AGREEMENT

                                    BETWEEN

                           THE HORN & HARDART COMPANY

                                      AND

                        NORTH AMERICAN RESOURCES LIMITED

                              --------------------

                          Dated As Of October 25, 1991

                               For 279,110 Shares
                                of Common Stock

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

<PAGE>   2
                                  Exhibit 4.1

            WARRANT AGREEMENT (the "Agreement") dated as of October 25, 1991,
between THE HORN & HARDART COMPANY, a Nevada corporation (the "Company"), and
NORTH AMERICAN RESOURCES LIMITED, a British Virgin Islands corporation ("NAR").

            WHEREAS, NAR has agreed to make an equity investment in the Company
and The Hanover Companies, Inc., a Nevada corporation and wholly-owned direct
subsidiary of the Company, pursuant to the Stock Purchase Agreement dated as of
July 8, 1991, as amended (the "Stock Purchase Agreement"); and

            WHEREAS, as an inducement to NAR to enter into the Stock Purchase
Agreement, the Company proposes to issue to NAR warrants defined (the
"Warrants") to purchase up to an aggregate of 279,110 shares (the "Warrant
Shares") of the Company's Common stock, par value $0.66-2/3 per share (the
"Common Stock"), each Warrant entitling the holder thereof to purchase one share
of Common Stock for an exercise price of $5.25, or such other price as is
established pursuant to the terms hereof.

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

            1. Issuance of Warrants; Form of Warrant Certificate. Concurrently
with the execution of this Agreement, the Company will issue and deliver the
Warrants to NAR. The number of Warrants to be issued and delivered shall be
equal to 279,110. The text of the Warrant Certificate (the "Warrant
Certificate") and the form of election to purchase Warrant Shares to be printed
on the reverse thereof shall be as set forth in Annex A attached hereto. The
Warrant Certificate shall be executed on behalf of the Company by the manual or
facsimile signature of the Chairman of the Board, President or Vice President of
the Company, attested to by the manual or facsimile signature of the Secretary
or an Assistant Secretary of the Company.

            The Warrant Certificate and any later certificate issued upon
division, exchange, substitution or transfer thereof (collectively
"Certificates"), bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company, shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold
such offices on the date of this Agreement.

            Certificates shall be dated as of the date of execution thereof by
the Company either upon initial issuance or upon division, exchange,
substitution or transfer.

                                     - 1 -
<PAGE>   3

            2. Registration. The Warrants shall be numbered and shall be
registered in a Warrant Register as they are issued. The Company shall be
entitled to treat the registered holder of any Certificate on the Warrant
Register (the "Holder") as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in such
Certificate on the part of any other person, and shall not be liable for any
registration or transfer of Warrants which are registered or to be registered in
the name of the fiduciary or the nominee of a fiduciary unless made with the
actual knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with knowledge of such facts that
its participation therein amounts to bad faith. The Warrants shall be registered
initially in the name of "Westmark Holdings Limited".

            3. Exchange of Warrant Certificates. Subject to any restriction upon
transfer set forth in this Agreement, each Certificate may be exchanged for
another Certificate or Certificates entitling the Holder thereof to purchase a
like aggregate number of Warrant Shares as the Certificate or Certificates
surrendered then entitle such Holder to purchase. Any Holder desiring to
exchange a Warrant Certificate or Warrant Certificates shall make such request
in writing delivered to the Company, and shall surrender, properly endorsed, the
Warrant Certificate or Warrant Certificates to be so exchanged. Thereupon, the
Company shall execute and deliver to the person entitled thereto a new Warrant
Certificate or Warrant Certificates, as the case may be, as so requested. The
Company may require payment by a Holder requesting such exchange of a sum
sufficient to cover any tax or other governmental charge that may be imposed
therewith.

            4. Transfer of Warrants and Warrant Shares.

                  (a) The Warrants will not be transferable except to affiliates
of NAR. The Warrants shall be transferable only on the books of the Company (the
"Warrant Register") upon delivery thereof, duly endorsed by the Holder or by his
duly authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer, in each case accompanied by any
necessary transfer tax or other governmental charge imposed upon transfer, or
evidence of the payment thereof. In all cases of transfer by an attorney, the
original power of attorney, duly approved, or an official copy thereof, duly
certified, shall be deposited with the Company. In case of transfer by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall promptly deliver a new Certificate or

                                     - 2 -
<PAGE>   4

Certificates to the persons entitled thereto. Notwithstanding the foregoing, the
Company shall have no obligation to cause Warrants to be transferred on its
books to any person, unless the holder of such Warrants shall furnish to the
Company evidence of compliance with the Securities Act of 1933, as amended (the
"Act"), in accordance with the provisions of this Section.

                  (b) NAR covenants to the Company that NAR will not dispose of
any Warrants or Warrant Shares except pursuant to (i) an effective Registration
Statement or (ii) an opinion of counsel, reasonably satisfactory to counsel for
the Company, that an exemption from such registration is available.

                  (c) The Warrants shall be subject to a stop-transfer order and
any Certificates shall bear the following legend by which each Holder shall be
bound:

                  "THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES
            OF COMMON STOCK ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR
            SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
            FILED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN
            OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY
            TO COUNSEL FOR THIS CORPORATION, THAT AN EXEMPTION FROM REGISTRATION
            UNDER SUCH ACT IS AVAILABLE."

                  (d) The Warrant Shares shall be subject to a stop-transfer
order and any certificates evidencing any such shares shall bear the following
legend:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
            OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
            FILED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN
            OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY
            TO COUNSEL FOR THIS CORPORATION, THAT AN EXEMPTION FROM REGISTRATION
            UNDER SUCH ACT IS AVAILABLE."

            5. Term of Warrants; Exercise of Warrants.

                  (a) Each Warrant entitles the Holder thereof to purchase, on
or after the date hereof, one share of Common Stock at any time on or before
5:00 p.m., New York Time, on July 10, 1996 (the "Expiration Date"), at the
lesser of (i) $5.25 per share or (ii) if there shall have occurred a Rights
Offering (as such term is defined in the Stock Purchase Agreement), a price per
share equal to the product of 1.75 multiplied by the Rights Offering Price (as
such term is defined in the Stock Purchase Agreement) (the "Exercise Price") as
the same may be adjusted pursuant to Annex B hereof.

                                     - 3 -
<PAGE>   5

                  (b) Subject to the provisions of this Agreement, the Holder of
each Warrant shall have the right, which may be exercised as expressed in such
Warrant, to purchase from the Company (and the Company shall issue and sell to
each such Holder) one fully paid and nonassessable share of Common Stock upon
surrender to the Company, or its duly authorized agent, of the Certificate or
Certificates representing such Warrant or Warrants, with the form of election to
purchase on the reverse thereof duly filled in and signed, and upon payment to
the Company of the Exercise Price. Payment of such Exercise Price may be made in
cash or by certified or official bank check or wire transfer payable to the
order of the Company.

                  (c) Subject to Section 6 hereof, upon such surrender of
Warrants, and payment of the Exercise Price as aforesaid, the Company shall
issue and cause to be delivered to the Holder or upon the written order of such
Holder and (subject to receipt of evidence of compliance with the Act in
accordance with the provisions of Section 4 of this Agreement) in such name or
names as the Holder may designate, a Certificate a Certificate or Certificates
for the number of full Warrant Shares so purchased, together with cash or check,
as provided in Section 10 of this Agreement, in respect of a fraction of a share
of such stock otherwise issuable upon such surrender and, if the number of
Warrants represented by a Certificate shall not be exercised in full, a new
Certificate or Certificates, executed by the Company, for the balance of the
number of whole Warrants represented by the surrendered Certificate.

                  (d) If permitted by applicable law, such Certificate or
Certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
shares as of the date of the surrender of such Warrants and payment of the
Exercise Price. The Warrants shall be exercisable, at the election of the Holder
thereof, either as an entirety or from time to time for part of the shares
specified therein.

            6. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue or delivery of any Warrants or certificates for Warrant Shares in a
name other than that of the Holder of such Warrants.

            7. Mutilated or Missing Certificates. In case any Certificates shall
be mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and in substitution

                                     - 4 -
<PAGE>   6

for and upon cancellation of the mutilated Certificates, or in lieu of and in
substitution for the Certificates lost, stolen or destroyed, new Certificates of
like tenor and representing an equivalent right or interest; but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Certificates and of indemnity or bond, if requested, also
satisfactory to the Company. An applicant for such substitute Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.

            8. Reservation of Warrant Shares; Authorization.

            8.1 Reservation of Warrant Shares. The Company has reserved and will
keep available, out of the authorized and unissued shares of Common Stock or the
authorized and issued shares of Common Stock held in the Company's Treasury, the
full number of shares sufficient to provide for the exercise of the rights of
purchase represented by all the outstanding Warrants. The transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent Transfer Agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid are hereby irrevocably authorized and directed at
all times until the Expiration Date to reserve such number of authorized and
unissued shares as shall be requisite for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will supply such Transfer Agent with
duly executed stock certificates for such purpose and will itself provide or
otherwise make available any cash or check which may be issuable as provided in
Section 10 of this Agreement. The Company will furnish to such Transfer Agent a
copy of all notices of adjustments and certificates related thereto, transmitted
to each Holder pursuant to this Agreement. All Warrants surrendered in the
exercise of the rights thereby evidenced shall be cancelled.

            8.2 Authorization. This Agreement has been duly and validly executed
and delivered by the Company and this Agreement constitutes a valid and binding
agreement of the Company enforceable in accordance with its terms (except in
each such case as enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and except as rights to indemnity and
contribution hereunder and thereunder may be

                                     - 5 -
<PAGE>   7

limited by federal or state securities laws). The execution, delivery and
performance of this Agreement by the Company and compliance by the Company with
the terms and provisions hereof do not and will not violate any provision of any
law, rule or regulation, order, writ, judgment, injunction, statute, decree,
determination or award having applicability to the Company, or any of its
properties or assets. The execution, delivery and performance of this Agreement
by the Company and compliance by the Company with the terms and provisions
hereof do not and will not (i) conflict with or result in a breach of or
constitute a default under any provision of the charter or by-laws of the
Company; or (ii) give rise to an event of default which may result in the
acceleration of any material amount of Indebtedness (as such item is defined in
the Stock Purchase Agreement) or an event of default under any other material
contractual obligation of the Company. The Company covenants that upon issuance
and delivery against payment pursuant to the terms of their Warrant Agreement,
all Warrant Shares will be validly issued, fully paid and nonassessable
outstanding shares of Common Stock of the Company. The Company represents and
warrants that the number of outstanding shares of the Company is 13,910,177.
Except as set forth on Schedule 1 attached hereto, there are not outstanding
subscriptions, convertible securities, options, warrants or other rights,
agreements or commitments to subscribe for or purchase or acquire from the
company, or any contracts providing for the issuance of, or the granting of
rights to acquire any capital stock of the Company or any securities convertible
or exchangeable for any such capital stock. There are no preemptive rights with
respect to and there are no outstanding contractual obligations of the Company
to repurchase, redeem or otherwise acquire any shares of the Company.

            9. Adjustments of Exercise Price and Number of Shares. The Exercise
Price and Warrant Shares shall be adjusted under certain circumstances in
accordance with Annex B attached hereto and expressly incorporated herein and
made a part hereof.

            10. Fractional Shares of Common Stock. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If more
than one Warrant shall be presented for exercise in full at the same time by the
same Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to the Closing Price for one share of
the Common Stock, on the trading day immediately preceding the date the Warrant
is presented for exercise,

                                     - 6 -
<PAGE>   8

multiplied by such fraction. The Company may also make any payment required by
this Section 10 by check.

            11. Registration Rights. The Holder shall have those registration
rights with respect to the Warrant Shares as set forth in that certain
Registration Rights Agreement dated as of July 8, 1991 by and among the Company,
NAR and Intercontinental Mining & Resources Limited (the "Registration Rights
Agreement").

            12. Rights as Stockholders, Notices to Holders. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the Holders or their transferees the right to vote or to receive dividends or to
consent to or receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as stockholders of the Company. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any of
the following events shall occur:

                  (a) the Company shall take any action which requires an
            adjustment under Annex B attached hereto; or

                  (b) a merger occurs to which the Company is a party and for
            which approval of any stockholders of the Company is required, or of
            the conveyance or transfer of the properties and assets of the
            Company as, or substantially as, an entirety, or of any
            reclassification or change of outstanding Warrant Shares issuable
            upon exercise of the Warrants (other than a change in par value, or
            from par value to no par value, or from no par value to par value,
            or as a result of a subdivision or combination); or

                  (c) voluntary or involuntary dissolution, liquidation, or
            winding up of the Company;

then in any one or more of said events the Company shall give notice in writing
of such event to the Holders at least 20 days (10 days in any case specified in
clauses (a) and (b) above) prior to the date fixed as a record date or the date
of closing the transfer books for the determination of the stockholders entitled
to such dividend, distribution, or subscription rights, or for the determination
of stockholders entitled to vote on such proposed merger, sale,
reclassification, dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be.

            13. Miscellaneous.

                  (a) Notices. Any notice pursuant to this Agreement to be given
or made by the Holder of any Warrant

                                     - 7 -
<PAGE>   9

Certificate to the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed as follows:

                           The Horn & Hardart Company
                              1500 Harbor Boulevard
                           Weehawken, New Jersey 07087

                          Attention: Michael P. Sherman
                            Executive Vice President
                               and General Counsel

Notices or demands authorized by this Agreement to be given or made to the
Holder of any Warrant shall be sufficiently given or made (except as otherwise
provided in this Agreement) if sent by first-class mail, postage prepaid,
addressed to such Holder at the address of such Holder as shown on the Warrant
Register.

                  (b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflict of laws.

                  (c) Amendments and Waivers. This Agreement may be amended,
modified or superseded only by written instrument signed by all of the parties
hereto, and any of the terms, provisions, and conditions hereof may be waived,
only by a written instrument signed by the party waiving such term, provision or
condition.

                  (d) Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors and assigns hereunder.

                  (e) Merger or Consolidation of the Company. So long as
Warrants remain outstanding, until the Expiration Date, the Company will not
merge or consolidate with or into, or sell, transfer to or lease all or
substantially all of its property to, any other corporation unless the successor
or purchasing corporation, as the case may be (if not the Company), shall
expressly assume, by supplemental agreement executed and delivered to the
Holder, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.

                  (f) Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Holder, any legal or equitable right, remedy or claim under this
Agreement, but this Agreement shall be for the sole and exclusive benefit of the
Company and the Holder of the Warrants and Warrant Shares.

                                     - 8 -
<PAGE>   10

                  (g) Captions. The captions of the sections and subsections of
this Agreement have been inserted for convenience only and shall have no
substantive effect.

                  (h) Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same instrument.

                  (i) Termination. This Agreement shall terminate at the close
of business on the Expiration Date or any earlier date when all Warrants have
been exercised, provided that the registration rights provided for in the
Registration Rights Agreement shall remain in full force and effect to the
extent provided for therein.

                  (j) Specific Performance. The parties hereto acknowledge and
agree that in the event of any breach of this Agreement, NAR would be
irreparably harmed and would not be made whole by monetary damages. It is
accordingly agreed that NAR, in addition to monetary damage and any other remedy
to which it may be entitled at law or in equity, shall be entitled to compel
specific performance of this Agreement.

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

                                        THE HORN & HARDART COMPANY

                                        By: /s/ [ILLEGIBLE]
                                            ------------------------------------
                                        Name:
                                        Title:

                                        NORTH AMERICAN RESOURCES
                                        LIMITED

                                        By: /s/ [ILLEGIBLE]
                                            ------------------------------------
                                        Name:
                                        Title:

                                     - 9 -
<PAGE>   11

                                                                         Annex A

            THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
            COMMON STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED OR
            SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
            PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN
            OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY
            TO COUNSEL FOR THIS CORPORATION, THAT AN EXEMPTION FROM REGISTRATION
            UNDER SUCH ACT IS AVAILABLE.

            THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
            CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
            REFERRED TO HEREIN.

No. 1                                                           279,110 Warrants

                       VOID AFTER 5:00 P.M. NEW YORK CITY
                               TIME ON JULY 10, 1996
                           THE HORN & HARDART COMPANY
                               WARRANT CERTIFICATE

            THIS CERTIFIES THAT for value received the registered holder hereof
or registered assign (the "Holder"), is the owner of the number of Warrants set
forth above, each of which entitles the owner thereof to purchase on or after
the date hereof, at any time on or before 5:00 P.M., New York City time, on July
10, 1996, one fully paid and nonassessable share of Common Stock, $0.66-2/3 par
value (the "Common Stock") of The Horn & Hardart Company, a Nevada corporation
(the "Company"), at the purchase price of the lesser of (i) $5.25 per share or
(ii) if there shall have occurred a Rights Offering (as such term is defined in
the Stock Purchase Agreement), a price per share equal to the product of 1.75
multiplied by the Rights Offering Price (as such term is defined in the Stock
Purchase Agreement) (the "Exercise Price"). Payment of the Exercise Price may be
made in cash or by certified or official bank check to the order of the Company.
As provided in the Agreement referred to below, the Exercise Price and the
number or kind of shares which may be purchased upon the exercise of the
Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.

<PAGE>   12

            This Warrant Certificate is subject to and entitled to the benefits
of all of the terms, provisions and conditions of that certain agreement dated
as of October 25, 1991 (the "Warrant Agreement") by and between the Company and
North American Resources Limited, which Warrant Agreement is hereby incorporated
herein by reference and made a part hereof and to which Warrant Agreement
reference is hereby made of a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Company and the
Holders of the Warrant Certificates. Copies of the Warrant Agreement are on file
at the principal office of the Company.

            The Holder hereof may be treated by the Company and all other
persons dealing with this Warrant Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to the
contrary notwithstanding, and until such transfer on such books, the Company may
treat the Holder hereof as the owner for all purposes.

            This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Company, may be
exchanged for another Warrant Certificate or Warrant Certificates of like tenor
and date evidencing Warrants entitling the Holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered. If this Warrant Certificate
shall be exercised in part, the Holder shall be entitled to receive upon
surrender hereof, another Warrant Certificate or Warrant Certificates for the
number of whole Warrants not exercised.

            No fractional shares of Common Stock will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu thereof
payment will be made as provided in the Warrant Agreement.

            No Holder shall be entitled to vote or to receive dividends or be
deemed the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained in the Warrant Agreement or herein be construed to confer
upon such Holder, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issue of stock,
reclassification of stock, change of par value or change of stock to no par
value,

                                     - 2 -
<PAGE>   13

consolidation, merger, conveyance, or otherwise) or, except as provided in the
Warrant Agreement, to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until the Warrant or Warrants evidenced by
this Warrant Certificate shall have been exercised and the Common Stock
purchasable upon the exercise thereof shall have become deliverable as provided
in the Warrant Agreement.

            IN WITNESS WHEREOF, The Horn & Hardart Company has caused the
signature of its Executive Vice President and General Counsel to be printed
hereon.

                                        THE HORN & HARDART COMPANY

                                        By:
                                            ------------------------------------
                                            Michael P. Sherman
                                            Executive Vice President
                                            General Counsel

                                     - 3 -
<PAGE>   14

                                  PURCHASE FORM

                    (To be executed upon exercise of warrant)

To The Horn & Hardart Company:

            The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the Warrant Certificate attached hereto for, and to
purchase thereunder, ___________________ shares of Common Stock, as provided for
therein, and tenders herewith payment of the purchase price in full in the form
of cash or a certified or official bank check in the amount of $_______________.

            Please issue a Certificate or Certificates for such shares of Common
Stock in the name of, and pay any cash for any fractional share to:

PLEASE INSERT SOCIAL SECURITY             Name__________________________
OR OTHER IDENTIFYING NUMBER               (Please Print Name and Address)
OF ASSIGNEE

______________________________________    Address_________________________

______________________________________    Signature_______________________
                                          NOTE: The above signature should
                                          correspond exactly with the name on
                                          the face of this Warrant Certificate
                                          or with the name of assignee appearing
                                          in the assignment form below.

AND, if said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder less any fraction of a share paid in cash.

Dated: __________________________, 19__

                                     - 4 -
<PAGE>   15

                                     Annex B

                                  Antidilution

            The provisions set forth in this Annex B shall constitute a part of
that certain Warrant Agreement dated October 25, 1991 by and between the Horn &
Hardart Company and North American Resources Limited (the "Agreement"). Defined
terms used herein and not otherwise defined shall have the meaning set forth in
the Agreement.

            1. Adjustments. The number of Warrant Shares purchasable upon the
exercise of each Warrant and the Exercise Price shall be subject to adjustment
as follows:

                  (a)   In case the Company shall (i) pay a dividend or make a
                        distribution in shares of Common Stock, (ii) subdivide
                        its outstanding shares of Common Stock, (iii) combine
                        its outstanding shares of Common Stock into a smaller
                        number of shares of Common Stock or (iv) reclassify its
                        shares of Common Stock, the number of Warrant Shares
                        purchasable upon exercise of the Warrant immediately
                        prior thereto shall be adjusted so that the Holder of
                        the Warrant shall be entitled to receive the kind and
                        number of Warrant Shares which it would have owned or
                        have been entitled to receive after any of the events
                        described above, had the Warrant been exercised
                        immediately prior to such event or any record date with
                        respect thereto. An adjustment made pursuant to this
                        paragraph (a) shall become effective immediately after
                        the effective date of such event retroactive to the
                        record date, if any, for such event.

                  (b)   In case the Company shall issue rights, options or
                        warrants to all holders of its outstanding Common Stock,
                        other than pursuant to the Rights Offering (as defined
                        in the Stock Purchase Agreement) if the Rights Offering
                        Price (as defined

<PAGE>   16

                        in the Stock Purchase Agreement) is less than $3.00 per
                        share, without any charge to such holders, entitling
                        them to subscribe for or purchase shares of Common Stock
                        at a price per share which is lower at the record price
                        per share which is lower at the record date mentioned
                        below than the then current market price per share of
                        Common Stock (as defined in paragraph (d) below), the
                        number of Warrant Shares thereafter purchasable upon the
                        Exercise of the Warrant shall be determined by
                        multiplying the number of Warrant Shares theretofore
                        purchasable upon exercise of each Warrant by a fraction,
                        the numerator of which shall be the number of shares of
                        Common Stock outstanding on the date of issuance of such
                        rights, options or warrants plus the number of
                        additional shares of Common Stock offered for
                        subscription or purchase, and the denominator of which
                        shall be the number of shares of Common Stock
                        outstanding on the date of issuance of such rights,
                        options or warrants plus the number of shares which the
                        aggregate offering price of the total number of shares
                        of Common Stock so offered would purchase at the then
                        current market price per share of Common Stock. Such
                        adjustment shall be made whenever such rights, options
                        or warrants are issued, and shall become effective
                        retroactively immediately after the record date for the
                        determination of stockholders entitled to receive such
                        rights, options or entitled to receive such rights,
                        options or warrants, subject to readjustment as provided
                        in paragraph (i) below.

                  (c)   In case the Company shall distribute to all holders of
                        its shares of Common Stock evidences of its indebtedness
                        or assets (excluding cash dividends or distributions
                        payable out of consolidated earnings or earned surplus
                        and dividends or distributions referred to in paragraphs
                        (a) above) or rights, options or warrants or convertible
                        or exchangeable securities

                                      - 2-
<PAGE>   17

                        containing the right to subscribe for or purchase shares
                        of Common Stock (excluding those referred to in
                        paragraph (b) above), then in each case the number of
                        Warrant Shares thereafter purchasable upon the exercise
                        of the Warrant shall be determined by multiplying the
                        number of Warrant Shares theretofore purchasable upon
                        the exercise of the Warrant, by a fraction, the
                        numerator of which shall be the then current market
                        price per share of Common Stock (as defined in paragraph
                        (d) below) on the date of such distribution, and the
                        denominator of which shall be the then current market
                        price per share of Common Stock, less the then fair
                        value (as determined in good faith by the Board of
                        Directors of the Company, whose determination shall be
                        conclusive) of the portion of the assets or evidences of
                        indebtedness so distributed or of such subscription
                        rights, options or warrants, or of such convertible or
                        exchangeable securities applicable to one share of
                        Common Stock. Such adjustment shall be made whenever any
                        such distribution is made, and shall become effective on
                        the date of distribution retroactive to the record date
                        for the determination of shareholders entitled to
                        receive such distribution.

                  (d)   For the purpose of any computation under paragraphs (b)
                        and (c) of this Section the current market price per
                        share of Common Stock at any date shall be the average
                        of the daily market prices for 30 consecutive trading
                        days commencing 45 trading days before the date of such
                        computation. The daily market price for each day shall
                        be the last reported sale price regular way or, in case
                        no such reported sale takes place on such day, the
                        average of the reported closing bid and asked prices
                        regular way, in either case on the principal national
                        securities

                                     - 3 -
<PAGE>   18

                        exchange on which the Common Stock is listed or admitted
                        to trading, or if not listed or admitted to trading on
                        any national securities exchange, the average of the
                        highest reported bid and lowest reported asked
                        quotations for the Common Stock on NASDAQ or any
                        comparable system.

                  (e)   No adjustment in the number of Warrant Shares
                        purchasable hereunder shall be required unless such
                        adjustment would require an increase or decrease of at
                        least one percent (1%) in the number of Warrant Shares
                        purchasable upon the exercise of the Warrant; provided,
                        however, that any adjustments which by reason of this
                        paragraph (e) are not required to be made shall be
                        carried forward and taken into account in any subsequent
                        adjustment. All calculations shall be made to the
                        nearest one-thousandth of a share. Notwithstanding the
                        first sentence of this paragraph (e), any adjustment
                        shall be made no later than the earlier of three years
                        from the date of the transaction which mandates such
                        adjustment or the expiration of the right to exercise
                        any Warrant.

                  (f)   Whenever the number of Warrant Shares purchasable upon
                        the exercise of each Warrant is adjusted, as herein
                        provided, the Exercise Price payable upon exercise of
                        each Warrant shall be adjusted by multiplying such
                        Exercise Price immediately prior to such adjustment by a
                        fraction, the numerator of which shall be the number of
                        Warrant Shares purchasable upon the exercise of the
                        Warrant immediately prior to such adjustment, and the
                        denominator of which shall be the number of Warrant
                        Shares so purchasable immediately thereafter.

                  (g)   In case the Company shall sell and issue shares of
                        Common Stock, or rights, options, warrants or
                        convertible

                                     - 4 -
<PAGE>   19

                        securities containing the right to subscribe for or
                        purchase shares of Common Stock, at a price per share of
                        Common Stock (determined in the case of such rights,
                        options, warrants or convertible securities, by dividing
                        (i) the total amount received or receivable by the
                        Company in consideration of the sale and issuance of
                        such rights, options, warrants or convertible
                        securities, plus the total consideration payable to the
                        Company upon exercise or conversion thereof, by (ii) the
                        total number of shares of Common Stock covered by such
                        rights, options, warrants or convertible securities)
                        lower than the current market price (as defined in
                        paragraph (d) above) in effect immediately prior to such
                        sale and issuance, then the Warrant Price shall be
                        reduced to a price (calculated to the nearest cent)
                        determined by dividing (i) an amount equal to the sum of
                        (1) the number of shares of Common Stock outstanding
                        immediately prior to such sale and issuance multiplied
                        by the then existing Warrant Price, plus (2) the
                        consideration received by the Company for such sale and
                        issuance, by (ii) the total number of shares of Common
                        Stock outstanding immediately after such sale and
                        issuance, provided, however, that adjustments pursuant
                        to this paragraph (g) shall only be made if such sale or
                        issuance is to an officer, director or other affiliate
                        of the Company, or any relative of any of the above,
                        immediately prior to such sale or issuance, and if no
                        adjustment for such sale or issuance is made pursuant to
                        paragraph (c) above. Notwithstanding anything to the
                        contrary, no adjustment shall be made pursuant to this
                        subsection (g) in the event the Company shall issue
                        options to employees (including officers) or directors
                        in consideration of services, which options have an
                        exercise price not less than the

                                     - 5 -
<PAGE>   20

                        current market oprice (as defined in paragraph (d)
                        above) of Common Stock at the time of the issuance of
                        such options. The number of Warrant Shares purchasable
                        upon the exercise of each Warrant shall be that number
                        determined by multiplying the number of Warrant Shares
                        issuable upon exercise immediately prior to such
                        adjustment by a fraction, of which the numerator is the
                        Warrant Price in effect immediately prior to such
                        adjustment and the denominator is the Warrant Price as
                        so adjusted. For the purposes of such adjustment, the
                        shares of Common Stock which the holders of any such
                        rights, options, warrants or convertible securities
                        shall be entitled to subscribe for or purchase shall be
                        deemed to be issued and outstanding as of the date of
                        such sale and issuance and the consideration received by
                        the Company therfor shall be deemed to be the
                        consideration received by the Company for such rights,
                        options, warrants or convertible securities, plus the
                        consideration or premiums stated in such rights,
                        options, warrants, or convertible securities to be paid
                        for the shares of common stock, covered thereby. In case
                        the Company shall sell and issue shares of Common Stock,
                        or rights, options, warrants, or convertible securities
                        containing the right to subscribe for or purchse shares
                        of Common Stock, for a consideration consisting, in
                        whole or in part, of property other than cash or its
                        equivalent, then in determining the "price per share of
                        Common Stock" and the consideration received by the
                        Company for purposes of the first sentence of this
                        paragraph (g), the Board of Directors shall determine,
                        in its discretion, the fair value of said property and
                        such determination, if made in good faith, shall be
                        binding upon all Holders of Warrants. There shall be no
                        adjustment of the Warrant Price pursuant to this

                                     - 6 -
<PAGE>   21

                        paragraph (g) if the amount of such adjustment would be
                        less than $.05 per Share; provided, however, that any
                        adjustment which by reason of this provision is not
                        required to be made shall be carried forward and taken
                        into account in any subsequent adjustment.

                  (h)   For the purpose of this Section 1, the terms "shares of
                        Common Stock" shall mean (i) the class of stock
                        designated as the Common Stock of the Company at the
                        date of this Agreement, or (ii) any other class of stock
                        resulting from successive changes or reclassification of
                        such shares consisting solely of changes in par value,
                        or from par value to no par value, or from no par value
                        to par value.

                  (i)   Upon the expiration of any rights, options, warrants or
                        conversion or exchange privileges, if any thereof shall
                        not have been exercised, the Exercise Price and the
                        number of shares of Common Stock purchasable upon such
                        expiration, be readjusted and shall therafter be such as
                        it would have been had it been originally adjusted (or
                        had the original adjustment not been required, as the
                        case may be) as if (A) the only shares of Common Stock
                        so issued were the shares of Common Stock, if any,
                        actually issued or sold upon the exercise of such
                        rights, options, warrants or conversion or exchange
                        rights and (B) such shares of Common Stock, if any, were
                        issued or sold for the consideration actually received
                        by the Company upon such exercise plus the aggregate
                        consideration, if any, actually received by the Company
                        for the issuance, sale or grant of the rights, options,
                        warrants or conversion or exchange rights that were so
                        exercised; provided, further that no such readjustment
                        shall have the effect of increasing the Exercise Price
                        by an

                                     - 7 -
<PAGE>   22

                        amount in excess of the amount of the adjustment
                        initially made in respect to the issuance, sale or grant
                        of such rights, options, warrants or conversion or
                        exchange rights.

            2. Notice of Adjustment. Whenever the number or Exercise Price of
Warrant Shares purchasable upon the exercise of each Warrant are adjusted, as
herein provided, the Company shall mail by first class mail, postage prepaid, to
the Holder notice of such adjustment or adjustments setting forth (i) the number
of Warrant Shares purchasable upon the exercise of each Warrant and the Exercise
Price of such Warrant Shares after such adjustment, (ii) a brief statement of
the facts requiring such adjustment and (iii) the computation by which such
adjustment was made. Such certificate shall be conclusive evidence of the
correctness of such adjustment.

            3. No Adjustment for Dividends. Except as provided in Section 1, no
adjustment in respect of any dividends shall be made during the term of a
Warrant or upon the exercise of a Warrant.

            4. Preservation of Purchase Rights Upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of all or substantially all of the property of the Company,
Holder shall have the right thereafter upon payment of the Exercise Price in
effect immediately prior to such action to purchase upon exercise of the Warrant
the kind and amount of shares and other securities, cash and property which the
Holder would have owned or have been entitled to receive after the happening of
such consolidation, merger, sale or conveyance had such warrant been exercised
immediately prior to such action. Adjustments to such shares and other
securities shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Annex B. The provisions of this Section 4
shall apply to successive consolidations, mergers, sales or conveyances.

            5. Statement on Warrants. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrant, any Warrant theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in the
Warrant

                                     - 8 -
<PAGE>   23

initially issuable pursuant to this Agreement. Upon the request of any holder of
any Warrant, the Company shall issue a new Warrant to reflect the adjustment to
number of Warrant Shares and the Exercise Price.

                                     - 9 -
<PAGE>   24

                                                                      Schedule I
                                              Options and Convertible Securities

1.    Warrants issued to Sun Life Insurance Company of America on May 9, 1991 to
      purchase at any time prior to May 9, 1996 up to an aggregate of 973,712
      shares of the Company's Common Stock, par value $.66 2/3 per share, for
      $4.00 per share.

2.    Warrants isued to Sun Life Insurance Company of America on July 10, 1991
      to purchase at any time prior to July 10, 1996 up to an aggregate of
      291,667 shares of the Company's Common Stock, par value $.66 2/3 per
      share, for $5.25 per share.

3.    Warrants issued to Intercontinental Mining & Resources Limited on July 10,
      1991 to purchase at any time prior to July 10, 1996 up to an aggregate of
      1,750,000 shares of the Company's Common Stock, par value $.66 2/3 per
      share, for $5.25 per share.

4.    Options

<TABLE>
<CAPTION>
                                         OPTIONS            OPTION
      DATE OF         EXPIRATION       OUTSTANDING         EXERCISE
       GRANT             DATE            12/29/90            PRICE
      -------         ----------       -----------         --------
      <S>              <C>               <C>               <C>
      12/11/90         12/11/95          200,000           $  2.750
       9/14/90          9/14/95          291,050              5.000
      10/13/89         10/11/94           41,200              7.000
       5/24/88          5/24/93          235.165              7.000
      10/18/88         10/18/83          304,850              8.000
        4/7/89           4/7/94           37,500              8.000
       9/13/89          9/13/94           34,125              9.625
       9/15/87           9/2/92           28,000             13.000
       4/17/87          4/17/92           13,000             11.375
          1986                            22,500             12.000
          1988                            60,000              7.000
          1989                            75,000              7.250
          1990                            10,000              5.000
                                       ----------

                                       1,386,123
                                       =========
</TABLE>

5. Convertible Debentures

<TABLE>
<CAPTION>
                                        Debentures            Conversion
                                       Outstanding               Price
                                       -----------            ----------
<S>                                    <C>                     <C>
7-1/2% Convertible                     $30,000,000             $11.70
Subordinated
Debentures due
March 1, 2007
</TABLE>
<PAGE>   25

6.    Agreement under consideration by and among the Company, Buyer and Jack E.
      Rosenfeld.

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