Document:

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                                                                    EXHIBIT 4(j)

                            HANOVER FOODS CORPORATION

                                   $25,000,000

                    7.01% SENIOR NOTES DUE SEPTEMBER 15,2011

                             NOTE PURCHASE AGREEMENT

                             DATED SEPTEMBER 1, 2001
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                                TABLE OF CONTENTS
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Section                                                                                                          Page
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1.  THE NOTES..................................................................................................   1
   1.1.  Authorization of the Notes............................................................................   1

2.  SALE AND PURCHASE OF NOTES.................................................................................   1

3.  CLOSING....................................................................................................   1

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

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

6.  REPRESENTATIONS AND COVENANTS OF EACH PURCHASER............................................................  10
   6.1.  Purchase for Investment...............................................................................  10
   6.2.  Source of Funds.......................................................................................  10
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<S>                                                                                                              <C>
7.  INFORMATION AS TO COMPANY..................................................................................  11
   7.1.  Financial and Business Information....................................................................  11
   7.2.  Officer's Certificate.................................................................................  14
   7.3.  Inspection............................................................................................  15

8.  PREPAYMENT OF THE NOTES....................................................................................  15
   8.1.  Required Prepayments of Notes.........................................................................  15
   8.2.  Optional Prepayments with Make-Whole Amount...........................................................  15
   8.3.  Change of Control.....................................................................................  16
   8.4.  Allocation of Partial Prepayments.....................................................................  17
   8.5.  Maturity; Surrender, etc..............................................................................  17
   8.6.  Purchase of Notes.....................................................................................  17
   8.7.  Make-Whole Amount.....................................................................................  17

9.  AFFIRMATIVE COVENANTS......................................................................................  19
   9.1.  Compliance with Law...................................................................................  19
   9.2.  Insurance.............................................................................................  19
   9.3.  Maintenance of Properties.............................................................................  19
   9.4.  Payment of Taxes and Claims...........................................................................  20
   9.5.  Corporate Existence, etc..............................................................................  20
   9.6.  Maintenance of Restricted Subsidiaries; Designation of Unrestricted Subsidiaries......................  20

10.  NEGATIVE COVENANTS........................................................................................  21
   10.1.  Transactions with Affiliates.........................................................................  21
   10.2.  Merger, Consolidation, etc...........................................................................  21
   10.3.  Disposition of Stock of Restricted Subsidiaries......................................................  22
   10.4.  Limitation on Liens..................................................................................  22
   10.5.  Sales of Assets......................................................................................  24
   10.6.  Limitations on Indebtedness..........................................................................  25
   10.7.  Minimum Fixed Charges................................................................................  26
   10.8.  Consolidated Net Worth...............................................................................  26
   10.9.  Current Ratio; Working Capital.......................................................................  26
   10.10.  Pari Passu Position.................................................................................  26
   10.11.  Restricted Payments and Investments.................................................................  27
   10.12.  Guaranties..........................................................................................  27
   10.13.  Nature of Business..................................................................................  27
11.  EVENTS OF DEFAULT.........................................................................................  27

12.  REMEDIES ON DEFAULT, ETC..................................................................................  29
   12.1.  Acceleration.........................................................................................  29
   12.2.  Other Remedies.......................................................................................  30
   12.3.  Rescission...........................................................................................  30
   12.4.  No Waivers or Election of Remedies, Expenses, etc....................................................  31

13.  REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.............................................................  31
   13.1.  Registration of Notes................................................................................  31
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   13.2.  Transfer and Exchange of Notes.......................................................................  31
   13.3.  Replacement of Notes.................................................................................  32

14.  PAYMENTS ON NOTES.........................................................................................  32
   14.1.  Place of Payment.....................................................................................  32
   14.2.  Home Office Payment..................................................................................  32

15.  EXPENSES, ETC.............................................................................................  33
   15.1.  Transaction Expenses; Indemnification................................................................  33
   15.2.  Survival.............................................................................................  33

16.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..............................................  33

17.  AMENDMENT AND WAIVER......................................................................................  34
   17.1.  Requirements.........................................................................................  34
   17.2.  Solicitation of Holders of Notes.....................................................................  34
   17.3.  Binding Effect, etc..................................................................................  34
   17.4.  Notes held by Company, etc...........................................................................  35

18.  NOTICES...................................................................................................  35

19.  REPRODUCTION OF DOCUMENTS.................................................................................  35

20.  CONFIDENTIAL INFORMATION..................................................................................  36

21.  SUBSTITUTION OF PURCHASER.................................................................................  37

22.  MISCELLANEOUS.............................................................................................  37
   22.1.  Successors and Assigns...............................................................................  37
   22.2.  Payments Due on Non-Business Days....................................................................  37
   22.3.  Severability.........................................................................................  37
   22.4.  Construction.........................................................................................  37
   22.5.  Counterparts.........................................................................................  38
   22.6.  Governing Law........................................................................................  38

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                            HANOVER FOODS CORPORATION
                                 1486 York Road
                           Hanover, Pennsylvania 17331

                    7.01% Senior Notes due September 15, 2011

                                                               September 1, 2001

TO EACH OF THE PURCHASERS LISTED IN THE
 ATTACHED SCHEDULE A (the "Purchasers"):

Ladies and Gentlemen:

                  HANOVER FOODS CORPORATION, a Pennsylvania corporation (the
"COMPANY"), agrees with you as follows:

1.       THE NOTES.

1.1.     AUTHORIZATION OF THE NOTES.

                  The Company will authorize the issue and sale of up to
$25,000,000 aggregate principal amount of its 7.0 1% Senior Notes due September
15, 2011 (the "Notes", such term to include any such Notes issued in
substitution therefor pursuant to Section 13 of this Agreement). The Notes will
be substantially in the form set forth in Exhibit 1.1 with such changes
therefrom, if any, as may be approved by you and the Company. Certain
capitalized terms used in this Agreement are defined in Schedule B; references
to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement.

2.       SALE AND PURCHASE OF NOTES.

                  Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and you will purchase from the Company, at
the Closing provided for in Section 3, Notes in the principal amount specified
opposite your name in Schedule A at the purchase price of 100% of the principal
amount thereof. Your obligation hereunder and the obligations of the other
Purchasers are several and not joint obligations and you shall have no
obligation hereunder and no liability to any Person for the performance or
non-performance by any other Purchaser.

3.       CLOSING.

                  The sale and purchase of the Notes to be purchased by you and
the other Purchasers shall occur at the offices of Gardner, Carton & Douglas,
321 North Clark Street, Chicago, Illinois 60610, at 10:00 a.m., Central Standard
time, at a closing (the "Closing") on September 20, 2001 or on such other
Business Day thereafter no later than September 30, 2001 as may be agreed upon
by the Company and you and the other Purchasers. At the Closing the Company will
deliver to you the Notes to be purchased by you in the form of a single Note (or
such greater number of Notes in denominations of at least $100,000 as you may
request) dated
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the date of the Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
2030000115219, at First Union National Bank. Philadelphia, PA, ABA # 031201467,
Account Name: Hanover Foods Corporation. If at the Closing the Company shall
fail to tender such Notes to you as provided above in this Section 3, or any of
the conditions specified in Section 4 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.

4.       CONDITIONS TO CLOSING.

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

4.1.     REPRESENTATIONS AND WARRANTIES.

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

4.2.     PERFORMANCE; NO DEFAULT.

                  The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to be performed
or complied with by it prior to or at the Closing and after giving effect to the
issue and sale of the Notes (and the application of the proceeds thereof as
contemplated by Schedule 5.14) no Default or Event of Default shall have
occurred and be continuing. Neither the Company nor any Subsidiary shall have
entered into any transaction since June 3, 2001 that would have been prohibited
by Sections 10.1 through Section 10.13 hereof had such Sections applied since
such date.

4.3.     COMPLIANCE CERTIFICATES.

                  (a) Officer's Certificate. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 4.1,4.2 and 4.9 have been fulfilled.

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

4.4.     OPINIONS OF COUNSEL.

                  You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Blank, Rome, Comisky
& McCauley LLP, counsel for the Company, covering the matters set forth in
Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request

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(and the Company hereby instructs its counsel to deliver such opinion to you)
and (b) from Gardner, Carton & Douglas, your special counsel in connection with
such transactions, substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as you may reasonably
request.

4.5.     PURCHASE PERMITTED BY APPLICABLE LAW, ETC.

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

4.6.     SALE OF OTHER NOTES.

                  Contemporaneously with the Closing the Company shall sell to
the other Purchasers and the other Purchasers shall purchase the Notes to be
purchased by them at the Closing as specified in Schedule A.

4.7.     PAYMENT OF SPECIAL COUNSEL FEES.

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

4.8.     PRIVATE PLACEMENT NUMBER.

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

4.9.     CHANGES IN CORPORATE STRUCTURE.

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

4.10.    PROCEEDINGS AND DOCUMENTS.

                  All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions

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shall be satisfactory to you and your special counsel, and you and your special
counsel shall have received all such counterpart originals or certified or other
copies of such documents as you or they may reasonably request.

5.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

                  The Company represents and warrants to you that:

5.1.     ORGANIZATION; POWER AND AUTHORITY.

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

5.2.     AUTHORIZATION, ETC.

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

5.3.     DISCLOSURE.

                  The Company has delivered to you the documents set forth in
Schedule 5.3 hereof (collectively, the "INFORMATION"), relating to the
transactions contemplated hereby. The Information fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Information, the documents, certificates or other writings
delivered to you by or on behalf of the Company in connection with the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Information or as expressly described in Schedule 5.3, or in
one of the documents, certificates or other writings identified therein, or in
the financial statements listed in Schedule 5.5, since June 3, 2001, there has
been no change in the financial condition, operations, business, properties or
prospects of the Company or any Subsidiary except changes that individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect. There is no fact known to the Company that could reasonably be expected
to have a Material Adverse Effect that has not

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been set forth herein or in the Information or in the other documents,
certificates and other writings delivered to you by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.

5.4.     ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.

                  (a) Schedule 5.4 contains (except as noted therein) complete
and correct lists (i) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization,
whether such Subsidiary is a Restricted Subsidiary or Unrestricted Subsidiary
and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary,
(ii) of the Company's Affiliates, other than Subsidiaries, and (iii) of the
Company's directors and senior officers.

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

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

                  (d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or any
of its Subsidiaries that owns outstanding shares of capital stock or similar
equity interests of such Subsidiary.

5.5.     FINANCIAL STATEMENTS.

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

5.6.     COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.

                                       5
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                  The execution, delivery and performance by the Company of this
Agreement and the Notes will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (ii) conflict with or result in
a breach of any of the terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.

5.7.     GOVERNMENTAL AUTHORIZATIONS, ETC.

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

5.8.     LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.

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

                  (b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

5.9.     TAXES.

                  The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The Federal
income tax liabilities of the Company and

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its Subsidiaries have been determined by the Internal Revenue Service and paid
for all fiscal years up to and including the fiscal year ended March 31, 1998.

5.10.    TITLE TO PROPERTY; LEASES.

                  The Company and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the aggregate are
Material, including all such properties reflected in the most recent audited
balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Subsidiary after said date (except as sold or otherwise
disposed of in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement. All leases that individually or in the
aggregate are Material are valid and subsisting and are in full force and effect
in all Material respects.

5.11.    LICENSES, PERMITS, ETC.

                  Except as disclosed in Schedule 5.11,

                  (a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others;

                  (b) to the best knowledge of the Company, no product of the
Company infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or other
right owned by any other Person; and

                  (c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its Subsidiaries
with respect to any patent, copyright, service mark, trademark, trade name or
other right owned or used by the Company or any of its Subsidiaries.

5.12.    COMPLIANCE WITH ERISA.

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

                  (b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently

                                       7
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ended plan year on the basis of the actuarial assumptions specified for funding
purposes in such Plan's most recent actuarial valuation report, did not exceed
the aggregate current value of the assets of such Plan allocable to such benefit
liabilities. The term "BENEFIT LIABILITIES" has the meaning specified in section
4001 of ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the meaning
specified in Section 3 of ERISA.

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

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

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

5.13.    PRIVATE OFFERING BY THE COMPANY.

                  Neither the Company nor anyone acting on its behalf has
offered the Notes or any similar securities for sale to, or solicited any offer
to buy any of the same from, or otherwise approached or negotiated in respect
thereof with, any person other than you and the other Purchasers, each of which
has been offered the Notes at a private sale for investment. Neither the Company
nor anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.

5.14.    USE OF PROCEEDS; MARGIN REGULATIONS.

                  The Company will apply the proceeds of the sale of the Notes
as set forth in Schedule 5.14. No part of the proceeds from the sale of the
Notes hereunder will be used, directly or indirectly, for the purpose of buying
or carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Securities purchased with the proceeds of Indebtedness do not
constitute more than 0% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 0% of the value of such assets. As

                                       8
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used in this Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR
CARRYING" shall have the meanings assigned to them in said Regulation U.

5.15.    EXISTING DEBT; FUTURE LIENS.

                  (a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and its
Subsidiaries as of September 2001, since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Debt of the Company or its Subsidiaries. Neither the Company
nor any Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Debt of the Company
or such Subsidiary and no event or condition exists with respect to any Debt of
the Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such Debt to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.

                  (b) Except as disclosed in Schedule 5.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.4.

5.16.    FOREIGN ASSETS CONTROL REGULATIONS, ETC.

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

5.17.    STATUS UNDER CERTAIN STATUTES.

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

5.18.    ENVIRONMENTAL MATTERS.

                  Neither the Company nor any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding has been
instituted raising any claim against the Company or any of its Subsidiaries or
any of their respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the environment
or violation of any Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing,

                  (a) neither the Company nor any Subsidiary has knowledge of
any facts which would give rise to any claim, public or private, of violation of
Environmental Laws or damage to the environment emanating from, occurring on or
in any way related to real properties

                                       9
<PAGE>
now or formerly owned, leased or operated by any of them or to other assets or
their use, except, in each case, such as could not reasonably be expected to
result in a Material Adverse Effect;

                  (b) neither the Company nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and

                  (c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.

6.       REPRESENTATIONS AND COVENANTS OF EACH PURCHASER.

6.1.     PURCHASE FOR INVESTMENT.

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

6.2.     SOURCE OF FUNDS.

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

                  (a) the Source is an insurance company general account as such
term is used in Prohibited Transaction Class Exemption ("PTE") 95-60 issued by
the United States Department of Labor and there is no employee benefit plan
(treating as a single plan all plans maintained by the same employer or employee
organization) with respect to which the amount of the general account reserves
and liabilities for all contracts held by or on behalf of such plan exceeds 10%
of the total reserves and liabilities of such general account (exclusive of
separate account liabilities) plus surplus, as set forth in the NAIC Annual
Statements filed with your state of domicile;

                  (b) the Source is an insurance company separate account
maintained solely in connection with the fixed contractual obligations of the
insurance company under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) and to any participant or beneficiary of
such plan (including any annuitant) are not affected in any manner by the
investment performance of the separate account; or

                                       10
<PAGE>
                  (c) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as you have disclosed to the Company in
writing pursuant to this paragraph (b), no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially owns
more than 10% of all assets allocated to such pooled separate account or
collective investment fund; or

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

                  (e) the Source is a governmental plan; or

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

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

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

7.       INFORMATION AS TO COMPANY.

7.1.     FINANCIAL AND BUSINESS INFORMATION

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

                  (a) Quarterly Statements -- within 45 days after the end of
each quarterly fiscal period of the Company (other than the last quarterly
fiscal period of each fiscal year), duplicate copies of,

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

                                       11
<PAGE>
                    (ii) unaudited consolidated statements of income, changes in
               shareholders' equity and cash flows of the Company and its
               Subsidiaries, for such quarter and (in the case of the second and
               third quarters) for the portion of the fiscal year ending with
               such quarter,

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

                  (b) Annual Statements -- within 90 days after the end of each
fiscal year of the Company, duplicate copies of,

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

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

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied

                    (A) by an opinion thereon of independent certified public
               accountants of recognized national standing, which opinion shall
               state that such financial statements present fairly, in all
               material respects, the financial position of the companies being
               reported upon and their results of operations and cash flows and
               have been prepared in conformity with GAAP, and that the
               examination of such accountants in connection with such financial
               statements has been made in accordance with generally accepted
               auditing standards, and that such audit provides a reasonable
               basis for such opinion in the circumstances; and

                    (B) a certificate of such accountants stating that they have
               reviewed this Agreement and stating further whether, in making
               their audit, they have become aware of any condition or event
               that then constitutes a Default or an Event of Default, and, if
               they are aware that any such condition or event then exists,
               specifying the nature and period of the existence thereof (it
               being understood that such accountants shall not be liable,
               directly or indirectly, for any failure to obtain knowledge of
               any Default or Event of Default unless such accountants should
               have obtained knowledge thereof in making an audit in accordance
               with generally accepted auditing standards or did not make such
               an audit),

                                       12
<PAGE>
provided that the delivery within the time period specified above of the
Company's Annual Report on Form 10-K for such fiscal year (together with the
Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor
and filed with the Securities and Exchange Commission, together with the
accountant's certificate described in clause (B) above, shall be deemed to
satisfy the requirements of this Section (b);

                  (c) Unrestricted Subsidiaries -- in the event that
Unrestricted Subsidiaries account for more than 10% of the Consolidated Total
Assets of the Company and its Subsidiaries, or more than 10% of the Consolidated
Net Income of the Company and its Subsidiaries, then the financial information
delivered pursuant to (a) and (b) of this Section 7.1 shall be accompanied by
unaudited financial statements for all Unrestricted Subsidiaries of the Company
taken as a group, together with consolidating statements reflecting eliminations
or adjustments required to reconcile such group statements to the consolidated
financial statements of the Company and its Subsidiaries;

                  (d) SEC and Other Reports -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice or proxy
statement sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration statement
(without exhibits except as expressly requested by such holder), and each
prospectus and all amendments thereto filed by the Company or any Subsidiary
with the Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;

                  (e) Notice of Default or Event of Default -- promptly, and in
any event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default hereunder or that
any Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 11(f), a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;

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

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

                    (ii) the taking by the PBGC of steps to institute, or the
               threatening by the PBGC of the institution of, proceedings under
               section 4042 of ERISA for the termination of, or the appointment
               of a trustee to administer, any Plan, or the receipt by the
               Company or any ERISA Affiliate of a notice from a Multiemployer

                                       13
<PAGE>
               Plan that such action has been taken by the PBGC with respect to
               such Multiemployer Plan; or

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

                  (g) Notices from Governmental Authority -- promptly, and in
any event within 30 days of receipt thereof, copies of any notice to the Company
or any Subsidiary from any Federal or state Governmental Authority relating to
any order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;

                  (h) Litigation -- promptly, and in any event within 5 Business
Days after the filing or entry thereof, copies of (i) any pleadings, complaints,
or documents filed with any court by Michael Warehime or any other member of the
Warehime family against the Company or any of the Company's officers or
directors, (ii) any orders or judgments of any court relating to the matters
described in clause (i) hereof and (iii) any press releases of the Company
relating to the matters described in clauses (i) or (ii) hereof; and

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

7.2.     OFFICER'S CERTIFICATE.

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

                  (a) Covenant Compliance -- (i) a list of Unrestricted
Subsidiaries, if any, and (ii) the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the
requirements of Section 10.1 through Section 10.13 hereof, inclusive, during the
quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, the calculations
of the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and

                  (b) Event of Default -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the

                                       14
<PAGE>
quarterly or annual period covered by the statements then being furnished to the
date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a
Default or an Event of Default or, if any such condition or event existed or
exists (including, without limitation, any such event or condition resulting
from the failure of the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company shall have taken or proposes to take with respect
thereto.

7.3.     INSPECTION.

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

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

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

8.       PREPAYMENT OF THE NOTES

8.1.     REQUIRED PREPAYMENTS OF NOTES.

                  On September 15, 2002 and on each September 15 thereafter to
and including September 15, 2011 the Company will prepay $2,500,000 principal
amount (or such lesser principal amount as shall then be outstanding) of the
Notes at par and without payment of the Make-Whole Amount or any premium,
provided that upon any partial prepayment of the Notes pursuant to Section 8.2
or purchase of the Notes permitted by Section 8.6 the principal amount of each
required prepayment of the Notes becoming due under this Section 8.1 on and
after the date of such prepayment or purchase shall be reduced in [inverse order
of maturity] the same proportion as the aggregate unpaid principal amount of the
Notes is reduced as a result of such prepayment or purchase.

8.2.     OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.

                  The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes, in an
amount not less than $1,000,000 in the

                                       15
<PAGE>
case of a partial prepayment, at 100% of the principal amount so prepaid, plus
accrued interest to the date of prepayment, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The
Company will give each holder of Notes written notice of each optional
prepayment under this Section 8.2 not less than 7 days and not more than 30 days
prior to the date fixed for such prepayment. Each such notice shall specify such
date, the aggregate principal amount of the Notes to be prepaid on such date,
the principal amount of each Note held by such holder to be prepaid (determined
in accordance with Section 8.4), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as to the estimated
Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details
of such computation. Two Business Days prior to such prepayment, the Company
shall deliver to each holder of Notes a certificate of a Senior Financial
Officer specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

8.3.     CHANGE OF CONTROL.

                  (a) In the event that any Change of Control shall occur or the
Company shall have knowledge of any pending Change of Control, the Company will
give written notice (the "Company Notice") of such fact in the manner provided
in Section 18 hereof to the holders of the Notes. The Company Notice shall be
delivered promptly upon receipt of such knowledge by the Company and in any
event no later than 5 days following the occurrence of a Change of Control. The
Company Notice shall (i) describe the facts and circumstances of such Change of
Control in reasonable detail, (ii) make reference to this Section 8.3 and the
right of the holders of the Notes to require payment in full of the Notes on the
terms and conditions provided for in this Section 8.3, (iii) offer in writing to
prepay the outstanding Notes, together with accrued interest to the date of
prepayment and a premium equal to the then applicable Make-Whole Amount, and
(iv) specify a date for such prepayment (the "Change of Control Prepayment
Date") which Change of Control Prepayment Date shall be not more than 60 days
nor less than 30 days following the date of such Company Notice. Each holder of
the then outstanding Notes shall have the right to accept such offer and require
prepayment of the Notes held by such holder by written notice to the Company (a
"Noteholder Notice") given not later than 10 days after receipt of the Company
Notice. The Company shall on the Change of Control Prepayment Date prepay all
Notes held by holders which have so accepted such offer of prepayment. A failure
by a holder of Notes to respond to any prepayment offer made pursuant to this
Section 8.3(a) shall be deemed to constitute an acceptance of such offer by such
holder. The prepayment price of the Notes payable upon the occurrence of a
Change of Control shall be an amount equal to 100% of the outstanding principal
amount of the Notes so to be prepaid and accrued interest thereon to the date of
such prepayment, together with a premium equal to the then applicable Make-Whole
Amount, determined as of five Business Days prior to the Change of Control
Prepayment Date.

                  (b) Without limiting the foregoing, notwithstanding any
failure on the part of the Company to give the Company Notice herein required as
a result of the occurrence of a Change of Control, each holder of the Notes that
shall not have received notice shall have the right to require the Company to
prepay, and the Company will prepay, such holder's Notes in full, together with
accrued interest thereon to the date of prepayment and an amount equal to the
then applicable Make-Whole Amount at any time after such holder has actual
knowledge of any

                                       16
<PAGE>
such Change of Control. Notice of any required prepayment pursuant to this
Section 8.3(b) shall be delivered by a holder of the Notes which was entitled
to, but did not receive, such Company Notice to the Company after such holder
has actual knowledge of such Designated Event. On the date (the "Change of
Control Delayed Prepayment Date") designated in such holder's notice (which
shall be not more than 60 days nor less than 30 days following the date of such
holder's notice), the Company shall prepay in full all the Notes held by such
holder, together with accrued interest thereon to the date of prepayment and an
amount equal to the then applicable Make-Whole Amount, determined as of five
Business Days prior to the Change of Control Delayed Prepayment Date. If the
holder of any Note gives any notice pursuant to this Section 8.3(b), the Company
shall give a Company Notice within 10 days of receipt of such notice and
identify the Change of Control Delayed Prepayment Date to all other holders of
the Notes and each of such holders shall then and thereupon have the right to
accept the Company's offer to prepay the Notes held by such holder and require
prepayment of such Notes by delivery of a Noteholder Notice within 10 days
following receipt of such Company Notice; provided only that any date for
prepayment of such Notes shall be the Change of Control Delayed Prepayment Date.
The Company agrees to make such prepayment on the Change of Control Delayed
Prepayment Date.

8.4.     ALLOCATION OF PARTIAL PREPAYMENTS.

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

8.5.     MATURITY; SURRENDER, ETC.

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

8.6.     PURCHASE OF NOTES.

                  The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement. The Company will promptly cancel
all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Agreement and no Notes may
be issued in substitution or exchange for any such Notes.

8.7.     MAKE-WHOLE AMOUNT.

                  The term "MAKE-WHOLE AMOUNT" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with

                                       17
<PAGE>
respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:

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

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

                  "REINVESTMENT YIELD" means, with respect to the Called
         Principal of any Note, .50% over the yield to maturity implied by (i)
         the yields reported, as of 10:00 A.M. (New York City time) on the
         second Business Day preceding the Settlement Date with respect to such
         Called Principal, on the display designated as the "PX Screen" on the
         Bloomberg Financial Market Service (or such other display as may
         replace the "PX Screen" on the Bloomberg Financial Market Service) for
         actively traded U.S. Treasury securities having a maturity equal to the
         Remaining Average Life of such Called Principal as of such Settlement
         Date, or (ii) if such yields are not reported as of such time or the
         yields reported as of such time are not ascertainable, the Treasury
         Constant Maturity Series Yields reported, for the latest day for which
         such yields have been so reported as of the second Business Day
         preceding the Settlement Date with respect to such Called Principal, in
         Federal Reserve Statistical Release H. 15 (519) (or any comparable
         successor publication) for actively traded U.S. Treasury securities
         having a constant maturity equal to the Remaining Average Life of such
         Called Principal as of such Settlement Date. Such implied yield will be
         determined, if necessary, by (a) converting U.S. Treasury bill
         quotations to bond-equivalent yields in accordance with accepted
         financial practice and (b) interpolating linearly between (1) the
         actively traded U.S. Treasury security with the duration closest to and
         greater than the Remaining Average Life and (2) the actively traded
         U.S. Treasury security with the duration closest to and less than the
         Remaining Average Life.

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

                  "REMAINING SCHEDULED PAYMENTS" means, with respect to the
         Called Principal of any Note, all payments of such Called Principal and
         interest thereon that would be due after the Settlement Date with
         respect to such Called Principal if no payment of such

                                       18
<PAGE>
         Called Principal were made prior to its scheduled due date, provided
         that if such Settlement Date is not a date on which interest payments
         are due to be made under the terms of the Notes, then the amount of the
         next succeeding scheduled interest payment will be reduced by the
         amount of interest accrued to such Settlement Date and required to be
         paid on such Settlement Date pursuant to Section 8.2, 8.3 or 12.1.

                  "SETTLEMENT DATE" means, with respect to the Called Principal
         of any Note, the date on which such Called Principal is to be prepaid
         pursuant to Section 8.2 or 8.3 or has become or is declared to be
         immediately due and payable pursuant to Section 12.1, as the context
         requires.

9.       AFFIRMATIVE COVENANTS.

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

9.1.     COMPLIANCE WITH LAW.

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

9.2.     INSURANCE.

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

9.3.     MAINTENANCE OF PROPERTIES.

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

                                       19
<PAGE>
9.4.     PAYMENT OF TAXES AND CLAIMS.

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

9.5.     CORPORATE EXISTENCE, ETC.

                  The Company will at all times preserve and keep in full force
and effect its corporate existence. Subject to Sections 10.2, 10.3 and 10.5, the
Company will at all times preserve and keep in full force and effect the
corporate existence of each of its Restricted Subsidiaries (unless merged into
the Company or a Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise could not, individually or in the
aggregate, have a Material Adverse Effect.

9.6.     MAINTENANCE OF RESTRICTED SUBSIDIARIES; DESIGNATION OF UNRESTRICTED
         SUBSIDIARIES.

                  (a) At all times, Subsidiaries designated as Restricted
Subsidiaries shall comprise 80% of Consolidated Total Assets, measured as of the
end of the immediately prior fiscal quarter and 80% of Consolidated Net
Earnings, measured as of the end of the immediately prior fiscal quarter.

                  (b) The Company may designate a Restricted Subsidiary as an
Unrestricted Subsidiary and an Unrestricted Subsidiary as a Restricted
Subsidiary, provided that: (a) if such Subsidiary initially is a Restricted
Subsidiary, then such Restricted Subsidiary may be subsequently redesignated as
an Unrestricted Subsidiary and such Unrestricted Subsidiary may be subsequently
designated as a Restricted Subsidiary, but no further changes in designation may
be made; (b) if such Subsidiary initially is an Unrestricted Subsidiary, then
such Unrestricted Subsidiary may be subsequently redesignated as a Restricted
Subsidiary and such Restricted Subsidiary may be subsequently redesignated as an
Unrestricted Subsidiary, but no further changes in designation may be made; and
(c) no such designation of a Restricted Subsidiary as an Unrestricted Subsidiary
shall be permitted unless immediately before and after such designation (i) the
requirements of paragraph (a) of this Section 9.6 are met and (ii) there exists
no Default or Event of Default.

                                       20
<PAGE>
10. NEGATIVE COVENANTS.

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

10.1. TRANSACTIONS WITH AFFILIATES.

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

10.2. MERGER, CONSOLIDATION, ETC.

            The Company shall not, and shall not permit any Restricted
Subsidiary to, consolidate with or merge with any other corporation or convey,
transfer or lease substantially all of its assets in a single transaction or
series of transactions to any Person provided, however, that:

            (a) the Company may consolidate or merge with any other Person if
the successor formed by such consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer or lease substantially all of the
assets of the Company as an entirety, as the case may be, shall be a solvent
corporation organized and existing under the laws of the United States or any
State thereof (including the District of Columbia), and, if the Company is not
such corporation, (i) such corporation shall have executed and delivered to each
holder of any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement and the Notes, (ii)
shall have caused to be delivered to each holder of any Notes an opinion of
nationally recognized independent counsel, or other independent counsel
reasonably satisfactory to the Required Holders, to the effect that all
agreements or instruments effecting such assumption are enforceable in
accordance with their terms and comply with the terms hereof, and (iii)
immediately after giving effect to such transaction, (x) no Default or Event of
Default shall have occurred and be continuing and (y) the successor or surviving
corporation would be permitted by the provisions of Section 10.6 hereof to incur
at least $1.00 of additional Consolidated Funded Debt; and

            (b) any Restricted Subsidiary may merge or consolidate with or into
the Company or any Wholly-owned Restricted Subsidiary so long as in any merger
or consolidation involving the Company, the Company shall be the surviving or
continuing corporation and so long as in any merger or consolidation of a
Restricted Subsidiary with or into a Wholly-owned Restricted Subsidiary, the
Wholly-owned Restricted Subsidiary shall be the surviving or continuing
corporation.

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 10.2 from its liability under this Agreement or the Notes.

                                       21
<PAGE>
10.3. DISPOSITION OF STOCK OF RESTRICTED SUBSIDIARIES.

            (a) The Company will not permit any Restricted Subsidiary to issue
or sell any shares of stock of any class (including as "stock" for the purposes
of this section, any warrants, rights or options to purchase or otherwise
acquire stock or other securities exchangeable for or convertible into stock) of
such Restricted Subsidiary to any Person other than the Company or a
Wholly-Owned Restricted Subsidiary, except for the purpose of qualifying
directors, or except in satisfaction of the validly pre-existing preemptive or
contractual rights of minority shareholders in connection with the simultaneous
issuance of stock to the Company or a Restricted Subsidiary whereby the Company
or such Restricted Subsidiary maintain their same proportionate interest in such
Restricted Subsidiary or the extent required by applicable law; and

            (b) The Company will not sell, transfer or otherwise dispose of any
shares of stock of any Restricted Subsidiary (except to qualify directors), and
will not permit any Restricted Subsidiary to sell, transfer or otherwise dispose
of (except to the Company or a Wholly-Owned Restricted Subsidiary) any share of
stock of any other Restricted Subsidiary, unless such sale or other disposition
can be made pursuant to the requirements of Section 10.2 or of Section 10.5.

10.4. LIMITATION ON LIENS.

            The Company will not, and will not permit any Restricted Subsidiary
to, create or incur, or suffer to be incurred or to exist, any Lien on its or
their property or assets, whether now owned or hereafter acquired, or upon any
income or profits therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in priority to the payment of
its or their general creditors, or acquire or agree to acquire, or permit any
Restricted Subsidiary to acquire, any property or assets upon conditional sales
agreements or other title retention devices, except:

            (a) Liens for property taxes and assessments or governmental charges
or levies and Liens securing claims or demands of mechanics and materialmen,
provided that payment thereof is not at the time required by Section 9.4;

            (b) Liens of or resulting from any judgment or award, the time for
the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Company or a Restricted Subsidiary shall at any time in
good faith be prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review shall
have been secured;

            (c) Liens incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and attorneys' liens
and statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money, provided in each
case,

                                       22
<PAGE>
the obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings;

            (d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are necessary for the conduct of the activities of the Company and its
Restricted Subsidiaries or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in any
event materially impair their use in the operation of the business of the
Company and its Restricted Subsidiaries;

            (e) Liens securing Indebtedness of a Wholly-owned Restricted
Subsidiary to the Company or to another Wholly-owned Restricted Subsidiary;

            (f) Liens existing as of the date of this Agreement and described on
Schedule 10.4 hereto;

            (g) Liens resulting from judgments, unless such judgments are not,
within 60 days, discharged or stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay;

            (h) Liens securing Debt of a Restricted Subsidiary owed to the
Company or to another Restricted Subsidiary;

            (i) minor survey exceptions and the like which do not Materially
detract from the value of the property subject to such exceptions;

            (j) leases, subleases, easements, rights-of-way, zoning restrictions
or other restrictions and other similar charges or encumbrances incidental to
the ownership of property or assets or the ordinary conduct of the Company or
any of its Restricted Subsidiaries' businesses, provided that the aggregate of
such Liens do not Materially detract from the value of property subject to such
Liens;

            (k) Liens (i) existing on property at the time of its acquisition or
construction by the Company or a Restricted Subsidiary and not created in
contemplation thereof (ii) on property created contemporaneously with its
acquisition or within 180 days of the acquisition or completion of construction
or improvement thereof to secure or provide for all or a portion of the purchase
price or cost of construction or improvement thereof; or (iii) existing on
property of a Person at the time such Person is consolidated with or merged into
the Company or a Restricted Subsidiary and not created in contemplation thereof;
provided that in the case of clauses (i), (ii) and (iii) such Liens do not
extend to additional property of the Company or any Restricted Subsidiary (other
than property that is an improvement to or is acquired for specific use in
connection with the subject property) and, in the case of clause (ii) only, that
the aggregate principal amount of Debt secured by such Lien shall not exceed the
lesser of (y) the cost of acquisition or construction or (z) fair market value
of such property (as determined in good faith by one or more officers of the
Company to whom authority to enter into the transaction has been delegated by
the board of directors);

                                       23
<PAGE>
            (l) any Liens renewing, extending or replacing Liens permitted by
sections (d), (e), (g) and (h), provided that (A) the principal amount of the
Debt secured is not increased or the maturity thereof reduced, (B) such Lien is
not extended to any other property, and (C) immediately after such extension,
renewal, or refunding, no Default or Event of Default would exist or occur; and

            (m) Liens securing Debt of the Company and its Subsidiaries not
otherwise permitted by paragraphs (a) through (i) above, provided that, after
giving effect to the incurrence of such additional Debt, (i) Priority Debt
outstanding shall not exceed 15% of Consolidated Net Worth, (ii) no Default or
Event of Default shall exist or occur and (iii) such Priority Debt could be
incurred without violating Section 1 0.6(a)(iii) hereof.

      If, notwithstanding the prohibition contained herein, the Company shall,
or shall permit any of its Restricted Subsidiaries to directly or indirectly
create, incur, assume or permit to exist any Lien, other than those Liens
permitted by the provisions of paragraphs (a) through (m) of this Section 10.4,
it will make or cause to be made effective provision whereby the Notes will be
secured equally and ratably with any and all other obligations thereby secured,
such security to be pursuant to agreements reasonably satisfactory to the
Required Holders and, in any such case, the Notes shall have the benefit, to the
fullest extent that, and with such priority as, the holders of the Notes may be
entitled under applicable law, of an equitable Lien on such property. Any
violation of this Section 10.4 will constitute a Default, whether or not
provision is made for an equal and ratable Lien pursuant to this Section 10.4.

10.5. SALES OF ASSETS.

            The Company will not, and will not permit any Restricted Subsidiary
to, sell, lease, transfer or otherwise (including by way of merger) dispose of
(collectively a "Disposition") any assets, including capital stock of
Subsidiaries, in one or a series of transactions, other than in the ordinary
course of business, to any Person, except to the Company or a Wholly-Owned
Restricted Subsidiary, (i) if, in any fiscal year, after giving effect to such
Disposition, the aggregate net book value of assets subject to Dispositions
during such fiscal year would exceed 10% of Consolidated Total Assets as of the
end of the immediately preceding fiscal quarter or (ii) if, after giving effect
to such Disposition, the aggregate net book value of assets subject to
Dispositions made since the date of the Agreement would exceed 20% of
Consolidated. Total Assets as of the end of the immediately preceding fiscal
quarter or (iii) if a Default or Event of Default then exists or would exist as
a result of such Disposition or (iv) if, after giving effect to such
Disposition, the Company could not incur an additional $1.00 of additional
Consolidated Funded Debt pursuant to Section 10.6 hereof. Notwithstanding the
foregoing, the Company may, or may permit a Restricted Subsidiary to, make a
Disposition and the assets subject to such Disposition shall not be subject to
or included in the foregoing limitation and computations contained in clauses
(i) and (ii) of the preceding sentence to the extent that (x) such assets are
leased back by the Company or such Restricted Subsidiary, as lessee, within 180
days following the acquisition by the Company or such Restricted Subsidiary or
completion of construction of such assets or (y) the net proceeds from such
Disposition are (1) reinvested in productive assets to be used in the business
of the Company or a Restricted Subsidiary of at least equivalent value within
180 days of such Disposition or (2) applied to the payment or prepayment on a
pro rata basis of outstanding Senior Funded Debt of the Company

                                       24
<PAGE>
and its Restricted Subsidiaries, subject, with respect to the Notes, to the
prepayment requirements and at the price set forth in Section 8.2; provided,
however, that, in the case of the Notes, any holder of the Notes may, at its
sole discretion, decline to have its Notes so prepaid.

10.6. LIMITATIONS ON INDEBTEDNESS.

            (a) The Company will not, and will not permit any Restricted
Subsidiary to, create, assume, guarantee or otherwise incur or in any manner be
or become liable in respect of any Current Debt or Funded Debt, except:

                        (i) Funded Debt evidenced by the Notes;

                        (ii) Funded Debt of the Company and its Restricted
            Subsidiaries existing on the date hereof and described on Schedule
            10.6 hereto;

                        (iii) additional Funded Debt of the Company or a
            Restricted Subsidiary; provided that at the time of creation,
            issuance, assumption, guarantee or incurrence thereof and after
            giving effect thereto and to the application of the proceeds thereof
            Consolidated Funded Debt would not exceed 50% of Consolidated Total
            Capitalization (determined as of the end of the most recent fiscal
            quarter).

                        (iv) Current Debt of the Company or a Restricted
            Subsidiary; provided that for purposes of determining whether
            additional Funded Debt may be incurred pursuant to Section 1
            0.6(a)(iii), if there shall not have been a period of at least 60
            consecutive days during the twelve-month period immediately
            preceding the date of such determination during which no Current
            Debt of the Company and no Current Debt of its Restricted
            Subsidiaries shall have been outstanding, then the daily average
            outstanding balance of the Company's and its Restricted
            Subsidiaries' Current Debt during any period of 60 consecutive days
            selected by the Company occurring during such twelve-month period
            shall be deemed to constitute Funded Debt for purposes of such
            determination; and

                        (v) Funded Debt of a Restricted Subsidiary to the
            Company or to a Wholly-owned Restricted Subsidiary.

            (b) The renewal, extension or refunding of any Funded Debt, created,
issued, assumed, guaranteed, incurred or otherwise outstanding pursuant to
Section 10.6(a) shall constitute the issuance of additional Funded Debt which
is, in turn, subject to the limitations of the applicable provisions of this
Section 10.6.

            (c) Any corporation which becomes a Restricted Subsidiary after the
date hereof shall for all purposes of this Section 10.6 be deemed to have
created, assumed or incurred at the time it becomes a Restricted Subsidiary all
Funded Debt of such corporation existing immediately after it becomes a
Restricted Subsidiary.

                                       25
<PAGE>
10.7. MINIMUM FIXED CHARGES.

            (a) Until the earlier of March 15, 2007 or the date of payment in
full of the 1991 Notes, the Company will keep and maintain the ratio of Net
Income Available for Interest Charges to Interest Charges for each period of
four consecutive fiscal quarters most recently ended at not less than 2.75 to
1.00.

            (b) Commencing on the earlier of March 15, 2007 or the date of
payment in full of the 1991 Notes, the Company will keep and maintain the ratio
of Consolidated Earnings Available for Consolidated Fixed Charges to
Consolidated Fixed Charges for the 12-month period then ended of not less than
2.00 to 1.00.

10.8. CONSOLIDATED NET WORTH.

            (a) Until the earlier of March 15, 2007 or the date of payment in
full of the 1991 Notes, the Company will at all times keep and maintain
Consolidated Tangible Net Worth at an amount not less than the sum of (i)
$26,000,000 plus (ii) 50% of Consolidated Net Income computed on a cumulative
basis for each of the elapsed fiscal quarters ending after September 30, 1991;
provided that notwithstanding that Consolidated Net Income for any of such
elapsed fiscal quarters may be a deficit figure, no reduction as a result
thereof shall be made in the sum to be maintained pursuant hereto.

            (b) Commencing on the earlier of March 15, 2007 or the date of
payment in full of the 1991 Notes, the Company will at all times keep and
maintain Consolidated Net Worth at an amount not less than the sum of (i)
$60,000,000 plus (ii) 50% of Consolidated Net Earnings computed on a cumulative
basis for each of the elapsed fiscal quarters ending after June 3, 2001;

provided that notwithstanding that Consolidated Net Earnings for any of such
elapsed fiscal quarters may be a deficit figure, no reduction as a result
thereof shall be made in the sum to be maintained pursuant hereto.

10.9. CURRENT RATIO; WORKING CAPITAL.

            (a) Until the earlier of March 15, 2007 or the date of payment in
full of the 1991 Notes, the Company will as at the end of each fiscal year keep
and maintain the ratio of Consolidated Current Assets to Consolidated Current
Liabilities at not less than 1.25 to 1.00.

            (b) Until the earlier of March 15, 2007 or the date of payment in
full of the 1991 Notes, the Company will keep and maintain as at the end of each
of the first three fiscal quarters of each fiscal year Consolidated Working
Capital in an amount not less than $5,000,000.

10.10 PARI PASSU POSITION.

            The Company agrees that it will not grant or provide, and at no time
will it allow to exist, be created or granted, any Guaranties by Subsidiaries
for the benefit of any other holders of Debt for borrowed money of the Company
or its Subsidiaries, unless in the case of the giving of any Guaranties by
Subsidiaries, the holders of the Notes shall simultaneously be provided with
such Guaranties.

                                       26
<PAGE>
10.11 RESTRICTED PAYMENTS AND INVESTMENTS.

            (a) The Company's Restricted Payments and Restricted Investments and
those of its Subsidiaries in any annual period will be limited to the amount in
the pool (the "Pool"). The following amounts will be included in the Pool:

                        (i) $10,000,000 million; plus

                        (ii) 50% (minus 100% in the case of a deficit) of
            Consolidated Net Earnings computed on a cumulative basis for each of
            the elapsed fiscal quarters ending after June 3, 2001; plus

                        (iii) all net proceeds from the sale or issuance of
            non-redeemable shares of any class of capital stock of the Company
            for such period.

            (b) The Restricted Payments and Restricted Investments for each
period will be subtracted from the Pool and the outstanding balance in the Pool
will be carried over to the next annual period.

            (c) The Company or any Subsidiary will not make any Restricted
Payment or Restricted Investment (i) if a Default or Event of Default exists or
would exist as a result of the making of such Restricted Payment or Restricted
Investment or (ii) if after giving effect to the making of such Restricted
Payment or Restricted Investment, the Company would not be able to incur at
least $1.00 of additional Consolidated Funded Debt pursuant to Section 10.6
hereof.

10.12 GUARANTIES.

            Until the earlier of March 15, 2007 or the date of payment in full
of the 1991 Notes, the Company will not, and will not permit any Restricted
Subsidiary to, become or be liable in respect of any Guaranty except Guaranties
by the Company which are limited in amount to a stated maximum dollar exposure
or which constitute Guaranties of obligations incurred by any Restricted
Subsidiary in compliance with the provisions of this Agreement.

10.13 NATURE OF BUSINESS

            The Company will not, and will not permit any Restricted Subsidiary
to, engage in any business, if, as a result, the general nature of the business
in which the Company and its Restricted Subsidiaries, taken as a whole, would
then be engaged in would be substantially changed from the general nature of the
business in which the Company and its Restricted Subsidiaries are engaged on the
date of this Agreement.

11. EVENTS OF DEFAULT.

            An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:

                                       27
<PAGE>
            (a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or

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

            (c) the Company defaults in the performance of or compliance with
any term contained in (i) Section 7.1(e), (ii) Section 9.6 and (iii) Sections
10.1 through 10.13; or

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

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

            (f) (i) the Company or any Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $3,000,000 beyond any period of grace provided with
respect thereto, or (ii) the Company or any Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt in an
aggregate outstanding principal amount of at least $5,000,000 or of any
mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has become,
or has been declared (or one or more Persons are entitled to declare such Debt
to be), due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the
right of the holder of Debt to convert such Debt into equity interests), (x) the
Company or any Subsidiary has become obligated to purchase or repay Debt before
its regular maturity or before its regularly scheduled dates of payment in an
aggregate outstanding principal amount of at least $5,000,000, or (y) one or
more Persons have the right to require the Company or any Subsidiary so to
purchase or repay such Debt; or

            (g) the Company or any Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its

                                       28
<PAGE>
property, (vi) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or

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

            (i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within 60 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or

if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or
the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of
the Code, (ii) a notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any ERISA
Affiliate that a Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001 (a)(1 8) of ERISA) under all Plans, determined in accordance with
Title IV of ERISA, shall exceed $5,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect. As used in this paragraph (j) herein, the terms
"EMPLOYEE BENEFIT PLAN" and "EMPLOYEE WELFARE BENEFIT PLAN" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.

12. REMEDIES ON DEFAULT, ETC.

12.1. ACCELERATION.

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

                                       29
<PAGE>
            (b) If any other Event of Default has occurred and is continuing,
the holder or holders of more than 25% of the principal amount of the Notes at
the time outstanding may at any time at their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.

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

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

12.2. OTHER REMEDIES.

            If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder by
an action at law, suit in equity or other appropriate proceeding, whether for
the specific performance of any agreement contained herein or in any Note, or
for an injunction against a violation of any of the terms hereof or thereof, or
in aid of the exercise of any power granted hereby or thereby or by law or
otherwise.

12.3. RESCISSION.

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

                                       30
<PAGE>
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.

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

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1. REGISTRATION OF NOTES.

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

13.2. TRANSFER AND EXCHANGE OF NOTES.

            Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
his attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1.1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.

                                       31
<PAGE>
13.3. REPLACEMENT OF NOTES.

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

            (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that if the holder of such Note is, or
is a nominee for, an original Purchaser or another holder of a Note with a
minimum net worth of at least $50,000,000, such Person's own unsecured agreement
of indemnity shall be deemed to be satisfactory), or

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

14. PAYMENTS ON NOTES.

14.1. PLACE OF PAYMENT.

            Subject to Section 14.2, payments of principal, Make-Whole Amount,
if any, and interest becoming due and payable on the Notes shall be made in
Charlotte, North Carolina at the principal office of First Union National Bank
in such jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

14.2. HOME OFFICE PAYMENT.

            So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.

                                       32
<PAGE>
15. EXPENSES, ETC.

15.1. TRANSACTION EXPENSES; INDEMNIFICATION.

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

            (b) The Company agrees immediately to fully indemnify and hold
harmless you and your Affiliates, officers, directors, employees, attorneys,
accountants and agents against any and all loss, damage, expense (including but
not limited to attorneys' fees), liabilities or claims (or a claim in respect
thereof) which arises out of or is based upon or asserted against you in
connection with your entering into this Agreement or purchasing the Notes or
which arises in connection with any term, covenant, provision or other matter
set forth or referred to in this Agreement or the Notes.

15.2. SURVIVAL.

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

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

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

                                       33
<PAGE>
understanding between you and the Company and supersede all prior agreements and
understandings relating to the subject matter hereof.

17. AMENDMENT AND WAIVER.

17.1. REQUIREMENTS.

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

17.2. SOLICITATION OF HOLDERS OF NOTES.

            (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

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

17.3. BINDING EFFECT, ETC.

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

                                       34
<PAGE>
waiver of any rights of any holder of such Note. As used herein, the term "this
Agreement" and references thereto shall mean this Agreement as it may from time
to time be amended or supplemented.

17.4. NOTES HELD BY COMPANY, ETC.

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

18. NOTICES.

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

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

                        (ii) if to any other holder of any Note, to such holder
            at such address as such other holder shall have specified to the
            Company in writing, or

                        (iii) if to the Company, to the Company at its address
            set forth at the beginning hereof to the attention of the Executive
            Vice President, or at such other address as the Company shall have
            specified to the holder of each Note in writing.

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

19. REPRODUCTION OF DOCUMENTS.

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

                                       35
<PAGE>
other holder of Notes from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence to demonstrate
the inaccuracy of any such reproduction.

20. CONFIDENTIAL INFORMATION.

            For the purposes of this Section 20, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (v) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder, of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 20.

                                       36
<PAGE>
21. SUBSTITUTION OF PURCHASER.

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

22. MISCELLANEOUS.

22.1. SUCCESSORS AND ASSIGNS.

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

22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.

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

22.3. SEVERABILITY.

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

22.4. CONSTRUCTION.

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

                                       37
<PAGE>
22.5. COUNTERPARTS.

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

22.6. GOVERNING LAW.

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

                                 * * * * *

                                       38
<PAGE>
            If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.

                                    Very truly yours,

                                    HANOVER FOODS CORPORATION

                                    By: /s/ Gary T. Knisely
                                        --------------------------
                                    Name:   Gary T. Knisely
                                    Title:  Executive Vice President

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

JOHN HANCOCK LIFE INSURANCE
COMPANY

By: /s/ Scott A. McFetridge
    --------------------------------------
Name:   Scott A. McFetridge
Title:  Managing Director

JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY

By: /s/ Scott A. McFetridge
------------------------------------------
Name:   Scott A. McFetridge
Title:  Managing Director

INVESTORS PARTNER LIFE
INSURANCE COMPANY

By: /s/ Scott A. McFetridge
    --------------------------------------
Name:   Scott A. McFetridge
Title:  Managing Director

                                       39
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
STATE EMPLOYEES' RETIREMENT SYSTEM

By:     John Hancock Life Insurance Company,
        As Investment Advisor

By: /s/ Scott A. McFetridge
    --------------------------------------
Name:   Scott A. McFetridge
Title:  Managing Director

                                       40<PAGE>
                                  EXHIBIT 10(s)

                    ANNUAL TOP MANAGEMENT CASH BONUS PROGRAM

         The Corporation maintains a cash bonus plan whereby the executive
officers are eligible to receive cash bonuses equal to a percentage of the
executive officer's base salary if certain corporate pretax profit objectives
are achieved. The executive officers selected each year to participate in the
cash bonus plan, as well as the performance targets on which the cash bonuses
are based and the amount of the cash bonuses are determined each year at the
discretion of the Chairman and the Board of Directors.

         Specifically, the Chairman recommends to the Board of Directors certain
executive officers who will participate in the plan each year. Such executive
officers who will participate in the plan as evidenced by written notice from
the Corporation. The amount of the actual cash bonus paid to the various
executive officers participating in the cash bonus plan is calculated based on
the attainment of the corporate pretax profit objectives set-at the commencement
of each fiscal year.

         The cash bonuses are normally paid within the sixty (60) days after the
end of the fiscal year.

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