Document:

<PAGE>

                                                                   EXHIBIT 10(o)

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

                             MYERS INDUSTRIES, INC.

            $65,000,000 6.08% Series 2003-A Senior Notes, Tranche 1,
                              due December 12, 2010

            $35,000,000 6.81% Series 2003-A Senior Notes, Tranche 2,
                              due December 12, 2013

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

                             NOTE PURCHASE AGREEMENT

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

                          DATED AS OF DECEMBER 12, 2003

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                HEADING                                                     PAGE
<S>                        <C>                                                                                     <C>
SECTION 1.                 AUTHORIZATION OF NOTES................................................................    1

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

       Section 2.1.        Series 2003-A Notes...................................................................    1
       Section 2.2.        Additional Series of Notes............................................................    2
       Section 2.3.        Subsidiary Guaranty...................................................................    3
       Section 2.4.        Security for the Notes................................................................    3

SECTION 3.                 CLOSING...............................................................................    4

SECTION 4.                 CONDITIONS TO CLOSING.................................................................    4

       Section 4.1.        Representations and Warranties........................................................    4
       Section 4.2.        Performance; No Default...............................................................    4
       Section 4.3.        Compliance Certificates...............................................................    5
       Section 4.4.        Opinions of Counsel...................................................................    5
       Section 4.5.        Purchase Permitted by Applicable Law, Etc.............................................    5
       Section 4.6.        Related Transactions..................................................................    6
       Section 4.7.        Payment of Special Counsel Fees.......................................................    6
       Section 4.8.        Private Placement Number..............................................................    6
       Section 4.9.        Changes in Corporate Structure........................................................    6
       Section 4.10.       Subsidiary Guaranty...................................................................    6
       Section 4.11.       Pledge Agreement......................................................................    6
       Section 4.12.       Intercreditor Agreement...............................................................    6
       Section 4.13.       Proceedings and Documents.............................................................    7
       Section 4.14.       Conditions to Issuance of Additional Notes............................................    7

SECTION 5.                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................    8

       Section 5.1.        Organization; Power and Authority.....................................................    8
       Section 5.2.        Authorization, Etc....................................................................    8
       Section 5.3.        Disclosure............................................................................    8
       Section 5.4.        Organization and Ownership of Shares of Subsidiaries; Affiliates......................    8
       Section 5.5.        Financial Statements..................................................................    9
       Section 5.6.        Compliance with Laws, Other Instruments, Etc..........................................    9
       Section 5.7.        Governmental Authorizations, Etc......................................................   10
       Section 5.8.        Litigation; Observance of Statutes and Orders.........................................   10
       Section 5.9.        Taxes.................................................................................   10
       Section 5.10.       Title to Property; Leases.............................................................   11
       Section 5.11.       Licenses, Permits, Etc................................................................   11
       Section 5.12.       Compliance with ERISA.................................................................   11
</TABLE>

                                       -i-

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<TABLE>
<S>                        <C>                                                                                      <C>
       Section 5.13.       Private Offering by the Company.......................................................   12
       Section 5.14.       Use of Proceeds; Margin Regulations...................................................   12
       Section 5.15.       Existing Debt; Future Liens...........................................................   13
       Section 5.16.       Foreign Assets Control Regulations, Etc...............................................   13
       Section 5.17.       Status under Certain Statutes.........................................................   13
       Section 5.18.       Environmental Matters.................................................................   13

SECTION 6.                 REPRESENTATIONS OF THE PURCHASER......................................................   14

       Section 6.1.        Purchase for Investment...............................................................   14
       Section 6.2.        Source of Funds.......................................................................   14

SECTION 7.                 INFORMATION AS TO COMPANY.............................................................   16

       Section 7.1.        Financial and Business Information....................................................   16
       Section 7.2.        Officer's Certificate.................................................................   19
       Section 7.3.        Inspection............................................................................   19

SECTION 8.                 PAYMENT OF THE NOTES..................................................................   20

       Section 8.1.        Required Payments.....................................................................   20
       Section 8.2.        Optional Prepayments with Make-Whole Amount...........................................   20
       Section 8.3.        Allocation of Partial Prepayments.....................................................   21
       Section 8.4.        Maturity; Surrender, Etc..............................................................   21
       Section 8.5.        Purchase of Notes.....................................................................   21
       Section 8.6.        Make-Whole Amount for the Series 2003-A Notes.........................................   21

SECTION 9.                 AFFIRMATIVE COVENANTS.................................................................   23

       Section 9.1.        Compliance with Law...................................................................   23
       Section 9.2.        Insurance.............................................................................   23
       Section 9.3.        Maintenance of Properties.............................................................   23
       Section 9.4.        Payment of Taxes and Claims...........................................................   23
       Section 9.5.        Corporate Existence, Etc..............................................................   24
       Section 9.6.        Additional Subsidiary Guarantors......................................................   24

SECTION 10.                NEGATIVE COVENANTS....................................................................   25

       Section 10.1.       Consolidated Adjusted Net Worth.......................................................   25
       Section 10.2.       Limitation on Debt....................................................................   25
       Section 10.3.       Consolidated Interest Coverage Ratio..................................................   25
       Section 10.4.       Limitation on Liens...................................................................   26
       Section 10.5.       Sales of Asset........................................................................   28
       Section 10.6.       Merger, Consolidation.................................................................   29
       Section 10.7.       Nature of Business....................................................................   29
       Section 10.8.       Transactions with Affiliates..........................................................   30

SECTION 11.                EVENTS OF DEFAULT.....................................................................   30
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<S>                        <C>                                                                                      <C>
SECTION 12.                REMEDIES ON DEFAULT, ETC..............................................................   32

       Section 12.1.       Acceleration..........................................................................   32
       Section 12.2.       Other Remedies........................................................................   33
       Section 12.3.       Rescission............................................................................   33
       Section 12.4.       No Waivers or Election of Remedies, Expenses, Etc.....................................   33

SECTION 13.                REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.........................................   34

       Section 13.1.       Registration of Notes.................................................................   34
       Section 13.2.       Transfer and Exchange of Notes........................................................   34
       Section 13.3.       Replacement of Notes..................................................................   35

SECTION 14.                PAYMENTS ON NOTES.....................................................................   35

       Section 14.1.       Place of Payment......................................................................   35
       Section 14.2.       Home Office Payment...................................................................   35

SECTION 15.                EXPENSES, ETC.........................................................................   36

       Section 15.1.       Transaction Expenses..................................................................   36
       Section 15.2.       Survival..............................................................................   36

SECTION 16.                SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT..........................   36

SECTION 17.                AMENDMENT AND WAIVER..................................................................   37

       Section 17.1.       Requirements..........................................................................   37
       Section 17.2.       Solicitation of Holders of Notes......................................................   37
       Section 17.3.       Binding Effect, Etc...................................................................   38
       Section 17.4.       Notes Held by Company, Etc............................................................   38

SECTION 18.                NOTICES...............................................................................   38

SECTION 19.                REPRODUCTION OF DOCUMENTS.............................................................   39

SECTION 20.                CONFIDENTIAL INFORMATION..............................................................   39

SECTION 21.                SUBSTITUTION OF PURCHASER.............................................................   41

SECTION 22.                MISCELLANEOUS.........................................................................   41

       Section 22.1.       Successors and Assigns................................................................   41
       Section 22.2.       Payments Due on Non-Business Days.....................................................   41
       Section 22.3.       Severability..........................................................................   41
       Section 22.4.       Construction..........................................................................   41
</TABLE>

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<TABLE>
<S>                        <C>                                                                                      <C>
       Section 22.5.       Counterparts..........................................................................   42
       Section 22.6.       Governing Law.........................................................................   42
</TABLE>

                                      -iv-

<PAGE>

<TABLE>
<S>                       <C>
SCHEDULE A                -- INFORMATION RELATING TO PURCHASERS

SCHEDULE B                -- DEFINED TERMS

SCHEDULE 4.9              -- Changes in Corporate Structure

SCHEDULE 5.4(a)-1         -- Subsidiaries of the Company, Ownership of Subsidiary Stock, Affiliates

SCHEDULE 5.4(a)-2         -- Investments

SCHEDULE 5.4(d)           -- Restrictive Agreements

SCHEDULE 5.5              -- Financial Statements

SCHEDULE 5.11             -- Licenses, Permits, Etc.

SCHEDULE 5.15             -- Existing Debt

SCHEDULE 10.4             -- Existing Liens

EXHIBIT 1                 -- Form of 6.08% Series 2003-A Senior Notes, Tranche 1, due December 12, 2010

EXHIBIT 2                 -- Form of 6.81% Series 2003-A Senior Notes, Tranche 2, due December 12, 2013

EXHIBIT 2.3               -- Form of Subsidiary Guaranty

EXHIBIT 2.4(a)            -- Form of Pledge Agreement

EXHIBIT 2.4(b)            -- Form of Intercreditor Agreement

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

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

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

EXHIBIT S                 -- Form of Supplement to Note Purchase Agreement
</TABLE>

                                       -v-

<PAGE>

                             MYERS INDUSTRIES, INC.
                             1293 SOUTH MAIN STREET
                                AKRON, OHIO 44301

            $65,000,000 6.08% SERIES 2003-A SENIOR NOTES, TRANCHE 1,
                              DUE DECEMBER 12, 2010

            $35,000,000 6.81% SERIES 2003-A SENIOR NOTES, TRANCHE 2,
                              DUE DECEMBER 12, 2013

                                                                     Dated as of
                                                               December 12, 2003

TO THE PURCHASERS LISTED IN
         THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

         MYERS INDUSTRIES, INC., an Ohio corporation (the "Company"), agrees
with the Purchasers listed in the attached Schedule A (the "Purchasers") to this
Note Purchase Agreement (this "Agreement") as follows:

SECTION 1. AUTHORIZATION OF NOTES.

         The Company will authorize the issue and sale of (i) $65,000,000 6.08%
Series 2003-A Senior Notes, Tranche 1, due December 12, 2010 (the "Tranche 1
Notes") and (ii) $35,000,000 6.81% Series 2003-A Senior Notes, Tranche 2, due
December 12, 2013 (the "Tranche 2 Notes," and together with the Tranche 1 Notes,
the "Series 2003-A Notes"). The Series 2003-A Notes together with each Series of
Additional Notes which may from time to time be issued pursuant to the
provisions of Section 2.2 are collectively referred to as the "Notes" (such term
shall also include any such notes issued in substitution therefor pursuant to
Section 13 of this Agreement). The Tranche 1 Notes and the Tranche 2 Notes shall
be substantially in the form set out in Exhibit 1(a) and Exhibit 1(b),
respectively, with such changes therefrom, if any, as may be approved by the
Purchasers 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.

THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY ONLY BE SOLD PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE
SECURITIES LAWS.

                                    EXHIBIT 1
                                 (to Supplement)

<PAGE>

SECTION 2. SALE AND PURCHASE OF NOTES.

         Section 2.1. Series 2003-A Notes. Subject to the terms and conditions
of this Agreement, the Company will issue and sell to each Purchaser and each
Purchaser will purchase from the Company, at the Closing provided for in Section
3, Series 2003-A Notes in the principal amount specified opposite such
Purchaser's name in Schedule A at the purchase price of 100% of the principal
amount thereof. The obligations of each Purchaser hereunder are several and not
joint obligations and each Purchaser shall have no obligation and no liability
to any Person for the performance or nonperformance by any other Purchaser
hereunder.

         Section 2.2. Additional Series of Notes. The Company may, from time to
time, in its sole discretion but subject to the terms hereof, issue and sell one
or more additional Series of its promissory notes under the provisions of this
Agreement pursuant to a supplement (a "Supplement") substantially in the form of
Exhibit S. Each additional Series of Notes (the "Additional Notes") issued
pursuant to a Supplement shall be subject to the following terms and conditions:

                  (i)      each Series of Additional Notes, when so issued,
         shall be differentiated from all previous Series by sequential
         alphabetical designation inscribed thereon;

                  (ii)     Additional Notes of the same Series may consist of
         more than one different and separate tranches and may differ with
         respect to outstanding principal amounts, maturity dates, interest
         rates and premiums, if any, and price and terms of redemption or
         payment prior to maturity, but all such different and separate tranches
         of the same Series shall vote as a single class and constitute one
         Series;

                  (iii)    each Series of Additional Notes shall be dated the
         date of issue, bear interest at such rate or rates, mature on such date
         or dates, be subject to such mandatory and optional prepayment on the
         dates and at the premiums, if any, have such additional or different
         conditions precedent to closing, such representations and warranties
         and such additional covenants as shall be specified in the Supplement
         under which such Additional Notes are issued and upon execution of any
         such Supplement, this Agreement shall be amended (a) to reflect such
         additional covenants without further action on the part of the holders
         of the Notes outstanding under this Agreement, provided, that any such
         additional covenants shall inure to the benefit of all holders of Notes
         so long as any Additional Notes issued pursuant to such Supplement
         remain outstanding, and (b) to reflect such representations and
         warranties as are contained in such Supplement for the benefit of the
         holders of such Additional Notes in accordance with the provisions of
         Section 16;

                  (iv)     each Series of Additional Notes issued under this
         Agreement shall be in substantially the form of Exhibit 1 to Exhibit S
         hereto with such variations, omissions and insertions as are necessary
         or permitted hereunder;

                  (v)      the minimum principal amount of any Note issued under
         a Supplement shall be $100,000, except as may be necessary to evidence
         the outstanding amount of any Note originally issued in a denomination
         of $100,000 or more;

                                      E-1-2
<PAGE>

                  (vi)     all Additional Notes shall constitute Senior Debt of
         the Company and shall rank pari passu with all other outstanding Notes;
         and

                  (vii)    no Additional Notes shall be issued hereunder if at
         the time of issuance thereof and after giving effect to the application
         of the proceeds thereof, any Default or Event of Default shall have
         occurred and be continuing.

         Section 2.3. Subsidiary Guaranty. (a) The payment by the Company of all
amounts due with respect to the Notes and the performance by the Company of its
obligations under this Agreement will be absolutely and unconditionally
guaranteed by the Subsidiary Guarantors pursuant to the Subsidiary Guaranty
Agreement dated as of even date herewith, which shall be substantially in the
form of Exhibit 2.3 attached hereto, and otherwise in accordance with the
provisions of Section 9.6 hereof (the "Subsidiary Guaranty").

         (b)      The holders of the Notes agree to discharge and release any
Subsidiary Guarantor from the Subsidiary Guaranty upon the written request of
the Company, provided that (i) such Subsidiary Guarantor has been released and
discharged (or will be released and discharged concurrently with the release of
such Subsidiary Guarantor under the Subsidiary Guaranty) as an obligor and
guarantor under and in respect of the Bank Credit Agreement and the Company so
certifies to the holders of the Notes in a certificate of a Responsible Officer
and (ii) at the time of such release and discharge, the Company shall deliver a
certificate of a Responsible Officer to the holders of the Notes stating that no
Default or Event of Default exists.

         Section 2.4. Security for the Notes. (a) The payment of all amounts due
with respect to the Notes and the performance by the Company of its obligations
under this Agreement will be secured in accordance with the terms of the Pledge
Agreement, which shall be substantially in the form of Exhibit 2.4(a) attached
hereto.

         (b)      The enforcement of the rights and benefits in respect of the
Subsidiary Guaranty and the Pledge Agreement and the allocation of proceeds
thereof shall be subject to the Intercreditor Agreement, which shall be
substantially in the form of Exhibit 2.4(b) attached hereto.

         (c)      If at any time the Company or any Subsidiary shall grant to
any one or more of the Collateral Agent or the Bank Lenders additional
Guaranties or other credit support or collateral of any kind pursuant to the
requirements of the Bank Credit Agreement (other than collateral required in
respect of letters of credit by the Bank Credit Agreement so long as a default
shall have occurred and shall be continuing thereunder), then the Company or
such Subsidiary shall grant to the holders of the Notes the same credit support
or collateral or Guaranty so that the Notes shall at all times be secured on an
equal and ratable basis with the Debt outstanding under the Bank Credit
Agreement pursuant to an intercreditor agreement, guaranty agreement or other
security documents (which documents shall be in form and substance reasonably
satisfactory to the Required Lenders). The holders of the Notes agree to release
any such additional Guaranties, credit support, or collateral and any Liens
created by the Pledge Agreement upon the written request of the Company,
provided that (i) any such Guaranties, credit support, or collateral has been
released and discharged (or will be released and discharged concurrently with
the release of

                                      E-1-3
<PAGE>

the additional Guaranties, credit support, or collateral securing the Notes)
under and in respect of the Bank Credit Agreement and the Company so certifies
to the holders of the Notes in a certificate of a Responsible Officer and (ii)
at the time of such release and discharge, the Company shall deliver a
certificate of a Responsible Officer to the holders of the Notes stating that no
Default or Event of Default exists.

SECTION 3. CLOSING.

         The sale and purchase of the Series 2003-A Notes to be purchased by
each Purchaser shall occur at the offices of Chapman and Cutler, 111 West Monroe
Street, Chicago, Illinois 60603 at 10:00 a.m. Chicago time, at a closing (the
"Closing") on December 12, 2003 or on such other Business Day thereafter on or
prior to December 16, 2003 as may be agreed upon by the Company and the
Purchasers. At the Closing the Company will deliver to each Purchaser the Series
2003-A Notes to be purchased by such Purchaser in the form of a single Series
2003-A Note (or such greater number of Series 2003-A Notes in denominations of
at least $100,000 as such Purchaser may request) dated the date of the Closing
and registered in such Purchaser's name (or in the name of such Purchaser's
nominee), against delivery by such Purchaser 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 076 4084, at Key Bank, N.A., Cleveland, Ohio, ABA Number
041001039, in the Account Name of "Myers Industries, Inc." If at the Closing the
Company shall fail to tender such Notes to any Purchaser as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to any Purchaser's satisfaction, such Purchaser shall, at such
Purchaser's election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights such Purchaser may have by reason
of such failure or such nonfulfillment.

SECTION 4. CONDITIONS TO CLOSING.

         The obligation of each Purchaser to purchase and pay for the Series
2003-A Notes to be sold to such Purchaser at the Closing is subject to the
fulfillment to such Purchaser's satisfaction, prior to or at the Closing, of the
following conditions:

         Section 4.1. Representations and Warranties.

         (a)      Representations and Warranties of the Company. The
representations and warranties of the Company in this Agreement shall be correct
when made and at the time of Closing.

         (b)      Representations and Warranties of the Subsidiary Guarantors.
The representations and warranties of the Subsidiary Guarantors in the
Subsidiary Guaranty shall be correct when made and at the time of Closing.

         Section 4.2. Performance; No Default. The Company and each Subsidiary
Guarantor shall have performed and complied with all agreements and conditions
contained in this Agreement and the Subsidiary Guaranty required to be performed
or complied with by the

                                      E-1-4
<PAGE>

Company and each such Subsidiary Guarantor prior to or at the Closing, and after
giving effect to the issue and sale of the Series 2003-A Notes (and the
application of the proceeds thereof as contemplated by Section 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 the date of the
Memorandum that would have been prohibited by Section 10 hereof had such
Sections applied since such date.

         Section 4.3. Compliance Certificates.

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

         (b)      Secretary's Certificate of the Company. The Company shall have
delivered to such Purchaser a certificate certifying as to the resolutions
attached thereto and other corporate proceedings relating to the authorization,
execution and delivery of the Series 2003-A Notes and this Agreement.

         (c)      Officer's Certificate of the Subsidiary Guarantors. Each
Subsidiary Guarantor shall have delivered to such Purchaser an Officer's
Certificate, dated the date of the Closing, certifying that the conditions
specified in Sections 4.1(b), 4.2 and 4.9 have been fulfilled.

         (d)      Secretary's Certificate of the Subsidiary Guarantors. Each
Subsidiary Guarantor shall have delivered to such Purchaser a certificate
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of the
Subsidiary Guaranty.

         Section 4.4. Opinions of Counsel. Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser, dated the date of
the Closing (a) from Kevin C. O'Neil, General Counsel of the Company, covering
the matters set forth in Exhibit 4.4(a) and covering such other matters incident
to the transactions contemplated hereby as such Purchaser or such Purchaser's
counsel may reasonably request (and the Company hereby instructs its counsel to
deliver such opinion to such Purchaser), (b) from special counsel for the
Company, covering the matters set forth in Exhibit 4.4(b) and covering such
other matters incident to the transactions contemplated hereby as such Purchaser
or such Purchaser's counsel may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to such Purchaser), and (c) from
Chapman and Cutler, the Purchasers' special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(c) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.

         Section 4.5. Purchase Permitted by Applicable Law, Etc. On the date of
Closing each purchase of Series 2003-A Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which each Purchaser is 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, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of

                                      E-1-5
<PAGE>

Governors of the Federal Reserve System) and (c) not subject any Purchaser 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 any Purchaser, such Purchaser shall have received an Officer's
Certificate certifying as to such matters of fact as such Purchaser may
reasonably specify to enable such Purchaser to determine whether such purchase
is so permitted.

         Section 4.6. Related Transactions. The Company shall have consummated
the sale of the entire principal amount of the Series 2003-A Notes scheduled to
be sold on the date of Closing pursuant to this Agreement.

         Section 4.7. Payment of Special Counsel Fees. Without limiting the
provisions of Section 15.1, the Company shall have paid on or before the
Closing, the reasonable fees, reasonable charges and reasonable disbursements of
the Purchasers' 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.

         Section 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 each Series of the Series 2003-A
Notes.

         Section 4.9. Changes in Corporate Structure. Neither the Company nor
any Subsidiary Guarantor shall have changed its jurisdiction of organization or,
except as reflected in Schedule 4.9, been a party to any merger or
consolidation, or shall 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.

        Section 4.10. Subsidiary Guaranty. The Subsidiary Guaranty shall have
been duly authorized, executed and delivered by each Subsidiary Guarantor, shall
constitute the legal, valid and binding contract and agreement of each
Subsidiary Guarantor and such Purchaser shall have received a true, correct and
complete copy thereof.

        Section 4.11. Pledge Agreement. The Pledge Agreement shall have been
duly authorized, executed and delivered by the Pledgor and each other party
thereto, shall constitute the legal, valid and binding contract and agreement of
each such party and such Purchaser shall have received a true, correct and
complete copy thereof.

        Section 4.12. Intercreditor Agreement. The Intercreditor Agreement shall
have been duly authorized, executed and delivered by the Collateral Agent on
behalf of each of the Bank Lenders and each of the Purchasers and acknowledged
by the Company, the Subsidiary Guarantors and the Pledgor, and such Purchaser
shall have received a true, correct and complete copy thereof.

        Section 4.13. Proceedings and Documents. All corporate or other
organizational proceedings in connection with the transactions contemplated by
this Agreement and all documents and instruments incident to such transactions
shall be satisfactory to such Purchaser

                                      E-1-6
<PAGE>

and such Purchaser's special counsel, and such Purchaser and such Purchaser's
special counsel shall have received all such counterpart originals or certified
or other copies of such documents as such Purchaser or such Purchaser's special
counsel may reasonably request.

         Section 4.14. Conditions to Issuance of Additional Notes. The
obligations of the Additional Purchasers to purchase any Additional Notes shall
be subject to the following conditions precedent, in addition to the conditions
specified in the Supplement pursuant to which such Additional Notes may be
issued:

                  (a)      Compliance Certificate. A duly authorized Senior
         Financial Officer shall execute and deliver to each Additional
         Purchaser and each holder of Notes an Officer's Certificate dated the
         date of issue of such Series of Additional Notes stating that such
         officer has reviewed the provisions of this Agreement (including any
         Supplements hereto) and setting forth the information and computations
         (in sufficient detail) required in order to establish whether after
         giving effect to the issuance of the Additional Notes and after giving
         effect to the application of the proceeds thereof, the Company is in
         compliance with the requirements of Section 10.2 on such date (based
         upon the financial statements for the most recent fiscal quarter ended
         prior to the date of such certificate).

                  (b)      Execution and Delivery of Supplement. The Company and
         each such Additional Purchaser shall execute and deliver a Supplement
         substantially in the form of Exhibit S hereto.

                  (c)      Representations of Additional Purchasers. Each
         Additional Purchaser shall have confirmed in the Supplement that the
         representations set forth in Section 6 are true with respect to such
         Additional Purchaser on and as of the date of issue of the Additional
         Notes.

                  (d)      Execution and Delivery of Guaranty Ratification. Each
         Subsidiary Guarantor shall execute and deliver a Guaranty Ratification
         in the form attached to the Subsidiary Guaranty.

SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to each Purchaser that:

         Section 5.1. Organization; Power and Authority. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Ohio, 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, to execute and deliver this Agreement and the Notes and to perform the
provisions hereof and thereof.

                                      E-1-7
<PAGE>

         Section 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 against
payment of the consideration therefore 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).

         Section 5.3. Disclosure. The Company, through its agent, McDonald
Investments, Inc., has delivered to each Purchaser a copy of a Private Placement
Memorandum, dated October 20, 2003 (the "Memorandum"), relating to the
transactions contemplated hereby. The Memorandum fairly describes, in all
material respects, the general nature of the business and principal properties
of the Company and its Restricted Subsidiaries. This Agreement, the Memorandum,
the documents, certificates or other writings delivered to the Purchasers 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. Since December 31, 2002, there has
been no change in the financial condition, operations, business or properties of
the Company or any of its Restricted Subsidiaries 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 been set
forth herein or in the Memorandum or in the other documents, certificates and
other writings delivered to each Purchaser by or on behalf of the Company
specifically for use in connection with the transactions contemplated hereby.

         Section 5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates. (a) Schedule 5.4 contains (except as noted therein) complete and
correct lists of (i) the Company's Restricted and Unrestricted Subsidiaries,
showing, as to each Subsidiary, the correct name thereof, the jurisdiction of
its organization, and the percentage of shares of each class of its capital
stock or similar equity interests outstanding owned by the Company and each
other Subsidiary, and on Schedule 5.4(a)-2 all other material Investments of the
Company and its Restricted Subsidiaries, (ii) the Company's Affiliates, other
than Subsidiaries, and (iii) 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(a) 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 under the Pledge Agreement and 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

                                      E-1-8
<PAGE>

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.

         Section 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 financial statements 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).

         Section 5.6. Compliance with Laws, Other Instruments, Etc. The
execution, delivery and performance by the Company of this Agreement and the
Notes will not (a) 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 (except for the Lien created by the Pledge Agreement), (b)
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 (c)
violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.

         Section 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.

         Section 5.8. Litigation; Observance of Statutes and Orders. (a) There
are no actions, suits or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Restricted
Subsidiary or any property of the Company or any Restricted 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.

                                      E-1-9
<PAGE>

         (b)      Neither the Company nor any Restricted 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.

         Section 5.9. Taxes. The Company and its Restricted 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 (a) the amount of which is not individually or in the aggregate
Material or (b) 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 Restricted Subsidiary, as the case may be, has
established adequate reserves in accordance with, and where required by, 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 Restricted Subsidiaries in
respect of federal, state or other taxes for all fiscal periods are adequate.
The federal income tax liabilities of the Company and its Subsidiaries (other
than AC Buckhorn Ltd.) have been determined by the Internal Revenue Service and
paid for all fiscal years up to and including the fiscal year ended December 31,
1999.

         Section 5.10. Title to Property; Leases. The Company and its Restricted
Subsidiaries have good and sufficient title to their respective properties which
the Company and its Restricted Subsidiaries own or purport to own, 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
Restricted Subsidiary after said date (except as sold or otherwise disposed of
in the ordinary course of business), in each case free and clear of Liens
prohibited by this Agreement, except for such defects in title or Liens that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. All leases under which the Company and its Restricted
Subsidiaries hold or purport to hold properties are valid and subsisting and are
in full force and effect in all material respects with only exceptions that
individually and in the aggregate could not reasonably be expected to have a
Material Adverse Effect.

         Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule
5.11,

                   (a) the Company and its Restricted Subsidiaries own or
          possess all Material licenses, permits, franchises, authorizations,
          patents, copyrights, service marks, trademarks and trade names, or
          rights thereto, without known conflict with the rights of others,
          except any conflicts that individually or in the aggregate could not
          reasonably be expected to have a Material Adverse Effect;

                   (b) to the best knowledge of the Company, no product of the
          Company or any of its Restricted Subsidiaries infringes in any
          Material respect any license, permit,

                                     E-1-10
<PAGE>

          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 Restricted 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 Restricted Subsidiaries which violation
          could reasonably be expected to have a Material Adverse Effect.

         Section 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 ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities by more than $2,500,000. 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 any
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 post-retirement 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 each Purchaser's
representation in Section 6.2 as to the sources of the funds to be used to pay
the purchase price of the Notes to be purchased by such Purchaser.

                                     E-1-11
<PAGE>

         Section 5.13. Private Offering by the Company. Neither the Company nor
(based on the letter dated as of December 12, 2003 to the Company from McDonald
Investments, Inc. (the "McDonald Letter") anyone acting on the Company's behalf
has offered the Series 2003-A 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 60 Institutional
Investors (including the Purchasers), each of which has been offered the Series
2003-A Notes in connection with a private sale for investment. Neither the
Company nor, based on the McDonald Letter, anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Series 2003-A Notes to the registration requirements of Section 5 of the
Securities Act.

         Section 5.14. Use of Proceeds; Margin Regulations. The Company will
apply the proceeds of the sale of the Series 2003-A Notes for the repayment of
certain bank indebtedness of the Company and its Subsidiaries. No part of the
proceeds from the sale of the Series 2003-A 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 221), or for the purpose of buying or carrying or trading
in any securities under such circumstances as to involve the Company in a
violation of Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock
does not constitute more than 2% 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 2% of the value of such assets. As
used in this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said Regulation U.

         Section 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 Restricted Subsidiaries as of October 31, 2003,
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 Restricted Subsidiaries. Neither the Company nor any Restricted
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
Restricted Subsidiary, and no event or condition exists with respect to any Debt
of the Company or any Restricted 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 Restricted 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.

         Section 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

                                     E-1-12
<PAGE>

executive order relating thereto, or is in violation of any federal statute or
Presidential Executive Order, including without limitation Executive Order 13224
66 Fed. Reg. 49079 (September 25, 2001) (Blocking Property and Prohibiting
Transactions with Persons who Commit, Threaten to Commit or Support Terrorism),
or The USA Patriot Act.

         Section 5.17. Status under Certain Statutes. Neither the Company nor
any Restricted Subsidiary is an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, or is
subject to regulation under the Public Utility Holding Company Act of 1935, as
amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act,
as amended.

         Section 5.18. Environmental Matters. Neither the Company nor any
Restricted 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 Restricted Subsidiaries or any of their respective real
properties now or formerly owned, leased or operated by any of them, or other
assets, alleging damage to the environment or any 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 each Purchaser in
writing:

                  (a)      neither the Company nor any Restricted Subsidiary has
         knowledge of any facts which would give rise to any claim, public or
         private, for violation of Environmental Laws or damage to the
         environment emanating from, occurring on or in any way related to real
         properties or to other assets now or formerly owned, leased or operated
         by any of them 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 Restricted
         Subsidiaries has stored any Hazardous Materials on real properties now
         or formerly owned, leased or operated by any of them or has disposed of
         any Hazardous Materials, in each case in a manner both contrary to any
         Environmental Laws and 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 Restricted 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.

SECTION 6. REPRESENTATIONS OF THE PURCHASER.

         Section 6.1. Purchase for Investment. Each Purchaser represents that
(i) it is an "accredited investor" within the meaning of Rule 501(a) of
Regulation D of the Securities Act, and (ii) it is purchasing the Series 2003-A
Notes for its own account or for one or more separate accounts maintained by it
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 such Purchaser's or
such pension or trust funds' property shall at all times be within such
Purchaser's or such pension or trust funds' control. Each Purchaser understands
that the Series 2003-A Notes have not been

                                     E-1-13
<PAGE>

registered under the Securities Act and 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 Series 2003-A Notes.

         Section 6.2. Source of Funds. Each Purchaser represents that at least
one of the following statements is an accurate representation as to each source
of funds (a "Source") to be used by it to pay the purchase price of the Series
2003-A Notes to be purchased by it hereunder:

                  (a)      the Source is an "insurance company general account"
         within the meaning of Department of Labor Prohibited Transaction
         Exemption ("PTE") 95-60 (issued July 12, 1995) 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 ten percent (10%)
         of the total reserves and liabilities of such general account
         (exclusive of separate account liabilities) plus surplus, as set forth
         in the NAIC Annual Statement for such Purchaser most recently filed
         with such Purchaser's state of domicile; or

                  (b)      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 such Purchaser
         prior to the execution and delivery of this Agreement has 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

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

                  (d)      the Source is a governmental plan; or

                                     E-1-14
<PAGE>

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

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

                  (g)      the Source 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.

If any Purchaser or any Additional Purchaser or any subsequent transferee of the
Notes indicates that such Purchaser or any Additional Purchaser or such
transferee is relying on any representation contained in paragraph (b), (c) or
(e) above, the Company shall deliver on the date of issuance of such Notes and
on the date of any applicable transfer a certificate, which shall either state
that (i) it is neither a party in interest nor a "disqualified person" (as
defined in Section 4975(e)(2) of the Code), with respect to any plan identified
pursuant to paragraphs (b) or (e) above, or (ii) with respect to any plan,
identified pursuant to paragraph (c) above, neither it nor any "affiliate" (as
defined in Section V(c) of the QPAM Exemption) has at such time, and during the
immediately preceding one year, exercised the authority to appoint or terminate
said QPAM as manager of any plan identified in writing pursuant to paragraph (c)
above or to negotiate the terms of said QPAM's management agreement on behalf of
any such identified plan. 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.

SECTION 7. INFORMATION AS TO COMPANY.

         Section 7.1. Financial and Business Information. The Company shall
deliver to each holder of Notes that is an Institutional Investor:

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

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

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

                                     E-1-15
<PAGE>

         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 120 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 under a
                           financial covenant, 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 under a
                           financial covenant 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),

         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

                                     E-1-16
<PAGE>

         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 7.1(b);

                  (c)      SEC and Other Reports -- promptly upon their becoming
         available, one copy of (i) each financial statement, report, notice or
         proxy statement sent by the Company or any Subsidiary to public
         securities holders generally, and (ii) each regular or periodic report,
         each registration statement (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;

                  (d)      Notice of Default or Event of Default -- promptly,
         and in any event within five Business Days after a Responsible Officer
         becomes 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;

                  (e)      ERISA Matters -- promptly, and in any event within
         five Business Days after a Responsible Officer becomes 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(c) of ERISA and the
                  regulations thereunder, for which notice thereof has not been
                  waived pursuant to such regulations as in effect on the date
                  thereof; 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 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 imposition of a penalty or excise tax under the provisions
                  of the Code relating to employee benefit plans, or 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

                                     E-1-17
<PAGE>

                  or Liens then existing, could reasonably be expected to have a
                  Material Adverse Effect;

                  (f)      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;

                  (g)      Supplements -- promptly and in any event within 10
         Business Days after the execution and delivery of any Supplement, a
         copy thereof; and

                  (h)      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.

         Notwithstanding the foregoing, in the event that one or more
Unrestricted Subsidiaries shall either (i) own more than 10% of the total
consolidated assets of the Company and its Subsidiaries, or (ii) account for
more than 10% of the consolidated gross revenues of the Company and its
Subsidiaries, determined in each case in accordance with GAAP, then, within the
respective periods provided in Section 7.1(a) and (b) above, the Company shall
deliver to each holder of Notes that is an Institutional Investor, unaudited
financial statements of the character and for the dates and periods as in said
Sections 7.1(a) and (b) covering such group of Unrestricted Subsidiaries (on a
consolidated basis), together with a consolidating statement reflecting
eliminations or adjustments required to reconcile the financial statements of
such group of Unrestricted Subsidiaries to the financial statements delivered
pursuant to Sections 7.1(a) and (b).

         Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:

                  (a)      Covenant Compliance -- 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 10.3, Section 10.4(l) and Section 10.5 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

                                     E-1-18
<PAGE>

         beginning of the quarterly or annual period covered by the statements
         then being furnished to the date of the certificate and that such
         review shall not have disclosed the existence during such period of any
         condition or event that constitutes a Default or an Event of Default
         or, if any such condition or event existed or exists (including,
         without limitation, any such event or condition resulting from the
         Material 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.

         Section 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 Restricted Subsidiary,
         all at such reasonable times during normal business hours 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 Restricted 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 reasonably requested.

SECTION 8. PAYMENT OF THE NOTES.

         Section 8.1. Required Payments. (a) The Notes shall not be subject to
any required prepayments prior to the final maturity thereof (as set forth in
subsections (b) and (c) below) except in connection with an acceleration of the
Notes pursuant to Section 12.1 hereof.

         (b)      The entire principal amount of the Tranche 1 Notes shall
become due and payable on December 12, 2010.

         (c)      The entire principal amount of the Tranche 2 Notes shall
become due and payable on December 12, 2013.

         Section 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 of any Series, in an amount not less
than 10% of the aggregate principal amount of the

                                     E-1-19
<PAGE>

Notes of such Series then outstanding in the case of a partial prepayment (or
such lesser amount as shall be required to effect a partial prepayment resulting
from an offer of prepayment pursuant to Section 10.5), at 100% of the principal
amount so prepaid, together with interest accrued thereon to the date of such
prepayment, plus (except in the case of any prepayment pursuant to Section 10.5)
the Make-Whole Amount or other premium determined for the prepayment date with
respect to such principal amount of each Note of the applicable Series then
outstanding. The Company will give each holder of Notes of the Series to be
prepaid written notice of each optional prepayment under this Section 8.2 not
less than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date, the aggregate principal
amount of the Notes of the applicable Series to be prepaid on such date, the
principal amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.3), and the interest to be 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 or other premium 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 of the Series to be prepaid a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.

         Section 8.3. Allocation of Partial Prepayments. In the case of each
partial prepayment of the Notes pursuant to the provisions of Section 8.2
(excluding any prepayment resulting from an offer of prepayment pursuant to
Section 10.5), the principal amount of the Notes of the Series to be prepaid
shall be allocated among all of the Notes of such Series at the time outstanding
in proportion, as nearly as practicable, to the respective unpaid principal
amounts thereof. All regularly scheduled partial prepayments made with respect
to any Series of Additional Notes pursuant to any Supplement shall be allocated
as provided therein.

         Section 8.4. 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 or other premium, 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 or other
premium, 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.

         Section 8.5. Purchase of Notes. The Company will not and will not
permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes of any Series in accordance with the terms of this
Agreement (including any Supplement hereto) and the Notes. 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.

                                     E-1-20
<PAGE>

         Section 8.6. Make-Whole Amount for the Series 2003-A Notes. The term
"Make-Whole Amount" means with respect to a Series 2003-A Note an amount equal
to the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of the Series 2003-A Note of the
applicable Tranche, 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 a Series 2003-A
         Note, the principal of the Series 2003-A Note of the applicable Tranche
         that is to be prepaid pursuant to Section 8.2 or has become or is
         declared to be immediately due and payable pursuant to Section 12.1, as
         the context requires.

                  "Discounted Value" means, with respect to the Called Principal
         of a Series 2003-A 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 Series 2003-A Note is payable) equal
         to the Reinvestment Yield with respect to such Called Principal.

                  "Reinvestment Yield" means, with respect to the Called
         Principal of a Series 2003-A Note, 0.50% plus 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 "PX-1"
         on the Bloomberg Financial Market Screen (or such other display as may
         replace "PX-1" on the Bloomberg Financial Market Screen) 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 on a straight line
         basis between (1) the actively traded U.S. Treasury security with the
         maturity closest to and greater than the Remaining Average Life and (2)
         the actively traded U.S. Treasury security with the maturity closest to
         and less than the Remaining Average Life.

                  "Remaining Average Life" means, with respect to any Called
         Principal, the number of years (calculated to the nearest one-twelfth
         year) obtained by dividing (i) such Called Principal into (ii) the sum
         of the products obtained by multiplying (a) the principal component of
         each Remaining Scheduled Payment with respect to such Called Principal
         by (b) the number of years (calculated to the nearest one-twelfth year)
         that will elapse

                                     E-1-21
<PAGE>

         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 a Series 2003-A Note, all payments of such Called
         Principal and interest thereon that would be due after the Settlement
         Date with respect to such Called Principal if no payment of such Called
         Principal were made prior to its scheduled due date, provided that if
         such Settlement Date is not a date on which interest payments are due
         to be made under the terms of the Series 2003-A Note, 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 or 12.1.

                  "Settlement Date" means, with respect to the Called Principal
         of a Series 2003-A Note, the date on which such Called Principal is to
         be prepaid pursuant to Section 8.2 or has become or is declared to be
         immediately due and payable pursuant to Section 12.1, as the context
         requires.

SECTION 9. AFFIRMATIVE COVENANTS.

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

         Section 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.

         Section 9.2. Insurance. The Company will, and will cause each of its
Restricted 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.

         Section 9.3. Maintenance of Properties. The Company will, and will
cause each of its Restricted 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 Restricted Subsidiary from
discontinuing the operation and the maintenance of any of its properties if such

                                     E-1-22
<PAGE>

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.

         Section 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 not permitted by Section 10.4, 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, and where required by, GAAP on the books of the Company or such
Subsidiary or (ii) the non-filing or nonpayment, as the case may be, of all such
taxes and assessments in the aggregate could not reasonably be expected to have
a Material Adverse Effect.

         Section 9.5. Corporate Existence, Etc. Subject to Sections 10.5 and
10.6, the Company will at all times preserve and keep in full force and effect
its corporate existence, and 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 Wholly-Owned Restricted Subsidiary) and all
rights and franchises of the Company and its Restricted 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, to have a Material
Adverse Effect.

         Section 9.6. Additional Subsidiary Guarantors. The Company will cause
any Subsidiary (other than a Foreign Subsidiary which is a borrower under the
Bank Credit Agreement) which is required by the terms of the Bank Credit
Agreement to become a party to, or otherwise guarantee, Debt in respect of the
Bank Credit Agreement, to enter into the Subsidiary Guaranty and deliver to each
of the holders of the Notes (concurrently with the incurrence of any such
obligation pursuant to the Bank Credit Agreement) the following items:

                  (a)      a joinder agreement in respect of the Subsidiary
         Guaranty;

                  (b)      a certificate signed on behalf of the Company by the
         President, a Vice President or another authorized Responsible Officer
         of the Company by which the Company makes representations and
         warranties to the effect of those contained in Sections 5.4, 5.6 and
         5.7, with respect to such Subsidiary and the Subsidiary Guaranty, as
         applicable; and

                  (c)      an opinion of counsel (who may be in-house counsel
         for the Company) addressed to each of the holders of the Notes
         satisfactory to the Required Holders, to the effect that the Subsidiary
         Guaranty by such Person has been duly authorized, executed

                                     E-1-23
<PAGE>

         and delivered and that the Subsidiary Guaranty constitutes the legal,
         valid and binding contract and agreement of such Person enforceable in
         accordance with its terms, except as an enforcement of such terms may
         be limited by bankruptcy, insolvency, fraudulent conveyance and similar
         laws affecting the enforcement of creditors' rights generally and by
         general equitable principles.

         Section 9.7. Designation of Subsidiaries. The Company may from time to
time cause any Subsidiary (other than a Subsidiary Guarantor) to be designated
as an Unrestricted Subsidiary or any Unrestricted Subsidiary to be designated a
Restricted Subsidiary; provided, however, that at the time of such designation
and immediately after giving effect thereto, (a) no Default or Event of Default
would exist under the terms of this Agreement, and (b) the Company and its
Restricted Subsidiaries would be in compliance with all of the covenants set
forth in this Section 9 and Section 10 if tested on the date of such action and
provided, further, that once a Subsidiary has been designated an Unrestricted
Subsidiary, it shall not thereafter be redesignated as a Restricted Subsidiary
on more than one occasion. Within ten (10) days following any designation
described above, the Company will deliver to you a notice of such designation
accompanied by a certificate signed by a Senior Financial Officer of the Company
certifying compliance with all requirements of this Section 9.7 and setting
forth all information required in order to establish such compliance.

SECTION 10. NEGATIVE COVENANTS.

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

         Section 10.1. Consolidated Adjusted Net Worth. The Company will not, at
any time, permit Consolidated Adjusted Net Worth to be less than the sum of (i)
$224,696,119 plus (ii) 50% of Consolidated Net Income (if positive) on a
cumulative basis for each fiscal quarter ending after September 30, 2003.

         Section 10.2. Limitation on Debt. The Company will not permit:

                  (a)      the Consolidated Leverage Ratio to exceed (i) 4.0 to
         1.0 on or prior to March 31, 2004; (ii) 3.75 to 1.0 after March 31,
         2004 and on or prior to September 30, 2004; and (iii) 3.5 to 1.0 after
         September 30, 2004; and

                  (b)      Priority Debt of Restricted Subsidiaries to exceed
         15% of Consolidated Adjusted Net Worth.

Compliance with this Section 10.2 shall be determined as of the last day of each
fiscal quarter and on each day on which the Company or any Subsidiary incurs
Debt (other than revolving credit Debt under the Bank Credit Agreement);
provided that in the case of any such incurrence, compliance shall be determined
as of the last day of the fiscal quarter immediately preceding such incurrence
but after giving effect to the Debt then proposed to be incurred and the
application of the proceeds thereof.

                                     E-1-24
<PAGE>

         Section 10.3. Consolidated Interest Coverage Ratio. The Company will
not permit the Consolidated Interest Coverage Ratio to be less than 2.25 to 1.0
determined as of the end of the most recently ended fiscal quarter.

         Section 10.4. Limitation on Liens. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly create,
incur, assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset (including,
without limitation, any document or instrument in respect of goods or accounts
receivable) of the Company or any such Restricted Subsidiary, whether now owned
or held or hereafter acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits, except:

                  (a)      Liens for taxes, assessments or other governmental
         charges that are not yet due and payable or the payment of which is not
         at the time required by Section 9.4;

                  (b)      any attachment or judgment Lien, unless the judgment
         it secures shall not, within 60 days after the entry thereof, have been
         discharged or execution thereof stayed pending appeal, or shall not
         have been discharged within 60 days after the expiration of any such
         stay;

                  (c)      Liens incidental to the conduct of business or the
         ownership of properties and assets (including landlords', carriers',
         warehousemen's, mechanics', materialmen's and other similar Liens for
         sums not yet due and payable) and Liens to secure the performance of
         bids, tenders, leases, or trade contracts, or to secure statutory
         obligations (including obligations under workers compensation,
         unemployment insurance and other social security legislation), surety
         or appeal bonds or other Liens incurred in the ordinary course of
         business and not in connection with the borrowing of money;

                  (d)      leases or subleases granted to others, easements,
         rights-of-way, restrictions and other similar charges or encumbrances,
         in each case incidental to the ownership of property or assets or the
         ordinary conduct of the business of the Company or any of its
         Restricted Subsidiaries, provided that such Liens do not, in the
         aggregate, materially detract from the value of such property;

                  (e)      Liens securing Debt of a Restricted Subsidiary to the
         Company or to a Wholly-Owned Restricted Subsidiary;

                  (f)      Liens existing as of the date of Closing and
         reflected in Schedule 10.4;

                  (g)      Liens incurred after the date of Closing given to
         secure the payment of the purchase price incurred in connection with
         the acquisition, construction or improvement of property (other than
         accounts receivable or inventory) useful and intended to be used in
         carrying on the business of the Company or a Restricted Subsidiary,
         including Liens existing on such property at the time of acquisition or
         construction thereof, provided that (i) the Lien shall attach solely to
         the property acquired, purchased, constructed or improved; (ii) at the
         time of acquisition, construction or improvement of such property,

                                     E-1-25
<PAGE>

         the aggregate amount remaining unpaid on all Debt secured by Liens on
         such property, whether or not assumed by the Company or a Restricted
         Subsidiary, shall not exceed the lesser of (y) the cost of such
         acquisition, construction or improvement or (z) the 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); and (iii) at the time of such incurrence and after giving
         effect thereto, no Default or Event of Default would exist;

                  (h)      any Lien existing on property of a Person immediately
         prior to its being consolidated with or merged into the Company or a
         Restricted Subsidiary or its becoming a Restricted Subsidiary, or any
         Lien existing on any property acquired by the Company or any Restricted
         Subsidiary at the time such property is so acquired (whether or not the
         Debt secured thereby shall have been assumed), provided that (i) no
         such Lien shall have been created or assumed in contemplation of such
         consolidation or merger or such Person's becoming a Restricted
         Subsidiary or such acquisition of property, (ii) each such Lien shall
         extend solely to the item or items of property so acquired and, if
         required by the terms of the instrument originally creating such Lien,
         other property which is an improvement to or is acquired for specific
         use in connection with such acquired property, and (iii) at the time of
         such incurrence and after giving effect thereto, no Default or Event of
         Default would exist;

                  (i)      Liens granted by the Company and its Restricted
         Subsidiaries in connection with Permitted Securitization Transactions;
         provided that (i) such Liens shall extend solely to the Receivables
         transferred or sold and (ii) the obligations secured by such Liens do
         not constitute Debt of the Company or any Restricted Subsidiary other
         than a Receivables Subsidiary;

                  (j)      any extensions, renewals or replacements of any Lien
         permitted by the preceding subparagraphs (f), (g) and (h) of this
         Section 10.4, provided that (i) no additional property shall be
         encumbered by such Liens, (ii) the unpaid principal amount of the Debt
         or other obligations secured thereby shall not be increased on or after
         the date of any extension, renewal or replacement, and (iii) at such
         time and immediately after giving effect thereto, no Default or Event
         of Default shall have occurred and be continuing;

                  (k)      in addition to Liens permitted by the preceding
         subparagraphs (a) through (j), inclusive, of this Section 10.4, Liens
         securing Senior Debt of the Company and its Restricted Subsidiaries;
         provided that the Company shall make effective provision pursuant to an
         intercreditor agreement and other security documents (which documents
         shall be in form and substance reasonably satisfactory to the Required
         Holders) pursuant to which the Notes shall be equally and ratably
         secured with such Senior Debt; provided further that any pledge of
         additional shares of Subsidiary stock pursuant to the Pledge Agreement
         or any pledge agreement substantially similar to the Pledge Agreement
         and which is subject to the terms of the Intercreditor Agreement shall
         not require the approval of the Required Holders; and

                                     E-1-26
<PAGE>

                  (l)      Liens securing Priority Debt of the Company or any
         Restricted Subsidiary, provided that the aggregate principal amount of
         Priority Debt shall not exceed 20% of Consolidated Adjusted Net Worth
         and any such Priority Debt, shall be permitted by Section 10.2.

         Section 10.5. Sales of Assets. The Company will not, and will not
permit any Restricted Subsidiary to, sell, lease or otherwise dispose of any
substantial part (as defined below) of the assets of the Company and its
Restricted Subsidiaries (including without limitation the sale or transfer of
assets in a sale and leaseback transaction or a securitization transaction or a
sale of equity interest in any Subsidiary); provided, however, that the Company
or any Restricted Subsidiary may sell, lease or otherwise dispose of assets
constituting a substantial part of the assets of the Company and its Restricted
Subsidiaries if such assets are sold in an arms length transaction and, at such
time and after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing and an amount equal to the Net Proceeds received from
such sale, lease or other disposition shall be used within 365 days of such
sale, lease or disposition, in any combination:

                  (1)      to acquire productive assets used or useful in
         carrying on the business of the Company and its Restricted Subsidiaries
         and having a value at least equal to the value of such assets sold,
         leased or otherwise disposed of; or

                  (2)      to prepay or retire Senior Debt of the Company and/or
         its Restricted Subsidiaries, provided that (i) the Company shall offer
         to prepay each outstanding Note in a principal amount which equals the
         Ratable Portion for such Note, and (ii) any such prepayment of the
         Notes shall be made at par, together with accrued interest thereon to
         the date of such prepayment, but without the payment of the Make-Whole
         Amount. Any offer of prepayment of the Notes pursuant to this Section
         10.5 shall be given to each holder of the Notes by written notice which
         shall be delivered not less than 30 days and not more than 60 days
         prior to the proposed prepayment date. Each such notice shall state
         that it is given pursuant to this Section and that the offer set forth
         in such notice must be accepted by such holder in writing and shall
         also set forth (i) the prepayment date, (ii) a description of the
         circumstances which give rise to the proposed prepayment and (iii) a
         calculation of the Ratable Portion for such holder's Notes. Each holder
         of the Notes which desires to have its Notes prepaid shall notify the
         Company in writing delivered not less than 5 Business Days prior to the
         proposed prepayment date of its acceptance of such offer of prepayment.
         Prepayment of Notes pursuant to this Section 10.5 shall be made in
         accordance with Section 8.2 and Section 8.4 of the Note Agreement.

         As used in this Section 10.5, a sale, lease or other disposition of
assets shall be deemed to be a "substantial part" of the assets of the Company
and its Restricted Subsidiaries if the book value of such assets, when added to
the book value of all other assets sold, leased or otherwise disposed of by the
Company and its Restricted Subsidiaries during the period of 12 consecutive
months ending on the date of such sale, lease or other disposition, exceeds 10%
of the book value of Consolidated Total Assets, determined as of the end of the
fiscal quarter immediately preceding such sale, lease or other disposition;
provided that there shall be excluded from any

                                     E-1-27
<PAGE>

determination of a "substantial part" any (i) sale or disposition of assets in
the ordinary course of business of the Company and its Restricted Subsidiaries,
(ii) any transfer of assets from the Company to any Wholly-Owned Restricted
Subsidiary or from any Restricted Subsidiary to the Company or a Wholly-Owned
Restricted Subsidiary, and (iii) any sale or other disposition of Receivables in
a Permitted Securitization Transaction.

         Section 10.6. Merger, Consolidation. The Company will not, and will not
permit any of its Restricted Subsidiaries 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 that:

                  (1)      a Restricted Subsidiary of the Company may (x)
         consolidate with or merge with, or convey, transfer or lease
         substantially all of its assets in a single transaction or series of
         transactions to, the Company or a Wholly-Owned Restricted Subsidiary so
         long as in any merger or consolidation involving the Company, the
         Company shall be the surviving or continuing corporation, or (y)
         convey, transfer or lease all of its assets in compliance with the
         provisions of Section 10.5; and

                  (2)      the foregoing restriction does not apply to the
         consolidation or merger of the Company with, or the conveyance,
         transfer or lease of substantially all of the assets of the Company in
         a single transaction or series of transactions to, any Person so long
         as:

                           (a)      the successor formed by such consolidation
                  or the survivor of such merger or the Person that acquires by
                  conveyance, transfer or lease substantially all of the assets
                  of the Company as an entirety, as the case may be (the
                  "Successor Corporation"), shall be a solvent corporation
                  organized and existing under the laws of the United States of
                  America, any State thereof or the District of Columbia;

                           (b)      if the Company is not the Successor
                  Corporation, such Successor Corporation shall have executed
                  and delivered to each holder of Notes its assumption of the
                  due and punctual performance and observance of each covenant
                  and condition of this Agreement and the Notes (pursuant to
                  such agreements and instruments as shall be reasonably
                  satisfactory to the Required Holders), and the Company shall
                  have caused to be delivered to each holder of Notes (A) an
                  opinion of nationally recognized independent counsel, to the
                  effect that all agreements or instruments effecting such
                  assumption are enforceable in accordance with their terms and
                  (B) an acknowledgment from each Subsidiary Guarantor that the
                  Subsidiary Guaranty continues in full force and effect; and

                           (c)      immediately after giving effect to such
                  transaction no Default or Event of Default would exist.

         Section 10.7. Nature of Business. The Company and its Restricted
Subsidiaries will not engage in any business, if, as a result, when taken as a
whole, the general

                                     E-1-28
<PAGE>

nature of the business of the Company and its Restricted Subsidiaries would be
substantially changed from the general nature of the business conducted by the
Company and its Restricted Subsidiaries on the date of this Agreement as
described in the Memorandum.

         Section 10.8. Transactions with Affiliates. The Company will not and
will not permit any Restricted Subsidiary to enter into directly or indirectly
any Material transaction or Material group of related transactions (including
without limitation the purchase, lease, sale or exchange of properties of any
kind or the rendering of any service) with any Affiliate (other than the Company
or another Restricted Subsidiary), except upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtainable
in a comparable arm's-length transaction with a Person not an Affiliate.

SECTION 11. EVENTS OF DEFAULT.

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

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

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

                  (c)      the Company defaults in the performance of or
         compliance with any term contained in Section 10 (other than Section
         10.7 and Section 10.8) or any covenant in a Supplement which
         specifically provides that it shall have the benefit of this paragraph
         (c); or

                  (d)      the Company defaults in the performance of or
         compliance with any term contained herein or in any Supplement (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)      for any reason any provision of the Subsidiary
         Guaranty ceases to be in full force and effect, including, without
         limitation, a determination by any Governmental Authority that the
         Subsidiary Guaranty is invalid, void or unenforceable and which, in
         each case, could reasonably be expected to have a Material Adverse
         Effect, or any Subsidiary Guarantor shall contest or deny in writing
         the enforceability of any its obligations under the Subsidiary
         Guaranty; or

                  (f)      any representation or warranty made in writing by or
         on behalf of the Company or by any officer of the Company in this
         Agreement, the Pledge Agreement or any Supplement or in any writing
         furnished in connection with the transactions

                                     E-1-29
<PAGE>

         contemplated hereby or thereby proves to have been false or incorrect
         in any material respect on the date as of which made; or

                  (g)      (i) the Company or any Restricted 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 other than the Notes that is outstanding in an aggregate principal
         amount of at least $10,000,000 beyond any period of grace provided with
         respect thereto, or (ii) the Company or any Restricted Subsidiary is in
         default in the performance of or compliance with any term of any
         instrument, mortgage, indenture or other agreement relating to any Debt
         other than the Notes in an aggregate principal amount of at least
         $10,000,000 or any other condition exists, and as a consequence of such
         default or condition such Debt has become, or has been declared, 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), the Company or any Restricted Subsidiary has become
         obligated to purchase or repay Debt other than the Notes before its
         regular maturity or before its regularly scheduled dates of payment in
         an aggregate outstanding principal amount of at least $10,000,000; or

                  (h)      the Company, any Material Subsidiary or any
         Subsidiary Guarantor (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 property, (v) is adjudicated as
         insolvent or to be liquidated, or (vi) takes corporate action for the
         purpose of any of the foregoing; or

                  (i)      a court or governmental authority of competent
         jurisdiction enters an order appointing, without consent by the
         Company, any of its Material Subsidiaries or any Subsidiary Guarantor,
         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, any of its Material Subsidiaries or any
         Subsidiary Guarantor, or any such petition shall be filed against the
         Company, any of its Material Subsidiaries or any Subsidiary Guarantor
         and such petition shall not be dismissed within 90 days; or

                  (j)      a final judgment or judgments at any one time
         outstanding for the payment of money aggregating in excess of
         $5,000,000 are rendered against one or more of the Company, its
         Restricted Subsidiaries or any Subsidiary Guarantor and which judgments

                                     E-1-30
<PAGE>

         are not, within 90 days after entry thereof, bonded, discharged or
         stayed pending appeal, or are not discharged within 90 days after the
         expiration of such stay; or

                  (k)      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 Section 4042 of ERISA to terminate or appoint a
         trustee to administer any Plan or the PBGC shall have notified the
         Company or any ERISA Affiliate that a Plan may become a subject of any
         such proceedings, (iii) the aggregate "amount of unfunded benefit
         liabilities" (within the meaning of Section 4001(a)(18) of ERISA) under
         all Plans, determined in accordance with Title IV of ERISA, shall
         exceed $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 could
         increase the liability of the Company or any Subsidiary thereunder;
         provided that 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 Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA.

SECTION 12. REMEDIES ON DEFAULT, ETC.

         Section 12.1. Acceleration. (a) If an Event of Default with respect to
the Company described in paragraph (h) or (i) of Section 11 (other than an Event
of Default described in clause (i) of paragraph (h) or described in clause (vi)
of paragraph (h) by virtue of the fact that such clause encompasses clause (i)
of paragraph (h)) has occurred, all the Notes of every Series then outstanding
shall automatically become immediately due and payable.

         (b)      If any other Event of Default has occurred and is continuing,
any holder or holders of more than 50% in aggregate principal amount of the
Notes of any Series at the time outstanding may at any time at its or their
option, by notice or notices to the Company, declare all the Notes of such
Series 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 with respect to any Series of Notes,
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 of such Series held by such holder or holders to
be immediately due and payable.

                                     E-1-31
<PAGE>

         Upon any Note's becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (i) all accrued and unpaid
interest thereon and (ii) the Make-Whole Amount or other premium 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 or other premium 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.

         Section 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.

         Section 12.3. Rescission. At any time after any Notes of any Series
have been declared due and payable pursuant to clause (b) or (c) of Section
12.1, the holders of not less than 51% in aggregate principal amount of the
Notes of the affected Series 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 of the affected Series, all
principal of and Make-Whole Amount or premium, if any, on any Notes of the
affected Series 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 or premium, if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes of the affected Series, 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 any 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.

         Section 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

                                     E-1-32
<PAGE>

in any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.

SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

         Section 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.

         Section 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 its 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 not more than 5
Business Days following surrender of such Note, at the Company's expense (except
as provided below), one or more new Notes (as requested by the holder thereof)
of the same Series (and of the same tranche if such Series has separate
tranches) 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 the Note of such Series originally issued hereunder or pursuant to
any Supplement. 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, provided that such holder may (in reliance upon information
provided by the Company, which shall not be unreasonably withheld) make a
representation to the effect that the purchase by such holder of any Note will
not constitute a non-exempt prohibited transaction under Section 406(a) of
ERISA.

         The Notes have not been registered under the Securities Act or under
the securities laws of any state and may not be transferred or resold unless
registered under the Securities Act and all applicable state securities laws or
unless an exemption from the requirement for such registration is available.

         Section 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

                                     E-1-33
<PAGE>

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 not more than five
Business Days following satisfaction of such conditions, in lieu thereof, a new
Note of the same Series (and of the same tranche if such Series has separate
tranches), 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.

SECTION 14. PAYMENTS ON NOTES.

         Section 14.1. Place of Payment. Subject to Section 14.2, payments of
principal, Make-Whole Amount or premium, if any, and interest becoming due and
payable on the Notes shall be made in New York, New York at the principal office
of Bank One, N.A. 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.

         Section 14.2. Home Office Payment. So long as any Purchaser or
Additional Purchaser or such Purchaser's nominee or such Additional Purchaser's
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 or premium, if any,
and interest by the method and at the address specified for such purpose for
such Purchaser on Schedule A hereto or, in the case of any Additional Purchaser,
Schedule A attached to any Supplement pursuant to which such Additional
Purchaser is a party, or by such other method or at such other address as such
Purchaser or Additional Purchaser 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, such Purchaser or Additional
Purchaser 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 any Purchaser
or Additional Purchaser or such Person's nominee, such Person will, at its
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

                                     E-1-34
<PAGE>

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.

SECTION 15. EXPENSES, ETC.

         Section 15.1. Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable costs
and expenses (including reasonable attorneys' fees of one special counsel for
the Purchasers or any Additional Purchasers and, if reasonably required, local
or other counsel) incurred by each Purchaser and each Additional Purchaser and
each other 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 (including any Supplement) 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 (including
any Supplement) or the Notes or in responding to any subpoena or other legal
process or informal investigative demand by any Governmental Authority issued in
connection with this Agreement (including any Supplement) or the Notes, or by
reason of being a holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby and by the Notes. The
Company will pay, and will save each Purchaser, each Additional Purchaser and
each other holder of a Note harmless from, all claims in respect of any
reasonable fees, costs or expenses if any, of brokers and finders (other than
those retained by the Purchasers).

         Section 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, any Supplement or the
Notes, and the termination of this Agreement or any Supplement.

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

         All representations and warranties contained herein or in any
Supplement shall survive the execution and delivery of this Agreement, such
Supplement and the Notes, the purchase or transfer by any Purchaser or any
Additional Purchaser of any such Note or portion thereof or interest therein and
the payment of any Note may be relied upon by any subsequent holder of any such
Note, regardless of any investigation made at any time by or on behalf of any
Purchaser or any Additional Purchaser or any other holder of any such Note. All
statements contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant to this Agreement or any Supplement shall be
deemed representations and warranties of the Company under this Agreement;
provided, that the representations and warranties contained in any Supplement
shall only be made for the benefit of the Additional Purchasers which are party
to such Supplement and the holders of the Notes issued pursuant to such
Supplement, including subsequent holders of any Note issued pursuant to such
Supplement, and shall not require the consent of the holders of existing Notes.
Subject to the preceding sentence, this Agreement (including every Supplement)
and the Notes embody the entire agreement and understanding

                                     E-1-35
<PAGE>

between the Purchasers and the Additional Purchasers and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.

SECTION 17. AMENDMENT AND WAIVER.

         Section 17.1. Requirements. (a) This Agreement (including any
Supplement) 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 (i) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4,
5, 6 or 21 hereof or the corresponding provision of any Supplement, or any
defined term (as it is used in any such Section or such corresponding provision
of any Supplement), will be effective as to any holder of Notes unless consented
to by such holder of Notes in writing, and (ii) no such amendment or waiver may,
without the written consent of all of the holders of Notes at the time
outstanding affected thereby, (A) subject to the provisions of Section 12
relating to acceleration or rescission, 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 or
premium on, the Notes, (B) 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 (C) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

         (b)      Supplements. Notwithstanding anything to the contrary
contained herein, the Company may enter into any Supplement providing for the
issuance of one or more Series of Additional Notes consistent with Sections 2.2
and 4.14 hereof without obtaining the consent of any holder of any other Series
of Notes.

         Section 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, any Supplement 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 such holder of
Notes of any waiver or amendment of any of the terms and provisions hereof or
any Supplement 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.

         Section 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

                                     E-1-36
<PAGE>

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

         Section 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.

SECTION 18. NOTICES.

         All notices and communications provided for hereunder shall be in
writing and sent (a) by telefacsimile 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 a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:

                  (i)      if to a Purchaser or such Purchaser's nominee, to
         such Purchaser or such Purchaser's nominee at the address specified for
         such communications in Schedule A to this Agreement, or at such other
         address as such Purchaser or such Purchaser's nominee shall have
         specified to the Company in writing pursuant to this Section 18;

                  (ii)     if to an Additional Purchaser or such Additional
         Purchaser's nominee, to such Additional Purchaser or such Additional
         Purchaser's nominee at the address specified for such communications in
         Schedule A to any Supplement, or at such other address as such
         Additional Purchaser or such Additional Purchaser's nominee shall have
         specified to the Company in writing,

                  (iii)    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 pursuant to this Section 18, or

                  (iv)     if to the Company, to the Company at its address set
         forth at the beginning hereof to the attention of Chief Financial
         Officer, with a copy to the General Counsel, 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.

                                     E-1-37<PAGE>

                                                                   EXHIBIT 10.38

                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 4th, 2002, by
and between Genesee & Wyoming Inc. (the "Company") and Robert Grossman (the
"Executive").

         The Company desires to employ Executive and to enter into an agreement
embodying the terms of such employment, and Executive desires to accept such
employment with the Company and enter into such an agreement (the "Agreement").

         In consideration of the premises and mutual covenants herein and for
other good and valuable consideration, the parties agree as follows:

         1. Effectiveness: Term of Employment.

                  a. Effectiveness. This Agreement shall constitute a binding
agreement between the parties as of the date hereof (the "Effective Date").

                  b. Term of Employment. Subject to the provisions of Section 7
of this Agreement, Executive shall be employed by the Company for a period
commencing on the Effective Date and ending on the third anniversary of the
Effective Date (the "Employment Term") on the terms and subject to the
conditions set forth in this Agreement.

         2. Position.

                  a. During the Employment Term, Executive shall serve as an
Executive Vice President, Government and Industry Affairs of the Company. In
such position, Executive shall have responsibilities related to federal, state
and local government affairs, securing state and federal funding; maximizing
synergies and facilitating integration of Emons into GWI, but shall not
responsible for managing Emons Transportation Group; overseeing development of
Emons' intermodal terminal in Maine; representing the Company at its industry
association, the ASLRRA; special project assignments, which might include by way
of example, responsibility for the start-up of rail-related businesses and
acquisition work including recommendations, due diligence and integration; and
such additional duties and authority as shall be determined from time to time by
the Board of Directors of the Company (the "Board") and the Chief Executive
Officer of the Company.

                  b. During the Employment Term, Executive will devote
Executive's full business time and best efforts to the performance of
Executive's duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict or
interfere with the rendition of such services either directly or indirectly,
without the prior written consent of the Board; provided, however, that nothing
herein shall preclude Executive, subject to the prior approval of the Board,
from accepting appointment to or continuing to serve on any board of directors
or trustees of any business corporation or any charitable organization;
provided, however, that in each case, and in the aggregate, such activities do
not conflict or interfere with the performance of Executive's duties hereunder
or conflict with Section 8 or 9 of this Agreement.

<PAGE>

         3. Base Salary. During the Employment Term, the Company shall pay
Executive a base salary at the annual rate of $250,000, payable in regular
installments in accordance with the Company's usual payment practices. In
conjunction with an annual performance review process, Executive shall be
entitled to such increases in Executive's base salary, if any, as may be
determined from time to time in the sole discretion of the Board. Executive's
annual base salary, as in effect from time to time, is hereinafter referred to
as the "Base Salary."

         4. Annual Bonus. With respect to each full fiscal year during the
Employment Term, Executive shall be eligible to earn an annual bonus award (an
"Annual Bonus") of up to 50% of Executive's Base Salary (the "Target") based
upon the achievement of performance goals established under the Genesee Value
Added bonus plan consistent with the terms of the plan.

         5. Employee Benefits. During the Employment Term, Executive shall be
entitled to participate in the Company's health, dental and other employee
benefit plans (other than severance pay plans) as in effect from time to time in
accordance with existing Company policy (collectively "Employee Benefits"), on
the same basis as those benefits are generally made available to other senior
executives of the Company. By way of clarification, under the plans as currently
constituted, the Company will pay for group term life insurance coverage of the
Executive in the amount of $165,000, and Executive will be eligible to
participate in the Company's 401(k) Plan as of the first quarter occurring after
the Effective Date, in accordance with the terms of such plan. Executive shall
be entitled to five weeks (25 days) of paid vacation time and 9 paid holidays
annually.

         6. Business Expenses and Perquisites.

                  a. Expenses. During the Employment Term, reasonable business
expenses incurred by Executive in the performance of Executive's duties
hereunder shall be reimbursed by the Company in accordance with Company
policies.

                  b. Perquisites. The Company shall pay Executive an automobile
allowance of $10,000 annually, to be paid in monthly installments on the first
day of each month, for the purpose of enabling Executive to obtain the use of an
automobile for the performance of Executive's duties hereunder. In addition,
reasonable operating expenses of such vehicle will be reimbursed to Executive in
accordance with Company practice.

         7. Termination. The Employment Term and Executive's employment
hereunder may be terminated by the Company at any time and for any reason or by
Executive for Good Reason; provided, however, that Executive will be required to
give the Company at least sixty (60) days advance written notice of any
resignation of Executive's employment. Notwithstanding any other provision of
this Agreement, the provisions of this Section 7 shall exclusively govern
Executive's rights upon termination of employment with the Company and its
affiliates.

                  a. By the Company For Cause or By Executive Resignation
Without Good Reason.

                  (i)      The Employment Term and Executive's employment
                           hereunder may be terminated by the Company for Cause
                           (as defined below) and shall

                                       2
<PAGE>

                           terminate automatically upon Executive's resignation
                           without Good Reason (as defined in Section 7(c)).

                  (ii)     For purposes of this Agreement, "Cause" shall mean
                           (A) Executive's continued failure substantially to
                           perform Executive's duties hereunder (other than as a
                           result of total or partial incapacity due to physical
                           or mental illness) for a period of 10 days following
                           written notice by the Company to Executive of such
                           failure, (B) an act or acts on Executive's part
                           constituting (x) a felony under the laws of the
                           United States or any state thereof excluding traffic
                           or vehicular violations or (y) a misdemeanor
                           involving moral turpitude, (C) Executive's willful
                           malfeasance or willful misconduct in connection with
                           Executive's duties hereunder or any act or omission
                           which is injurious to the financial condition or
                           business reputation of the Company or any of its
                           subsidiaries or affiliates or (D) Executive's breach
                           of the provisions of Sections 8 or 9 of this
                           Agreement.

                  (iii)    If Executive's employment is terminated by the
                           Company for Cause, or if Executive resigns without
                           Good Reason, Executive shall be entitled to receive:

                  (A) the Base Salary through the date of termination;

                  (B) any Annual Bonus earned but unpaid as of the date of
         termination for any previously completed fiscal year;

                  (C) reimbursement for any unreimbursed business expenses
         properly incurred by Executive in accordance with Company policy prior
         to the date of Executive's termination; and

                  (D) such Employee Benefits, if any, as to which Executive may
         be entitled under the employee benefit plans of the Company (the
         amounts described in clauses (A) through (D) hereof being referred to
         as the "Accrued Rights").

         Following such termination of Executive's employment by the Company for
Cause or resignation by Executive without Good Reason, except as set forth in
this Section 7(a)(iii), Executive shall have no further rights to any
compensation or any other benefits under this Agreement.

                  (iv)     Upon notice from the Company to Executive that it is
                           terminating Executive's employment pursuant to a
                           termination for Cause, the Termination Date shall be
                           the date on which such notice is mailed or
                           hand-delivered to Executive, or such other date as
                           specified to Executive in the Notice of Termination
                           as described in Section 7(e) herein.

                  b. Disability or Death.

                  (i)      The Employment Term and Executive's employment
                           hereunder shall terminate upon Executive's death and
                           may be terminated by the Company

                                       3
<PAGE>

                           if Executive becomes physically or mentally
                           incapacitated and is therefore unable for a period of
                           six (6) consecutive months or for an aggregate of
                           nine (9) months in any twenty-four (24) consecutive
                           month period to perform Executive's duties (such
                           incapacity is hereinafter referred to as
                           "Disability"). Any question as to the existence of
                           the Disability of Executive as to which Executive and
                           the Company cannot agree shall be determined in
                           writing by a qualified independent physician mutually
                           acceptable to Executive and the Company. If Executive
                           and the Company cannot agree as to a qualified
                           independent physician, each shall appoint such a
                           physician and those two physicians shall select a
                           third who shall make such determination in writing.
                           The determination of Disability made in writing
                           to the Company and Executive shall be final and
                           conclusive for all purposes of the Agreement.

                  (ii)     Upon termination of Executive's employment hereunder
                           for either Disability or death, Executive or
                           Executive's estate (as the case may be) shall be
                           entitled to receive:

                  (A) the Accrued Rights; and

                  (B) a pro rata portion of any Annual Bonus, if any, that
         Executive would have been entitled to receive pursuant to Section 3
         hereof in such year based upon the Target and the percentage of the
         fiscal year that shall have elapsed through the date of Executive's
         termination of employment, payable when such Annual Bonus would have
         otherwise been payable had Executive's employment not terminated.

         Following Executive's termination of employment due to death or
Disability, except as set forth in this Section 7(b)(ii), Executive shall have
no further rights to any compensation or any other benefits under this
Agreement, except for payments under any disability insurance policy maintained
by the Company.

                  c. By the Company Without Cause or Resignation by Executive
for Good Reason.

                  (i)      The Employment Term and Executive's employment
                           hereunder may be terminated by the Company without
                           Cause or by Executive's resignation for Good Reason.

                  (ii)     For purposes of this Agreement, "Good Reason" shall
                           mean (A) the failure of the Company to pay or cause
                           to be paid Executive's Base Salary or Annual Bonus,
                           when due hereunder, or (B) any substantial and
                           sustained diminution in Executive's duties or
                           responsibilities from those described in Section 2
                           hereof; provided, however, that either of the events
                           described in clauses (A) and (B) of this Section
                           7(c)(ii) shall constitute Good Reason only if the
                           Company fails to cure such event within 30 days after
                           receipt from Executive of written notice of the event
                           which constitutes Good Reason; provided, further,
                           that "Good Reason" shall cease to exist for an

                                       4
<PAGE>

                           event on the 50th day following the later of its
                           occurrence or Executive's knowledge thereof, unless
                           Executive has given the Company written notice
                           thereof prior to such date.

                  (iii)    If Executive's employment is terminated by the
                           Company without Cause (other than by reason of death
                           or Disability) or if Executive resigns for Good
                           Reason during the Employment Term, Executive shall be
                           entitled to receive:

                  (A) the Accrued Rights; and

                  (B) Subject to Executive's continued compliance with the
         provisions of Sections 8 and 9, continued payment of the Base Salary
         and Employee Benefits until the expiration of the Employment Term
         determined as if such termination had not occurred; provided that the
         aggregate amount described in this clause (B) shall be reduced by the
         present value of any other cash severance or termination benefits
         payable to Executive under any other plans, programs or arrangements of
         the Company or its affiliates.

         Following Executive's termination of employment by the Company without
Cause (other than by reason of Executive's death or Disability) or by
Executive's resignation for Good Reason, except as set forth in this
Section7(c)(iii), Executive shall have no further rights to any compensation or
any other benefits under this Agreement.

                  d. Expiration of Employment Term. Unless the parties otherwise
agree in writing, continuation of Executive's employment with the Company beyond
the expiration of the Employment Term shall be deemed an employment at-will and
shall not be deemed to extend any of the provisions of this Agreement, and
Executive's employment may thereafter be terminated at will by either Executive
or the Company; provided, however, that the provisions of Sections 8, 9 and 10
of this Agreement shall survive any termination of this Agreement or Executive's
termination of employment hereunder.

                  e. Notice of Termination. Any purported termination of
employment by the Company or by Executive (other than due to Executive's death)
shall be communicated by written Notice of Termination to the other party hereto
in accordance with Section 11(h) hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated.

                  f. Board/Committee Resignation. Upon termination of
Executive's employment for any reason, Executive agrees to resign, as of the
date of such termination and to the extent applicable, from the Board (and any
committees thereof) and the Board of Directors (and any committees thereof) of
any of the Company's affiliates.

         8. Non-Competition

                  a. Executive acknowledges and recognizes the highly
competitive nature of the businesses of the Company and its affiliates and
accordingly agrees as follows:

                                       5
<PAGE>

         (1) During the Employment Term and, for a period of one year following
the end of the Employment Term if the Executive ceases to be employed by the
Company (the "Restricted Period"), Executive will not, whether on Executive's
own behalf or on behalf of or in conjunction with any person, company, business
entity or other organization whatsoever, directly or indirectly solicit or
assist in soliciting in competition with the Company, the business of any
existing or prospective customer, supplier, licensee or other business relation
of the Company or any subsidiary or affiliate:

                  (i)      with whom Executive had personal contact or dealings
                           on behalf of the Company during the one year period
                           preceding Executive's termination of employment;

                  (ii)     with whom employees reporting to Executive have had
                           personal contact or dealings on behalf of the Company
                           during the one year immediately preceding the
                           Executive's termination of employment; or

                  (iii)    for whom Executive had direct or indirect
                           responsibility during the one year immediately
                           preceding Executive's termination of employment.

         (2) During the Restricted Period, Executive will not directly or
indirectly, without the prior written consent of the Company:

                  (i)      engage in any business that competes with the
                           business of the Company or its subsidiaries or
                           affiliates (including, without limitation, businesses
                           which the Company or its affiliates have specific
                           plans to conduct in the future and as to which
                           Executive is aware of such planning) in any
                           geographical area that is within 100 miles of any
                           geographical area where the Company or its affiliates
                           manufactures, produces, sells, leases, rents,
                           licenses or otherwise provides its products or
                           services (a "Competitive Business");

                  (ii)     enter the employ of, or render any services to, any
                           person or entity (or any division of any person or
                           entity) who or which engages in a Competitive
                           Business;

                  (iii)    acquire a financial interest in, or otherwise become
                           actively involved with, any Competitive Business,
                           directly or indirectly, as an individual, partner,
                           shareholder, officer, director, principal, agent,
                           trustee or consultant; or

                  (iv)     interfere with, or attempt to interfere with,
                           business relationships (whether formed before, on or
                           after the date of this Agreement) between the Company
                           or any of its affiliates and customers, clients, or
                           suppliers of the Company or its affiliates.

         (3) Notwithstanding anything to the contrary in this Agreement,
Executive may, directly or indirectly own, solely as an investment, securities
of any person or entity engaged in the business of the Company or its affiliates
which are publicly traded on a national or regional stock exchange or on the
over-the-counter market if Executive (i) is not a controlling person of, or a

                                       6
<PAGE>

member of a group which controls, such person or entity and (ii) does not,
directly or indirectly, own 5% or more of any class of securities of such person
or entity.

         (4) During the Restricted Period, Executive will not, whether on
Executive's own behalf or on behalf of or in conjunction with any person,
company, business entity or other organization whatsoever, directly or
indirectly:

                  (i)      solicit or encourage any employee of the Company or
                           its affiliates to leave the employment of the Company
                           or its affiliates; or

                  (ii)     hire any such employee who was employed by the
                           Company or its affiliates as of the date of
                           Executive's termination of employment with the
                           Company or who left the employment of the Company or
                           its affiliates coincident with, or within one year
                           prior to or after, the termination of Executive's
                           employment with the Company.

         (5) During the Restricted Period, Executive will not, directly or
indirectly, solicit or encourage to cease to work with the Company or its
affiliates any consultant then under contract with the Company or its
affiliates.

                  b. It is expressly understood and agreed that although
Executive and the Company consider the restrictions contained in this Section 8
to be reasonable, if a final judicial determination is made by a court of
competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is an unenforceable restriction against Executive,
the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable.
Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this Agreement is unenforceable, and such restriction cannot be
amended so as to make it enforceable, such finding shall not affect the
enforceability of any of the other restrictions contained herein.

         9. Confidentiality. Executive will not at any time (whether during or
after Executive's employment with the Company) disclose, retain, or use for
Executive's own benefit, purposes or account or the benefit, purposes or account
of any other person, firm, partnership, joint venture, association, corporation
or other business organization, entity or enterprise other than the Company and
any of its subsidiaries or affiliates, any trade secrets, know-how, software
developments, inventions, formulae, technology, designs and drawings, or any
Company property or confidential information relating to research, operations,
finances, current and proposed products and services, vendors, customers,
advertising, costs, marketing, trading, investment, sales activities, promotion,
manufacturing processes, or the business and affairs of the Company generally,
or of any subsidiary or affiliate of the Company ("Confidential Information")
without the written authorization of the Board; provided that the foregoing
shall not apply to information which is not unique to the Company or which is
generally known to the industry or the public other than as a result of
Executive's breach of this covenant or the wrongful acts of others who were
under confidentiality obligations as to the item or items involved. Executive
agrees that upon termination of Executive's employment with the Company for any
reason, Executive will return to the Company immediately all memoranda, books,

                                       7
<PAGE>

papers, plans, information, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of the Company, its affiliates
and subsidiaries, except that Executive may retain only those portions of
personal notes, notebooks and diaries that do not contain Confidential
Information of the type described in the preceding sentence. Executive further
agrees that Executive will not retain or use for Executive's own benefit,
purposes or account or the benefit, purposes or account of any other person,
firm, partnership, joint venture, association, corporation or other business
designation, entity or enterprise, other than the Company and any of its
subsidiaries or affiliates, at any time any trade names, trademark, service
mark, other proprietary business designation, patent, or other intellectual
property used or owned in connection with the business of the Company or its
affiliates.

         10. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Section 8 or Section 9 would be inadequate and the Company would
suffer irreparable damages as a result of such breach or threatened breach. In
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to cease making any payments or providing
any benefit otherwise required by this Agreement and obtain equitable relief in
the form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.

         11. Miscellaneous

                  a. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principles thereof.

                  b. Arbitration. Any controversy arising out of or relating to
this Agreement shall be settled by binding arbitration in Greenwich, Connecticut
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration shall be held before a single experienced
employment law arbitrator licensed to practice law in Connecticut and selected
in accordance with the Employment Dispute Resolution Rules of the American
Arbitration Association. The award rendered in any such proceeding shall be
final and binding, and judgment upon the award may be entered in any court
having jurisdiction thereof. The costs of any such arbitration proceedings shall
be borne equally by the Company and Executive. Neither party shall be entitled
to recover attorneys' fee or costs expended in the course of such arbitration or
enforcement of the award rendered thereunder.

                  c. Entire Agreement/Amendments. This Agreement contains the
entire understanding of the parties with respect to the employment of Executive
by the Company. There are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to the subject matter
herein other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties
hereto.

                  d. No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive

                                       8
<PAGE>

such party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement.

                  e. Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.

                  f. Assignment. This Agreement shall not be assignable by
Executive. This Agreement may be assigned by the Company to a person or entity
which is an affiliate or a successor in interest to substantially all of the
business operations of the Company. Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of
such affiliate or successor person or entity.

                  g. Successors; Binding Agreement. This Agreement shall inure
to the benefit of and be binding upon personal or legal representatives,
executors, administrators, successors, heirs, distributes, devises and legatees.

                  h. Notice. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below Agreement, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.

         If to the Company:

         Genesee & Wyoming Inc.
         66 Field Point Road
         Greenwich, Connecticut 06930

         Attention: Mortimer B. Fuller, III

         If to Executive:

         To the most recent address of Executive set forth in the personnel
records of the Company.

                  i. Executive Representation. Executive hereby represents to
the Company that the execution and delivery of this Agreement by Executive and
the Company and the performance by Executive of Executive's duties hereunder
shall not constitute a breach of, or otherwise contravene, the terms of any
employment agreement or other agreement or policy to which Executive is a party
or otherwise bound.

                  j. Prior Agreements. This Agreement supersedes all prior
agreements and understandings (including verbal agreements) between Executive
and the Company or its

                                       9
<PAGE>

affiliates regarding the terms and conditions of Executive's employment with the
Company or its affiliates (collectively, the "Prior Agreements") .

                  k. Set Off. The Company's obligation to pay Executive the
amounts provided and to make the arrangements provided hereunder shall be
subject to set-off, counterclaim or recoupment of amounts owed by Executive to
the Company or its affiliates.

                  l. Cooperation. Executive shall provide Executive's reasonable
cooperation in connection with any action or proceeding (or any appeal from any
action or proceeding) which relates to events occurring during Executive's
employment hereunder. This provision shall survive any termination of this
Agreement.

                  m. Withholding Taxes. The Company may withhold from any
amounts payable under this Agreement such Federal, state and local taxes as may
be required to be withheld pursuant to any applicable law or regulation.

                  n. Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

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

                                     GENESEE & WYOMING INC.

                                     By: /s/ Mortimer B. Fuller, III
                                         ---------------------------------------
                                             Mortimer B. Fuller, III
                                             Chairman and CEO

                                         /s/  Robert Grossman
                                         ---------------------------------------
                                         Robert Grosman

                                       10

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