NOTE PURCHASE AGREEMENT

Note Purchase Agreement

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EVANS BOB FARMS INC | BEF Holding Co., Inc.

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Title: NOTE PURCHASE AGREEMENT
Governing Law: New York Date: 7/29/2004
Industry: Restaurants Sector: Services

NOTE PURCHASE AGREEMENT, Parties: evans bob farms inc , bef holding co. inc.

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EXHIBIT 4(a)

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BOB EVANS FARMS, INC.

AND

BEF Holding Co., Inc.

$30,000,000 3.74% Senior Notes, Series A,

Due July 28, 2007

$40,000,000 4.61% Senior Notes, Series B,

Due July 28, 2010

$95,000,000 5.12% Senior Notes, Series C,

Due July 28, 2014

$25,000,000 5.67% Senior Notes, Series D,

Due July 28, 2016

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NOTE PURCHASE AGREEMENT

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DATED AS OF JULY 28, 2004

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TABLE OF CONTENTS

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SECTION HEADING PAGE

SECTION 1. AUTHORIZATION OF NOTES.............................................. 1

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

Section 2.1. Notes............................................................... 2

Section 2.2. Guaranty............................................................ 2

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

SECTION 4. CONDITIONS TO CLOSING............................................... 3

Section 4.1. Representations and Warranties...................................... 3

Section 4.2. Performance; No Default............................................. 3

Section 4.3. Compliance Certificates............................................. 3

Section 4.4. Opinions of Counsel................................................. 3

Section 4.5. Purchase Permitted by Applicable Law, Etc........................... 4

Section 4.6. Related Transactions................................................ 4

Section 4.7. Payment of Special Counsel Fees..................................... 4

Section 4.8. Private Placement Number............................................ 4

Section 4.9. Changes in Corporate Structure...................................... 4

Section 4.10. Subsidiary Guaranty................................................. 4

Section 4.11. Proceedings and Documents........................................... 4

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

Section 5.1. Organization; Power and Authority................................... 5

Section 5.2. Authorization, Etc.................................................. 5

Section 5.3. Disclosure.......................................................... 5

Section 5.4. Organization and Ownership of Shares of Subsidiaries................ 5

Section 5.5. Financial Statements................................................ 6

Section 5.6. Compliance with Laws, Other Instruments, Etc........................ 6

Section 5.7. Governmental Authorizations, Etc.................................... 6

Section 5.8. Litigation; Observance of Statutes and Orders....................... 7

Section 5.9. Taxes............................................................... 7

Section 5.10. Title to Property; Leases........................................... 7

Section 5.11. Licenses, Permits, Etc.............................................. 7

Section 5.12. Compliance with ERISA............................................... 7

Section 5.13. Private Offering by the Company and the Issuer...................... 8

Section 5.14. Use of Proceeds; Margin Regulations................................. 8

Section 5.15. Existing Indebtedness............................................... 9

Section 5.16. Foreign Assets Control Regulations, Etc............................. 9

Section 5.17. Status under Certain Statutes....................................... 9

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Section 5.18. Environmental....................................................... 9

SECTION 6. REPRESENTATIONS OF THE PURCHASER.................................... 10

Section 6.1. Purchase for Investment............................................. 10

Section 6.2. Source of Funds..................................................... 10

SECTION 7. INFORMATION AS TO COMPANY........................................... 12

Section 7.1. Financial and Business Information.................................. 12

Section 7.2. Officer's Certificate............................................... 14

Section 7.3. Inspection.......................................................... 14

SECTION 8. PAYMENT OF THE NOTES................................................ 15

Section 8.1. Required Prepayments................................................ 15

Section 8.2. Optional Prepayments with Make-Whole Amount......................... 16

Section 8.3. Maturity; Surrender, etc............................................ 18

Section 8.4. Purchase of Notes................................................... 18

Section 8.5. Change in Control................................................... 18

SECTION 9. AFFIRMATIVE COVENANTS............................................... 20

Section 9.1. Compliance with Law................................................. 20

Section 9.2. Insurance........................................................... 20

Section 9.3. Maintenance of Properties........................................... 20

Section 9.4. Payment of Taxes.................................................... 21

Section 9.5. Corporate Existence, Etc............................................ 21

Section 9.6. Ownership of Issuer................................................. 21

SECTION 10. NEGATIVE COVENANTS.................................................. 21

Section 10.1. Consolidated Net Worth.............................................. 21

Section 10.2. Consolidated Fixed Charge Coverage Ratio............................ 21

Section 10.3. Limitation on Indebtedness.......................................... 21

Section 10.4. Limitation on Liens................................................. 22

Section 10.5. Sales of Asset...................................................... 23

Section 10.6. Merger, Consolidation............................................... 24

Section 10.7. Limitation on Sale and Leasebacks................................... 25

Section 10.8. Restrictions on Subsidiaries........................................ 25

Section 10.9. Nature of Business.................................................. 25

Section 10.10. Transactions with Affiliates........................................ 26

SECTION 11. GUARANTY BY THE COMPANY............................................. 26

Section 11.1. Guaranty by the Company............................................. 26

Section 11.2. Guaranty of Payment and Performance................................. 26

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Section 11.3. General Provisions Relating to Guaranty by the Company of

the Issuer's Obligations under this Agreement and the Notes....... 27

SECTION 12. EVENTS OF DEFAULT................................................... 31

SECTION 13. REMEDIES ON DEFAULT, ETC............................................ 33

Section 13.1. Acceleration........................................................ 33

Section 13.2. Other Remedies...................................................... 34

Section 13.3. Rescission.......................................................... 34

Section 13.4. No Waivers or Election of Remedies, Expenses, Etc................... 34

SECTION 14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES....................... 35

Section 14.1. Registration of Notes............................................... 35

Section 14.2. Transfer and Exchange of Notes...................................... 35

Section 14.3. Replacement of Notes................................................ 36

SECTION 15. PAYMENTS ON NOTES................................................... 36

Section 15.1. Place of Payment.................................................... 36

Section 15.2. Home Office Payment................................................. 36

SECTION 16. EXPENSES, ETC....................................................... 37

Section 16.1. Transaction Expenses................................................ 37

Section 16.2. Survival............................................................ 37

SECTION 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT........ 37

SECTION 18. AMENDMENT AND WAIVER................................................ 38

Section 18.1. Requirements........................................................ 38

Section 18.2. Solicitation of Holders of Notes.................................... 38

Section 18.3. Binding Effect, Etc................................................. 38

Section 18.4. Notes Held by Company, Etc.......................................... 39

SECTION 19. NOTICES............................................................. 39

SECTION 20. REPRODUCTION OF DOCUMENTS........................................... 39

SECTION 21. CONFIDENTIAL INFORMATION............................................ 40

SECTION 22. SUBSTITUTION OF PURCHASER........................................... 41

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SECTION 23. MISCELLANEOUS....................................................... 41

Section 23.1. Successors and Assigns.............................................. 41

Section 23.2. Payments Due on Non-Business Days................................... 41

Section 23.3. Severability........................................................ 41

Section 23.4. Construction........................................................ 41

Section 23.5. Counterparts........................................................ 41

Section 23.6. Governing Law....................................................... 42

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SCHEDULE A -- INFORMATION RELATING TO PURCHASERS

SCHEDULE B -- DEFINED TERMS

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

SCHEDULE 5.5 -- Financial Statements

SCHEDULE 5.8 -- Litigation; Observance of Statutes and Orders

SCHEDULE 5.11 -- Licenses, Permits, Etc.

SCHEDULE 5.15 -- Existing Indebtedness

SCHEDULE 10.4 -- Existing Liens

EXHIBIT 1(a) -- Form of 3.74% Senior Note, Series A due July 28, 2007

EXHIBIT 1(b) -- Form of 4.61% Senior Note, Series B due July 28, 2010

EXHIBIT 1(c) -- Form of 5.12% Senior Note, Series C, due July 28, 2014

EXHIBIT 1(d) -- Form of 5.67% Senior Note, Series D, due July 28, 2016

EXHIBIT 2.2 -- Form of Subsidiary Guaranty.

EXHIBIT 4.4(a) -- Form of Opinion of Vorys, Sater, Seymour and Pease LLP, Special

Counsel to the Company and the Issuer

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

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BOB EVANS FARMS, INC.

3776 S. HIGH STREET

COLUMBUS, OHIO 43207

AND

BEF HOLDING CO., INC.

C/O BOB EVANS FARMS, INC.

1105 N. MARKET STREET

WILMINGTON, DELAWARE 19899

$30,000,000 3.74% SENIOR NOTES, SERIES A,

DUE JULY 28, 2007

$40,000,000 4.61% SENIOR NOTES, SERIES B,

DUE JULY 28, 2010

$95,000,000 5.12% SENIOR NOTES, SERIES C,

DUE JULY 28, 2014

$25,000,000 5.67% SENIOR NOTES, SERIES D,

DUE JULY 28, 2016

Dated as of

July 28, 2004

TO THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

BOB EVANS FARMS, INC., a Delaware corporation (the "Company"), and BEF

HOLDING CO., INC., a Delaware corporation (the "Issuer"), hereby jointly and

severally agree with you as follows:

SECTION 1. AUTHORIZATION OF NOTES.

The Issuer will authorize the issue and sale of (i) $30,000,000 aggregate

principal amount of its 3.74% Senior Notes, Series A, due July 28, 2007 (the

"Series A Notes"), (ii) $40,000,000 aggregate principal amount of its 4.61%

Senior Notes, Series B, due July 28, 2010 (the "Series B Notes"), (iii)

$95,000,000 aggregate principal amount of its 5.12% Senior Notes, Series C, due

July 28, 2014 (the "Series C Notes"), and (iv) $25,000,000 aggregate principal

amount of its 5.67% Senior Notes, Series D, due July 28, 2016 (the "Series D

Notes," and together with the Series A Notes, the Series B Notes and the Series

C Notes, the "Notes"). The term "Notes" shall also include any such notes issued

in substitution therefore pursuant to Section 14 of this Agreement. The Series A

Notes, the Series B Notes, the Series C Notes and the Series D Notes shall be

substantially in the forms set out in Exhibit 1(a), Exhibit 1(b), Exhibit 1(c)

and Exhibit

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1(d), respectively, with such changes therefrom, if any, as may be approved by

each Purchaser and the Issuer. 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 Exhibit attached to this Agreement.

SECTION 2. SALE AND PURCHASE OF NOTES.

Section 2.1. Notes. Subject to the terms and conditions of this Agreement,

the Issuer will issue and sell to each Purchaser and each Purchaser will

purchase from the Issuer, at the Closing provided for in Section 3, 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. Guaranty. The payment by the Issuer of all amounts due with

respect to the Notes and the performance by the Issuer of its obligations under

this Agreement will be absolutely and unconditionally guaranteed by the Company

pursuant to the terms and provisions of Section 11 of this Agreement and by the

Subsidiary Guarantor pursuant to the Subsidiary Guaranty Agreement (as amended,

restated, joined, supplemented or otherwise modified from time to time, the

"Subsidiary Guaranty"), which shall be in substantially the form attached hereto

as Exhibit 2.2.

SECTION 3. CLOSING.

The sale and purchase of the Notes to be purchased by each Purchaser shall

occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago,

Illinois 60603, at 10:00 a.m., Chicago time, at a closing (the "Closing") on

July 28, 2004 or on such other Business Day thereafter on or prior to July 30,

2004 as may be agreed upon by the Company, the Issuer and the Purchasers. At the

Closing the Issuer will deliver to each Purchaser the Notes to be purchased by

such Purchaser in the form of a single Note (or such greater number of Notes in

denominations of at least $100,000 as such Purchaser may reasonably request)

dated the date of the Closing and registered in such Purchaser's name (or in the

name of a nominee of such Purchaser), against delivery by such Purchaser to the

Issuer 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 Issuer to Account Number 22657-0, Account Name BEF Holding Co., Inc., at

Wilmington Trust Company, Wilmington, Delaware, ABA Number 031100092. If at the

Closing the Issuer 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.

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SECTION 4. CONDITIONS TO CLOSING.

The obligation of each Purchaser to purchase and pay for the 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 of the Company and the Issuer.

(a) The representations and warranties of the Company in this Agreement shall be

correct when made and at the time of Closing.

(b) The representations and warranties of the Issuer in this Agreement

shall be correct when made and at the time of Closing.

Section 4.2. Performance; No Default. The Company and the Issuer shall

have performed and complied with all agreements and conditions contained in this

Agreement required to be performed or complied with by the Company and the

Issuer prior to or at the Closing, and after giving effect to the issue and sale

of the Notes (and the application of the proceeds thereof as contemplated by

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 had such Section 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 this Agreement.

delivered to such Purchaser an Officer's Certificate, dated the date of

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 Issuer. The Issuer 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 Notes and this Agreement.

Section 4.4. Opinions of Counsel. Such Purchaser shall have received

opinions addressed to such Purchaser, dated the date of the Closing (a) from

Vorys, Sater, Seymour and Pease LLP, special counsel to the Company and the

Issuer, substantially in the form attached as Exhibit 4.4(a) (and the Company

and the Issuer hereby instruct their counsel to deliver such

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opinion to such Purchaser), and (b) from Chapman and Cutler LLP, the Purchasers'

special counsel in connection with such transactions, substantially in the form

set forth in Exhibit 4.4(b).

Section 4.5. Purchase Permitted by Applicable Law, Etc. On the date of

Closing each purchase of 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 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 Issuer shall have consummated the

sale of the entire principal amount of the Notes scheduled to be sold at the

Closing pursuant to this Agreement.

Section 4.7. Payment of Special Counsel Fees. Without limiting the

provisions of Section 16.1, the Company and the Issuer shall have paid on or

before the Closing, the reasonable fees, charges and 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 Notes.

Section 4.9. Changes in Corporate Structure. Neither the Company nor the

Issuer shall have changed its jurisdiction of organization or been a party to

any merger or consolidation and 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 the Subsidiary Guarantor, shall

constitute the legal, valid and binding contract and agreement of the Subsidiary

Guarantor 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) and such Purchaser shall have received a true,

correct and complete copy thereof.

Section 4.11. Proceedings and Documents. All corporate and other

proceedings in connection with the transactions contemplated by this Agreement

and all documents and instruments incident to such transactions shall be

reasonably satisfactory to such Purchaser and

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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 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE ISSUER.

The Company and the Issuer jointly and severally represent and warrant to

each Purchaser that:

Section 5.1. Organization; Power and Authority. Each of the Company and

the Issuer is a corporation duly organized, validly existing and in good

standing under the laws of its jurisdiction of organization, and is duly

qualified as a foreign corporation or other legal entity and is in good standing

in each jurisdiction in which such qualification is required by law, other than

those jurisdictions as to which the failure to be so qualified or in good

standing could not, individually or in the aggregate, reasonably be expected to

have a Material Adverse Effect. Each of the Company and the Issuer has the

corporate or other organizational 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, as the case may be, and to perform the provisions hereof and thereof.

Section 5.2. Authorization, Etc. This Agreement and the Notes have been

duly authorized by all necessary corporate or other organizational action on the

part of the Company and the Issuer, as the case may be, and this Agreement

constitutes, and upon execution and delivery thereof each Note will constitute,

a legal, valid and binding obligation of the Company enforceable against the

Company and of the Issuer enforceable against the Issuer, as the case may be, 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 Issuer, through its agent, NatCity

Investments, Inc., has delivered to each Purchaser a copy of a Confidential

Information Memorandum and Confidential Supplemental Information Memorandum,

both dated June, 2004 (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 Subsidiaries. This Agreement and the Memorandum, 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 are made. Except as disclosed in the Memorandum,

or in one of the documents, certificates or other writings identified therein,

or in the financial statements listed in Schedule 5.5, since April 30, 2004,

there has been no change in the financial condition, operations, business or

properties of the Company or any of its Subsidiaries except changes that

individually or in the aggregate would not reasonably be expected to have a

Material Adverse Effect.

Section 5.4. Organization and Ownership of Shares of Subsidiaries. (a)

Schedule 5.4 contains (except as noted therein) a complete and correct list of

the Company's Subsidiaries,

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showing, as to each such 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.

(b) All of the outstanding shares of capital stock or similar equity

interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company

and its Subsidiaries have been validly issued, are fully paid and nonassessable

and are owned by the Company or another Subsidiary free and clear of any Lien

(except as otherwise disclosed in Schedule 5.4).

legal entity duly organized, validly existing and in good standing under the

laws of its jurisdiction of organization, and is duly qualified as a foreign

corporation or other legal entity and is in good standing in each jurisdiction

in which such qualification is required by law, other than those jurisdictions

as to which the failure to be so qualified or in good standing would not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect. Each such 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.

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 Schedule and the consolidated results of

their operations and cash flows for the respective periods so specified and have

been prepared in accordance with GAAP consistently applied throughout the

periods involved except as set forth in the notes thereto (subject, in the case

of any interim financial statements, to normal year-end adjustments).

Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,

delivery and performance by the Company and the Issuer, as the case may be, of

this Agreement and the Notes will not (i) contravene, result in any breach of,

or constitute a default under, or result in the creation of any Lien in respect

of any property of the Company or any Subsidiary under, any indenture, mortgage,

deed of trust, loan, purchase or credit agreement, lease, corporate charter or

by-laws, or any other Material agreement or instrument to which the Company or

any Subsidiary is bound or by which the Company or any Subsidiary or any of

their respective properties may be bound or affected, (ii) conflict with or

result in a breach of any of the terms, conditions or provisions of any order,

judgment, decree, or ruling of any court, arbitrator or Governmental Authority

applicable to the Company or any Subsidiary, or (iii) violate any provision of

any statute or other rule or regulation of any Governmental Authority applicable

to the Company or any Subsidiary.

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 and the Issuer, as the case may be, of this Agreement or the

Notes.

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Section 5.8. Litigation; Observance of Statutes and Orders. (a) Except as

disclosed in Schedule 5.8, there are no actions, suits or proceedings pending

or, to the knowledge of the Company or the Issuer, threatened against or

affecting the Company, the Issuer or any Subsidiary or any property of the

Company, the Issuer or any Subsidiary in any court or before any arbitrator of

any kind or before or by any Governmental Authority that, individually or in the

aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) Neither the Company nor any Subsidiary is in default under any order,

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, would reasonably be

expected to have a Material Adverse Effect.

Section 5.9. Taxes. The Company and its Subsidiaries have filed all income

tax returns that are required to have been filed in any jurisdiction, and have

paid all taxes shown to be due and payable on such returns and all other taxes

and assessments payable by them, to the extent such taxes and assessments have

become due and payable and before they have become delinquent, except for any

taxes and assessments (i) the amount of which is not individually or in the

aggregate Material or (ii) the amount, applicability or validity of which is

currently being contested in good faith by appropriate proceedings and with

respect to which the Company or a Subsidiary, as the case may be, has

established adequate reserves in accordance with GAAP. The federal income tax

liabilities of the Company and its Subsidiaries have been determined by the

Internal Revenue Service and paid for all fiscal years up to and including the

fiscal year ended April 30, 1999.

Section 5.10. Title to Property; Leases. The Company and its Subsidiaries

have good and sufficient title to their respective Material properties,

including all such properties reflected in the most recent audited balance sheet

referred to in Section 5.5 or purported to have been acquired by the Company or

any Subsidiary after said date (except as sold or otherwise disposed of in the

ordinary course of business), in each case free and clear of Liens prohibited by

this Agreement, except for those defects in title and Liens that, individually

or in the aggregate, would not have a Material Adverse Effect. All Material

leases are valid and subsisting and are in full force and effect in all material

respects.

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

5.11, the Company and its Subsidiaries own or possess all licenses, permits,

franchises, authorizations, patents, copyrights, service marks, trademarks and

trade names, or rights thereto, that are Material, without known conflict with

the rights of others except for those conflicts, that, individually or in the

aggregate, would not have a Material Adverse Effect.

Section 5.12. Compliance with ERISA. (a) The Company, the Issuer 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 the Issuer 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 any Plan, and no event, transaction or

condition has occurred

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or exists that would reasonably be expected to result in the incurrence of any

such liability by the Company, the Issuer or any ERISA Affiliate, or in the

imposition of any Lien on any of the rights, properties or assets of the

Company, the Issuer 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. 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.

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 and the Issuer, as the case may be, 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.

Section 5.13. Private Offering by the Company and the Issuer. Neither the

Company nor the Issuer nor anyone acting on its or their behalf has offered the

Notes or any similar securities for sale to, or solicited any offer to buy any

of the same from, or otherwise approached or negotiated in respect thereof with,

any Person other than the Purchasers and not more than thirty-six (36) other

Institutional Investors, each of which has been offered the Notes at a private

sale for investment. Neither the Company nor the Issuer nor anyone acting on its

or their behalf has taken, or will take, any action that would subject the

issuance or sale of the Notes to the registration requirements of Section 5 of

the Securities Act.

Section 5.14. Use of Proceeds; Margin Regulations. The Issuer will apply

the proceeds from the sale of the Notes to pay all amounts outstanding under the

Credit Agreement, which amounts were incurred to finance the acquisition of all

of the Stock of SWH Corporation, a California corporation by the Subsidiary

Guarantor and to pay related fees and costs associated therewith, and for

general corporate purposes. No part of the proceeds from the sale of the Notes

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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 Issuer 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 Indebtedness. Except as described therein, Schedule

5.15 sets forth a complete and correct list of all outstanding Indebtedness of

the Company and its Subsidiaries as of July 8, 2004, since which date there has

been no Material change in the amounts (except for prepayment thereof), interest

rates, sinking funds, installment payments or maturities of such Indebtedness.

Neither the Company nor any Subsidiary is in default and no waiver of default is

currently in effect, in the payment of any principal or interest on any

Indebtedness of the Company or such Subsidiary and no event or condition exists

with respect to any Indebtedness of the Company or any Subsidiary that would

permit (or that with notice or the lapse of time, or both, would permit) one or

more Persons to cause such Indebtedness to become due and payable before its

stated maturity or before its regularly scheduled dates of payment.

Section 5.16. Foreign Assets Control Regulations, Etc. Neither the sale of

the Notes by the Issuer hereunder nor its use of the proceeds thereof will

violate the Trading with the Enemy Act, as amended, or any of the foreign assets

control regulations of the United States Treasury Department (31 CFR, Subtitle

B, Chapter V, as amended) or any enabling legislation or executive order

relating thereto 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

Subsidiary is subject to regulation 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. Neither the Company nor any Subsidiary has

knowledge of any claim or has received any notice of any claim, and no

proceeding has been instituted raising any claim against the Company or any of

its Subsidiaries or any of their respective real properties now or formerly

within the past 20 years owned, leased or operated by any of them or other

assets, alleging any damage to the environment or violation of any Environmental

Laws, except, in each case, such as could not reasonably be expected to result

in a Material Adverse Effect. Except as otherwise disclosed to you in writing,

(a) neither the Company nor any Subsidiary has knowledge of any

facts which would give rise to any claim, public or private, of violation

of Environmental Laws

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emanating from, occurring on or in any way related to real properties now

or formerly owned, leased or operated by any of them or to other assets or

their use, except, in each case, such as could not reasonably be expected

to result in a Material Adverse Effect;

(b) to the knowledge of Company and each Subsidiary neither the

Company nor any of its Subsidiaries has stored any Hazardous Materials on

real properties now or formerly owned, leased or operated by any of them

in a manner contrary to any Environmental Laws and has not disposed of any

Hazardous Materials in a manner contrary to any Environmental Laws, in

each case in any manner that could reasonably be expected to result in a

Material Adverse Effect; and

operated by the Company or any of its Subsidiaries are in compliance with

applicable Environmental Laws, except where failure to comply could not

reasonably be expected to result in a Material Adverse Effect.

SECTION 6. REPRESENTATIONS OF THE PURCHASER.

Section 6.1. Purchase for Investment. Each Purchaser represents that it is

purchasing the 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 Notes have not been registered under the Securities Act or

under the securities laws of any state and may be transferred or resold only if

registered pursuant to the provisions of the Securities Act and any applicable

state securities laws 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 Issuer is not required to register the 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 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

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as such Purchaser prior to the execution and delivery of this Agreement

has disclosed to the Issuer 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;

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 Issuer 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 Issuer 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) 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 Issuer in writing pursuant to this paragraph (e);

(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 subsequent transferee of the Notes indicates that such

Purchaser or such transferee is relying on any representation contained in

paragraph (b), (c) or (e) above, the Issuer 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

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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 45 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,

(ii) consolidated statements of income 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, and

(iii) consolidated statements of cash flows of the Company and

its Subsidiaries for the portion of the fiscal year ending with such

quarter,

setting forth in each case in comparative form the figures for the

corresponding periods in the previous fiscal year, all in reasonable

detail, prepared in accordance with GAAP applicable to quarterly financial

statements generally, and certified by a Senior Financial Officer as

fairly presenting, in all material respects, the financial position of the

companies being reported on and their results of operations and cash

flows, subject to changes resulting from year-end adjustments, provided

that delivery within the time period specified above of copies of the

Company's Quarterly Report on Form 10-Q prepared in compliance with the

requirements therefor and filed with the Securities and Exchange

Commission shall be deemed to satisfy the requirements of this Section

7.1(a);

(b) Annual Statements -- within 90 days after the end of each fiscal

year of the Company, duplicate copies of,

(i) a consolidated balance sheet of the Company and its

Subsidiaries, as at the end of such year, and

(ii) consolidated statements of income, changes in

shareholders' equity and cash flows of the Company and its

Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the

previous fiscal year, all in reasonable detail, prepared in accordance

with GAAP, and accompanied by an opinion thereon of independent certified

public accountants of recognized national standing,

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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,

provided that the delivery within the time period specified above of the

Company's Annual Report on Form 10-K for such fiscal year (together with

the Company's annual report to shareholders, if any, prepared pursuant to

Rule 14a-3 under the Exchange Act) prepared in accordance with the

requirements therefor and filed with the Securities and Exchange

Commission shall be deemed to satisfy the requirements of this Section

7.1(b);

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 that shall have become effective (without exhibits

except as expressly requested by such holder), and each final prospectus

and all amendments thereto filed by the Company or any Subsidiary with the

Securities and Exchange Commission;

(d) Notice of Default or Event of Default -- promptly, and in any

event within five days after a Responsible Officer becoming aware of the

existence of any Default or Event of Default, a written notice specifying

the nature and period of existence thereof and what action the Company is

taking or proposes to take with respect thereto;

(e) ERISA Matters -- promptly, and in any event within five days

after a Responsible Officer becoming aware of any of the following, a

written notice setting forth the nature thereof and the action, if any,

that the Company, the Issuer or an ERISA Affiliate proposes to take with

respect thereto:

(i) with respect to any Plan, any reportable event, as defined

in section 4043(b) of ERISA and the regulations thereunder, for

which notice thereof has not been waived pursuant to such

regulations as in effect on the date 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,

the Issuer 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, the Issuer or any

ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or

excise tax provisions of the Code relating to employee benefit

plans, or in the imposition of any Lien on any

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of the rights, properties or assets of the Company, the Issuer or

any ERISA Affiliate pursuant to Title I or IV of ERISA or such

penalty or excise tax provisions, if such liability or Lien, taken

together with any other such liabilities or Liens then existing,

would reasonably be expected to have a Material Adverse Effect;

(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; and

(g) 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 or the Issuer, as

the case may be, to perform its obligations hereunder and under the Notes

as from time to time may be reasonably requested by any such holder of

Notes (excluding management letters from the Company's independent public

accountants).

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 10.8

hereof, both inclusive, during the quarterly or annual period covered by

the statements then being furnished (including with respect to each such

Section, where applicable, the calculations of the maximum or minimum

amount, ratio or percentage, as the case may be, permissible under the

terms of such Sections, and the calculation of the amount, ratio or

percentage then in existence); and

(b) Event of Default -- a statement that such officer has reviewed

the relevant terms hereof and has made, or caused to be made, under his or

her supervision, a review of the transactions and conditions of the

Company and its Subsidiaries from the beginning of the quarterly or annual

period covered by the statements then being furnished to the date of the

certificate and that such review shall not have disclosed the existence

during such period of any condition or event that constitutes a Default or

an Event of Default or, if any such condition or event existed or exists

(including, without limitation, any such event or condition resulting from

the failure of the Company or any Subsidiary to comply with any

Environmental Law), specifying the nature and period of existence thereof

and what action the Company shall have taken or proposes to take with

respect thereto.

Section 7.3. Inspection. The Company shall permit the representatives of

each holder of Notes that is an Institutional Investor:

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(a) No Default -- if no Default or Event of Default then exists, at

the expense of such holder and upon reasonable prior notice to the

Company, to visit the principal executive office of the Company, to

discuss the affairs, finances and accounts of the Company and its

Subsidiaries with the Company's officers, and (with the consent of the

Company, which consent will not be unreasonably withheld) to visit the

other offices and properties of the Company and each Subsidiary, all at

such reasonable times 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 Subsidiary, to examine all their

respective books of account, records, reports and other papers, to make

copies and extracts therefrom, and to discuss their respective affairs,

finances and accounts with their respective officers and independent

public accountants (and by this provision the Company authorizes said

accountants to discuss the affairs, finances and accounts of the Company

and its Subsidiaries), all at such times and as often as may be requested.

SECTION 8. PAYMENT OF THE NOTES.

Section 8.1. Required Prepayments. (a) The entire unpaid principal amount

of the Series A Notes shall become due and payable on July 28, 2007.

(b) On July 28, 2008 and on July 28, 2009, the Issuer will prepay

$13,333,000 principal amount (or such lesser principal amount as shall then be

outstanding) of the Series B Notes at par and without payment of the Make-Whole

Amount or any premium, provided that upon any partial prepayment of the Series B

Notes pursuant to Section 8.2 or Section 8.5 or purchase of the Series B Notes

permitted by Section 8.4, the principal amount of each required prepayment of

the Series B Notes becoming due under this Section 8.1(b) on and after the date

of such prepayment or purchase shall be reduced in the same proportion as the

aggregate unpaid principal amount of the Series B Notes is reduced as a result

of such prepayment or purchase. The entire unpaid principal amount of the Series

B Notes shall become due and payable on July 28, 2010.

28, 2013, the Issuer will prepay $13,571,000 principal amount (or such lesser

principal amount as shall then be outstanding) of the Series C Notes at par and

without payment of the Make-Whole Amount or any premium, provided that upon any

partial prepayment of the Series C Notes pursuant to Section 8.2 or Section 8.5

or purchase of the Series C Notes permitted by Section 8.4, the principal amount

of each required prepayment of the Series C Notes becoming due under this

Section 8.1(c) on and after the date of such prepayment or purchase shall be

reduced in the same proportion as the aggregate unpaid principal amount of the

Series C Notes is reduced as a result of such prepayment or purchase. The entire

unpaid principal amount of the Series C Notes shall become due and payable on

July 28, 2014.

(d) On July 28, 2012 and on each July 28 thereafter to and including July

28, 2015, the Issuer will prepay $5,000,000 principal amount (or such lesser

principal amount as shall then

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be outstanding) of the Series D Notes at par and without any premium, provided

that upon any partial prepayment of the Series D Notes pursuant to Section 8.2

or Section 8.5 or purchase of the Series D Notes permitted by Section 8.4, the

principal amount of each required prepayment of the Series D Notes becoming due

under this Section 8.1(d) on and after the date of such prepayment or purchase

shall be reduced in the same proportion as the aggregate unpaid principal amount

of the Series D Notes is reduced as a result of such prepayment or purchase. The

entire unpaid principal amount of the Series D Notes shall become due and

payable on July 28, 2016.

Section 8.2. Optional Prepayment with Make-Whole Amount.

(a) The Issuer 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 aggregate principal amount of $1,000,000 or more in the case of a partial

prepayment, at 100% of the principal amount so prepaid, together with interest

accrued thereon to the date of such prepayment, plus the Make-Whole Amount

determined for the prepayment date with respect to such principal amount of each

Note of the applicable Series then outstanding. The Issuer 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 and each Series of Notes to be

prepaid on such date, the principal amount of each Note held by such holder to

be prepaid (determined in accordance with Section 8.2(b)), and the interest to

be paid on the prepayment date with respect to such principal amount being

prepaid, and shall be accompanied by a certificate of a Senior Financial Officer

as to the estimated Make-Whole Amount due in connection with such prepayment

(calculated as if the date of such notice were the date of the prepayment),

setting forth the details of such computation. Two Business Days prior to such

prepayment, the Issuer 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.

(b) In the case of each partial prepayment of the Notes of any Series, 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.

amount equal to the excess, if any, of the Discounted Value of the Remaining

Scheduled Payments with respect to the Called Principal of such Note over the

amount of such Called Principal, provided that the Make-Whole Amount may in no

event be less than zero. For the purposes of determining the Make-Whole Amount,

the following terms have the following meanings:

"Called Principal" means, with respect to any Note, the principal of

such Note that is to be prepaid pursuant to Section 8.2(a) or has become

or is declared to be immediately due and payable pursuant to Section 13.1,

as the context requires.

"Discounted Value" means, with respect to the Called Principal of

any Note, the amount obtained by discounting all Remaining Scheduled

Payments with respect to such

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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 such Notes is payable) equal

to the Reinvestment Yield with respect to such Called Principal.

"Reinvestment Yield" means, with respect to the Called Principal of

any Note, 0.5% 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 page on the Bloomberg Financial Markets Services Screen PX1 or

the equivalent screen provided by Bloomberg Financial Markets Commodities

News for actively traded U.S. Treasury securities having a maturity equal

to the Remaining Average Life of such Called Principal as of such

Settlement Date, or (ii) if such yields are not reported as of such time

or the yields reported as of such time are not ascertainable, the Treasury

Constant Maturity Series Yields reported, for the latest day for which

such yields have been so reported as of the second Business Day preceding

the Settlement Date with respect to such Called Principal, in Federal

Reserve Statistical Release H.15 (519) (or any comparable successor

publication) for actively traded U.S. Treasury securities having a

constant maturity equal to the Remaining Average Life of such Called

Principal as of such Settlement Date. Such implied yield will be

determined, if necessary, by (a) converting U.S. Treasury bill quotations

to bond-equivalent yields in accordance with accepted financial practice

and (b) interpolating linearly between (1) the actively traded U.S.

Treasury security with the maturity closest to and greater than the

Remaining Average Life and (2) the actively traded U.S. Treasury security

with the maturity closest to and less than the Remaining Average Life.

"Remaining Average Life" means, with respect to any Called

Principal, the number of years (calculated to the nearest one-twelfth

year) obtained by dividing (i) such Called Principal into (ii) the sum of

the products obtained by multiplying (a) the principal component of each

Remaining Scheduled Payment with respect to such Called Principal by (b)

the number of years (calculated to the nearest one-twelfth year) that will

elapse between the Settlement Date with respect to such Called Principal

and the scheduled due date of such Remaining Scheduled Payment.

"Remaining Scheduled Payments" means, with respect to the Called

Principal of any Note, all payments of such Called Principal and interest

thereon that would be due after the Settlement Date with respect to such

Called Principal if no payment of such Called Principal were made prior to

its scheduled due date, provided that if such Settlement Date is not a

date on which interest payments are due to be made under the terms of the

Notes of the applicable Series, 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(a) or Section 13.1.

"Settlement Date" means, with respect to the Called Principal of any

Note, the date on which such Called Principal is to be prepaid pursuant to

Section 8.2(a) or has

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become or is declared to be immediately due and payable pursuant to

Section 13.1, as the context requires.

(d) Notwithstanding the foregoing provisions of this Section 8.2, so long

as any Default or Event of Default shall exist hereunder, any prepayment of the

Notes pursuant to this Section 8.2 shall be allocated among all of the Notes at

the time outstanding in proportion, as nearly as practicable, to the respective

unpaid principal amounts thereof.

Section 8.3. Maturity; Surrender, etc. In the case of each prepayment of

Notes pursuant to this Section 8, the principal amount of each Note to be

prepaid shall mature and become due and payable on the date fixed for such

prepayment, together with interest on such principal amount accrued to such date

and the applicable Make-Whole Amount, if any. From and after such date, unless

the Issuer shall fail to pay such principal amount when so due and payable,

together with the interest and Make-Whole Amount, if any, as aforesaid, interest

on such principal amount shall cease to accrue. Any Note paid or prepaid in full

shall be surrendered to the Issuer and cancelled and shall not be reissued, and

no Note shall be issued in lieu of any prepaid principal amount of any Note.

Section 8.4. Purchase of Notes. The Issuer and the Company will not, and

will not permit any of their respective Affiliates to, purchase, redeem, prepay

or otherwise acquire, directly or indirectly, any of the outstanding Notes

except (a) upon the payment or prepayment of the Notes in accordance with the

terms of this Agreement and the Notes or (b) pursuant to an offer to purchase

made by the Issuer, the Company or any of their Affiliates pro rata to the

holders of all Notes at the time outstanding upon the same terms and conditions.

Any such offer shall provide each holder with sufficient information to enable

it to make an informed decision with respect to such offer, and shall remain

open for at least 20 Business Days. If the holders of more than 10% of the

principal amount of the Notes then outstanding accept such offer, the Issuer

shall promptly notify the remaining holders of such fact and the expiration date

for the acceptance by holders of Notes of such offer shall be extended by the

number of days necessary to give each such remaining holder at least 10 Business

Days from its receipt of such notice to accept such offer. The Issuer 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.

Section 8.5. Change in Control.

(a) Notice of Change in Control or Control Event. The Company will, within

ten days after any Responsible Officer of the Company has actual knowledge of

the occurrence of any Control Event, give written notice of such Control Event

to each holder of Notes. In addition, the Company will, within ten days after

any Responsible Officer of the Company has actual knowledge of the occurrence of

any Change of Control, give written notice of such Change of Control which

notice shall contain and constitute an offer to prepay Notes as described in

subparagraph (b) of this Section 8.5 and shall be accompanied by the certificate

described in subparagraph (e) of this Section 8.5.

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(b) Offer to Prepay Notes. The offer to prepay Notes contemplated by

subparagraph (a) of this Section 8.5 shall be an offer to prepay, in accordance

with and subject to this Section 8.5, all, but not less than all, the Notes held

by each holder (in this case only, "holder" in respect of any Note registered in

the name of a nominee for a disclosed beneficial owner shall mean such

beneficial owner) on a date specified in such offer (the "Proposed Prepayment

Date") that is not less than 20 days and not more than 90 days after the date of

such offer (if the Proposed Prepayment Date shall not be specified in such

offer, the Proposed Prepayment Date shall be the 30th day after the date of such

offer).

made pursuant to this Section 8.5 by causing a notice of such acceptance to be

delivered to the Issuer at least 5 days prior to the Proposed Prepayment Date. A

failure by a holder of Notes to respond to an offer to prepay made pursuant to

this Section 8.5 shall be deemed to constitute a rejection of such offer by such

holder.

(d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this

Section 8.5 shall be at 100% of the principal amount of such Notes together with

interest on such Notes accrued to the date of prepayment but without payment of

any Make-Whole Amount. The prepayment shall be made on the Proposed Prepayment

Date.

(e) Officer's Certificate. Each offer to prepay the Notes pursuant to this

Section 8.5 shall be accompanied by a certificate, executed by a Senior

Financial Officer of the Issuer and dated the date of such offer, specifying:

(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this

Section 8.5; (iii) the principal amount of each Note offered to be prepaid; (iv)

the interest that would be due on each Note offered to be prepaid, accrued to

the Proposed Prepayment Date; (v) that the conditions of this Section 8.5 have

been fulfilled; (vi) in reasonable detail, the nature and date of the Change in

Control; and (vii) that the failure to respond to such offer of prepayment shall

constitute a rejection of such offer.

(f) "Change in Control" Defined. "Change in Control" means each and every

issue, sale or other disposition of shares of voting stock of the Company which

results in any person (as such term is used in section 13(d) and section

14(d)(2) of the Exchange Act) or related persons constituting a group (as such

term is used in Rule 13d-5 under the Exchange Act), becoming the "beneficial

owners" (as such term is used in Rule 13d-3 under the Exchange Act as in effect

on the date of the Closing), directly or indirectly, of more than 50% of the

total voting power of all classes then outstanding of the Company's voting

stock. Notwithstanding the foregoing, a Permitted Reincorporation shall not be a

Change of Control for purposes of this Agreement.

(g) "Control Event" Defined. "Control Event" means:

(a) the execution by the Company or any of its Subsidiaries or

Affiliates of any agreement or binding letter of intent with respect to

any proposed transaction or event or series of transactions or events

which, individually or in the aggregate, could reasonably be expected to

result in a Change in Control;

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(b) the execution of any written agreement which, when fully

performed by the parties thereto, would result in a Change in Control; or

used in section 13(d) and section 14(d)(2) of the Exchange Act as in

effect on the date of the Closing) or related persons constituting a group

(as such term is used in Rule 13d-5 under the Exchange Act as in effect on

the date of the Closing) to the holders of the common stock of the

Company, which offer, if accepted by the requisite number of holders,

would result in a Change in Control unless such offer is rejected or

expires pursuant to its terms prior to the date on which notice of such

Change in Control is required to be delivered pursuant to Section 8.5(a).

SECTION 9. AFFIRMATIVE COVENANTS.

Each of the Company and the Issuer covenants that so long as any of the

Notes are outstanding:

Section 9.1. Compliance with Law. The Company and the Issuer will, and

will cause each of their 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 would

not reasonably be expected, individually or in the aggregate, to have a

materially adverse effect on the business, operations, affairs, financial

condition, properties or assets of the Company and its Subsidiaries taken as a

whole.

Section 9.2. Insurance. The Company and the Issuer will, and will cause

each of their 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 and the Issuer will,

and will cause each of their Subsidiaries to, maintain and keep, or cause to be

maintained and kept, their respective properties in good repair, working order

and condition (other than ordinary wear and tear), so that the business carried

on in connection therewith may be properly conducted at all times, provided that

this Section shall not prevent the Company or any Subsidiary from discontinuing

the operation and the maintenance of any of its properties if such

discontinuance is desirable in the conduct of its business and the Company has

concluded that such discontinuance would not, individually or in the aggregate,

have a materially adverse effect on the business,

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operations, affairs, financial condition, properties or assets of the Company

and its Subsidiaries taken as a whole.

Section 9.4. Payment of Taxes. The Company and the Issuer will, and will

cause each of their Subsidiaries to, file all income tax or similar tax returns

required to be filed in any jurisdiction and to pay and discharge all taxes

shown to be due and payable on such returns and all other taxes, assessments,

governmental charges, or levies payable by any of them, to the extent such taxes

and assessments have become due and payable and before they have become

delinquent, provided that neither the Company nor any Subsidiary need file any

such tax return or pay any such tax or assessment if (i) the amount,

applicability or validity thereof is contested by the Company or such Subsidiary

on a timely basis in good faith and in appropriate proceedings, and the Company

or such Subsidiary has established adequate reserves therefor in accordance with

GAAP on the books of the Company or such Subsidiary or (ii) failure to file all

such tax returns and the nonpayment of all such taxes and assessments in the

aggregate would not reasonably be expected to have a materially adverse effect

on the business, operations, affairs, financial condition, properties or assets

of the Company and its Subsidiaries taken as a whole.

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 or other similar legal entity existence of each of its

Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary) and

all rights and franchises of the Company and its Subsidiaries unless, in the

good faith judgment of the Company, the termination of or failure to preserve

and keep in full force and effect such corporate existence, right or franchise

would not, individually or in the aggregate, have a materially adverse effect on

the business, operations, affairs, financial condition, properties or assets of

the Company and its Subsidiaries taken as a whole.

Section 9.6. Ownership of Issuer. The Company (including any successor

thereto permitted under this Agreement) or a Wholly-Owned Subsidiary will at all

times directly own 100% of the outstanding equity interest of the Issuer.

SECTION 10. NEGATIVE COVENANTS.

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

Section 10.1. Consolidated Net Worth. The Company will not at any time

permit Consolidated Net Worth to be less than the sum of (a) $480,000,000 plus

(b) an amount equal to 25% of positive Consolidated Net Income for each

completed fiscal year, beginning with the fiscal year ending April 29, 2005,

calculated on a cumulative basis for such entire period.

Section 10.2. Fixed Charges Coverage Ratio. The Company will not permit

the Fixed Charges Coverage Ratio (calculated as of the end of each fiscal

quarter) to be less than 1.50 to 1.00.

Section 10.3. Limitation on Indebtedness. The Company will not permit:

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(a) Consolidated Indebtedness (calculated as of the end of each

fiscal quarter) to exceed 60% of Consolidated Capitalization; and

(b) Priority Indebtedness to exceed 25% of Consolidated Net Worth.

Section 10.4. Limitation on Liens. The Company will not, and will not

permit any of its 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 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 (unless it makes, or causes to be made, effective

provision whereby the Notes will be equally and ratably secured with any and all

other obligations thereby secured, such security to be pursuant to a written

agreement satisfactory to the Required Holders), 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;

properties and assets (including landlords', carriers', warehousemen's,

mechanics', materialmen's and other similar Liens for sums) and Liens to

secure (or to obtain letters of credit that 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;

(d) leases or subleases granted to others, easements, rights-of-way,

minor survey exceptions, restrictions and other similar charges or

encumbrances, in each case incidental to, and not interfering with, the

ordinary conduct of the business of the Company or any of its

Subsidiaries, provided that such Liens do not, in the aggregate,

materially detract from the value of all property of the Company and its

Subsidiaries taken as a whole;

(e) Liens on property or assets of the Company or any of its

Subsidiaries securing Indebtedness owing to the Company or any 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

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carrying on the business of the Company or a 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, the aggregate

amount remaining unpaid on all Indebtedness secured by Liens on such

property, whether or not assumed by the Company or a 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, 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 Subsidiary or

its becoming a Subsidiary, or any Lien existing on any property acquired

by the Company or any Subsidiary at the time such property is so acquired

(whether or not the Indebtedness 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

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) 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 Indebtedness or other

obligations secured thereby shall not be increased, and (iii) at such time

and immediately after giving effect thereto, no Default or Event of

Default shall have occurred and be continuing; and

(j) in addition to the Liens permitted by the preceding

subparagraphs (a) through (i), inclusive, of this Section 10.4, Liens

securing Priority Indebtedness of the Company or any Subsidiary, provided

that the aggregate principal amount of Priority Indebtedness secured by

Liens pursuant to this Section 10.4(j) shall be permitted by Section 10.3.

Section 10.5. Sales of Assets. Except as permitted under Section 10.6, the

Company will not, and will not permit any Subsidiary to, sell, lease or

otherwise dispose of any substantial part (as defined below) of the assets of

the Company and its Subsidiaries; provided, however, that the Company or any

Subsidiary may sell, lease or otherwise dispose of assets (including equity

interests in Subsidiaries) constituting a substantial part of the assets of the

Company and its 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:

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(1) to acquire productive assets used or useful in carrying on the

business of the Company and its Subsidiaries and having a value and

revenue generating capacity at least equal to the Net Proceeds received

from such sale, lease or disposition; or

(2) to prepay or retire any Senior Indebtedness of the Company

and/or its Subsidiaries.

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

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

Subsidiaries during the period beginning with the date of Closing to and

including the date on which such sale, lease or other disposition occurs,

exceeds 30% of Consolidated Total Assets, determined as of the end of the fiscal

year immediately preceding such sale, lease or other disposition; provided that

there shall be excluded from any determination of a "substantial part" (i) any

sale or disposition of assets in the ordinary course of business of the Company

and its Subsidiaries, and (ii) so long as no Default or Event of Default shall

exist, any transfer of assets from the Company to the Issuer or to any other

Wholly-Owned Subsidiary or from any Subsidiary to the Company, the Issuer or a

Wholly-Owned Subsidiary or any other Subsidiary with the same percentage

ownership by the Company and its Subsidiaries as the transferor.

Section 10.6. Merger, Consolidation. The Company will not, and will not

permit any of its Subsidiaries to, consolidate with or merge with any other

corporation or legal entity 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 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, the Issuer

or a Wholly-Owned Subsidiary or any other Subsidiary with the same

percentage ownership by the Company, the Issuer and their Subsidiaries as

such Subsidiary so long as in any merger or consolidation involving the

Company, the Company shall be the surviving or continuing corporation, and

in any merger or consolidation involving the Issuer and any other

Subsidiary of the Company, the Issuer shall be the surviving or continuing

corporation, or (y) convey, transfer or lease all of its assets (which may

include a merger or consolidation) 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 or the Issuer with, or the conveyance, transfer or

lease of substantially all of the assets of the Company or the Issuer 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 or the

Issuer as an entirety, as the case may be (the "Successor

Corporation"), shall be a solvent corporation or other legal entity

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organized and existing under the laws of the United States of

America, any State thereof or the District of Columbia;

(b) if the Company or the Issuer, as the case may be, is not

the Successor Corporation, such corporation or other legal entity

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 or the

Issuer, as the case may be, shall have caused to be delivered to

each holder of Notes 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

comply with the terms hereof; and

the Company or the Surviving Corporation, as the case may be, would

have been in compliance with Section 10.3 as of the end of the

immediately preceding fiscal quarter, and (ii) no Default or Event

of Default would exist.

Section 10.7. Limitation on Sale and Leasebacks. The Company will not, and

will not permit any Subsidiary to, enter into any arrangement, directly or

indirectly, whereby the Company or such Subsidiary shall in one or more related

transactions sell, transfer or otherwise dispose of any property now owned or

hereafter acquired by the Company or such Subsidiary, and then rent or lease, as

lessee, such property or any part thereof (other than pursuant to a Capital

Lease) or similarly acquire the right to possession or use of, such property or

one or more properties which it intends to use for the same purpose or purposes

as such property for a period of more than nine months or longer (a "Sale and

Leaseback Transaction"); provided that the foregoing restriction shall not apply

to any Sale and Leaseback Transaction if either

(a) the sale or transfer of property relating to such Sale and

Leaseback Transaction constitutes a sale or transfer of such property by a

Subsidiary to the Company or to a Wholly-Owned Subsidiary or by the

Company to a Wholly-Owned Subsidiary; or

(b) after giving effect to the consummation of such Sale and

Leaseback Transaction and to the application of the proceeds therefrom,

the Attributable Debt to be incurred in connection with such Sale and

Leaseback Transaction shall be permitted by Section 10.3(b).

Section 10.8. Restriction on Subsidiaries. The Company will not, and will

not permit any Significant Subsidiary to, enter into any agreement which would

restrict the ability of any Significant Subsidiary (other than the Issuer or the

Subsidiary Guarantor) to pay any dividends to, or make advances, loans or

distributions to, or other investments in, the Company or any other Subsidiary.

Section 10.9. Nature of Business. The Company will not, and will not

permit any of its Subsidiaries to, engage in any business, if, as a result, when

taken as a whole, the gener

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