SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
                                      FORM 10-K

          (Mark One)
          [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
               For the fiscal year ended September 26, 1998

                                          OR

          [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE 
             SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
               For the transition period from   to

                             Commission File No. 0-14616

                               J & J SNACK FOODS CORP.
               (Exact name of registrant as specified in its charter)

                        New Jersey                           22-1935537
           (State or other jurisdication                 (I.R.S. Employer
          of incorporation or organization)             Identification No.)

                    6000 Central Highway
                 Pennsauken, New Jersey                       08109
          (Address of principal executive offices)          (Zip Code)
                            
                  Registrant's telephone number, including area code: (609-
          665-9533)
                                             __________
                 Securities registered pursuant to Section 12(b) of the Act:

            Common Stock, par value: None                          None
                  (Title of each class)             (Name of  each exchange 
                                                       on which registered)
                                        
                                             __________

          Securities registered pursuant to  Section 12(g) of the Act: None
                                             __________
               Indicate by check mark whether the Registrant (1) has filed
          all reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months
          and (2) has been subject to such filing requirements for the past
          90 days.  Yes [X]  No [ ]

               Indicate by check mark if disclosure of delinquent filers
          pursuant to Item 405 of Regulation S-K is not contained herein,
          and will not be contained, to the best of the registrant's
          knowledge, in definitive proxy or information statements
          incorporated by reference in Part III of this Form 10-K or any
          amendment to this Form 10-K [ ].

               As of November 30, 1998, the latest practicable date,
          9,036,833 shares of the Registrant's common stock were issued and
          outstanding.  The aggregate market value of shares held by non-
          affiliates of the Registrant on such date was $121,823,319, based
          on the last price on that date of $20.4375 per share, which is an
          average of bid and asked prices.

                         DOCUMENTS INCORPORATED BY REFERENCE

               The Registrant's 1998 Annual Report to Shareholders for the
          fiscal year ended September 26, 1998 and Proxy Statement for its
          Annual Meeting of Shareholders to be held on February 11, 1999
          are incorporated herein by reference into Parts I, II, III and IV
          as set forth herein.

                               J & J SNACK FOODS CORP.
                            1998 FORM 10-K ANNUAL REPORT
                                  TABLE OF CONTENTS

                                         PART I

                                                                      Page

          Item 1       Business ...................................      1

          Item 2       Properties .................................      8

          Item 3       Legal Proceedings ..........................      9

          Item 4       Submission Of Matters To A Vote Of
                       Security Holders ...........................      9

                       Executive Officers Of The Registrant .......     10

                                      PART II

          Item 5       Market For Registrant's Common
                       Stock And Related Stockholder
                       Matters ....................................     11

          Item 6       Selected Financial Data ....................     11

          Item 7       Management's Discussion And Analysis
                       Of Financial Condition And Results
                       Of Operations ..............................     11

          Item 7a      Quantitative And Qualitative Disclosures
                       About Market Risk ..........................     11

          Item 8       Financial Statements And Supplementary
                       Data .......................................     12

          Item 9       Changes In And Disagreements With
                       Accountants On Accounting And
                       Financial Disclosure........................     13

                                      PART III

          Item 10      Directors And Executive Officers Of
                       The Registrant .............................     14

          Item 11      Executive Compensation .....................     14

          Item 12      Security Ownership Of Certain Bene-
                       ficial Owners And Management ...............     14

          Item 13      Certain Relationships And Related
                       Transactions ...............................     14

                                      PART IV

          Item 14      Exhibits, Financial Statement
                       Schedules And Reports On Form 8-K ..........     15

                                       PART I
          Item 1.  Business

          General

               J & J Snack Foods Corp. (the "Company" or "J & J")
          manufactures nutritional snack foods which it markets nationally
          to the food service and retail supermarket industries.  Its
          principal snack food products are soft pretzels marketed
          principally under the brand name SUPERPRETZEL. J & J believes it
          is the largest manufacturer of soft pretzels in the United
          States. The Company also markets frozen carbonated beverages to
          the food service industry under the brand names ICEE and ARCTIC
          BLAST in the United States, Mexico and Canada. Other snack
          products include Italian ice and frozen juice treats and
          desserts, churros (a Hispanic pastry), funnel cake, popcorn and
          bakery products.

               The Company's sales are made primarily to food service
          customers including snack bar and food stand locations in leading
          chain, department, discount, warehouse club and convenience
          stores; malls and shopping centers; fast food outlets; stadiums
          and sports arenas; leisure and theme parks; movie theatres;
          independent retailers; and schools, colleges and other
          institutions. The Company's retail supermarket customers are
          primarily supermarket chains.  The Company sells direct to the
          public through its chains of specialty snack food retail outlets,
          BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, located primarily in
          the Mid-Atlantic States.

               The Company was incorporated in 1971 under the laws of the
          State of New Jersey.

          Products

          Soft Pretzels

               The Company's soft pretzels are sold under many brand names;
          some of which are: SUPERPRETZEL, MR. TWISTER, SOFT PRETZEL BITES,
          SOFTSTIX, SOFT PRETZEL BUNS, HOT KNOTS, DUTCH TWIST, TEXAS TWIST
          and SANDWICH TWIST and; to a lesser extent, under private labels.
          The Company sells its soft pretzels to the food service and the
          retail supermarket industries and direct to the public through
          BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET, its chains of
          specialty snack food retail outlets. The Company's soft pretzels
          qualify under USDA regulations as the nutritional equivalent of
          bread for purposes of the USDA school lunch program, thereby
          enabling a participating school to obtain partial reimbursement
          of the cost of the Company's soft pretzels from the USDA. Soft
          pretzel sales amounted to 35% and 40% of the Company's revenue in
          fiscals 1998 and 1997, respectively.

               The Company's soft pretzels are manufactured according to a
          proprietary formula.  Soft pretzels, approximately 2-1/2 ounces
          in weight, and jumbo or king size soft pretzels, approximately
          5-1/2 ounces in weight, are shaped and formed by the Company's
          proprietary twister machines.  These soft pretzel tying machines
          are automated, high speed machines for twisting dough into  the
          traditional pretzel shape. Soft pretzel nuggets, mini one ounce
          soft pretzels and soft pretzels in customized shapes and sizes
          and with fillings are extruded or shaped by hand.  Soft pretzels,

                                          1

          after processing, are primarily quick-frozen in either raw or
          baked form and packaged for delivery.

               The Company's food service marketing program includes
          supplying ovens, mobil merchandisers, display cases, warmers and
          similar merchandising equipment to the retailer to prepare and
          promote the sale of soft pretzels.  Some of this equipment is
          proprietary, including combination warmer and display cases that
          reconstitute frozen soft pretzels while displaying them, thus
          eliminating the need for an oven.  The Company retains ownership
          of the equipment placed in customer locations and, as a result,
          customers are not required to make an investment in equipment.

          Frozen Carbonated Beverages

               The Company markets, through its direct sales force, frozen
          carbonated beverages to the food service industry under the names
          ICEE and ARCTIC BLAST in the United States, Mexico and Canada. 
          The Company sells direct to the public through BAVARIAN PRETZEL
          BAKERY and PRETZEL GOURMET, its chains of specialty snack food
          retail outlets. Frozen carbonated beverage sales amounted to 29%
          of revenue in fiscal 1998 and 20% of revenue in fiscal 1997. 
          Under the Company's marketing program, it installs frozen
          carbonated beverage dispensers at customer locations and
          thereafter services the machines, arranges to supply customers
          with ingredients required for production of the frozen carbonated
          beverages, and supports customer retail sales efforts with
          in-store promotions and point-of-sale materials. In most cases,
          the Company retains ownership of its dispensers and, as a result,
          customers are not required to make an investment in equipment or
          arrange for the ingredients and supplies necessary to produce and
          market the frozen carbonated beverages.

               Each new customer location requires a frozen carbonated
          beverage dispenser supplied by the Company or by the customer. 
          Company supplied dispensers are purchased from outside vendors,
          built new or rebuilt by the Company at an approximate cost of
          $5,500 each. The following shows the number of Company owned and
          customer owned frozen carbonated beverage dispensers at customer
          locations at the dates indicated:

                               Company Owned   Customer Owned         Total
          September 28, 1996         7,823              901           8,724
          September 27, 1997         8,546              711           9,257
          September 26, 1998        16,520              223          16,743

               As a result of the acquisition of National Icee Corporation
          on December 8, 1997, the Company has the rights to market and
          distribute frozen carbonated beverages under the name ICEE to all
          of the Continental United States, except for portions of eleven
          states.
                                                    
          Frozen Juice Treats and Desserts

               The Company's frozen juice treats and desserts are marketed
          under the FROSTAR, SHAPE-UPS, MAZZONE'S, MAMA TISH'S and LUIGI'S
          brand names to the food service and to the retail supermarket

                                          2

          industries.  Frozen juice treat and dessert sales were 15% and
          19% of the Company's revenue in fiscal years 1998 and 1997,
          respectively.

               The Company's SHAPE-UPS and MAZZONE frozen juice bars are
          manufactured from an apple or pear juice base to which water,
          sweeteners, coloring (in some cases) and flavorings are added. 
          The juice bars contain two to three ounces of apple or pear juice
          and the minimum daily requirement of vitamin C, and qualify as
          reimbursable items under the USDA school lunch program.  The
          juice bars are produced in various flavors and are packaged in a
          sealed push-up paper container referred to as the Milliken M-pak,
          which the Company believes has certain sanitary and safety
          advantages.

               The FROSTAR product line includes frozen juice and other
          frozen desserts on a stick and in a cup.  The juice bar and
          FROSTAR products are sold primarily to the school portion of the
          food service industry.

               LUIGI'S Real Italian Ice and MAMA TISH'S Italian Ice and
          Sorbets are sold to the foodservice and to the retail supermarket
          industries. They are manufactured from water, sweeteners and
          fruit juice concentrates in various flavors and are packaged in
          plastic cups for retail supermarket and foodservice and in four
          and eight ounce squeeze up tubes for foodservice.

          Churros

               The Company sells frozen churros under the TIO PEPE'S brand
          name to both the food service and retail supermarket industries,
          primarily in the Western and Southwestern United States.  Churro
          sales were 4% and 5% of the Company's sales in fiscal 1998 and 
          1997, respectively. Churros are Hispanic donuts in stick form
          which the Company produces in several sizes according to a
          proprietary formula.  The churros are deep fried, frozen and
          packaged.  At food service point-of-sale they are reheated and
          topped with a cinnamon sugar mixture. The Company also sells
          fruit and creme filled churros. The Company supplies churro
          merchandising equipment similar to that used for its soft
          pretzels.

          Baked Goods

               The Company has a contract and private label bakery business
          which manufactures cookies, muffins and other baked goods for
          third parties. In addition, the Company produces and markets
          these products under its own brand names, including DANISH MILL
          and PRETZELCOOKIE.  Baked goods sales amounted to 9% and 8% of
          the Company's sales in fiscals 1998 and 1997, respectively.

          Other Products

               The Company also markets to the food service industry and
          direct to the public other products including soft drinks, funnel
          cakes sold under the FUNNEL CAKE FACTORY brand name, popcorn sold
          under the AIRPOPT brand name, as well as smaller amounts of
          various other food products.  In addition, J & J manufactures and
          markets machines and machine parts for sale primarily to other
          food and beverage companies.

                                          3

          Customers

               The Company sells its products to two principal customer
          groups:  food service and retail supermarkets. The primary
          products sold to the food service group are soft pretzels, frozen
          carbonated beverages, frozen juice treats and desserts, churros
          and baked goods.  The primary products sold to the retail
          supermarket industry are soft pretzels and Italian ice. 
          Additionally, the Company sells soft pretzels, frozen carbonated
          beverages and various other food products direct to the public
          through BAVARIAN  PRETZEL BAKERY and PRETZEL GOURMET, its chains
          of specialty snack food retail outlets.

               The Company's customers in the food service industry include
          snack bars and food stands in chain, department and discount
          stores such as KMart, Walmart, Bradlees, Caldor and Target; malls
          and shopping centers; fast food outlets; stadiums and sports
          arenas; leisure and theme parks such as Disneyland, Walt Disney
          World, Opryland, Universal Studios, Sea World, Six Flags, Hershey
          Park and Busch Gardens; convenience stores such as 7-Eleven,
          Circle K, AM/PM, White Hen Pantry and Wawa; movie theatres;
          warehouse club stores such as Sam's Club, Price Costco and
          B.J.'s; schools, colleges and other institutions; and independent
          retailers such as Hot Sam. Food service concessionaires
          purchasing soft pretzels and other products from the Company for
          use in sports arenas and for institutional meal services include
          ARAMARK, Ogden, Service America, Sportservice, Marriott and
          Volume Services.  Machines and machine parts are sold to other
          food and beverage companies.  Within the food service industry,
          the Company's products are purchased by the consumer primarily
          for consumption at the point-of-sale.

               The Company sells its products to over 90% of supermarkets
          in the United States.  Products sold to retail supermarket
          customers are primarily soft pretzel products, including
          SUPERPRETZEL, LUIGI'S Real Italian Ice and MAMA TISH'S Italian
          Ice and sorbets and various secondary brands. Within the retail
          supermarket industry, the Company's frozen and prepackaged
          products are purchased by the consumer for consumption at home.

          Marketing and Distribution

               The Company has developed a national marketing program for
          its products. For food service customers, this marketing program
          includes providing ovens, mobile merchandisers, display cases,
          warmers, frozen carbonated beverage dispensers and other
          merchandising equipment for the individual customer's
          requirements and point-of-sale materials as well as participating
          in trade shows and in-store demonstrations.  The Company's
          ongoing advertising and promotional campaigns for its retail
          supermarket products include trade shows, newspaper
          advertisements with coupons, in-store demonstrations, billboards
          and, periodically, television advertise- ments.

               The Company's products are sold through a network of about
          180 food brokers and over 1,000 independent sales distributors
          and the Company's own direct sales force.  The Company maintains
          frozen warehouse and distribution facilities in Pennsauken, New
          Jersey; Vernon (Los Angeles) California; Scranton, Pittsburgh,

                                          4

          Hatfield and Lancaster, Pennsylvania; and Solon, Ohio. Frozen
          carbonated beverages are distributed from 97 warehouse and
          distribution facilities located in 41 states, Mexico and Canada
          which allow the Company to directly service its customers in the
          surrounding areas.  The Company's products are shipped in
          refrigerated and other vehicles from the Company's manufacturing
          and warehouse facilities on a fleet of Company operated
          tractor-trailers, trucks and vans, as well as by independent
          carriers.

          Seasonality

               The Company's sales are seasonal because frozen carbonated
          beverage sales and Italian ice sales are generally higher during
          the warmer months and sales of the Company's retail stores are
          generally higher in the Company's first quarter during the
          holiday shopping season.

          Trademarks and Patents

               The Company has numerous trademarks, the most important of
          which are SUPERPRETZEL, DUTCH TWIST, TEXAS TWIST, MR. TWISTER,
          SOFT PRETZEL BITES and SOFTSTIX for its soft pretzel products;
          FROSTAR, SHAPE-UPS, MAZZONE'S, MAMA TISH'S and LUIGI'S for its
          frozen juice treats and desserts; TIO PEPE'S for its churros;
          ARCTIC BLAST for its frozen carbonated beverages; FUNNEL CAKE
          FACTORY for its funnel cake products, PRIDE O' THE FARM for its
          cookies, muffins and other baked goods; and TANGO WHIP for its
          whipped fruit drinks.  The trademarks, when renewed and
          continuously used, have an indefinite term and are considered
          important to the Company as a means of identifying its products.

               The Company markets frozen carbonated beverages under the
          trademark ICEE in all of the Continental United States, except
          for portions of eleven states, and in Mexico and Canada. 
          Additionally, the Company has the international rights to the
          trademark ICEE.

               The Company has four patents related to frozen carbonated
          beverage dispensers, including a countertop unit.  One expires in
          2005 and three expire in 2006.  The Company also has two process
          patents for dessert products which expire in 2010 and 2012.   

          Supplies

               The Company's manufactured products are produced from raw
          materials which are readily available from numerous sources. 
          With the exception of the Company's soft pretzel twisting
          equipment and funnel cake production equipment, which are made
          for J & J by independent third parties, and certain specialized
          packaging equipment, the Company's manufacturing equipment is
          readily available from various sources. Syrup for frozen
          carbonated beverages is purchased from the Coca Cola Company, the
          Pepsi Cola Company, and Western Syrup Company. Cups, straws and
          lids are readily available from various suppliers. Parts for
          frozen carbonated beverage dispensing machines are manufactured
          internally and purchased from other sources.  Frozen carbonated
          beverage dispensers are purchased from IMI Cornelius, Inc.

                                          5

                  
          Competition

               Snack food and baked goods markets are highly competitive. 
          The Company's principal products compete against similar and
          different food products manufactured and sold by numerous other
          companies, some of which are substantially larger and have
          greater resources than the Company. As the soft pretzel, frozen
          juice treat and dessert, baked goods and related markets grow,
          additional competitors and new competing products may enter the
          markets. Competitive factors in these markets include product
          quality,  customer service, taste, price, identity and brand name
          awareness, method of distribution and sales promotions.

               The Company believes it is the only national distributor of
          soft pretzels. However, there are numerous regional and local
          manufacturers of food service and retail supermarket soft
          pretzels.  Competition is also increasing in that there are
          several chains of retail pretzel stores which have been
          aggressively expanding over the past several years. These chains
          compete with the Company's products.

               In Frozen Carbonated Beverages the Company competes directly
          with other frozen carbonated beverage companies.  These include
          several companies which have the right to use the ICEE name in
          portions of eleven states.  There are many other regional frozen
          carbonated beverage competitors throughout the country and one
          large retail chain which uses its own frozen carbonated beverage
          brand.

               The Company competes with large soft drink manufacturers for
          counter and floor space for its frozen carbonated beverage
          dispensing machines at retail locations and with products which
          are more widely known than the ICEE and ARCTIC BLAST frozen
          carbonated beverages.

               The Company competes with a number of other companies in the
          frozen juice treat and dessert and baked goods markets.

          Divestitures

               During the third quarter of fiscal year 1995, the Company
          sold its syrup and flavor manufacturing subsidiary, Western Syrup
          Company, to an unrelated third party for cash and notes.  The
          sale of Western did not have a material impact on the Company's
          operations or financial position.

          Employees

               The Company had approximately 1,900 full and part time
          employees as of September 26, 1998. Certain production and
          distribution employees at the Pennsauken plant are covered by a
          collective bargaining agreement which expires in September 1999.
          The Company considers its employee relations to be good.

          Year 2000

               The Year 2000 ("Y2K") issue is the result of computer
          programs using a two-digit format, as opposed to four digits, to
          indicate the year. Such computer systems will be unable to

                                          6

          interpret dates beyond the year 1999, which could cause a system
          failure or other computer errors, leading to disruptions in
          operations.

               In 1997 the Company commenced a program to evaluate and
          determine the potential impact of Y2K issues on its operations
          and the need to modify or replace its existing computer systems.
          The scope of the program encompassed all phases of the
          operational activities of the Company and its subsidiaries. In
          1998 the program was expanded to develop an action plan for the
          resolution of problem issues. The process of resolving problem
          issues is anticipated to be completed by the third calendar
          quarter of 1999.  The Company has identified the following areas
          to be critical for Y2K compliance: financial and informational
          systems, manufacturing applications, third-party relationships,
          and what was deemed to include environmental areas of concern to
          include HVAC, telephone and communication environments, and
          security systems.

               The Company is currently monitoring all of its software
          vendors to determine the compliance status of purchased
          applications.  This is an ongoing process that is scheduled for
          completion by the second calendar quarter of 1999.  The Company
          currently has been implementing enhanced financial and
          informational application systems.  The software product is Y2K
          compliant and will satisfy the majority of the informational
          processing requirements when fully implemented.  This process is
          in the final stages of implementation and it is anticipated to be
          fully completed early in 1999.  Additionally, the Company is
          negotiating to purchase a new, and fully Y2K compliant, financial
          reporting system to enhance our future ability to manage, control
          and report on the operation of the business.  It is anticipated
          that this system will be in place by mid 1999. In the
          manufacturing area, the Company is in the process of identifying
          areas of exposure.  The third party relationship area has been
          addressed by directly contacting major trading partners.  Most of
          the parties  who have so far responded to our inquiries indicate
          that they will be Y2K compliant no later than the end of 1999.

               The Company has been utilizing outside consultants to
          augment the efforts of its internal staff to address the Y2K
          problem.  It is anticipated that there will be an ongoing need to
          utilize these services through the first half of 1999. Specific
          areas of activity include the Y2K monitoring process and
          additional application programming effort.  The balance of 1998
          and the first half of 1999 will be devoted to the completion and
          testing of the software applications and testing of the
          environmental areas. 

               The Company does not anticipate that Y2K compliance costs
          will be significantly higher than its normal management
          information systems operating costs.

                                          7

          Item 2.  Properties

               The Company's primary east coast manufacturing facility is
          located in Pennsauken, New Jersey in a 70,000 square foot
          building on a two acre lot.  Soft pretzels and churros are
          manufactured at this company-owned facility which also serves as
          the Company's corporate headquarters. This facility operates at
          approximately 80% of capacity. The Company leases a 101,200
          square foot building adjacent to its manufacturing facility in
          Pennsauken, New Jersey through March 2012.  The Company has
          constructed a large freezer within this facility for warehousing
          and distribution purposes.  The warehouse has a utilization rate
          of 60-90% depending on product demand.  The Company also leases
          through September 1999 16,000 square feet of office and warehouse
          space located next to the Pennsauken, New Jersey plant.

               The Company owns a 150,000 square foot building on eight
          acres in Bellmawr, New Jersey.  Approximately 30% of the facility
          is leased to a third party.  The remainder is used by the Company
          to manufacture some of its products including funnel cake and
          pretzels.

               The Company's primary west coast manufacturing facility is
          located in Vernon (Los Angeles), California.  It consists of a
          137,000 square foot facility in which soft pretzels, churros and
          various lines of baked goods are produced and warehoused. 
          Included in the 137,000 square foot facility is a 30,000 square
          foot freezer used for warehousing and distribution purposes which
          was constructed in 1996.  The facility is leased through November
          2010.  The Company leases an additional 15,000 square feet of
          warehouse space, adjacent to its manufacturing facility, through
          May 2002.  The manufacturing facility operates at approximately
          60% of capacity.

               The Company owns a 52,700 square foot building located on
          five acres in Chicago Heights, Illinois which is leased to a
          third party.

               The Company owns a 46,000 square foot frozen juice treat and
          dessert manufacturing facility located on three acres in
          Scranton, Pennsylvania. The facility, which was expanded from
          26,000 square feet in 1998, operates at less than 50% of
          capacity.

               The Company leases a 29,635 square foot soft pretzel
          manufacturing facility located in Hatfield, Pennsylvania.  The
          lease runs through June 2017. The facility operates at
          approximately two thirds of capacity.

               The Company leases a 19,200 square foot soft pretzel
          manufacturing facility located in Carrollton, Texas.  The lease
          runs through April 2004.  The facility operates at less than 50%
          of capacity.

               The Company's Bavarian Pretzel Bakery headquarters and
          warehouse and distribution facilities are located in a 11,000
          square foot owned building in Lancaster, Pennsylvania.

               The Company owns a 25,000 square foot facility located on 11
          acres in Hatfield, Pennsylvania which is leased to a third party.

                                          8

               The Company also leases 99 warehouse and distribution
          facilities.

          Item 3.  Legal Proceedings

               The Company has no material pending legal proceedings, other
          than ordinary routine litigation incidental to the business, to
          which the Company or any of its subsidiaries is a party or of
          which any of their property is subject.

          Item 4.  Submission Of Matters To A Vote Of Security Holders

               None.

                                          9

                        EXECUTIVE OFFICERS OF THE REGISTRANT

               The following is a list of the executive officers of the
          Company and their principal past occupations or employment.  All
          such persons serve at the pleasure of the Board of Directors and
          have been elected to serve until the Annual Meeting of
          Shareholders on February 11, 1999 or until their successors are
          duly elected.

                Name            Age            Position 

          Gerald B. Shreiber     57      Chairman of the Board, President,
                                           Chief Executive Officer and
                                           Director
          Dennis G. Moore        43      Senior Vice President, Chief 
                                           Financial Officer, Secretary, 
                                           Treasurer and Director
          Robert M. Radano       49      Senior Vice President, Sales,
                                           Chief Operating Officer and
                                           Director
          Robyn Shreiber Cook    38      Senior Vice President
          Dan Fachner            38      President of The ICEE Company
                                         Subsidiary

               Gerald B. Shreiber is the founder of the Company and has
          served as its Chairman of the Board, President, and Chief
          Executive Officer since its inception in 1971.  His term as a
          director expires in 2000.

               Dennis G. Moore joined the Company in 1984.  He served in
          various controllership functions prior to becoming the Chief
          Financial Officer in June 1992.  His term as a director expires
          in 2002.
                                                                          
               Robert M. Radano joined the Company in 1972 and in May 1996
           was named Chief Operating Officer of the Company.  Prior to
          becoming Chief Operating Officer, he was Senior Vice President,
          Sales responsible for national foodservice sales of J & J.  His
          term as a director expires in 2001.

               Robyn Shreiber Cook joined the Company in 1982 and in
          February 1996 was named Senior Vice President, West with
          operating and sales responsibilities for the Company's West Coast
          foodservice and bakery business.  Prior to becoming Senior Vice
          President, West she was responsible for Western region food
          service sales.

               Dan Fachner has been an employee of ICEE-USA Corp., which
          was acquired by the Company in May 1987, since 1979. He was named
          Senior Vice President of The ICEE Company in April 1994 and
          became President in May 1997.

                                         10

 

                                       PART II

          Item 5.  Market For Registrant's Common Stock And 
                   Related Stockholder Matters

               The Company's common stock is traded on the over-the-counter
          market on the NASDAQ National Market System under the symbol
          JJSF.  The following table sets forth the high and low final sale
          price quotations as reported by NASDAQ for the common stock for
          each quarter of the years ended September 27, 1997 and September
          26, 1998.
                                                         High      Low

          Fiscal 1997                                   
             First quarter ended December 28, 1996      14-1/8    10-5/8
             Second quarter ended March 29, 1997        14-1/8    10-1/2
             Third quarter ended June 28, 1997          16-1/8    11-1/4
             Fourth quarter ended September 27, 1997    17-1/4    14-1/2

          Fiscal 1998
             First quarter ended December 30, 1997      17-3/8    13-1/2
             Second quarter ended March 28, 1998        19-1/2    12-1/2
             Third quarter ended June 27, 1998          20-3/4    17-7/8
             Fourth quarter ended September 26, 1998    22-1/4    14-3/4

               On November 30, 1998, there were 9,036,833 shares of common
          stock outstanding. Those shares were held by approximately 2,200
          beneficial shareholders and shareholders of record.

               The Company has never paid a cash dividend on its common
          stock and does not anticipate paying cash dividends in the
          foreseeable future.

          Item 6.  Selected Financial Data

               The information set forth under the caption "Financial
          Highlights" of the 1998 Annual Report to Shareholders is
          incorporated herein by reference.

          Item 7.  Management's Discussion And Analysis Of
                   Financial Condition And Results Of Operations

               The information set forth under the caption "Management's
          Discussion and Analysis of Financial Condition and Results of
          Operations" of the 1998 Annual Report to Shareholders is
          incorporated herein by reference.

          Item 7a. Quantitative And Qualitative Disclosures
                   About Market Risk

               The following is the Company's quantitative and qualitative
          analysis of its financial market risk:

          Interest Rate Sensitivity

               The table below provides information about the Company's
          derivative financial instruments and other financial instruments
          as of September 26, 1998 that are sensitive to changes in

                                         11

          interest rates.  These instruments include debt obligations and
          interest rate swaps.  For debt obligations, the table presents
          principal cash flows and related weighted-average interest rates
          by expected maturity dates. For interest rate swaps, the table
          presents notional amounts and weighted-average interest rates by
          expected (contractual) maturity dates.  The notional amounts are
          used to calculate the contractual payments to be exchanged under
          the swap contract. Weighted-average variable rates are based on
          implied forward rates in the yield curve at the reporting date.

                             Expected Maturity Date
                                ($ in thousands)
                                                         There-            Fair
                       1999   2000    2001   2002   2003  after   Total   Value
  Liabilities
    Long-term debt
      Fixed rate     $  423 $  382 $   317 $  131 $  369 $5,000 $ 6,622 $ 6,622
        Average 
          interest 
          rate        8.34%  8.54%   8.48%  8.50%  9.27%  7.25%   7.59%
      Variable rate  $8,000 $8,000 $24,000 $8,000 $2,000      - $50,000 $50,000
        Average 
          interest 
          rate        5.89%  5.89%   5.78%  5.89%  5.89%      -   5.84%

    Interest Rate Swaps
      Receive 
        variable/
          pay fixed  $8,000 $8,000 $ 8,000 $8,000 $2,000 $    - $34,000 $ 1,400
          Average 
          pay rate    6.11%  6.11%   6.11%  6.11%  6.11%      -   6.11%
          Average 
            receive 
              rate    5.39%  5.39%   5.39%  5.39%  5.39%      -   5.39%    

          Interest Rate Risk

               The Company holds long-term debt with variable interest
          rates  indexed to LIBOR, which exposes it to the risk of
          increased interest costs if interest rates rise.  To reduce the
          risk related to unfavorable interest rate movements, the Company
          enters into interest rate swap contracts to pay a fixed rate and
          receive a variable rate that is indexed to LIBOR. The ratio of
          the swap notional amount to the principal amount of variable rate
          debt issued changes periodically based on the Company's ongoing
          assessment of the future trend in interest rate movements.  At
          September 26, 1998, this ratio was 68 percent and no change in
          the ratio is expected at the current time.  The percentage of
          variable rate debt fixed under interest rate swap contracts is
          expected to decrease as scheduled debt payments are made.

          Foreign Exchange Rate Risk

               The Company has not entered into any forward exchange
          contracts to hedge its foreign currency rate risk as of September
          26, 1998 because it does not believe its foreign exchange
          exposure is significant.

          Item 8.  Financial Statements And Supplementary Data

               The following consolidated financial statements of the
          Company set forth in the 1998 Annual Report to Shareholders are
          incorporated herein by reference:

               Consolidated Balance Sheets as of September 26, 1998 and
                  September 27, 1997
               Consolidated Statements of Earnings for the fiscal years
                  ended September 26, 1998, September 27, 1997 and
                  September 28, 1996
               Consolidated Statement of Stockholders' Equity for the

                                         12

                  three fiscal years ended September 26, 1998
               Consolidated Statements of Cash Flows for the fiscal years
                  ended September 26, 1998, September 27, 1997 and
                  September 28, 1996
               Notes to Consolidated Financial Statements
               Report of Independent Certified Public Accountants

          Item 9.  Changes In And Disagreements With Accountants On
                   Accounting And Financial Disclosure

               None.

                                         13

                                      PART III

          Item 10.  Directors And Executive Officers Of The Registrant

               Information concerning directors, appearing under the
          captions "Information Concerning Nominee For Election To Board"
          and "Information Concerning Continuing Directors And Executive
          Officers" in the Company's Proxy Statement filed with the
          Securities and Exchange Commission in connection with the Annual
          Meeting of Shareholders to be held on February 11, 1999, is
          incorporated herein by reference.  Information concerning the
          executive officers is included on page 10 following Item 4 in
          Part I hereof.

          Item 11.  Executive Compensation

               Information concerning executive compensation appearing in
          the Company's Proxy Statement under the caption "Management
          Remuneration" is incorporated herein by reference.

          Item 12.  Security Ownership Of Certain Beneficial Owners And
                    Management

               Information concerning the security ownership of certain
          beneficial owners and management appearing in the Company's Proxy
          Statement under the caption "Principal Shareholders" is
          incorporated herein by reference.

          Item 13.  Certain Relationships And Related Transactions

               Not applicable.

                                         14

                                       PART IV

          Item 14.  Exhibits, Financial Statement Schedules And
                    Reports On Form 8-K

           (a)Financial Statements

                   The following are incorporated by reference in Part II
               of this report:

                   Report of Independent Certified Public Accountants
                   Consolidated Balance Sheets as of September 26, 1998 and
                      September 27, 1997
                   Consolidated Statements of Earnings for the fiscal years
                      ended September 26, 1998, September 27, 1997 and
                      September 28, 1996
                   Consolidated Statement of Stockholders' Equity for the
                      three fiscal years ended September 26, 1998
                   Consolidated Statements of Cash Flows for the fiscal
                      years ended September 26, 1998, September 27, 1997
                      and September 28, 1996
                   Notes to Consolidated Financial Statements

               Financial Statement Schedule

                    The following are included in Part IV of this report:

                                                                       Page
                    Report of Independent Certified Public Account-
                      ants on Schedule                                   18
                    Schedule:
                      II.  Valuation and Qualifying Accounts             19

               All other schedules are omitted either because they are not
          applicable or because the information required is contained in
          the financial statements or notes thereto.

              Exhibits

                 3.1   Amended and Restated Certificate of Incorporation
                       filed February 28, 1990.  (Incorporated by reference
                       from the Company's Form 10-Q dated May 4, 1990.)

                 3.2   Amended and Restated Bylaws adopted May 15, 1990.
                       (Incorporated by reference from the Company's Form
                       10-Q dated August 3, 1990.)

                 4.1   New Jersey Economic Development Authority Economic
                       Development Revenue Bonds Trust Indenture dated as
                       of December 1, 1991.  (Incorporated by reference
                       from the Company's 10-K dated December 18, 1992.)

                 4.2   Credit Agreement dated as of December 5, 1997 by and
                       among J & J Snack Foods Corp. and Certain of its
                       Subsidiaries, as borrowers, Mellon Bank, N.A. and
                       Corestates Bank, N.A., as lenders, and Mellon Bank,
                       N.A. as Administrative Agent (Page 20).

                10.1   Proprietary Exclusive Manufacturing Agreement dated

                                         15

                       July 17, 1984 between J & J Snack Foods Corp. and
                       Wisco Industries, Inc.  (Incorporated by reference
                       from the Company's Form S-1 dated February 4, 1986,
                       file no. 33-2296.)

                10.2*  J & J Snack Foods Corp. Stock Option Plan.
                       (Incorporated by reference from the Company's Form
                       S-8 dated July 24, 1992, file no. 33-50036.)

                10.3*  J & J Snack Foods Corp. 401(K) Profit Sharing Plan,
                       As Amended, Effective January 1, 1989.  Incorporated
                       by reference from the Company's 10-K dated December
                       18, 1992.)

                10.4*  First, Second and Third Amendments to the J & J    
                       Snack Foods Corp. 401(k) Profit Sharing Plan.      
                       (Incorporated by reference from the Company's 10-K 
                       dated December 19, 1996).

                10.6   Lease dated September 24, 1991 between J & J Snack
                       Foods Corp. of New Jersey and A & H Bloom
                       Construction  Co. for the 101,200 square foot
                       building next to the Company's manufacturing 
                       facility in Pennsauken, New Jersey.  (Incorporated
                       by reference from the Company's Form 10-K dated 
                       December 17, 1991).

                10.7   Lease dated August 29, 1995 between J & J Snack 
                       Foods Corp. and 5353 Downey Associates Ltd for the 
                       lease of the Vernon, CA facility. (Incorporated by 
                       reference from the Company's Form 10-K dated
                       December 21, 1995).

                10.8*  J & J Snack Foods Corp. Employee Stock Purchase Plan
                       (Incorporated by reference from the Company's Form
                       S-8 dated May 16, 1996).

                13.1   Company's 1998 Annual Report to Shareholders
                       (except for the captions and information thereof
                       expressly incorporated by reference in this Form
                       10-K, the Annual Report to Shareholders is provided
                       solely for the information of the Securities and
                       Exchange Commission and is not deemed "filed" as
                       part of the Form 10-K.)  (Page 115.)

                22.1   Subsidiaries of J & J Snack Foods Corp. (Page 148.)

                24.1   Consent of Independent Certified Public Accountants.
                       (Page 149.)

          *Compensatory Plan

           (b)Reports on Form 8-K

              No reports on Form 8-K have been filed by the Company during
          the last quarter of the period covered by this report.

                                         16

                                    SIGNATURES

              Pursuant to the requirements of Section 13 or 15(d) of the
          Securities Exchange Act of 1934, the Registrant has duly caused
          this report to be signed on its behalf by the undersigned,
          thereunto duly authorized.

                                         J & J SNACK FOODS CORP.

          December 21, 1998              By /s/ Gerald B. Shreiber 
                                            Gerald B. Shreiber,
                                            Chairman of the Board,
                                            President, Chief Executive
                                            Officer and Director

              Pursuant to the requirements of the Securities Exchange Act
          of 1934, this report has been signed below by the following
          persons on behalf of the Registrant and in the capacities and on
          the dates indicated.

          December 21, 1998                 /s/ Robert M. Radano          
                                            Robert M. Radano, Senior Vice
                                            President, Sales, Chief Operating
                                            Officer and Director

          December 21, 1998                 /s/ Dennis G. Moore           
                                            Dennis G. Moore, Senior Vice 
                                            President, Chief Financial 
                                            Officer and Director         

          December 21, 1998                 /s/ Stephen N. Frankel        
                                            Stephen N. Frankel, Director

          December 21, 1998                 /s/ Peter G. Stanley          
                                            Peter G. Stanley, Director

          December 21, 1998                 /s/ Leonard M. Lodish         
                                            Leonard M. Lodish, Director

                                         17

                       REPORT OF INDEPENDENT CERTIFIED PUBLIC
                               ACCOUNTANTS ON SCHEDULE

          Board of Directors
          J & J Snack Foods Corp.

              In connection with our audit of the consolidated financial

          statements of J & J Snack Foods Corp. and Subsidiaries referred

          to in our report dated November 3, 1998 which is included in the

          Annual Report to Shareholders and incorporated by reference in

          Part II of this form, we have also audited Schedule II for each

          of the three years in the period ended September 26, 1998.  In

          our opinion, this schedule presents fairly, in all material

          respects, the information required to be set forth therein.

                                       GRANT THORNTON LLP

          Philadelphia, Pennsylvania
          November 3, 1998

                                       18

     SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                            Opening    Charged to                   Closing
     Year  Desscription     balance      expense      Deductions    balance   

     1998 Allowance 
          for doubtful 
          accounts          $392,000     $250,000     $ 45,000(1)  $597,000

     1997 Allowance 
          for doubtful 
          accounts           257,000      252,000      117,000(1)   392,000

     1996 Allowance 
          for doubtful 
          accounts           271,000       64,000       78,000(1)   257,000

     (1) Write-off unncollectible accounts receivable.

                             19                                              

     EXHIBIT  4.2   Credit Agreement dated as of December 5, 1997 by and
                    among J & J Snack Foods Corp. and Certain of its
                    Subsidiaries, as borrowers, Mellon Bank, N.A. and
                    Corestates Bank, N.A., as lenders, and Mellon Bank,
                    N.A. as Administrative Agent 

                                                                          

                                              

                                 CREDIT AGREEMENT
                            dated as of December 5, 1997
                                    by and among

                             J & J SNACK FOODS CORP. and
                     CERTAIN OF ITS SUBSIDIARIES, AS BORROWERS,
              MELLON BANK, N.A. and CORESTATES BANK, N.A., AS LENDERS,
                   and MELLON BANK, N.A., AS ADMINISTRATIVE AGENT

                                              

          PR\79666\1
                                      -1-

          Exhibits
          A-1       RC Note                          DBR to Provide
          A-2       Term Note                        DBR to Provide
          B         Borrowing Notice                 DBR to Provide
          C         Prepayment Notice                DBR to Provide
          D         LIBO Rate Selection Notice       DBR to Provide
          E         Officer's Certificate            DBR to Provide
          F         Assignment and Acceptance        DBR to Provide
          G         Joinder Supplement               DBR to Provide

          Schedules
          1.1       Lender's Commitments             Banks to Provide
          4.1(a)    Jurisdictions                    BRCM to Provide
          4.1(n)    Property Owned or Leased         BRCM to Provide
          4.1(p)    ERISA Matters                    BRCM to Provide
          5.10      Joining Subsidiaries as
                    Borrower                         DBR to Provide
          7.1       Remaining Indebtedness           BRCM to Provide
          7.2       Permitted Liens                  BRCM to Provide
          7.4       Acquisitions Conditions          DBR to Provide
          7.5       Anticipated Transfer             BRCM to Provide

          PR\79666\1
                                      -2-

                                  CREDIT AGREEMENT

                    THIS CREDIT AGREEMENT, dated as of December 5, 1997, by
          and among J & J SNACK FOODS CORP., a New Jersey corporation
          (together with its successors, "J & J"), the Subsidiaries of J &
          J referred to on the signature pages hereto and such other
          Subsidiaries of J & J which may from time to time become
          Borrowers hereunder in accordance with the provisions hereof
          (collectively with J & J, the "Borrowers"), MELLON BANK, N.A., a
          national banking association (together with its successors and
          assigns, "Mellon") and CORESTATES BANK, N.A., a national banking
          association (together with its successors and assigns
          "CoreStates"; and CoreStates and Mellon, together with other
          lender parties hereto from time to time pursuant to Section 12.9
          below and their successors and assigns, the "Lenders"), MELLON
          BANK, N.A., a national banking association, as Administrative
          Agent for itself and for the Lenders hereunder (in such capacity,
          together with its successors and assigns in such capacity, the
          "Administrative Agent").  Certain terms used herein are defined
          in Article 11 below.
                            W I T N E S S E T H   T H A T
                    WHEREAS, J & J, ICEE USA CORP., a Delaware corporation,
          a Subsidiary of J & J and a Borrower hereunder ("IUC"), and COCA-
          COLA FINANCIAL CORPORATION, a Delaware corporation ("CCFC")
          entered into an Assignment and Sale Agreement dated October 20,
          1997 (the "Assignment") whereby CCFC will sell to IUC and IUC
          will purchase from CCFC a Zero Coupon Convertible Subordinated
          Note (the "NIC Note") due December 23, 1999, in the principal
          amount of $1,609,359.00 issued by National ICEE Corporation
          ("NIC") together with related rights as set forth in the
          Assignment; and
                    WHEREAS, J & J and IUC intend to exercise certain
          rights acquired under the Assignment in order to acquire all of
          the outstanding capital stock of NIC; and
                    WHEREAS, J & J has requested that the Lenders extend
          the Loans to the Borrowers for the purposes described herein; and
                    WHEREAS, the Lenders have agreed to extend the Loans to
          the Borrowers on the terms and conditions described herein.
                    NOW, THEREFORE, in consideration of the premises and of
          the mutual covenants herein contained and intending to be legally
          bound hereby, the parties hereto hereby agree as follows.

                                      ARTICLE 1

                                   CREDIT FACILITY 

          1.1  COMMITMENT TO LEND.

                    (a)  Term Loan.  Upon the terms and subject to the
          conditions of this Agreement, each Lender agrees to make, on the
          Closing Date, a Loan (a "Term Loan") to the Borrowers in the
          amount of such Lender's Term Loan Commitment.  The total amount
          of the Term Loan Commitment of all Lenders on the Agreement Date
          is $40,000,000.00.

                    (b)  Revolving Credit Loans.  Upon the terms and
          subject to the conditions of this Agreement, each Lender agrees
          to make, from time to time during the period from and including
          the Closing Date to but excluding the RC Maturity Date, one or
          more Loans ("RC Loans") to the Borrowers in an aggregate unpaid
          principal amount not exceeding at any time such Lender's RC
          Commitment at such time; provided, however, that the Borrowers
          shall not request, and the Lenders shall have no obligation to
          make, any RC Loans at any time in excess of the Available RC
          Commitment.  The total amount of the RC Commitment of all Lenders
          on the Agreement Date is $30,000,000.00.

               1.2  JOINT AND SEVERAL OBLIGATIONS.

                    WHETHER OR NOT EXPRESSLY STATED HEREIN OR IN ANY OTHER
          LOAN DOCUMENT, ALL OBLIGATIONS OF THE BORROWERS (OR OF ANY
          BORROWER) HEREUNDER AND UNDER EACH OTHER LOAN DOCUMENT (WHETHER
          IN CONNECTION WITH LOANS OR OTHER  OBLIGATIONS) ARE JOINT AND
          SEVERAL OBLIGATIONS OF ALL BORROWERS.

               1.3  MANNER OF BORROWING.

                    (a)  Notice of Borrowing.  J & J (on behalf of the
          Borrowers) shall give the Administrative Agent notice (which
          shall be irrevocable), in the case of Prime Rate Loans, no later
          than 12:00 p.m. (Philadelphia, Pennsylvania time) on the Business
          Day for the making of such Loans and, in the case of LIBO Rate
          Loans, 12:00 p.m. (Philadelphia, Pennsylvania, time) three
          Business Days before the requested date for the making of such
          Loans.  Each such notice shall be in the form of Exhibit B hereto
          and shall specify (i) whether the requested Loans are to be Term
          Loans or RC Loans, (ii) the requested date for the making of such
          Loans which date shall be a Business Day, (iii) the Type or Types
          of Loans requested and (iv) the amount of each such Type of Loan,
          which amount shall be $1,000,000.00 or any integral multiple of
          $500,000.00 in excess thereof (except that in the case of RC
          Loans, the amount of the requested Loan may be less if the amount
          requested is equal to the total Available RC Commitment).  Upon
          receipt of any such notice, the Administrative Agent shall

          PR\79666\1
                                      -2-

          promptly notify each applicable Lender of the contents thereof
          and of the amount and Type of each Loan to be made by such Lender
          on the requested date specified therein.

                    (b)  Funding by Lenders.  Not later than 3:00 p.m.
          (Philadelphia, Pennsylvania time) on each requested date for the
          making of Loans, each Lender shall make available to the
          Administrative Agent, in Dollars and in funds immediately
          available to the Administrative Agent at the office designated by
          the Administrative Agent, the Loans to be made by such Lender on
          such date, provided however that if a Lender does not receive
          timely notice from the Administrative Agent as set forth in
          paragraph (a) above, such Lender shall fund the required amount
          promptly upon receipt of such notice.  The obligations of the
          Lenders hereunder are several; accordingly, any Lender's failure
          to make any Loan to be made by it on the requested date therefor
          shall not relieve any other Lender of its obligation to make any
          Loan to be made by it on such date, but the latter shall not be
          liable for the former's failure.

                    (c)  Permitted Assumption as to Funding.  Unless the
          Administrative Agent shall have received notice from a Lender
          prior to 12:00 p.m. (Philadelphia, Pennsylvania time) on the
          requested date for the making of any Loan that such Lender will
          not make available to the Administrative Agent the Loan requested
          to be made by it on such date, the Administrative Agent may
          assume that such Lender has made such Loan available.  The
          Administrative Agent in its sole discretion and in reliance upon
          such assumption, may make available to the Borrowers on the
          requested date a corresponding amount on behalf of such Lender. 
          If and to the extent such Lender shall not have made available to
          the Administrative Agent the Loans requested to be made by such
          Lender on such date and the Administrative Agent shall have so
          made available to the Borrowers a corresponding amount on behalf
          of such Lender, (i) such Lender shall, on demand, pay to the
          Administrative Agent such corresponding amount together with
          interest thereon, for each day from the date such amount shall
          have been so made available by the Administrative Agent to the
          Borrowers until the date such amount shall have been paid in full
          to the Administrative Agent, at the Federal Funds Rate until (and
          including) the third Business Day after demand is made and
          thereafter at the Prime Rate, and (ii) the Administrative Agent
          shall be entitled to all interest payable by Borrowers on such
          amount for the period commencing on the date such amount was
          advanced by the Administrative Agent to but not including the
          date on which such amount is received by the Administrative Agent
          from such Lender.  Moreover, any Lender that shall have failed to
          make available the required amount shall not be entitled to vote
          on such matters as Lenders or Required Lenders are otherwise
          entitled to vote on or consent to or approve under this Agreement
          and the other Loan Documents until such amount with interest is
          paid in full to the Administrative Agent by such Lender.  Without
          limiting any obligations of any Lender pursuant to this paragraph
          (c), if such Lender does not pay such corresponding amount

          PR\79666\1
                                      -3-

          promptly upon the Administrative Agent's demand therefor, the
          Administrative Agent shall notify J & J (on behalf of the
          Borrowers) and the Borrowers shall promptly repay such
          corresponding amount to the Administrative Agent together with
          accrued interest thereon at the applicable rate or rates on such
          Loans.

                    (d)  Disbursements of Funds to Borrowers.  All amounts
          made available to the Administrative Agent in accordance with
          paragraph (b) above shall be disbursed by the Administrative
          Agent promptly but in any event not later than 4:00 p.m.
          (Philadelphia, Pennsylvania time) on the requested date therefor
          in Dollars, in funds immediately available to the Borrowers by
          crediting such amount to an account of J & J at the
          Administrative Agent's Domestic Lending Office or in such other
          manner as may be agreed to by J & J and the Administrative Agent.

               1.4  SCHEDULED REPAYMENTS. 

                    (a)  Term Loans.  The Term Loans shall mature and
          become due and payable and shall be repaid by the Borrowers in
          monthly installments, payable on successive Monthly Payment Dates
          commencing on January 30, 1998, and ending on the Term Loan
          Maturity Date (whether or not such date would otherwise be a
          Monthly Payment Date).  Each such installment shall be in an
          amount equal to $666,666.67, provided that the final installment
          shall be in an amount equal to the aggregate amount of the Term
          Loans then outstanding.

                    (b)  RC Loans.  The aggregate outstanding principal
          amount of the RC Loans shall mature and become due and payable,
          and shall be repaid by the Borrowers, on the RC Maturity Date.

               1.5  VOLUNTARY PREPAYMENTS.

                    (a)  Optional Prepayments.  The Borrowers may, at any
          time and from time to time, prepay the Loans in whole or in part,
          without premium or penalty (but with any payment required under
          Section 2.4 (Breakage)), except that any optional partial
          prepayment (other than a prepayment of all outstanding RC Loans)
          shall be in an aggregate principal amount of $500,000.00 or any
          integral multiple of $250,000.00 in excess thereof.  Amounts to
          be so prepaid shall irrevocably be due and payable on the date
          specified in the applicable notice of prepayment delivered
          pursuant to paragraph (b) of this Section 1.5 together with
          interest thereon as provided in Section 1.8 (Interest) and
          together with any payment required under Section 2.4 (Breakage).

                    (b)  Application and Timing of Prepayments.

          PR\79666\1
                                      -4-

                              (i)  Notice.  The Borrowers shall give the
          Administrative Agent notice of each prepayment of Loans, which
          notice, in the case of a prepayment of Prime Rate Loans, shall be
          given no later than 1:00 p.m. (Philadelphia, Pennsylvania time)
          one (1) Business Day before and, in the case of a prepayment of
          LIBO Rate Loans, no later than 12:00 P.M. (Philadelphia,
          Pennsylvania, time) three (3) Business Days before, the date of
          such prepayment.  Each such notice of prepayment shall be in the
          form of Exhibit C hereto and shall specify (i) the date such
          prepayment is to be made and (ii) whether the Loans to be prepaid
          are Term Loans or RC Loans, and (iii) the amount and Type and, in
          the case of any LIBO Rate Loan, the last day of the applicable
          Interest Period for the Loan to be prepaid.  Upon receipt of any
          such notice, the Administrative Agent shall promptly notify each
          applicable Lender of the contents thereof.

                              (ii) Timing and Application of Voluntary
          Prepayments.  Any voluntary prepayments pursuant to paragraph (a)
          of this Section 1.5 shall be applied in the following order
          unless otherwise directed by the Borrowers:

                              (A)  First, prepayments shall be applied
                         against any amounts due and payable in respect of
                         the Loan Obligations.

                              (B)  Second, prepayments shall be applied
                         against the RC Loans but with no corresponding
                         reduction in the amount of the RC Commitment
                         unless otherwise specified by J & J (on behalf of
                         the Borrowers.

                              (C)  Third, prepayments shall be applied
                         against the Term Loans, applied to each of the
                         respective remaining installments thereof in
                         inverse order of their maturity.

          Any excess shall be applied to any other amounts owing in respect
          of the Loan Obligations and, if all such Loan Obligations have
          been then paid in full, then any excess amount shall be returned
          to J & J (on behalf of the Borrowers) or as otherwise required by
          applicable Law.
                    (c)  Certain Provisions Respecting Prepayments
          Generally.  Prepayments shall be subject to the interest payment
          provisions, as applicable, set forth in Section 1.8 and the
          breakage indemnity provisions, as applicable, set forth in
          Section 2.4 below.

               1.6  PAYMENTS BY THE BORROWERS IN GENERAL.

                    (a)  Time, Place and Manner.  All payments due to the
          Administrative Agent under the Loan Documents shall be made to
          the Administrative Agent at the office designated by the

          PR\79666\1
                                      -5-

          Administrative Agent on the signature pages hereto or to such
          other Person or at such other address as the Administrative Agent
          may designate by written notice to J & J on behalf of the
          Borrowers.  All payments due to any Lender under the Loan
          Documents, whether made to the Administrative Agent or directly
          to a Lender, shall be made for the account of, in the case of
          payments in respect of LIBO Rate Loans, such Lender's Eurodollar
          Lending Office and, in the case of all other payments, such
          Lender's Domestic Lending Office.  Except as otherwise set forth
          in this Agreement, a payment shall not be deemed to have been
          made on any day unless such payment has been received by the
          required Person, at the required place of payment, in Dollars in
          funds immediately available to such Person, no later than 1:00
          p.m. (Philadelphia, Pennsylvania time) on such day; provided,
          however, that the failure of the Borrowers to make any such
          payment by such time shall not constitute a Default hereunder so
          long as such payment is received no later than 3:00 p.m.
          (Philadelphia, Pennsylvania time) on such day, but any such
          payment received later than 1:00 p.m. (Philadelphia, Pennsylvania
          time) on such day shall be deemed to have been made on the next
          Business Day for the purpose of calculating interest on the
          amount paid, provided further, that any such payment made with
          the proceeds of Loans shall be deemed to have been made on the
          date of the making of such Loans, so long as such proceeds are
          immediately so applied and are not otherwise disbursed to the
          Borrowers.

                    (b)  No Reductions.  All payments due to the
          Administrative Agent or any Lender under this Agreement and the
          other Loan Documents, shall be made by the Borrowers without any
          reduction or deduction whatsoever, including any reduction or
          deduction for any charge, set-off, holdback, recoupment or
          counterclaim (whether sounding in tort, contract or otherwise).

                    (c)  Authorization to Charge Accounts.  The Borrowers
          hereby authorize each Lender Party, each participant and each
          Affiliate of each Lender Party if and to the extent any amount
          payable by the Borrowers under the Loan Documents (whether
          payable to such Person or to any other Lender Party) is not
          otherwise paid when due, to charge such amount against any or all
          of the demand deposit or other accounts of any Borrower with such
          Person (whether maintained at a branch or office located within
          or without the United States), with the Borrowers remaining
          jointly and severally liable for any deficiency.  The Person so
          charging any such account shall give the relevant Borrower prompt
          notice thereof, but any failure to give or delay in giving such
          notice shall not affect such Person's right to effect such
          charge.  Such charging of accounts shall be subject to the
          provisions of Section 12.18 hereof.

                    (d)  Extension of Payment Dates if Not a Business Day.
           Whenever any payment to the Administrative Agent or any Lender
          under the Loan Documents would otherwise be due (except by reason
          of acceleration) on a day that is not a Business Day, such

          PR\79666\1
                                      -6-

          payment shall instead be due on the next succeeding Business Day
          unless, in the case of a payment of the principal of LIBO Rate
          Loans, such extension would cause payment to be due in the next
          succeeding calendar month, in which case such due date shall be
          advanced to the next preceding Eurodollar Business Day.  If the
          due date for any payment under the Loan Documents is extended
          (whether by operation of any Loan Document, applicable Law or
          otherwise), such payment shall bear interest for such extended
          time at the rate of interest applicable hereunder.

                    (e)  Disbursement of Payments to Lenders.  The
          Administrative Agent shall promptly distribute to each applicable
          Lender Party its ratable share of each payment received by the
          Administrative Agent under the Loan Documents for the account of
          such Lender Party by crediting an account of such Lender Party at
          the Administrative Agent's office or by wire transfer to an
          account of such Lender Party at an office of any other commercial
          bank located in the United States or at any Federal Reserve Bank
          designated by such Person.  Unless the Administrative Agent shall
          have received notice from J & J (on behalf of the Borrowers)
          prior to the date on which any payment is due to any Lender
          Parties under the Loan Documents that the Borrowers will not make
          such payment in full, the Administrative Agent may assume that
          the Borrowers have made such payment in full to the
          Administrative Agent on such date and the Administrative Agent,
          in its sole discretion may, in reliance upon such assumption,
          cause to be distributed to each applicable Lender Party on such
          due date, a corresponding amount with respect to the amount then
          due to such Person.  If and to the extent that the Borrowers
          shall not have so made such payment in full to the Administrative
          Agent, and the Administrative Agent shall have so distributed to
          such Lender or Lenders a corresponding amount, such Lender
          Parties shall, on demand, repay to the Administrative Agent the
          amount so distributed together with interest thereon, for each
          day from the date such amount is distributed to such Lender Party
          until the date the such Person repays such amount to the
          Administrative Agent, at the Federal Funds Rate until (and
          including) the third Business Day after demand is made and
          thereafter at the Prime Rate.  Moreover, any Lender Party that
          shall have failed to make available the required amount shall not
          be entitled to vote on such matters as Lenders or Required
          Lenders are otherwise entitled to vote on or consent to or
          approve under this Agreement and the other Loan Documents until
          such amount with interest is paid in full to the Administrative
          Agent by such Lender.  Nothing in this Section 1.6 shall relieve
          the Borrowers from any payment obligations.

                    (f)  Breakage Costs on LIBO Rate Loans.  Any repayment
          or prepayment of a LIBO Rate Loan made on a day other than the
          last day of the applicable Interest Period therefor shall be
          subject to payments in respect of breakage costs as required to
          be paid in respect thereof pursuant to Section 2.4 below.

          PR\79666\1
                                      -7-

               1.7  REDUCTIONS OF RC COMMITMENT.

                    (a)  Optional Reductions.  The Borrowers may reduce the
          RC Commitment by giving the Administrative Agent notice (which
          shall be irrevocable) thereof no later than 11:00 a.m.
          (Philadelphia, Pennsylvania, time) on the third Business Day
          before the requested date of such reduction, provided, that each
          partial reduction thereof shall be in an amount equal to
          $5,000,000.00 or any integral multiple of $1,000,000.00 in excess
          thereof and,provided, further, that no reduction shall reduce
          the RC Commitment to an amount less than the aggregate of the
          principal amount of all RC Loans outstanding on such date (after
          giving effect to any repayment or prepayment of RC Loans made on
          or prior to such date).  Upon receipt of any such notice, the
          Administrative Agent shall promptly notify each Lender of the
          contents thereof and the amount (based on a pro rata reduction to
          each Lender's RC Commitment) to which such Lender's RC Commitment
          is to be reduced.

                    (b)  No Reinstatement of RC Commitment.  All reductions
          of the RC  Commitment are permanent and the RC Commitment cannot
          be restored without the written consent of all Lenders.

               1.8  INTEREST.

                    (a)  Interest Rates in General.  Subject to the terms
          and conditions of this Agreement, each Loan, at the option of the
          Borrowers, shall bear interest on the outstanding principal
          amount thereof until paid in full at a rate per annum equal to
          (i) the Prime Rate as in effect from time to time or (ii) the
          applicable LIBO Rate for a specified Interest Period plus in the
          case of clause (ii) the Applicable Margin.

                    (b)  Election of LIBO Rate.  Unless otherwise
          designated by the Borrowers as a LIBO Rate Loan in accordance
          with this paragraph (b), each Loan shall be deemed to be a Prime
          Rate Loan as more fully set forth below.

                              (i)  Prime Rate Unless Otherwise Designated.
           Prime Rate Loans shall continue as Prime Rate Loans unless and
          until such Loans are converted into Loans of another Type.  LIBO
          Rate Loans for any Interest Period shall continue as Loans of
          such Type until the end of the then current Interest Period
          therefor, at which time they shall be automatically converted
          into Prime Rate Loans unless J & J (on behalf of the Borrowers)
          shall have given the Administrative Agent notice in accordance
          with clause (ii) below requesting that such Loans continue as
          LIBO Rate Loans for another Interest Period of a specified
          duration.

          PR\79666\1
                                      -8-

                              (ii) Election of LIBO Rate.  To elect a LIBO
          Rate, J & J (on behalf of the Borrowers) shall give the
          Administrative Agent notice (which shall be irrevocable) no later
          than 12:00 p.m. (Philadelphia, Pennsylvania, time) three (3)
          Eurodollar Business Days before the requested date of the
          funding, conversion or continuation which date shall be a
          Eurodollar Business Day.  Each such notice shall be in the form
          of Exhibit D hereto and shall specify (A) the requested date of
          such funding, conversion or continuation, (B) whether the subject
          Loan is a new advance or an existing Loan that is to be converted
          or continued, (C) in the case of any LIBO Rate Loan being
          continued, the last day of the current Interest Period, (D)
          whether such Loan is to be a Term Loan, or an RC Loan and (E) the
          amount of, and the desired Interest Period for, the Loan subject
          to such LIBO Rate election,provided that the Borrowers shall not
          be entitled to select an Interest Period for any Loan which shall
          end on a date later than the Maturity Date applicable to such
          Loan.  Upon receipt of any such notice, the Administrative Agent
          shall promptly notify each applicable Lender of the contents
          thereof.

                              (iii)LIBO Rate Suspended During Event of 
          Default.  Notwithstanding anything to the contrary contained in
          clauses (i) or (ii) of this paragraph (b), so long as an Event of
          Default shall have occurred and be continuing, the Administrative
          Agent may (and, at the request of the Required Lenders, shall)
          notify J & J (on behalf of the Borrowers) that Loans may only be
          converted into or continued upon the expiration of the applicable
          current Interest Period therefor as Prime Rate Loans or Loans of
          such specified Types as shall be acceptable to the Required
          Lenders.  Thereafter, until no Event of Default shall continue to
          exist, Loans may not be converted into or continued as Loans of
          any Type other than Prime Rate Loans or one or more of such
          specified Types.

                              (iv) Limitation on Types of Loans. 
          Notwithstanding anything to the contrary contained in this
          Agreement, the Borrowers shall borrow, prepay, convert and
          continue Loans in a manner such that (A) unless otherwise agreed
          to by the Administrative Agent, the aggregate principal amount of
          LIBO Rate Loans of the same Type shall, at all times, be not less
          than $1,000,000.00 and (B) there shall be, at any one time, no
          more than the number of Interest Periods specified below in
          effect for each Loan:

       ?????             Maximum No. of
                         Interest Periods                       Loan

                         five (5)                           RC Loans
                         three (3)                          Term Loan

                              (v)  Flexibility as to Source.  Each Lender
          may fund LIBO Rate Loans from any source that such Lender deems

          PR\79666\1
                                      -9-

          (in its sole discretion) appropriate without loss of any rights
          hereunder.

                    (c)  Interest Payment Dates.  Interest shall be
          payable, (i) in the case of Prime Rate Loans, monthly in arrears
          on each Monthly Payment Date, (ii) in the case of LIBO Rate
          Loans, on the last day of each applicable Interest Period (and,
          in the case of any LIBO Rate Loan having an Interest Period
          longer than three months, on each three month anniversary of the
          first day of such Interest Period) and (iii) in the case of any
          Loan, when such Loan shall be due (whether at maturity, upon
          mandatory prepayment, by reason of notice of prepayment or
          acceleration or otherwise) or converted, but only to the extent
          then accrued on the amount then so due or converted.

                    (d)  Default Rate.  At any time that an Event of
          Default shall have occurred and shall be continuing, any amount
          payable hereunder and under each other Loan Document shall bear
          interest (whether before or after judgment), payable on demand,
          at a rate per annum equal to the applicable Default Rate.

               1.9  FEES. 

                    (a)  Commitment Fees.  The Borrowers shall pay to the
          Administrative Agent, for the account of each Lender, a
          commitment fee calculated at a rate per annum equal to 0.25% on
          the daily unused amount of such Lender's RC Commitment for each
          day from and including the Closing Date to but excluding the RC
          Maturity Date.  The commitment fee shall be payable in arrears
          (i) on successive Quarterly Payment Dates beginning with the
          first Quarterly Payment Date after the Closing Date, (ii) on the
          date of any reduction of the RC Commitment (to the extent accrued
          and unpaid on the amount of such reduction) and (iii) on the RC
          Maturity Date.

                    (b)  Other Fees.  The Borrowers shall pay to the
          Administrative Agent for the sole account of the Administrative
          Agent, an annual Administrative Agent's fee as have been or may
          be agreed to in writing by the Borrowers or any of them and the
          Administrative Agent in connection with this Agreement and the
          transactions contemplated by this Agreement.

               1.10 COMPUTATION OF INTEREST AND FEES.  Interest and
          commitment fees shall be computed on the basis of a year of 360
          days and paid for the actual number of days elapsed.  Interest
          and commitment fees for any period shall be calculated from and
          including the first day thereof to but excluding the last day
          thereof.

          PR\79666\1
                                      -10-

               1.11 PROMISSORY NOTES; RECORDS OF ACCOUNT.  Each Lender's
          Loans and the Borrowers' joint and several obligations to repay
          such Loans with interest in accordance with the terms of this
          Agreement shall be evidenced by this Agreement, the Register and
          other records of the Administrative Agent and such Lender and, in
          the case of Term Loans, a single Term Note payable to the order
          of such Lender, and in the case of RC Loans, a single RC Note
          payable to the order of such Lender.  The records of each Lender
          shall be prima facie evidence of such Lender's Loans and, in each
          case, of accrued interest thereon and all payments made in
          respect thereto.  In the event that there is any dispute
          concerning the amount of any such obligations, the amount of each
          Lender's Commitment with respect to RC Loans and Term Loans and
          the amount of outstanding Loan Obligations of each and every Type
          shall at all times be ascertained from the records of the
          Administrative Agent, including the Register, all of which shall
          be conclusive absent manifest error.

               1.12 PRO RATA TREATMENT.  Except to the extent otherwise
          provided herein, (a) Term Loans shall be made by, and principal,
          interest and fees in respect thereof shall be paid or repaid to,
          the Lenders pro rata in accordance with their respective
          Commitments and interest in Term Loans; and (b) RC Loans shall be
          made by, and principal, interest and fees in respect thereof
          shall be paid or repaid to, the Lenders pro rata in accordance
          with their respective RC Commitments and interest in RC Loans.

               1.13 TAXES ON PAYMENTS. 

                    (a)  Taxes Payable by the Borrowers.  If any Tax is
          required to be withheld or deducted from, or is otherwise payable
          by the Borrowers in connection with, any payment due to the
          Administrative Agent or any Lender that is not a "United States
          Person" (as such term is defined in Section 7701(a)(30) of the
          Code), the Borrowers (i) shall, if required, withhold or deduct
          the amount of such Tax from such payment and, in any case, pay
          such Tax to the appropriate taxing authority in accordance with
          applicable Law and (ii) except in the case of any Bank Tax, shall
          pay to such Lender or the Administrative Agent such additional
          amounts as may be necessary so that the net amount received by
          such Person with respect to such payment, after withholding or
          deducting all Taxes required to be withheld or deducted, is equal
          to the full amount payable hereunder.  If any Tax is withheld or
          deducted from, or is otherwise payable by the Borrowers in
          connection with, any payment due to any Lender or the
          Administrative Agent hereunder, the Borrowers shall furnish to
          such Person the original or a certified copy of a receipt (if
          any) for such Tax from the applicable taxing authority or other
          evidence of payment thereof satisfactory to such Person within 30
          days after the date of such payment (or, if such receipt shall

          PR\79666\1
                                      -11-

          not have been made available by such taxing authority within such
          time, the Borrowers shall use reasonable efforts to promptly
          obtain and furnish such receipt).  If the Borrowers fail to pay
          any such Taxes when due to the appropriate taxing authority or
          fail to remit to any Lender or the Administrative Agent the
          required receipts or other evidence of payment thereof
          satisfactory to such Person, the Borrowers shall indemnify such
          Person for any Taxes, interest, penalties or additions to Tax
          that may become payable by such Person as a result of any such
          failure. 

                    (b)  Taxes Payable by any Lender or the Administrative
          Agent.  The Borrowers shall, promptly upon request by any Lender
          or the Administrative Agent that is not a United States Person,
          pay to such Person an amount equal to (i) all Taxes (other than
          Bank Taxes and without duplication of amounts paid pursuant to
          the preceding paragraph (a)) payable by such Person with respect
          to any payment due to such Person hereunder and (ii) all Taxes
          (other than Bank Taxes) payable by such Person as a result of
          payments made by the Borrowers (whether made to a taxing
          authority or to such Person pursuant to the preceding paragraph
          (a) or this paragraph (b)).

                    (c)  Credits and Deductions.  If any Lender or the
          Administrative Agent is, in its sole opinion, able to apply for
          any refund, offset, credit, deduction or other reduction in Taxes
          by reason of any payment made by the Borrowers under the
          preceding paragraphs (a) or (b), such Lender or the
          Administrative Agent, as the case may be, shall use reasonable
          efforts to obtain such refund, offset, credit, deduction or other
          reduction and, upon receipt thereof, will pay to the Borrowers
          such amount, not exceeding the increased amount paid by the
          Borrowers, as is equal to the net after-tax value to such Lender
          or the Administrative Agent, in its sole opinion, of such part of
          such refund, offset, credit, deduction or other reduction as it
          considers to be allocable to such payment by the Borrowers,
          having regard to all of such Person's dealings giving rise to
          similar refunds, offsets, credits, deductions or other reductions
          in relation to the same tax period and to the cost of obtaining
          the same; provided, however, that if such Person has made a
          payment to the Borrowers pursuant to this paragraph (c) and the
          applicable refund, offset, credit, deduction or other reduction
          in Tax is subsequently disallowed, the Borrowers shall, promptly
          upon request by the Administrative Agent or such Lender refund to
          such Person that portion of such payment determined by such
          Person, in its sole opinion, relating to such disallowance; and 
          provided, further that (i) the Administrative Agent or such
          Lender, as the case may be, shall not be obligated to disclose to
          the Borrowers any information regarding its Tax affairs or
          computations and (ii) nothing in this paragraph (c) shall
          interfere with the right of such Person to arrange its Tax
          affairs as it deems appropriate.

          PR\79666\1
                                      -12-

                    (d)  Exemption from U.S. Withholding Taxes.  Each
          Lender that is not a United States Person shall submit to the
          Borrowers and the Administrative Agent, on or before the fifth
          day prior to the first Monthly Payment Date occurring after the
          Closing Date (or, in the case of a Person that is not a United
          States Person and that became a Lender by assignment, promptly
          upon such assignment), two duly completed and signed copies of
          either (A) Form 1001 of the United States Internal Revenue
          Service entitling such Lender to a complete exemption from
          withholding on all amounts to be received by such Lender pursuant
          to this Agreement and the Loans, (B) Form 4224 of the United
          States Internal Revenue Service relating to all amounts to be
          received by such Lender pursuant to this Agreement and the Loans
          or (C) in the case of a Lender Party that is claiming an
          exemption from United States withholding tax under Section 871(h)
          or 881(c) of the Internal Revenue Code with respect to payments
          of "portfolio interest" two accurate and complete signed original
          Forms W-8 (or any successor form prescribed by the Internal
          Revenue Service, certifying that such Lender Party is exempt from
          or is entitled to a reduced rate of United States withholding tax
          on payments under this Agreement or the Notes) and, if such
          Lender Party delivers such Forms W-8 (or successor form), two
          signed certificates that such Lender Party is not (1) a "bank"
          for purposes of Section 881(c) of the Internal Revenue Code, (2)
          is not a 10% shareholder (within the meaning of Section
          871(h)(3)(B) of the Internal Revenue Code) of any Borrower and
          (3) is not a controlled foreign corporation related to any
          Borrower (within the meaning of Section 864(d)(4) of the Internal
          Revenue Code), as appropriate,   Each such Lender shall, from
          time to time after submitting either such form, submit to the
          Borrowers and the Administrative Agent such additional duly
          completed and signed copies of one or the other such forms (or
          any successor forms as shall be adopted from time to time by the
          relevant United States taxing authorities) as may be (A)
          requested in writing by the Borrowers or the Administrative Agent
          and (B) appropriate under the circumstances and under then
          current United States law or regulations to avoid or reduce
          United States withholding taxes on payments in respect of all
          amounts to be received by such Lender pursuant to this Agreement
          or the Loans.  Upon the request of the Borrowers or the
          Administrative Agent, each Lender that is a United States Person
          shall submit to the Borrowers and the Administrative Agent a
          certificate to the effect that it is a United States Person. 

                    (e)  Obligations under this Section 1.13 shall survive
          payment of the Loans.

               1.14 REGISTERED NOTES AND LOANS.

                    (a)  Request for Registration.  Any Lender may request
          the Borrowers (through the Administrative Agent), and the
          Borrowers agree thereupon, to register such Loans as provided in
          Section 1.14(c) and to issue such Lender's Note(s), evidencing

          PR\79666\1
                                      -13-

          such Loans, or to exchange such Note(s) for new Note(s),
          registered as provided in Section 1.14(c) (each, a "Registered
          Note").  A Registered Note may not be exchanged for a Note that
          is not in registered form.  A Registered Note shall be deemed to
          be and shall be a Note for all purposes of this Agreement and the
          other Loan Documents.

                    (b)  Delivery of Tax Forms.  Each Non-U.S. Lender that
          requests or holds a Registered Note pursuant to Section 1.14(a)
          or registers its Loans pursuant to Section 1.14(a) (a "Registered
          Lender") (or, if such Registered Lender is not the beneficial
          owner thereof, such beneficial owner) shall deliver to J & J (on
          behalf of the Borrowers) (with a copy to the Administrative
          Agent) prior to or at the time such Non-U.S. Lender becomes a
          Registered Lender, the applicable form described in Section
          1.13(d) (or such successor and related forms as may from time to
          time be adopted by the relevant taxing authorities of the United
          States) together with an annual certificate stating that such
          Registered Lender or beneficial owner, as the case may be, is not
          a "bank" within the meaning of Section 881(c)(3)(A) of the Code
          and is not otherwise described in Section 881(c)(3) of the Code.
           Each Registered Lender or beneficial owner, as the case may be,
          shall promptly notify J & J (on behalf of the Borrowers) (with a
          copy to the Administrative Agent) if at any time such Registered
          Lender or beneficial owner, as the case may be, determines that
          it is no longer in a position to provide such previously
          delivered certificate to the Borrowers (or any other form of
          certification adopted by the relevant taxing authorities of the
          United States for such purposes).

                    (c)  Registration of Loans.  The Administrative Agent,
          acting, for this purpose, as agent of the Borrowers, shall, upon
          request of any Registered Lender, enter in the Register the name,
          address and taxpayer identification number (if provided) of the
          Registered Lender or beneficial owner, as the case may be.  In
          addition to the requirements of Section 12.9 (Successors and
          Assigns), a Registered Note and the Loans evidenced thereby (or
          such Loans pending delivery of such Registered Note) or any other
          Loans registered pursuant to Section 1.14(a) above may be
          assigned or otherwise transferred in whole or in part only by
          registration of such assignment or transfer of such Registered
          Note and/or the Loans so registered on the Register (and each
          such Registered Note shall expressly so provide).  Any assignment
          or transfer of all or part of such Loans and such Registered Note
          shall be registered on the Register only upon compliance with the
          provisions of Section 12.9 and, in the case of Registered Notes,
          surrender for registration of assignment or transfer of the
          Registered Note evidencing such Loans, duly endorsed by (or
          accompanied by a written instrument of assignment or transfer
          fully executed by) the Registered Lender thereof, and thereupon
          one or more new Registered Notes in the same aggregate principal
          amount shall be issued to the designated assignee(s) or
          transferee(s) and, if less than all of such Registered Notes is

          PR\79666\1
                                      -14-

          thereby being assigned or transferred, the assignor or
          transferor.

          PR\79666\1
                                      -15-

                                      ARTICLE 2

                       YIELD PROTECTION AND BREAKAGE INDEMNITY

               2.1  MANDATORY SUSPENSION AND CONVERSION OF LIBO RATE LOANS.
           Any Lender's obligations to make, continue or convert into LIBO
          Rate Loans of any Type shall be suspended, all such Lender's
          outstanding Loans of such Type shall be converted into Prime Rate
          Loans on the last day of their applicable Interest Periods (or,
          in the case of clause (c) below, on the last day such Lender may
          lawfully continue to maintain Loans of such Type if earlier, or,
          in the case of clause (d) below, on the day determined by such
          Lender to be the last Business Day before the effective date of
          the applicable restriction), and all pending requests for the
          making or continuation of or conversion into Loans of such Type
          by such Lender shall be deemed requests for Prime Rate Loans, if:

                    (a)  on or prior to the date required for the
          determination of a LIBO Rate for any Interest Period, the
          Administrative Agent determines that for any reason appropriate
          information is not available to it for purposes of determining
          the LIBO Rate for such Interest Period;

                    (b)  on or prior to the first day of any Interest
          Period for a LIBO Rate Loan, the Required Lenders have informed
          the Administrative Agent of their determination that the LIBO
          Rate as determined by the Administrative Agent for such Interest
          Period would not accurately reflect the cost to such Lenders of
          making, continuing or converting into a LIBO Rate Loan for such
          Interest Period;

                    (c)  at any time such Lender determines that any
          Regulatory Change makes it unlawful or impracticable for such
          Lender or its applicable Eurodollar Lending Office to make,
          continue or convert into a LIBO Rate Loan of such Type, or to
          comply with its obligations hereunder in respect thereof; or

                    (d)  such Lender notifies the Administrative Agent of
          its determination that (i) by reason of any Regulatory Change,
          such Lender or its applicable Eurodollar Lending Office is
          restricted, directly or indirectly, in the amount that it may
          hold of (A) a category of liabilities that includes deposits by
          reference to which, or on the basis of which, the interest rate
          applicable to LIBO Rate Loans of such Type is directly or
          indirectly determined or (B) the category of assets that includes
          LIBO Rate Loans of such Type and (ii) in connection therewith,
          such Lender has elected not to make available hereunder LIBO Rate
          Loans of such Type.

          If, as a result of this Section 2.1, any Loan of any Lender that
          would otherwise be made or maintained as or converted into a LIBO
          Rate Loan for any Interest Period is instead made or maintained
          as or converted into a Prime Rate Loan, then, unless the
          corresponding Loan of each of the other Lenders is also to be

          PR\79666\1
                                      -16-

          made or maintained as or converted into a Prime Rate Loan, such
          Loan shall be treated as being a LIBO Rate Loan of such Type for
          such Interest Period for all purposes of this Agreement
          (including the timing, application and proration among the
          Lenders of interest payments, conversions and prepayments) except
          for the calculation of the interest rate borne by such Loan.  The
          Administrative Agent shall promptly notify J & J (on behalf of
          the Borrowers) and each Lender of the existence or occurrence of
          any condition or circumstance specified in clause (a) or (b)
          above, and each Lender shall promptly notify J & J (on behalf of
          the Borrowers) and the Administrative Agent of the existence,
          occurrence or termination of any condition or circumstance
          specified in clause (c) or (d) above applicable to such Lender's
          Loans, but the failure by the Administrative Agent or such Lender
          to give any such notice shall not affect such Lender's rights
          hereunder.

               2.2  REGULATORY CHANGES.  If in the determination of any
          Lender (a) any Regulatory Change shall directly or indirectly

                         (i)  reduce the amount of any sum received or
               receivable by such Lender with respect to any LIBO Rate Loan
               or the return to be earned by such Lender on any LIBO Rate
               Loan,

                         (ii) impose a cost on such Lender or any Affiliate
               of such Lender that is attributable to the making or
               maintaining of, or such Lender's commitment to make or
               acquire, any LIBO Rate Loan,

                         (iii) require such Lender or any Affiliate of such
               Lender to make any payment on or calculated by reference to
               any amount received by such Lender in respect of its LIBO
               Rate Loans or its obligations to make LIBO Rate Loans or

                         (iv) reduce, or have the effect of reducing, the
               rate of return on any capital such Lender or any Affiliate
               of such Lender is required to maintain on account of any
               LIBO Rate Loan or such Lender's commitment to make any LIBO
               Rate Loan.

          and (b) such reduction, increased cost or payment shall not be
          fully compensated for by an adjustment in the applicable rates of
          interest payable under the Loan Documents, then the Borrowers
          shall pay to such Lender such additional amounts as such Lender
          determines will fully compensate it for such reduction, increased
          cost or payment.  Such additional amounts shall be payable, in
          the case of those applicable to prior periods, within 15 Business
          Days after request for such payment by such Lender, accompanied
          by the certificate described in Section 2.5 and, in the case of
          those applicable to future periods, on the dates specified, or
          determined in accordance with a method specified, by such Lender,
          provided that the Borrowers shall not be liable for any amount
          payable with respect to any period more than 90 days before the

          PR\79666\1
                                      -17-

          date of such request or certificate, or, if earlier the
          retroactive effective date of the Regulatory Change if such
          Regulatory Change occurs during such 90-day period.

               2.3  CAPITAL AND RESERVE REQUIREMENTS.  If, in the
          determination of any Lender, such Lender or any Affiliate thereof
          is required, under applicable Law (including Regulation D), or
          interpretations, directives, requests and governmental or
          regulatory guidelines (whether or not having the force of law),
          to maintain capital or deposit any reserve on account of any
          Loan, or any commitment to make any Loan then, upon request by
          such Lender, the Borrowers shall pay to such Lender such
          additional amounts as such Person determines will fully
          compensate it for any reduction in the rate of return on the
          capital that such Lender or such Affiliate thereof is so required
          to maintain.  Such additional amounts shall be payable, in the
          case of those applicable to prior periods, within 15 Business
          Days after request by such Lender for such payment accompanied by
          the certificate described in Section 2.5 (provided that the
          Borrowers shall not be liable for any amount payable with respect
          to any period more than 90 days before the date of such request
          or certificate, or, if earlier, the retroactive effective date of
          such determination if made during such 90-day period), and, in
          the case of those relating to future periods, on the dates
          specified, or determined in accordance with a method specified,
          by such Lender.

               2.4  BREAKAGE.  The Borrowers shall pay to each Lender, upon
          request, such amount as such Lender reasonably determines is
          necessary to compensate it for any loss, cost or expense incurred
          by it as a result of (a) any payment, prepayment or conversion of
          a LIBO Rate Loan on a date other than the last day of an Interest
          Period for such LIBO Rate Loan or (b) a LIBO Rate Loan for any
          reason not being made or converted, or any payment of principal
          thereof or interest thereon not being made, on the date therefor
          determined in accordance with the applicable provisions of this
          Agreement.  At the election of such Lender, and without limiting
          the generality of the foregoing, but without duplication, such
          compensation on account of losses may include an amount equal to
          the excess of (i) the interest that would have been received from
          the Borrowers under this Agreement during the remainder of the
          applicable Interest Period over (ii) the interest component of
          the return that such Lender determines it could have obtained had
          it placed such amount on deposit in the interbank Dollar market
          for a period equal to such remaining portion of the Interest
          Period.

               2.5  DETERMINATIONS.  In making the determinations
          contemplated by this Article 2, each Lender shall make such
          estimates, assumptions, allocations and the like that such Person

          PR\79666\1
                                      -18-

          in good faith determines to be appropriate, and such Person's
          selection thereof in accordance with this Section 2.5, and the
          determinations made by such Person on the basis thereof, shall be
          final, binding and conclusive upon the Borrowers, except, in the
          case of such determinations, for manifest errors.  Each Lender
          shall furnish to the Borrowers, at the time of any request for
          compensation under Section 2.2 or 2.3, a certificate outlining in
          reasonable detail the computation of any amounts claimed by it
          under this Article 2 and the assumptions underlying such
          computations, which shall include a statement of an officer of
          such Person certifying that such request for compensation is
          being made pursuant to a policy adopted by such Person to seek
          such compensation generally from customers similar to the
          Borrowers and having similar provisions in agreements with such
          Person.

               2.6  REPLACEMENT OF LENDERS.  If any Lender requests
          compensation pursuant to Sections 1.13 (Taxes on Payments), 2.2
          (Regulatory Changes) or 2.3 (Capital and Reserve Requirements),
          or such Lender's obligation to make or continue Loans as LIBO
          Rate Loans shall be suspended pursuant to Section 2.1 (Mandatory
          Suspension and Conversion of LIBO Rate Loans) or such Lender has
          defaulted on its obligations to make or participate in Loans
          pursuant to Section 1.3 (Manner of Borrowing), J & J (on behalf
          of the Borrowers), upon three Business Days' notice, may require
          that such Lender transfer all of its right, title and interest
          under this Agreement, such Lender's Notes, if any, and the other
          Loan Documents to any Eligible Institution identified by J & J
          (on behalf of the Borrowers) subject to

                    (a)  the consent of the Administrative Agent (which
          consent shall not be unreasonably withheld),

                    (b)  satisfaction of the other conditions specified in
          Section 12.9 below (Successors and Assigns),

                    (c)  the agreement of the proposed transferee to assume
          all of the obligations of such Lender hereunder and under the
          other Loan Documents for consideration equal to the outstanding
          principal amount of such Lender's Loans, interest thereon to the
          date of such transfer, and all other amounts payable hereunder to
          such Lender to the date of transfer,

                    (d)  such transferor Lender shall have been paid on or
          prior to the date of such transfer all fees and other amounts
          payable to such transferor hereunder including those amounts
          payable under said Sections 1.13, 2.2 or 2.3, as applicable (and
          including any fees accrued hereunder and any amounts that would
          be payable under Section 2.4 (Breakage) as if all of such
          Lender's Loans were being prepaid in full on such date) or
          arrangements satisfactory to the transferor Lender shall have
          been made for such payments, and

          PR\79666\1
                                      -19-

                    (e)  satisfaction of the condition that if the Lender
          being replaced has requested compensation pursuant to Sections
          1.13, 2.2 or 2.3, the proposed transferee's aggregate requested
          compensation, if any, pursuant to Sections 1.13, 2.2 or 2.3 with
          respect to such replaced Lender's Loans is lower than that of the
          Lender replaced.

          Without prejudice to the survival of any other agreement of the
          Borrowers hereunder, the agreements of the Borrowers contained in
          Sections 1.13 (Taxes on Payments), 2.2 (Regulatory Changes), 2.3
          (Capital and Reserve Requirements), 2.4 (Breakage), 12.12
          (Indemnification) and 12.13 (Expenses) (without duplication of
          any payments made to such Lender by the Borrowers or the proposed
          transferee) shall survive for the benefit of any Lender replaced
          under this Section 2.6 with respect to the time prior to such
          replacement.

               2.7  CHANGE OF LENDING OFFICE.  Each Lender agrees that,
          upon the occurrence of any event giving rise to the operation of
          Sections 1.13 (Taxes on Payments), 2.1 (Mandatory Suspension and
          Conversion of LIBO Rate Loans), 2.2 (Regulatory Changes) or 2.3
          (Capital and Reserve Requirements) with respect to such Lender,
          it will, if requested by the Borrowers, use reasonable efforts
          (subject to overall policy considerations of such Lender) to
          designate another lending office for any Loans affected by such
          event, provided that such designation is made on such terms that
          such Lender and its lending office suffer no material economic,
          legal or regulatory disadvantage, with the object of avoiding the
          consequence of the event giving rise to the operation of any such
          Section.  Nothing in this Section 2.7 shall affect or postpone
          any of the obligations of the Borrowers or the right of any
          Lender provided in Section 1.13 (Taxes on Payments), 2.1
          (Mandatory Suspension and Conversion of LIBO Rate Loans), 2.2
          (Regulatory Changes) or 2.3 (Capital and Reserve Requirements).

          PR\79666\1
                                      -20-

                                      ARTICLE 3

                      CONDITIONS TO EFFECTIVENESS OF AGREEMENT
                                      AND FUNDINGS
               3.1  CONDITIONS TO EFFECTIVENESS OF AGREEMENT AND INITIAL
          FUNDING.  The effectiveness of this Agreement and the obligation
          of the Lenders to make the initial Loans hereunder are subject to
          the fulfillment of the following conditions on or before December
          31, 1997, (unless such date is extended in writing by the
          Required Lenders in their sole discretion), in each case to the
          satisfaction of each Lender.

                    (a)  Secretary's Certificates.  The Borrowers shall
          have delivered, or caused to be delivered, a certificate of the
          Secretary or an Assistant Secretary of each of the Borrowers,
          with specimen signatures of the authorized signatories to the
          Loan Documents, and to which shall be attached copies of the
          following:  articles or certificate of incorporation, bylaws,
          resolutions and, if any, shareholder agreements.

                    (b)  Good Standing Certificates.  The Borrowers shall
          have delivered, or caused to be delivered, a good standing or
          subsistence certificate, as the case may be, issued as of a
          recent date with respect to each Borrower, (i) issued by the
          Secretary of State or other appropriate official of the
          jurisdiction of formation of such Person and (ii) issued by the
          Secretary of State of the State of California with respect to IUC
          and, if any such certificate is dated more than ten (10) days
          prior to the Closing Date, a confirmation (which may be provided
          by a reputable corporate service) of the information in such
          certificate.

                    (c)  The Notes.  The Borrowers shall have delivered to
          the Administrative Agent for distribution to each of the Lenders
          the Notes referred to in Section 1.11.

                    (d)  Lien Searches.  The Administrative Agent and
          CoreStates shall have received such Uniform Commercial Code, tax,
          and judgment lien searches of the Borrowers with respect to such
          jurisdictions so the Lender Parties reasonably require, each, in
          such form, as of such date and with such content as are
          acceptable to the Lenders.

                    (e)  Purchase of NIC.  The Borrowers shall have
          provided the Lenders with evidence satisfactory to the Lenders
          that the Assignment is in full force and effect and J & J and IUC
          have acquired (or with funding hereunder, will acquire) the NIC
          Note and related rights from CCFC.  Borrower's representations
          herein, with respect thereto, provided that no Lender has
          knowledge to the contrary, shall constitute sufficient evidence
          for purposes of the preceding sentence.  There shall be no
          impediment, legal or otherwise, to the acquisition of the capital
          stock of NIC by J & J, IUC or their Affiliates.

          PR\79666\1
                                      -21-

                    (f)  Opinions of Counsel.  The Borrowers shall have
          delivered favorable opinions of counsel, dated as of the Closing
          Date, from Blank, Rome, Comisky & McCauley, counsel to the
          Borrowers, as to such matters as the Lenders may reasonably
          request, in form and substance satisfactory to the Lenders.

                    (g)  Consents and Approvals.  All corporate,
          governmental, judicial and third party consents and approvals
          necessary in connection with this Agreement and the other Loan
          Documents, the Assignment and the related transactions shall have
          been obtained and, as applicable, become final orders (without
          imposition of any conditions that are not acceptable to the
          Lenders) and shall remain in full force and effect and certified
          copies thereof shall have been delivered to the Lenders.

                    (h)  Financial Statements; Projections.

                         (i)  Financial Statements.  The Borrowers shall
                    have delivered, or caused to be delivered, to the
                    Lenders prior to the Closing Date a consolidated income
                    statement of J & J and its consolidated Subsidiaries
                    for the period ending on September 27, 1997, and a
                    consolidated balance sheet of J & J and its
                    consolidated Subsidiaries as of September 27, 1997,
                    each of which statements shall be (1) in form
                    acceptable to the Lenders, (2) accompanied by
                    explanatory notes acceptable to the Lenders, and (3)
                    certified by the chief financial officer of J & J to
                    fairly present the financial condition and results of
                    operations as at the date, or for the period,
                    indicated.

                         (ii) Projections.  J & J on behalf of the
                    Borrowers shall have delivered to each Lender
                    projections respecting the consolidated financial
                    condition and results of operations of J & J and its
                    consolidated Subsidiaries for the period through the
                    end of fiscal year 2002, which projections shall be in
                    reasonable detail, shall reflect the consummation of
                    the transactions contemplated hereby and the
                    Transaction Documents, including the making of the
                    initial Loans, and shall be accompanied by a written
                    statement of the assumptions and estimates underlying
                    such projections.

                    (i)  Officer's Compliance Certificate.  J & J, on
          behalf of the Borrowers, shall have delivered an Officer's
          Compliance Certificate, dated as of the Closing Date, as to the
          truth of the representations and warranties herein and in the
          other Loan Documents and the absence of any Default (in each
          case, both before and after giving effect to the initial Loans).

                    (j)  Repayment of Predecessor Indebtedness.  The
          Borrowers shall have delivered to the Lenders evidence that,

          PR\79666\1
                                      -22-

          prior to or substantially simultaneously with the making of the
          initial Loans, (i) all Indebtedness of the Borrowers other than
          that expressly permitted under Section 7.1 (Indebtedness) below
          will be repaid, (ii) all commitments to lend in respect of such
          Indebtedness shall have been effectively terminated, and (iii)
          all collateral held in connection therewith shall have been
          released (or undertakings to release such collateral upon receipt
          of specified funds shall have been duly made) and UCC-3
          termination statements and all other documents necessary in the
          determination of the Lenders to effectively terminate of record
          all security interests related to such Indebtedness shall have
          been duly executed by the proper parties and shall have been
          delivered to the Administrative Agent (or undertakings to do so
          upon receipt of specified funds shall have been furnished to the
          Administrative Agent).

                    (k)  Insurance.  The Borrowers shall have delivered to
          the Administrative Agent evidence of the insurance required by
          Section 5.8 below.

                    (l)  Fees and Expenses.  The Borrowers shall have paid
          the fees required to be paid to the Administrative Agent and the
          Lenders on or before the Closing Date and the fees and
          disbursements of counsel for the Lenders in connection with the
          negotiation, preparation, execution and delivery of the Loan
          Documents and the making of the initial Loans.

               3.2  CONDITIONS TO EACH LOAN.

                    (a)  Conditions.  The obligation of the Lenders to make
          any Loans, including the initial Loans are subject to fulfillment
          of each of the following conditions, in each case, unless
          otherwise specified, to the satisfaction of the Administrative
          Agent:

                              (i)  Absence of Default.  There shall not,
          either prior to or after giving effect to each such Loan, exist
          an Event of Default or a Default.

                              (ii) Borrowing Notice.  In connection with
          any request for Loans, the Administrative Agent shall have
          received a borrowing notice as required by Section 1.3 above.

                              (iii)Truth of Representations.  The
          representations and warranties of the Borrowers made in this
          Agreement and each other Loan Document shall be true and correct
          in all material respects as of the date each such Loan is made
          (both immediately prior to and after giving effect to said Loan)
          as if made on and as of such date.

          PR\79666\1
                                      -23-

                              (iv) No Violations of Law.  Neither the
          making of, nor use of proceeds of, such Loans shall conflict
          with, or cause any Borrower to violate any Law.

                              (v)  Additional Information.  The Lenders
          shall have received such additional information and documentation
          as the Lenders may reasonably request.

                    (b)  Deemed Representation and Warranty.  The request
          for, and acceptance of, any Loan by any Borrowers shall be deemed
          a representation and warranty by the Borrowers that the
          conditions specified in clauses (i), (iii) and (iv) of the
          preceding paragraph (a) have been satisfied.

          PR\79666\1
                                      -24-

                                      ARTICLE 4

                           REPRESENTATIONS AND WARRANTIES

               4.1  REPRESENTATIONS.  The Borrowers hereby jointly and
          severally represent and warrant to each Lender Party as follows:

                    (a)  Status of Borrowers.  Each Borrower is a
          corporation duly organized, validly existing and in good standing
          under the laws of its jurisdiction of organization.  Each
          Borrower has the power and authority to own its property and to
          transact the business in which it is engaged or presently
          proposes to engage.  Each Borrower is duly qualified to do
          business as a foreign corporation and is in good standing in all
          jurisdictions in which the ownership of its properties or the
          nature of its activities or both makes such qualification
          necessary or advisable, except for any failures to maintain such
          qualifications which, individually or in the aggregate, could not
          have a Material Adverse Effect.  Schedule 4.1(a)hereto sets
          forth for each Borrower, as of the Closing Date,  the
          jurisdiction of its organization.  Each direct and indirect
          Subsidiary of J & J except for ICEE-Canada, Inc. and ICEE de
          Mexico, S.A. De C.V. is a Borrower hereunder and is designated as
          such on the signature pages hereto (or, after the Closing Date,
          on signature pages of a Joinder Supplement hereto).

                    (b)  Capitalization of Borrowers.  The outstanding
          equity of each Borrower has been duly authorized and validly
          issued.  All capital stock is fully paid and nonassessable.  J &
          J owns directly or indirectly through other Borrowers, all of the
          capital stock of each other Borrower.  There are no options,
          warrants, calls, or similar rights relating to equity of the
          Borrowers.

                    (c)  Authorization, Execution and Binding Effect of
          Loan Documents.  Each Borrower has the power and authority to
          execute, deliver, perform, and take all actions contemplated by,
          each Loan Document to which it is a party, and all such action
          has been duly and validly authorized by all necessary corporate
          proceedings on its part.  This Agreement and each other Loan
          Document has been duly and validly executed and delivered by each
          Borrower listed on the signature pages hereto or thereto, as the
          case may be.  This Agreement and each other Loan Document
          constitutes the legal, valid and binding obligation of each
          Borrower purporting to be a party hereto or thereto, as the case
          may be, enforceable against such Person in accordance with its
          terms, except as the enforceability hereof of thereof may be
          limited by bankruptcy, insolvency or other similar laws of
          general application affecting the enforcement of creditors'
          rights or by general principles of equity limiting the
          availability of equitable remedies.

          PR\79666\1
                                      -25-

                    (d)  Governmental Approvals and Filings; Absence of
          Conflicts.  No approval, order, consent, authorization, exemption
          or other action by, or filing, recording or registration with, or
          notice to, any Governmental Authority or other Person is
          necessary in connection with, the execution and delivery of any
          Loan Document by any Borrower, or in connection with the
          performance of the terms hereof or thereof by such Person.  No
          Borrower is subject to any Law which purports to restrict or
          regulate its ability to borrow money, obtain credit or provide a
          guarantee or other form of credit support as a consequence of the
          nature of the business conducted by such Borrower.  Neither the
          execution and delivery of this Agreement or any other Loan
          Document by any Borrower, nor the performance of or compliance
          with the terms and conditions hereof or thereof (including the
          execution, delivery and performance of the Transaction Documents)
          by any Borrower does or will

                         (i)  violate or conflict with any Law or any
                    judgment, decree, or order of a court or Governmental
                    Authority or any settlement agreement,

                         (ii) violate, conflict with or result in a breach
                    of any term or condition of, or constitute a default
                    under, or cause an acceleration of, or result in the
                    creation or imposition of any Lien upon any of property
                    of any Borrower under or in connection with,

                              (x)  its articles or certificate of
                         incorporation or, bylaws, (or other constituent
                         documents),
                              (y)  any agreement or instrument creating,
                         evidencing or securing any Indebtedness to which
                         any Borrower is a party or by which it or any of
                         its properties (now owned or hereafter acquired)
                         may be subject or bound, or
                              (z)  any other agreement or instrument or
                         arrangement to which it is a party or by which it
                         or any of its properties (now owned or hereafter
                         acquired) may be subject or bound,

                    except, in the case of the foregoing clauses (y) and
                    (z), for matters that, individually or in the
                    aggregate, could not have a Material Adverse Effect, or
                         (iii) result in a Limitation on any Licenses
                    applicable to the operations or properties of any
                    Borrower.

          No approval, order, consent of, authorization, exemption or other
          action by, or filing, recording or registration with, or notice
          to, any Governmental Authority or other Person is necessary in
          connection with the transactions contemplated in the Transaction
          Documents except such consents as have been obtained and are in
          full force and effect.

          PR\79666\1
                                      -26-

                    (e)  Financial Statements.  J & J has heretofore
          furnished to the Administrative Agent and each Lender
          consolidated balance sheets of J & J and its consolidated
          Subsidiaries as of September 28, 1996, and the related
          consolidated statements of income, cash flows and changes in
          stockholders' equity for the fiscal years then ended, as examined
          and reported on by independent certified public accountants for J
          & J, who delivered an unqualified opinion in respect thereof. 
          Such financial statements (including the notes thereto) present
          fairly the financial condition of J & J and its consolidated
          Subsidiaries as of the end of each such fiscal year and the
          results of their operations and their cash flows for the fiscal
          years then ended, all in conformity with GAAP.  J & J has
          heretofore furnished to the Administrative Agent and each Lender
          interim consolidated balance sheets of J & J and its consolidated
          Subsidiaries as of the first three fiscal quarters of the fiscal
          year beginning September 29, 1996, together with the related
          consolidated statements of income, cash flows and changes in
          stockholders' equity for the applicable fiscal periods ending on
          each such date.  Such financial statements (including the notes
          thereto), as well as those financial statements delivered
          pursuant to paragraph (h) of Section 3.1 above, present fairly
          the financial condition of J & J and its consolidated
          Subsidiaries as of the date specified and the results of their
          operations and their cash flows for the fiscal periods specified,
          all in conformity with GAAP, subject to normal and recurring
          year-end audit adjustments, except that such financial statements
          do not contain all of the footnote disclosures required by GAAP.
           There are no material liabilities of the Borrowers except as
          disclosed on such financial statements.  Schedule 7.1 hereto sets
          forth, as of the Closing Date, all Indebtedness (and commitments
          for Indebtedness) of the Borrowers.

                    (f)  Projections.  The projections delivered pursuant
          to paragraph (h) of Section 3.1 above and the assumptions and
          estimates referred to therein, as of the Closing Date, are
          reasonable, are made in good faith, are consistent with the Loan
          Documents and represent the Borrowers' best judgment as to such
          matters.  Nothing has come to the attention of any Borrower which
          would lead such Borrower to believe that such projections will
          not be attained or exceeded provided, however, that nothing
          contained in this paragraph (f) shall constitute a representation
          or warranty that such future financial performance or results of
          operations will in fact be achieved.

                    (g)  Absence of Material Adverse Change.  Since
          September 28, 1996, there has been no material adverse change in
          the business, operations, condition (financial or otherwise),
          properties or prospects of the Borrowers taken as a whole or the
          industry served by the Borrowers.

                    (h)  Title to Property.  Each Borrower has good and
          marketable title to all property owned or purported to be owned
          by it, including but not limited to all property reflected in the

          PR\79666\1
                                      -27-

          most recent balance sheets delivered to the Lenders pursuant to
          this Agreement subject to no Liens except Permitted Liens. 
          Schedule 7.2 hereto sets forth, as of the Closing Date, all Liens
          on property of the Borrowers.

                    (i)  Solvency.  The present fair saleable value of the
          assets of the Borrowers, taken as a whole, after giving effect to
          all the transactions contemplated by the Loan Documents and the
          funding of the Loans hereunder exceeds the amount that will be
          required to be paid on or in respect of the existing debts and
          other liabilities (including contingent liabilities) of
          Borrowers, taken as a whole, as they mature.  J & J does not
          intend to, nor does J & J believe that it will, incur debts
          beyond its ability to pay such debts as they mature (taking into
          account the timing and amounts of cash to be received by J & J,
          and of amounts to be payable on or in respect of debt of J & J).
           The property of each Borrower does not constitute unreasonably
          small capital for such Borrower to carry out its business as now
          conducted and as proposed to be conducted including the capital
          needs of such Borrower.  The cash available to each Borrower
          after taking into account all other anticipated uses of the cash
          of such Borrower, is anticipated to be sufficient to pay all such
          amounts on or in respect of debt of such Borrower when such
          amounts are required to be paid.

                    (j)  Accurate and Complete Disclosure.  The information
          heretofore, contemporaneously or hereafter provided in writing by
          or on behalf of any Borrower to any Lender Party pursuant to or
          in connection with this Agreement or any other Loan Document is
          or will be (as the case may be) true and accurate in all material
          respects on the date as of which such information is dated (or,
          if not dated, when received by such Lender Party) and does not or
          will not (as the case may be) omit to state any material fact
          necessary to make such information not misleading at such time in
          light of the circumstances in which it was provided. 

                    (k)  Legal and Administrative Proceedings.  There is no
          action, suit, litigation or proceeding pending, or to the
          knowledge of the Borrowers, threatened nor, to the knowledge of
          the Borrowers, is there any investigation pending or threatened,
          in any court or before any arbitrator or Governmental Authority
          respecting or relating to any Borrowers (or any officer or
          director thereof) or any property of any Borrowers that,
          individually or in the aggregate, (i) could have a material
          adverse effect on the business, condition (financial or
          otherwise), operations, properties or prospects of the Borrowers
          taken as a whole or (ii) could materially adversely affect the
          Lenders' rights and remedies hereunder or under the other Loan
          Documents, this Agreement or other Loan Documents or the ability
          of the Borrowers to perform their obligations hereunder or
          thereunder.

                    (l)  Absence of Violations and Conflicts.  No Borrower
          is in violation of, in default under, or is subject to any

          PR\79666\1
                                      -28-

          contingent liability on account of any violation of or conflict
          with: (i) any Law; (ii) its articles or certificate of
          incorporation or bylaws; or (iii) any financing agreement or
          other instrument or arrangement to which it is a party or by
          which it or any of its properties (now owned or hereafter
          acquired) may be subject or bound, except, with respect to
          clauses (i) or (iii) above for matters that, individually or in
          the aggregate, could not have a Material Adverse Effect.

                    (m)  Operations.

                              (i)  Except where the failure to possess the
          same, either individually or in the aggregate, could not have a
          Material Adverse Effect, each Borrower possesses all Licenses
          necessary to operate its business as now operated and as
          presently proposed to be operated.  No Borrower is in material
          violation of the terms of its Licenses.

                              (ii) Except for Limitations which,
          individually or in the aggregate, could not reasonably be
          expected to have a Material Adverse Effect, there is no
          threatened or pending Limitation of any material License relating
          to the operation of any of Borrowers' businesses.

                              (iii)No Borrower is subject to any claim,
          litigation, proceeding or other action or, to any Borrower's
          knowledge, investigation relating to a claim or action by any
          Governmental Authority.

                    (n)  Properties.  Schedule 4.1(n) identifies all
          properties owned or leased by any Borrower as of the Closing
          Date.  As of the Closing Date, all leases relating to such leased
          properties are in full force and effect subject to no material
          default.  Such leases comply with the provisions of Section 7.7
          below.

                    (o)  Intellectual Property.  Each Borrower owns, or is
          licensed or otherwise has the right to use, all the patents,
          trademarks, service marks, names (trade, service, fictitious or
          otherwise), copyrights, technology (including computer programs
          and software), processes, data bases and other rights
          (collectively, "intellectual property"), free from burdensome
          restrictions, necessary to own and operate its properties and to
          carry on its business as presently conducted and presently
          planned to be conducted without conflict with the rights of
          others.  No Borrower is in material violation of the rights of
          others with respect to any intellectual property.

                    (p)  Employee Benefits/ERISA. 

                              (i)  The Borrowers and the members of their
                    Controlled Groups maintain only those Defined Benefit
                    Pension Plans, Defined Contribution Plans and other
                    Plans listed on Schedule 4.1(p) attached hereto. 

          PR\79666\1
                                      -29-

                    Neither the Borrowers nor any members of their
                    Controlled Groups contribute to any Multiemployer
                    Plans.

                              (ii) To the extent the Borrowers or any
                    members of their Controlled Groups maintain then, each
                    Defined Benefit Pension Plan and Defined Contribution
                    Plan, as most recently amended, including amendments to
                    any trust agreement, group annuity, or insurance
                    contracts, or other governing instrument, is the
                    subject of a favorable determination letter by the
                    Internal Revenue Service with respect to its
                    qualification under S401(a) of the Code.

                              (iii) All Plans comply, both in form and in
                    operation, with the requirements of the Code and ERISA.

                              (iv) There is not now, and has not been, any
                    material violation of the Code or ERISA with respect to
                    the filing of applicable reports, documents, and
                    notices regarding any Plan with the Secretary of Labor,
                    the Secretary of the Treasury, the PBGC or any other
                    governmental entity or the furnishing of such documents
                    to the participants or beneficiaries of any Plan. 
                    Borrowers have furnished to the Lenders copies of the
                    most recent annual report, audited financial
                    statements, and other reports filed with the Secretary
                    of Labor, the Secretary of the Treasury, the PBGC or
                    any other governmental entity with respect to each
                    Plan.

                              (v)  To the extent that any Borrower or any
                    member of their Controlled Group maintains them, all
                    Pension Plans, as of the date hereof, meet the minimum
                    funding standards of S412 of the Code and S302 of ERISA
                    without regard to any funding waiver.  Borrowers and
                    the members of their Controlled Group have, as of the
                    date hereof, made all contributions or payments to or
                    under Pension Plans, if any, required by the terms of
                    any such Plan or any contract or agreement.

                              (vi) No material liability to the PBGC has
                    been, or is expected by any Borrower or any member of
                    its Controlled Group to be, incurred by the Borrower or
                    any member of its Controlled Group.

                              (vii) No Defined Benefit Pension Plan if any
                    has any Amount of Unfunded Benefit Liabilities except
                    as listed on Schedule 4.1(p) which, in the aggregate,
                    do not exceed $100,000.00.

                              (viii)    No trust was established in
                    connection with any Defined Benefit Pension Plan
                    pursuant to S4049 of ERISA (as in effect on December

          PR\79666\1
                                      -30-

                    17, 1987) and no liabilities (whether or not such
                    liability is being litigated) have been asserted
                    against any borrower or any member of its Controlled
                    Group in connection with any such Defined Benefit
                    Pension Plan by the PBGC or by a trustee appointed
                    pursuant to S4042(b) or (c) of ERISA, and no lien has
                    been attached and no person has threatened to attach a
                    lien on any property of any Borrower or any member of
                    its Controlled Group as a result of any failure to
                    comply with the Code or ERISA.

                              (ix) No Prohibited Transaction has occurred
                    with respect to any Plan.

                              (x)  No Reportable Event has occurred with
                    respect to any Defined Benefit Plan.

                              (xi) No Borrower or any member of its
                    Controlled Group has any unfunded liabilities of
                    unfunded and uninsured "employee welfare benefit plans"
                    (as defined in S3(1) of ERISA).

                              (xii) There is not now, and has not been, any
                    COBRA Violation with respect to any Plan to which such
                    continuation coverage requirements apply which has a
                    material adverse effect, directly or indirectly, on the
                    financial condition of any of the Borrowers.

                              (xiii) Borrowers and the members of their
                    Controlled Group have not established any irrevocable
                    trusts the assets of which remain subject to the
                    general creditors of Borrowers and/or members of their
                    Controlled Group (sometimes referred to as "rabbi
                    trusts").

                    (q)  Environmental Matters.

                              (i)  Each Borrower and each of its respective
                    Environmental Affiliates is and has been, in full
                    compliance with all applicable Environmental Laws,
                    except for matters which, individually or in the
                    aggregate, could not have a Material Adverse Effect. 
                    There are no circumstances that may prevent or
                    interfere with such full compliance now or in the
                    future.

                              (ii) Each Borrower and each of its respective
                    Environmental Affiliates have all Environmental
                    Approvals necessary or desirable for the ownership and
                    operation of their respective properties, facilities
                    and businesses as presently owned and operated and as
                    presently proposed to be owned and operated, in the
                    future, except for matters which, individually or in

          PR\79666\1
                                      -31-

                    the aggregate, could not have a Material Adverse
                    Effect.

                              (iii) There is no Environmental Claim pending
                    or to the knowledge of any Borrower after due inquiry,
                    threatened, and there are no past or present acts,
                    omissions, events or circumstances (including but not
                    limited to any dumping, leaching, deposition, removal,
                    abandonment, escape, emission, discharge or release of
                    any Environmental Concern Material at, on or under any
                    facility or property now or previously owned, operated
                    or leased by any Borrower or any Environmental
                    Affiliates of Borrowers) that could form the basis of
                    any Environmental Claim against any Borrower or any
                    such Environmental Affiliates, except for matters
                    which, if adversely decided, individually or in the
                    aggregate, could not have a Material Adverse Effect.

                              (iv) No facility or property now or
                    previously owned, operated or leased by any Borrower or
                    any of their respective Environmental Affiliates is an
                    Environmental Cleanup Site.  No Borrower and none of
                    their respective Environmental Affiliates has directly
                    transported or disposed of or arranged for the
                    transportation or disposal of any Environmental Concern
                    Materials to any Environmental Cleanup Site.  No Lien
                    exists, and, to the Borrowers' knowledge after due
                    inquiry, no condition exists which could result in the
                    filing of a Lien, against any property of any Borrower
                    or any Subsidiary of any Borrower or any of their
                    respective Environmental Affiliates, under any
                    Environmental Law.

                    (r)  Margin Regulations.  No proceeds of any Loan
          hereunder will be used for the purpose of purchasing or carrying
          any "margin stock," as such term is used in Regulations G and U
          of the Board of Governors of the Federal Reserve System, as
          amended from time to time, or to extend credit to others for the
          purpose of purchasing or carrying any "margin stock".  Neither
          the making of any Loan nor any use of proceeds of the foregoing
          will violate or conflict with the provisions of Regulation G, T,
          U or X of the Board of Governors of the Federal Reserve System,
          as amended from time to time.

                    (s)  Regulation O.  No director, executive officer or
          principal shareholder of any Borrower is a "director," "executive
          officer" or "principal shareholder" of any Lender, as such terms
          are used in Regulation O of the Board of Governors of the Federal
          Reserve System, as amended.

                    (t)  Certain Documents and Transactions.  Each of the
          Transaction Documents are in full force and effect and no
          amendments, modifications or supplements have been made to any
          such documents as the same were delivered to the Lenders pursuant

          PR\79666\1
                                      -32-

          to Article 3 above except such amendments, modifications or
          supplements to Transaction Documents as could not reasonably be
          expected to have an adverse effect on any Borrower (including the
          condition (financial or otherwise), properties or prospects of
          such Borrower), the Loan Documents or any Lender Parties.  There
          exists no default under any such agreements.  The Assignment is
          in full force and effect and, upon the initial funding of the
          Loans in accordance with the wire transfer instructions delivered
          by the Borrowers to the Administrative Agent upon the execution
          hereof, IUC will have acquired the NIC Note and related rights
          from CCFC.  There are no impediments, legal or otherwise, to the
          acquisition of the capital stock of NIC by J & J, IUC or their
          Affiliates.

                    (u)  Labor Matters.  There are no existing, or, to the
          best of Borrowers' knowledge, threatened or contemplated,
          strikes, slowdowns, picketing or work stoppages by any employees
          against any Borrower, any lockouts by any Borrower of any of its
          employees or any labor trouble or other occurrence, event or
          condition of a similar character which individually or in the
          aggregate, could have a Material Adverse Effect.

               4.2  REPRESENTATIONS AND WARRANTIES ABSOLUTE.  The
          representations and warranties of the Borrowers set forth in this
          Article 4 are unaffected by any prior or subsequent investigation
          by, or knowledge of, the Administrative Agent or any Lender.

          PR\79666\1
                                      -33-

                                      ARTICLE 5

                                AFFIRMATIVE COVENANTS

                    So long as any Loan Obligation shall remain unpaid or
          any Lender shall have any Commitment under this Agreement, each
          of the Borrowers shall comply with the following covenants.

               5.1  REPORTING REQUIREMENTS.

                    (a)  Annual Financial Statements.  As soon as
          practicable, and in any event within 90 days after the close of
          each fiscal year of J & J, J & J (on behalf of the Borrowers)
          shall furnish to the Administrative Agent and each Lender,
          audited consolidated and consolidating statements of income, cash
          flows and changes in stockholders' equity of the Borrowers for
          such fiscal year and a consolidated and consolidating balance
          sheet of the Borrowers as of the close of such fiscal year,
          setting forth the appropriate footnotes, all in reasonable
          detail, setting forth in comparative form the corresponding
          figures for the preceding fiscal year.  Such financial statements
          shall be accompanied by an unqualified opinion in form and
          substance satisfactory to the Lenders of independent certified
          public accountants of recognized national standing selected by
          the Borrowers and satisfactory to the Lenders. 

                    (b)  Quarterly Financial Statements.  As soon as
          practicable, and in any event within 45 days after the close of
          each fiscal quarter of each fiscal year of J & J, J & J, on
          behalf of the Borrowers, shall furnish to the Administrative
          Agent and each Lender, consolidated statements of income, cash
          flows and changes in stockholders' equity of the Borrowers for
          such fiscal quarter and the applicable year to date period, and a
          consolidated balance sheet of the Borrowers as of the close of
          such fiscal quarter, all in reasonable detail, setting forth in
          comparative form the corresponding figures for the same periods
          or as of the same date during the preceding fiscal year (except
          for the balance sheets, which shall set forth in comparative form
          the corresponding balance sheets as of the prior fiscal year
          end).  Such financial statements shall be certified by the chief
          financial officer or other Responsible Officer of J & J, as
          presenting fairly the financial position of the subject entities
          as of the end of such fiscal quarter and year-to-date period, and
          the results of their operations and their cash flows and changes
          in stockholders' equity for such fiscal quarter and year-to-date
          period, in conformity with GAAP, subject to normal and recurring
          year-end audit adjustments.

                    (c)  Quarterly Compliance Certificates.  J & J, on
          behalf of the Borrowers, shall deliver to the Administrative
          Agent and each Lender, an Officer's Compliance Certificate
          concurrently with the delivery of the financial statements
          referred to in paragraph (a) of this Section 5.1 (with respect to

          PR\79666\1
                                      -34-

          the fiscal year) and paragraph (b) of this Section 5.1 (with
          respect to the first three fiscal quarters).  Each such Officer's
          Compliance Certificate shall include among other things referred
          to therein the calculations necessary to demonstrate the
          Borrowers' compliance with the covenants set forth in Article 6
          hereof.

                    (d)  Other Information To Be Delivered Annually.  J &
          J, on behalf of the Borrowers, shall deliver to the
          Administrative Agent and each Lender, the following: (i)
          annually, within one hundred twenty (120) days of the end of J &
          J's fiscal year, an accountants' management letter respecting J &
          J and its Subsidiaries, provided by independent certified public
          accountants satisfactory to the Administrative Agent, and (ii)
          annually, no later than ninety (90) days prior to the
          commencement of each fiscal year of J & J's, an annual budget
          respecting J & J and its Subsidiaries, setting forth in
          reasonable detail, expected sources and uses of funds, for the
          fiscal year then beginning in form and substance satisfactory to
          the Administrative Agent.

                    (e)  SEC Filings and Other Disclosure.  Promptly upon
          their becoming available to any Borrower but no later than ten
          Business Days after the same are filed with the Securities
          Exchange Commission or any securities exchange, J & J, on behalf
          of the Borrowers, shall deliver to the Administrative Agent and
          each Lender, a copy of (i) all regular or special reports,
          registration statements and amendments to the foregoing which any
          Borrower or any of its Affiliates shall file with the Securities
          and Exchange Commission or any securities exchange, (ii) all
          reports, proxy statements, financial statements and other
          information distributed by any Borrower or any of its Affiliates
          to its stockholders, bondholders or the financial community
          generally, and (iii) all accountants' management letters (not
          otherwise delivered pursuant to the preceding paragraph (d)) and
          all other reports submitted by accountants in connection with any
          audit of any Borrower.

                    (f)  Notice of Certain Events.  Promptly upon any
          Borrower becoming aware of any of the following, such Borrower or
          J & J, on behalf of the Borrowers, shall give the Administrative
          Agent notice thereof, together with a written statement setting
          forth the details thereof and any action with respect thereto
          taken or proposed to be taken by any Borrower:

                         (i)  Loss of Licenses.  Any actual Limitation
                    (other than in the ordinary course of business) or any
                    threatened Limitation (to the extent that it
                    individually or in the aggregate with all other actual
                    or threatened Limitations is material) of any License
                    relating to the operation of any Borrower's business;

                         (ii) Default.  Any Event of Default or Default;

          PR\79666\1
                                      -35-

                         (iii) Material Adverse Change.  Any material
                    adverse change in the business, operations or condition
                    (financial or otherwise), or prospects of any Borrower;

                         (iv) Litigation.  Any pending or threatened
                    action, suit, proceeding or investigation by or before
                    any Governmental Authority against or affecting any
                    Borrower (or any officer or director thereof) or any
                    property of any Borrower which, if determined adversely
                    could have a Material Adverse Effect;

                         (v)  Breach or Termination of Certain Agreements.
                     Any breach, claimed breach, termination or purported
                    or threatened termination (including a copy of any
                    notice of termination) of any Transaction Document
                    which could have a Material Adverse Effect.

                         (vi) ERISA.  To the extent applicable to the
                    Borrowers or any member of their Controlled Group,

                              (A)  any taxes, penalties, interest charges
                         and other financial obligations in excess of
                         $100,000.00 that have been assessed or otherwise
                         imposed, or which any Borrower has reason to
                         believe may be assessed or otherwise imposed in
                         excess of $100,000.00, against any Borrower or any
                         member of its Controlled Group by the Internal
                         Revenue Service, the PBGC, the Department of Labor
                         or any other governmental entity with respect to
                         any Plan or Multiemployer Plan;

                              (B)  any application for a waiver by a
                         Borrower or any member of its Controlled Group of
                         the minimum funding standard under S412 of the
                         Code with respect to a Pension Plan;

                              (C)  the adoption of any Plan, including but
                         not limited to a Defined Benefit Pension Plan, or
                         any obligation to contribute to any Multiemployer
                         Plan by a Borrower or any member of its Controlled
                         Group;

                              (D)  any Prohibited Transaction with respect
                         to a Plan.

                              (E)  (1)  that any Reportable Event has or
                         will occur with respect to any Defined Benefit
                         Pension Plan maintained by any Borrower or any
                         member of its Controlled Group, (2) that any
                         Defined Benefit Pension Plan maintained by any
                         Borrower or any member of its Controlled Group is
                         to be terminated in "distress termination" (within
                         the meaning of S4041(c) of ERISA), (3) that the
                         PBGC has instituted or will institute proceedings

          PR\79666\1
                                      -36-

                         under Title IV of ERISA to terminate any Defined
                         Benefit Pension Plan maintained by any Borrower or
                         any member of its Controlled Group, (4) that any
                         Borrower has incurred Withdrawal Liability from a
                         Multiemployer Plan maintained by it or any member
                         of its Controlled Group, (5) that any
                         Multiemployer Plan to which any Borrower or any
                         member of its Controlled Group has made
                         contributions is or will be in Reorganization, or
                         (6) that any other condition exists with respect
                         to a Defined Benefit Pension Plan or Multiemployer
                         Plan which presents a material risk of termination
                         of any such Plan, Borrowers will furnish a
                         statement to the Lenders setting forth the details
                         of such Reportable Event, distress termination,
                         termination proceedings, Withdrawal Liability,
                         Reorganization or condition, and the action that
                         Borrowers propose to take with respect thereto,
                         together with a copy of any notice of such
                         Reportable Event or distress termination given to
                         the PBGC, or a copy of any notice of termination
                         proceedings, Withdrawal Liability or
                         Reorganization received by such Borrower or any
                         member of its Controlled Group.

                              (F)  any default by Borrower or any member of
                         its Controlled Group (as defined in S4219(c)(5) of
                         ERISA) with respect to payments to a Multiemployer
                         Plan required by reason of its withdrawal (as
                         defined in S4203 or S4205 of ERISA).

                              (G)  any action brought against Borrower or
                         any member of its Controlled Group under S502 of
                         ERISA with respect to its failure to comply with
                         S519 of ERISA.

                         (vii)Environmental.  Any Environmental Claim
                    pending or threatened against any Borrower or any of
                    its Environmental Affiliates, or any past or present
                    acts, omissions, events or circumstances (including but
                    not limited to any dumping, leaching, deposition,
                    removal, abandonment, escape, emission, discharge or
                    release of any Environmental Concern Material at, on or
                    under any facility or property now or previously owned,
                    operated or leased by any Borrower or any of its
                    Environmental Affiliates) that could form the basis of
                    such Environmental Claim.

                    (g)  Other ERISA Information.  The Borrowers shall
          deliver to the Administrative Agent, copies of the following:

          PR\79666\1
                                      -37-

                              (A)  Promptly after the filing thereof with
                         the Secretary of Labor, the Secretary of the
                         Treasury, the PBGC or any other governmental
                         entity, copies of each annual report, each audited
                         financial statement and any other report so filed
                         with respect to each Plan.

                              (B)  As soon as possible (and in any event
                         within five days) after the receipt by any
                         Borrower or any member of its Controlled Group of
                         a demand letter from the PBGC notifying any
                         Borrower or any member of its Controlled Group of
                         the final decision finding liability and the date
                         by which such liability must be paid, Borrowers
                         will furnish to the Lenders a copy of such letter
                         together with a statement to the Lenders setting
                         forth the action which Borrowers propose to take
                         with respect thereto.

                              (C)  Borrowers will furnish to the Lenders as
                         soon as possible after receipt thereof a copy of
                         any notice that any Borrower or any member of its
                         Controlled Group receives from the PBGC, the
                         Internal Revenue Service, the Department of Labor
                         or any other governmental entity or the sponsor of
                         any Multiemployer Plan that sets forth or proposes
                         any action to be taken or determination made by
                         the PBGC, the Internal Revenue Service, the
                         Department of Labor or any other governmental
                         entity or the sponsor of any Multiemployer Plan
                         with respect to any Plan.

                    (h)  Other Information.  In addition, the Borrowers
          will promptly furnish to the Administrative Agent such other
          information as any Lender Party, through the Administrative
          Agent, may reasonably request including information submitted by
          the Borrowers to any Governmental Authority, and the
          Administrative Agent will furnish such information to the
          requesting Lender Party.

               5.2  MAINTENANCE OF EXISTENCE.  Each Borrower shall preserve
          and maintain its corporate existence and good standing in the
          jurisdiction of its organization.  Each Borrower shall qualify
          and remain qualified as a foreign corporation in each
          jurisdiction in which such qualification is required.  Nothing
          contained in this Section 5.2, however, shall prevent any
          Borrower from merging into any other Borrower as long as such
          transaction does not result in the dissolution of J & J.

          PR\79666\1
                                      -38-

               5.3  CONDUCT OF BUSINESS AND MAINTENANCE OF LICENSES AND
          OTHER PROPERTY.

                    (a)  Type of Business.  Each Borrower shall continue to
          engage in the business of the same general type as conducted by
          the Borrowers on the Closing Date and not engage in any other
          type of business without the consent of the Required Lenders. 
          Each Borrower shall maintain in effect all Licenses necessary or
          appropriate to operate its businesses.

                    (b)  Maintenance of Property.  Each Borrower shall
          maintain, keep and preserve all of its property necessary or
          useful in the proper conduct of its business in good working
          order and condition, ordinary wear and tear excepted.  Without
          limiting the generality of the foregoing, each Borrower shall
          maintain in full force and effect each lease and other material
          agreement used or useful in its business, subject to no material
          default except where the loss of, or default under, such lease or
          other agreement (i) could not individually or in the aggregate
          reasonably be expected to have a Material Adverse Effect or (ii)
          is not otherwise prohibited by the terms of this Agreement.

               5.4  MAINTENANCE OF RECORDS; FISCAL YEAR.  Each Borrower
          shall keep adequate records and books of account, in which
          complete entries will be made in accordance with historical
          practice and GAAP, reflecting all financial transactions of the
          Borrowers.  Each Borrower shall maintain a fiscal year end of the
          last Saturday in September.

               5.5  COMPLIANCE WITH LAWS.  Each Borrower shall comply (and
          maintain procedures to assure compliance) in all material
          respects with all applicable Laws (including Environmental Laws)
          and all judgments, decrees or orders of any court or Governmental
          Authority and all settlement agreements. 

               5.6  ERISA.

                    (a)  Each Borrower will, and will cause each member of
          its Controlled Group, to comply in all material respects with the
          provisions of ERISA and the Code with respect to any Plan both in
          form and in operation.

                    (b)  Each Borrower will cause to be made all
          contributions required to avoid any Accumulated Funding
          Deficiency, whether or not waived, with respect to any Pension
          Plan.

          PR\79666\1
                                      -39-

                    (c)  No Borrower will adopt or permit the adoption by
          any member of its Controlled Group of any Defined Benefit Pension
          Plan which would result in any Amount of Unfunded Benefit
          Liabilities in excess of $100,000.00.

                    (d)  No Borrower will acquire, or permit the
          acquisition by any member of its Controlled Group of, any trade
          or business which has incurred either directly or indirectly any
          Amount of Unfunded Benefit Liabilities under any Defined Benefit
          Pension Plan in excess of $100,000.00.

                    (e)  The Borrowers will not permit with respect to any
          Plan, any Prohibited Transaction or Prohibited Transactions under
          ERISA or the Code resulting in liability of any Borrower or any
          member of its Controlled Group which together with any other
          liabilities subject to this paragraph (e) would in the aggregate
          be in excess of $100,000.00.

                    (f)  No Borrower will withdraw, or permit any member of
          its Controlled Group to withdraw, from any Multiemployer Plan to
          which any of them may hereafter contribute if the Withdrawal
          Liability which would thereupon be incurred would have a Material
          Adverse Effect.

                    (g)  No Borrower will permit any unfunded liabilities
          of unfunded and uninsured "employee welfare benefit plans" (as
          defined in S3(1) of ERISA) of any Borrower and of any member of
          its Controlled Group in excess of $100,000.00 in the aggregate
          with all other liabilities subject to this paragraph (g).

                    (h)  No Borrower will, or will permit any member of its
          Controlled Group to, cause or suffer to exist a COBRA Violation
          with respect to any Plan to which such continuation coverage
          requirements apply if the violation(s) could result in a
          liability in excess of $100,000.00 in the aggregate.

               5.7  RIGHT OF INSPECTION.  Each Borrower shall, at any
          reasonable time and from time to time, and upon reasonable
          advance notice (but no advance notice shall be required if a
          Default or an Event of Default shall then exist), permit the
          Administrative Agent or any Lender or any agent or representative
          thereof, to examine and make copies and abstracts from the
          records and books of account of, and visit and inspect the
          properties of, any Borrower, and to discuss the affairs, finances
          and accounts of such Borrower with any of its officers, directors
          and independent accountants.

               5.8  INSURANCE.  Each Borrower shall maintain with
          financially sound and reputable insurers, insurance with respect
          to its properties and business and against such liabilities,

          PR\79666\1
                                      -40-

          casualties and contingencies and of such types and in such
          amounts as are customary in the case of Persons engaged in the
          same or similar businesses or having similar properties similarly
          situated, including insurance covering its respective properties,
          buildings, machinery, equipment, tools, furniture, fixtures and
          operations, and public liability, as well as business
          interruption.  The Borrowers shall have the Administrative Agent
          named to receive certificates evidencing such insurance annually
          at least thirty days prior to the anniversary date of such
          insurance policies and any other time requested by the
          Administrative Agent.

               5.9  PAYMENT OF TAXES AND OTHER CHARGES.  Each Borrower
          shall 

                    (a)  on or prior to the date on which penalties attach
          thereto and file all tax returns, pay all taxes, assessments and
          other governmental charges imposed upon it or any of its
          properties; and

                    (b)  on or prior to the date when due, pay all lawful
          claims of materialmen, mechanics, carriers, warehousemen,
          landlords and other like Persons and all other lawful claims
          which, in each case if unpaid, might result in the creation of a
          Lien upon any of its properties, provided that unless and until
          foreclosure, distraint, levy, sale or similar proceedings shall
          have been commenced, such Borrower need not pay or discharge any
          such tax, assessment, charge or claim so long as (x) the validity
          thereof is being contested in good faith and by appropriate
          proceedings diligently conducted and (y) such reserves or other
          appropriate provisions as may be required by GAAP shall have been
          made therefor.

               5.10 SUBSIDIARIES TO BE BORROWERS. 

                    Each Borrower shall cause all of its Subsidiaries at
          all times to be Borrowers hereunder (by signing Joinder
          Supplements hereto, executing Notes or allonges thereto and
          taking such other action as the Administrative Agent may
          reasonably request).  Without limiting the generality of the
          foregoing, when the Borrowers are required, in connection with an
          Acquisition or otherwise, to cause one or more (direct or
          indirect) Subsidiaries of J & J (each, a "Joining Subsidiary") to
          become Borrowers hereunder, then the Borrowers and each such
          Joining Subsidiary shall take the actions set forth on Schedule
          5.10, in the case of the formation of a new Subsidiary, promptly
          upon such formation, and in the case of the Acquisition of an
          entity which shall become a Subsidiary, no later than the date of
          the consummation of the relevant Acquisition.

          PR\79666\1
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               5.11 TRANSACTIONS WITH AFFILIATES.  Each Borrower shall
          effect all transactions with Affiliates (including with ICEE-
          Canada, Inc. and ICEE de Mexico, S.A. de C.V., but excluding
          transactions with other Borrowers) on a basis at least as
          favorable to such Borrower as would at the time be obtainable for
          a comparable transaction on an arm's length dealing with an
          unrelated third party.

               5.12 CAPITAL STOCK.  All of the capital stock of each
          Borrower (other than J & J) shall be owned at all times, directly
          or indirectly, by J & J, subject to no Liens.

               5.13 USE OF PROCEEDS.  The Borrowers will apply the proceeds
          of the Term Loans only (i) to acquire the NIC Note and all of the
          capital stock of NIC and (ii) to pay off certain existing
          Indebtedness.  The Borrowers will apply the proceeds of the RC
          Loans only (i) to fund working capital and Capital Expenditure
          needs, subject to the other limitations set forth in this
          Agreement, and (ii) to fund future Acquisitions and the
          transaction costs associated therewith.

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                                      ARTICLE 6

                                 FINANCIAL COVENANTS

               6.1  CERTAIN FINANCIAL COVENANTS.  So long as any Loan
          Obligations shall remain unpaid or any Lender has any Commitment
          under this Agreement, the Borrowers shall comply with the
          following financial covenants.

                    (a)  Fixed Charge Coverage Ratio.  The Fixed Charge
          Coverage Ratio shall be not less than 1.3 at any time.

                    (b)  Consolidated Net Worth.  Tangible Net Worth of the
          Borrowers, on a consolidated basis, at any date of determination
          after the Agreement Date shall be not less than the sum of

                         (i)  The greater of (a) Fifty Five Million Dollars
                         ($55,000,000.00), or (b) Seventy Nine Million
                         Dollars ($79,000,000.00) minus the value of the
                         intangible assets added by reason of the
                         acquisition of the capital stock of NIC,

                         plus
                         (ii) 50% of the cumulative amount of Net Income
                         (which shall not be reduced by the amount of any
                         net loss for any fiscal quarter) of the Borrowers,
                         on a consolidated basis, for the period commencing
                         on the first day of the fiscal quarter in which
                         the Agreement Date occurs through the last day of
                         the fiscal quarter ending on, or most recently
                         prior to, such date of determination.

                    (c)  Total Funded Indebtedness/EBITDA.  The Total
          Funded Indebtedness/EBITDA shall be not greater than the ratios
          set forth below during the periods indicated below:

                              Period                             Ratio

                    Closing Date through June 26, 1999           3.50
                    June 27, 1999 and thereafter                 3.00

                    (d)  Leverage Ratio.  The Leverage Ratio shall be not
          greater than 2.0 at any time.

               6.2  CALCULATION OF FINANCIAL COVENANTS.  The financial
          covenants set forth in this Article 6 shall be maintained
          continuously and shall be tested at the end of each fiscal
          quarter and at such other times as may be required by the terms
          of this Agreement. 

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                                      ARTICLE 7

                                 NEGATIVE COVENANTS

               So long as any Loan Obligations shall remain unpaid or any
          Lender shall have any Commitment under this Agreement, each of
          the Borrowers shall comply with the following covenants.

               7.1  INDEBTEDNESS.  No Borrower shall at any time, create,
          incur, assume or suffer to exist any Indebtedness (including any
          Guaranties, Capitalized Leases or Assumed Indebtedness), except:

                    (a)  Indebtedness to the Lender Parties pursuant to
          this Agreement and the other Loan Documents;

                    (b)  Indebtedness constituting intercompany (i.e.
          inter-Borrower) loans and advances;

                    (c)  Obligations of J & J under Interest Rate Hedging
          Agreements;

                    (d)  Indebtedness existing on the Closing Date
          acceptable to the Lenders and described on Schedule 7.1 hereto,
          which sets forth certain Indebtedness in a principal amount not
          exceeding $5,100,000.00; and any extensions, renewals,
          refinancing of the same so long as such extensions, renewals and
          refinancing (i) are in a principal amount no greater than the
          amount the Indebtedness so extended, renewed or refinanced, (ii)
          have maturity dates (and amortization schedules) no earlier than
          the debt being refinanced, (iii) are incurred pursuant to
          agreements or instruments which do not prohibit the Indebtedness
          created pursuant to the Loan Documents or otherwise conflict with
          the terms of the Loan Documents or contain terms and conditions
          which are more onerous than the terms and conditions in the
          existing agreements and instruments, and (iv) are not made at a
          time that a Default or Event of Default has occurred and is
          continuing or would be caused thereby;

                    (e)  Guaranties and similar contingent obligations
          relating to underlying Indebtedness not exceeding $300,000.00 in
          any fiscal year;

                    (f)  Indebtedness owed to sellers or Assumed
          Indebtedness in each case, incurred in connection with
          Acquisitions otherwise permitted under Section 7.4 hereof,
          provided that such Indebtedness not exceed in the aggregate
          $3,000,000.00 during the term of this Agreement;

                    (g)  Purchase money Indebtedness not otherwise
          permitted by clause (f) above not exceeding $1,000,000.00 in the
          aggregate during the term of this Agreement; and

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                    (h)  Indebtedness, not otherwise permitted by clauses
          (a) through (g), not exceeding $1,000,000.00 incurred in any one
          fiscal year.

               7.2  LIENS.  No Borrower shall at any time create, incur,
          assume or suffer to exist any Lien on any of its assets (now
          owned or hereafter acquired), except for the following
          ("Permitted Liens"):

                    (a)  Liens acceptable to the Lenders and existing on
          the Closing Date securing obligations existing on the Closing
          Date, which Liens and obligations are listed on Schedule 7.2
          hereto (and any extension, renewal and replacement Liens upon the
          same property theretofore subject to a listed Lien, provided that
          (i) the amount secured by each Lien constituting such an
          extension, renewal or replacement Lien shall not exceed the
          amount secured by the corresponding Lien theretofore existing and
          (ii) such replacement Liens are incurred pursuant to agreements
          or instruments which do not prohibit the Indebtedness created
          pursuant to the Loan Documents, prohibit the Borrowers from
          granting any Lien to the Lender Parties, or otherwise conflict
          with the terms of the Loan Documents);

                    (b)  Liens arising from taxes, assessments, charges or
          claims described in Section 5.9 hereof to the extent permitted by
          said Section 5.9;

                    (c)  Liens in respect of property or assets of the
          Borrowers imposed by law which were incurred in the ordinary
          course of business, such as carriers', warehousemen's and
          mechanics' Liens, statutory landlord's Liens, and other similar
          Liens arising in the ordinary course of business, and (i) which
          do not in the aggregate materially detract from the value of such
          property or assets or materially impair the use thereof in the
          operation of the business of the Borrowers taken as a whole or
          (ii) which are being contested in good faith by appropriate
          proceedings, which proceedings have the effect of preventing the
          forfeiture or sale of the property or asset subject to such lien
          and that adequate reserves have been set aside on the applicable
          Borrower's books to protect against an adverse result;

                    (d)  Liens arising from judgments, decrees or
          attachments and Liens securing appeal bonds arising from
          judgments, in each case in circumstances not constituting an
          Event of Default under Section 8.1(f);

                    (e)  Liens (other than any Lien imposed by ERISA)
          incurred or deposits made in the ordinary course of business in
          connection with workers' compensation, unemployment insurance and
          other types of social security, or to secure the performance of
          tenders, statutory obligations, surety and appeal bonds, bids,
          leases, government contracts, performance and return-of-money

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          bonds and other similar obligations incurred in the ordinary
          course of business (exclusive of obligations in respect of the
          payment for borrowed money);

                    (f)  easements, rights-of-way, restrictions, minor
          defects or irregularities in title to real property and other
          similar charges or encumbrances on real property not interfering
          in any material respect with the ordinary conduct of the business
          of the Borrowers taken as a whole or the value or salability of
          the assets so encumbered or affecting their use for their
          intended purposes;

                    (g)  Liens securing Assumed Indebtedness permitted
          under Section 7.1(f), provided that such Liens are limited to the
          assets being acquired in connection with the Acquisition giving
          rise to such Assumed Indebtedness; and

                    (h)  Liens securing purchase money Indebtedness
          permitted under Section 7.1(g) provided that such Liens are
          limited to the assets purchased with such purchase money
          Indebtedness.

          "Permitted Liens" shall in no event include any Lien imposed by,
          or required to be granted pursuant to, ERISA or any Environmental
          Law.

               7.3  LOANS, ADVANCES AND INVESTMENTS.  No Borrower shall at
          any time (i) make or suffer to exist any loan or advance to, or
          (ii) purchase, acquire or own (beneficially or of record) any
          stock, bonds, notes or securities of, or any partnership interest
          (whether general or limited) in, or any other interest in, or
          (iii) make any capital contribution to, or other investment in
          (collectively, "Investments") any other Person, except:

                    (a)  receivables owing to such Borrower arising from
          provision of services or sales of inventory under usual and
          customary terms in the ordinary course of business;

                    (b)  loans or advances from one Borrower to another;

                    (c)  the capital stock or other ownership interests in
          other Borrowers;

                    (d)  Cash Equivalent Investments;

                    (e)  Acquisitions permitted under Section 7.4
          (Acquisitions, Etc.) below;

                    (f)  Investments existing on the Closing Date in an
          amount not greater than $4,000,000.00;

                    (g)  Investments in businesses or ventures in the same
          or related line of business as the Borrowers, not exceeding

          PR\79666\1
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          $500,000.00 in the aggregate during the term of this Agreement;
          and

                    (h)  Loans or advances not exceeding $1,000,000.00 in
          the aggregate during the term of this Agreement.

          The "amount" of any Investment referred to in this Section 7.3
          shall mean the sum of the following (without duplication):  the
          amount of cash paid for or contributed to such Investment; the
          fair market value of any equity or assets constituting
          consideration for or contributed to such Investment; and any
          commitment to pay, contribute, incur, or become liable for any of
          the foregoing.

               7.4  ACQUISITIONS, ETC.  No Borrower shall engage in any
          Acquisition (other than an acquisition of assets in the ordinary
          course of business) except:

                    (a)  A Borrower may merge with or into another
               Borrower, provided that (i) if J & J is a party to the
               merger, it is the surviving entity and (ii) no Event of
               Default or Default shall occur and be continuing before or
               after giving effect to such transaction;

                    (b)  J & J, IUC or any of their Affiliates may acquire
               the NIC Note and all of the capital stock of NIC for an
               Acquisition Cost of not more than $56,000,000.00, provided
               that upon such acquisition NIC becomes a Borrower hereunder
               pursuant to Section 5.10 hereof; and

                    (c)  So long as no Default or Event of Default has
               occurred or would exist after giving effect to such
               Acquisition, any Borrower may make an Acquisition not
               covered by clauses (a) or (b) of this Section 7.4, provided,
               however, that (i) the Acquisition Cost of all Acquisitions
               made pursuant to this paragraph (c) does not exceed
               $5,000,000.00 in the aggregate during the term of this
               Agreement, (ii) such Acquisition is of an enterprise in the
               same line of business as any of the Borrowers are now in,
               and (iii) the "Acquisition Conditions" set forth on Schedule
               7.4 hereto shall have been satisfied.

               7.5  DISPOSITIONS.  No Borrower shall sell, convey, assign,
          lease as lessor, transfer, abandon or otherwise dispose of
          (collectively, for purposes of this Section 7.5, "transfer"),
          voluntarily or involuntarily, any of its assets, except:

                    (a)  A Borrower may sell inventory in the ordinary
               course of business;

          PR\79666\1
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                    (b)  A Borrower may dispose of equipment which is
               obsolete or no longer useful in its business or otherwise
               replaced with equipment having similar value and use;

                    (c)  A Borrower may transfer its properties to J & J so
               long as no Event of Default or Default shall exist either
               before or after giving effect to such transfer;

                    (d)  Anticipated transfers identified on Schedule 7.5;
               and

                    (e)  Borrowers may transfer its property having an
               aggregate fair market value not to exceed $2,500,000.00
               during the term of this Agreement.

               7.6  ISSUANCE OF SUBSIDIARY STOCK OR OTHER OWNERSHIP
          INTERESTS.  The Borrowers shall not create, acquire, dispose of,
          or change any interest in any Subsidiary except as follows:

                    (a)  Subsidiaries of Borrowers (or any interest
               therein) may be created or acquired in connection with an
               Acquisition to the extent permitted under Section 7.4 above
               (Acquisitions, Etc.); and

                    (b)  Subsidiaries of Borrowers (or any interest
               therein) may be created or acquired in connection with an
               Investment to the extent permitted under Section 7.3 above
               (Loans, Advances and Investments);

          provided, however, that any such Subsidiaries so created or
          acquired shall become "Borrowers" hereunder and corresponding
          parties to the other Loan Documents within thirty (30) days
          thereafter.
               7.7  LEASES.   The Borrowers shall not at any time, enter
          into or suffer to remain in effect any lease, as lessee, of any
          property, except:

                    (a)  Leases (including subleases) between Borrowers;

                    (b)  Capitalized Leases to the extent permitted under
               Section 7.1 above;

                    (c)  Leases existing on the date hereof; and

                    (d)  Other leases which are not Capitalized Leases or
               Synthetic Leases, provided that such leases entered into any
               fiscal year not increase net aggregate rental payable in any
               lease year, thereafter by more than $1,500,000.00, and
               provided further that all such leases entered into at any
               time during the term of this Agreement not increase net
               aggregate rental payable in any lease year by more than
               $3,000,000.00.

          PR\79666\1
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               7.8  DIVIDENDS AND RELATED DISTRIBUTIONS.   J & J shall not
          (a) declare or pay any dividends, (b)  purchase, redeem, retire
          or otherwise acquire for value any of its capital stock now or
          hereafter outstanding, (c) make any distribution of assets to its
          stockholders as such whether in cash, assets or obligations of J
          & J, (d) allocate or otherwise set apart any sum for the payment
          of any dividend or distribution on, or for the purchase,
          redemption or retirement of, any shares of its capital stock, or
          (e) make any other distribution by return of capital or otherwise
          in respect of any shares of its capital stock, unless J & J could
          have taken such action in the last completed fiscal quarter and
          still remained in compliance with all of the financial covenants
          set forth in Article 6 hereof.

               7.9  CONSOLIDATED TAX RETURN.  No Borrower shall (a) file or
          consent to the filing of any consolidated income tax return with
          any Person other than other Borrowers, or (b) become party to any
          tax sharing or tax allocation agreement with any other Person.

               7.10 LIMITATIONS ON MODIFICATION OF CERTAIN DOCUMENTS.  No
          Borrower shall amend, modify or supplement its articles or
          certificate of incorporation, bylaws, or other constituent
          documents (i) if a Material Adverse Effect could result from such
          amendment, modification or supplement or (ii) if such amendment,
          modification or waiver could reasonably be expected to materially
          adversely affect the rights or interests of the Administrative
          Agent or the Lenders.

               7.11 LIMITATION ON CERTAIN RESTRICTIVE PROVISIONS.  No
          Borrower shall enter into, or remain a party to, any agreement or
          instrument which would impose any restriction:  (a) on the right
          of such Person from time to time to declare and pay dividends or
          take similar actions with respect to capital stock owned by such
          Person or pay any Indebtedness, obligations or liabilities from
          time to time owed to another Borrower; or (b) that would prohibit
          the grant of any Lien upon any of its properties (now owned or
          hereafter acquired) to secure any Indebtedness; or (c) would
          prohibit, or require the consent of any Person to, any amendment,
          modification or supplement to any of the Loan Documents except: 
          (i) restrictions set forth in the Loan Documents;  and (ii) legal
          restrictions of general applicability.

               7.12 LIMITATIONS ON MERGERS, ETC.  No Borrower shall merge
          or consolidate with or into any Person, except (a) mergers of any

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          Borrower with J & J where J & J is the survivor, (b) mergers of
          any other Borrower with any other Borrower; (c) any merger
          pursuant to an Acquisition permitted under Section 7.4 above
          (Acquisitions, Etc.); or (d) any merger pursuant to a transfer
          permitted under Section 7.5 above (Dispositions).

               7.13 AVOIDANCE OF OTHER CONFLICTS.  No Borrower shall
          violate or conflict with, be in default under, or be or remain
          subject to any liability (contingent or otherwise) on account of
          any violation or conflict with (a) its articles or certificate of
          incorporation, bylaws or other constituent documents, or (b) any
          agreement or instrument to which it is party or by which any of
          its properties (now owned or hereafter acquired) may be subject
          or bound, except, with respect to clause (b), for matters that
          could not, individually or in the aggregate, have a Material
          Adverse Effect.

          PR\79666\1
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                                      ARTICLE 8

                                      DEFAULTS

               8.1  "EVENTS OF DEFAULT."  An Event of Default means any one
          of the following events (whatever the reason for such Event of
          Default, whether it shall be voluntary or involuntary and whether
          it shall be by action or inaction, by operation of law, pursuant
          to a court order or any rule or regulation of any Governmental
          Authority or otherwise):

                    (a)  Failure to Pay Principal or Reimburse Drawings. 
          The Borrowers shall fail to make any payment of the principal of
          any Loan on the date when the same shall become due and payable,
          whether at stated maturity or at a date fixed for any installment
          or prepayment thereof or otherwise.

                    (b)  Failure to Pay Interest, Fees and Other Amounts. 
          The Borrowers shall fail to make any payment of interest on any
          Loan or shall fail to pay any fees or any other amounts owing
          hereunder or under any other Loan Documents (other than as
          specified in paragraph (a) above) on the dates when such
          interest, fees or other amounts shall become due and payable.

                    (c)  Covenant Defaults.    (i)  There shall occur a
          default in the due performance or observance of any term,
          covenant or agreement to be performed or observed pursuant to any
          of Sections 5.7, 5.10, 5.12 or 5.13 or any Section of Article 6
          or any Section of Article 7.

                              (ii) There shall occur any default in the due
          performance or observance of any term, covenant or agreement to
          be performed or observed pursuant to the provisions of this
          Agreement (other than as provided in paragraph (a) or paragraph
          (b) above or subparagraph (i) of this paragraph (c)) and, if
          capable of being remedied, such default shall continue unremedied
          for thirty (30) days after any Borrower becomes aware, or should
          in the exercise of reasonable diligence have become aware, of
          such default.

                    (d)  Misrepresentation.  Any representation or warranty
          made or deemed  made by any Borrower in or pursuant to or in
          connection with any Loan Document shall prove to have been false
          or misleading in any material respect as of the time when made or
          deemed made.

                    (e)  Cross-Defaults.  (i) Any Borrower shall fail to
          pay, in accordance with its terms and when due and payable, any
          Indebtedness (other than Indebtedness referred in paragraph (a)
          above) under, or arising out of any Interest Rate Hedging
          Agreement or an agreement or instrument (or group or series of
          related agreements or instruments) which evidences outstanding
          Indebtedness in excess of $500,000.00; (ii) the maturity of any
          such Indebtedness shall, in whole or in part, have been

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          accelerated, or any such Indebtedness shall, in whole or in part,
          have been required to be prepaid or purchased prior to the stated
          maturity thereof; (iii) any event shall have occurred and be
          continuing that permits any holder or holders of such
          Indebtedness, any trustee or agent acting on behalf of such
          holder or holders or any other Person to accelerate the maturity
          thereof or require any prepayment or repurchase thereof; or (iv)
          a default by any Borrower shall be continuing under any other
          instrument or agreement (whether or not relating to Indebtedness)
          binding upon such Person, except a default that, together with
          all other such defaults under this clause (iv), could not have a
          Material Adverse Effect.

                    (f)  Judgments and Executions.  One or more judgments
          for the payment of money shall have been entered against any
          Borrower or Borrowers which judgment or judgments, to the extent
          not paid or fully covered by insurance, exceed $500,000.00 in the
          aggregate, and such judgment or judgments shall have remained
          undischarged and unstayed for a period of 30 consecutive days; or
          one or more writs or warrants of attachment, garnishment,
          execution, distraint or similar process or any attachment
          (prejudgment or otherwise) of assets exceeding in value the
          aggregate amount of $500,000.00 shall have been issued against
          any Borrower or Borrowers or any of its or their respective
          properties.

                    (g)  Invalidity or Noncompliance With Loan Documents. 
          Any of the Borrowers shall fail to perform any of its obligations
          under any of the Loan Documents (after taking into account any
          applicable cure period set forth in such agreements), or the
          validity of this Agreement or any of the other Loan Documents, or
          the subordination provisions of any other instrument or document
          intended by the parties hereto to benefit the Lender Parties,
          shall have been challenged or disaffirmed by or on behalf of any
          of the Borrowers, or any of the Loan Documents shall cease to be
          in full force and effect (other than pursuant to its terms) or,
          other than as a direct result of any action or inaction of a
          Lender Party.

                    (h)  Environmental.  Any one or more of the events or
          conditions set forth in the following clauses (i) or (ii) shall
          have occurred with respect to any Borrower or any of their
          Environmental Affiliates, and the Required Lenders shall
          determine in good faith (which determination shall be conclusive)
          that such event(s) or condition(s), individually or in the
          aggregate, could have a Material Adverse Effect:  (i) any past or
          present violation of any Environmental Law by such Person which
          has not been cured to the satisfaction of the Required Lenders,
          or (ii) the existence of any pending or threatened Environmental
          Claim against any such Person, or the existence of any past or
          present acts, omissions, events or circumstances that could form
          the basis of any Environmental Claim against any such Person.

          PR\79666\1
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                    (i)  Subsidiaries as Borrowers.  Any direct or indirect
          Subsidiary of J & J shall fail to be, or shall cease to be, or
          fail to become, a Borrower hereunder.

                    (j)  Insolvency, Bankruptcy, Etc.  Any Borrower shall
          make an assignment for the benefit of creditors or a composition
          with creditors, shall generally not be paying its debts as they
          mature, shall admit its inability to pay its debts as they
          mature, shall file a petition in bankruptcy, shall be adjudicated
          insolvent or bankrupt, shall petition or apply to any tribunal
          for the appointment of any receiver, custodian, liquidator or
          trustee of or for it or any substantial part of its property or
          assets, shall commence any proceeding relating to it under any
          bankruptcy, reorganization, arrangement, readjustment of debt,
          receivership, dissolution or liquidation law or statute of any
          jurisdiction, whether now or hereafter in effect; or there shall
          be commenced against such Borrower, any such proceeding and the
          same shall not be dismissed within thirty (30) days or an order,
          judgment or decree approving the petition in any such proceeding
          shall be entered against such Borrower; or any Borrower shall by
          any act or failure to act indicate its consent to, approval of or
          acquiescence in, any such proceeding or any appointment of any
          receiver, custodian, liquidator or trustee of or for it or for
          any substantial part of its property or assets, or shall suffer
          the appointment of any receiver, liquidator or trustee, or shall
          take any corporate action for the purpose of effecting any of the
          foregoing; or any court of competent jurisdiction shall assume
          jurisdiction with respect to any such proceeding and the same
          shall not be dismissed within thirty (30) days or a receiver or a
          trustee or other officer or representative of a court or of
          creditors, or any court, governmental office or agency, shall,
          under color of legal authority, take and hold possession of any
          substantial part of the property or assets of such Borrower and
          shall not have relinquished possession within thirty (30) days,
          or such Borrower shall have concealed, removed, or permitted to
          be concealed or removed, any part of its property, with intent to
          hinder, delay or defraud its creditors, or any of them, or any
          Borrower shall have suffered or permitted, while insolvent, any
          creditor to obtain a Lien upon any of its property through legal
          proceedings or distraint.

               8.2  CONSEQUENCES OF AN EVENT OF DEFAULT.

                    (a)  Events of Default in General.  If an Event of
          Default (other than one specified in paragraph (j) of Section 8.1
          (Insolvency, Bankruptcy, Etc.) hereof) shall occur and be
          continuing or shall exist, then, in addition to all other rights
          and remedies which the Administrative Agent or any other Lender
          Party may have hereunder or under any other Loan Document, at
          law, in equity or otherwise, the Lenders shall be under no
          further obligation to make Loans and the Administrative Agent
          may, (and upon the written request of the Required Lenders,

          PR\79666\1
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          shall), by notice to J & J (on behalf of the Borrowers), from
          time to time do any or all of the following:

                         (i)  Declare the Commitments terminated, whereupon
                    the Commitments will terminate and any fees hereunder
                    shall be immediately due and payable without
                    presentment, demand, protest or further notice of any
                    kind, all of which are hereby waived, and an action
                    therefor shall immediately accrue.

                         (ii) Declare the unpaid principal amount of the
                    Loans, interest accrued thereon and all other Loan
                    Obligations to be immediately due and payable without
                    presentment, demand, protest or further notice of any
                    kind, all of which are hereby waived, and an action
                    therefor shall immediately accrue.

                         (iii) Exercise such other remedies as may be
                    available to the Lender Parties under applicable Law.

                    (b)  Automatic Acceleration; Certain Bankruptcy-Related
          Events.  If an Event of Default specified in paragraph (j) of
          Section 8.1 (Insolvency, Bankruptcy, Etc.) hereof shall occur or
          exist, then, in addition to all other rights and remedies which
          any Lender Party may have hereunder or under any other Loan
          Document, at law, in equity or otherwise, the Commitments shall
          automatically terminate and the Lenders shall be under no further
          obligation to make Loans, and the unpaid principal amount of the
          Loans, interest accrued thereon and all other Loan Obligations
          shall become immediately due and payable without presentment,
          demand, protest or notice of any kind, all of which are hereby
          waived, and an action therefor shall immediately accrue, and in
          addition, the Administrative Agent may, and upon the written
          request of the Required Lenders, shall exercise such other
          remedies as may be available to the Lender Parties under
          applicable Law.

                    (c)  Equitable Remedies.  It is agreed that, in
          addition to all other rights hereunder or under Law, the
          Administrative Agent shall have the right to institute
          proceedings in equity or other appropriate proceedings for the
          specific performance of any covenant or agreement made in any of
          the Loan Documents or for an injunction against the violation of
          any of the terms of any of the Loan Documents or in aid of the
          exercise of any power granted in any of the Loan Documents or by
          Law or otherwise. 

               8.3  APPLICATION OF PROCEEDS.  After the occurrence of an
          Event of Default and acceleration of the Loans, any amounts
          received on account of Loan Obligations shall be applied by the
          Administrative Agent in the following order:

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                    First, to payment of that portion of the Loan
               Obligations constituting fees, indemnities, expenses and
               other amounts due to the Administrative Agent in its
               capacity as such;
                    Second, to payment of that portion of the Loan
               Obligations constituting fees, indemnities (other than those
               paid pursuant to the preceding clause First) due to the
               Lender Parties, ratably among them in proportion to the
               amounts described in this clause Second due to them;
                    Third, to payment of that portion of the Loan
               Obligations constituting accrued and unpaid interest on
               Loans, ratably among the Lender Parties in proportion to the
               respective amounts described in this clause Third due to
               them;
                    Fourth, to payment of that portion of the Loan
               Obligations constituting unpaid principal of the Loans
               ratably among the Lender Parties in proportion to the
               respective amounts described in this clause Fourth due to
               them;
                    Fifth, to payment of all other Loan Obligations,
               ratably among the Lender Parties in proportion to the
               respective amounts described in this clause Fifth due to
               them; and
                    Finally, the balance, if any, after all of the Loan
               Obligations have been indefeasibly paid in full, to J & J
               (on behalf of the Borrowers) or as otherwise required by
               Law.

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                                      ARTICLE 9

                              THE ADMINISTRATIVE AGENT

               9.1  APPOINTMENT.  Subject to the provisions of the second
          sentence of Section 9.9 below, each Lender hereby irrevocably
          appoints Mellon to act as Administrative Agent for such Lender
          under this Agreement and the other Loan Documents.  Each Lender
          hereby irrevocably authorizes the Administrative Agent to take
          such action on behalf of such Lender under the provisions of this
          Agreement and the other Loan Documents, and to exercise such
          powers and to perform such duties, as are expressly delegated to
          or required of the Administrative Agent by the terms hereof or
          thereof, together with such powers as are reasonably incidental
          thereto.  Mellon hereby agrees to act as Administrative Agent on
          behalf of the Lenders on the terms and conditions set forth in
          this Agreement and the other Loan Documents, subject to its right
          to resign as provided in Section 9.9 hereof.  Each Lender hereby
          irrevocably authorizes the Administrative Agent to execute and
          deliver each of the Loan Documents and to accept delivery of such
          of the other Loan Documents as may not require execution by the
          Administrative Agent.  Each Lender agrees that the rights and
          remedies granted to the Administrative Agent under the Loan
          Documents shall be exercised exclusively by the Administrative
          Agent (or a Person designated by the Administrative Agent), and
          that no Lender shall have any right individually to exercise any
          such right or remedy, except to the extent, if any, expressly
          provided herein or therein.

               9.2  GENERAL NATURE OF ADMINISTRATIVE AGENT'S DUTIES. 
          Notwithstanding anything to the contrary elsewhere in this
          Agreement or in any other Loan Document:

                    (a)  The Administrative Agent shall have no duties or
               responsibilities except those expressly set forth in this
               Agreement and the other Loan Documents, and no implied
               duties or responsibilities on the part of the Administrative
               Agent shall be read into this Agreement or any other Loan
               Document or shall otherwise exist.

                    (b)  The duties and responsibilities of the
               Administrative Agent under this Agreement and the other Loan
               Documents shall be mechanical and administrative in nature,
               and the Administrative Agent shall not have a fiduciary
               relationship with respect to any Lender.

                    (c)  The Administrative Agent's relationship with and
               to the Lenders is governed exclusively by the terms of this
               Agreement and the other Loan Documents.  The Administrative
               Agent does not assume, and shall not at any time be deemed

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               to have, any relationship of agency or trust with or for,
               any Lender or any other Person or (except only as expressly
               provided in this Agreement and the other Loan Documents) any
               other duty or responsibility to such Lender or other Person.

                    (d)  The Administrative Agent shall be under no
               obligation to take any action hereunder or under any other
               Loan Document if the Administrative Agent believes in good
               faith that taking such action may conflict with any Law or
               any provision of this Agreement or any other Loan Document,
               or may require the Administrative Agent to qualify to do
               business in any jurisdiction where it is not then so
               qualified.

                    (e)  The authority of the Administrative Agent to
               request information from the Borrowers or take any other
               voluntary action hereunder shall impose no duty of any kind
               on the Administrative Agent to make such request or take any
               such action.

                    (f)  The Administrative Agent shall have no duty to
               inquire whether any Interest Rate Hedging Agreement conforms
               to the terms and limitations of this Agreement and shall
               have no duty to inquire as to whether the Borrowers maintain
               any Interest Rate Hedging Agreements.

               9.3  EXERCISE OF POWERS.  The Administrative Agent shall
          take any action of the type specified in this Agreement or any
          other Loan Document as being within the Administrative Agent's
          rights, powers or discretion in accordance with directions from
          the Required Lenders (or as otherwise provided in the Loan
          Documents).  In the absence of such direction, the Administrative
          Agent shall have the authority (but under no circumstances shall
          be obligated), in its sole discretion, to take any such action,
          except to the extent that this Agreement or such other Loan
          Document expressly requires the direction or consent of the
          Required Lenders (or all of the Lenders, or some other Person or
          group of Persons), in which case the Administrative Agent shall
          not take such action absent such direction or consent.  Any
          action or inaction pursuant to such direction, discretion or
          consent shall be binding on each Lender (whether or not it so
          consented).  The Administrative Agent shall not have any
          liability to any Person as a result of any action or inaction in
          conformity with this Section 9.3.

               9.4  GENERAL EXCULPATORY PROVISIONS.  Notwithstanding
          anything to the contrary elsewhere in this Agreement or any other
          Loan Document:

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                    (a)  The Administrative Agent shall not be liable for
          any action taken or omitted to be taken by it under or in
          connection with this Agreement or any other Loan Document, except
          only for direct (as opposed to consequential or other) damages
          suffered by a Person and only to the extent that such Person
          proves that such damages were caused by the Administrative
          Agent's own gross negligence or willful misconduct.

                    (b)  The Administrative Agent shall not be responsible
          for (i) the execution, delivery, effectiveness, enforceability,
          genuineness, validity or adequacy of any Loan Document, (ii) any
          recital, representation, warranty, document, certificate, report
          or statement in, provided for in, or received under or in
          connection with, any Loan Document, or (iii) any failure of any
          Borrower or, any Lender to perform any of their respective
          obligations under any Loan Document.

                    (c)  The Administrative Agent shall not be under any
          obligation to ascertain, inquire or give any notice relating to
          (i) the performance or observance of any of the terms or
          conditions of this Agreement or any other Loan Document on the
          part of any Borrower, (ii) the business, operations, condition
          (financial or otherwise) or prospects of any Borrower or any
          other Person (even if the Administrative Agent knows or should
          know that some event or condition exists or fails to exist), or
          (iii) except to the extent set forth in Section 9.5(f) below, the
          existence of any Event of Default or Default.

                    (d)  The Administrative Agent shall not be under any
          obligation, either initially or on a continuing basis, to provide
          any Lender Party with any notices, reports or information of any
          nature, whether in its possession presently or hereafter, whether
          obtained under or in connection with this Agreement or otherwise,
          except for such notices, reports and other information expressly
          required by this Agreement or any other Loan Document to be
          furnished by the Administrative Agent to such Lender Party.

               9.5  ADMINISTRATION BY THE ADMINISTRATIVE AGENT.

                    (a)  The Administrative Agent may rely upon any notice
          or other communication of any nature (written or oral, including
          but not limited to telephone conversations, whether or not such
          notice or other communication is made in a manner permitted or
          required by this Agreement or any other Loan Document)
          purportedly made by or on behalf of the proper party or parties,
          and the Administrative Agent shall not have any duty to verify
          the identity or authority of any Person giving such notice or
          other communication.

                    (b)  The Administrative Agent may consult with legal
          counsel (including in-house counsel for the Administrative Agent
          or in-house or other counsel for any Borrower), independent

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          public accountants and any other experts selected by it from time
          to time, and the Administrative Agent shall not be liable for any
          action taken or omitted to be taken in good faith by it in
          accordance with the advice of such counsel, accountants or
          experts.

                    (c)  The Administrative Agent may conclusively rely
          upon the truth of the statements and the correctness of the
          opinions expressed in any certificates or opinions furnished to
          the Administrative Agent in accordance with the requirements of
          this Agreement or any other Loan Document.  Whenever the
          Administrative Agent shall deem it necessary or desirable that a
          matter be proved or established with respect to any Borrower or
          Lender Party, such matter may be established by a certificate of
          such Borrower or Lender Party, as the case may be, and the
          Administrative Agent may conclusively rely upon such certificate
          (unless other evidence with respect to such matter is
          specifically prescribed in this Agreement or another Loan
          Document).

                    (d)  The Administrative Agent may fail or refuse to
          take any action unless it shall be directed by the Required
          Lenders (or all of the Lenders, or some other Person or group of
          Persons, if this Agreement or another Loan Document so expressly
          requires) to take such action and it shall be indemnified to its
          satisfaction from time to time against any and all amounts,
          liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses or disbursements of any kind or
          nature which may be imposed on, incurred by or asserted against
          the Administrative Agent by reason of taking or continuing to
          take any such action.

                    (e)  The Administrative Agent may perform any of its
          duties under this Agreement or any other Loan Document by or
          through agents or attorneys-in-fact.  The Administrative Agent
          shall not be responsible for the negligence or misconduct of any
          agents or attorneys-in-fact selected by it with reasonable care.

                    (f)  The Administrative Agent shall not be deemed to
          have any knowledge or notice of the occurrence of any Event of
          Default or Default unless the Administrative Agent has received
          notice from a Lender Party or a Borrower referring to this
          Agreement, describing such Event of Default or Default, and
          stating that such notice is a "notice of default."  If the
          Administrative Agent receives such a notice, the Administrative
          Agent shall give prompt notice thereof to each Lender Party.

               9.6  LENDER PARTIES NOT RELYING ON ADMINISTRATIVE AGENT OR
          OTHER LENDERS.  Each Lender Party acknowledges as follows:  (a)
          neither the Administrative Agent nor any other Lender Party has
          made any representations or warranties to it, and no act taken
          hereafter by the Administrative Agent or any other Lender Party

          PR\79666\1
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          shall be deemed to constitute any representation or warranty by
          the Administrative Agent or such other Lender Party to it; (b) it
          has, independently and without reliance upon the Administrative
          Agent or any other Lender Party, and based upon such documents
          and information as it has deemed appropriate, made its own credit
          and legal analysis and decision to enter into this Agreement and
          the other Loan Documents; and (c) it will, independently and
          without reliance upon the Administrative Agent or any other
          Lender Party, and based upon such documents and information as it
          shall deem appropriate at the time, make its own decisions to
          take or not take action under or in connection with this
          Agreement and the other Loan Documents.

               9.7  INDEMNIFICATION.  Each Lender agrees to reimburse and
          indemnify the Administrative Agent and its directors, officers,
          employees and agents (to the extent not reimbursed by a Borrower
          and without limitation of the obligations of the Borrowers to do
          so), in proportion to the Lenders' respective pro rata share of
          (without duplication) the Commitment and the Loans, from and
          against any and all amounts, losses, liabilities, claims,
          damages, expenses, obligations, penalties, actions, judgments,
          suits, costs or disbursements of any kind or nature (including
          the fees and disbursements of counsel for the Administrative
          Agent or such other Person in connection with any investigative,
          administrative or judicial proceeding commenced or threatened,
          whether or not the Administrative Agent or such other Person
          shall be designated a party thereto) that may at any time be
          imposed on, incurred by or asserted against the Administrative
          Agent or such other Person as a result of, or arising out of, or
          in any way related to or by reason of, this Agreement, any other
          Loan Document, any Acquisition or any other transaction from time
          to time contemplated hereby or thereby, or any transaction
          actually or proposed to be financed in whole or in part, directly
          or indirectly, with the proceeds of any Loan, provided that no
          Lender shall be liable for any portion of such amounts, losses,
          liabilities, claims, damages, expenses, obligations, penalties,
          actions, judgments, suits, costs or disbursements that such
          Lender Party proves were the result of the gross negligence or
          willful misconduct of the Administrative Agent or such other
          Person.  Payments under this Section 9.7 shall be due and payable
          on demand.

               9.8  REGISTER.  The Administrative Agent shall maintain at
          its address referred to in Section 12.1 a copy of each Assignment
          and Acceptance delivered to and accepted by it and a register for
          the recordation of the names and addresses of the Lenders and the
          Commitment of, and principal amount of the Loans and stated
          interest thereon owing to, each Lender from time to time (the
          "Register").  The entries in the Register shall be conclusive and
          binding for all purposes, absent manifest error, and the

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          Borrowers, the Administrative Agent and the Lenders may treat
          each Person whose name is recorded in the Register as a Lender
          hereunder for all purposes of this Agreement.  The Register shall
          be available for inspection by J & J on behalf of the Borrowers
          or any Lender at any reasonable time and from time to time upon
          reasonable prior notice.

               9.9  SUCCESSOR ADMINISTRATIVE AGENT.  The Administrative
          Agent may resign at any time by giving 30 days' prior written
          notice thereof to the other Lender Parties and J & J on behalf of
          the Borrowers.  The Administrative Agent may be removed by the
          Required Lenders at any time for cause by such Required Lenders
          giving 30 days' prior written notice thereof to the
          Administrative Agent, the other Lender Parties and J & J on
          behalf of the Borrowers.  Upon any such resignation or removal,
          the Required Lenders shall have the right to appoint a successor
          Administrative Agent with (so long as no Default or Event of
          Default shall have occurred and then be continuing) the consent
          of J & J on behalf of the Borrowers whose consent shall not be
          unreasonably withheld or delayed.  If no successor Administrative
          Agent shall have been so appointed and consented to, and shall
          have accepted such appointment, within 30 days after such notice
          of resignation or removal, then CoreStates shall have the right
          to become the successor Administrative Agent by giving written
          notice thereof to J & J and the Lenders and if CoreStates
          declines to become successor Administrative Agent or fails to
          give such notice within thirty five (35) days after the retiring
          Administrative Agent's notice of resignation or removal, then the
          retiring Administrative Agent may (but shall not be required to)
          appoint a successor Administrative Agent.  Each successor
          Administrative Agent shall be a Lender if any Lender shall at the
          time be willing to become the successor Administrative Agent, and
          if no Lender shall then be so willing, then such successor
          Administrative Agent shall be an Eligible Institution.  Upon the
          acceptance by a successor Administrative Agent of its appointment
          as Administrative Agent hereunder, such successor Administrative
          Agent shall thereupon succeed to and become vested with all the
          properties, rights, powers, privileges and duties of the former
          Administrative Agent in its capacity as such, without further
          act, deed or conveyance.  Upon the effective date of resignation
          or removal of a retiring Administrative Agent, such
          Administrative Agent shall be discharged from its duties under
          this Agreement and the other Loan Documents, but the provisions
          of this Agreement shall inure to its benefit as to any actions
          taken or omitted by it while it was Administrative Agent under
          this Agreement.  If and so long as no successor Administrative
          Agent shall have been appointed, then any notice or other
          communication required or permitted to be given by the
          Administrative Agent shall be sufficiently given if given by the
          Required Lenders, all notices or other communications required or
          permitted to be given to the Administrative Agent shall be given
          to each Lender, and all payments to be made to the Administrative

          PR\79666\1
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          Agent shall be made directly to the Borrowers or Lender Party for
          whose account such payment is made.

               9.10 ADDITIONAL ADMINISTRATIVE AGENTS.  If the
          Administrative Agent shall from time to time deem it necessary or
          advisable, for its own protection in the performance of its
          duties hereunder or in the interest of the Lender Parties, the
          Administrative Agent and the Borrowers shall execute and deliver
          a supplemental agreement and all other instruments and agreements
          necessary or advisable, in the opinion of the Administrative
          Agent, to constitute one or more other Persons designated by the
          Administrative Agent, to act as co-Administrative Agent, with
          such powers of the Administrative Agent as may be provided in
          such supplemental agreement, and to vest in such other Person as
          such co-agent or separate agent, as the case may be, any
          properties, rights, powers, privileges and duties of the
          Administrative Agent under this Agreement or any other Loan
          Document.

               9.11 CALCULATIONS.  The Administrative Agent shall not be
          liable for any calculation, apportionment or distribution of
          payments made by it in good faith and without gross negligence or
          willful misconduct.  If such calculation, apportionment or
          distribution is subsequently determined to have been made in
          error, the sole recourse of any Lender Party to whom payment was
          due but not made shall be to recover from the other Lender
          Parties any payment in excess of the amount to which they are
          determined to be entitled or, if the amount due was not paid by
          the appropriate Borrower, to recover such amount from the
          appropriate Borrower.

               9.12 ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY.  With
          respect to its Commitment hereunder and the Loan Obligations
          owing to it, the Administrative Agent shall have the same rights
          and powers under this Agreement and each other Loan Document as
          any other Lender and may exercise the same as though it were not
          the Administrative Agent, and the terms "Lender", "Holder of
          Notes" and like terms shall include the Administrative Agent in
          its individual capacity as such.  The Administrative Agent and
          its Affiliates may, without liability to account, make loans to,
          accept deposits from, acquire debt or equity interests in, act as
          trustee under indentures of, enter into Interest Rate Hedging
          Agreements with, serve as "Administrative Agent" for other
          financing vehicles, issue letters of credit on behalf of, and
          engage in any other business with, (a) any Borrower or any
          stockholder, Subsidiary or Affiliate of any Borrower, or (b) any
          other Person, whether such other Person may be engaged in any
          conflict or dispute with any Borrower or any Lender Party or

          PR\79666\1
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          otherwise, as though the Administrative Agent were not the
          Administrative Agent hereunder.

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                                     ARTICLE 10

                          SPECIAL INTER-BORROWER PROVISIONS

               10.1 CERTAIN BORROWER ACKNOWLEDGEMENTS. 

                    (a)  Each Borrower acknowledges that it will enjoy
          significant benefits from the business conducted by the other
          Borrowers because of, inter alia, their combined ability to
          bargain with other Persons including without limitation their
          ability to receive the credit facilities on favorable terms
          granted by this Agreement and other Loan Documents which would
          not have been available to an individual Borrower acting alone. 
          Each Borrower has determined that it is in its best interest to
          procure credit facilities which each Borrower may utilize
          directly and which receive the credit support of the other
          Borrowers as contemplated by this Agreement and the other Loan
          Documents.

                    (b)  The Lenders have advised the Borrowers that they
          are unwilling to enter into this Agreement and the other Loan
          Documents and make available the credit facilities extended
          hereby to any Borrower unless each Borrower agrees, among other
          things, to be jointly and severally liable for the due and proper
          payment of the obligations of each other Borrower under this
          Agreement and other Loan Documents.  Each Borrower has determined
          that it is in its best interest and in pursuit of its purposes
          that it so induce the Lenders to extend credit pursuant to this
          Agreement and the other documents executed in connection herewith
          (i) because of the desirability to each Borrower of the credit
          facilities, the interest rates and the modes of borrowing
          available hereunder, (ii) because each Borrower may engage in
          transactions jointly with other Borrowers and (iii) because each
          Borrower may require, from time to time, access to funds under
          this Agreement for the purposes herein set forth.

                    (c)  Each Borrower has determined that it has and,
          after giving effect to the transactions contemplated by this
          Agreement and the other Loan Documents (including, without
          limitation, the inter-Borrower arrangement set forth in this
          Article 10 will have, assets having a fair saleable value in
          excess of the amount required to pay its probable liability on
          its existing debts as they fall due for payment and that the sum
          of its debts is not and will not then be greater than all of its
          property at a fair valuation, that such Borrower has, and will
          have, access to adequate capital for the conduct of its business
          and the ability to pay its debts from time to time incurred in
          connection therewith as such debts mature and that the value of
          the benefits to be derived by such Borrower from the access to
          funds under this Agreement (including, without limitation, the
          inter-Borrower arrangement set forth in this Article 10) is
          reasonably equivalent to the obligations undertaken pursuant
          hereto.

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               10.2 CERTAIN INTER-BORROWER AGREEMENTS.

                    (a)  Subject to paragraph (b) below, each Borrower as
          indemnitor shall indemnify the other Borrowers as indemnitees for
          all Loan Obligations incurred by the indemnitee Borrowers for
          Loans advanced to the indemnitor Borrower.

                    (b)  The rights and obligations of the Borrowers
          pursuant to paragraph (a) above shall be subordinated in all
          respects to the rights of the Administrative Agent and the other
          Lender Parties with respect to the Loan Obligations and,
          accordingly, each Borrower agrees that it shall not make any
          payment or receive any payment pursuant to the preceding
          paragraph (a) at any time a Default has occurred and is
          continuing or would be caused thereby.  Each Borrower agrees that
          in the event it receives any payment described by or in violation
          of this paragraph (b), it shall accept such payment as agent of
          the Administrative Agent, for the benefit of the Lender Parties,
          and hold the same in trust on behalf of and for the benefit of
          the Administrative Agent, for the benefit of the Lender Parties.

               10.3 RECORDS.  J & J (on behalf of each Borrower) shall
          maintain records specifying (a) all Loan Obligations incurred by
          each Borrower, (b) the date of such incurrence, (c) the date and
          amount of any payments made in respect of such Loan Obligations
          and (d) all inter-Borrower obligations pursuant to paragraph 10.2
          above.  J & J shall make copies of such records available to the
          Administrative Agent, upon request.

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                                     ARTICLE 11

                              DEFINITIONS; CONSTRUCTION

               11.1 CERTAIN DEFINITIONS.  As used in this Agreement, the
          following terms have the following meanings, (terms defined in
          the singular to have a correlative meaning when used in the
          plural) unless the context hereof otherwise clearly requires:

                    "Accumulated Funding Deficiency" has the meaning given
          to such term in S4001(a)(18) of ERISA.
                    "Acquisition" means any acquisition by one or more of
          the Borrowers,  directly or indirectly, whether in one
          transaction or in a series of related transactions (and whether
          by merger, consolidation, acquisition of assets or otherwise) of
          all or any substantial portion of the ownership interests in or
          assets of any separate business enterprise.
                    "Acquisition Cost" means, with respect to any
          Acquisition, the value in Dollars of the total consideration paid
          or payable (whether immediate or deferred and whether in cash,
          equity or other assets) by any of the Borrowers for or in respect
          of the ownership interests or assets being acquired in such
          Acquisition.
                    "Administrative Agent" has the meaning ascribed to such
          term in the preamble of this Agreement.
                    "Affiliate" of a Person means (a) any other Person
          which directly or indirectly controls, or is controlled by, or is
          under common control with, such Person, (b) any director or
          officer (or, in the case of a Person which is not a corporation,
          any individual having analogous powers) of such Person or of a
          Person who is an Affiliate of such Person, and (c) any individual
          related to such Person or Affiliate by consanguinity or adoption
          within the third degree.  For purposes of the preceding sentence,
          "control" of a Person means (a) the possession, directly or
          indirectly, of the power to direct or cause the direction of the
          management or policies of such Person, whether through the
          ownership of voting securities, by contract or otherwise and (b)
          in any case shall include direct or indirect ownership
          (beneficially or of record) of, or direct or indirect power to
          vote, 5% or more of the outstanding shares of any class of
          capital stock of such Person (or in the case of a Person that is
          not a corporation, 5% or more of any class of equity interest).
                    "Agreement" means this Credit Agreement as the same may
          be amended, modified, restated or supplemented from time to time
          in accordance with its terms.
                    "Agreement Date" means the date first-above written.
                    "Amount of Unfunded Benefit Liabilities" has the
          meaning given to such term in S4001(a)(18) of ERISA.
                    "Applicable Margin" means a marginal rate of interest
          which is added to the LIBO Rate to determine the effective rate
          of interest on LIBO Rate Loans.  Until the Officer's Compliance
          Certificate for the fiscal year ended December 31, 1997 is
          delivered to the Administrative Agent and Lenders pursuant to
          Section 5.1 above, the Applicable Margin for LIBO Rate Loans

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          shall be 0.50%.  Thereafter, the Applicable Margin shall be
          determined in the following manner:
                    For any LIBO Rate Loans, the Applicable Margin shall be
          the percentage amount set forth below under the caption
          "Applicable Margin" opposite the relevant Total Funded
          Indebtedness/EBITDA Ratio:
                    Total Funded                       Applicable Margin
          for
                    Indebtedness/EBITDA Ratio LIBO Rate Loans

                    below 2.50                         0.50%
                    > 2.50 < 2.75                      0.75%
                    > 2.75 < 3.00                      1.00%
                    > 3.00                             1.25%

          The Applicable Margin shall be adjusted five Business Days after
          receipt of the annual or quarterly Officer's Compliance
          Certificate, delivered pursuant to Section 5.1.  At any time that
          such annual or quarterly Officer's Compliance Certificate is
          required to be delivered pursuant to said Section 5.1 and is not
          so delivered, then the Applicable Margin shall be the highest
          rate specified above until the Officer's Compliance Certificate
          is so delivered.
                    "Assignment" has the meaning ascribed to such term in
          the recitals hereof.
                    "Assignment and Acceptance" shall have the meaning
          ascribed to such term in Section 12.9.
                    "Assumed Indebtedness" means Indebtedness incurred by a
          Person which is not a Borrower and which (a) is existing at the
          time such Person (or assets of such Person) is acquired by a
          Borrower and (b) is assumed by a Borrower in connection with such
          Acquisition, other than Indebtedness incurred by the original
          obligor in connection with, or in contemplation of, such
          Acquisition.
                    "Available RC Commitment" means, as of any date, the
          difference obtained by subtracting (a) minus (b) where (a) is the
          amount of the RC Commitment on such date and (b) is the aggregate
          outstanding principal amount of all RC Loans on such date.
                    "Bank Tax" means (i) any Tax based on or measured by
          net income of a Lender Party, any franchise Tax and any doing
          business Tax imposed upon any Lender Party by any jurisdiction
          (or any political subdivision thereof) in which such Lender Party
          or any lending office of a Lender Party is located and (ii) for
          the purposes of Section 1.13, any other Tax imposed by a
          jurisdiction other than the United States or a political
          subdivision thereof that would not have been imposed but for a
          present or former connection between such Lender Party or lending
          office (as the case may be) and such jurisdiction.
                    "Borrowers" has the meaning ascribed to such term in
          the preamble hereto.  It is the intent of the parties (and a
          covenant of the Borrowers herein) that each Person which is now
          or hereafter becomes a direct or indirect Subsidiary of J & J
          shall at all times after becoming a Subsidiary of J & J be a
          "Borrower" pursuant to the terms of this Agreement.

          PR\79666\1
                                      -67-

                    "Business Day" means any day other than a Saturday,
          Sunday, public holiday under the laws of the Commonwealth of
          Pennsylvania, or other day on which banking institutions are
          authorized or obligated to close in the city in which the
          Administrative Agent's Domestic Lending Office is located
          provided, however, that whether or not expressly stated in this
          Agreement or other Loan Documents, when "Business Day" is used
          with respect to any LIBO Rate Loan, such Business Day must also
          be a Eurodollar Business Day.
                    "Capital Expenditures", with respect to any Person,
          means, for any period, all expenditures (whether paid in cash or
          accrued as liabilities) of such Person during such period which
          are, or should be, classified as capital expenditures in
          accordance with GAAP.
                    "Capitalized Lease" means at any time any lease which
          is, or should be, capitalized on the balance sheet of the lessee
          at such time in accordance with GAAP.
                    "Capitalized Lease Obligation" of any Person at any
          time means the aggregate amount which is, or should be, reported
          as a liability on the balance sheet of such Person at such time
          as lessee under a Capitalized Lease in accordance with GAAP.
                    "Cash Equivalent Investments" means any of the
          following:  (i) full faith and credit obligations of the United
          States of America, or fully guaranteed as to interest and
          principal by the full faith and credit of the United States of
          America, maturing in not more than one year from the date such
          investment is made; (ii) time deposits and certificates of
          deposit having a final maturity of not more than one year after
          the date of issuance thereof of any commercial bank incorporated
          under the laws of the United States of America or any state
          thereof or the District of Columbia, which bank is a member of
          the Federal Reserve System and has a combined capital and surplus
          of not less than $1,000,000,000.00 and with a senior unsecured
          debt credit rating of at least "A" by Moody's Investors Service,
          Inc. or "A" by Standard & Poor's Ratings Services;
          (iii) commercial paper of companies, banks, trust companies or
          national banking associations (in each case excluding J & J and
          its Affiliates) incorporated or doing business under the laws of
          the United States or one of the States thereof, in each case
          having a remaining term until maturity of not more than 180 days
          from the date such investment is made and rated at least P-1 by
          Moody's Investors Service, Inc. or at least A-1 by Standard &
          Poor's Ratings Services; and (iv) repurchase agreements with any
          financial institution having combined capital and surplus of not
          less than $1,000,000,000.00 with a term of not more than seven
          days for underlying securities of the type referred to in clause
          (i) above.
                    "Cash Flow", with respect to any Person, for any
          period, means (a) Net Income of such Person plus (b) each of the
          following to the extent deducted in determining Net Income:  (i)
          depreciation expense, and (ii) amortization expense in each case
          for such period.
                    "CCFC" has the meaning ascribed to such term in the
          recitals hereof.

          PR\79666\1
                                      -68-

                    "CERCLA" means the Comprehensive Environmental
          Response, Compensation and Liability Act, as amended, and any
          successor statute of similar import, and regulations thereunder,
          in each case as in effect from time to time.
                    "CERCLIS" means the Comprehensive Environmental
          Response, Compensation and Liability Information System List, as
          the same may be amended from time to time.
                    "Closing Date" means the date that the initial Loans
          are made hereunder.
                    "COBRA Violation" means any violation of the
          "continuation coverage requirements" of "group health plans" of
          former S162(k) of the Code (as in effect for tax years beginning
          on or before December 31, 1988) and of S4980B of the Code (as in
          effect for tax years beginning on or after January 1, 1989) and
          Part 6 of Subtitle B of Title I of ERISA.
                    "Code" means the Internal Revenue Code of 1986, as
          amended, and any successor statute of similar import, and
          regulations thereunder, in each case as in effect from time to
          time, and the Treasury regulations thereunder.
                    "Collateral" means (a) the cash collateral account, if
          any, in respect of Letters of Credit from time to time and (b)
          the collateral subject to, or purported to be subject to, the
          Liens of the Pledge Agreement, from time to time.
                    "Commitment" means, with respect to any Lender, the
          obligation of such Lender to make Loans pursuant to the terms of
          this Agreement.  "Commitment" means, with respect to all Lender
          Parties, the sum of each Lender Party's Commitment.
                    "Controlled Group" means a group of employers, of which
          any Borrower is a member and which group constitutes:
                         (a)  A controlled group of corporations (as
          defined in S414(b) of the Code);

                         (b)  Trades or businesses (whether or not
          incorporated) which are under common control (as defined in
          S414(c) of the Code);

                         (c)  Trades or businesses (whether or not
          incorporated) which constitute an affiliated service group (as
          defined in S414(m) of the Code); or

                         (d)  Any other entity required to be aggregated
          with any Borrower pursuant to S414(o) of the Code.

                    "CoreStates" has the meaning ascribed to such term in
          the preamble hereof.
                    "Default" means any event or condition which with
          notice, passage of time or both, would constitute an Event of
          Default.
                    "Default Rate" means, with respect to any amounts
          payable hereunder or under the other Loan Documents, a rate equal
          to the sum of (a) two percent (2%) per annum plus (b) the
          interest rate otherwise in effect with respect to such amounts
          or, if no such rate is otherwise in effect with respect to such

          PR\79666\1
                                      -69-

          amounts, a rate equal to the sum of (i) the Prime Rate plus (ii)
          two percent (2%).
                    "Defined Benefit Pension Plan" means a defined benefit
          plan (other than a Multiemployer Plan) as defined in S3(35) of
          ERISA which is maintained by any Borrower or any member of its
          Controlled Group.
                    "Defined Contribution Plan" means an individual account
          plan (other than a Multiemployer Plan) as defined in S3(34) of
          ERISA which is maintained by any Borrower or any member of its
          Controlled Group.
                    "Dollar," "Dollars" and the symbol "$" means lawful
          money of the United States of America.
                    "Domestic Lending Office" means, with respect to any
          Lender (i) the office designated as such on the signature page
          hereof, or (ii) the branch or office of such Lender designated,
          from time to time, by such Lender in a notice to the
          Administrative Agent and J & J.
                    "EBITDA" means Net Income before (a) Interest Expense,
          (b) income taxes, (c) depreciation and (d) amortization.
                    "Eligible Institution" means (i) a Lender; (ii) an
          Affiliate of a Lender; (iii) a commercial bank organized under
          the laws of the United States, or any State thereof, and having a
          combined capital and surplus of at least $1,000,000,000.00; (iv)
          a savings and loan association or savings bank organized under
          the laws of the United States, or any State thereof, and having a
          combined capital and surplus of at least $1,000,000,000.00; (v) a
          commercial bank organized under the laws of any other country
          that is a member of the Organization for Economic Cooperation and
          Development or has concluded special lending arrangements with
          the International Monetary Fund associated with its General
          Arrangements to Borrow or under the laws of a political
          subdivision of any such country, and having a combined capital
          and surplus of at least $1,000,000,000.00, so long as such bank
          is acting through a branch or agency located in the United
          States; and (vi) a finance company, insurance company or other
          financial institution or fund (whether a corporation,
          partnership, trust or other entity) that is engaged in making,
          purchasing or otherwise investing in commercial loans in the
          ordinary course of its business and having a combined capital and
          surplus or total assets of at least $500,000,000.00 and (vii)
          with respect to any Lender that is a fund, any other fund with
          assets in excess of $100,000,000.00 that invests in bank loans
          and is managed by the same investment advisor as such Lender;
          provided, however, that neither any Borrower nor any Affiliate of
          a Borrower shall qualify as an Eligible Institution under this
          definition.
                    "Environmental Affiliate" means, with respect to any
          Person, any other Person whose liability (contingent or
          otherwise) for any Environmental Claim such Person has retained,
          assumed or otherwise is liable for (by Law, agreement or
          otherwise).
                    "Environmental Approvals" means any approval, order,
          consent, authorization, certificate, license, permit or
          validation of, or exemption or other action by, or filing,

          PR\79666\1
                                      -70-

          recording or registration with, any Governmental Authority
          pursuant to or required under any Environmental Law.
                    "Environmental Claim" means, with respect to any
          Person, any action, suit, proceeding, investigation, notice,
          claim, complaint, demand, request for information or other
          communication (written or oral) by any other Person (including
          but not limited to any Governmental Authority, citizens' group or
          present or former employee of such Person) alleging, asserting or
          claiming any actual or potential (a) violation of any
          Environmental Law, (b) liability under any Environmental Law or
          (c) liability for investigatory costs, cleanup costs,
          governmental response costs, natural resources damages, property
          damages, personal injuries, fines or penalties arising out of,
          based on or resulting from the presence, or release into the
          environment, of any Environmental Concern Materials at any
          location, whether or not owned by such Person.
                    "Environmental Cleanup Site" means any location which
          is listed or proposed for listing on the National Priorities List
          (as established under CERCLA), on CERCLIS or on any similar state
          list of sites requiring investigation or cleanup, or which is the
          subject of any pending or threatened action, suit, proceeding or
          investigation related to or arising from any alleged violation of
          any Environmental Law.
                    "Environmental Concern Materials" means (a) any
          flammable substance, explosive, radioactive material, hazardous
          material, hazardous waste, toxic substance, solid waste,
          pollutant, contaminant or any related material, raw material,
          substance, product or by-product of any substance specified in or
          regulated or otherwise affected by any Environmental Law
          (including but not limited to any "hazardous substance" as
          defined in CERCLA or any similar state Law), (b) any toxic
          chemical or other substance from or related to industrial,
          commercial or institutional activities, and (c) asbestos,
          gasoline, diesel fuel, motor oil, waste and used oil, heating oil
          and other petroleum products or compounds, polychlorinated
          biphenyls, radon and urea formaldehyde.
                    "Environmental Law" means any Law, whether now existing
          or subsequently enacted or amended, relating to (a) pollution or
          protection of the environment, including natural resources, (b)
          exposure of Persons, including but not limited to employees, to
          Environmental Concern Materials, (c) protection of the public
          health or welfare from the effects of products, by-products,
          wastes, emissions, discharges or releases of Environmental
          Concern Materials or (d) regulation of the manufacture, use or
          introduction into commerce of Environmental Concern Materials
          including their manufacture, formulation, packaging, labeling,
          distribution, transportation, handling, storage or disposal. 
          "Environmental Law" shall also include any Environmental Approval
          and the terms and conditions thereof.
                    "ERISA" means the Employee Retirement Income Security
          Act of 1974, as amended from time to time, and the regulations
          thereunder.
                    "Eurodollar Business Day" means any Business Day on
          which dealings in Dollar deposits are carried on in the London

          PR\79666\1
                                      -71-

          interbank market and on which commercial banks are open for
          domestic and international business (include dealings in Dollar
          deposits) in London, England.
                    "Eurodollar Lending Office" means, with respect to any
          Lender, the branch or office of such Lender designated by such
          Person on the signature page hereof or in a notice to the
          Administrative Agent and J & J.
                    "Event of Default" means any of the Events of Default
          described in Section 8.1 hereof.
                    "Federal Funds Rate" for any day means the rate per
          annum determined by the Administrative Agent (which determination
          shall be conclusive) to be the rate per annum announced by the
          Federal Reserve Bank of New York on such day as being the
          weighted average of the rates on overnight Federal funds
          transactions arranged by federal funds brokers on the previous
          trading day, or, if such Federal Reserve Bank does not announce
          such rate on any day, the rate for the last day on which such
          rate was announced.
                    "Fixed Charge Coverage Ratio" means, as of any date of
          determination, the result of:
                         (a)  Cash Flow of the Borrowers, on a consolidated
                         basis, for the four fiscal quarters ending on, or
                         most recently prior to, such date of determination

                    divided by
                         (b)  current maturities of long term debt as
                         determined in accordance with GAAP.

                    "GAAP" has the meaning set forth in Section 11.3
          hereof.
                    "Governmental Authority" means any government or
          political subdivision or any agency, authority, bureau, central
          bank, commission, department or instrumentality of either, or any
          court, tribunal, grand jury or arbitrator, in each case whether
          foreign or domestic.
                    "Guaranty" means, with respect to any Person (a
          "Guarantor"), any contractual or other obligation, contingent or
          otherwise, of such Person to pay any Indebtedness or other
          obligation of any other Person or to otherwise protect the holder
          of any such Indebtedness or other obligation against loss
          (whether such obligation arises by agreement to pay, to keep
          well, to purchase assets, goods, securities or services or
          otherwise) provided, however, that the term "Guaranty" shall not
          include an endorsement for collection or deposit in the ordinary
          course of business.  The term, "Guaranty," when used as a verb
          has the correlative meaning.
                    "Indebtedness" of any Person means (without
          duplication):
                         (a)  all obligations on account of money borrowed
          by, or credit extended to or on behalf of, or for or on account
          of deposits with or advances to, such Person;
                         (b)  all obligations of such Person evidenced by
          bonds, debentures, notes or similar instruments;

          PR\79666\1
                                      -72-

                         (c)  all obligations of such Person for the
          deferred purchase price of property or services;
                         (d)  all obligations secured by a Lien on property
          owned by such Person (whether or not assumed) provided, however,
          for purposes of determining the amount of such Indebtedness under
          this clause (d), the amount of any such non-recourse Indebtedness
          shall be limited to the lesser of (i) the fair market value of
          the asset subject to such Lien and (ii) the amount of such
          Indebtedness;
                         (e)  all obligations of such Person under
          Capitalized Leases (without regard to any limitation of the
          rights and remedies of the holder of such Lien or the lessor
          under such Capitalized Lease to repossession or sale of such
          property);
                         (f)  the face amount of all letters of credit
          issued for the account of such Person and, without duplication,
          the unreimbursed amount of all drafts drawn thereunder, and all
          other obligations of such Person associated with such letters of
          credit or draws thereon;
                         (g)  all obligations of such Person with respect
          to acceptances or similar obligations issued for the account of
          such Person;
                         (h)  all obligations of such Person under a
          product financing or similar arrangement described in paragraph 8
          of FASB Statement of Accounting Standards No. 49 or any similar
          requirement of GAAP;
                         (i)  all obligations of such Person under any
          Interest Rate Hedging Agreement or any currency protection
          agreement, currency future, option or swap or other currency
          hedge agreement;
                         (j)  all Guaranties of such Person; and
                         (k)  all obligations of such Person under, or in
          respect of, any Synthetic Leases.

          Indebtedness shall not include accounts payable to trade
          creditors arising out of purchases of goods or services in the
          ordinary course of business, provided that (i) such accounts
          payable are payable on usual and customary trade terms, and (ii)
          such accounts payable are not overdue by more than 60 days
          according to the original terms of sale except (if no
          foreclosure, distraint, levy, sale or similar proceeding shall
          have been commenced) where such payments are being contested in
          good faith by appropriate proceedings diligently conducted and
          subject to such reserves or other appropriate provisions as may
          be required by GAAP.
                    "Indemnified Parties" means, collectively, the Lender
          Parties and their respective Affiliates and (without duplication)
          the directors, trustees, officers, employees, attorneys and
          agents of each of the foregoing.
                    "Interest Expense" means, for any Person, for any
          period, the sum (without duplication) of (a) all interest accrued
          (or accreted) on Indebtedness of such Person during such period
          whether or not actually paid (excluding any obligations under any
          Synthetic Leases) plus (b) the net amount accrued under any

          PR\79666\1
                                      -73-

          Interest Rate Hedging Agreements (or less the net amount
          receivable thereunder) during such period.
                    "Interest Period" means with respect to any LIBO Rate
          Loan, (a) initially, the period commencing on the borrowing or
          conversion date, as the case may be, and ending one, two, three
          or six months thereafter as selected by the Borrowers pursuant to
          Section 1.8 above and (b) thereafter, each period commencing on
          the day after the last day of the preceding Interest Period and
          ending one, two, three or six months thereafter, as selected by
          the Borrower pursuant to Section 1.8 above provided, however, if
          any such Interest Period would otherwise end on a day which is
          not a Eurodollar Business Day, such Interest Period shall be
          extended to the next succeeding Eurodollar Business Day unless
          the result of such extension would be to carry such Interest
          Period into another calendar month in which event such Interest
          Period shall end on the immediately preceding Eurodollar Business
          Day and provided, further, if any such Interest Period begins on
          a day for which there is no numerically corresponding day in the
          calendar month at the end of such Interest Period (as may be the
          case with an Interest Period commencing at the end of a calendar
          month) the Interest Period shall end on the last Eurodollar
          Business Day of the relevant calendar month.
                    "Interest Rate Hedging Agreement" means any rate swap,
          cap or collar agreement with a term as may be acceptable to the
          Lenders to which any or all of the Borrowers are party and which
          is on terms and conditions satisfactory to the Lenders.
                    "Investments" has the meaning set forth in Section 7.3
          hereof.
                    "IUC" has the meaning ascribed to it in the recitals
          hereof.
                    "J & J" has the meaning ascribed to such term in the
          preamble of this Agreement.
                    "Joinder Effective Date" means the date that any
          Joining Subsidiary becomes a Borrower hereunder pursuant to
          Section 5.10.
                    "Joinder Supplement" has the meaning set forth in
          Schedule 5.10 hereto. 
                    "Joining Subsidiary" has the meaning set forth in
          Section 5.10 hereof.
                    "Law" means any law (including common law),
          constitution, statute, treaty, convention, regulation, rule,
          ordinance, order, injunction, writ, decree or award of any
          Governmental Authority.
                    "Lender" has the meaning ascribed to such term in the
          preamble hereto.
                    "Lender Parties" means, collectively, the Lenders and
          the Administrative Agent.
                    "Leverage Ratio" means as of any date of determination
          the ratio  of total liabilities (as determined in accordance with
          GAAP) divided by Tangible Net Worth.
                    "LIBO Rate" means the rate per annum determined by the
          Administrative Agent by dividing (the resulting quotient to be
          rounded upward to the nearest 1/100 of 1%) (a) the rate of
          interest (which shall be the same for each day in such Interest

          PR\79666\1
                                      -74-

          Period) determined in good faith by the Administrative Agent
          (which determination shall be conclusive) to be the average of
          the rates per annum for deposits in Dollars offered to major
          money center banks in the London interbank market at
          approximately 11:00 a.m., London time, two Eurodollar Business
          Days prior to the first day of the applicable Interest Period for
          delivery on the first day of such Interest Period in similar
          amounts and maturities as the proposed LIBO Rate Loan by (b) a
          number equal to 1.0 minus the Reserve Percentage.  "Reserve
          Percentage" for any day means the percentage (expressed as a
          decimal, rounded upward to the nearest 1/100 of 1%), as
          determined in good faith by the Administrative Agent (which
          determination shall be conclusive), which is in effect on such
          day as prescribed by the Board of Governors of the Federal
          Reserve System representing the maximum reserve requirement
          (including supplemental, marginal and emergency reserve
          requirements) with respect to eurocurrency funding (currently
          referred to as "Eurocurrency liabilities") of a member bank in
          such System.  The  LIBO Rate shall be adjusted automatically as
          of the effective date of each change in the Reserve Percentage.
                    "LIBO Rate Loan" means a Loan bearing interest at the
          per annum rate of the LIBO Rate plus Applicable Margin.
                    "Licenses" means any and all licenses, permits,
          franchises, rights to conduct business, approvals by a
          Governmental Authority or otherwise, consents, qualifications,
          operating authority, and/or any other authorizations.
                    "Lien" means any mortgage, deed of trust, pledge, lien,
          security interest, charge or other encumbrance or security
          arrangement of any nature whatsoever, including any conditional
          sale or title retention arrangement, and any assignment, deposit
          arrangement or lease intended as, or having the effect of,
          security.
                    "Limitation" means a revocation, suspension,
          termination, impairment, probation, limitation, non-renewal,
          forfeiture, declaration of ineligibility, and/or loss of any
          other rights.
                    "Loans" means, collectively, the Term Loans and the RC
          Loans.  "Loan" means any of the Loans.
                    "Loan Documents" means this Agreement, the Notes, each
          Joinder Supplement and all other agreements and instruments
          executed in connection herewith or therewith, in each case as the
          same may be amended, modified or supplemented from time to time.
                    "Loan Obligations" means all obligations, from time to
          time, of any Borrower to any Lender Party or other Indemnified
          Party under, or arising out of, this Agreement or any Loan
          Document whether such obligations are direct or indirect,
          absolute or contingent, due or to become due, now or hereafter
          arising, (specifically including obligations arising or accruing
          after the commencement of any bankruptcy, insolvency, or similar
          proceeding with respect to any Borrower, or which would have
          accrued but for the commencement of such proceeding even if the
          claim is not allowed in such proceeding under applicable law).
                    "Material Adverse Effect" means (a) a material adverse
          effect on the business, operations, condition (financial or

          PR\79666\1
                                      -75-

          otherwise), properties or prospects of J & J or of any other
          Borrowers, or (b) an adverse effect on the legality, validity,
          binding effect or enforceability of any Loan Document, or the
          ability of the Administrative Agent or any Lender Party to
          enforce any rights or remedies under or in connection with any
          Loan Document. 
                    "Maturity Date" means the later of the RC Maturity Date
          or the Term Loan Maturity Date, or, as the context may require,
          the applicable maturity date for a specified Loan.
                    "Mellon" has the meaning ascribed to such term in the
          preamble hereof.
                    "Monthly Payment Date" means the last Business Day of
          each month.
                    "J & J Group"  has the meaning ascribed to such term in
          Section 6.1 hereof.
                    "Multiemployer Plan" means such term in S4001(a)(3) of
          ERISA.
                    "Net Income" means, with respect to any Person,  for
          any period the net earnings (or loss) after taxes of such Person
          for such period less extraordinary gains, plus extraordinary non-
          cash losses. 
                    "NIC" has the meaning ascribed to such term in the
          recitals hereof.
                    "NIC Note" has the meaning ascribed to such term in the
          recitals hereof.
                    "Non-U.S. Lender" means any Lender that is not a United
          States Person.
                    "Notes" means, collectively, the Term Notes and the RC
          Notes.  A "Note" means any of the Notes.
                    "Officer's Compliance Certificate" means a certificate,
          as of a specified date, of the chief financial officer or
          controller of J & J in substantially the form of Exhibit E hereto
          as to each of the following:  (a) the absence of any Event of
          Default or Default on such date, (b) the truth of the
          representations and warranties herein and in the other Loan
          Documents as of such date, and (c) with the financial covenants
          set forth in Article 6 and the financial limitations set forth in
          Sections 7.1(d) and 7.4(c).
                    "PBGC" means the Pension Benefit Guaranty Corporation
          or any entity succeeding to any or all of its functions under
          ERISA.
                    "Pension Plan" means a pension plan (as defined in
          S3(2) of ERISA) which is subject to Part 3 of Subtitle B of Title
          I of ERISA or subject to S412 of the Code and maintained by any
          Borrower or any member of its Controlled Group.
                    "Permitted Liens" has the meaning set forth in Section
          7.2 above.
                    "Person" means an individual, corporation, partnership,
          trust, unincorporated association, limited liability company,
          joint venture, joint-stock company, Governmental Authority or any
          other entity.
                    "Plan" means an employee benefit plan (other than a
          Multiemployer Plan) as defined in S3(3) of ERISA which is either
          (1) maintained by any Borrower or any member of its Controlled

          PR\79666\1
                                      -76-

          Group, or (2) maintained pursuant to a collective bargaining
          agreement or any other arrangement under which more than one
          employer makes contributions and to which any Borrower or any
          member of its Controlled Group is then making or accruing an
          obligation to make contributions or has ever been obligated to
          make contributions.
                    "Premises" has the meaning set forth in Section 12.12
          hereof.
                    "Prime Rate" means the greater of (A) the interest rate
          per annum announced from time to time by the Administrative Agent
          as its prime rate or (B) the Federal Funds Rate plus .50%.  The
          Prime Rate may be greater or less than other interest rates
          charged by the Administrative Agent to other borrowers.
                    "Prime Rate Loan" means any Loan bearing interest at
          the Prime Rate.
                    "Prohibited Transaction" has the meaning given to such
          term in S406 of ERISA or S4975(c) of the Code.
                    "Quarterly Payment Date" means the last Business Day of
          each December, March, June and September.
                    "RC Commitment" means, with respect to any Lender, (a)
          the amount set forth opposite such Lender's name under the
          heading "RC Commitment" on Schedule 1.1 hereto or, in the case of
          a Lender that becomes a Lender pursuant to an assignment, the
          amount of the assignor's RC Commitment assigned to such Lender,
          in either case as the same may be reduced from time to time
          pursuant to Section 1.7 above or increased or reduced from time
          to time pursuant to assignments in accordance with Section 12.9
          below, or (b) as the context may require, the obligation of such
          Lender to make RC Loans in an aggregate unpaid principal amount
          not exceeding such amount; and "RC Commitment" means with respect
          to all Lenders, the sum of each Lender's RC Commitment.
                    "RC Loans" has the meaning ascribed to such term in
          Section 1.1 (b) hereof.
                    "RC Maturity Date" means December 31, 2000.
                    "RC Note" means each promissory note of the Borrowers
          issued to a Lender relating to such Lender's RC Loans and RC
          Commitments substantially in the form of Exhibit A-1 hereto,
          together with any allonges thereto, from time to time, and any
          promissory note issued in substitution therefor pursuant to the
          terms hereof, together with all extensions, renewals,
          refinancings or refundings thereof in whole or part, in each case
          as the same may be amended, modified, restated or supplemented
          from time to time.
                    "Register" has the meaning ascribed to such term in
          Section 9.8 hereof.
                    "Registered Lender" has the meaning ascribed to such
          term in Section 1.14 hereof.
                    "Registered Note" has the meaning ascribed to such term
          in Section 1.14 hereof.

                    "Regulatory Change" means any applicable law,
          interpretation, directive, request or guideline (whether or not
          having the force of law), or any change therein or in the
          administration or enforcement thereof, that becomes effective or

          PR\79666\1
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          is implemented or first required or expected to be complied with
          after the Agreement Date (including any applicable law that shall
          have become such as the result of any act or omission of the
          Borrowers or any of their Affiliates, without regard to when such
          applicable law shall have been enacted or implemented), whether
          the same is (a) the result of an enactment by a government or any
          agency or political subdivision thereof, a determination of a
          court or regulatory authority or otherwise or (b) enacted,
          adopted, issued or proposed before or after the Agreement Date,
          including any such that imposes, increases or modifies any Tax,
          reserve requirement, insurance charge, special deposit
          requirement, assessment or capital adequacy requirement, but
          excluding any such that imposes, increases or modifies any Bank
          Tax.
                    "Rental Expense" means, with respect to any Person for
          any period, the aggregate rental obligations of such Person,
          payable in respect of any leases (including Synthetic Leases but
          excluding Capitalized Leases) during such period, but in any case
          including obligations for taxes, insurance, maintenance and
          similar costs which the lessee is obligated to pay under the
          terms of such leases and which are attributable to the leases for
          such period (whether such amounts are accrued or paid during such
          period).
                    "Reorganization" has the meaning ascribed to such term
          in ERISA.
                    "Reportable Event" has the meaning ascribed to such
          term in S4043(b) of ERISA.
                    "Required Lenders" means, as of any date, Lenders
          otherwise eligible to vote pursuant to the terms of this
          Agreement holding, in the aggregate, at least 51% of the
          aggregate outstanding Loans and available Commitments so eligible
          to vote; provided that "Required Lenders" must include Mellon
          and/or CoreStates as long as either remains a Lender.
                    "Responsible Officer" of a Person means the President,
          the Secretary, the Chief Executive Officer, any Vice President,
          the Controller, the Treasurer or the Chief Financial Officer of
          such Person.
                    "Subsidiary" of a Person at any time means:
                         (a)  any corporation of which a majority (by
                    number of shares or number of votes) of any class of
                    outstanding capital stock normally entitled to vote for
                    the election of one or more directors (regardless of
                    any contingency which does or may suspend or dilute the
                    voting rights of such class) is at such time owned
                    directly or indirectly, beneficially or of record, by
                    such Person or one or more Subsidiaries of such Person;
                         (b)  any trust of which a majority of the
                    beneficial interest is at such time owned directly or
                    indirectly, beneficially or of record, by such Person
                    or one or more Subsidiaries of such Person;
                         (c)  any partnership, limited liability company,
                    joint venture or other entity of which ownership
                    interests having ordinary voting power to elect a
                    majority of the board of directors or other Persons

          PR\79666\1
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                    performing similar functions are at such time owned
                    directly or indirectly, beneficially or of record, by,
                    or which is otherwise controlled directly, indirectly
                    or through one or more intermediaries by, such Person
                    or one or more Subsidiaries of such Person; or
                         (d)  any entity which is consolidated with such
                    Person for financial reporting purposes.

                    "Synthetic Lease" means any lease (other than a
          Capitalized Lease) wherein the lessee is treated (or purported to
          be treated) as the owner of the leased property for income tax
          purposes.
                    "Tangible Net Worth" of a Person as of a certain date
          means the value of such Person's tangible assets less liabilities
          all as of such date, as determined in accordance with GAAP.
                    "Tax" means any federal, state, local or foreign tax
          assessment or other governmental charge or levy (including any
          withholding tax) upon a Person or upon its assets, revenues,
          income or profits.
                    "Term Loan Commitment" means, (a) with respect to any
          Lender, (i) at any time prior to the Closing Date, (A) the amount
          set forth opposite such Lender's name under the heading "Term
          Loan Commitment" on Schedule 1.1 hereto or, in the case of a
          Lender that becomes a Lender pursuant to an assignment, the
          amount of the assignor's Term Loan Commitment assigned to such
          Lender, in either case as the same may be increased or reduced
          from time to time pursuant to assignments in accordance with
          Section 12.9 or (B) as the context may require, the obligation of
          such Lender to make Term Loans in an aggregate unpaid principal
          amount not exceeding such amount, and (ii) thereafter, zero; and
          (b) with respect to all Lenders, the sum of each Lender's Term
          Loan Commitment.
                    "Term Loan Maturity Date" means December 31, 2002,
          provided that (a) if J & J, IUC or any of their Affiliates fail
          to purchase all of the capital stock of NIC by December 31, 1997,
          then "Term Loan Maturity Date" shall mean such date, or (b) if
          the Assignment is terminated prior to the date referred to in
          clause (a) without J & J, IUC or any of their Affiliates having
          acquired all of the capital stock of NIC, then "Term Loan
          Maturity Date" shall mean the date on which the Assignment is
          terminated.
                    "Term Loans" has the meaning ascribed to such term in
          Section 1.1(a) hereof.
                    "Term Note" means each promissory note of the Borrowers
          issued to a Lender relating to such Lender's Term Loans and Term
          Loan Commitment substantially in the form of Exhibit A-2 hereto,
          together with any allonges thereto from time to time and any
          promissory note issued in substitution therefor pursuant to the
          terms hereof, together with all extensions, renewals,
          refinancings or refundings thereof in whole or part, in each case
          as the same may be amended, modified, restated or supplemented
          from time to time.
                    "Third Party Claims" has the meaning set forth in
          Section 12.12 hereof.

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                    "Total Funded Indebtedness" means the aggregate amount
          of consolidated Indebtedness (including the current portion
          thereof) of J & J and its Subsidiaries (including all
          Indebtedness consisting of Capitalized Lease Obligations,
          Synthetic Leases, Guaranties and letter of credit reimbursement
          obligations).
                    "Total Funded Indebtedness/EBITDA Ratio" means, as of
          any date of determination, the ratio of (a) Total Funded
          Indebtedness as of such date of determination, divided by (b)
          EBITDA for the four fiscal quarters ended on, or most recently
          prior to, such date of determination.
                    "Transaction Documents " means each of the material
          documents as may exist from time to time with such changes
          thereto as are permitted by the terms of this Agreement
          respecting (i) the purchase of the NIC Note, (ii) the
          consummation of the transactions contemplated in the Assignment,
          (iii) the acquisition by J & J, IUC or their Affiliates of the
          capital stock of NIC, and (iv) related matters.
                    "Type" means with respect to Loans, any of the
          following, each of which shall be deemed to be a different "Type"
          of Loan:  Prime Rate Loans, LIBO Rate Loans having a one-month
          Interest Period commencing on a specified date, LIBO Rate Loans
          having a two-month Interest Period commencing on a specified
          date, LIBO Rate Loans having a three-month Interest Period
          commencing on a specified date, and LIBO Rate Loans having a six-
          month Interest Period commencing on a specified date.
                    "United States Person" has the meaning ascribed to such
          term in Section 1.13 hereof.
                    "Withdrawal Liability" has the meaning given to such
          term in S4201 of ERISA.

               11.2 CONSTRUCTION.  In this Agreement and each other Loan
          Document, unless the context otherwise clearly requires,

                    (a)  references to the plural include the singular, the
          singular the plural and the part the whole;

                    (b)  "or" has the inclusive meaning represented by the
          phrase "and/or;"

                    (c)  the terms "property" and "assets" each include all
          properties and assets of any kind or nature, tangible or
          intangible, real, personal or mixed, now existing or hereafter
          acquired;

                    (d)  the words "hereof," "herein" and "hereunder" (and
          similar terms) in this Agreement or any other Loan Document refer
          to this Agreement or such other Loan Document, as the case may
          be, as a whole and not to any particular provision of this
          Agreement or such other Loan Document;

                    (e)  the words "includes" and "including" (and similar
          terms) in this Agreement or any other Loan Document mean

          PR\79666\1
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          "includes, without limitation" and "including, without
          limitation," respectively whether or not stated; and

                    (f)  references to "determination" (and similar terms)
          by any Lender Party include good faith estimates by such Lender
          Party (in the case of quantitative determinations) and good faith
          beliefs by such Lender Party (in the case of qualitative
          determinations).

          No doctrine of construction of ambiguities in agreements or
          instruments against the interests of the party controlling the
          drafting thereof shall apply to this Agreement or any other Loan
          Document.  The section and other headings contained in this
          Agreement and in each other Loan Document, and any tables of
          contents contained herein or therein, are for reference purposes
          only and shall not affect the construction or interpretation of
          this Agreement or such other Loan Document in any respect. 
          Whenever this Agreement requires the delivery of financial
          projections, it is understood that the projections shall be made
          in good faith, consistent with the Loan Documents and based on J
          & J's reasonable judgment as to the anticipated financial
          performance and results of operations.  However, any such
          financial projections shall not constitute a representation or
          warranty that such future financial performance or results of
          operations will in fact be achieved.

               11.3 ACCOUNTING PRINCIPLES.

                    (a)  As used herein, "GAAP" shall mean generally
          accepted accounting principles (other than as set forth herein as
          to consolidation) in the United States, applied on a basis
          consistent with the principles used in preparing the financial
          statements of J & J and its consolidated Subsidiaries as of
          December 31, 1996 and for the fiscal year then ended.  When the
          word "consolidated" is used in this Agreement, it shall be used
          in a manner consistent with generally accepted accounting
          principles in the United States except that such principles
          relating to what entities shall be consolidated shall be
          superseded by any terms of this Agreement which designate what
          entities shall be consolidated for purposes relating hereto.

                    (b)  Except as otherwise provided in this Agreement,
          all computations and determinations as to accounting or financial
          matters shall be made, and all financial statements to be
          delivered pursuant to this Agreement shall be prepared, in
          accordance with GAAP and all accounting or financial terms shall
          have the meanings ascribed to such terms by GAAP.

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                                     ARTICLE 12

                                    MISCELLANEOUS

               12.1 NOTICES.  Unless otherwise expressly provided under
          this Agreement all notices, requests, demands, directions and
          other communications (collectively "notices") given to or made
          upon any party under the provisions of this Agreement (and unless
          otherwise specified, in each other Loan Document) shall be by
          telephone (immediately confirmed in writing) or in writing
          (including facsimile communication)  and if in writing shall be
          delivered by hand, nationally recognized overnight courier or
          U.S. mail or sent by facsimile to the respective parties at the
          addresses and numbers set forth under their respective names on
          the signature pages of this Agreement or in accordance with any
          subsequent unrevoked written direction from any party to the
          others.  All notices shall, except as otherwise expressly
          provided in this Agreement, be effective (a) in the case of
          facsimile, when received, (b) in the case of hand-delivered
          notice, when hand delivered, (c) in the case of telephone, when
          telephoned, provided, however, that in order to be effective
          unless otherwise expressly provided, telephonic notices must be
          confirmed in writing no later than the next day by letter or
          facsimile, (d) if given by U.S. mail, the day after such
          communication is deposited in the mails with overnight first
          class postage prepaid, return receipt requested, and (e) if given
          by any other means (including by air courier), when delivered;
          provided, further, that notices to the Administrative Agent shall
          not be effective until received.  Any Lender giving any notice to
          the Borrowers shall simultaneously send a copy of such notice to
          the Administrative Agent, and the Administrative Agent shall
          promptly notify the other Lenders of the receipt by it of any
          such notice.  Except as otherwise provided in this Agreement, in
          the event of a discrepancy between any telephonic or written
          notice, the written notice shall control.

               12.2 PRIOR UNDERSTANDINGS; ENTIRE AGREEMENT.  This Agreement
          and the other Loan Documents supersede all prior and
          contemporaneous understandings and agreements, whether written or
          oral, among the parties hereto relating to the transactions
          provided for herein and therein except as expressly provided
          otherwise (e.g., certain fee agreements and fee arrangements with
          the Administrative Agent).  This Agreement and the other Loan
          Documents represent the entire agreement between the parties to
          this Agreement with respect to the transactions contemplated
          hereby or thereby and, except as expressly provided herein or in
          the other Loan Documents, shall not be affected by reference to
          any other documents.

          PR\79666\1
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               12.3 SEVERABILITY.  Every provision of this Agreement and
          each of the other Loan Documents is intended to be severable, and
          if any term or provision of this Agreement or any of the other
          Loan Documents shall be invalid, illegal or unenforceable for any
          reason, the validity, legality and enforceability of the
          remaining provisions shall not be affected or impaired thereby,
          and any invalidity, illegality or unenforceability in any
          jurisdiction shall not affect the validity, legality or
          enforceability of any such term or provision in any other
          jurisdiction.  If any provision of this Agreement shall be held
          invalid or unenforceable in whole or in part in any jurisdiction,
          this Agreement shall, as to such jurisdiction, be deemed amended
          to modify or delete, as necessary, the offending provision or
          provisions and to alter the bounds thereof in order to render it
          or them valid and enforceable to the maximum extent permitted by
          applicable Law, without in any manner affecting the validity or
          enforceability of such provision or provisions in any other
          jurisdiction or the remaining provisions hereof in any
          jurisdiction.

               12.4 DESCRIPTIVE HEADINGS.  The descriptive headings of the
          several sections of this Agreement are inserted for convenience
          only and shall not affect the meaning or construction of any of
          the provisions of this Agreement.

               12.5 GOVERNING LAW.  This Agreement and the rights and
          obligations of the parties under this Agreement and under the
          other Loan Documents shall be construed in accordance with and
          shall be governed by the laws of the State of New Jersey.

               12.6 NON-MERGER OF REMEDIES.  The covenants and obligations
          of the Borrowers and the rights and remedies of the
          Administrative Agent and other Lender Parties hereunder and under
          the other Loan Documents shall not merge with or be extinguished
          by the entry of a judgment hereunder or thereunder, and such
          covenants, obligations, rights and remedies shall survive any
          entry of a judgment until payment in full of the Loan Obligations
          and termination of the Commitment.  All obligations under the
          Loan Documents shall continue to apply with respect to and during
          the collection of amounts due under the Loan Documents or the
          proof and allowability of any claim arising under this Agreement
          or any other Loan Document, whether in bankruptcy or receivership
          proceedings or otherwise, and in any workout, restructuring or in
          connection with the protection, preservation, exercise or
          enforcement of any of the terms of this Agreement or of any
          rights under this Agreement or under any other Loan Document or
          in connection with any foreclosure, collection or bankruptcy
          proceedings.  Without limiting the generality of the foregoing,

          PR\79666\1
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          post-judgment interest rate shall be the interest rate provided
          in paragraph (d) of Section 1.8 (Default Rate) above.

               12.7 NO IMPLIED WAIVER; CUMULATIVE REMEDIES.  No course of
          dealing and no delay or failure of the Administrative Agent or
          any other Lender Party in exercising any right, power or
          privilege under this Agreement or any other Loan Document shall
          affect any other or future exercise thereof or exercise of any
          other right, power or privilege; nor shall any single or partial
          exercise of any such right, power or privilege or any abandonment
          or discontinuance of steps to enforce such a right, power or
          privilege preclude any further exercise thereof or of any other
          right, power or privilege.  The rights and remedies of the
          Administrative Agent and the other Lender Parties under this
          Agreement and any other Loan Document are cumulative and not
          exclusive of any rights or remedies which the Administrative
          Agent or any other Lender Party would otherwise have hereunder or
          thereunder, at law, in equity or otherwise.  Any waiver of a
          specific default made in accordance with Section 12.8 below shall
          be effective only as to such specific default and shall not apply
          to any subsequent default.

               12.8 AMENDMENTS; WAIVERS.  Any term, covenant, agreement or
          condition of any Loan Document to which the Lenders (or the
          Administrative Agent) are party may be amended, and any right
          under the Loan Documents may be waived, if, but only if, such
          amendment or waiver is in writing and is signed by the Required
          Lenders (or by the Administrative Agent at the direction of the
          Required Lenders); provided, however, if the rights and duties of
          the Administrative Agent are affected thereby, such amendment or
          waiver must be executed by the Administrative Agent; and
          provided, further, that no such amendment or waiver shall be
          effective unless in writing and signed by each Lender referred to
          below, if it would

                         (a)  increase such Lender's Commitment or the
               outstanding amount of such Lender's Loans, or

                         (b)  extend the maturity of any Loan held by such
               Lender, or the time of any scheduled principal payment of
               any Loan of such Lender;

                         (c)  decrease the rate of interest or amount of
               fees due to such Lender or decrease the principal amount in
               respect of any Loan of such Lender or extend the time of
               payment of interest or fees due to such Lender, provided
               that the written consent of the Required Lenders, rather
               than the consent of all Lenders, shall be sufficient to
               waive imposition of the Default Rate,

          PR\79666\1
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                         (d)  change the number of Lenders which are
               required to consent to any proposed action under this
               Agreement before such action may be taken under this
               Agreement if such change could cause such Lender to lose its
               right to participate in such consent;

          and provided, further, that no such amendment or waiver shall be
          effective unless in writing and signed by all the Lenders if it
          would
                              (i)  amend the definition of "Required
          Lenders" or

                              (ii) release any Borrower of its Loan
          Obligations;

          provided, however, the Administrative Agent may, without the
          consent of any Person, release any Borrower as a court of
          competent jurisdiction may direct, and provided further that for
          purposes of determining whether" all Lenders", "the Required
          Lenders" or "any Lender" has consented to any amendment or
          waiver, no effect shall be given to the determination of any
          Lender who has lost its right to vote pursuant to Sections
          1.3(c), 1.3(e)(ii), or 1.6(e).
          Further, the Administrative Agent and the Lenders may amend or
          modify the provisions of Article 9 hereof (except for Section 9.9
          (Successor Administrative Agent) and Article 10 hereof) without
          the need for any consent or approval from the Borrowers, it being
          acknowledged that the Borrowers are not third party beneficiaries
          of the provisions of said Article 9 (except for Section 9.9
          (Successor Administrative Agent) and (y) without the consent of
          any Lenders, the Administrative Agent may enter into amendments
          and modifications to this Agreement and the other Loan Documents
          as necessary or desirable to cure any ambiguities herein or
          therein or to add additional Borrowers or add collateral. 

               12.9 SUCCESSORS AND ASSIGNS

                    (a)  Assignments by the Borrowers.  Without the prior
          written consent of all of the Lenders, no Borrower may assign any
          of its rights or delegate any of its duties or obligations under
          this Agreement or any other Loan Document.

                    (b)  Participations.  Any Lender may sell
          participations to one or more Eligible Institutions of all or a
          portion of its rights and obligations under this Agreement
          (including, without limitation, all or a portion of its
          Commitment); provided, however, that, with respect to any Lender,
          (i) such Lender's obligations under this Agreement shall remain
          unchanged, (ii) such Lender shall remain solely responsible to
          the other parties to this Agreement for the performance of such
          obligations, (iii) all amounts payable by the Borrowers under
          this Agreement shall be determined as if such transferor Lender
          had not sold such participation and no participant shall be
          entitled to receive any greater amount pursuant to this Agreement

          PR\79666\1
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          than the transferor Lender would have been entitled to receive in
          respect of the amount of the participation transferred by such
          transferor Lender to such participant had no such transfer
          occurred, (iv) such participant shall agree to be bound by the
          provisions of this Agreement and the other Loan Documents, and
          (v) the Borrowers, the Administrative Agent and the other Lenders
          shall continue to deal solely and directly with such transferor
          Lender in connection with such Lender's rights and obligations
          under this Agreement, and such Lender shall retain the sole
          rights and responsibility vis-a-vis the Borrowers to enforce the
          obligations of the Borrowers relating to the Loans including the
          right to approve any amendment, modification or waiver of any
          provision of this Agreement (except that such Lender may give its
          participants the right to direct such Lender to approve or
          disapprove any amendment, modification or waiver which would
          require such Lender's consent under clause (a) (b), (c), of the
          preceding Section 12.8).

                    (c)  Assignments by Lenders.  Each Lender may assign to
          one or more Eligible Institutions all or a portion of its
          interest, rights and obligations under this Agreement (including
          all or a portion of its Commitment) and the other Loan Documents;
          provided, however, that with respect to any assignment, (i)
          unless the assignee is (prior to the effective time of the
          assignment) an existing Lender or an Affiliate of an existing
          Lender, the Administrative Agent and, if no Event of Default has
          occurred and is continuing, J & J (on behalf of the Borrowers)
          must give their prior written consent to such assignment (which
          consent shall not be unreasonably withheld), (ii) the parties to
          each such assignment shall execute and deliver to the
          Administrative Agent and, unless an Event of Default has occurred
          and is continuing, J & J (on behalf of the Borrowers), for their
          acceptance, an Assignment and Acceptance Agreement in
          substantially the form attached hereto as Exhibit F (an
          "Assignment and Acceptance"), together with (A) any Note subject
          to such assignment, and (B) a processing and recordation fee of
          $3,500.00.  The parties hereto agree that to the extent that the
          consent of Borrowers is required by the preceding sentence,
          Borrowers shall be deemed to have acted reasonably if Borrowers
          withhold consent to a proposed assignment to an assignee who
          would be a non-U.S. Lender.

                    "Partial assignment" as used in clauses (iii) and (iv)
          above means any assignment of a Lender's rights and obligations
          hereunder except an assignment of all of such Lender's rights and
          obligations such that after the assignment such Lender shall have
          no Commitment and no interest in any Loans hereunder.  Upon
          compliance with clauses (i) through (iv) above, from and after
          the effective date specified in the relevant Assignment and
          Acceptance, (1) the assignee shall be a party to this Agreement
          and the other Loan Documents and to the extent provided in such
          Assignment and Acceptance, have the rights and obligations of a
          Lender under this Agreement and under the other Loan Documents
          and (2) the assigning Lender shall, to the extent provided in

          PR\79666\1
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          such Assignment and Acceptance, be released from its obligations
          under this Agreement and the other Loan Documents. 
                    (d)  Procedures Respecting Assignment.  Upon their
          receipt of an Assignment and Acceptance executed by the assignor
          and the assignee, subject to the conditions set forth in the
          preceding paragraph (c), the Administrative Agent and (unless an
          Event of Default shall have occurred and be continuing) J & J (on
          behalf of the Borrowers) shall accept such Assignment and
          Acceptance.  Within thirty (30) days after such Assignment and
          Acceptance is signed and accepted by all parties and made
          effective, the Borrowers, at their own expense, shall execute and
          deliver to the Administrative Agent new Notes in exchange for the
          surrendered Notes, each to the order of such assignee in an
          amount equal to its portion of the Commitment and Loans, assigned
          to it pursuant to such Assignment and Acceptance and new Notes to
          the order of the assigning Lender in an amount equal to the
          Commitment and Loans retained by it.  Such Notes shall be in an
          aggregate principal amount equal to the aggregate principal
          amount of such surrendered Notes, shall be dated the date of such
          surrendered Notes (each assignee shall confirm in the Assignment
          and Acceptance that, notwithstanding the date of the new Notes
          made in favor of such assignee, such assignee shall have no right
          to, or interest in, any fees or interest which shall have accrued
          on the Loans prior to the effective date of the Assignment and
          Acceptance). Cancelled or replaced Notes shall be returned to the
          Borrowers upon the execution of such new Notes.

                    (e)  Assignments to Federal Reserve Bank. 
          Notwithstanding any of the terms of this Section 12.9, without
          the consent of the Administrative Agent and the Borrowers, any
          Lender may assign all or any portion of its rights to payments in
          connection with this Agreement to a Federal Reserve Bank as
          collateral in accordance with Regulation A of the Board of
          Governors of the Federal Reserve System.  Such assignment shall
          not affect any other rights or any obligations of the assigning
          Lender

               12.10 COUNTERPARTS; PHOTOCOPIED OR TELECOPIED SIGNATURE
          PAGES.  Any Loan Document may be executed in one or more
          counterparts, each of which shall constitute an original, but all
          of which together shall constitute one and the same instrument. 
          Delivery of a photocopy or telecopy of an executed counterpart of
          a signature page to any Loan Document shall be as effective as
          delivery of a manually executed counterpart of such Loan
          Document.

               12.11 MAXIMUM LAWFUL INTEREST RATE.  Notwithstanding any
          provision contained in this Agreement or the Notes or any other
          Loan Document, the total liability of the Borrowers for payment
          of interest pursuant to this Agreement and the Notes shall not

          PR\79666\1
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          exceed the maximum amount of such interest permitted by Law to be
          charged, collected, or received from the Borrowers, and if any
          payment by the Borrowers includes interest in excess of such a
          maximum amount, each Lender shall apply such excess to the
          reduction of the unpaid principal amount due pursuant to this
          Agreement and the Notes, or if none is due, to the other Loan
          Obligations, if any, and then such excess shall be refunded to J
          & J (on behalf of the Borrowers).

               12.12INDEMNIFICATION.

                    (a)  Whether or not any fundings are made under this
          Agreement, the Borrowers jointly and severally shall
          unconditionally upon demand, pay or reimburse the Administrative
          Agent and other Lender Parties for, and indemnify and save the
          Administrative Agent, the other Lender Parties and their
          respective Affiliates, officers, directors, employees, agents,
          attorneys, shareholders and consultants (collectively,
          "Indemnitees") harmless from and against, any and all losses,
          liabilities, claims, damages, expenses, obligations, penalties,
          actions, judgments, suits, costs or disbursements of any kind or
          nature whatsoever (including the fees and disbursements of
          counsel for such Indemnitee in connection with any investigative,
          administrative or judicial proceeding commenced or threatened,
          whether or not such Indemnitee shall be designated a party
          thereto) that may at any time be imposed on, asserted against or
          incurred by such Indemnitee as a result of, or arising out of, or
          in any way related to or by reason of, this Agreement or any
          other Loan Document, any Acquisition or transaction from time to
          time contemplated hereby or by any other Loan Document, or any
          transaction actually or proposed to be financed in whole or in
          part or directly or indirectly with the proceeds of any Loan, any
          transaction contemplated by the Transaction Documents but
          excluding any such losses, liabilities, claims, damages,
          expenses, obligations, penalties, actions, judgments, suits,
          costs or disbursements that the Borrower proves were the result
          solely of the gross negligence or willful misconduct of such
          Indemnitee, as finally determined by a court of competent
          jurisdiction.  If and to the extent that the foregoing
          obligations of the Borrowers under this paragraph (a), or any
          other indemnification obligation of the Borrowers hereunder or
          under any other Loan Document are unenforceable for any reason,
          the Borrowers hereby agree, jointly and severally, to make the
          maximum contribution to the payment and satisfaction of such
          obligations which is permissible under applicable Law.

                    (b)  Without limiting the generality of the foregoing,
          the Borrowers jointly and severally hereby indemnify and agree to
          defend and hold harmless each Indemnitee, from and against any
          and all claims, actions, causes of action, liabilities,
          penalties, fines, damages, judgments, losses, suits, expenses,
          legal or administrative proceedings, interest, costs and expenses

          PR\79666\1
                                      -88-

          (including court costs and attorneys', consultants' and experts'
          fees) arising out of or in any way relating to:  (i) the use,
          handling, management, production, treatment, processing, storage,
          transfer, transportation, disposal, release or threat of release
          of any Environmental Concern Material by or on behalf of, any
          Borrower or any of its Environmental Affiliates; (ii) the
          presence of Environmental Concern Materials on, about, beneath or
          arising from any premises owned or occupied by any Borrower or
          any of its Environmental Affiliates (herein collectively, the
          "Premises"); (iii) the failure of any Borrower or Environmental
          Affiliate of a Borrower or any occupant of any Premises to comply
          with the Environmental Laws; (iv) any Borrower's breach of any of
          the representations, warranties and covenants contained herein or
          in any Loan Documents; (v) Regulatory Actions (as hereinafter
          defined) and Third Party Claims (as hereinafter defined); or (vi)
          the imposition or recording of a Lien against any Premises in
          connection with any release at, on or from any Premises or any
          activities undertaken on or occurring at any Premises, or arising
          from such Premises or pursuant to any Environmental Law.  The
          Borrowers' indemnity and defense obligations under this section
          shall include, whether foreseeable or unforeseeable, any and all
          costs related to any remedial action.  "Regulatory Action" means
          any notice of violation, citation, complaint, request for
          information, order, directive, compliance schedule, notice of
          claim, consent decree, action, litigation or proceeding brought
          or instituted by any governmental authority under or in
          connection with any Environmental Law involving any Borrower or
          any occupant of any of the Premises or involving any of the
          Premises or any activities undertaken on or occurring at any
          Premises.  "Third Party Claims" means claims by a party (other
          than a party to this Agreement and other than Regulatory Actions)
          based on negligence, trespass, strict liability, nuisance, toxic
          tort or detriment to human health or welfare due to Environmental
          Concern Materials on, about, beneath or arising from any Premises
          or in any way related to any alleged violation of any
          Environmental Laws or any activities undertaken on or occurring
          at any Premises.

                    (c)  The indemnities contained herein shall survive
          repayment of the Loan Obligations, termination of the Commitment
          and satisfaction, release, and discharge of the Loan Documents,
          whether through full payment of the Loans, foreclosure, deed in
          lieu of foreclosure or otherwise.

                    (d)  The foregoing amounts are in addition to any other
          amounts which may be due and payable to the Administrative Agent
          and/or the Lenders under this Agreement.  A certification by the
          Administrative Agent or a Lender hereunder of the amount of
          liabilities, losses, costs, expenses, claims and/or charges shall
          be conclusive, absent manifest error.

               12.13                     EXPENSES

          PR\79666\1
                                      -89-

                    Whether or not there shall be any funding hereunder,
          the Borrowers agree, jointly and severally, to pay promptly or
          cause to be paid promptly and to hold harmless
                              (i)  the Administrative Agent (and after an
                    Event of Default, and for the period in which the same
                    shall continue, each Lender Party) against liability
                    for the payment of all reasonable out-of-pocket costs
                    and expenses (including but not limited to reasonable
                    fees and expenses of counsel, including local counsel,
                    auditors, consulting engineers, appraisers, and all
                    other professional, accounting, evaluation and
                    consulting costs) incurred by it from time to time
                    arising from or relating to (1) the negotiation,
                    preparation, execution and delivery of this Agreement
                    and the other Loan Documents, (2) the administration
                    and performance of this Agreement and the other Loan
                    Documents, and (3) any requested amendments,
                    modifications, supplements, waivers or consents
                    (whether or not ultimately entered into or granted) to
                    this Agreement or any other Loan Document;

                              (ii) the Administrative Agent (and, with
                    respect to clause (2) of this paragraph (ii) after an
                    Event of Default, and for the period in which the same
                    shall continue, each Lender Party) against liability
                    for the payment of all reasonable out-of-pocket costs
                    and expenses (including but not limited to reasonable
                    fees and expenses of counsel, including local counsel,
                    auditors, consulting engineers, appraisers, and all
                    other professional, accounting, evaluation and
                    consulting costs) incurred by it from time to time
                    arising from or relating to the enforcement or
                    preservation of rights under, or administration of,
                    this Agreement or any other Loan Document (including
                    but not limited to any such costs or expenses arising
                    from or relating to (1) collection or enforcement of an
                    outstanding Loan, Obligation, and (2) any litigation,
                    proceeding, dispute, work-out, restructuring or
                    rescheduling related in any way to this Agreement or
                    the other Loan Documents); and

                              (iii) each Lender Party against liability for
                    all stamp, document, transfer, recording, filing,
                    registration, search, sales and excise fees and taxes
                    and all similar impositions now or hereafter determined
                    by any Lender Party to be payable in connection with
                    this Agreement or any other Loan Documents.

               12.14MAXIMUM AMOUNT OF JOINT AND SEVERAL LIABILITY.  To the
          extent that applicable Law otherwise would render the full amount
          of the joint and several obligations of any Subsidiary of J & J
          hereunder and under the other Loan Documents invalid or

          PR\79666\1
                                      -90-

          unenforceable, such Borrower's obligations hereunder and under
          the other Loan Documents shall be limited to the maximum amount
          which does not result in such invalidity or unenforceability,
          provided, however, that each Borrower's obligations hereunder and
          under the other Loan Documents shall be presumptively valid and
          enforceable to their fullest extent in accordance with the terms
          hereof or thereof, as if this Section 12.14 were not a part of
          this Agreement.

               12.15AUTHORIZATION OF J & J BY OTHER BORROWERS.

                    (a)  Each of the Borrowers hereby irrevocably
          authorizes J & J to give notices, make requests, make payments,
          receive payments and notices, give receipts and execute
          agreements, make agreements or take any other action whatever on
          behalf of such Borrower under and with respect to any Loan
          Document and each Borrower shall be bound thereby.  This
          authorization is coupled with an interest and shall be
          irrevocable, and the Administrative Agent and each Lender Party
          may rely on any notice, request, information supplied by J & J
          and every document executed by J & J, agreement made by J & J or
          other action taken by J & J in respect of the Borrowers or any
          thereof as if the same were supplied, made or taken by any or all
          Borrowers.  Without limiting the generality of the foregoing, the
          failure of one or more Borrowers to join in the execution of any
          writing in connection herewith shall not, unless the context
          clearly requires, relieve any such Borrower from obligations in
          respect of such writing.

                    (b)  The Borrowers acknowledge that the credit provided
          hereunder is on terms more favorable than any Borrower acting
          alone would receive and that each Borrower benefits indirectly
          from all Loans and Letters of Credit hereunder.  J & J and,
          subject only to the terms of the preceding paragraph (a), each of
          the other Borrowers, shall be jointly and severally liable for
          all Loan Obligations, regardless of, inter alia, which Borrower
          requested (or received the proceeds of) a particular Loan.

               12.16 CERTAIN WAIVERS BY BORROWERS.  Each Borrower hereby
          waives promptness, diligence, notice of acceptance and any other
          notice with respect to any of the Loan Obligations and any
          requirement that any Lender Party exhaust any right or take any
          action against any other Borrower or any other Person or any
          collateral or other direct or indirect security for any of the
          Loan Obligations.  Without limiting the generality of the
          foregoing, each Borrower acknowledges and agrees that the
          Administrative Agent or other Lender Party may commence an action
          against such Borrower whether or not any action is brought
          against any other Borrower or against any collateral and it shall
          be no defense to any action brought against any Borrower that the

          PR\79666\1
                                      -91-

          Lender Parties have failed to bring an action against any other
          Borrower or any Collateral.

               12.17 SET-OFF.  The Borrowers hereby agree that, to the
          fullest extent permitted by Law, if any Loan Obligation shall be
          due and payable (by acceleration or otherwise), each Lender Party
          shall have the right, without notice to any Borrower, to set-off
          against and to appropriate and apply to such Loan Obligation any
          indebtedness, liability or obligation of any nature owing to any
          Borrower by such Lender Party, including but not limited to all
          deposits now or hereafter maintained by any Borrower with such
          Lender Party.  Such right shall exist whether or not such Lender
          Party or any other Person shall have given notice or made any
          demand to any Borrower or any other Person.   The Borrowers
          hereby agree that, to the fullest extent permitted by Law, any
          participant and any Affiliate of any Lender Party or any
          participant shall have the same rights of set-off as a Lender
          Party as provided in this Section 12.17.  The rights provided by
          this Section 12.17 are in addition to all other rights of set-off
          and banker's lien and all other rights and remedies which any
          Lender Party (or any such participant, or Affiliate) may
          otherwise have under this Agreement, any other Loan Document, at
          law or in equity, or otherwise.

               12.18 SHARING OF COLLECTIONS.  The Lender Parties hereby
          agree among themselves that if any Lender Party shall receive (by
          voluntary payment, realization upon security, charging of
          accounts, set-off or from any other source) any amount on account
          of the Loan Obligations in greater proportion than any such
          amount received by any other Lender Party (based on the relative
          amount of each such Lender Party's interest in the Loan
          Obligations), then the Lender Party receiving such
          proportionately greater payment shall notify each other Lender
          Party and the Administrative Agent of such receipt, and equitable
          adjustment will be made in the manner stated in this Section
          12.18 so that, in effect, all such excess amounts will be shared
          ratably among all of the Lender Parties.  The Lender Party
          receiving such excess amount shall purchase (which it shall be
          deemed to have done simultaneously upon the receipt of such
          excess amount) for cash from the other Lender Parties a
          participation in the applicable Loan Obligations owed to such
          other Lender Parties in such amount as shall result in a ratable
          sharing by all Lender Parties of such excess amount (and to such
          extent the receiving Lender Party shall be a participant).  If
          all or any portion of such excess amount is thereafter recovered
          from the Lender Party making such purchase, such purchase shall
          be rescinded and the purchase price restored to the extent of
          such recovery, together with interest or other amounts, if any,
          required by Law to be paid by the Lender Party making such
          purchase.  The Borrowers hereby consent to and confirm the

          PR\79666\1
                                      -92-

          foregoing arrangements.  Each participant shall be bound by this
          Section 12.18 as fully as if it were a Lender hereunder.

               12.19 OTHER LOAN DOCUMENTS.  Each Lender acknowledges that on
          signing this Agreement it is bound by the terms of the Loan
          Documents.

               12.20CERTAIN BORROWER ACKNOWLEDGEMENTS.  Each Borrower
          hereby acknowledges that neither the Administrative Agent nor any
          other Lender Party has any fiduciary relationship with, or any
          fiduciary duty to any Borrower arising out of or in connection
          with this Agreement or any of the other Loan Documents and the
          relationship between the Administrative Agent and the other
          Lender Parties, on the one hand, and the Borrower, on the other
          hand, in connection herewith or therewith is solely that of
          debtor and creditor.

               12.21 CONSENT TO JURISDICTION, SERVICE AND VENUE; WAIVER OF
          JURY TRIAL.

                    (a)  Consent to Jurisdiction.  For the purpose of
          enforcing payment and performance of the Loan Documents,
          including, any payment under the Notes and performance of other
          obligations under the Loan Documents, or in any other matter
          relating to, or arising out of, the Loan Documents, each of the
          Borrowers hereby consents to the jurisdiction and venue of the
          courts of the Commonwealth of Pennsylvania or of any federal
          court located in such state, waive personal service of any and
          all process upon it and consents that all such service of process
          be made by certified or registered mail directed to J & J (on
          behalf of the applicable Borrowers) at the address provided for
          in Section 12.1 and service so made shall be deemed to be
          completed upon actual receipt or execution of a receipt by any
          Person at such address.  Each of the Borrowers hereby waives the
          right to contest the jurisdiction and venue of the courts located
          in the Commonwealth of Pennsylvania on the ground of
          inconvenience or otherwise and, further, waives any right to
          bring any action or proceeding against (a) the Administrative
          Agent in any court outside the Commonwealth of Pennsylvania, or
          (b) any other Lender other than in a state within the United
          States designated by such Lender.  The provisions of this Section
          12.21 shall not limit or otherwise affect the right of the
          Administrative Agent or any other Lender Party to institute and
          conduct an action in any other appropriate manner, jurisdiction
          or court.

                    (b)  WAIVER OF JURY TRIAL; DAMAGES.  NEITHER ANY LENDER
          PARTY NOR ANY BORROWER, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR
          PERSONAL REPRESENTATIVE OF THE FOREGOING SHALL SEEK A JURY TRIAL
          IN ANY PROCEEDING BASED UPON OR ARISING OUT OF THIS AGREEMENT, OR
          ANY OTHER LOAN DOCUMENT, OR INVOLVING ANY COLLATERAL OR ANY
          GUARANTY RELATING TO THE INDEBTEDNESS HEREUNDER OR THE
          RELATIONSHIP BETWEEN OR AMONG SUCH PERSONS OR ANY OF THEM.  NO
          SUCH PERSON WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY

          PR\79666\1
                                      -93-

          OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
          WAIVED.  EXCEPT AS PROHIBITED BY LAW, EACH PARTY TO THIS
          AGREEMENT WAIVES ANY RIGHTS IT MAY HAVE TO CLAIM OR RECOVER IN
          ANY LITIGATION REFERRED TO IN THIS SECTION 12.21 ANY SPECIAL,
          EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER
          THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH PARTY TO THIS
          AGREEMENT (i) CERTIFIES THAT NEITHER THE ADMINISTRATIVE AGENT NOR
          ANY LENDER PARTY NOR ANY REPRESENTATIVE, OR ATTORNEY OF THE
          ADMINISTRATIVE AGENT OR ANY LENDER PARTY HAS REPRESENTED,
          EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR SUCH
          LENDER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
          ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT IT HAS
          BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND EACH OTHER LOAN
          DOCUMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
          CERTIFICATIONS IN THIS PARAGRAPH (b) OF SECTION 12.21.  THE
          PROVISIONS OF THIS SECTION 12.21 HAVE BEEN FULLY DISCLOSED TO THE
          PARTIES AND THE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.  NO
          PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER
          PARTY THAT THE PROVISIONS OF THIS SECTION 12.21 WILL NOT BE FULLY
          ENFORCED IN ALL INSTANCES.

          PR\79666\1
                                      -94-

                    IN WITNESS WHEREOF, the parties hereto, by their
          officers thereunto duly authorized, have executed and delivered
          this Agreement as of the date first above written.

     J & J SNACK FOODS CORP.               ADDRESS FOR BORROWERS
     J & J SNACK FOODS INVESTMENT CORP.    6000 Central Highway
     J & J SNACK FOODS CORP. OF NEW JERSEY Pennsauken, New Jersey  08109
     J & J SNACK FOODS CORP. OF CALIFORNIA
     J & J SNACK FOODS CORP./MIDWEST       Telephone:  (609)  665-9533
     J & J SNACK FOODS CORP./MIA           Facsimile:  (609)  488-7587
     ICEE-USA CORP.
     J & J SNACK FOODS CORP. OF 
        PENNSYLVANIA                       With a copy to:
     MAZZONE ENTERPRISES, INC.             Fred A. Ruttenberg, Esquire
     J & J SNACK FOODS TRANSPORT CORP.     Blank, Rome, Comisky & McCauley
     BAKERS BEST SNACK FOOD CORP.          210 Lake Drive East
     PRETZELS, INC.                        Cherry Hill, New Jersey  08002
     J & J SNACK FOODS SALES CORP.
     SNACK FOODS ACQUISITION CORP.
     J & J RESTAURANT GROUP, INC.
     J & J SNACK FOODS SALES CORP. OF TEXAS
     AMERICAN SNACK FOODS CORP.

     By:  
        Name:   Dennis G. Moore
        Title:  Vice President

     MELLON BANK, N.A.                     Street Address:
     as Administrative Agent and Lender    AIM 199-5220
                                           Mellon Independence Center
     By:                                   701 Market Street
        Name:                              Philadelphia, Pennsylvania  19106
        Title:
                                           Mailing Address:
                                           AIM 199-5220
                                           Post Office Box 7899
                                           Philadelphia, Pennsylvania 19101-7899
                                           Attention:  Linda Sigler,
                                           Loan Administration
                                           Telephone:  (215)  553-4583
                                           Facsimile:  (215)  553-4789

                                           With a copy to:
                                           Plymouth Meeting Executive Campus
                                           610 W. Germantown Pike, Suite 200
                                           Plymouth Meeting, Pennsylvania 19462
                                           Attention:  Marita Carb
                                           Telephone:  (610)  941-5328
     Facsimile:  (610)
     CORESTATES BANK, N.A.                 600 Cuthbert Boulevard
     as Administrative Agent and Lender    Haddon Township, New Jersey 08108

          PR\79666\1
                                      -95-

     By:                                     Attention:  Alan B. Herman
        Name:
        Title:                               Telephone:  (609)  858-7608
                                             Facsimile:  (609)  858-7622

          PR\79666\1
                                      -96-

          EXHIBIT 13.1

                               J & J SNACK FOODS CORP.

                                  1998 ANNUAL REPORT

                                   TO SHAREHOLDERS

                                       115

     Positioned to Welcome a New Era of Growth
     1998 Annual Report

     6000 Central Highway.Pennsauken, NJ  08109.(609) 665-9533
     www.jjsnack.com

     Profile
     J&J Snack Foods Corp. is a manufacturer, marketer and distributor of an
     expanding variety of nutritional, popularly priced, branded snack foods and
     beverages for the food service and retail supermarket industries.  The
     Company is listed on the NASDAQ exchange as "JJSF," and serves both
     national and international markets.

     Our growing portfolio of products includes soft pretzels; frozen carbonated
     beverages; frozen juice bars and desserts; churros, a cinnamon pastry;
     funnel cakes; cookies and bakery goods; and other snack foods and drinks.
     Consumers can enjoy these tasty products in a variety of settings,
     including:

     * Snack bars and food stands in leading chain, department, discount and
       convenience stores
     * Malls and shopping centers
     * Fast food outlets
     * Stadiums and sports arenas
     * Leisure and theme parks
     * Movie theatres
     * Schools and colleges
     * Business and industry and other institutions
     * Supermarkets and warehouse club stores

     As we prepare for the future, J&J Snack Foods Corp. plans to continue
     expanding its unique product offerings and market niches, capitalizing on
     new opportunities wherever they may be found.

     Contents
     Financial Highlights                 1
     Letter From the President            2
     Our Family of Brands                 4
     Soft Pretzels                        5
     Frozen Carbonated Beverages (FCB)    8
     Frozen Desserts                     10
     Other Snacks                        12
     Financial Information               14
     Corporate Information               29

     Financial Highlights
                                  Fiscal year ended in September
                               (In thousands except per share data)
                          1998        1997        1996        1995        1994
     Net Sales         $ 262,390   $ 220,318   $ 186,018   $ 185,362   $ 174,425
     Net Earnings      $  11,850   $   8,159   $   5,843   $   5,804   $   8,532
     Total Assets      $ 213,261   $ 136,827   $ 123,128   $ 123,309   $ 127,366
     Long-Term Debt    $  48,199   $   5,028   $   5,010   $   5,011   $   5,028
     Stockholders' 
          Equity       $ 119,681   $ 105,904   $  96,708   $  96,084   $ 100,545
     Common Share Data
     Earnings Per 
       Diluted Share   $    1.26   $     .91   $     .65   $     .61   $     .82
     Earnings Per 
       Basic Share     $    1.32   $     .93   $     .65   $     .62   $     .84
     Book Value 
       Per Share       $   13.25   $   11.97   $   11.05   $   10.53   $   10.17
     Common Shares 
       Outstanding
       At Year End         9,036       8,850       8,749       9,126       9,889

     Letter from the President
     "Give me your tired, your poor, your huddled masses, yearning to breathe
     free. . ." so began poet Emma Lazarus' famous sonnet that was eventually
     displayed and made famous with the Statue of Liberty.

     We took some creative liberty by placing two of our famous brands, a
     SUPERPRETZEL soft pretzel and an ICEE drink, in her gentle but strong
     hands.  Historical and patriotic monuments aside, both our Company and
     these product lines stand as testaments to opportunities and success
     stories found only in America.

     We had a good year in fiscal '98.  No. . .we had a VERY good year and we
     are extremely proud of our people and their performance.

     1998 Results in Brief

     We achieved record sales and earnings for fiscal 1998.  For the 27th
     consecutive year we increased sales from the prior year.  In fiscal '98:
     * Sales increased 19% to $262,390,000 from $220,318,000
     * Net income rose 45% to $11,850,000 from $8,159,000
     * EPS climbed 38% to $1.26 from $.91
     
     And, we continued the growth momentum that we established and have been
     sustaining the past few years with further expansion of both our products
     and markets.

     "The Thinker" - Visions of Tomorrow
     I can't speak for Rodin or what "The Thinker" was contemplating, but I can
     assure you that my thoughts and those of our management team constantly
     revolve around our efforts to grow our business and increase shareholder
     value.  This past year's performance was due in large part to strategies
     and decisions developed over the years which were carefully and decisively
     implemented.

     Developing and Growing our Niches
     Soft pretzel sales again posted an increase in fiscal 1998, led by our
     flagship brand, SUPERPRETZEL.  Soft pretzel consumption opportunities and
     menu positioning ideas continue to be created and developed by our Food
     Service and Retail Supermarket divisions.  Traditional markets and
     occasions of incidence are being expanded by a variety of newly developed
     soft pretzel products and eating suggestions.  This includes filled soft
     pretzel sticks as appetizers, soft pretzel buns and rolls being tested by
     restaurants, and Pretzel Gourmet Express, a line of gourmet upscale soft
     pretzel products for business and college campus dining.  An exciting and
     aggressive marketing program to grow our supermarket soft pretzel business
     featuring television and billboard advertising is being tested in select
     markets beginning in fiscal 1999.

     Our West Coast Bakery had an excellent year posting increased sales and
     sharp improvements in manufacturing efficiency.  Churros and funnel cake
     sales also had strong sales gains and further developed their markets and
     geography.

     Not all was "cool" in J&J land.  Like Rodin's "The Thinker", we need to
     "think harder and better" in connection with our Scranton plant and frozen
     dessert lines, including LUIGI'S and MAMA TISH'S Italian ices and SHAPE-UPS
     frozen desserts.  Sales and profits were impacted this past year due in
     part to delays and start-up problems in connection with the expansion of
     our plant.

     ICEE - The Vision and Opportunity
     Our frozen beverage division now known as The ICEE Company had another
     excellent year.  Sales grew a whopping 75% with a significant part of the
     increase coming from the acquisition of National ICEE in December 1997.
     While the acquisition represented a key and significant step to growing
     the ICEE brand nationwide, equally important, we were able to consolidate
     and integrate the combined entities quickly and efficiently to maximize
     operations.

     Our vision and strategy for the frozen beverage business mirrors, in large
     part, a similar vision and strategy experienced in our soft pretzel
     business.  We acquired ICEE-USA in May 1987 - an unprofitable company with
     sales of $13 million selling, at the time, only in the West.  Our vision -
     a national company with the dominant brand that would someday be sold
     coast-to-coast (internationally too) and complement our snack food
     products.  Now, further enhanced with a strategic alliance with Coca-Cola,
     the world's leading soft drink company, we are excited with the
     opportunities to maximize our ICEE frozen beverage business.

     Looking ahead to fiscal 1999, we believe we are well positioned to continue
     our plans in this land of opportunity.  Twenty-seven years ago, I bought
     the assets of a bankrupt soft pretzel company with just eight employees
     and only $400,000 in sales.  And along the way, we acquired other troubled
     businesses and defunct product lines also in need of a new opportunity or
     another chance.  "Give me your tired, your poor, your huddled masses. . ."
     - only in America.  We remain committed and dedicated to growing our
     business and extremely enthused with the opportunity!
    
     Sincerely,

     Gerald B. Shreiber
     President and Chairman
     December 1, 1998

     Soft Pretzles: Building on Monumental Success

     When a product has one good year, it's a success.  When it has several good
     years, it's a phenomenon.  And when it records more than 25 great years, it
     becomes nothing less than an institution.

     That's the story of SUPERPRETZEL, America's Favorite Soft Pretzel.

     Thanks to the enduring strength of SUPERPRETZEL, our flagship brand, J&J
     Snack Foods is the largest manufacturer of soft pretzels in the world.  In
     fiscal 1998, our Food Service division increased soft pretzel sales by 5%.

     With a brand that's part of the American landscape, we're well positioned
     to lead the soft pretzel category into the next millennium.

     Sold Wherever Appetites are Found
     We're proud to say that SUPERPRETZELs are sold just about everywhere.
     They're available at tens of thousands of high-traffic snack bars across
     the country in malls and shopping centers, chain stores, convenience
     stores, stadiums and sports arenas, amusement, leisure and theme parks,
     schools and colleges, movie theatres, business and industry cafeterias,
     fast food outlets, supermarkets and warehouse club stores.

     The Anatomy of a Pretzel Sale
     The eye catches a glimpse of a brightly colored merchandiser that displays
     warm, soft pretzels.  The senses are stimulated.  The appetite is engaged.
     The brain agrees.  The hand reacts.  A sale is made.

     This scenario, repeated hundreds of thousands of times each day, is the key
     to the success of SUPERPRETZEL soft pretzels.  It's a matter of being in
     the right place at the right time - with the right product and promotion.
     And in fiscal 1998, we were in more of the right places than ever, having
     ramped up our merchandising initiatives at several major accounts to gain a
     larger share of their consumer snack purchases.  One result:  At a key
     account, our innovative custom display cases boosted sales by an impressive
     22%.

     Making Soft Pretzel History in Schools
     SUPERPRETZEL soft pretzels are a real lesson in how to provide both
     nutrition and fun to America's schoolchildren.  For nutrition, they satisfy
     bread requirements for U.S.D.A. approved school lunch and breakfast
     programs, making them a natural fit for both menu and a la carte sales.
     For fun, they provide a delicious treat that kids love.

     To make SUPERPRETZEL even more fun, J&J has created special promotions that
     help boost the holiday spirit in schools.  These promotions include
     specialty-shaped SUPERPRETZEL soft pretzels, such as snowmen and
     shamrocks, in conjunction with our frozen desserts.  It's a combination
     that delights school food service directors and students alike.

     "What's the Pretzel du Jour?"
     With today's busy lifestyles, Americans are dining out more than ever.  And
     J&J is there.

     Our diverse family of soft pretzel products is gaining popularity with
     customers at more and more restaurants nationwide, thanks in part to an
     aggressive, channel-specific marketing program.  This program includes a
     print advertising campaign that gives restaurateurs new ideas on how to add
     our shaped, flavored and filled varieties to their menus.

     J&J also continues to innovate with new restaurant-oriented products like
     Gourmet Soft Pretzel Buns, a delicious alternative to an ordinary hot dog
     bun that adds an exciting twist to an all-American favorite.  We've teamed
     up with a leading hot dog chain to launch this new value-added menu item at
     all their locations.

     Merchandising our Success
     In the food service business, great products aren't enough.  You've got to
     merchandise, merchandise, merchandise.  J&J has become one of the
     industry's most respected providers of merchandising and branded programs,
     offering a wide variety of point-of-sale materials, display cases and
     specialty mobile merchandisers.  These items, which prominently display our
     eye-catching SUPERPRETZEL graphics, provide food service customers with
     everything they need to highlight our products - even in non-traditional
     locations.

     One of our growing branded programs is the upscale PRETZEL GOURMET EXPRESS
     (PGX), which targets colleges, businesses, theme parks, stadiums and
     arenas.  PGX is becoming a hit with customers because it provides a 
     complete package that includes proprietary merchandising equipment and 
     point-of-sale materials.  Best of all, it features our premium line of 
     delicious raw and baked flavored soft pretzels.  Simply irresistible.

     Supermarket. SUPERPRETZEL. Super Challenge.
     In the supermarket, our SUPERPRETZEL brand continues to lead its category,
     with a commanding 74% market share.  However, the supermarket freezer case
     where our products are sold continues to be a challenging environment,
     with our soft pretzel sales declining by 11% in fiscal 1998.  This was
     largely due to the discontinuation of underperforming product lines as well
     as increased competition in the hot snacks/appetizers category.  We are
     increasing our consumer driven marketing activities to reverse the trend in
     this important category, including television and billboard advertising in
     select markets beginning in fiscal 1999.

     SUPERPRETZEL SOFTSTIX, which combine SUPERPRETZEL soft pretzel sticks with
     KRAFT* cheese filling, experienced a substantial turnaround, with a 13%
     sales gain.  This can be attributed to both increased sales and
     distribution as well as a successful co-branding agreement with KRAFT.
     
     In addition, we redesigned both the supermarket and warehouse club
     SUPERPRETZEL packages to highlight the consumer benefits of convenience and
     ease of preparation.  This redesign and update is part of a total marketing
     strategy that is being launched at the start of fiscal 1999.  We look
     forward to generating good news in the months ahead.

     (*KRAFT and the KRAFT logo are registered trademarks owned and licensed by
     Kraft General Foods, Inc.)

     Going and Growing Where the Traffic Is
     Our chain of BAVARIAN PRETZEL BAKERY and PRETZEL GOURMET retail stores,
     operated by the J&J Restaurant Group, delivered an 8% sales gain during
     fiscal 1998.  Located in regional malls primarily in the Mid-Atlantic
     states, the chain benefited from a combination of the addition of co-
     branded products and improved operating performance.  During the year we
     closed several poorly performing stores which will have a positive impact
     in fiscal 1999.

     Frozen Carbonated Beverages (FCB): The People's Choice
     ICEE:  Now One Company, Indivisible
     It's official:  From New York to California, from the Arctic regions of
     Canada to the tropics of Mexico, The ICEE Company is the source for the
     popular and refreshing line of ICEE products.  In December 1997, we
     acquired National ICEE Corporation which had distributed ICEE frozen
     carbonated beverages and products throughout the eastern half of the
     country, while our subsidiary, ICEE-USA, distributed in the western United
     States.

     And now we are one.

     The ICEE Company now sells the ICEE brand in over 90% of the U.S. as well
     as Canada and Mexico and in addition, sells ARCTIC BLAST and other brands
     in select markets.  Plans are developing for international market expansion
     as well.  Thanks to an ICEE-smooth consolidation effort, we achieved a
     soaring sales increase of 72% in beverage sales alone for the fiscal year.

     ICEE - A "Too Cool" Brand
     Consumers can't get enough of our refreshing ICEE drinks, which are served
     from proprietary dispensing equipment and can be enjoyed with a straw or a
     spoon.  They're an ultra-satisfying treat that people of all ages enjoy
     year-round. ICEE beverages are now available at over 17,000 food service
     locations nationally, many of which also sell our SUPERPRETZEL soft
     pretzels and other snack foods.

     More locations are being added all the time.  During fiscal 1998, we
     installed several new major account outlets, and began testing in a number
     of fast food chains across the country.  We pledge not to stop until
     there's an ICEE in the chilly hands of every consumer.

     ICEE and Coca-Cola*:  Partners For Growth
     This past year ICEE joined Coca-Cola in an exciting new venture that offers
     great potential in the frozen beverage category for both of these all-
     American favorites.  We've entered into a long-term marketing agreement
     that combines ICEE's operational and service system expertise with the
     marketing power of Coca-Cola.  In the years ahead, we'll be leveraging this
     agreement to expand our business with new selling opportunities for frozen
     beverages featuring ICEE and Coca-Cola.

     (*"Coca-Cola" is a trademark of The Coca-Cola Company.)

     Focused on the Fundamentals
     The ICEE Company is more than just great tasting beverages and exciting
     brand names.  Behind the scenes, there's a modern infrastructure that
     maintains our equipment in peak condition, and keeps our trade customers
     satisfied.

     To stay the best in the business, we've expanded and relocated our training
     facility.  This technical service center, known as FCB University, provides
     comprehensive training and education to keep pace with our planned growth.

     In addition, we continue to invest in our centralized Customer Service
     Center, which supports our branches and service technicians by providing
     state-of-the-art "Service Excellence" to our 17,000+ and growing customer
     base.

     We continue to improve on the performance and reliability of our beverage
     dispensing equipment.  This, together with specialized, unique
     distribution systems, will help The ICEE Company remain the leader in the
     frozen beverage industry.

     Frozen Desserts: Ringing in the New

     Building for the Future
     In fiscal 1998, we completed a major modernization and expansion of our
     Italian ice and frozen dessert plant in Scranton, Pennsylvania.  This
     facility, which was expanded in part to accommodate the MAMA TISH'S
     acquisition of a year ago, has more than doubled its production capacity.
     And today, modernization has resulted in measurable product quality
     improvements that add value to our brands.

     Two Category Leaders Get New Images
     Combined retail supermarket sales of LUIGI'S and MAMA TISH'S Italian ices
     grew by 3% in fiscal 1998, led by an increase of 9% for the LUIGI'S brand.
     These two brands continue to lead the category as two of the top selling
     Italian ice product lines in the highly competitive supermarket freezer
     case.

     To increase consumer visibility, we updated the LUIGI'S box with bold
     contemporary graphics, and re-positioned MAMA TISH'S as MAMA TISH'S
     FRUTTUOSSO SORBETTO - an upscale image to match its premium quality.  Both
     brands offer consumers a refreshing, anytime taste treat.

     The Squeeze is on in Food Service
     Our Food Service division sells frozen dessert products under the brand
     names of LUIGI'S, SHAPE-UPS, MAMA TISH'S, FROSTAR and SNAPPLE* ICE.
     Overall sales experienced a decline of 12% for fiscal year 1998 due to
     decreased sales to several key customers.  While these results are
     disappointing, we continue to aggressively pursue every opportunity to
     boost Food Service sales in the future.

     As part of our sales building efforts, we introduced new items to the Food
     Service market, particularly convenience stores, including ICEE Squeeze-up
     Tubes which capture the fizz and taste of a traditional ICEE drink and
     extend the brand's equity and awareness.

     (SNAPPLE is a registered trademark of Snapple Beverage Corp.)

     SHAPE-UPS Go to School
     Our SHAPE-UPS frozen juice bars continue to score high marks with America's
     schoolchildren and are welcomed by school food service directors since
     they carry the U.S.D.A. approved Child Nutrition (CN) Label.

     To keep SHAPE-UPS shipping out, we recently introduced bright and colorful
     new packaging, along with new creative promotions targeted to school food
     service directors.

     Other Snacks: Building Bridges to New Markets
     Our other niche snack foods, including churros, funnel cakes, cookies and
     other baked goods, also had a good year.  Sales grew in all four of these
     product lines.

     West Coast Bakery Rides a Wave of Good News
     The surf was up - way up - at our Los Angeles based West Coast Bakery.
     Sales increased an awesome 30% and through production improvements,
     manufacturing efficiency was riding high, too.

     These results are attributable to a number of factors.  We grew our frozen
     cookie dough business, expanded our contract private label products,
     including organically certified baked goods, extended the variety of
     offerings in our industrial ingredient business, and built a stronger
     presence in the gift pack market with our cookie lines.

     Things are also looking good for MRS. GOODCOOKIE, a frozen ready-to-bake
     cookie line that we introduced to limited markets late last year.  In
     fiscal 1998 we refined and expanded our program and were encouraged by the
     sales results.  Watch for national expansion in the years ahead.

     Churros - From Sea to Shining Sea
     Through our geographic expansion efforts, more and more consumers are
     discovering what people in the West and Southwest have known for years:
     TIO PEPE'S churros are a sweet treat anywhere.
     
     These crispy, cinnamon-sugared, doughnut-like snacks of Hispanic origin are
     growing in popularity and gaining in sales.  And even long-time fans are
     discovering the versatility of churros through our delicious new fruit-
     filled varieties.  As a result, Food Service churros sales grew by 8% this
     year.  Much of this growth was due to the introduction of TIO PEPE'S fruit-
     filled churros to school menus, where they provide both bread and fruit
     requirements for U.S.D.A. approved school lunch and breakfast programs.
     Retail churros experienced significant growth both in existing and newly
     entered geographic markets.

     Making Fun with Funnel Cakes
     You can't have a funnel cake without "fun."  And more people than .ever are
     having fun with THE FUNNEL CAKE FACTORY funnel cakes, sold through our Food
     Service division.

     These tempting treats are available as frozen pre-cooked, pre-shaped funnel
     cakes as well as a make-your-own dry mix.  They're a huge hit at theme and
     amusement parks, and are gaining popularity as a restaurant dessert item as
     a result of our innovative menu ideas.

     We recently reformulated our funnel cakes to meet two bread requirements
     for U.S.D.A. approved school lunch and breakfast programs.  As a result,
     they're being added to numerous school menus around the country.

     It all adds up to a sales increase of 34% in fiscal 1998 - and results like
     that are great fun for J&J Snack Foods.

     Here in America, brand names have the opportunity and power to become
     icons, recognized and enjoyed by millions.  J&J Snack Foods is proud that
     our many brands continue to grow in popularity, taking their place on the
     great landscape of American popular culture.

     Management's Discussion and Analysis of Financial Condition and Results of
     Operations

     In addition to historical information, this discussion and analysis
     contains forward-looking statements.  The forward-looking statements
     contained herein are subject to certain risks and uncertainties that could
     cause actual results to differ materially from those projected in the
     forward-looking statements.  Important factors that might cause such a
     difference include, but are not limited to, those discussed in the
     "Management's Discussion and Analysis of Financial Condition and Results of
     Operations."  Readers are cautioned not to place undue reliance on these
     forward-looking statements, which reflect management's analysis only as of
     the date hereof.  The Company undertakes no obligation to publicly revise
     or update these forward-looking statements to reflect events or
     circumstances that arise after the date hereof.

     Results of Operations

     Fiscal 1998 Compared to Fiscal 1997
     Net sales increased $42,072,000 or 19% to $262,390,000 in fiscal 1998 from
     $220,318,000 in fiscal 1997.  Approximately $31,000,000 of the increase in
     sales for the year resulted from the December 1997 acquisition of National
     ICEE Corporation.

     Sales to food service customers increased $1,534,000 or 2% to $103,470,000
     in fiscal 1998.  Soft pretzel sales to the food service market increased 5%
     to $60,589,000.  Churro sales increased 8% to $11,195,000.  Frozen juice
     bar and dessert sales decreased 12% to $24,746,000 primarily due to lower
     sales to three customers.

     Sales of products to retail supermarkets decreased $1,708,000 or 4% to
     $38,594,000 in fiscal 1998.  Total soft pretzel sales to retail
     supermarkets were $21,849,000, a decrease of 11% from fiscal 1997.  Sales
     of our flagship brand SUPERPRETZEL soft pretzels, excluding SOFTSTIX and
     CINNAMON RAISIN MINI'S, decreased 5% to $17,298,000.  SOFTSTIX sales
     increased $268,000 or 13% to $2,286,000 from the previous year.  Sales of
     Italian ice increased $485,000 or 3% to $15,038,000 in 1998 from
     $14,553,000 in 1997; sales were impacted by limited production output
     during the expansion and modernization of the Company's Italian ice and
     frozen dessert plant in Scranton, PA.

     Frozen carbonated beverage and related product sales increased $35,884,000
     or 75% to $83,799,000 in fiscal 1998.  Beverage sales alone increased 72%
     to $75,191,000 for the year, including approximately $31,000,000
     attributable to the December 1997 acquisition of National ICEE Corporation.

     Bakery sales increased $5,351,000 or 30% to $23,307,000 in fiscal 1998 due
     primarily to increased product sales to one customer.  Sales of our
     Bavarian Pretzel Bakery increased 8% to $13,220,000 for the year.

     Gross profit on sales increased to 52% of sales in 1998 from 49% of sales
     in 1997.  The gross profit percentage increase is primarily attributable to
     higher gross profit percentages of the acquired National ICEE Corporation
     business and lower flour costs, net of higher manufacturing costs of
     approximately $1,300,000 incurred during the startup of operations in the
     third and fourth quarters at the Company's expanded Italian ice and frozen
     dessert plant in Scranton, PA.

     Total operating expenses increased $18,598,000 to $115,117,000 in fiscal
     1998 but as a percentage of sales were 44% in both 1998 and 1997.
     Marketing and distribution expenses were 30% and 9% of sales, respectively,
     in both fiscal 1998 and 1997.  Administrative expenses decreased to 4% of
     sales in fiscal 1998 from 5% in fiscal 1997 due primarily to lower
     litigation costs in fiscal 1998.

     Operating income increased $8,821,000 or 76% to $20,461,000 in fiscal 1998.

     Interest expense increased $2,602,000 to $3,033,000 in fiscal 1998 due to
     the purchase and assumption and subsequent refinancing of the debt of
     National ICEE Corporation.

     Sundry income increased by $696,000 in fiscal 1998 from $112,000 in fiscal
     1997 due to the successful settlement of certain litigation.  In 1998,
     Sundry income was offset by $525,000 in write offs and accruals for the
     closing of unprofitable Bavarian Pretzel Bakery retail stores.

     The effective income tax rate increased to 37% in fiscal 1998 from 32% in
     fiscal 1997.  The lower rate in fiscal 1997 is due primarily to
     adjustments relating to settlements of federal tax matters.

     Net earnings increased $3,691,000 or 45% in fiscal 1998 to $11,850,000.

     Fiscal 1997 Compared to Fiscal 1996
     Net sales increased $34,300,000 or 18% to $220,318,000 in fiscal 1997 from
     $186,018,000 in fiscal 1996.  Excluding sales of acquired businesses, net
     sales increased $16,395,000 or 9% for the year.

     Sales to food service customers increased $15,432,000 or 18% to
     $101,936,000 in fiscal 1997.  Excluding sales of acquired businesses,
     sales to food service customers increased $2,675,000 or 3% for the year.
     Soft pretzel sales to the food service market increased 5% to $57,668,000.
     Excluding sales of acquired businesses, food service soft pretzel sales
     decreased $636,000 or 1% from last year.  Two customers accounted for
     approximately $2,500,000 of lower pretzel sales in 1997 compared to 1996.
     Churro sales increased 3% to $10,403,000.  Frozen juice bar and dessert
     sales increased 76% to $28,210,000.  Approximately 75% of the juice bar and
     dessert sales increase resulted from sales of acquired businesses.

     Sales of products to retail supermarkets increased $3,384,000 or 9% to
     $40,302,000 in fiscal 1997.  Total soft pretzel sales to retail
     supermarkets were $24,504,000, an increase of 3% from fiscal 1996.
     Excluding sales of an acquired business, sales to retail supermarkets
     decreased 2% or $919,000 for the year.  Sales of our flagship
     SUPERPRETZEL brand soft pretzels, excluding SOFTSTIX and CINNAMON RAISIN
     MINI'S, decreased 7% to $18,157,000.  SOFTSTIX sales decreased $701,000 or
     26% to $2,018,000 from the previous year.  Sales of Italian ice increased
     $2,335,000 or 19% to $14,553,000 in 1997 from $12,218,000 in 1996 due to
     sales of Mama Tish's International Foods which was acquired during the
     second quarter.  Excluding sales of Mama Tish's, Italian ice sales were
     down 4% for the year.

     Frozen carbonated beverage and related product sales increased $3,558,000
     or 8% to $47,915,000 in fiscal 1997.  Beverage sales alone increased 4% to
     $43,594,000 for the year.  Excluding last year's pricing adjustment to one
     customer and an unusually high sales of promotional cups to another
     customer, beverage sales increased 7%.

     Bakery sales increased $10,225,000 or 132% to $17,956,000 in fiscal 1997
     due to increased product sales to one customer.  Sales of our Bavarian
     Pretzel Bakery increased 16% to $12,209,000 for the year.  Excluding sales
     from an acquired business, Bavarian Pretzel Bakery sales increased 8% or
     $856,000 for the year.

     Gross profit on sales was 49% of sales in both 1997 and 1996.

     Total operating expenses increased $12,449,000 to $96,519,000 in fiscal
     1997 but as a percentage of sales decreased to 44% from 45% in fiscal 1996.
     Marketing expenses as a percentage of sales dropped to 30% in 1997 from 32%
     in 1996.  This decline was due primarily to overhead efficiencies
     resulting from higher sales levels.  Distribution expenses were 9% of sales
     in 1997 and 1996.  Administrative expenses increased to 5% of sales in 1997
     from 4% in 1996 due to increased litigation costs.

     Operating income increased $3,692,000 or 46% to $11,640,000 in fiscal 1997.

     Investment income decreased $796,000 or 56% in fiscal year 1997 due to a
     sharply lower level of investable funds which were used to pay for
     acquisitions.  Interest expense increased $66,000 or 18% due to short-term
     borrowings.

     The effective income tax rate was 32% in 1997 and 35% in 1996.  The lower
     rate in 1997 is primarily due to adjustments relating to settlements of
     federal tax matters.

     Net earnings increased $2,316,000 or 40% in fiscal 1997 to $8,159,000.

     Acquisitions, Liquidity and Capital Resources
     In December 1997, the Company acquired the common stock of National ICEE
     Corporation.  National ICEE Corporation, with annual sales of
     approximately $40 million, markets and distributes frozen carbonated
     beverages primarily in the eastern half of the United States.  The Company
     has incurred approximately $50 million of debt to complete the
     acquisition.  The following are the unaudited pro forma results of
     operations for the fiscal years 1998, 1997 and 1996 assuming the above
     had occurred at the beginning of that fiscal year:

                                     1998             1997             1996
     Sales                     $268,390,000     $259,952,000     $222,964,000
     Net Earnings               $11,346,000       $8,645,000       $7,036,000
     Earnings per diluted share       $1.21             $.96             $.78

     In January 1997, the Company acquired the assets of Mama Tish's
     International Foods by assuming certain liabilities.  Mama Tish's is a
     manufacturer and distributor of Italian ices, sorbets and other frozen
     juice products with annual sales of approximately $15 million.

     In November 1996, the Company acquired all of the .common stock of
     Pretzels, Inc. for cash.  Trading as TEXAS TWIST, Pretzels, Inc. is a soft
     pretzel manufacturer selling to both the food service and retail
     supermarket industries.

     In October 1996, the Company acquired the assets of Bakers Best Snack Food
     Corp. for cash.  Bakers Best is a manufacturer of soft pretzels selling to
     both the food service and retail supermarket industries.

     In May 1996, the Company acquired the assets of Mazzone Enterprises, Inc.
     for cash and by assuming certain of its liabilities.  Mazzone Enterprises
     is a manufacturer and distributor of Italian ices and other specialty
     frozen desserts.

     In April 1996, the Company acquired the assets of Pretzel Gourmet Corp. for
     cash.  Pretzel Gourmet is a chain of retail stores specializing in freshly
     baked hand-rolled soft pretzels.

     The Company's current cash and marketable securities balances and cash
     expected to be provided by future operations are its primary sources of
     liquidity.  The Company believes that these sources, along with its
     borrowing capacity, are sufficient to fund future growth and expansion.

     The devaluation of the Mexican peso caused reductions of $285,000, $53,000
     and $235,000 in stockholders' equity for the 1998, 1997 and 1996 fiscal
     years, respectively, because of the revaluation of the net assets of the
     Company's Mexican frozen carbonated beverage subsidiary.  In 1998, sales of
     the Mexican subsidiary were $2,170,000.

     Under various share repurchase programs authorized by the Board of
     Directors, the Company purchased and retired 433,000 shares of its common
     stock at a cost of $5,029,000 in fiscal year 1996.  Under the most recent
     share repurchase authorization, 712,000 shares remain to be repurchased.

     An unsecured general-purpose bank line of credit totalling $30,000,000 is
     available to the Company.  Borrowings under the bank line of credit were
     $16,000,000 at September 26, 1998.

     The Financial Accounting Standards Board ("FASB") has issued Statement of
     Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share"
     ("EPS"), which is effective for financial statements issued after December
     31, 1997.  The new standard eliminates primary and fully diluted EPS and
     instead requires presentation of basic and diluted EPS in conjunction with
     the disclosure of the methodology used in computing such EPS.  Basic EPS
     excludes dilution and is computed by dividing income available to common
     shareholders by the weighted-average common shares outstanding during the
     period.  Diluted EPS takes into consideration the potential dilution that
     could occur if securities or other contracts to issue common stock were
     exercised and converted into common stock.  The Company adopted this new
     standard in its financial statements for the second quarter of this fiscal
     year.  The effect of adopting this new standard is not material.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
     Income," which is effective for years beginning after December 15, 1997.
     This new standard requires entities presenting a complete set of financial
     statements to include details of comprehensive income.  Comprehensive
     income consists of net income or loss for the current period and income,
     expenses, gains and losses that bypass the income statement and are
     reported directly in a separate component of equity.  The effect of
     adopting this new standard is not expected to be material.

     In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
     an Enterprise and Related Information," which is effective for all periods
     beginning after December 15, 1997.  SFAS No. 131 requires that public
     business enterprises report certain information about operating segments in
     complete sets of financial statements of the enterprise and in condensed
     financial statements of interim periods issued to shareholders.  It also
     requires that public business enterprises report certain information about
     their products and services, the geographic areas in which they operate,
     and their major customers.  The effect of adopting this new standard is
     not expected to be material.

     Fiscal 1998 Compared to Fiscal 1997
     Trade receivables increased $9,301,000 or 40% to $32,683,000 in 1998, and
     inventories increased $2,912,000 or 22% to $16,447,000 in 1998 from 1997
     primarily because of higher sales levels attributable to the acquisition of
     National ICEE Corporation.

     Other receivables decreased $371,000 to $1,705,000 in 1998 due to
     reimbursement received from the Company's insurance carrier on settlement
     of legal matters.

     Property, plant and equipment increased $48,216,000 to $212,564,000
     primarily because of expenditures for dispensers required for the
     expansion of the frozen carbonated beverage business, for ovens and
     portable merchandisers required for the expansion of the food service
     business and for the expansion and upgrading of production and warehousing
     capability at the Company's manufacturing facilities.  Additionally,
     property, plant and equipment from the National ICEE Corporation
     acquisition accounted for approximately one-half of the overall increase.

     Goodwill, trademarks and rights, net of accumulated amortization increased
     $30,412,000 to $51,871,000 due to goodwill acquired in the National ICEE
     Corporation acquisition.

     Accounts payable and accrued liabilities increased $10,169,000 in 1998 from
     $21,967,000 in 1997 due primarily to the acquisition of National ICEE
     Corporation and higher sales levels.

     Current maturities of long-term debt increased by $8,407,000 to $8,423,000
     and long-term debt, less current maturities increased by $43,171,000 to
     $48,199,000 due to borrowings to fund the acquisition of National ICEE
     Corporation and the subsequent refinancing of its debt.

     Deferred income decreased $97,000 to $435,000 primarily as a result of the
     reduction in the Company's guarantees related to the sale of its Hawaiian
     ICEE operations.

     Deferred Income Taxes increased by $1,007,000 to $4,387,000 in 1998 which
     related to depreciation of property, plant and equipment.

     Common stock increased $2,212,000 in 1998 to $39,120,000 primarily because
     of the exercise of incentive stock options.

     Net cash provided by operating activities increased $16,808,000 to
     $37,179,000 in 1998 primarily due to increases in net earnings,
     depreciation and amortization of fixed assets, amortization of intangibles
     and deferred costs and accounts payable and accrued liabilities.

     Net cash used in investing activities increased $14,659,000 to $45,132,000
     in 1998 primarily due to purchases of property, plant and equipment which
     increased by $12,222,000 in 1998.  Expenditures increased for dispensers
     for the expansion of the frozen carbonated beverage business and for the
     expansion and modernization of the Company's Italian ice and frozen dessert
     plant in Scranton, PA.

     Net cash provided by financing activities of $9,756,000 in 1998 compared to
     $956,000 in 1997.  The increase was due to a net increase in borrowings to
     fund the acquisition of National ICEE Corporation and the subsequent
     refinancing of its debt.

     Fiscal 1997 Compared to Fiscal 1996
     The combined balance of cash and cash equivalents and marketable securities
     decreased $10,363,000 from $11,764,000 in 1996 to $1,401,000 in 1997
     primarily because of the use of cash for acquisitions.

     Trade receivables increased $6,105,000 or 35% to $23,382,000 in 1997, and
     inventories increased $2,259,000 or 20% to $13,535,000 in 1997 from 1996
     primarily because of higher sales levels.

     Other receivables increased $1,151,000 to $2,076,000 in 1997 due to an
     increase in reimbursements due from the Company's insurance carrier.

     Property, plant and equipment increased $22,248,000 primarily because of
     expenditures for dispensers required for the expansion of the frozen
     carbonated beverage business, for ovens and portable merchandisers required
     for the expansion of the food service business and for the expansion and
     upgrading of production and warehousing capability at the Company's
     manufacturing facilities.  Additionally, property, plant and equipment from
     acquisitions accounted for approximately one-third of the overall increase.

     Goodwill, trademarks and rights, net of accumulated amortization increased
     $12,133,000 to $21,459,000 primarily because of goodwill and restrictive
     covenants acquired in the Bakers Best Snack Foods Corp., Pretzels, Inc. and
     Mama Tish's International Foods acquisitions.  Long-term investments
     decreased $6,652,000 to $3,835,000 primarily because proceeds from sales of
     these investments were used for acquisitions.  Sundry assets increased by
     $181,000 from 1996 primarily because of an increase in funding of various
     long-term merchandising agreements.

     Accounts payable and accrued liabilities increased $4,535,000 in 1997 from
     $17,432,000 in 1996 due primarily to higher sales levels.

     Deferred income decreased $35,000 primarily as a result of the reduction in
     the Company's guarantees related to the sale of its Hawaiian ICEE
     operations.

     Common stock increased $1,090,000 in 1997 to $36,908,000 primarily because
     of the exercise of incentive stock options.

     Net cash provided by operating activities decreased $1,509,000 to
     $20,371,000 in 1997 from $21,880,000 in 1996 primarily because of an
     increase in accounts receivable.

     Net cash used in investing activities increased $13,311,000 to $30,473,000
     in 1997 from $17,162,000 in 1996 primarily because of payments for
     purchases of companies, net of cash acquired and debt assumed and higher
     capital expenditures.  Capital expenditures increased by $5,101,000 in 1997
     from 1996 because of increased expenditures for dispensers for the
     expansion of the frozen carbonated beverage business.

     There was net cash provided by financing activities of $956,000 in 1997
     compared to a net use of $4,867,000 in 1996.  The use in 1996 was for the
     Company's repurchase of common stock.

     Consolidated Statements of Earnings

                                             Fiscal year ended
                              September 26,    September 27,    September 28,
                                   1998             1997             1996
          Net sales           $ 262,390,000    $ 220,318,000    $ 186,018,000
          Cost of goods sold    126,812,000      112,159,000       94,000,000
              Gross profit      135,578,000      108,159,000       92,018,000

          Operating expenses
               Marketing         77,385,000       65,231,000       58,604,000
               Distribution      24,846,000       19,197,000       17,264,000
               Administrative    10,072,000       10,326,000        7,309,000
               Amortization of 
                 intangibles and
                 deferred costs   2,814,000        1,765,000          893,000

                                115,117,000       96,519,000       84,070,000

              Operating income   20,461,000       11,640,000        7,948,000

          Other income (deductions)
               Investment income    573,000          630,000        1,426,000
               Interest expense  (3,033,000)        (431,000)        (365,000)
               Sundry               808,000          112,000           34,000

                                 (1,652,000)         311,000        1,095,000

               Earnings before
                income taxes     18,809,000       11,951,000        9,043,000

          Income taxes            6,959,000        3,792,000        3,200,000

               NET EARNINGS     $ 11,850,00     $  8,159,000     $  5,843,000

          Earnings per 
            diluted share             $1.26             $.91             $.65

          Weighted average number
            of diluted shares     9,368,000        8,985,000        9,016,000
          Earnings per basic share    $1.32             $.93             $.65

          Weighted average number
            of basic shares       8,947,000        8,781,000        8,940,000

          The accompanying notes are an integral part of these statements.

     Consolidated Balance Sheets
                                                         Fiscal year ended
                                                   September 26,  September 27,
                                                          1998           1997
          Assets
          Current Assets
               Cash and cash equivalents          $    3,204,000  $   1,401,000
               Receivables
                   Trade, less allowance of
                     $597,000 and $392,000, 
                     respectively                     32,683,000     23,382,000
                   Other                               1,705,000      2,076,000
               Inventories                            16,447,000     13,535,000
               Prepaid expenses and deposits           1,104,000        853,000
                    Total current assets              55,143,000     41,247,000

          Property, Plant and Equipment, at cost     212,564,000    164,348,000
               Less accumulated depreciation 
                 and amortization                    112,444,000     97,126,000
                                                     100,120,000     67,222,000
          Other Assets
               Goodwill, trademarks and rights, 
                 less accumulated amortization
                 of $9,712,000 and $6,883,000, 
                 respectively                         51,871,000     21,459,000
               Long-term investment securities 
                 available for sale                           _         495,000
               Long-term investment securities 
                 held to maturity                      3,127,000      3,340,000
               Sundry                                  3,000,000      3,064,000
                                                      57,998,000      8,358,000
                                                  $  213,261,000  $ 136,827,000

          Liabilities and Stockholders' Equity
          Current Liabilities
               Current maturities of long-term 
                 debt                             $    8,423,000  $      16,000
               Accounts payable                       23,222,000     13,315,000
               Accrued liabilities                     8,914,000      8,652,000
                    Total current liabilities         40,559,000     21,983,000

          Long-Term Debt, less current maturities     48,199,000      5,028,000
          Deferred Income                                435,000        532,000
          Deferred Income Taxes                        4,387,000      3,380,000

          Commitments                                         _              _

          Stockholders' Equity
               Capital stock
                 Preferred, $1 par value; 
                   authorized, 5,000,000 shares; none
                   issued                                     _              _
                 Common, no par value; authorized,
                   25,000,000 shares; issued and 
                   outstanding, 9,036,000 and 8,850,000,
                   respectively                       39,120,000     36,908,000
               Foreign currency translation 
                   adjustment                         (1,694,000)    (1,409,000)
               Retained earnings                      82,255,000     70,405,000
                                                     119,681,000    105,904,000
                                                  $  213,261,000  $ 136,827,000

     The accompanying notes are an integral part of these statements.

Consolidated Statement of Changes in Stockholders' Equity

                                           Foreign
                                           Currency
                         Common Stock     Translation    Retained
                      Shares      Amount   Adjustment    Earnings        Total
Balance at 
  Oct. 1, 1995      9,126,000 $40,802,000 $(1,121,000) $56,403,000 $ 96,084,000
  Issuance of common 
    stock upon 
    exercise of stock
    options            56,000     199,000         -            -        199,000
  Adjustments to common
    stock for acquisition -      (154,000)        -            -       (154,000)
  Foreign currency 
    translation 
    adjustment            -           -      (235,000)         -       (235,000)
  Repurchase of 
    common stock     (433,000) (5,029,000)        -            -     (5,029,000)
  Net earnings for
    the fiscal year
    ended September 28,
    1996                  -           -           -      5,843,000    5,843,000

Balance at 
  Sep. 28, 1996     8,749,000  35,818,000  (1,356,000)  62,246,000   96,708,000
  Issuance of common
    stock upon
    exercise of stock
    options            84,000     945,000         -            -        945,000
  Issuance of common
    stock for employee
    stock purchase
    plan               17,000     145,000         -            -        145,000
  Foreign currency 
    translation
    adjustment            -           -       (53,000)         -        (53,000)
  Net earnings for
    the fiscal year
    ended September 27,
    1997                  -           -           -      8,159,000    8,159,000

Balance at 
  Sep. 27, 1997     8,850,000  36,908,000  (1,409,000)  70,405,000  105,904,000
  Issuance of common
    stock upon
    exercise of stock
    options           171,000   2,017,000         -            -      2,017,000
  Issuance of common
    stock for employee
    stock purchase
    plan               15,000     195,000         -            -        195,000
  Foreign currency 
    translation
    adjustment            -          -       (285,000)         -       (285,000)
  Net earnings for
    the fiscal year 
    ended September 26,
    1998                  -          -            -     11,850,000   11,850,000

Balance at 
  Sep. 26, 1998     9,036,000 $39,120,000 $(1,694,000) $82,255,000 $119,681,000

  The accompanying notes are an integral part of this statement.

     Consolidated Statements of Cash Flows

                                                 Fiscal year ended
                                  September 26,     September 27,  September 28,
                                     1998              1997           1996
     Operating activities:
        Net earnings             $11,850,000    $    8,159,000 $    5,843,000
        Adjustments to reconcile
          net earnings to net 
          cash provided by
          operating activities:
            Depreciation and 
              amortization of 
              fixed assets        21,807,000        17,090,000     15,613,000
            Amortization of 
              intangibles and 
              deferred costs       3,352,000         2,180,000      1,262,000
            Losses (gains) from 
              disposals of property
              and equipment          306,000           (26,000)        44,000
            Increase (decrease) 
              in deferred income 
              taxes                1,007,000           (23,000)    (1,600,000)
            Other adjustments         23,000            14,000        (24,000)
            Changes in assets and 
              liabilities, net of 
              effects from purchase
              of companies:
                Increase in accounts 
                  receivable      (6,378,000)       (6,615,000)      (488,000)
                Decrease (increase)
                  in inventories     958,000        (1,008,000)       (30,000)
                (Increase) decrease 
                  in prepaid 
                  expenses           (71,000)          174,000        572,000
                Increase in accounts
                  payable and accrued
                  liabilities      4,325,000           426,000        688,000
            Net cash provided 
              by operating
              activities          37,179,000        20,371,000     21,880,000

     Investing activities:
        Purchases of property, 
          plant and equipment    (31,803,000)      (19,581,000)   (14,480,000)
        Payments for purchases 
          of companies, net of 
          cash acquired and
          debt assumed           (14,813,000)      (18,601,000)    (2,739,000)
        Proceeds from investments
          held to maturity           190,000         6,146,000        575,000
        Payments for investments 
          held to maturity               -                 -       (2,750,000)
        Proceeds from investments
          available for sale         495,000         1,710,000      7,133,000
        Payments for investments 
          available for sale             -                 -       (4,578,000)
        Proceeds from disposals of 
          property and equipment   1,000,000           273,000        191,000
        Other                       (201,000)         (420,000)      (514,000)
            Net cash used in 
              investing 
              activities         (45,132,000)      (30,473,000)   (17,162,000)

     Financing activities:
        Proceeds from borrowings  56,150,000            35,000            -
        Proceeds from issuance 
          of common stock          2,125,000           930,000        183,000
        Payments to repurchase 
          common stock                   -                 -       (5,029,000) 
        Payments of long-term 
          debt                   (48,519,000)           (9,000)       (21,000)
            Net cash provided by 
             (used in) financing
             activities            9,756,000           956,000     (4,867,000)

            Net increase (decrease)
              in cash and cash 
              equivalents          1,803,000        (9,146,000)      (149,000)

     Cash and cash equivalents 
        at beginning of year       1,401,000        10,547,000     10,696,000
     Cash and cash equivalents 
        at end of year         $   3,204,000     $   1,401,000   $ 10,547,000

     The accompanying notes are an integral part of these statements.

     Notes to Consolidated Financial Statements

     Note A - Summary of Significant Accounting Policies
     J&J Snack Foods Corp. and Subsidiaries (the Company) manufactures, markets
     and distributes a variety of nutritional snack foods and beverages to the
     food service and retail supermarket industries.  A summary of the
     significant accounting policies consistently applied in the preparation of
     the accompanying consolidated financial statements follows.

     1.  Principles of Consolidation
     The consolidated financial statements include the accounts of J&J Snack
     Foods Corp. and its wholly-owned subsidiaries.  Intercompany balances and
     transactions have been eliminated in the consolidated financial statements.

     2.  Revenue Recognition
     The Company recognizes revenue when its product is shipped.
     The Company sells service contracts covering frozen carbonated beverage
     machines sold.  The terms of coverage range between 12 and 48 months.  The
     Company records deferred income on service contracts which is amortized by
     the straight-line method over the term of the contracts.

     3.  Foreign Currency
     Assets and liabilities in foreign currencies are translated into U.S.
     dollars at the rate of exchange prevailing at the balance sheet date.
     Revenues and expenses are translated at the average rate of exchange for
     the period.  The cumulative translation adjustment is recorded as a
     separate component of stockholders' equity.

     4.  Use of Estimates
     In preparing financial statements in conformity with generally accepted
     accounting principles, management is required to make estimates and
     assumptions that affect the reported amounts of assets and liabilities, the
     disclosure of contingent assets and liabilities at the date of the
     financial statements, and the reported amounts of revenues and expenses
     during the reporting period.  Actual results could differ from those
     estimates.

     5.  Cash Equivalents
     Cash equivalents are short-term, highly liquid investments with original
     maturities of three months or less.

     6.  Concentrations of Credit Risk
     Concentrations of credit risk with respect to trade receivables are limited
     due to the dispersion of the Company's customers over different industries
     and geographies.

     7.  Inventories
     Inventories are valued at the lower of cost (determined by the first-in,
     first-out method) or market.

     8.  Depreciation and Amortization
     Depreciation of equipment and buildings is provided for.by the straight-
     line and accelerated methods over the assets' estimated useful lives.
     Amortization of improvements is provided for by the straight-line method
     over the term.of the lease or the assets' estimated useful life,
     whichever is shorter.  Goodwill, trademarks and rights arising from
     acquisitions are amortized by the straight-line method over periods ranging
     from 5 to 30 years.  Management reviews the realization of goodwill based
     upon past and expected performance of individual acquired businesses.
     In fiscal year 1997, the Company adopted a new standard issued by the
     Financial Accounting Standards Board ("FASB"), Statement of Financial
     Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
     Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
     provides guidance on when to recognize and how to measure impairment losses
     of long-lived assets and certain identifiable intangibles and how to value
     long-lived assets to be disposed of.  There was no material impact as a
     result of the adoption of SFAS No. 121 on the financial position and
     results of operations of the Company.

     9.  Fair Value of Financial Instruments
     Financial instruments consist primarily of cash and cash equivalents,
     investments and long-term debt.  Based on the borrowing rates currently
     available to the Company, long-term debt approximates fair value at
     September 26, 1998 and September 27, 1997.

     10.  Income Taxes
     The Company accounts for its income taxes under the liability method.
     Under the liability method, deferred tax assets and liabilities are
     determined based on the difference between the financial statement and tax
     bases of assets and liabilities as measured by the enacted tax rates which
     will be in effect when these differences reverse.  Deferred tax expense is
     the result of changes in deferred tax assets and J&J liabilities.  The
     principal types of differences between assets and liabilities for financial
     statement and tax return purposes are vacation accruals, insurance
     accruals, deferred income and accumulated depreciation.

     11.  Earnings Per Common Share
     Earnings per common share are based on the weighted average number of
     common shares outstanding, including common stock equivalents (stock
     options).

     The Company adopted a new standard issued by the FASB, SFAS No. 128,
     "Earnings Per Share" ("EPS") in its fiscal 1998 second quarter financial
     statements.  The new standard eliminates primary and fully diluted EPS and
     instead requires presentation of basic and diluted EPS in conjunction with
     the disclosure of the methodology used in computing such EPS.  Basic EPS
     excludes dilution and is computed by dividing income available to common
     shareholders by the weighted-average common shares outstanding during the
     period.  Diluted EPS takes into consideration the potential dilution that
     could occur if securities or other contracts to issue common stock were
     exercised and converted into common stock.  The effect of adopting this new
     standard was not material.

     12.  Accounting for Stock-Based Compensation
     In fiscal 1997, the Company adopted a new standard issued by the FASB, SFAS
     No. 123, "Accounting for Stock-Based Compensation," which contains a fair
     value-based method for valuing stock-based compensation that entities may
     use, which measures compensation cost at the grant date based on the fair
     value of the award.  Compensation is then recognized over the service
     period, which is usually the vesting period.  The Company has chosen an
     alternative, permitted by the standard, to continue accounting for employee
     stock options and similar equity instruments under Accounting Principles
     Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."

     13.  Advertising Costs
     Advertising costs are expensed as incurred.  Total advertising expense was
     $4,128,000, $3,892,000, and $4,119,000 for the fiscal years 1998, 1997 and
     1996, respectively.

     14.  Interest Rate Risk Management
     As part of its risk management activities, the Company uses interest rate
     swaps to modify the interest rate characteristics of certain long-term
     debt.  The Company holds no other derivatives or similar instruments.  The
     derivatives contracts are designated as hedges when acquired.  They are
     expected to be effective economic hedges and have high correlation with the
     items being hedged at inception and throughout the hedge period.  The
     variable interest rate of a swap contract is referenced to the same index
     as the variable interest rate of the debt being hedged.

     Interest rate swaps are accounted for using the accrual method, with an
     adjustment to interest expense in the income statement.  The effects of
     swap positions are included in financing activities in the Statement of
     Cash Flows.  Interest receivable or payable under the swap contracts is
     included in Receivables or Accounts Payable.  Unrealized gains and losses
     on the swaps are not recognized in the balance sheet.  Realized gains and
     losses from disposition or settlement of swap contracts are deferred on the
     balance sheet and amortized to interest expense over the appropriate
     period.

     If the hedged item is settled or terminated, deferred and/or unrecognized
     gains or losses on the hedging instrument on that date are recognized as an
     adjustment to the gain or loss on disposition or termination of the related
     hedged item.  Future accruals on the swap and subsequent gains and losses
     on the swap or forward contract are included in income in the period they
     occur.

     15.  Recent Accounting Pronouncements
     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
     Income," which is effective for years beginning after December 15, 1997.
     This new standard requires entities presenting a complete set of financial
     statements to include details of comprehensive income.  Comprehensive
     income consists of net income or loss for the current period and income,
     expenses, gains and losses that bypass the income statement and are
     reported directly in a separate component of equity.  The effect of
     adopting this new standard is not expected to have a material impact
     on.financial statement presentation.

     In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
     an Enterprise and Related Information," which is effective for all periods
     beginning after December 15, 1997.  SFAS No. 131 requires that public
     business enterprises report certain information about operating segments
     in complete sets of financial statements of the enterprise and in condensed
     financial statements of interim periods issued to shareholders.  It also
     requires that public business enterprises report certain information about
     their products and services, the geographic areas in which they operate,
     and their major customers.

     Note B - Acquisition

     In December 1997, the Company acquired the common stock of National ICEE
     Corporation.  National ICEE Corporation, with annual sales of approximately
     $40 million, markets and distributes frozen carbonated beverages primarily
     in the eastern half of the United States.  The Company incurred
     approximately $50 million of debt to complete the acquisition.  The
     following are the unaudited pro forma results of operations for the fiscal
     years 1998, 1997 and 1996 assuming the above had occurred at the beginning
     of that fiscal year:
 
                                          1998           1997           1996
     Sales                          $268,390,000   $259,952,000   $222,964,000
     Net Earnings                    $11,346,000     $8,645,000     $7,036,000
     Earnings per.  diluted share          $1.21           $.96           $.78

     In January 1997, the Company acquired the assets of Mama Tish's
     International Foods by assuming certain of its liabilities.  Mama Tish's is
     a manufacturer and distributor of Italian ices, sorbets and other frozen
     juice products.

     In November 1996, the Company acquired all of the common stock of
     Pretzels, Inc. for cash.  Trading as TEXAS TWIST, Pretzels, Inc. is a soft
     pretzel manufacturer selling to both the food service and retail
     supermarket industries.

     In October 1996, the Company acquired the assets of Bakers Best Snack Food
     Corp. for cash.  Bakers Best is a manufacturer of soft pretzels selling to
     both the food service and retail supermarket industries.

     The acquisitions were accounted for under the purchase method of
     accounting, and the operations are included in the consolidated financial
     statements from the respective acquisition dates.

     Note C - Credit Arrangements

     To fund the acquisition of National ICEE Corporation in December 1997, and
     to retire most of its debt, the Company incurred the following debt:

     $40,000,000 unsecured term note, at an interest rate of 6.61% fixed through
     swap agreements, with 60 monthly principal payments of $666,667 plus
     interest beginning January 8, 1998.  At September 26, 1998, $8,000,000 of
     the note was .classified under current maturities of long-term debt.  At
     September 26,1998, the principal balance of the note was $34,000,000.  (See
     Note H.)

     $10,000,000 borrowing under a $30,000,000 unsecured general-purpose bank
     line of credit.  Interest payments on the balance borrowed under the line
     are due monthly.  The interest rate on the outstanding borrowings under
     the line was 6.54% at September 26, 1998.  Borrowings under the credit line
     were $16,000,000 at September 26, 1998.  (See Note H.)

     Note D - Investment Securities

     The Company classifies its investments in securities in one of three
     categories: held to maturity, trading and available for sale.  Debt
     securities that the Company has the positive intent and ability to hold to
     maturity are classified as held to maturity and are reported at amortized
     cost.  As the Company does not engage in securities trading, the balance of
     its debt securities and any equity securities are classified as available
     for sale.  Net unrealized gains and losses on such securities, net of
     income tax, are reported as a separate component of stockholders' equity
     and excluded from the determination.of net income.

     Proceeds from sales of securities classified as available for sale were
     $495,000, $1,710,000 and $7,133,000 for fiscal years 1998, 1997 and 1996,
     respectively.  The Company uses the specific identification method to
     determine the cost of securities sold.  No material gains or losses were
     realized.on sales of investment securities.

     The amortized cost, gross unrealized gains and losses, and fair market
     values of the Company's investment securities held to maturity at September
     26, 1998 are summarized.as follows:

                                       Gross        Gross           Fair     
                       Amortized    Unrealized    Unrealized        Market
                           Cost        Gains        Losses          Value
     Corporate debt.  
       securities     $  947,000    $  38,000    $       -      $   985,000
     Municipal
       government 
       securities      1,680,000       28,000            -        1,708,000
     Other debt.  
       securities        500,000          -              -          500,000
                      $3,127,000    $  66,000    $       -      $ 3,193,000

     The amortized cost, gross unrealized gains and losses, and fair market
     values of the Company's investment securities available for sale and held
     to maturity at September 27, 1997 are summarized as follows:

                                       Gross          Gross         Fair     
                       Amortized    Unrealized      Unrealized      Market   
                           Cost        Gains          Losses        Value
     Available for sale
       Corporate debt
        securities    $  495,000    $     -      $       -       $  495,000
     Held to maturity
       Corporate debt
        securities    $  970,000    $  19,000    $       -       $  989,000
       Municipal
        government
        securities     1,870,000        3,000         (8,000)     1,865,000
       Other debt
        securities       500,000          -              -          500,000
                      $3,340,000    $  22,0000   $    (8,000)    $3,354,000

     The following table lists the maturities of investment securities
     classified as held to maturity at September 26, 1998:

                                              Amortized      Fair Market   
                                                  Cost           Value
     Due after one year.
       through five years                  $   3,127,000   $   3,193,000
     Due after five years                            -               -
                                           $   3,127,000   $   3,193,000

     Note E - Inventories

     Inventories consist of the following:
                                            September 26,   September 27,
                                                  1998            1997
     Finished goods                        $   8,054,000   $   7,108,000
     Raw materials                             2,190,000       1,789,000
     Packaging materials                       2,239,000       2,262,000
     Equipment parts and other                 3,964,000       2,376,000
                                           $  16,447,000   $  13,535,000

     Note F - Property, Plant and Equipment

     Property, plant and equipment consist of the following:
                                 September 26,  September 27,     Estimated
                                       1998           1997       Useful Lives
     Land                        $    839,000   $    819,000          -
     Buildings                      5,432,000      5,340,000    15-39.5 years
     Plant machinery
       and equipment               60,275,000     51,891,000       5-10 years
     Marketing.  equipment        126,653,000     90,988,000          5 years
     Transportation equipment       2,149,000      1,856,000          5 years
     Office equipment               5,446,000      4,792,000        3-5 years
     Improvements                  10,616,000      7,837,000       5-20 years
     Construction in progress       1,154,000        825,000          -
                                 $212,564,000   $164,348,000

     Note G - Accrued Liabilities
     Included in accrued liabilities is accrued compensation of $4,297,000 and
     $3,275,000 as of September 26, 1998 and September 27, 1997, respectively.

     Note H - Long-Term Debt
     Long-term debt consists of the following:
                                            September 26,  September 27,
                                                  1998           1997
     $40,000,000 unsecured term note,
     with 60 monthly principal payments
     of $666,667 plus 6.61% interest
     beginning January 8, 1998 (subject
     to financial covenants)                $ 34,000,000   $        -
     $30,000,000 unsecured general-
     purpose bank credit line, with
     interest rate tied to LIBOR with 
     interest payments due monthly
     (subject to financial covenants)         16,000,000            -
     7.25% redeemable economic 
     development revenue bonds payable
     December 2005; interest payable
     semiannually (subject to financial
     covenants)                                5,000,000      5,000,000
     Other                                     1,622,000         44,000
                                              56,622,000      5,044,000
     Less current maturities                   8,423,000         16,000
                                            $ 48,199,000   $  5,028,000

     Annual principal payments of long-term debt as of September 26, 1998 are as
     follows:

          1999                 $    8,423,000
          2000                      8,382,000
          2001                     24,317,000
          2002                      8,131,000
          2003                      2,369,000
          2004 and thereafter       5,000,000
                               $   56,622,000

     Note I - Deferred Income

     1.  Sale of ICEE Operations in Hawaii
     Deferred income consists of the Company's unrecognized gain on the sale of
     its ICEE operations in Hawaii to the former President of ICEE-USA Corp. in
     July 1994 for $1,100,000 in cash.  Under the terms of the sale, the Company
     has guaranteed the payment of a bank note by the purchaser, ICEE of Hawaii,
     Inc., through the issuance of a letter of credit.  The Company's guarantee
     is collateralized by the assets of ICEE of Hawaii, Inc.  The Company
     recognizes gain on the sale as the principal due on the bank note is
     reduced through payments by ICEE of Hawaii, Inc.  The Company recognized
     gains of $94,000, $76,000 and $83,000 for the fiscal years ended 1998, 1997
     and 1996, respectively.

     2.  Service Contracts
     During the years ended September 26, 1998 and September 27,1997, the 
     Company sold $509,000 and $296,000, respectively, of service contracts 
     related to its frozen carbonated beverage machines.  At September26,1998, 
     deferred income on service contracts was $199,000, of which $173,000 is 
     reflected as short-term and included in accrued liabilities on the 
     consolidated balance sheet.  Service contract income of $578,000 and 
     $179,000 was recognized for the fiscal years ended 1998 and 1997, 
     respectively.

     Note J - Income Taxes
     Income tax expense is as follows:
                                               Fiscal year ended
                                  September 26,   September 27,   September 28,
                                        1998            1997         1996
     Current (Benefit)
       U.S. Federal                $ 5,389,000     $ 3,381,000     $ 4,538,000
       Foreign                          38,000          40,000         (31,000)
       State                           525,000         394,000         293,000
                                     5,952,000       3,815,000       4,800,000
     Deferred (Benefit)
       U.S. Federal                    913,000          (3,000)     (1,552,000)
       Foreign                           7,000         (23,000)            _
       State                            87,000           3,000         (48,000)
                                     1,007,000         (23,000)     (1,600,000)
                                   $ 6,959,000     $ 3,792,000     $ 3,200,000

     The provisions for income taxes differ from the amounts computed by
     applying the federal income tax rate of approximately 34% to earnings
     before income taxes for the following reasons:

                                                Fiscal year ended
                                    September 26,  September 27,  September 28,
                                        1998           1997             1996
     Income taxes at
       statutory rates             $ 6,395,000     $ 4,063,000      $ 3,075,000
     Increase (decrease)
       in taxes resulting
       from:
       State income taxes,
         net of federal income 
         tax benefit                   404,000         267,000          193,000
       Nontaxable
         income                        (55,000)       (120,000)        (343,000)
       Other net                       215,000        (418,000)         275,000
                                   $ 6,959,000     $ 3,792,000      $ 3,200,000

     Deferred tax assets and liabilities consist of the following:

                                                  September 26,    September 27,
                                                        1998             1997
     Deferred tax assets
       Vacation accrual                            $   298,000      $   296,000
       Insurance accrual                               515,000          404,000
       Deferred income                                 206,000          272,000
       Other, net                                      458,000          537,000
                                                     1,477,000        1,509,000

     Deferred tax liabilities
       Depreciation of property
         and equipment                               5,628,000        4,237,000
       Other, net                                      236,000          652,000
                                                     5,864,000        4,889,000
                                                   $ 4,387,000      $ 3,380,000

     Note K - Earnings Per Share
     The Company adopted the provisions of SFAS No. 128, "Earnings Per Share"
     ("EPS"), which eliminates primary and fully diluted EPS and requires
     presentation of basic and diluted EPS in conjunction with the disclosure of
     the methodology used in computing such EPS.  Basic EPS excludes dilution
     and is computed by dividing income available to common shareholders by the
     weighted-average common shares outstanding during the period.  Diluted EPS
     takes into account the potential dilution that could occur if securities or
     other contracts to issue common stock were exercised and converted into
     common stock.  EPS calculations for 1997 and 1996 have been restated to
     reflect the adoption of SFAS No. 128.

     The Company's calculation of EPS in accordance with SFAS No. 128, "Earnings
     Per Share," is as follows:

                              Fiscal Year Ended September 26, 1998
                                 Income       Shares     Per Share.     
                              (Numerator)  (Denominator)   Amount
     Earnings Per
       Basic Share
     Net Income
       available to common
       stockholders            $11,850,000   8,947,000     $1.32
     Effect of
       Dilutive Securities
       Options                         -       421,000      (.06)
     Earnings Per
       Diluted Share
     Net Income available
       to common
       stockholders plus
       assumed conversions     $11,850,000    9,368,000    $1.26

                              Fiscal Year Ended September 27, 1997
                                 Income       Shares     Per Share.     
                              (Numerator)  (Denominator)   Amount
     Earnings Per
       Basic Share
     Net Income available
       to common
       stockholders            $ 8,159,000    8,781,000     $.93
     Effect of 
       Dilutive Securities
     Options                           -        204,000     (.02)
     Earnings Per
       Diluted Share
     Net Income available to
       common stockholders
       plus assumed 
       conversions             $ 8,159,000    8,985,000     $.91

                              Fiscal Year Ended September 28, 1996
                                 Income       Shares     Per Share
                              (Numerator)  (Denominator)   Amount
     Earnings Per 
       Basic Share
     Net Income available
       to common
       stockholders            $ 5,843,000    8,940,000      $.65
     Effect of
       Dilutive Securities
     Options                           -         76,000         _
     Earnings Per 
       Diluted Share
     Net Income available to
       common stockholders 
       plus assumed 
       conversions             $ 5,843,000    9,016,000      $.65

     Note L - Commitments
     1.  Lease Commitments
     The following is a summary of approximate future minimum rental commitments
     for noncancelable operating leases with terms of more than one year as of
     September 26, 1998:

                         Plants and
                           Offices            Equipment             Total
     1999               $ 3,727,000      $    3,153,000      $    6,880,000
     2000                 3,117,000           2,595,000           5,712,000
     2001                 2,548,000           1,728,000           4,276,000
     2002                 2,332,000             479,000           2,811,000
     2003                 2,029,000             223,000           2,252,000
     2004 and thereafter 11,256,000             103,000          11,359,000
                       $ 25,009,000      $    8,281,000      $   33,290,000

     Total rent expense was $7,766,000, $6,002,000 and $5,748,000 for fiscal
     years 1998, 1997 and 1996, respectively.

     2.  Other Commitments
     The Company is a party to litigation which management currently believes
     will not have a material adverse effect on the Company's financial
     condition or results of operations.

     Note M - Capital Stock
     Under share repurchase programs authorized by the Board of Directors,
     712,000 shares remain to be repurchased.

     Note N - Stock Options
     The Company has a Stock Option Plan (the "Plan").  Pursuant to the Plan,
     stock options may be granted to officers and key employees of the Company
     which qualify as incentive stock options as well as stock options which are
     nonqualified.  The exercise price of incentive stock options is at least
     the fair market value of the common stock on the date of grant.  The
     exercise price for nonqualified options is determined by a committee of the
     Board of Directors.  The options are generally exercisable after three 
     years and expire no later than ten years from date of grant.  There were
     1,500,000 shares reserved under the Plan; options for 472,000 shares remain
     unissued as of September 26, 1998.

     The Company has a nonqualified stock option plan for nonemployee directors
     and the Chief Executive Officer of the Company whereby a total of 340,000
     shares of common stock may be issued.  Under this plan, each nonemployee
     director is granted options to purchase 3,000 shares of common stock, and
     the Chief Executive Officer is granted options to purchase 25,000 shares
     annually.  The option price is equal to the fair market value of the common
     stock at the date of grant, and the options expire ten years after date of
     grant. Other nonqualified options have been issued to the Chief Executive
     Officer, directors and certain employees.

     The Company has adopted only the disclosure provisions of SFAS No. 123,
     "Accounting for Stock-Based Compensation."  It applies APB Opinion No. 25
     and related interpretations in accounting for its plans and does not
     recognize compensation expense for its stock-based compensation plans.  Had
     compensation cost for the plans been determined based on the fair value of
     the options at the grant date consistent with SFAS No. 123, the Company's
     net earnings and earnings per common share would have been reduced to the
     pro forma amounts indicated below:

                                            Fiscal year ended
                               September 26,    September 27,    September 28,
                                     1998             1997             1996
     Net Earnings: 
       As reported             $ 11,850,000     $  8,159,000     $  5,843,000
       Pro forma                 11,112,000        7,697,000        5,786,000
     Earnings Per 
       Common Share:
        As reported                   $1.26             $.91             $.65
        Pro forma                      1.18              .86              .64

     These pro forma amounts may not be representative of future disclosures
     because they do not take into effect pro forma compensation expense related
     to grants before October 1, 1995.  The fair value of these options is
     estimated on the date of grant using the Black-Scholes option pricing model
     with the following weighted-average assumptions for grants in fiscal 1998,
     1997 and 1996, respectively; expected volatility of 30% for all years;
     risk-free interest rates of 5.12%, 6.71% and 6.45%; and expected lives
     ranging between 4.5 and 10 years for all years.

     A summary of the status of the Company's option plans as of fiscal years
     1998, 1997 and 1996 and the changes during the years ended on those dates
     is represented below:

                              Incentive          Nonqualified  
                             Stock Options       Stock Options
                            Stock   Weighted-   Stock   Weighted-
                           Options  Average    Options   Average  
                            Out-    Exercise     Out-   Exercise 
                           standing  Price     standing  Price
     Balance,
      October 1, 1995      642,812   $11.42    326,000    $ 9.88
       Granted             292,826   $10.00     34,000    $12.25     
       Exercised           (21,000)  $ 8.71    (45,000)   $ 2.50     
       Cancelled          (169,145)  $12.03        -         -
     Balance,
      September 28, 1996   745,493   $10.97    315,000    $11.27
       Granted             267,743   $11.53     34,000    $12.75     
       Exercised           (84,200)  $ 9.38        -         -     
       Cancelled           (52,650)  $11.15        -         -
     Balance,
      September 27, 1997   876,386   $11.26    349,000    $11.41
       Granted             223,396   $15.77     34,000    $19.25     
       Exercised          (150,949)  $12.56    (22,500)   $ 6.63     
       Cancelled           (52,500)  $11.40        -         -
     Balance,
      September 26, 1998   896,333   $12.18    360,500    $12.41
     Exercisable Options,
      September 26, 1998   274,113             326,500

     The weighted-average fair value of incentive options granted during fiscal
     years ended September 26, 1998, September27, 1997 and September 28, 1996 
     was $5.31, $4.24 and $3.62, respectively.  The weighted-average fair 
     value of nonqualified stock options granted during fiscal years ended 
     September 26, 1998, September 27, 1997 and September 28, 1996 was 
     $10.56, $5.97 and $5.70, respectively.

     The following table summarizes information.about incentive stock options
     outstanding at September 26, 1998:

                            Options Outstanding         Options Exercisable
                         Number   Weighted-               Number   
                     Outstanding    Average   Weighted- Exercisable Weighted-
                           at     Remaining    Average      at       Average
       Range of        September  Contractual  Exercise  September  Exercise  
     Exercise Prices    26, 1998     Life        Price   26, 1998     Price
     $ 7.25-$10.75       202,981   2.6 years    $ 9.43     34,900    $  7.86
     $11.00-$16.38       693,352   3.2 years    $12.98    239,213     $11.82
                         896,333                          274,113

     The following table summarizes information about nonqualified options
     outstanding at September 26, 1998:

                            Options Outstanding          Options Exercisable
                         Number   Weighted-               Number   
                     Outstanding    Average   Weighted- Exercisable Weighted-
                           at     Remaining    Average       at      Average
       Range of        September  Contractual  Exercise  September  Exercise  
     Exercise Prices    26, 1998     Life        Price   26, 1998     Price
     $ 7.25-$10.75        44,500   3.1 years    $ 9.92     44,500     $ 9.92
     $11.00-$13.63       282,000   4.7 years    $11.98    282,000     $11.98
     $19.25               34,000   9.6 years    $19.25        -          -
                         360,500                          326,500

     Note O - 401(k) Profit-Sharing Plan
     The Company maintains a 401(k) profit-sharing plan for its employees.
     Under this plan, the Company may make discretionary profit-sharing and
     matching 401(k) contributions.  Contributions of $512,000, $404,000 and
     $313,000 were made in fiscal years 1998, 1997 and 1996, respectively.

     Note P - Major Customer Information
     One customer accounted for 10% of the Company's sales in each of the
     fiscal years 1998 and 1997.

     Note Q - Cash Flow Information
     The following is supplemental cash flow information:
                                             Fiscal year ended
                                September 26,   September 27,   September 28,
                                     1998            1997            1996
     Cash paid for:
       Interest                 $  2,870,000       $ 431,000      $  367,000
       Income taxes                6,461,000       4,469,000       3,077,000

     Report of Independent Certified Public Accountants

     Shareholders and Board of Directors
     J & J SNACK FOODS CORP.

     We have audited the accompanying consolidated balance sheets of J&J Snack
     Foods Corp. and Subsidiaries as of September 26, 1998 and September 27,
     1997, and the related consolidated statements of earnings, changes in
     stockholders' equity and cash flows for each of the fiscal years in the
     three-year period ended September 26, 1998.  These financial statements are
     the responsibility of the Company's management.  Our responsibility is to
     express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
     standards.  Those standards require that we plan and perform the audit to
     obtain reasonable assurance about whether the financial statements are free
     of material misstatement.  An audit includes examining, on a test basis,
     evidence supporting the amounts and disclosures in the financial
     statements.  An audit also includes assessing the accounting principles
     used and significant estimates made by management, as well as evaluating
     the overall financial statement presentation.  We believe that our audits
     provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
     in all material respects, the consolidated financial position of J&J Snack
     Foods Corp. and Subsidiaries as of September 26, 1998 and September 27,
     1997, and the consolidated results of their operations and their
     consolidated cash flows for each of the fiscal years in the three-year
     period ended September 26, 1998 in conformity with generally accepted
     accounting principles.

     Philadelphia, Pennsylvania
     November 3, 1998

     Corporate Information

     Directors

     Gerald B. Shreiber
     Chairman of the Board, 
     President and Chief Executive Officer

     Dennis G. Moore
     Senior Vice President, Chief Financial Officer,
     Secretary and Treasurer

     Robert M. Radano 
     Senior Vice President and
     Chief Operating Officer

     Stephen N. Frankel
     President,
     Stephen N. Frankel Realtor, Inc.
     
     Peter G. Stanley
     Consultant
     
     Leonard M. Lodish, Ph.D.
     Samuel R. Harrell Professor, 
     Marketing Department of the
     Wharton School,
     University of Pennsylvania

     Officers

     Gerald B. Shreiber
     Chairman of the Board,
     President and Chief Executive Officer

     Dennis G. Moore
     Senior Vice President, 
     Chief Financial Officer,
     Secretary and Treasurer

     Robert M. Radano 
     Senior Vice President and
     Chief Operating Officer
     
     Robyn Shreiber Cook
     Senior Vice President, West

     Paul L. Hirschman
     Vice President, Information Systems

     Officers of Subsidiary Companies
     
     J&J SNACK FOODS CORP. OF NEW JERSEY
     
     John Duckett
     Vice President, Service & Assembly

     Anthony P. Harrison II
     Vice President, Quality Control and Research & Development

     John P. Heim
     Vice President, Engineering & Manufacturing
     
     Michael Karaban
     Vice President, Marketing

     H. Robert Long
     Vice President, Distribution

     Craig S. Parker
     Vice President, School Food Service & Branded Concepts

     Milton L. Segal
     Vice President, Purchasing

     Steven J. Taylor
     Vice President, Sales

     J&J SNACK FOODS CORP. OF CALIFORNIA

     Don Smith
     Vice President, Research and Development

     MIA PRODUCTS
     T.J. Couzens
     Vice President/General Manager

     THE ICEE COMPANY

     Dan Fachner
     President of The ICEE Company

     Kent Galloway
     Vice President and Chief Financial Officer

     Joe Boulanger
     Vice President/General Manager 
     Western Zone

     Lou Fiorentino
     Vice President/General Manager 
     Eastern Zone

     Rick Naylor
     Vice President/General Manager 
     Central Zone

     Rod Sexton
     Vice President of Service Operations

     ICEE DE MEXICO, S.A. DE C.V.

     Andres Gonzalez
     Vice President

     PRETZELS, INC.
     Gary Powell
     President

     Quarterly Common Stock Data

                           Market Price
     Fiscal 1998          High       Low
     1st Quarter         17 3/8     13 1/2
     2nd Quarter         19 1/2     12 1/2
     3rd Quarter         20 3/4     17 7/8
     4th Quarter         22 1/4     14 3/4

     Fiscal 1997
     1st Quarter         14 1/8     10 5/8
     2nd Quarter         14 1/8     10 1/2
     3rd Quarter         16 1/8     11 1/4
     4th Quarter         17 1/4     14 1/2

     Stock Listing
     The common stock of J&J Snack Foods Corp. is traded on the 
     over-the-counter market on the NASDAQ National Market System 
     with the symbol JJSF.

     Transfer Agent and Registrar
     American Stock Transfer & Trust Company
     6201 15th Avenue
     Brooklyn, NY 11219

     Independent Accountants
     Grant Thornton LLP

     Counsel
     Blank, Rome, Comisky & McCauley LLP

     Annual Meeting
     The Annual Meeting of Shareholders is scheduled for 
     Thursday, February 11, 1999 at 10:00 a.m. at the Hilton at 
     Cherry Hill, 2349 W. Marlton Pike,
     Cherry Hill, New Jersey.

     Form 10-K
     Copies of the Company's Annual Report to the Securities and Exchange
     Commission on Form 10-K may be obtained without charge by writing to:
     J&J Snack Foods Corp..6000 Central Highway.Pennsauken, NJ  08109
     Attention: Dennis G. Moore

     Web Site
     www.jjsnack.com

          EXHIBIT 22.1 - SUBSIDIARIES OF J & J SNACK FOODS CORP.

                                                         Place of
                                                        Incorporation

                                                                    

              J & J Snack Foods Investment Corp.         Delaware

              The ICEE Company                           Delaware

              J & J Snack Foods Corp. of New Jersey      New Jersey

              J & J Snack Foods Corp. of California      California

              J & J Snack Foods Corp./Midwest            Illinois

              J & J Snack Foods Corp./Mia                Pennsylvania

              J & J Snack Foods Corp. of Pennsylvania    Pennsylvania

              J & J Snack Foods Sales Corp.              New Jersey

              J & J Snack Foods Sales Corp. of Texas     Texas

              J & J Snack Foods Transport Corp.          New Jersey

              Trotter Soft Pretzels, Inc.                Pennsylvania

              ICEE-Canada, Inc.                          Canada

              ICEE de Mexico, S.A. De C.V.               Mexico

              J & J Restaurant Group, Inc.               Pennsylvania

              Mazzone Enterprises, Inc.                  Illinois

              Bakers Best Snack Food Corp.               Pennsylvania

              Pretzels, Inc.                             Texas         

                                           148

          EXHIBIT 24.1

                   CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

              We have issued our reports dated November 3, 1998 accompanying

          the consolidated financial statements and schedules incorporated by

          reference or included in the Annual Report of J & J Snack Foods Corp.

          and Subsidiaries on Form 10-K for the year ended September 26, 1998.

          We hereby consent to the incorporation by reference of said reports

          in the Registration Statement of J & J Snack Foods Corp. and

          Subsidiaries on Forms S-8 (File No. 333-03833, effective May 16,

          1996, File No. 33-87532, effective December 16, 1994 and File No.

          33-50036, effective July 24, 1992).

                                            GRANT THORNTON LLP

          Philadelphia, Pennsylvania
          December 21, 1998

                                            149

  

 5
 1,000

                   12-MOS
                          SEP-26-1998
                               SEP-26-1998
                                            3204
                                         0
                                    34985
                                     (597)
                                      16447
                                 55143
                                          212564
                                (112444)
                                  213261
                            40559
                                          48199
                                0
                                          0
                                         39120
                                       80561
                    213261
                                         262390
                                262390
                                           126812
                                   115117
                                     0
                                     0
                                3033
                                  18809
                                      6959
                              11850
                                       0
                                      0
                                            0
                                     11850
                                     1.32
                                     1.26

  

 5
 1,000

                   12-MOS
                          SEP-27-1997
                               SEP-27-1997
                                            1401
                                         0
                                    25850
                                     (392)
                                      13535
                                 41247
                                          164348
                                 (97126)
                                  136827
                            21983
                                           5028
                                0
                                          0
                                         36908
                                       68996
                    136827
                                         220318
                                220318
                                           112159
                                    96519
                                     0
                                     0
                                 431
                                  11951
                                      3792
                               8159
                                       0
                                      0
                                            0
                                      8159
                                      .93
                                      .91

  

 5
 1,000

                   12-MOS
                          SEP-28-1996
                               SEP-28-1996
                                           10547
                                      1217
                                    18459
                                     (257)
                                      11276
                                 42222
                                          142100
                                 (83890)
                                  123128
                            17440
                                           5010
                                0
                                          0
                                         35818
                                       60890
                    123128
                                         186018
                                186018
                                            94000
                                    84070
                                     0
                                     0
                                 365
                                   9043
                                      3200
                               5843
                                       0
                                      0
                                            0
                                      5843
                                      .65
                                      .65