<PAGE>

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


                            REFUNDING LOAN AGREEMENT

                                     between

            BUSINESS FINANCE AUTHORITY OF THE STATE OF NEW HAMPSHIRE

                                       and

                                 CROWN PAPER CO.





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

                                   $17,955,000
                   Pollution Control and Solid Waste Disposal
                             Refunding Revenue Bonds
                            (Crown Paper Co. Project)
                                   Series 1996

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


                                      Dated

                                      as of

                                  July 1, 1996


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<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I  DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
     Section 1.1.   Use of Defined Terms . . . . . . . . . . . . . . . . . .  1
     Section 1.2.   Definitions. . . . . . . . . . . . . . . . . . . . . . .  1
     Section 1.3.   Interpretation . . . . . . . . . . . . . . . . . . . . .  6
     Section 1.4.   Captions and Headings. . . . . . . . . . . . . . . . . .  6

ARTICLE II  REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . .  7
     Section 2.1.   Representations and Covenants of the Company . . . . . .  7

ARTICLE III  ISSUANCE OF THE SERIES 1996 REFUNDING BONDS . . . . . . . . . .  9
     Section 3.1.   Issuance of the Series 1996 Refunding Bonds;
                     Application of Proceeds . . . . . . . . . . . . . . . .  9
     Section 3.2.   Application of Series 1996 Refunding Bond Proceeds;
                     Company Required to Pay Costs in Event Refunding
                     Project Fund Insufficient . . . . . . . . . . . . . . .  9
     Section 3.3.   [Reserved] . . . . . . . . . . . . . . . . . . . . . . .  9
     Section 3.4.   Investment of Fund Moneys. . . . . . . . . . . . . . . .  9
     Section 3.5.   Rebate Fund. . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE IV  LOAN BY ISSUER; REPAYMENT OF THE LOAN;
     LOAN PAYMENTS AND ADDITIONAL PAYMENTS . . . . . . . . . . . . . . . . . 11
     Section 4.1.   Loan Repayment; Delivery of Notes. . . . . . . . . . . . 11
     Section 4.2.   Additional Payments. . . . . . . . . . . . . . . . . . . 12
     Section 4.3.   Place of Payments. . . . . . . . . . . . . . . . . . . . 13
     Section 4.4.   Obligations Unconditional. . . . . . . . . . . . . . . . 13
     Section 4.5.   Assignment of Agreement and Revenues; Binding Effect
                     of Indenture on Company; Financing Statements . . . . . 13
     Section 4.6.   Deposit of Moneys in Bond Fund; Moneys for Redemption. . 14
     Section 4.7.   Assignment by Company. . . . . . . . . . . . . . . . . . 14

ARTICLE V  ADDITIONAL AGREEMENTS AND COVENANTS . . . . . . . . . . . . . . . 16
     Section 5.1.   Right of Inspection. . . . . . . . . . . . . . . . . . . 16
     Section 5.2.   Sale, Lease or Grant of Use by Company . . . . . . . . . 16
     Section 5.3.   Indemnification. . . . . . . . . . . . . . . . . . . . . 16
     Section 5.4.   Company Not to Adversely Affect Tax Exempt Status of
                     Bonds' Interest . . . . . . . . . . . . . . . . . . . . 17
     Section 5.5.   Company to Maintain its Existence; Sales of Assets or
                     Mergers . . . . . . . . . . . . . . . . . . . . . . . . 17
     Section 5.6.   Books and Records; Financial Statements. . . . . . . . . 18
     Section 5.7.   Maintenance of Project by Company. . . . . . . . . . . . 18
     Section 5.8.   Insurance Required . . . . . . . . . . . . . . . . . . . 19
     Section 5.9.   Land Use . . . . . . . . . . . . . . . . . . . . . . . . 19


                                        i
<PAGE>

     Section 5.10.  Current Expenses . . . . . . . . . . . . . . . . . . . . 19
     Section 5.11.  Covenant with respect to Mortgage. . . . . . . . . . . . 19

ARTICLE VI  REDEMPTION OF SERIES 1996 REFUNDING BONDS. . . . . . . . . . . . 21
     Section 6.1.   Optional Redemption. . . . . . . . . . . . . . . . . . . 21
     Section 6.2.   Extraordinary Optional Redemption. . . . . . . . . . . . 21
     Section 6.3.   Mandatory Redemption in Event of a Determination of
                     Taxability. . . . . . . . . . . . . . . . . . . . . . . 23
     Section 6.4.   Actions by Issuer. . . . . . . . . . . . . . . . . . . . 23

ARTICLE VII  EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . 24
     Section 7.1.   Events of Default. . . . . . . . . . . . . . . . . . . . 24
     Section 7.2.   Remedies on Default. . . . . . . . . . . . . . . . . . . 25
     Section 7.3.   No Remedy Exclusive. . . . . . . . . . . . . . . . . . . 26
     Section 7.4.   Agreement to Pay Attorneys' Fees and Expenses. . . . . . 27
     Section 7.5.   No Waiver. . . . . . . . . . . . . . . . . . . . . . . . 27
     Section 7.6.   Notice of Default. . . . . . . . . . . . . . . . . . . . 27

ARTICLE VIII  MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 28
     Section 8.1.   Term of Agreement. . . . . . . . . . . . . . . . . . . . 28
     Section 8.2.   Amounts Remaining in Funds . . . . . . . . . . . . . . . 28
     Section 8.3.   Notices. . . . . . . . . . . . . . . . . . . . . . . . . 28
     Section 8.4.   Extent of Covenants of the Issuer; No Personal
                     Liability . . . . . . . . . . . . . . . . . . . . . . . 28
     Section 8.5.   Binding Effect . . . . . . . . . . . . . . . . . . . . . 29
     Section 8.6.   Amendments and Supplements . . . . . . . . . . . . . . . 29
     Section 8.7.   Execution Counterparts . . . . . . . . . . . . . . . . . 29
     Section 8.8.   Severability . . . . . . . . . . . . . . . . . . . . . . 29
     Section 8.9.   Governing Law. . . . . . . . . . . . . . . . . . . . . . 29
     Section 8.10.  Further Assurances and Corrective Instruments. . . . . . 29
     Section 8.11.  Issuer and Company Representative. . . . . . . . . . . . 29
     Section 8.12.  Matters to be Considered by the Issuer . . . . . . . . . 30

EXHIBIT A  FORM OF NOTE. . . . . . . . . . . . . . . . . . . . . . . . . . .A-1

EXHIBIT B  PROJECT FACILITIES. . . . . . . . . . . . . . . . . . . . . . . .B-1


                                       ii
<PAGE>

                            REFUNDING LOAN AGREEMENT

     THIS REFUNDING LOAN AGREEMENT (the "Agreement") is made and entered into as
of July 1, 1996 between the BUSINESS FINANCE AUTHORITY OF THE STATE OF NEW
HAMPSHIRE, a body corporate and politic as an agency of the State of New
Hampshire (the "Issuer"), and CROWN PAPER CO. (the "Company"), a corporation for
profit duly organized and validly existing under the laws of the Commonwealth of
Virginia, under the following circumstances summarized in the following recitals
(the capitalized terms not defined in the recitals being used therein as defined
in Article I hereof):

     A.   The Company has requested, and the Issuer has agreed, to issue revenue
bonds for the purpose of providing funds for the refinancing of the construction
and acquisition of the Project.

     B.   Pursuant to such request, the Issuer has determined to issue and sell
the Series 1996 Refunding Bonds to assist in the refinancing of the Project
undertaken by the Company.

     NOW THEREFORE, in consideration of the premises and the mutual
representations and agreements hereinafter contained, the Issuer and the Company
agree as follows (provided that any obligation of the Issuer created by or
arising out of this Agreement shall never constitute an indebtedness of the
Issuer or give rise to any pecuniary liability of the Issuer but shall be
payable solely out of Revenues):


                                    ARTICLE I

                                   DEFINITIONS


     Section 1.1.  USE OF DEFINED TERMS.  In addition to the words and terms
defined elsewhere in this Agreement or by reference to the Indenture or to
another document, the words and terms set forth in Section 1.2 hereof shall have
the meanings set forth therein unless the context or use clearly indicates
another meaning or intent.  Such definitions shall be equally applicable to both
the singular and plural forms of any of the words and terms defined therein.
Unless otherwise defined herein, any terms defined in the Indenture shall have
the same meaning herein.

     Section 1.2.  DEFINITIONS.  As used herein:

     "Act" means Chapter 162-I of the New Hampshire Revised Statutes Annotated,
as amended and supplemented.

     "Additional Bonds" means the Additional Bonds as defined in the Indenture.
<PAGE>

     "Additional Notes" means any nonnegotiable promissory note or notes, in
addition to the Series 1996 Refunding Note, delivered by the Company to the
Trustee in connection with the issuance of Additional Bonds, as provided herein.

     "Additional Payments" means the amounts required to be paid by the Company
pursuant to the provisions of Section 4.2 hereof.

     "Agreement" means this Refunding Loan Agreement as amended or supplemented
from time to time.

     "Authorized Company Representative" means the person at the time designated
to act on behalf of the Company by written certificate furnished to the Issuer
and the Trustee, containing the specimen signature of that person and signed on
behalf of the Company by any of its officers.  Such certificate may designate an
alternate or alternates.

     "Bond Fund" means the Bond Fund created in the Indenture.

     "Bond Resolution" means (a) when used with reference to the Series 1996
Refunding Bonds, the resolution providing for their issuance and approving this
Agreement, the Indenture and related matters; (b) when used with reference to an
issue of Additional Bonds, the resolution providing for the issuance of the
Series 1996 Refunding Bonds, to the extent applicable, and the resolution of the
Issuer providing for the issuance of the Additional Bonds and approving any
amendment or supplement to this Agreement, any Supplemental Indenture and
related matters; and (c) when used with reference to Bonds when Additional Bonds
are outstanding, the resolution providing for the issuance of the Series 1996
Refunding Bonds and the resolution of the Issuer providing for the issuance of
the then outstanding and the then to be issued Additional Bonds; in each case as
amended or supplemented from time to time.

     "Bond Service Charges" means, for any period or time, the principal of and
interest and premium, if any, due on the Bonds for that period or payable at
that time whether due at maturity, upon acceleration, redemption or otherwise.

     "Bonds" means the Series 1996 Refunding Bonds and any Additional Bonds.

     "Bond Year" means any annual period commencing on the anniversary date of
the original issuance and delivery of the Bonds, with the earliest Bond Year
commencing with that original date and the last Bond Year commencing on the
anniversary date of such original date preceding or falling on the final payment
in full of all outstanding Bonds of each series.

     "Change in Control" means, at any time after the date of original issuance
of the Bonds, the relinquishment by Holdings of its ownership of outstanding
shares of stock of the Company or, alternatively, the acquisition by any person
or group of persons (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934, as amended) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission


                                        2
<PAGE>

under said Act) of 40% or more of the outstanding shares of common stock of
Holdings; or, during any period of 12 consecutive calendar months, individuals
who were either (i) directors of Holdings on the first day of such period or
(ii) whose nomination or election was approved by a vote of at least a majority
of the directors then still in office who were directors of Holdings on the
first day of such period or who were theretofore elected or nominated in
accordance with this clause (ii), shall cease to constitute a majority of the
board of directors of Holdings.

     "Code" means the Internal Revenue Code of 1986, as amended, including, when
appropriate, the statutory predecessor of the Code, and all applicable
regulations (whether proposed, temporary or final) under that Code and the
statutory predecessor of the Code, and any official rulings and judicial
determinations under the foregoing applicable to the Bonds.

     "Company" means Crown Paper Co., a corporation duly organized and validly
existing under the laws of the Commonwealth of Virginia and duly authorized to
conduct business in the State of New Hampshire and having its principal office
in Oakland, California, and its lawful successors and assigns to the extent
permitted by this Agreement.

     "Computation Date" means the last day of each Bond Year and the date on
which the final payment in full of all outstanding Bonds of each series is made.

     "Determination of Taxability" means, with respect to the Series 1996
Refunding Bonds, receipt by the Company of written notice from Owner or former
Owner or the Trustee of a final determination by the Internal Revenue Service or
a court of competent jurisdiction that, as a result of a failure by the Company
to perform any of its agreements in this Agreement or the Refunding Loan
Agreement or the inaccuracy of any of its representations in this Agreement or
the Refunding Loan Agreement, the interest paid or to be paid on any Bond
(except to a "substantial user" of the Projects or a "related person" within the
meaning of Section 147(a) of the Code) is or was includable in the gross income
of the Bond's owner for federal income tax purposes.  No such determination will
be considered final unless the Owner or former Owner involved in the
determination gives the Company and the Trustee prompt written notice of the
commencement of the proceedings resulting in the determination and offers the
Company, subject to the Company's agreeing to pay all expenses of the
proceedings and to indemnify the Owner or former Owner against all liabilities
that might result from it, the opportunity to control the defense of the
proceedings and either the Company does not agree within thirty days to pay the
expenses, indemnify the Owner or former Owner and control the defense or the
Company exhausts or chooses not to exhaust available procedures to contest or
obtain review of the result of the proceedings.  As to any series of Additional
Bonds, any Determination of Taxability shall be as defined in the applicable
Supplemental Indenture.

     "Eligible Investments" means Eligible Investments as defined in the
Indenture.

     "Event of Default" means any of the events described as an Event of Default
in Section 7.1. hereof.


                                        3
<PAGE>

     "Excess Earnings" means Excess Earnings as defined in the Indenture.

     "Federal Tax Statement" means the Statement as to Tax Exempt Status of the
Bonds executed by the Company in connection with the issuance of the Series 1996
Refunding Bonds.

     "Force Majeure" means any of the causes, circumstances or events described
as constituting Force Majeure in Section 7.1. hereof.

     "Holdings" means Crown Vantage Inc., a corporation duly organized and
validly existing under the laws of the Commonwealth of Virginia and having its
principal office in Oakland, California, and its lawful successors and assigns
to the extent permitted by this Agreement.

     "Indenture" means the Trust Indenture, dated as of even date herewith,
between the Issuer and the Trustee, as amended or supplemented from time to time
which provides for the issuance of the Series 1996 Refunding Bonds.

     "Issuer" means the Business Finance Authority of the State of New
Hampshire, a body corporate and politic as an agency of the State of New
Hampshire, and its predecessors, successors and assigns.

     "Loan" means the loan by the Issuer to the Company of the proceeds received
from the sale of the Bonds.

     "Loan Agreement" means the Loan Agreement dated as of July 1, 1996 between
the Issuer and the Company, as the same may be amended or supplemented from time
to time.

     "Loan Payments" means the amounts required to be paid by the Company in
respect of the Bond Service Charges pursuant to Section 4.1 hereof.

     "Notes" means the Series 1996 Refunding Note and any Additional Notes.

     "Notice Address" means:

          (a)  As to the Issuer:   14 Dixon Avenue, Suite 101
                                   Concord, NH 03301
               Attention:          Executive Director

          (b)  As to the Company:  300 Lakeside Drive, 14th Floor
                                   Oakland, CA 94612
               Attention:          General Counsel


                                        4
<PAGE>

          (c)  As to the Trustee:  The Bank of New York
                                   101 Barclay Street, 21st Floor West
                                   New York, New York  10286
               Attention:          Corporate Trust Trustee Administration


or such additional or different address, notice of which is given under Section
8.3 hereof.

     "Original Bonds" means the Issuer's (i) Pollution Control Revenue Bonds
(Brown Company Project), Series 1973, (ii) Pollution Control Revenue Bonds
(Brown Company Project), Series 1974 and (iii) Solid Waste Disposal Revenue
Bonds (Brown Company Project), Series 1978.

     "Person" or words importing persons mean firms, associations, partnerships
(including without limitation, general and limited partnerships), joint
ventures, societies, estates, trusts, corporations, public or governmental
bodies, other legal entities and natural persons.

     "Prior Bonds" means the $18,070,000 Business Finance Authority of the State
of New Hampshire Pollution Control and Solid Waste Disposal Refunding Revenue
Bonds (James River Project) Series 1993, which refunded the Original Bonds.

     "Project" means the "project" (within the meaning of the Act) used as
pollution control and solid waste disposal facilities, including the Project
Facilities generally described on Exhibit B hereto.

     "Project Facilities" means the Company's facilities described in Exhibit B
hereto, together with any additions, modifications and substitutions to those
facilities.

     "Revenues" means (a) the amounts to be paid by the Company as Loan
Payments, (b) all other moneys received or to be received by the Issuer or the
Trustee in respect of Loan Payments, including, without limitation, all moneys
and investments in the Bond Fund, (c) any moneys and investments in the
Refunding Fund, and (d) all income and profit from the investment of the
foregoing moneys.  The term "Revenues" does not include any moneys or
investments in the Rebate Fund, or amounts received by the Issuer as fees,
reimbursement of costs and expenses, or indemnity.

     "Senior Debt" means the obligations of the Company under the Senior Loan
Document.

     "Senior Loan Document" means the $350,000,000 Credit Agreement, dated as of
August 15, 1995, among the Company, Holdings, the banks listed therein, the
letter of credit issuing banks named therein and Morgan Guaranty Trust Company
of New York, as Administrative Agent, J.P. Morgan Securities Inc., Arranger and
The Bank of New York, The Long-Term


                                        5
<PAGE>

Credit Bank of Japan, Ltd., NationsBank, N.A. (Carolinas), The Toronto-Dominion
Bank (Texas, Inc.), Co-Agents.

     "Series 1996 Refunding Bonds" means the $17,955,000 Pollution Control and
Solid Waste Disposal Refunding Revenue Bonds (Crown Paper Co. Project), Series
1996 of the Issuer authorized in the Bond Resolution and in Section 2.02 of the
Indenture.

     "Series 1996 Refunding Note" means the nonnegotiable promissory note of the
Company, dated as of the date of issuance of the Series 1996 Refunding Bonds,
initially issued in the form attached to this Loan Agreement as Exhibit A and in
the principal amount of $17,955,000, evidencing the obligation of the Company to
make Loan Payments with respect to the Series 1996 Refunding Bonds.

     "Unassigned Issuer's Rights" means all of the rights of the Issuer to
receive Additional Payments under Section 4.2 hereof, to inspect the Project
under Section 5.1 hereof, to be held harmless and indemnified under Section 5.3
hereof, to be reimbursed for attorney's fees and expenses under Section 7.4
hereof, to receive notices under Section 8.3 hereof, to give or withhold consent
under Sections 4.7, 5.2 and 8.6 hereof and to exercise remedies expressly
reserved to the Issuer pursuant to Section 7.2 hereof.

     Section 1.3.  INTERPRETATION.  Any reference herein to the Issuer, or to
any member or officer of the Issuer, includes entities or officials succeeding
to their respective functions, duties or responsibilities pursuant to or by
operation of law or lawfully performing their functions.

     Any reference to a section or provision of the Constitution of the State or
the Act, or to a section, provision or chapter of the laws of the State or to
any statute of the United States of America, includes that section, provision or
chapter or statute as amended, modified, revised, supplemented or superseded
from time to time; provided, that no amendment, modification, revision,
supplement or superseding section, provision or chapter of statute shall be
applicable solely by reason of this provision, if it constitutes in any way an
impairment of the rights or obligations of the Issuer, the Owners, the Trustee
or the Company under this Agreement.

     Unless the context indicates otherwise, words importing the singular number
include the plural number, and vice versa; the terms "hereof", "hereby",
"herein", "hereto", "hereunder", "hereinafter", and similar terms refer to this
Agreement; and the term "hereafter" means after, and the term "heretofore" means
before, the date of delivery of the Series 1996 Refunding Bonds.  Words of any
gender include the correlative words of the other genders, unless the sense
indicates otherwise.

     Section 1.4.  CAPTIONS AND HEADINGS.  The captions and headings in this
Agreement are solely for convenience of reference and in no way define, limit or
describe the scope or intent of any Articles, Sections, subsections, paragraphs,
subparagraphs or clauses hereof.

                               (End of Article I)


                                        6
<PAGE>

                                   ARTICLE II

                                 REPRESENTATIONS


     Section 2.1.  REPRESENTATIONS AND COVENANTS OF THE COMPANY.  The Company
represents and covenants that:

     (a)  It is a corporation duly incorporated under the laws of the
     Commonwealth of Virginia, and is duly qualified and authorized to transact
     business in the State.

     (b)  It has full power and authority to execute, deliver and perform this
     Agreement and the Series 1996 Refunding Note and to enter into and carry
     out the transactions contemplated by those documents.  That execution,
     delivery and performance do not, and will not, cause or result in a
     material violation in any provision of law applicable to the Company or the
     Company's Articles of Incorporation or its Bylaws and do not, and will not,
     conflict with or result in a default under any agreement or instrument to
     which the Company is a party or by which it is bound.  This Agreement and
     the Series 1996 Refunding Note have, by proper action, been duly
     authorized, executed and delivered by the Company and all steps necessary
     have been taken to constitute this Agreement and the Series 1996 Refunding
     Note valid and binding obligations of the Company.

     (c)  None of the proceeds of the Original Bonds were used to finance the
     acquisition and construction of any costs of the Project funded by such
     Bonds that were paid or incurred prior to (i) the adoption of the
     resolution of the Issuer on October 11, 1972 with respect to costs of the
     Project paid from proceeds of the Original Bonds issued in 1973 and 1974 or
     (ii) the adoption of the resolution of the Issuer on November 9, 1977 with
     respect to costs of the Project paid from proceeds of the Original Bonds
     issued in 1978.

     (d)  The provision of financial assistance made available to it hereunder
     and the commitments therefor made by the Issuer induced the Company to
     maintain within the jurisdiction of the Issuer that business of the Company
     to be conducted by use of the Project and such business will create or
     preserve jobs and employment opportunities within the jurisdiction of the
     Issuer.

     (e)  The Company has no present intention to sell or otherwise dispose of
     or cease operating the Project.

     (f)  At least 90% of the proceeds of the Original Bonds (including
     investment earnings thereon) were used for the acquisition, construction,
     reconstruction or improvement of land or property of a character subject to
     the allowance for depreciation under Section 167 of the Code and
     constituting "air or water pollution control facilities" or "sewage or
     solid waste disposal facilities" within the meaning of Sections
     103(b)(4)(E) and (F) of the Internal Revenue Code of 1954, as amended to
     October 22, 1986.  None of the proceeds


                                        7
<PAGE>

     of the Prior Bonds were used to pay the costs of issuance of the Prior
     Bonds.  None of the proceeds of the Series 1996 Refunding Bonds will be
     used to pay cost of issuance of the Series 1996 Refunding Bonds.

     (g)  The average maturity of the Series 1996 Refunding Bonds does not
     exceed 120% of the average reasonably expected economic life of the
     facilities to be refinanced by the Series 1996 Refunding Bonds, determined
     pursuant to Section 147(b) of the Code as of the date the Series 1996
     Refunding Bonds are issued.

     (h)  None of the proceeds of the Original Bonds were used to provide any
     airplane, skybox or other private luxury box or health club facility; any
     facility primarily used for gambling; or any store the principal business
     of which is the sale of alcoholic beverages for consumption off premises.

     (i)  Less than 25% of the proceeds of the Original Bonds were used to
     acquire land or any interest therein, and none of the proceeds of the
     Original Bonds were used to provide land which was or will be used for
     farming purposes.

     (j)  No portion of the proceeds of the Original Bonds were used to acquire
     existing property or any interest therein.

     (k)  The information furnished by the Company and used by the Issuer in
     preparing the certification pursuant to Section 148 of the Code and the
     information statement pursuant to Section 149(e) of the Code with respect
     to the Series 1996 Refunding Bonds is accurate and complete as of the date
     of the issuance of the Series 1996 Refunding Bonds.


                                        8
<PAGE>

     (l)  After the expiration of any applicable temporary period under Section
     148(d)(3) of the Code, at no time during any Bond Year will the aggregate
     amount of gross proceeds of the Series 1996 Refunding Bonds invested in
     higher yielding investments (within the meaning of Section 148(b) of the
     Code) exceed 150% of the debt service on the Series 1996 Refunding Bonds
     for such Bond Year and the aggregate amount of gross proceeds of the Series
     1996 Refunding Bonds invested in higher yielding investments, if any, will
     be promptly and appropriately reduced as the amount of outstanding Series
     1996 Refunding Bonds is reduced, provided however that the foregoing shall
     not require the sale or disposition of any investments in higher yielding
     investments if such sale or disposition would result in a loss which
     exceeds the amount which would be paid to the United States pursuant to
     Section 5.08 of the Indenture (but for such sale or disposition) at the
     time of such sale or disposition if a payment under Section 5.08 of the
     Indenture were due at such time.

     (m)  The Series 1996 Refunding Bonds are not and will not be "federally
     guaranteed" within the meaning of Section 149(b) of the Code.

     (n)  The Company will not take any action or omit to take any action if
     such action or omission would cause the Series 1996 Refunding Bonds to be
     included in gross income for federal income tax purposes.

     (o)  The Project constitutes an "industrial facility" within the meaning of
     the Act.

                               (End of Article II)


                                        9
<PAGE>

                                   ARTICLE III

                   ISSUANCE OF THE SERIES 1996 REFUNDING BONDS


     Section 3.1.  ISSUANCE OF THE SERIES 1996 REFUNDING BONDS; APPLICATION OF
PROCEEDS.  To provide funds for the purpose of financing the facilities of the
Project, the Issuer will issue, sell and deliver each series of the Series 1996
Refunding Bonds to the Original Purchaser upon the satisfaction of the
requirements specified in the Indenture and upon execution and delivery of and
satisfaction of the conditions contained in the applicable Purchase Agreement.
The Series 1996 Refunding Bonds will be issued pursuant to the Indenture in the
aggregate principal amount, will bear interest, will mature and will be subject
to redemption as set forth therein.  The Company hereby approves the terms and
conditions of the Indenture, the Purchase Agreement and the Series 1996
Refunding Bonds, and of the terms and conditions under which the Series 1996
Refunding Bonds will be issued, sold and delivered.  The Company shall carry out
any duties or obligations imposed upon it by the Indenture.

     The proceeds from the sale of the Series 1996 Refunding Bonds shall be paid
over to the Trustee for the benefit of the Company and the Owners of the Series
1996 Refunding Bonds and deposited as follows:  (a) a sum equal to any accrued
interest paid by the Original Purchaser on the Series 1996 Refunding Bonds shall
be deposited in the Series 1996 Bond Fund and (b) the balance of the proceeds of
the Series 1996 Refunding Bonds shall be deposited in the Refunding Fund.
Pending disbursement pursuant to Section 3.2 hereof the proceeds so deposited in
the Refunding Fund, together with any investment earnings thereon, shall
constitute a part of the Revenues in which a security interest is granted by the
Issuer to secure the payment of Bond Service Charges with respect to the Series
1996 Refunding Bonds as provided in the Indenture.

     At the request of the Company, and for the purposes and upon fulfillment of
the conditions specified in the Indenture, the Issuer may provide for the
issuance, sale and delivery of Additional Bonds and provide the proceeds from
the sale thereof to the Company.

     Section 3.2.  APPLICATION OF SERIES 1996 REFUNDING BOND PROCEEDS; COMPANY
REQUIRED TO PAY COSTS IN EVENT REFUNDING PROJECT FUND INSUFFICIENT.  The sale
proceeds of the Series 1996 Refunding Bonds shall be deposited in the Refunding
Fund and applied by the Trustee to pay principal of the Prior Bonds as provided
by the Indenture.

     Section 3.3.  [Reserved]

     Section 3.4.  INVESTMENT OF FUND MONEYS.  At the written request or at the
oral request, confirmed in writing within two Business Days, of the Authorized
Company Representative, any moneys held as part of the Bond Fund, the Refunding
Fund or the Rebate Fund shall be invested or reinvested by the Trustee in
specified Eligible Investments.  The Company hereby covenants that it will
restrict any investment and reinvestment and the use of the proceeds of the
Series 1996 Refunding Bonds in such manner and to such extent, if any, as may be
necessary so that


                                       10
<PAGE>

the Series 1996 Refunding Bonds will not constitute arbitrage bonds under
Section 148 of the Code.

     Section 3.5.  REBATE FUND.  Within five days after the end of each Bond
Year and within five days after payment in full of all outstanding Bonds of each
series, the Company shall calculate the amount of Excess Earnings as of the end
of that Bond Year or the date of such payment in full and shall notify the
Trustee of that amount.  If the amount then on deposit in the applicable account
in Rebate Fund created under the Indenture is less than the amount of Excess
Earnings for that series of Bonds (computed by taking into account the amount or
amounts, if any, previously paid to the United States pursuant to Section 5.08
of the Indenture and this Section), the Company shall, within five days after
the date of the aforesaid calculation, pay to the Trustee for deposit in the
Rebate Fund an amount sufficient to cause the Rebate Fund to contain an amount
equal to the Excess Earnings for that series of Bonds.  The Company agrees to
direct the Trustee to make rebate payments to the United States as are required
pursuant to Section 5.08 of the Indenture.  The obligation of the Company to
make such payments and provide direction to the Trustee hereunder shall remain
in effect and be binding upon the Company notwithstanding the release and
discharge of the Indenture or termination of this Agreement.

                              (End of Article III)


                                       11
<PAGE>

                                   ARTICLE IV

                     LOAN BY ISSUER; REPAYMENT OF THE LOAN;
                      LOAN PAYMENTS AND ADDITIONAL PAYMENTS


     Section 4.1.  LOAN REPAYMENT; DELIVERY OF NOTES.  In consideration of
issuance of the Series 1996 Refunding Bonds, the Company shall make, as loan
payments, in lawful money of the United States of America, on or before each
date that any payment of principal, premium or interest on any Bond is due (at a
maturity, upon redemption, by acceleration or otherwise), Loan Payments which
correspond, as to amount, to the Bond Service Charges then payable on the Series
1996 Refunding Bonds so that the Trustee shall have immediately available funds
in its possession on each such date that a payment is due on the Bonds in the
full amount of such payment.  All such Loan Payments shall be paid to the
Trustee in accordance with the terms of the Series 1996 Refunding Notes for the
account of the Issuer and shall be held and disbursed in accordance with the
provisions of the Indenture and this Agreement for application to the payment of
Bond Service Charges.

     To further evidence the Company's performance of its obligations under this
Agreement, the Company shall execute and deliver to the Trustee, concurrently
with the issuance and delivery of the Series 1996 Refunding Bonds, the Series
1996 Refunding Note.  The Series 1996 Refunding Note shall be dated as of the
date of this Agreement and shall mature and bear interest, shall contain
substantially the other terms and provisions and shall be subject to prepayment,
as set forth, in Exhibit A hereto and as necessary to provide full and timely
payment of the Series 1996 Refunding Bonds.

     So long as there exists no Event of Default hereunder, the Company shall be
entitled to a credit against the Loan Payments required to be made on any date
to the extent that the balance in the Bond Fund (which is available therefor) is
then in excess of amounts required (a) for the payment of Bonds theretofore
called for redemption, (b) for the payment of interest due on a prior date for
which checks or drafts have been drawn and mailed by the Trustee and (c) to be
deposited in the Bond Fund by the Indenture for use other than for the payment
of Bond Service Charges on such date.  In any event, however, if on any date
that any payment of principal, premium or interest on any Bond is due (at
maturity, upon redemption, by acceleration or otherwise), the balance in the
Bond Fund (which is available therefor) is for any reason insufficient to make
required payments of Bond Service Charges, as and when due, the Company
forthwith will pay to the Trustee in immediately available funds, for the
account of the Issuer and for deposit into the Bond Fund, any deficiency.

     In connection with the issuance of any Additional Bonds, the Company shall
execute and deliver to the Trustee one or more Additional Notes in a form
substantially similar to the form set forth in Exhibit A hereto.  All Notes
shall:


                                       12
<PAGE>

     (a)  provide for payments of interest equal to the payments of interest on
     the corresponding Bonds;

     (b)  require payments of principal and redemption payments and any premium
     equal to the payments of principal, prepayments and sinking fund payments
     and any premium on the corresponding Bonds;

     (c)  require all payments on any such Notes to be made no later than the
     due dates for the corresponding payments to be made on the corresponding
     Bonds; and

     (d)  contain by reference or otherwise optional and mandatory redemption
     provisions and provisions in respect of the optional and mandatory
     acceleration or prepayment of principal and any premium corresponding with
     the redemption and acceleration provisions of the corresponding Bonds.

     All payments on the Notes shall be applied solely to the payment of Bond
Service Charges on all outstanding Bonds, except that, so long as no Event of
Default has occurred and is subsisting hereunder, payments by the Company on any
of the Notes shall be used by the Trustee to make a like payment of Bond Service
Charges on the corresponding Bonds in connection with which those Notes were
delivered and shall constitute Loan Payments made in respect of those
corresponding Bonds.

     Upon payment in full, in accordance with the Indenture, of the Bond Service
Charges on any or all Bonds, whether at maturity, upon acceleration or by
redemption or otherwise, or upon provision for the payment thereof having been
made in accordance with the provisions of the Indenture, and upon payment of all
amounts owed to the Trustee, (i) the Notes issued concurrently with those
corresponding Bonds, of the same maturity, bearing the same interest rate and in
an amount equal to the aggregate principal amount of the Bonds so surrendered
and cancelled or for the payment of which provision has been made, shall be
deemed fully paid, the obligations of the Company thereunder shall be
terminated, and any of those Notes shall be surrendered by the Trustee to the
Company, and shall be cancelled by the Company, or (ii) in the event there is
only one of those Notes, an appropriate notation shall be endorsed thereon
evidencing the date and amount of the principal payment or prepayment equal to
the Bonds so paid, or with respect to which provision for payment has been made,
and that Note shall be surrendered by the Trustee to the Company for
cancellation if all Bonds shall have been paid (or provision made therefor) and
cancelled as aforesaid.  Unless the Company is entitled to a credit under
express terms of this Agreement or the Notes, all payments on each of the Notes
shall be in the full amount required thereunder.


                                       13
<PAGE>

     Except for such interest of the Company as may hereinafter arise pursuant
to Section 8.2 hereof or Section 5.06 of the Indenture, the Company and the
Issuer each acknowledge that neither the Company nor the Issuer has any interest
in the Bond Fund and any moneys deposited therein shall be in the custody of and
held by the Trustee in trust for the benefit of the Owners.

     Section 4.2.  ADDITIONAL PAYMENTS.

     (a)  The Company shall pay to the Issuer, as Additional Payments hereunder,
any and all reasonable costs and expenses incurred or to be paid by the Issuer
in connection with the issuance, delivery and carrying of the Series 1996
Refunding Bonds and Additional Bonds, including without limitation, (i) any
necessary expenses incurred by the members of the Issuer while engaged in the
performance of their duties as such members or officers of the Issuer, (ii) the
reasonable fees and expenses of counsel to the Issuer and of bond counsel,
(iii) all publication, filing and recording fees, and (iv) expenses incurred or
advances made in the exercise of the Issuer's rights or the performance of its
obligations hereunder, under the Indenture, or under the Purchase Agreement.

     (b)  The Company also agrees to pay to the Trustee, when due, until the
principal of, premium, if any and interest on the Bonds shall have been paid in
full:  (i) an amount equal to the annual fee of the Trustee for its Ordinary
Services rendered as Trustee and the Ordinary Expenses (including reasonable
attorneys' fees and expenses) of the Trustee incurred as Trustee under the
Indenture (including reasonable attorneys' fees and expenses), (ii) the
reasonable fees and charges of the Trustee as Registrar, authenticating agent
and paying agent under the Indenture, (iii) the reasonable fees and charges of
the Trustee for Extraordinary Services rendered by it and Extraordinary Expenses
(including reasonable attorneys' fees and expenses) incurred by it under the
Indenture and (iv) all other amounts which the Trustee is entitled to receive
hereunder or under the Indenture as reimbursement or indemnity; provided,
however, that the Company may, without creating a default hereunder, withhold
such payment to contest in good faith the necessity or reasonableness for any
such Extraordinary Services or Extraordinary Expenses and the reasonableness of
any such fees, charges or expenses that the Trustee has incurred without the
consent of the Company in excess of $2,000.

     (c)  Upon the issuance of the Bonds, the Company shall pay the Issuer an
administrative fee of $134,662.50.

     Section 4.3.  PLACE OF PAYMENTS.  The Company shall make all Loan Payments
directly to the Trustee at its principal corporate trust office.  Additional
Payments shall be made directly to the person or entity to whom or to which they
are due.


                                       14
<PAGE>

     Section 4.4.  OBLIGATIONS UNCONDITIONAL.  The obligations of the Company to
make Loan Payments, Additional Payments and any payments required of the Company
under Section 3.2 hereof or Section 5.07 of the Indenture shall be absolute and
unconditional under any and all circumstances whatsoever, and the Company shall
make such payments without abatement, diminution or deduction regardless of any
cause or circumstances whatsoever including, without  limitation, any defense,
set-off, recoupment or counterclaim which the Company may have or assert against
the Issuer, the Trustee or any other Person.

     Section 4.5.  ASSIGNMENT OF AGREEMENT AND REVENUES; BINDING EFFECT OF
INDENTURE ON COMPANY; FINANCING STATEMENTS.  To secure the payment of Bond
Service Charges, the Issuer shall assign to the Trustee, by the Indenture, its
rights under and interest in this Agreement (except for the Unassigned Issuer's
Rights) and shall assign and grant a security interest in the Revenues to the
Trustee.

     The Company hereby agrees and consents to those assignments and grants.
The Company hereby agrees to be bound by and to comply with the provisions of
the Indenture applicable to, affecting or purporting to bind the Company.  The
Trustee shall be a third party beneficiary of this Agreement and shall be
entitled to all rights provided to it hereunder and to enforce all provisions
hereof.

     The Company will, at its own expense, cause all necessary financing
statements, amendments thereto, continuation statements and instruments of
similar character relating to the assignment and grants made to secure the
Bonds, to be recorded and filed in such manner and in such places as may be
required by law in order to fully preserve and protect the security of the
Owners of the Bonds and the rights of the Trustee under this Agreement and the
Indenture.

     Section 4.6.  DEPOSIT OF MONEYS IN BOND FUND; MONEYS FOR REDEMPTION.  The
Company may at any time deposit moneys in the Bond Fund, without premium or
penalty, to be held by the Trustee for application to Loan Payments not yet due
and payable.  Such deposits shall be credited against the Loan Payments, or any
portion thereof, in the order of their due dates.  In addition, the Company may
deliver moneys to the Trustee for optional redemption of Series 1996 Refunding
Bonds pursuant to Section 6.1 or 6.2 hereof and shall deliver moneys to the
Trustee for mandatory redemption of Series 1996 Refunding Bonds pursuant to
Section 6.3 hereof.

     Section 4.7.  ASSIGNMENT BY COMPANY.  This Agreement may be assigned in
whole or in part by the Company without the necessity of obtaining the consent
of the Issuer, the Trustee or the Owners, subject, however, to each of the
following conditions:

          (a)  Unless waived by the Issuer, the Company shall notify the Issuer
     in writing of the identity of any assignee at least 15 Business Days prior
     to the effective date of such assignment;


                                       15
<PAGE>

          (b)  No assignment (other than pursuant to Section 5.5 hereof) shall
     relieve the Company from primary liability for any of its obligations
     hereunder, and in the event of any such assignment the Company shall
     continue to remain primarily liable for the payment of the Loan Payments
     and Additional Payments and for performance and observance of the
     agreements on its part herein provided to be performed and observed by it;

          (c)  Any assignment from the Company must retain for the Company such
     rights and interests as will permit it to perform its obligations under
     this Agreement, and any assignee from the Company shall assume in writing
     the obligations of the Company hereunder to the extent of the interest
     assigned;

          (d)  The Company shall, within thirty (30) days after execution
     thereof, furnish or cause to be furnished to the Issuer and the Trustee a
     true and complete copy of each such assignment together with any instrument
     of assumption;

          (e)  Any assignment from the Company shall not materially impair
     fulfillment of the purposes to be accomplished by operation of the Project
     as a project, the refinancing and financing, respectively, of which is
     permitted under the Act; and

          (f)  No assignment from the Company shall occur unless and until the
     Company obtains an opinion of Bond Counsel to the effect that such
     assignment will not, in and of itself, have an adverse effect on the
     exclusion of interest on the Series 1996 Refunding Bonds from gross income
     for federal income tax purposes;

provided, however, that the foregoing conditions shall not apply if all of the
Owners and the Issuer consent in writing to the assignment of this Agreement.

                               (End of Article IV)


                                       16
<PAGE>

                                    ARTICLE V

                       ADDITIONAL AGREEMENTS AND COVENANTS


     Section 5.1.  RIGHT OF INSPECTION.  Subject to reasonable security and
safety regulations and upon two days' written notice, the Issuer and the
Trustee, and their respective agents, shall have the right during normal
business hours to inspect the Project.

     Section 5.2.  SALE, LEASE OR GRANT OF USE BY COMPANY.  The Company may
sell, lease or otherwise grant the right to occupy and use the Project, in whole
or in part, to others, provided that:

     (a)  No such grant, sale or lease shall relieve the Company from its
     obligations under this Agreement or the Notes;

     (b)  In connection with any such grant, sale or lease the Company shall
     retain such rights and interests as will permit it to comply with its
     obligations under this Agreement and the Notes;

     (c)  No such grant, sale or lease shall impair materially the purposes of
     the Act to be accomplished by operation of the Project as a project as
     provided herein and in the Act;

     (d)  The Issuer consents to such sale, lease or other such grant in
     writing;

     (e)  The Company obtains the opinion of Bond Counsel to the effect that
     such lease, sale or grant shall not have an adverse effect on the exclusion
     of interest on the Bonds from gross income for federal income tax purposes.

Notwithstanding the foregoing, the Company may remove, sell or otherwise dispose
of property that has become worn out, obsolete or unnecessary for its business
purposes without satisfying the requirements of Clauses (d) and (e).

     Section 5.3.  INDEMNIFICATION.  The Company regardless of any agreement to
maintain insurance, will indemnify the Issuer against (a) any and all
liabilities, claims, damages, costs and expenses by any person related to the
participation of the Issuer in the transactions contemplated by the Indenture,
the Purchase Agreement, or this Agreement, including without limitation claims
arising out of any condition of the Project or the construction, use, occupancy
or management thereof; any accident, injury or damage to any person occurring in
or about the Project site; any breach by the Company of its obligations under
the Purchase Agreement or this Agreement; any act or omission of the Company or
any of its agents, contractors, servants, employees or licensees; or the
offering, issuance, sale or any resale of the Bonds to the extent permitted by
law, and (b) all costs, counsel fees and expenses, expenses or liabilities
reasonably incurred in connection with any such claim or any action or
proceeding brought thereon.  In case


                                       17
<PAGE>

any action or proceeding is brought against the Issuer by reason of any such
claim, the Company will defend the same at its expense upon notice from the
Issuer, and Issuer will cooperate with the Company, at the expense of the
Company, in connection therewith.

     The Company agrees to indemnify the Trustee for and to hold it harmless
against any and all liabilities, claims, damages, costs and expenses incurred by
or asserted against the Trustee without negligence or bad faith on the part of
the Trustee, on account of any action taken or omitted to be taken by the
Trustee in accordance with the terms of this Agreement, the Bonds, the Notes or
the Indenture or in connection with the Project or the sale of the Bonds, or any
action taken at the request of or with the consent of the Company, including the
costs and expenses of the Trustee in defending itself against any such claim,
action or proceeding brought in connection with the exercise or performance of
any of its powers or duties under this Agreement, the Bonds, the Indenture or
the Notes.

     In case any action or proceeding is brought against the Issuer or the
Trustee in respect of which indemnity may be sought hereunder, the party seeking
indemnity promptly shall give notice of that action or proceeding to the
Company, and the Company upon receipt of that notice shall have the obligation
and the right to assume the defense of the action or proceeding; provided, that
failure of a party to give that notice shall not relieve the Company from any of
its obligations under this Section unless that failure prejudices the defense of
the action or proceeding by the Company.  An indemnified party may employ
separate counsel and participate in the defense, which shall be at the expense
of the indemnified party unless such counsel is approved by the Company which
such approval shall not be unreasonably withheld.  The Company shall not be
liable for any settlement made without its consent.

     The indemnification set forth above is intended to and shall include the
indemnification of all affected officials, directors, officers and employees of
the Issuer and the Trustee, respectively.  That indemnification is intended to
and shall be enforceable by the Issuer and the Trustee, respectively, to the
full extent permitted by law.

     This section shall survive the termination of this Agreement and the
Indenture.

     Section 5.4.  COMPANY NOT TO ADVERSELY AFFECT TAX EXEMPT STATUS OF BONDS'
INTEREST.  The Company hereby represents that it has taken and caused to be
taken, and covenants that it will take and cause to be taken, all actions that
may be required of it, alone or in conjunction with the Issuer, for the interest
on the Series 1996 Refunding Bonds to be and remain excluded from gross income
for federal income tax purposes, and represents that it has not taken or
permitted to be taken on its behalf, and covenants that it will not take or
permit to be taken on its behalf, any action that would adversely affect such
exclusion under the provisions of the Code.

     Section 5.5.  COMPANY TO MAINTAIN ITS EXISTENCE; SALES OF ASSETS OR
MERGERS.  The Company shall do all things necessary to preserve and keep in full
force and effect its existence, rights and franchises, except as otherwise
permitted by this Section 5.5.  In particular, the Company shall not (a) sell,
transfer or otherwise dispose of all, or substantially all, of its assets;


                                       18
<PAGE>

(b) consolidate with or merge into any other entity; or (c) permit one or more
other entities to consolidate with or merge into it.  The preceding restrictions
shall not apply, however, to a transaction if all of the following conditions
are met:

     (i)  the transferee or the surviving or resulting entity is duly formed and
     existing under the laws of one of the states of the United States of
     America or the District of Columbia and is duly qualified to do business in
     the State;

     (ii) the transferee or the surviving or resulting entity, if other than the
     Company, by proper written instrument satisfactory to the Issuer and the
     Trustee, irrevocably and unconditionally assumes the obligation to perform
     and observe the agreements and obligations of the Company under this
     Agreement, the Indenture and the Notes;

     (iii)     no Event of Default, or condition which with the passage of time
     or notice would become an Event of Default, will exist hereunder or under
     the Indenture immediately after the transfer, consolidation or merger; and

     (iv)  the Company obtains the opinion of Bond Counsel regarding the
     exclusion of interest on the Series 1996 Refunding Bonds from gross income
     for federal income tax purposes.

     Section 5.6.  BOOKS AND RECORDS; FINANCIAL STATEMENTS.  The Company shall
within 120 days after the close of each fiscal year furnish to the Trustee, the
Issuer and the Owner of any Bond who shall request the same in writing a copy of
each of the consolidated financial statements for the Company, certified by its
independent certified public accountants, that it customarily furnishes to its
shareholders; provided that so long as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, a copy of the
Company's annual report on Form 10-K shall satisfy this requirement.  The
Company also agrees to furnish to the Trustee, the Issuer and the Owner of any
Bond who shall request the same in writing a copy of each of the other financial
statements and reports which it customarily furnishes to its shareholders at the
same times as they are furnished to its shareholders.  The Company agrees to
permit the Issuer and the Trustee to examine the books and records of the
Company with respect to the Project at reasonable times and upon reasonable
notice.

     Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder.

     Section 5.7.  MAINTENANCE OF PROJECT BY COMPANY.  The Company agrees that
at all times during the term of this Agreement it will, at its own expense,
maintain, preserve and keep the Project or cause the Project to be maintained,
preserved and kept with the appurtenances and every part and parcel thereof, in
good repair, working order and condition and it will from time to time make or
cause to be made all necessary and proper repairs, replacements and renewals;


                                       19
<PAGE>

provided, however, that the Company shall not be under any obligation to renew,
repair or replace any inadequate, obsolete, worn-out, unsuitable, undesirable or
unnecessary portion of the Project.  In any instance where the Company
determines that all or any portion of the Project has become inadequate,
obsolete, worn-out, unsuitable, undesirable or unnecessary, the Company may
remove all or such portion of the Project and sell, trade-in, exchange or
otherwise dispose of the Project or such removed portion, provided that such
removal shall not impair (i) the character of the Project as an "industrial
facility" as such term is defined in the Act, or (ii) the exclusion of interest
on the Bonds from gross income for federal income tax purposes.

     The removal from the Project of any portion thereof pursuant to the
provisions of this Section shall not entitle the Company to any abatement or
diminution of the payments and other sums payable hereunder.

     Section 5.8.  INSURANCE REQUIRED.  The Company agrees that at all times
during the term of this Agreement it will, at its own expense, insure the
Project in such amounts and in such manner (including self insurance) as its
similar properties are usually insured by it, and will carry liability insurance
with respect to the Project in such amounts and in such manner (including self
insurance) as are carried by it with respect to similar properties.  The
proceeds of any fire or casualty insurance carried on the Project shall belong
solely to the Company and the Company shall have no obligation to pay any part
thereof to the Issuer or the Trustee.  In addition, the Company shall have no
obligation to apply the proceeds of any insurance to the repair or
reconstruction of the Project.

     Section 5.9.  LAND USE.  In the acquisition, construction, maintenance,
improvement and operation of the Project, the Company will comply in all
material respects with all applicable building, zoning, subdivision,
environmental protection, sanitary and safety and other land use laws, rules and
regulations and will not permit any nuisance thereat.  It shall not be a breach
of this Section if the Company fails to comply with such laws, rules and
regulations during any period in which the Company shall in good faith be
diligently contesting the validity thereof.

     Section 5.10.  CURRENT EXPENSES.  The Company will pay all costs and
expenses of operation, maintenance and upkeep of the Project including without
limitation all taxes, excises and other governmental charges lawfully levied
thereon or with respect to the Company's interest therein or use thereof.  It
shall not be a breach of this Section if the Company fails to pay any such taxes
or charges during any period in which the Company shall in good faith be
diligently contesting the validity or amount thereof.

     Section 5.11.  COVENANT WITH RESPECT TO MORTGAGE.  (a)  The Company agrees
that it will not take (or permit to be taken) any action with respect to the
amendment or termination of the Mortgage or the rights of the owners thereunder,
the release of all or any part of the property subject to the lien of the
Mortgage, or the waiver or release of any right of the Company under the
Mortgage unless and until there has been delivered to the Trustee the following:
(1) written evidence from each Rating Agency to the effect that such action,
release or waiver will not result in the withdrawal or reduction of such Rating
Agency's then current rating of the Bonds; (2) an


                                       20
<PAGE>

Opinion of Counsel stating that such action by the Trustee is permitted by the
Indenture and this Agreement; and (3) an Opinion of Tax Counsel stating that
such action by the Trustee will not adversely affect the exclusion of interest
on the Bonds from gross income for federal income tax purposes.  At such time as
the Company's obligations under the Senior Loan Document (or any refinancing
thereof) have been fully discharged, it is the Company's intention that the
Bondholders (together with the holders of any other debt then secured under the
Mortgage) shall succeed to all the rights and remedies under the Mortgage of the
lenders under the Senior Loan Document, with full right to control any
proceedings thereunder.

     (b)  By its execution and delivery of this Agreement, the Company
authorizes the Trustee to execute and deliver the Mortgage Acknowledgement
attached to the Indenture.  In connection with such execution and delivery by
the Trustee, the Company represents to the Trustee for the benefit of Owners of
the Bonds that the Bonds constitute "Permitted IRB Debt" as defined in the
Mortgage.

                               (End of Article V)


                                       21
<PAGE>

                                   ARTICLE VI

                    REDEMPTION OF SERIES 1996 REFUNDING BONDS


     Section 6.1.  OPTIONAL REDEMPTION.  Provided no Event of Default shall have
occurred and be subsisting, at any time and from time to time, the Company may
deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made for the purpose of prepaying amounts due under this
Agreement and the Series 1996 Refunding Note and direct the Trustee to use the
moneys so delivered for the purpose of purchasing or redeeming Bonds pursuant to
Subsection 4.01(c) of the Indenture of the Series 1996 Refunding Bonds.  Pending
application for those purposes, any moneys so delivered shall be held by the
Trustee in a special account in the Bond Fund and delivery of those moneys shall
not operate to abate or postpone Loan Payments or Additional Payments otherwise
becoming due or to alter or suspend any other obligations of the Company under
this Agreement or the Series 1996 Refunding Note.

     Section 6.2.  EXTRAORDINARY OPTIONAL REDEMPTION.  The Company may deliver,
subject to the conditions hereinafter imposed, to the Trustee the moneys needed
to redeem the entire unpaid principal balance of the Series 1996 Refunding Bonds
in accordance with Subsection 4.01(a) of the Indenture upon the occurrence of
any of the following events:

     (a)  The Project shall have been damaged or destroyed to such an extent
     that the Company has determined and notified the Issuer and the Trustee
     that (1) the Project cannot reasonably be expected to be restored, within a
     period of six consecutive months, to the condition thereof immediately
     preceding such damage or destruction or (2) the normal use and operation of
     the Project is reasonably expected to be prevented for a period of six
     consecutive months;

     (b)  Title to, or the temporary use of, all or a significant part of the
     Project shall have been taken under the exercise of the power of eminent
     domain to such extent that (1) the Project cannot reasonably be expected to
     be restored within a period of six consecutive months to a condition of
     usefulness comparable to that existing prior to the taking or (2) as a
     result of the taking, normal use and operation of the Project is reasonably
     expected to be prevented for a period of six consecutive months;

     (c)  As a result of any changes in the Constitution of the State, the
     Constitution of the United States of America, or state or federal laws as a
     result of legislative or administrative action or by final decree, judgment
     or order of any court or administrative body (whether state or federal)
     entered after the contest thereof by the Issuer or the Company in good
     faith, the obligations of the Company under this Agreement or the Series
     1996 Refunding Note shall have become void or unenforceable or impossible
     of performance in any material respect in accordance with the intent and
     purpose of the parties as expressed in this Agreement and the Series 1996
     Refunding Note, or if


                                       22
<PAGE>

     unreasonable burdens or excessive liabilities shall have been imposed with
     respect to the Project or the operation thereof, including, without
     limitation, federal, state or other ad valorem property, income or other
     taxes not being imposed on the date of this Agreement other than ad valorem
     taxes presently levied upon privately owned property used for the same
     general purpose as the Project; or

     (d)  Changes in economic availability of raw materials, operating supplies
     or facilities necessary to operate the Project or technological or other
     changes make continued operation of the Project uneconomical in the opinion
     of the Company.

Moneys delivered by the Company to the Trustee pursuant to this Section shall
upon the redemption of the Series 1996 Refunding Bonds constitute a prepayment
of amounts otherwise due under the Section 4.1 of this Agreement and of the
Series 1996 Refunding Note.  The Company shall, if it is to exercise its right
to prepayment specified in this Section, within six months following the
occurrence of an event described above, give notice to the Issuer and to the
Trustee of such occurrence and, if the Company shall so elect, upon the
occurrence of an event specified in clauses (a) or (b) above, that the Company
does not intend to restore the affected Project.  Such notice also shall specify
the date on which the Company will deliver the funds required to redeem the
Series 1996 Refunding Bonds, which date shall be not more than ninety days from
the date that notice is mailed.  The Company shall make arrangements
satisfactory to the Trustee for the giving of the required notice of redemption.

     The amount payable by the Company in the event of redemption of Series 1996
Refunding Bonds pursuant to this Section and Subsection 4.01(a) of the Indenture
shall be the sum of the following:

     (i)   An amount of money which, when added to the moneys and investments
     held to the credit of the Bond Fund, will be sufficient pursuant to the
     provisions of the Indenture to pay, at par, plus any accrued interest
     thereon, and discharge all then outstanding Series 1996 Refunding Bonds of
     the applicable series on the earliest applicable redemption date, that
     amount to be paid to the Trustee, plus

     (ii)  An amount of money equal to the Additional Payments relating to the
     applicable Series 1996 Refunding Bonds accrued and to accrue until actual
     final payment and redemption of such Series 1996 Refunding Bonds, that
     amount or applicable portions thereof to be paid to the Trustee or to the
     Persons to whom those Additional Payments are or will be due, plus

     (iii) An amount sufficient to pay all amounts due or that will become due
     with respect to the Series 1996 Refunding Bonds pursuant to Section 3.5
     hereof, Section 5.08 of the Indenture and Section 148(f) of the Code.


                                       23
<PAGE>


The requirement of (ii) above with respect to Additional Payments to accrue may
be met if provisions satisfactory to the Trustee and the Issuer are made for
paying those amounts as they accrue.

     Section 6.3.  MANDATORY REDEMPTION IN EVENT OF A DETERMINATION OF
TAXABILITY.  Upon receipt by the Company from any Owner or the Trustee of notice
of Determination of Taxability with respect to the Series 1996 Refunding Bonds,
the Company shall, in the manner and upon the earliest practicable date selected
by the Trustee (after consultation with the Company as provided in the
Indenture), and in no event later than 180 days following that notice, deliver
to the Trustee the moneys needed to redeem the applicable principal amount of
outstanding Series 1996 Refunding Bonds in accordance with the loss of tax
exemption redemption provisions set forth in Subsection 4.01(b) of the
Indenture.  The amount payable by the Company in such event shall be an amount
which, together with any moneys available in the Bond Fund for such purposes,
shall equal 100% of the outstanding principal amount of the series of Series
1996 Refunding Bonds to be redeemed, together with accrued interest to the
redemption date.  In the event that all Series 1996 Refunding Bonds are redeemed
in accordance with this Section, the amount payable by the Company shall include
an amount of money equal to the Additional Payments relating to the Series 1996
Refunding Bonds accrued and to accrue until actual final payment and redemption
of the Series 1996 Refunding Bonds.  Moneys delivered by the Company to the
Trustee pursuant to this Section shall upon the redemption of the Series 1996
Refunding Bonds constitute a prepayment of amounts otherwise due under Section
4.1 hereof and the Series 1996 Refunding Note.

     Section 6.4.  ACTIONS BY ISSUER.  At the request of the Company or the
Trustee, the Issuer shall take all steps, if any, required of it under the
applicable provisions of the Indenture or the Series 1996 Refunding Bonds to
effect the redemption of all or a portion of the Series 1996 Refunding Bonds
pursuant to this Article VI.

                               (End of Article VI)


                                       24
<PAGE>

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES


     Section 7.1.  EVENTS OF DEFAULT.  Each of the following shall be an Event
of Default:

     (a)  The Company shall fail to pay any Loan Payment when and as that Loan
     Payment is due and payable;

     (b)  The Company shall fail to deliver to the Trustee, or cause to be
     delivered on its behalf, the moneys needed to redeem any outstanding Series
     1996 Refunding Bonds in the manner and upon the date requested in writing
     by the Trustee as provided in Article VI of this Agreement;

     (c)  The Company shall fail to observe and perform any other agreement,
     term or condition contained in this Agreement (other than with respect to
     Section 5.4 hereof), and the continuation of such failure for a period of
     ninety days after notice thereof shall have been given to the Company by
     the Trustee, or for such longer period as the Trustee may agree to in
     writing; provided, that if the failure is other than the payment of money
     and is of such nature that it can be corrected, but not within the
     applicable period, that failure shall not constitute an Event of Default so
     long as the Company institutes curative action within the applicable period
     and diligently pursues such action to completion;

     (d)  The Company shall: (i) fail to pay, or admit in writing its inability
     to pay, its debts generally as they become due; (ii) have an order for
     relief entered in any case commenced by or against it under the federal
     bankruptcy laws, as now or hereafter in effect; (iii) commence a proceeding
     under any other federal or state bankruptcy, insolvency, reorganization or
     similar law, or have such a proceeding commenced against it and either have
     an order of insolvency or reorganization entered against it or have such a
     proceeding remain undismissed and unstayed for ninety days; (iv) make an
     assignment for the benefit of creditors; or (v) have a receiver or trustee
     appointed for it or for the whole or any substantial part of its property;

     (e)  The occurrence and continuance of a Change of Control;

     (f)  The occurrence and continuance of any event of default under the
     Senior Loan Document resulting in the acceleration of the Senior Debt; and

     (g)  The occurrence and continuance of any event of default under the Loan
     Agreement or the Trust Indenture dated as of July 1, 1996 between the
     Issuer and The Bank of New York, as Trustee.


                                       25
<PAGE>

     Notwithstanding the foregoing, if, by reason of Force Majeure, the Company
is unable to perform or observe any agreement, term or condition hereof (other
than any under Sections 7.1(a), (b) or (d) or otherwise with respect to the
payment of money, as to which Force Majeure shall not be applicable) which would
give rise to an Event of Default under subsection (c) hereof, the Company shall
not be deemed in default during the continuance of such inability.  However, the
Company shall promptly give notice to the Trustee and the Issuer of the
existence of an event of Force Majeure and shall use its best efforts to remove
the effects thereof; provided that the settlement of strikes or other industrial
disturbances shall be entirely within its discretion.

     The term Force Majeure shall mean, without limitation, the following:

          (i)  acts of God; strikes, lockouts or other industrial disturbances;
          acts of public enemies; orders or restraints of any kind of the
          government of the United States of America or of the State or any of
          their departments, agencies, political subdivisions or officials, or
          any civil or military authority; insurrections; civil disturbances;
          riots; epidemics; landslides; lightning; earthquakes; fires;
          hurricanes; tornadoes; storms; droughts; floods; arrests; restraint of
          government and people; explosions; breakage, malfunction or accident
          to facilities, machinery, transmission pipes or canals; partial or
          entire failure of utilities; shortages of labor, materials, supplies
          or transportation; or

          (ii) any cause, circumstance or event not reasonably within the
          control of the Company.

     The declaration of an Event of Default under subsection (d) above, and the
exercise of remedies upon any such declaration, shall be subject to any
applicable limitations of federal bankruptcy law affecting or precluding that
declaration or exercise during the pendency of or immediately following any
bankruptcy, liquidation or reorganization proceedings.

     Section 7.2.  REMEDIES ON DEFAULT.  Whenever an Event of Default shall have
happened and be subsisting, any one or more of the following remedial steps may
be taken:

     (a)  If acceleration of the principal amount of the Series 1996 Refunding
     Bonds has been declared pursuant to Section 7.03 of the Indenture, the
     Trustee shall declare all Loan Payments to be immediately due and payable,
     whereupon the same shall become immediately due and payable;

     (b)  The Issuer or the Trustee may have access to, inspect, examine and
     make copies of the books, records, accounts and financial data of the
     Company pertaining to the Project; or


                                       26
<PAGE>

     (c)  The Issuer or the Trustee may pursue all remedies now or hereafter
     existing at law or in equity to collect all amounts then due and thereafter
     to become due under this Agreement or the Series 1996 Refunding Note or to
     enforce the performance and observance of any other obligation or agreement
     of the Company under those instruments.

Notwithstanding the foregoing, the Issuer shall not be obligated to take any
step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and until a satisfactory indemnity bond has
been furnished to the Issuer at no cost or expense to the Issuer.  Any amounts
collected as Loan Payments or applicable to Loan Payments and any other amounts
which would be applicable to payment of Bond Service Charges collected pursuant
to action taken under this Section shall be paid into the Bond Fund and applied
in accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in accordance with the provisions of the
Indenture, shall be paid as provided in Section 5.06 of the Indenture for
transfers of remaining amounts in the Bond Fund.

     If an Event of Default under Section 7.1(d) hereof shall occur and be
continuing, the Trustee shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Agreement, irrespective of whether the
principal of the Bonds or any amount hereunder shall then be due and payable as
therein or herein expressed or by declaration or otherwise, and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions of
this Section 7.2 or of Section 6.02 of the Indenture, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
allowed in such judicial proceedings relative to the Company, its creditors, or
its property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized to make such payments to the Trustee, and
to pay to the Trustee any amount due it for compensation and expenses, including
reasonable counsel fees and disbursements incurred by it up to the date of such
distribution.

     The provisions of this Section are subject to the further limitation that
the rescission by the Trustee of its declaration that all of the Series 1996
Refunding Bonds are immediately due and payable also shall constitute an
annulment of any corresponding declaration made pursuant to paragraph (a) of
this Section and a waiver and rescission of the consequences of that declaration
and of the Event of Default with respect to which that declaration has been
made, provided that no such waiver or rescission shall extend to or affect any
subsequent or other default or impair any right consequent thereon.

     Section 7.3.  NO REMEDY EXCLUSIVE.  No remedy conferred upon or reserved to
the Issuer or the Trustee by this Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or the Series 1996 Refunding Note, or now or


                                       27
<PAGE>

hereafter existing at law, in equity or by statute.  No delay or omission to
exercise any right or power accruing upon any default shall impair that right or
power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient.  In
order to entitle the Issuer or the Trustee to exercise any remedy reserved to it
in this Article, it shall not be necessary to give any notice, other than any
notice required by law or for which express provision is made herein.

     Section 7.4.  AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES.  If an Event
of Default should occur and the Issuer or the Trustee should incur expenses,
including, without limitation, attorneys' fees and expenses, in connection with
the enforcement of this Agreement, the Series 1996 Refunding Note or the
Indenture or the collection of sums due thereunder, the Company shall reimburse
the Issuer and the Trustee, as applicable, for such expenses so incurred upon
demand, together with interest thereon from the date of demand for payment at
the Interest Rate for Advances, to the date of payment thereof.

     Section 7.5.  NO WAIVER.  No failure by the Issuer or the Trustee to insist
upon the strict performance by the Company of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Company to observe or comply with any provision hereof.

     Section 7.6.  NOTICE OF DEFAULT.  The Company shall notify the Trustee in
writing immediately if it becomes aware of the occurrence of any Event of
Default hereunder of any fact, condition or event which, with the giving of
notice or passage of time or both, would become an Event of Default.

                              (End of Article VII)


                                       28
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS


     Section 8.1.  TERM OF AGREEMENT.  This Agreement shall be and remain in
full force and effect from the date of delivery of the Series 1996 Refunding
Bonds to the Original Purchaser until such time as all of the Bonds shall have
been fully paid (or provision made for such payment) pursuant to Article IX of
the Indenture and all other sums payable by the Company under this Agreement and
the Series 1996 Refunding Note shall have been paid, except for obligations of
the Company under Sections 3.5, 4.2 and 5.3 hereof, which shall survive any
termination of this Agreement.

     Section 8.2.  AMOUNTS REMAINING IN FUNDS.  Any amounts in the Bond Fund
remaining unclaimed by the Owners of Bonds for two years after the due date
thereof (whether at stated maturity, by redemption or pursuant to any mandatory
sinking fund requirements or otherwise), at the option of the Company, shall be
deemed to belong to and shall be paid, at the written request of the Company, to
the Company by the Trustee as overpayment of Loan Payments.  With respect to
that principal of and interest and any premium on the Bonds to be paid from
moneys paid to the Company pursuant to the preceding sentence, the Owners of the
Bonds entitled to those moneys shall look solely to the Company for the payment
of those moneys (which shall remain unconditionally obligated to make such
payments).  Further, any amounts remaining in the Bond Fund, the Rebate Fund and
any other special funds or accounts created under this Agreement or the
Indenture after all of the outstanding Bonds shall be deemed to have been paid
and discharged under the provisions of the Indenture and all other amounts
required to be paid under this Agreement, the Notes and the Indenture have been
paid, shall be paid to the Company to the extent that those moneys are in excess
of the amounts necessary to effect the payment and discharge of the outstanding
Bonds, provided that, with respect to any moneys remaining in any of the
accounts in the Rebate Fund, such moneys shall not be paid to the Company until
after the Trustee has made the final payment from that account to the United
States in accordance with Section 5.08 of the Indenture and Section 148 of the
Code.

     Section 8.3.  NOTICES.  All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by first class mail, postage prepaid, and
addressed to the appropriate Notice Address.  A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Issuer, the
Company and the Trustee shall also be given to the others.  The Company, the
Issuer and the Trustee, by notice given hereunder, may designate any further or
different addresses to which subsequent notices, certificates, requests or other
communications shall be sent.

     Section 8.4.  EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL LIABILITY.
All covenants, obligations and agreements of the Issuer contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law.  No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future


                                       29
<PAGE>

member, trustee, officer, agent or employee of the Issuer in other than his
official capacity, and neither the members of the Issuer nor any official
executing the Bonds shall be liable personally on the Bonds or be subject to any
personal liability or accountability by reason of the issuance thereof or by
reason of the covenants, obligations or agreements of the Issuer contained in
this Agreement or in the Indenture.

     Section 8.5.  BINDING EFFECT.  This Agreement shall inure to the benefit of
and shall be binding in accordance with its terms upon the Issuer, the Company
and their respective permitted successors and assigns provided that this
Agreement may not be assigned by the Company (except pursuant to Sections 4.7,
5.2 and 5.5 hereof) and may not be assigned by the Issuer except to the Trustee
pursuant to the Indenture or as otherwise may be necessary to enforce or secure
payment of Bond Service Charges.  This Agreement may be enforced only by the
parties, their assignees and others who may, by law, stand in their respective
places.

     Section 8.6.  AMENDMENTS AND SUPPLEMENTS.  Except as otherwise expressly
provided in this Agreement or the Indenture, subsequent to the issuance of the
Series 1996 Refunding Bonds and prior to all conditions provided for in the
Indenture for release of the Indenture having been met, this Agreement may not
be effectively amended, changed, modified, altered or terminated except in
accordance with the provisions of Article XI of the Indenture, as applicable and
to provide for the issuance of the Series 1996 Refunding Bonds.

     Section 8.7.  EXECUTION COUNTERPARTS.  This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.

     Section 8.8.  SEVERABILITY.  If any provision of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, that determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if the invalid or unenforceable portion were not contained
herein.  That invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement shall be deemed to be effective, operative, made, entered into or
taken in the manner and to the full extent permitted by law.

     Section 8.9.  GOVERNING LAW.  This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.

     Section 8.10. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.  The Issuer
and the Company agree that they will, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as may reasonably be required
for carrying out the expressed intention of this Agreement.


                                       30
<PAGE>

     Section 8.11. ISSUER AND COMPANY REPRESENTATIVE.  Whenever under the
provisions of this Agreement the approval of the Issuer or the Company is
required or the Issuer or the Company is required to take some action at the
request of the other, such approval or such request shall be given for the
Issuer by an Authorized Issuer Representative, as defined in a Resolution of the
Issuer relating to the Series 1996 Refunding Bonds, and for the Company by an
Authorized Company Representative.  The Trustee shall be authorized to act on
any such approval or request.

     Section 8.12. MATTERS TO BE CONSIDERED BY THE ISSUER.  In approving,
concurring in or consenting to action or in exercising any discretion or in
making any determination under this Agreement or the Indenture, the Issuer may
consider the interests of the public, which shall include the anticipated effect
as well as the interests of the Company and the Issuer; provided, however,
nothing shall be construed as conferring on any person other than the Trustee
and the Owners any right to notice, hearing or participation in the Issuer's
consideration, and nothing in this Section shall be construed as conferring on
any of them any right additional to those conferred elsewhere.  Subject to the
foregoing, the Issuer will not unreasonably withhold any approval or consent to
be given by it hereunder.

                              (End of Article VIII)


                                       31
<PAGE>

     IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement
to be duly executed in their respective names, all as of the date hereinbefore
written.


                                   BUSINESS FINANCE AUTHORITY OF THE STATE OF
                                   NEW HAMPSHIRE


                                   By: /s/ Jack Donovan
                                      -------------------------------------
                                      Executive Director


                                   CROWN PAPER CO.


                                   By: /s/ Christopher M. McLain
                                      -------------------------------------
                                   Name:  Christopher M. McLain
                                   Title: Senior Vice President


                                       32
<PAGE>

                                    EXHIBIT A

                                  FORM OF NOTE

     This Promissory Note has not been registered under the Securities Act of
1933.  Its transferability is restricted by the Trust Indenture and the Loan
Agreement referred to herein.


                                 CROWN PAPER CO.

                           SERIES 1996 REFUNDING NOTE

     Crown Paper Co. (the "Company"), a Virginia corporation, for value
received, promises to pay to The Bank of New York, as Trustee (the "Trustee")
under the Indenture hereinafter referred to, the principal sum of

           SEVENTEEN MILLION NINE HUNDRED FIFTY-FIVE THOUSAND DOLLARS
                                  ($17,955,000)

and to pay interest on the unpaid balance of such principal sum from and
after July 18, 1996 at the Applicable Rate until the payment of such
principal sum has been made or provided for.  As used herein, "Applicable
Rate" means seven and three-quarters percent (7.75%) per annum.  Interest
shall be calculated on the basis of a 360-day year, consisting of twelve
30-day months.

     This Series 1996 Refunding Note has been executed and delivered by the
Company to the Trustee pursuant to a certain Refunding Loan Agreement (the
"Agreement") of even date herewith, between the Business Finance Authority of
the State of New Hampshire (the "Issuer") and the Company.  Under the Agreement,
the Issuer has applied the proceeds received from the sale of the Issuer's
$17,955,000 aggregate principal amount of Pollution Control and Solid Waste
Disposal Refunding Revenue Bonds (Crown Paper Co. Project), Series 1996, and the
Company has agreed to make Loan Payments at the times and in the amounts set
forth in the Agreement and in this Series 1996 Refunding Note for application to
the payment of the principal of and interest on the Series 1996 Refunding Bonds
as and when due.  The Series 1996 Refunding Bonds have been issued, concurrently
with the execution and delivery of this Series 1996 Refunding Note, pursuant to,
and are secured by, the Trust Indenture (the "Indenture"), dated as of July 1,
1996, between the Issuer and the Trustee.

     The Series 1996 Refunding Bonds bear interest from their date at the
Applicable Rate payable on January 1 and July 1 of each year, commencing on
January 1, 1997 (each, an "Interest Payment Date"), and the Series 1996
Refunding Bonds mature on January 1, 2022.


                                       A-1
<PAGE>

     To provide funds to pay the principal of and interest on the Series 1996
Refunding Bonds as and when due as above-specified, the Company hereby agrees to
and shall make as Loan Payments in immediately available funds on or before each
date that any principal or interest on any Series 1996 Refunding Bond is due (at
maturity, upon redemption, by acceleration or otherwise) an amount equal to the
amount payable as principal and interest, on the Series 1996 Refunding Bonds on
such date.

     If payment or provision for payment in accordance with the Indenture is
made in respect of the principal of and interest on all or any portion of the
Bonds from moneys other than payments on the Series 1996 Refunding Note from the
Company, this Series 1996 Refunding Note shall be deemed paid to the extent such
payments or provision for payment of Series 1996 Refunding Bonds has been made.
If the Series 1996 Refunding Bonds are thereby deemed paid in full, this Series
1996 Refunding Note shall be cancelled and returned to the Company.  The Company
shall receive a credit against its obligation to make payments hereunder to the
extent of moneys available in the Bond Fund, created by the Indenture, for
payment of principal and interest on the Series 1996 Refunding Bonds, as
provided in the Agreement.  In any event, however, if on any date that any
payment of principal or interest on any Series 1996 Refunding Bond is due (at
maturity, upon redemption, by acceleration or otherwise), the balance in the
Bond Fund (which is available therefor) is for any reason insufficient to make
required payments of Bond Service Charges, as and when due, the Company
forthwith shall pay to the Trustee, in immediately available funds, for the
account of the Issuer and for deposit into the Bond Fund, any deficiency.  If
the Series 1996 Refunding Bonds are thereby deemed paid in full, this Series
1996 Refunding Note shall be cancelled and returned to the Company.  Subject to
the foregoing, all payments on the Series 1996 Refunding Note from the Company
shall be in the full amount required hereunder.

     All Loan Payments shall be payable in lawful money of the United States of
America and shall be made to the Trustee at its principal corporate trust office
in New York, New York, for the account of the Issuer and deposited in the Bond
Fund created by the Indenture.  Except as otherwise provided in the Indenture,
such Loan Payments shall be used by the Trustee to pay the principal of and
interest on the Series 1996 Refunding Bonds as and when due.

     The obligation of the Company to make the payments required hereunder shall
be absolute and unconditional under any and all circumstances whatsoever and the
Company shall make such payments without abatement, diminution or deduction
regardless of any cause or circumstances whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Company
may have or assert against the Issuer, the Trustee or any other person.

     This Note is subject to optional and mandatory prepayment prior to stated
maturity pursuant to the obligation of the Company to give the Issuer and the
Trustee sufficient notice of such prepayment as shall enable the Issuer and the
Trustee to take all action necessary under the Indenture to redeem on the date
specified for prepayment a like principal amount of Series 1996 Refunding Bonds
at the same redemption price.


                                       A-2
<PAGE>

     Whenever an Event of Default under Section 7.01 of the Indenture (other
than an Event of Default as defined in Section 7.01(c) thereof) shall have
occurred and, as a result thereof, the principal of all Series 1996 Refunding
Bonds then outstanding, and interest accrued thereon, shall have been declared
to be immediately due and payable pursuant to Section 7.02 of the Indenture, the
unpaid principal amount of and accrued interest on this Series 1996 Refunding
Note shall also be due and payable on the date on which the principal of and
interest on the Series 1996 Refunding Bonds shall have been declared due and
payable; provided that the annulment of a declaration of acceleration with
respect to the Series 1996 Refunding Bonds shall also constitute an annulment of
any corresponding acceleration with respect to this Series 1996 Refunding Note.

     If an Event of Default should occur and the Issuer or the Trustee should
incur expenses, including attorneys' fees and expenses, in connection with the
enforcement of this Series 1996 Refunding Note, the Agreement or the Indenture
or the collection of sums due thereunder, the Company shall reimburse the Issuer
or the Trustee, as applicable, for reasonable expenses so incurred upon demand,
together with interest thereon from the date of demand for payment at the
Interest Rate for Advances, to the date of payment thereof.

     IN WITNESS WHEREOF, the Company has caused this Series 1996 Refunding Note
to be executed in its name by a duly authorized officer as of July 18, 1996.

                                   CROWN PAPER CO.



                                   By:  /s/ Christopher M. McLain
                                      -------------------------------------
                                        Title: Senior Vice President


                                       A-3
<PAGE>

                                    EXHIBIT B

                               PROJECT FACILITIES


     The Project Facilities consist of certain air pollution and water pollution
facilities and a solid waste disposal facility, all of which are located at the
Company's pulp and paper mills in Berlin and Gorham, New Hampshire.  The air
pollution and water pollution facilities and the solid waste disposal facility
consist of 19 separate groups of facilities (and specific assets within such
facility group).


     No. 8 Recovery Boiler Renovations

     Black Liquor Oxidation
     Oxidation Tank Recirculation System

     Revise Scrubbing System for Old Lime Kiln

     Kraft Mill Vent Gas Disposal System
     Engineering
     Start Up/Shut Down Tank CL02 System

     Caustic Plant Dust Collection System

     No. 11 Boiler Smelt Tank Vent Scrubber
     No. 8 Boiler Smelt Tank Vent Scrubber

     Smoke Density Recording Equipment - Heine
     Air Pollution Monitoring - TRS Testing Equipment
     Air Pollution Monitoring - Particulate Testing Equipment
     Recorders for monitoring scrubbers for kiln and boilers
     Ambient Air Testing Equipment

     No. 14 Bark Burning Boiler

     Kraft Screen Room White Water Close-Up
     Screen Room Water System Close-Up
     Green Liquor Clarification
     Sep. Foam/Filtrate System for Brown Stock Washer

     Woodroom Water System Close-Up


                                       B-1
<PAGE>

     No. 9 Paper Machine White Water Close-Up
     No. 1 Paper Machine White Water Recovery & Reuse
     No. 9 Paper Machine Save-All Engineering
     No. 2 Paper Machine Changes to Wet End

     Cascade Mill General White Water System

     Cascade Mill Spill System

     Riverside Mill White Water Reuse

     Kraft Mill Liquor Spill Recovery System

     No. 10 Paper Machine White Water System
     No. 2 Pulp Dryer White Water Recovery
     No. 4 Paper Machine White Water Reuse
     B L Plant Water Conservation
     Spill Prevention, Containment & Countermeasure Plan
     CL2 Water Dilution System
     No. 11 Recovery Boiler Scrubber Modifications

     Burgess Mill Wastewater Treatment Plant
     Burgess Mill Wastewater Treatment Plant Misc.

     Cascade Mill External Treatment Plant

     Engineering Fees Relating to External Treatment Plants


                                       B-2