Exhibit 10.31








CLOSING ITEM NO.:  A-4






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                COUNTY OF SARATOGA INDUSTRIAL DEVELOPMENT AGENCY

                                       AND

                            SPURLOCK ADHESIVES, INC.




                           INSTALLMENT SALE AGREEMENT




                           DATED AS OF OCTOBER 1, 1997



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

              CERTAIN  RIGHTS OF THE COUNTY OF SARATOGA  INDUSTRIAL
              DEVELOPMENT   AGENCY   (THE   "ISSUER")   UNDER  THIS
              INSTALLMENT SALE AGREEMENT AND CERTAIN MONEYS DUE AND
              TO  BECOME  DUE TO THE  ISSUER  HEREUNDER  HAVE  BEEN
              ASSIGNED  TO  STAR  BANK,   N.A.,   AS  TRUSTEE  (THE
              "TRUSTEE"), PURSUANT TO A PLEDGE AND ASSIGNMENT DATED
              AS OF  OCTOBER  1,  1997,  FROM  THE  ISSUER  TO  THE
              TRUSTEE.

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



              THIS   INSTALLMENT  SALE  AGREEMENT  IS  INTENDED  TO
              CONSTITUTE  A SECURITY  AGREEMENT  UNDER THE  UNIFORM
              COMMERCIAL CODE OF THE STATE OF NEW YORK.

         
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<PAGE>




                                TABLE OF CONTENTS


             (This Table of Contents is not part of the Installment
            Sale Agreement and is for convenience of reference only)

<TABLE>
<CAPTION>

<S>                                                                                                               <C>    
ARTICLE I
         DEFINITIONS
            SECTION 1.1.  DEFINITIONS.............................................................................3
            SECTION 1.2.  INTERPRETATION..........................................................................9


ARTICLE II
         REPRESENTATIONS, WARRANTIES AND COVENANTS
            SECTION 2.1.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF ISSUER....................................11
            SECTION 2.2.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY...................................12
            SECTION 2.3.  COVENANT WITH TRUSTEE AND BONDHOLDERS AND BANK.........................................13


ARTICLE III
         CONVEYANCE AND USE OF PROJECT FACILITY
            SECTION 3.1.  CONVEYANCE TO ISSUER...................................................................14
            SECTION 3.2.  USE OF PROJECT FACILITY................................................................14


ARTICLE IV
         ACQUISITION,  RECONSTRUCTION,  CONSTRUCTION  AND  INSTALLATION OF PROJECT  FACILITY;  ISSUANCE OF
            BONDS; USE OR PROCEEDS
            SECTION 4.1.  ACQUISITION, CONSTRUCTION AND INSTALLATION OF PROJECT FACILITY.........................15
            SECTION 4.2.  ISSUANCE OF BONDS......................................................................16
            SECTION 4.3.  APPLICATION OF PROCEEDS OF BONDS.......................................................16
            SECTION 4.4.  COMPLETION OF PROJECT FACILITY.........................................................18
            SECTION 4.5.  COMPLETION BY COMPANY..................................................................18
            SECTION 4.6.  REMEDIES TO BE PURSUED  AGAINST  CONTRACTORS,  SUBCONTRACTORS,  MATERIALMEN  AND
                  THEIR SURETIES.................................................................................18


ARTICLE V
         AGREEMENT TO CONVEY PROJECT FACILITY; INSTALLMENT PURCHASE PAYMENTS AND OTHER AMOUNTS PAYABLE
            SECTION 5.1.  AGREEMENT TO CONVEY PROJECT FACILITY...................................................20
            SECTION 5.2.  CONVEYANCE; INSTRUMENTS................................................................20
            SECTION 5.3.  INSTALLMENT PURCHASE PAYMENTS AND OTHER AMOUNTS PAYABLE................................20
            SECTION 5.4.  NATURE OF OBLIGATIONS OF COMPANY HEREUNDER.............................................21

                                       i
<PAGE>

            SECTION 5.5.  PREPAYMENT OF INSTALLMENT PURCHASE PAYMENTS............................................22
            SECTION 5.6.  RIGHTS AND OBLIGATIONS OF COMPANY UPON DISCHARGE OF LIEN OF MORTGAGE...................22
            SECTION 5.7.  GRANT OF SECURITY INTEREST.............................................................22


ARTICLE VI
         MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
            SECTION 6.1.  MAINTENANCE AND MODIFICATIONS OF PROJECT FACILITY......................................24
            SECTION 6.2.  TAXES, ASSESSMENTS AND UTILITY CHARGES.................................................24
            SECTION 6.3.  INSURANCE REQUIRED.....................................................................25
            SECTION 6.4.  ADDITIONAL PROVISIONS RESPECTING INSURANCE.............................................26
            SECTION 6.5.  APPLICATION OF NET PROCEEDS OF INSURANCE...............................................27
            SECTION 6.6.  PAYMENTS IN LIEU OF TAXES..............................................................27


ARTICLE VII
         DAMAGE, DESTRUCTION AND CONDEMNATION
            SECTION 7.1.  DAMAGE OR DESTRUCTION..................................................................29
            SECTION 7.2.  CONDEMNATION...........................................................................30
            SECTION 7.3.  ADDITIONS TO PROJECT FACILITY..........................................................32


ARTICLE VIII
         SPECIAL COVENANTS
            SECTION 8.1.  NO WARRANTY OF CONDITION OR SUITABILITY BY ISSUER; ACCEPTANCE "AS IS\..................33
            SECTION 8.2.  HOLD HARMLESS PROVISIONS...............................................................33
            SECTION 8.3.  RIGHT OF ACCESS TO PROJECT FACILITY....................................................34
            SECTION  8.4.  COMPANY  NOT TO  TERMINATE  EXISTENCE  OR DISPOSE OF ASSETS;  CONDITIONS  UNDER
                  WHICH EXCEPTIONS PERMITTED.....................................................................34
            SECTION 8.5.  AGREEMENT TO PROVIDE INFORMATION.......................................................34
            SECTION 8.6.  BOOKS OF RECORD AND ACCOUNT; FINANCIAL STATEMENTS; COMPLIANCE CERTIFICATES.............35
            SECTION 8.7.  COMPLIANCE WITH ORDERS, ORDINANCES, ETC................................................35
            SECTION 8.8.  DISCHARGE OF LIENS AND ENCUMBRANCES....................................................35
            SECTION 8.9.  PERFORMANCE BY ISSUER OR TRUSTEE OF COMPANY'S OBLIGATIONS..............................36
            SECTION 8.10.  DEPRECIATION DEDUCTIONS AND TAX CREDITS...............................................36
            SECTION 8.11.  IDENTIFICATION OF EQUIPMENT...........................................................36
            SECTION 8.12.  INDEMNIFICATION OF TRUSTEE............................................................36
            SECTION 8.13.  COVENANT AGAINST ARBITRAGE BONDS......................................................37
            SECTION 8.14.  ENVIRONMENTAL MATTERS.................................................................37
            SECTION 8.15.  INDEMNIFICATION OF BANK...............................................................38


ARTICLE IX
         ASSIGNMENTS; MERGER OF ISSUER
            SECTION 9.1.  ASSIGNMENT OF INSTALLMENT SALE AGREEMENT...............................................39
            SECTION 9.2.  PLEDGE AND ASSIGNMENT OF ISSUER'S INTERESTS TO TRUSTEE.................................39

                                       ii
<PAGE>

            SECTION 9.3.  MERGER OF ISSUER.......................................................................39
            SECTION 9.4.  SALE OR LEASE OF PROJECT FACILITY......................................................39


ARTICLE X
         EVENTS OF DEFAULT AND REMEDIES
            SECTION 10.1.  EVENTS OF DEFAULT DEFINED.............................................................41
            SECTION 10.2.  REMEDIES ON DEFAULT...................................................................42
            SECTION 10.3.  REMEDIES CUMULATIVE...................................................................43
            SECTION 10.4.  AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES.........................................43
            SECTION 10.5.  NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER............................................43


ARTICLE XI
         MISCELLANEOUS
            SECTION 11.1.  NOTICES...............................................................................44
            SECTION 11.2.  BINDING EFFECT........................................................................45
            SECTION 11.3.  SEVERABILITY..........................................................................45
            SECTION 11.4.  AMENDMENTS, CHANGES AND MODIFICATIONS.................................................46
            SECTION 11.5.  EXECUTION OF COUNTERPARTS.............................................................46
            SECTION 11.6.  APPLICABLE LAW........................................................................46
            SECTION 11.7.  RECORDING AND FILING..................................................................46
            SECTION 11.8.  SURVIVAL OF OBLIGATIONS...............................................................46
            SECTION 11.9.  TABLE OF CONTENTS AND SECTION HEADINGS NOT CONTROLLING................................46
            SECTION 11.10.  NO RECOURSE; SPECIAL OBLIGATION......................................................46
            SECTION 11.11.  SUBORDINATION TO MORTGAGE AND ASSIGNMENT.............................................47
            SECTION 11.12.  SUBMISSION TO JURISDICTION...........................................................47


EXHIBIT "A"
            REAL PROPERTY DESCRIPTION...........................................................................A-1


EXHIBIT "B"
            DESCRIPTION OF EQUIPMENT............................................................................B-1


EXHIBIT "C"
            FORM OF DEED TO COMPANY.............................................................................C-1


EXHIBIT "D"
            FORM OF BILL OF SALE TO THE COMPANY.................................................................D-1

</TABLE>


                                      iii
<PAGE>






                           INSTALLMENT SALE AGREEMENT


         THIS  INSTALLMENT  SALE  AGREEMENT  dated as of OCTOBER  1, 1997,  (the
"Installment  Sale Agreement") by and between the COUNTY OF SARATOGA  INDUSTRIAL
DEVELOPMENT  AGENCY, a public benefit  corporation of the State of New York (the
"State") having its office at 40 McMaster  Street,  Ballston Spa, New York 12020
(the  "Issuer"),  and SPURLOCK  ADHESIVES,  INC., a  corporation  organized  and
existing under the laws of the State of Virginia,  having an address of 209 West
Main Street, Waverly, Virginia 23890 (the "Company");

                              W I T N E S S E T H :

         WHEREAS,  the Issuer, by resolution adopted on September 16, 1997, (the
"Resolution"),  determined to issue its $6,000,000 aggregate principal amount of
Multi-Mode   Variable  Rate  Industrial   Development  Revenue  Bonds  (Spurlock
Adhesives,  Inc.  Project),  Series  1997 A (the  "Bonds")  for the  purpose  of
financing a portion of the costs of the Project (as hereinafter defined); and

         WHEREAS,  said Project  (the  "Project")  shall  consist of (A) (1) the
acquisition of a certain  parcel of land  comprising  approximately  16.37 acres
constituting Lot #3 located in the Moreau Industrial Park in the Town of Moreau,
Saratoga County, New York (the "Land"),  (2) the construction on the Land of two
(2)  buildings  approximately  10,000  square  feet  each  in  size  and one (1)
approximately 800 square foot building for use in the manufacturing of synthetic
organic  chemicals and related  functions  (collectively the "Facility") and (3)
the acquisition and installation therein of certain machinery and equipment (the
"Equipment"  and  together  with  the  Land  and  the  Facility,   the  "Project
Facility"),  and (B) the  financing of a portion of the costs of the  foregoing;
and

         WHEREAS,  contemporaneously  with the execution of the Installment Sale
Agreement,  the Issuer and Star Bank,  N.A.,  as trustee (the  "Trustee"),  have
entered into a trust indenture  dated as of October 1, 1997,  (the  "Indenture")
specifying the terms and conditions upon which the Bonds are issued and secured;
and

         WHEREAS,  as  security  for the Bonds,  the  Company  will enter into a
letter  of  credit  reimbursement  agreement  dated as of  October  1, 1997 (the
"Reimbursement Agreement") with KeyBank National Association, a national banking
association  organized  and  existing  under the laws of the United  States (the
"Bank"),  pursuant  to which  the Bank is to  issue in favor of the  Trustee  an
irrevocable transferable direct-pay letter of credit (the "Letter of Credit") in
an amount equal to the aggregate of the principal amount of the Bonds,  together
with one  hundred  ten (110)  days'  interest  thereon at a maximum  rate of ten
percent (10%); and

         WHEREAS,  the Issuer  proposes to undertake  the  Project,  appoint the
Company as agent of the Issuer to undertake the  acquisition,  construction  and
installation  of the  Project  Facility  and sell the  Project  Facility  to the
Company,  and the Company desires to act as agent of the Issuer to undertake the
acquisition,  reconstruction,  construction  and  installation  of  the  Project
Facility and purchase the Project Facility from the Issuer,  all pursuant to the
terms and conditions  hereinafter set forth in the  Installment  Sale Agreement;
and

         WHEREAS,  the  providing  of the Project  Facility  and the sale of the
Project  Facility to the Company  pursuant to the Installment  Sale Agreement is
for a proper purpose, to wit, to advance the job 



<PAGE>

opportunities,   health,   general   prosperity  and  economic  welfare  of  the
inhabitants of the State,  pursuant to the provisions of the Act (as hereinafter
defined); and

         WHEREAS,  all things  necessary  to  constitute  the  Installment  Sale
Agreement a valid and  binding  agreement  by and between the parties  hereto in
accordance with the terms hereof have been done and performed, and the creation,
execution and delivery of the  Installment  Sale  Agreement have in all respects
been duly authorized by the Issuer and the Company;

         NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE PREMISES AND THE MUTUAL
COVENANTS  HEREINAFTER  CONTAINED,  THE PARTIES HERETO HEREBY FORMALLY COVENANT,
AGREE AND BIND THEMSELVES AS FOLLOWS, TO WIT:




                                       2
<PAGE>



                                    ARTICLE I

                                   DEFINITIONS


SECTION 1.1. The terms  defined in this Section 1.1 (except as herein  otherwise
expressly provided or unless the context otherwise requires) for all purposes of
the Installment  Sale Agreement and of any agreement  supplemental  hereto shall
have the respective meaning specified in this Section 1.1

         "Act" means Title 1 of Article 18-A of the General Municipal Law of the
State,  as amended from time to time,  together  with Chapter 855 of the Laws of
1971 of the State, as amended from time to time.

         "Act of  Bankruptcy"  means the filing of a petition in bankruptcy  (or
the other commencement of a bankruptcy or similar  proceeding) by or against the
Company   or  the   Issuer   under  any   applicable   bankruptcy,   insolvency,
reorganization or similar law, now or hereafter in effect.

         "Assignment"  means the  pledge and  assignment  dated as of October 1,
1997 from the Issuer to the Trustee pursuant to which the Issuer has assigned to
the  Trustee  its  rights  under the  Installment  Sale  Agreement  (other  than
Unassigned Rights), as said pledge and assignment may be supplemented or amended
from time to time.

         "Alternate  Credit  Facility"  shall have the meaning  assigned to such
term in the Indenture.

         "Authorized  Representative"  means the  Person or  Persons at the time
designated to act in behalf of the Issuer or the Company, as the case may be, by
written  certificate  furnished to the Trustee containing the specimen signature
of each such  Person and signed on behalf of (A) the Issuer by its  Chairman  or
Vice  Chairman,  or such other person as may be  authorized by resolution of the
Issuer,  and (B) the Company by Irvine  Spurlock,  Phillip Sumpter or such other
person as may be authorized by the Company.

         "Available  Moneys" shall have the meaning assigned to such term in the
Indenture.

         "Bank"  means  initially,   KeyBank  National   Association,   and  its
successors  and assigns in its capacity as issuer of the Letter of Credit and in
the  event an  Alternate  Credit  Facility  is  outstanding,  the  issuer of the
Alternate Credit Facility.

         "Bank  Documents"  means  the  Letter  of  Credit,   the  Reimbursement
Agreement,  the  Mortgage,  the Pledge and Security  Agreement,  the  Collateral
Mortgage, the Security Agreement, the Guaranty, the Term Loan Note, the Building
Loan Agreement and any other document now or hereafter executed by the Issuer or
the Company or the  Guarantor  in favor of the Bank which  affects the rights of
the  Bank in or to the  Project,  in  whole or in  part,  or  which  secures  or
guarantees any sum due under any Bank Document.

         "Bill of Sale to Issuer" means the bill of sale from the Company to the
Issuer conveying the Company's interest in the Equipment to the Issuer.

         "Bond Counsel"  means Lemery and Reid,  P.C. of Saratoga  Springs,  New
York or such other  attorney  or firm of  attorneys  located in the State  whose
experience  in matters  relating to the  issuance of  

                                       3
<PAGE>

obligations by states and their political  subdivisions is nationally recognized
and who are  acceptable  to the  Issuer  and the  Trustee  in  their  reasonable
discretion.

         "Bond Fund" means the fund so designated  and  established  pursuant to
Section 402 of the Indenture.

         "Bond Payment  Date" means each Interest  Payment Date and each date on
which  principal  or premium  shall be payable on the Bonds  according  to their
terms and the Indenture, so long as any Bonds shall be Outstanding.

         "Bond Registrar" means the Trustee.

         "Bond Year" means each one (1) year period ending on the anniversary of
the Closing Date.

         "Bondholder"  or "Holder" or "Owner" means the registered  owner of any
Bond as indicated on the bond register maintained by the Bond Registrar.

         "Bonds"  means  the  Issuer's   Multi-Mode   Variable  Rate  Industrial
Development  Revenue Bonds (Spurlock  Adhesives,  Inc.  Project),  Series 1997 A
issued  in  the  aggregate  principal  amount  of  $6,000,000  pursuant  to  the
Resolution and Article II of the Indenture.

         "Building Loan Agreement" means the building loan agreement dated as of
October 1, 1997 by and between the Issuer,  the Company and the Bank, as amended
or supplemented from time to time.

         "Business  Day"  means  any day of the year on which  the  Trustee  and
banking institutions located in the State are open for the purpose of conducting
business.

         "Closing  Date"  means  the  date  on  which  authenticated  Bonds  are
delivered to the purchaser of the Bonds and payment is received  therefor by the
Trustee on behalf of the Issuer.

         "Code" means the Internal  Revenue  Code of 1986,  as amended,  and the
applicable  regulations  of the United States  Treasury  Department  promulgated
thereunder and under the Internal Revenue Code of 1954, as amended.

         "Collateral Mortgage" means the collateral mortgage dated as of October
1, 1997 from the Company in favor of the Bank, as said  collateral  mortgage may
be amended or supplemented from time to time.

         "Company" means Spurlock Adhesives,  Inc., a corporation  organized and
existing under the laws of the State of Virginia,  having an address of 209 West
Main Street, Waverly, Virginia 23890, and its successors and permitted assigns.

         "Completion   Date"  means  the  date   identified  on  the  completion
certificate  delivered  by the  Company in  accordance  with  Section 4.4 of the
Installment Sale Agreement.

         "Condemnation"  means the  taking of title to, or the use of,  Property
under the exercise of the power of eminent domain by any Governmental Authority.

                                       4
<PAGE>

         "Construction  Contract" means the contract for the construction of the
Facility by and between the Company and the Contractor.

         "Construction  Period"  means the period (A)  beginning  on the Closing
Date and (B) ending on the Completion Date.

         "Contractor" means D.B. Western, Inc.

         "Cost of the  Project"  means  all those  costs  and  items of  expense
enumerated in Section 4.3 of the Installment Sale Agreement.

         "Debt Service Payment" means, with respect to any Interest Payment Date
and/or Purchase Date, (A) the interest payable on the Bonds on such Bond Payment
Date, plus (B) the principal,  if any, payable on the Bonds on such Bond Payment
Date,  plus (C) the premium,  if any,  payable on the Bonds on such Bond Payment
Date.

         "Deed to Issuer"  means the deed from the  Company  to the Issuer  with
respect to the Project Facility.

         "Equipment"  means all  materials,  machinery,  equipment,  fixtures or
furnishings  intended  to be  acquired  with the  proceeds  of the  Bonds or any
payment  made by the Company  pursuant to Section  4.5 of the  Installment  Sale
Agreement,  and such substitutions and replacements therefor as may be made from
time to time pursuant to the  Installment  Sale  Agreement,  including,  without
limitation,   all  the  Property  described  in  Exhibit  "B"  attached  to  the
Installment Sale Agreement and the Mortgage.

         "Event of  Default"  means  any of those  events  defined  as Events of
Default by the terms of Article X of the Indenture, Article X of the Installment
Sale Agreement or Article VI of the Mortgage.

         "Facility"  means all those  buildings,  improvements,  structures  and
other related facilities (A) affixed to or attached to the Land and (B) financed
with the  proceeds of the sale of the Bonds or any  payment  made by the Company
pursuant to Section 4.5 of the Installment Sale Agreement.

         "Financing  Documents" means the Bonds, the Indenture,  the Installment
Sale Agreement, the Assignment, the Bank Documents, the Tax Regulatory Agreement
and any other document now or hereafter executed by the Issuer or the Company in
favor of the  Bondholders or the Trustee or the Bank which affects the rights of
the  Bondholders  or the Trustee or the Bank in or to the Project  Facility,  in
whole or in part, or which secures or guarantees  any sum due under the Bonds or
any  other  Financing  Document,  each as  amended  from  time to time,  and all
documents related thereto and executed in connection therewith.

         "Governmental  Authority" means the United States, the State, any other
state and any political subdivision of any of them, and any agency,  department,
commission, board, bureau or instrumentality of any of them.

         "Gross  Proceeds"  means one hundred  percent (100%) of the proceeds of
the  transaction in question,  including,  but not limited to, the settlement of
any insurance or Condemnation award.

         "Guarantor" means Spurlock Industries, Inc.

                                       5
<PAGE>

         "Guaranty"  means the  payment  and  performance  guaranty  dated as of
October 1, 1997 from the  Guarantor  in favor of the Bank,  as said  payment and
performance guaranty may be amended or supplemented from time to time.

         "Indebtedness"  shall have the meaning assigned to such term in Section
2.01 of the Mortgage.

         "Indenture"  means the trust indenture dated as of September 1, 1997 by
and  between  the  Issuer  and the  Trustee,  as  said  trust  indenture  may be
supplemented or amended from time to time.

         "Independent  Counsel" shall mean an attorney or firm of attorneys duly
admitted to practice  law before the highest  court of any state and approved by
the Bank and not a full-time employee of the Company or the Issuer.

         "Installment Sale Agreement" means the installment sale agreement dated
as of  October  1, 1997 by and  between  the  Issuer  and the  Company,  as said
installment sale agreement may be supplemented or amended from time to time.

         "Insurance  and  Condemnation  Fund" means the fund so  designated  and
established pursuant to Section 4.03 of the Indenture.

         "Interest  Payment  Date"  means  the date on which an  installment  of
interest on the Bonds is paid as set forth in the Indenture.

         "Issuer" means (A) County of Saratoga Industrial Development Agency and
its successors and assigns,  and (B) any public benefit corporation or political
subdivision  resulting  from or surviving any  consolidation  or merger to which
County of Saratoga  Industrial  Development  Agency or its successors or assigns
may be a party.

         "Land" means the  approximately  16.37 acre parcel of land constituting
Lot #3 in the Moreau Industrial Park in the Town of Moreau, Saratoga County, New
York, as more particularly  described in Exhibit "A" attached to the Installment
Sale Agreement and Exhibit "A" attached to the Mortgage.

         "Letter  of Credit"  means (A) the  irrevocable,  direct-pay  Letter of
Credit  issued by the Bank and delivered to the Trustee upon the issuance of the
Bonds and (B) any Alternate Credit Facility.

         "Lien" means any interest in Property  securing an obligation owed to a
Person,  whether such interest is based on the common law,  statute or contract,
and  including but not limited to a security  interest  arising from a mortgage,
encumbrance,  pledge,  conditional sale or trust receipt or a lease, consignment
or  bailment  for  security  purposes.  The term "Lien"  includes  reservations,
exceptions,  encroachments,  projections,  easements,  rights of way, covenants,
conditions,   restrictions,  leases  and  other  similar  title  exceptions  and
encumbrances,   including   but  not  limited  to   mechanics',   materialmen's,
warehousemen's and carriers' liens and other similar encumbrances affecting real
property.  For purposes  hereof, a Person shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional  sale agreement
or other  arrangement  pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes.

         "Local  Authority"  means any  Governmental  Authority  which exercises
jurisdiction over the Land or the  reconstruction,  construction or installation
of the Project Facility.

                                       6
<PAGE>

         "Maturity Date" means with respect to any Bonds, the Stated Maturity.

         "Mortgage"  means  the  mortgage  and  security  agreement  dated as of
October 1, 1997 from the Issuer and the  Company to the Bank,  as said  mortgage
may be supplemented or amended from time to time.

         "Mortgaged  Property"  shall have the meaning  assigned to such term in
Section 2.01 of the Mortgage.

         "Net  Proceeds"  means so much of the Gross  Proceeds  with  respect to
which  that  term is used as  remain  after  payment  of all fees for  services,
expenses, costs and taxes (including attorneys' fees) incurred in obtaining such
Gross Proceeds.

         "Outstanding"  shall  have the  meaning  assigned  to such  term in the
Indenture.

         "Permit" shall mean any permit,  license,  certificate or authorization
of any kind required by any  Governmental  Authority in connection with the use,
ownership,  occupancy or operation of the Project  Facility,  including all such
environmental permits required for the transfer,  sale or conveyance of any part
of  the  Project  Facility  or the  storage,  treatment,  generation,  handling,
transportation, processing or disposal of Hazardous Substances.

         "Permitted Encumbrances" means (A) utility, access and other easements,
rights of way, restrictions, encroachments and exceptions that benefit or do not
materially  impair the utility or the value of the Property affected thereby for
the  purposes  for  which  it  is  intended,   (B)  mechanics',   materialmen's,
warehousemen's,  carriers' and other  similar  Liens to the extent  permitted by
Section  8.8(B)  of  the  Installment  Sale  Agreement,  (C)  Liens  for  taxes,
assessments and utility charges (1) to the extent permitted by Section 6.2(B) of
the Installment Sale Agreement, or (2) at the time not delinquent,  (D) any Lien
on the  Project  Facility  obtained  through  any  Financing  Document,  (E) any
exception  appearing  in the  mortgagee  title  insurance  policy  issued on the
Closing Date and accepted by the Bank and (F) any Permitted  Lien (as defined in
the Reimbursement Agreement).

         "Person"  means  an  individual,   partnership,   corporation,   trust,
unincorporated organization or Governmental Authority.

         "Plans and  Specifications"  means the plans and specifications for the
construction  and  reconstruction  of the Facility,  prepared and stamped by the
Architect,  and all material amendments and modifications thereof made by change
orders;  and, if an item for the construction and reconstruction of the Facility
is not specifically detailed in the aforementioned plans and specifications, but
rather is described by way of  manufacturer's or supplier's or contractor's shop
drawings,  catalog  references or similar  descriptions,  the term also includes
such shop drawings, catalog references and descriptions.

         "Pledge  and  Security  Agreement"  means (A) the pledge  and  security
agreement  dated as of October 1, 1997 by and  between the Company and the Bank,
as the same may be supplemented or amended from time to time, and (B) the pledge
and security  agreement by and between the Company and any  substitute  Bank, as
the same may be supplemented or amended form time to time.

         "Project" means (A) the  acquisition of the Land, (B) the  construction
of the Facility, (C) the installation of the Equipment; and (D) the financing of
a portion of the costs of the foregoing by the issuance of the Bonds.

                                       7
<PAGE>

         "Project Facility" means, collectively,  the Land, the Facility and the
Equipment.

         "Project Fund" means the fund so designated and established pursuant to
Section 402 of the Indenture.

         "Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.

         "Rebate Amount" shall have the meaning assigned to such term in the Tax
Regulatory Agreement.

         "Rebate Fund" means the fund so designated and established  pursuant to
Section 402 of the Indenture.

         "Request for Disbursement"  means a request from the Company,  as agent
of the Issuer,  stating the amount of disbursement  sought in substantially  the
form of Schedule "D" attached to the Building Loan Agreement.

         "Reimbursement  Agreement"  means the  letter  of credit  reimbursement
agreement  dated as of October 1, 1997 between the Company and the Bank,  as the
same may be amended  from time to time and any  agreement  of the Company with a
Credit  Facility  Issuer  setting forth the  obligations  of the Company to such
Credit Facility Issuer arising out of any payments under a Credit Facility.

         "Requirement" or "Local Requirement" means any law,  ordinance,  order,
rule  or  regulation  of  a  Governmental   Authority  or  a  Local   Authority,
respectively.

         "Resolution"  means the  resolution of the Issuer  adopted on September
16, 1997, authorizing the Issuer to undertake the Project, to issue and sell the
Bonds and to execute and deliver the Financing  Documents to which the Issuer is
a party.

         "Security  Agreement" means the security  agreement dated as of October
1,  1997  from the  Company  to the  Bank,  as said  security  agreement  may be
supplemented or amended from time to time.

         "SEQR" means Article 8 of the  Environmental  Conservation Law, Chapter
43-B of the  Consolidated  Laws of New  York,  as  amended  and the  regulations
adopted pursuant thereto.

         "State" means the State of New York.

         "Stated  Amount"  shall have the  meaning  assigned to such term in the
Letter of Credit.

         "Stated  Maturity"  means,  when used with  respect  to any Bond or any
installment  of interest  thereon,  the date specified in such Bond as the fixed
date on which the principal of such Bond or such installment of interest on such
Bond is due and payable.

         "Tax Regulatory Agreement" means the tax regulatory agreement dated the
Closing Date executed by the Company in favor of the Issuer, the Trustee and the
Bank regarding,  among other things, the restrictions  prescribed by the Code in
order for interest on the Bonds to remain excluded from gross income for federal
income tax purposes.

                                       8
<PAGE>

         "Term Loan Note" means the term loan note dated the Closing Date in the
principal amount of $1,500,000 from the Company in favor of the Bank.

         "Trust  Estate"  shall have the  meaning  assigned  to such term in the
Indenture.

         "Trustee"  means  Star  Bank,  N.A.,  a  national  banking  association
organized and existing under the laws of the United States, having its office at
425 Walnut Street,  Cincinnati,  Ohio  45201-1118,  or any successor  trustee or
co-trustee, acting as trustee under the Indenture.

         "Unassigned Rights" means (A) the rights of the Issuer granted pursuant
to Sections 2.2(E),  2.2(F),  2.2(J), 3.2, 4.1(B),  4.1(D),  4.1(E)(2),  4.1(F),
4.1(G), 4.4, 5.2, 5.3(B)(2), 6.1(B)(1), 6.3, 6.4 (as it relates to the insurance
required by Section 6.3),  6.5, 6.6, 7.1, 7.2, 8.1, 8.2, 8.3, 8.4, 8.5,  8.6(C),
8.7, 8.8, 8.9, 8.11,  8.14, 9.1, 9.3, 9.4, 11.1, 11.2, 11.10 and 11.11(B) of the
Installment  Sale Agreement,  (B) the moneys due and to become due to the Issuer
for its own account or the members,  officers,  agents  (other than the Company)
and employees of the Issuer for their own account  pursuant to Sections  2.2(F),
4.1(F),  5.3(B)(2),  5.3(C),  6.4(B), 8.2, 8.14 and 10.4 of the Installment Sale
Agreement,  (C) the rights of the Issuer  under  Section 6.6 of the  Installment
Sale Agreement and the moneys due as payments in lieu of taxes under Section 6.6
of the Installment  Sale  Agreement,  and (D) the right to enforce the foregoing
pursuant to Article X of the  Installment  Sale Agreement.  Notwithstanding  the
preceding  sentence,  to the extent the  obligations  of the  Company  under the
Sections of the  Installment  Sale  Agreement  listed in (A) or (C) above do not
relate to the  payment  of moneys to the  Issuer  for its own  account or to the
members,  officers,  agents (other than the Company) and employees of the Issuer
for their own account, such obligations, upon assignment of the Installment Sale
Agreement  by the Issuer to the Trustee  pursuant to the  Assignment  and to the
Bank  pursuant  to  the  Mortgage,  shall  be  deemed  to and  shall  constitute
obligations  of the Company to the Issuer and the Trustee and the Bank,  jointly
and severally,  and either the Issuer or the Trustee or the Bank may commence an
action  to  enforce  the  Company's   obligations  under  the  Installment  Sale
Agreement.

SECTION 1.2. INTERPRETATION.  (A) In the Installment Sale Agreement,  unless the
context otherwise requires:

                  (1)      the terms "hereby", "hereof",  "herein",  "hereunder"
                  and  any  similar  terms  as  used  in  the  Installment  Sale
                  Agreement  refer to the Installment  Sale  Agreement,  and the
                  term "heretofore"  shall mean before, and the term "hereafter"
                  shall mean after, the date of the Installment Sale Agreement;

                  (2)      words of  masculine  gender  shall  mean and  include
                  correlative  words of feminine and neuter  genders,  and words
                  importing  the  singular  number  shall mean and  include  the
                  plural number, and vice versa;

                  (3)      words   importing   persons  shall   include   firms,
                  associations,  partnerships  (including limited partnerships),
                  trusts,  corporations  and  other  legal  entities,  including
                  public bodies, as well as natural persons;

                  (4)      any  headings  preceding  the  texts  of the  several
                  Articles and Sections of the Installment  Sale Agreement,  and
                  any table of  contents or  marginal  notes  appended to copies
                  hereof, shall be solely for convenience of reference and shall
                  neither  constitute a part of the  Installment  Sale Agreement
                  nor affect its meaning, construction or effect; and

                                       9
<PAGE>

                  (5)      any certificates,  letters or opinions required to be
                  given pursuant to the Installment  Sale Agreement shall mean a
                  signed   document    attesting   to   or   acknowledging   the
                  circumstances,  representations,  opinions  of  law  or  other
                  matters  therein  stated or set forth or setting forth matters
                  to be determined pursuant to the Installment Sale Agreement.

                  (B)      If any  one or more of the  covenants  or  agreements
provided herein on the part of the Issuer or the Company to be performed  shall,
for any reason,  be held or shall,  in fact, be  inoperative,  unenforceable  or
contrary to law in any particular case, such  circumstance  shall not render the
provision  in  question  inoperative  or  unenforceable  in any  other  case  or
circumstance.  Further, if any one or more of the phrases,  sentences,  clauses,
paragraphs  or sections  herein should be contrary to law, then such covenant or
covenants  or  agreement  or  agreements  shall  be  deemed  separable  from the
remaining  covenants  and  agreements  hereof  and  shall in no way  affect  the
validity of the other provisions of the Installment Sale Agreement.

                  (C)      The Installment  Sale Agreement shall be construed in
accordance with the applicable laws of the State.


                                       10
<PAGE>


                                   ARTICLE II

                           REPRESENTATIONS, WARRANTIES
                                  AND COVENANTS


SECTION 2.1.  REPRESENTATIONS,  WARRANTIES  AND COVENANTS OF ISSUER.  The Issuer
makes the following  representations,  warranties and covenants as the basis for
the undertakings on its part herein contained:

                  (A)      The Issuer is duly  established  under the provisions
of the Act and has the power to enter into the Installment Sale Agreement and to
carry out its  obligations  hereunder.  Based  upon the  representations  of the
Company as to the utilization of the Project Facility, the Project Facility will
constitute  a  "project",  as such  quoted term is defined in the Act. By proper
official  action,  the Issuer has been duly  authorized to execute,  deliver and
perform the  Installment  Sale  Agreement and the other  Financing  Documents to
which it is a party.

                  (B)      Neither the execution and delivery of the Installment
Sale Agreement, the consummation of the transactions contemplated hereby nor the
fulfillment  of or  compliance  with  the  provisions  of  the  other  Financing
Documents by the Issuer will  conflict  with or result in a breach by the Issuer
of any of the terms,  conditions  or  provisions  of the Act, the by-laws of the
Issuer or any order, judgment,  agreement or instrument to which the Issuer is a
party or by which it is bound,  or will constitute a default by the Issuer under
any of the foregoing.

                  (C)      The Issuer  will  cause the  Project  Facility  to be
acquired,  reconstructed,  constructed  and  installed and will sell the Project
Facility to the Company pursuant to the Installment Sale Agreement,  all for the
purpose of advancing  the job  opportunities,  health,  general  prosperity  and
economic  welfare of the people of the State and  improving  their  standard  of
living.

                  (D)      Except  as  provided  in  Article  IX  hereof  and in
Section  10.2(A)(3)  hereof,  the Issuer, to the extent of its interest therein,
shall not sell,  assign,  transfer,  encumber or pledge as security  the Project
Facility or any part thereof and shall  maintain the Project  Facility  free and
clear of all Liens and  encumbrances,  except as  contemplated or allowed by the
terms of the Installment Sale Agreement and the other Financing Documents.

                  (E)      To assist in financing  the Cost of the Project,  the
Issuer will issue and sell the Bonds. In no event will the Issuer issue and sell
additional  obligations  to pay the Cost of the Project if the issuance and sale
of such further  obligations  would cause  interest on the Bonds to be or become
subject to federal income  taxation  under the Code. The Issuer shall  cooperate
with the Company in the filing by the Company,  as agent of the Issuer,  of such
returns and other  information with the Internal Revenue Service as are required
by any applicable  law or regulation,  provided the Company shall bear all costs
of preparing, gathering and/or filing such returns and other information.

                  (F)      So long as the Bonds shall be outstanding, the Issuer
shall not take any action (or omit to take any action  which the  Trustee or the
Company, together with Bond Counsel, advise the Issuer in writing to take) which
action (or omission) will in any way cause (1) the proceeds from the sale of the
Bonds to be applied  in a manner  contrary  to that  provided  in the  Financing
Documents  or (2) interest on the Bonds to be  includable  under the Code in the
gross income of the holders thereof.


                                       11
<PAGE>

SECTION 2.2. The Company makes the  following  representations,  warranties  and
covenants as the basis for the undertakings on its part herein contained:

                  (A)      The Company is a corporation duly organized,  validly
existing  and in good  standing  under  the laws of the  State of  Virginia,  is
authorized to conduct  business within the State and has the power and authority
to enter into the Installment  Sale Agreement and the other Financing  Documents
to which the  Company  is a party and carry out its  obligations  hereunder  and
thereunder.

                  (B)      Neither the execution and delivery of the Installment
Sale Agreement or the other Financing Documents to which the Company is a party,
the  consummation  of the  transactions  contemplated  hereby or thereby nor the
fulfillment  of or  compliance  with  the  provisions  of the  Installment  Sale
Agreement  or the  other  Financing  Documents  to which it is a party  will (1)
conflict  with  or  result  in a  breach  of  any of the  terms,  conditions  or
provisions of the Company's  Certificate of  Incorporation  or By-Laws or of any
order,  judgment,  agreement or instrument to which the Company is a party or by
which it is bound,  or  constitute  a default  under any of the  foregoing,  (2)
result in the creation or imposition of any Lien of any nature upon any Property
of the  Company  under the terms of any such  instrument  or  agreement,  or (3)
require consent under (which has not been heretofore received), conflict with or
violate any existing law, rule, regulation, judgment, order, writ, injunction or
decree of any  government,  governmental  instrumentality  or court (domestic or
foreign)  having  jurisdiction  over the  Company or any of the  Property of the
Company.

                  (C)      The completion of the Project  Facility by the Issuer
and the lease and sale  thereof by the Issuer to the Company  will not result in
the removal of a commercial, manufacturing or industrial plant of the Company or
any other proposed  occupant of the Project  Facility from one area of the State
to  another  area of the State or in the  abandonment  of one or more  plants or
facilities of the Company or any other proposed occupant of the Project Facility
located in the State.

                  (D)      The  Financing  Documents  to which the  Company is a
party  constitute,  or upon their  execution and delivery in accordance with the
terms thereof will  constitute,  valid and legally  binding  obligations  of the
Company, enforceable in accordance with their respective terms.

                  (E)      So  long  as any  Bond is  Outstanding,  the  Project
Facility will continue to be a "project",  as such quoted term is defined in the
Act,  and the  Company  will  not take any  action  (or omit to take any  action
required by the  Financing  Documents  or which the Trustee or the Issuer or the
Bank,  together  with Bond  Counsel,  advise the  Company  in writing  should be
taken), or allow any action to be taken, which action (or omission) would in any
way (1) cause the Project Facility not to constitute a "project", as such quoted
term is defined in the Act, (2) cause the proceeds of the Bonds to be applied in
a manner  contrary to that provided in the Financing  Documents or (3) adversely
affect the exclusion  from gross income of the interest on the Bonds for federal
income tax purposes.

                  (F)      The Company  shall cause all notices  required by law
to be given,  and shall comply or cause  compliance  with all laws,  ordinances,
municipal rules and regulations and requirements of all Governmental Authorities
applying to or  affecting  the conduct of work on the Project  Facility  and the
Company will defend and save the Issuer and its  officers,  members,  agents and
employees  harmless  from all  fines  and  penalties  due to  failure  to comply
therewith.

                  (G)      The  Company  hereby  covenants  to  comply  with all
mitigation  measures,  requirements  and conditions,  if any,  enumerated in the
findings  issued by the Town of Moreau  under 

                                       12
<PAGE>

SEQR with respect to the Project  Facility and in any other approvals  issued by
any other Governmental Authority.

                  (H)      The Project  Facility and the operation  thereof will
comply  with  all  applicable  building,  zoning,  environmental,  planning  and
subdivision laws, ordinances,  rules and regulations of Governmental Authorities
having jurisdiction over the Project Facility.

                  (I)      All proceeds from the sale of the Bonds shall be used
solely to pay the Cost of the  Project  and the total Cost of the Project is not
expected to be less than $6,000,000.

                  (J)      The  Company  shall  (1)  cause  any  new  employment
opportunities  created in connection  with the Project to be listed with (i) the
Regional Office of the New York State Department of Economic Development serving
Moreau,  New York,  (ii) the New York State  Department  of Labor  Jobs  Service
Division,  and (iii) the  local  service  delivery  area  administrative  entity
created pursuant to the United States Job Training Partnership Act (P.L. 97-300)
serving  Moreau,  New York,  (2) the  Company  shall  file with the Issuer on or
before January 1 of each year during which the Bonds are  outstanding the status
of its  employment  plan with  respect to the Project,  including  the number of
employment  opportunities  created,  the number of employment openings listed in
accordance with (i) above and the number of employment positions filled, and (3)
the Company agrees,  subject to the terms of an existing  collective  bargaining
agreement(s),  to first consider for such new employment  persons eligible under
the United States Job Training Partnership Act.

                  (K)      Except as  provided  in Section  9.4(B)  hereof,  all
items  comprising the Equipment shall remain in the Facility at all times during
which any Bonds are Outstanding.

                  (L)      Not more  than  one-third  of the  total  Cost of the
Project  shall be used to provide  facilities  primarily  used in making  Retail
Sales (as such term is defined in Section  862 of the General  Municipal  Law of
the State) to customers who personally visit such facilities.

                  (M)      All   representations,   warranties,   statements  of
reasonable  expectation  and covenants of the Company made in the Tax Regulatory
Agreement  (including the schedules  attached thereto) are hereby declared to be
for the benefit of, among others, the Issuer and are hereby  incorporated herein
by  reference  with the same force and effect as if set forth in full herein and
are hereby represented to be true and correct.

SECTION 2.3.  COVENANT WITH TRUSTEE AND BONDHOLDERS AND BANK. The Issuer and the
Company agree that the Installment  Sale Agreement is executed in part to induce
the  purchase of the Bonds and to induce the Bank to issue the Letter of Credit.
Accordingly,  all  representations,  covenants and agreements on the part of the
Issuer and the Company set forth in the  Installment  Sale  Agreement are hereby
declared to be for the benefit of the Issuer, the Trustee, the holders from time
to time of the Bonds and the Bank.


                                       13
<PAGE>


                                   ARTICLE III

                     CONVEYANCE AND USE OF PROJECT FACILITY


SECTION 3.1.  CONVEYANCE TO ISSUER.  The Company has conveyed or will convey, or
will cause to be conveyed,  to the Issuer title to the Project Facility pursuant
to the Deed to Issuer and the Bill of Sale to Issuer. The Company represents and
warrants that it has good and marketable title to the Project Facility, free and
clear of all Liens except for  Permitted  Encumbrances,  and agrees that it will
defend,  indemnify  and hold the Issuer,  the Trustee and the Bank harmless from
any expense or liability due to any defect in title thereto.

SECTION  3.2.  USE OF PROJECT  FACILITY.  Subsequent  to the Closing  Date,  the
Company  shall  be  entitled  to use the  Project  Facility  in any  manner  not
otherwise prohibited by the Financing  Documents,  provided that such use causes
the Project  Facility to qualify or continue to qualify as a "project" under the
Act and does not tend, in the  reasonable  judgment of the Issuer,  to bring the
Project Facility into disrepute as a public project; provided, further, however,
that at no time  shall any such use be other  than as a  manufacturing  facility
without the written consent of the Issuer and the Bank.


                                       14
<PAGE>


                                   ARTICLE IV

                  ACQUISITION, CONSTRUCTION AND INSTALLATION OF
              PROJECT FACILITY; ISSUANCE OF BONDS; USE OF PROCEEDS


SECTION 4.1. ACQUISITION, CONSTRUCTION AND INSTALLATION OF PROJECT FACILITY. (A)
The Company  shall,  on behalf of the Issuer,  promptly  acquire,  construct and
install the  Project  Facility  or cause the  Project  Facility to be  acquired,
constructed, and installed, all in accordance with the Plans and Specifications.

                  (B)      No  material  change in the Plans and  Specifications
shall be made  unless the Bank shall have  consented  thereto in writing and the
Issuer shall have been  furnished  with an  unqualified  opinion of Bond Counsel
that the  construction  of the Facility  and  installation  of the  Equipment in
accordance with the revised Plans and  Specifications  will not adversely affect
the tax-exempt status of the interest payable on the Bonds.

                  (C)      Title  to all  materials,  equipment,  machinery  and
other items of Property  intended to be incorporated into or installed in and to
become part of the Project  Facility shall vest in the Issuer  immediately  upon
deposit  on the Land or  incorporation  into or  installation  in the  Facility,
whichever  shall occur first.  The Company shall  execute,  deliver and file all
instruments  necessary or appropriate to vest title in the Issuer and shall take
all action  necessary or appropriate to protect such title against claims of any
third Persons.

                  (D)      The  Issuer   shall  enter   into,   and  accept  the
assignment  of, such contracts as the Company may request in order to effectuate
the purposes of this Section 4.1; provided,  however,  that the liability of the
Issuer thereunder shall be limited to moneys disbursed under the Indenture.

                  (E)      The Issuer  hereby  appoints  the Company as its true
and lawful agent to perform under the following authority in compliance with the
terms,  purposes and intent of the Financing  Documents,  and the Company hereby
accepts such agency:  (1) to acquire the land and  reconstruct and construct the
Facility and acquire,  construct and install the Project Facility,  (2) to make,
execute,  acknowledge and deliver any contracts,  orders, receipts, writings and
instructions  with any other Persons,  and in general to do all things which may
be  requisite  or  proper,   all  for  the   reconstruction,   construction  and
installation  of the  Project  Facility,  with the same powers and with the same
validity as the Issuer could do if acting in its own behalf,  provided  that the
liability of the Issuer thereunder shall be limited to moneys advanced under the
Indenture,   (3)  to  pay  all  fees,   costs  and  expenses   incurred  in  the
reconstruction, construction and installation of the Project Facility from funds
made available  therefor in accordance with the  Installment  Sale Agreement and
the  Indenture,  (4) to request on behalf of the  Issuer,  and  receive  for the
purpose of paying the Cost of the Project,  disbursements of the proceeds of the
Bonds pursuant to the Indenture,  (5) to ask, demand, sue for, levy, recover and
receive all such sums of money,  debts, dues and other demands  whatsoever which
may be due,  owing and  payable to the Issuer  under the terms of any  contract,
order,  receipt or writing in connection with the  reconstruction,  construction
and  installation  of the Project  Facility and to enforce the provisions of any
contract,   agreement,   obligation,  bond  or  other  performance  security  in
connection  with the same, and (6) to appoint  sub-agents in connection with any
of the foregoing.

                  (F)      The  Company  has  given or will  give or cause to be
given all notices and has complied or will comply or cause  compliance  with all
laws,  ordinances,  rules,  regulations  and  


                                       15
<PAGE>

requirements  of all  Governmental  Authorities  applying  to or  affecting  the
conduct of work on the Project Facility, and the Company will defend,  indemnify
and save the Issuer,  the Trustee  and the Bank and their  respective  officers,
members,  agents,  servants and employees  harmless from all fines and penalties
due to failure to comply therewith.  All permits and licenses  necessary for the
prosecution of work on the Project  Facility  shall be procured  promptly by the
Company.

                  (G)      To the extent required by applicable law, the Company
will cause (1) compliance with the requirements of Article 8 of the Labor Law of
the State, and (2) any contractor,  subcontractors and other persons involved in
the construction and installation of the Project Facility to comply with Article
8 of the Labor Law of the State.

                  (H)      The  Company  for  itself and on behalf of the Issuer
covenants that the moneys advanced  pursuant to the Indenture shall be held as a
trust  fund  pursuant  to  Section 13 of the Lien Law of the State to be applied
first for the purpose of paying the Cost of Improvement  (as defined in the Lien
Law) with  regard to the  Project  Facility  and it will apply the same first to
such payment before using any part thereof for any other purpose.

                  (I)      The  Company  agrees to file with the  Department  of
Taxation  and  Finance  of the  State  in a manner  and at the  time  prescribed
thereby,  information relating to the extent of exemption from sales and use tax
claimed with respect to the  construction  and equipping of the Project Facility
all in  compliance  with Section 874 of the General  Municipal Law of the State.
THE COMPANY  ACKNOWLEDGES THAT THE FAILURE TO COMPLY WITH THE PROVISIONS OF SAID
SECTION 874 SHALL RESULT IN A REVOCATION  OF THE AUTHORITY  GRANTED  PURSUANT TO
SUBSECTION (E) OF THIS SECTION 4.1.

SECTION 4.2. ISSUANCE OF BONDS. In order to finance a portion of the Cost of the
Project,  together  with  other  costs and  incidental  expenses  in  connection
therewith,  the Issuer agrees that it will issue, sell and cause to be delivered
to the purchaser  thereof the Bonds,  as provided in the  Indenture.  THE ISSUER
MAKES NO REPRESENTATION,  EXPRESS OR IMPLIED, THAT THE NET PROCEEDS OF THE BONDS
WILL BE SUFFICIENT TO COMPLETE THE ACQUISITION, CONSTRUCTION AND INSTALLATION OF
THE PROJECT FACILITY.

SECTION 4.3.  APPLICATION OF PROCEEDS OF BONDS.  The proceeds of the sale of the
Bonds  shall be  deposited  by the Issuer  with the  Trustee as  provided in the
Indenture and,  following the Completion Date and upon submission to the Trustee
of a Request for Disbursement  certified by an Authorized  Representative of the
Company,  and otherwise  complying with the  requirements of the Indenture,  the
Reimbursement Agreement and the Building Loan Agreement, shall be applied to pay
the following  items of cost and expenses in connection  with the acquisition of
the Land, the construction of the Facility,  the acquisition and installation of
the Equipment and the financing of the same, and for no other purpose:

                  (A)      the cost of preparing the Plans and Specifications as
they relate to the Facility and the Equipment  (including any preliminary  study
or planning for the Facility and the Equipment or any necessary further study or
any aspect thereof);

                  (B)      all costs incurred in connection with the acquisition
of  the  Land,  the  construction  of  the  Facility  and  the  acquisition  and
installation  of  the  Equipment  (including   architectural,   engineering  and
supervisory services with respect thereto);

                                       16
<PAGE>

                  (C)      all  fees,  taxes,  charges  and other  expenses  for
recording or filing,  as the case may be, the Assignment,  the Installment  Sale
Agreement or a Memorandum thereof, the Indenture,  the Mortgage,  the Collateral
Mortgage any other agreement  contemplated  hereby, any financing statements and
any title curative documents that the Issuer or the Trustee or the Bank may deem
desirable in order to perfect or protect the Issuer's, the Trustee's, the Bank's
or the Company's respective interests in the Project Facility,  and any security
interests contemplated by the Financing Documents;

                  (D)      all fees and expenses in connection  with any actions
or proceedings  that the Issuer or the Trustee or the Bank may deem desirable in
order to perfect or  protect  the  Issuer's,  the  Trustee's,  the Bank's or the
Company's  respective  interests  in the Project  Facility,  except for removing
Permitted Encumbrances;

                  (E)      any expenses of the Company in  enforcing  any remedy
against any contractor or subcontractor in accordance with Section 4.6 hereof;

                  (F)      the cost of all insurance  maintained with respect to
the Project  Facility  pursuant to Section  6.3 hereof  during the  Construction
Period and the cost of maintaining a payment and performance  bond (or letter of
credit in  substitution  therefor),  if any,  with  respect to the  Construction
Contract;

                  (G)      all   interest   payable  on  the  Bonds  during  the
Construction Period;

                  (H)      all  interest  payable on any interim  financing  the
Company may have secured with respect to the Project Facility in anticipation of
the issuance of the Bonds;

                  (I)      all legal, accounting, financial advisory, investment
banking,  underwriting,  rating agency, blue sky, legal investment and any other
fees,  discounts,  costs and expenses incurred by the Issuer,  the Company,  the
Trustee  or  the  Bank  in  connection  with  the   preparation,   reproduction,
authorization, issuance, execution, delivery and sale of the Bonds and the other
Financing  Documents and all other documents in connection  therewith,  with the
acquisition of the Land, the  construction  of the Facility and the  acquisition
and installation of the Equipment,  and with any other transaction  contemplated
by the Bonds, the Indenture and the Installment Sale Agreement;

                  (J)      the  administration  and acceptance  fees,  costs and
expenses  (including,  but not limited to,  reasonable  attorneys'  fees) of the
Issuer, the Trustee and the Bank;

                  (K)      all title insurance, appraisal and surveying costs;

                  (L)      payment of the taxes and  assessments for the Project
Facility payable during or allocable to the Construction Period;

                  (M)      the   satisfaction   of  any  existing   indebtedness
encumbering the Project Facility; and

                  (N)      reimbursement  to the  Company  for any of the  above
enumerated costs and expenses paid and incurred by the Company.

SECTION 4.4.  COMPLETION OF PROJECT FACILITY.  The Company will proceed with due
diligence to complete in a good and  workmanlike  manner the  acquisition of the
Land, the  construction of the Facility and the acquisition and  installation of
the Equipment and in any event  completion of the 

                                       17
<PAGE>

Project  Facility  shall occur  within  three (3) years from the  Closing  Date.
Completion  of the  same  shall  be  evidenced  by a  certificate  signed  by an
Authorized  Representative of the Company  delivered to the Issuer,  the Trustee
and the Bank  stating  (A) the  date of such  completion,  (B)  that all  labor,
services,  materials  and supplies  used  therefor and all costs and expenses in
connection  therewith have been or will be paid, (C) that the acquisition of the
Land, the  construction of the Facility and the acquisition and  installation of
the Equipment have been completed with the exception of ordinary punchlist items
and work awaiting seasonal  opportunity,  (D) that the Company or the Issuer has
good and valid  title to all  Property  constituting  a portion  of the  Project
Facility,  and that the  Project  Facility  is subject to the  Installment  Sale
Agreement and that the Project  Facility is subject to the Lien of the Mortgage,
and (E) that the Project Facility is ready for occupancy,  use and operation for
its intended purposes. Notwithstanding the foregoing, such certificate may state
(1) that it is given  without  prejudice  to any rights of the  Company  against
third  parties  which  exist  at the  date  of such  certificate  or  which  may
subsequently come into being, (2) that it is given only for the purposes of this
Section 4.4,  and (3) that no Person other than the Issuer,  the Trustee and the
Bank may benefit  therefrom.  Such  certificate  shall be  accompanied  by (a) a
certificate  of  occupancy,  or a letter  from the Local  Authority  stating  no
certificate of occupancy is required,  and any and all permissions,  licenses or
consents required of Governmental  Authorities for the occupancy,  operation and
use of the Project  Facility for its intended  purposes,  (b) if  requested,  an
opinion of counsel to the Company  addressed to the Issuer,  the Trustee and the
Bank that the Indenture constitutes a valid first Lien on and perfected security
interest in the Trust Revenues subject only to Permitted Encumbrances,  and that
the Project  Facility will serve the purposes  contemplated  by the  Installment
Sale Agreement and the Indenture and (c) any other items reasonably requested by
the Issuer or the Trustee or the Bank.

SECTION 4.5.  COMPLETION  BY COMPANY.  (A) In the event that the proceeds of the
Bonds  are not  sufficient  to pay in full all  costs  of  acquiring  the  Land,
constructing  the Facility and  acquiring  and  installing  the  Equipment,  the
Company  agrees,  for the benefit of the Issuer and the Trustee and the Bank, to
complete such  acquisition,  construction  and  installation and to pay all such
sums as may be in excess of the moneys  available  therefor in the Project Fund.
Title to the interest in the Facility  constructed and the Equipment acquired or
installed at the Company's  expense  shall  immediately  upon such  acquisition,
construction  or  installation  vest in the Issuer.  The Company shall  execute,
deliver and record or file such  instruments  as the Issuer may request in order
to perfect or protect the Issuer's  title to or interest in such portions of the
Facility and the Equipment as are contemplated in this paragraph.

                  (B)      No payment by the Company  pursuant  to this  Section
4.5 shall entitle the Company to any reimbursement for any such expenditure from
the Issuer or the  Trustee or to any  diminution  or  abatement  of any  amounts
payable by the Company under the Installment Sale Agreement.

SECTION  4.6.  REMEDIES  TO  BE  PURSUED  AGAINST  CONTRACTORS,  SUBCONTRACTORS,
MATERIALMEN  AND THEIR  SURETIES.  In the event of a default by any  contractor,
subcontractor  or materialman  under any contract made by it in connection  with
the  construction  of the Facility or the  acquisition  and  installation of the
Equipment  or in the  event of a breach  of  warranty  or other  liability  with
respect to any materials,  workmanship or performance guaranty,  the Company may
proceed,  either  separately  or in  conjunction  with  others,  to exhaust  the
remedies of the Company and the Issuer against the contractor,  subcontractor or
materialman  so in default and against each surety for the  performance  of such
contract. The Company may, in its own name or, with the prior written consent of
the  Issuer,  in the name of the  Issuer,  prosecute  or  defend  any  action or
proceeding   or  take  any  other   action   involving   any  such   contractor,
subcontractor,   materialman  or  surety  which  the  Company  deems  reasonably
necessary,  and in such event the Issuer hereby  agrees,  at the Company's  sole
expense, to cooperate fully with the Company and to take all action necessary to
effect the  substitution  of the  Company  for the Issuer in any 

                                       18
<PAGE>

such action or  proceeding.  The Company  shall  immediately  advise the Issuer,
Trustee  and the Bank of any actions or  proceedings  taken  hereunder.  The Net
Proceeds  of any  recovery  secured  by the  Company  as a result of any  action
pursued  against a  contractor,  subcontractor,  materialman  or their  sureties
pursuant to this  Section 4.6 shall be used to the extent  necessary to complete
the Project  Facility,  the balance then to be deposited  in the  Insurance  and
Condemnation Fund and applied as provided in Section 4.03 of the Indenture.


                                       19
<PAGE>


                                    ARTICLE V

                AGREEMENT TO CONVEY PROJECT FACILITY; INSTALLMENT
                  PURCHASE PAYMENTS AND OTHER AMOUNTS PAYABLE


SECTION 5.1.  AGREEMENT TO CONVEY  PROJECT  FACILITY.  In  consideration  of the
Company's  covenant  herein  to  make  installment   purchase  payments  and  in
consideration of the other covenants of the Company contained herein,  including
the covenant to make additional and other payments  required hereby,  the Issuer
hereby agrees to sell and convey to the Company,  and the Company  hereby agrees
to purchase and acquire from the Issuer,  the Project Facility,  subject only to
Permitted  Encumbrances  and the Lien of the  Mortgage.  The  obligation  of the
Issuer under this Section to convey the Project Facility to the Company shall be
subject to there  being no Event of  Default  existing  hereunder,  or any other
event which would, but for the passage of time, be an Event of Default.

SECTION 5.2. CONVEYANCE; INSTRUMENTS. (A) the Project Facility shall be conveyed
from the  Issuer to the  Company on April 1, 2008,  or on such  earlier  date as
hereinafter provided.

                  (B)      The sale and conveyance of the Issuer's right,  title
and  interest  in and to the Land and the  Facility  shall  be  effected  by the
execution,  delivery  and  recording by the Issuer of the Deed to the Company (a
form of which is attached hereto as Exhibit "C"). The sale and conveyance of the
Issuer's right,  title and interest in and to the Equipment shall be effected by
the  execution  and delivery by the Issuer to the Company of the Bill of Sale to
the Company (a form of which is attached hereto as Exhibit "D").

                  (C)      The Company hereby agrees to pay all expenses, filing
and recording fees and taxes, if any, applicable to or arising from the transfer
contemplated by this Section.

SECTION 5.3.  INSTALLMENT PURCHASE PAYMENTS AND OTHER AMOUNTS PAYABLE. (A) On or
before each Bond Payment Date,  the Company shall pay to the Trustee for deposit
into the Bond Fund an amount  which,  when added to any amounts then held in the
Bond Fund, shall equal the amount payable as principal of, and premium,  if any,
and interest on the Bonds on such Bond  Payment Date and all other  amounts then
due or past due on the Bonds,  including any late charges  accruing  thereon and
any  acceleration  or  prepayment  of principal  and accrued  interest  thereon.
Notwithstanding  the  foregoing,  while the Letter of Credit is in  effect,  the
Company shall  deposit all such amounts  directly with the Bank to reimburse the
Bank for draws on the Letter of Credit, and the Bank shall apply such amounts to
the  reimbursement  obligation of the Company.  The obligation of the Company to
make any payment  hereunder  shall be deemed  satisfied  and  discharged  to the
extent of the  corresponding  payment made by the Bank to the Trustee  under the
Letter of Credit, provided further, however, that any payment by the Bank to the
Trustee  under the Letter of Credit  will not  relieve the Company of any of its
obligations under the Reimbursement Agreement.

                  (B)      The  Company  shall  pay  as  additional  installment
purchase payments any premium due on the Bonds and any of the following:

                           (1)      Within  thirty (30) days after  receipt of a
                  demand therefor from the Trustee, the Company shall pay to the
                  Trustee the following amounts:

                                       20
<PAGE>

                           (a)      the  reasonable  fees  and  expenses  of the
                  Trustee for performing its obligations under the Indenture;

                           (b)      the  sum of  the  expenses  of  the  Trustee
                  reasonably  incurred in performing the  obligations of (i) the
                  Company  under the  Installment  Sale  Agreement,  or (ii) the
                  Issuer under the Bonds,  the Indenture or the Installment Sale
                  Agreement; and

                           (c)      the  Trustee's  reasonable  attorneys'  fees
                  incurred in connection with the foregoing and any other moneys
                  due  the  Trustee  pursuant  to the  provisions  of any of the
                  Financing Documents.

                           (2)      (a) Within thirty (30) days after receipt of
         a demand therefor from the Issuer,  the Company shall pay to the Issuer
         the sum of the reasonable  expenses  including  attorneys'  fees of the
         Issuer and the officers, members, agents and employees thereof incurred
         by reason of the Issuer's  ownership,  financing or sale of the Project
         Facility or in connection  with the carrying out of the Issuer's duties
         and  obligations  under the  Installment  Sale  Agreement or any of the
         other  Financing  Documents,  and any other  reasonable  expense of the
         Issuer with  respect to the Project  Facility,  the sale of the Project
         Facility  to the  Company,  the  Bonds  or any of the  other  Financing
         Documents, the payment of which is not otherwise provided for under the
         Installment Sale Agreement.

                  (C)      The  Company  agrees  to  make  the   above-mentioned
payments,  without any further  notice,  in lawful money of the United States of
America  as, at the time of  payment,  shall be legal  tender for the payment of
public  and  private  debts.  In the event the  Company  shall  fail to make any
payment  required  by this  Section  5.3 for a period of more than ten (10) days
from the date such payment is due, the Company shall pay the same, together with
interest  thereon,  at a rate of two percent  (2%) per month or the maximum rate
permitted by law, whichever is less, from the date on which such payment was due
until the date on which such payment is made.

                  (D)      In the  event  of an  application  of  moneys  in the
Project Fund toward prepayment of the principal of the Bonds pursuant to Section
4.02 of the  Indenture,  there shall be no abatement or reduction in the amounts
payable by the Company under this Section 5.3.

SECTION 5.4. NATURE OF OBLIGATIONS OF COMPANY HEREUNDER.  (A) The obligations of
the Company to make the payments  required by the Installment Sale Agreement and
to perform and observe any and all of the other  covenants and agreements on its
part contained  herein shall be general  obligations of the Company and shall be
absolute and unconditional irrespective of any defense or any rights of set-off,
recoupment or  counterclaim  the Company may otherwise  have against the Issuer,
the  Trustee  or the  Bank.  The  Company  agrees  that  it  will  not  suspend,
discontinue  or abate any  payment  required  by, or fail to observe  any of its
other covenants or agreements  contained in, the Installment Sale Agreement,  or
terminate the Installment  Sale Agreement for any cause  whatsoever,  including,
without  limiting  the  generality  of the  foregoing,  failure to complete  the
acquisition of the Land, the construction of the Facility or the acquisition and
installation  of the  Equipment,  any  material  defect  in the  title,  design,
operation, merchantability,  fitness or condition of the Project Facility or any
part thereof or in the  suitability of the Project  Facility or any part thereof
for the Company's purposes or needs,  failure of consideration for,  destruction
of or damage to,  Condemnation  of title to or the use of all or any part of the
Project  Facility,  any change in the tax or other laws of the United  States of
America or of the State or any political  subdivision thereof, or any failure of
the Issuer to perform and observe any agreement,  whether  expressed or implied,
or any duty,  liability or obligation  arising out of or in connection  with the
Installment Sale Agreement.

                                       21
<PAGE>

                  (B)      Nothing  contained  in  this  Section  5.4  shall  be
construed to release the Issuer from the performance of any of the agreements on
its part  contained in the  Installment  Sale  Agreement,  and, in the event the
Issuer should fail to perform any such agreement, the Company may institute such
action  against  the  Issuer  as  the  Company  may  deem  necessary  to  compel
performance  (subject  to the  provisions  of Section  11.10  hereof) or recover
damages for  non-performance;  provided,  however,  that the Company  shall look
solely to the  Issuer's  estate and  interest  in the Project  Facility  for the
satisfaction  of any right or  remedy of the  Company  for the  collection  of a
judgment  (or other  judicial  process)  requiring  the  payment of money by the
Issuer in the event of any  liability  on the part of the  Issuer,  and no other
Property or assets of the Issuer shall be subject to levy, execution, attachment
or other  enforcement  procedure for the satisfaction of the Company's  remedies
under or with respect to the Installment Sale Agreement, the relationship of the
Issuer and the  Company  hereunder  or the  Company's  lease of and title to the
Project Facility, or any other liability of the Issuer to the Company.

SECTION 5.5. PREPAYMENT OF INSTALLMENT  PURCHASE PAYMENTS.  At any time that any
Bond is subject to prepayment,  to the extent and subject to the conditions upon
which  prepayment  of such Bond is permitted by the terms  thereof,  the Company
may,  at its  option,  prepay,  in whole or in part,  the  installment  purchase
payments payable hereunder by either (A) causing there to be Available Moneys in
an amount equal to the  redemption  price of the Bonds being redeemed on deposit
with the Trustee  thirty-five  (35) days prior to the date such moneys are to be
applied to the redemption of Bonds under Section 8.02 of the  Indenture,  or (B)
delivering to the Trustee  notice of its election to cause the redemption of the
Bonds together with a written  assurance from the Bank that the Letter of Credit
may be drawn upon to pay the redemption price of the Bonds being redeemed. In no
event shall prepayment be permitted unless the Company shall give to the Trustee
the notice required by Section 8.02 of the Indenture.

SECTION  5.6.  RIGHTS AND  OBLIGATIONS  OF  COMPANY  UPON  DISCHARGE  OF LIEN OF
MORTGAGE.  (A) Subject to the provisions of Section 5.6(B) hereof,  in the event
the  Bonds  and all sums due under  the  Reimbursement  Agreement  and the other
Financing  Documents  shall have been paid in full, the Issuer shall request the
Bank to do all acts and execute all documents as may be reasonably  necessary to
effect the satisfaction and discharge of the Lien of the Mortgage on the Project
Facility.

                  (B)      The  conditions  that must be  satisfied  in order to
obtain the discharge and satisfaction of the Lien of the Mortgage on the Project
Facility  shall be determined in accordance  with the provisions of the Mortgage
and the Indenture.  In the event that such conditions are satisfied,  the Issuer
shall  request  the  Bank  to do all  acts  and  execute  all  documents  as may
reasonably  be necessary to effect  discharge of the Lien of the Mortgage on the
Project  Facility,  and,  at the request of the  Company,  shall do all acts and
execute all  documents as may  reasonably  be necessary to discharge the Lien of
the  Installment  Sale Agreement on the Project  Facility to the extent the same
may be discharged.

SECTION 5.7. GRANT OF SECURITY INTEREST.  The Company hereby grants the Issuer a
security interest in all of the right,  title and interest of the Company in the
Project Facility and in all additions and accessions  thereto,  all replacements
and substitutions  therefor and all proceeds thereof and all books,  records and
accounts  of the Company  pertaining  to the  Project  Facility as security  for
payment  of the  installment  purchase  payments  and  all  other  payments  and
obligations of the Company hereunder.  The Company hereby  irrevocably  appoints
the  Issuer  as its  attorney-in-fact  to  execute  and  deliver  and  file  any
instruments  necessary  or  convenient  to perfect  and  continue  the  security
interest granted herein.

                                       22
<PAGE>


                                   ARTICLE VI

                 MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE


SECTION 6.1.  MAINTENANCE AND MODIFICATIONS OF PROJECT FACILITY.  (A) So long as
any of the Bonds are Outstanding the Company shall (1) keep the Project Facility
in good condition and repair and preserve the same against waste,  loss,  damage
and  depreciation,  ordinary  wear and  tear  excepted,  (2) make all  necessary
repairs and  replacements to the Project  Facility or any part thereof  (whether
ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen),
and (3)  operate  the  Project  Facility  in a  sound,  economic  manner  and in
conformity with all applicable environmental laws and regulations.

                  (B)      After the Construction  Period, the Company shall not
make any structural  additions,  modifications  or  improvements  to the Project
Facility  without the prior written  consent of the Bank, and in any event shall
not make any such structural additions, modifications or improvements unless:

                           (1)      the  Company  shall  (a) give or cause to be
         given  all  notices  and  comply  or cause  compliance  with all  laws,
         ordinances,  municipal rules and  regulations  and  requirements of all
         Governmental  Authorities  applying to or affecting the conduct of work
         on such addition,  modification or improvement to the Project Facility,
         or a part thereof,  (b) defend and save the Issuer, the Trustee and the
         Bank and their  respective  officers,  members,  agents  and  employees
         harmless  from  all  fines  and  penalties  due to  failure  to  comply
         therewith,  (c) promptly procure all permits and licenses necessary for
         the prosecution of any work described in this Section  6.1(B),  and (d)
         make all payments in lieu of taxes required by Section 6.6 hereof;

                           (2)      the addition, modification or improvement to
         the Project  Facility  shall not  constitute a default under any of the
         Financing Documents; and

                           (3)      the Company shall furnish to the Issuer, the
         Trustee  and the  Bank,  at least  30 days  prior  to  commencing  such
         addition, modification or improvement an opinion, in form and substance
         satisfactory  to the Issuer,  the Trustee and the Bank, of Bond Counsel
         that the  tax-exempt  status of the  interest  on the Bonds will not be
         adversely affected thereby.

SECTION 6.2. TAXES,  ASSESSMENTS AND UTILITY CHARGES.  (A) The Company shall pay
or cause to be paid,  as the same  respectively  become  due,  (1) all taxes and
governmental  charges of any kind  whatsoever  which may at any time be lawfully
assessed  or levied  against or with  respect to the Project  Facility,  (2) all
utility and other charges, including "service charges",  incurred or imposed for
the  operation,  maintenance,  use,  occupancy,  upkeep and  improvement  of the
Project Facility,  and (3) all assessments,  rents and other charges of any kind
whatsoever lawfully made by any Governmental  Authority for public improvements;
provided that, with respect to special assessments or other governmental charges
that may lawfully be paid in  installments  over a period of years,  the Company
shall be obligated hereunder to pay only such installments as are required to be
paid during all periods that sums payable by the Company  hereunder or under any
of the other Financing Documents are due and owing.

                  (B)      Notwithstanding  the  provisions of subsection (A) of
this  Section  6.2  but  subject,   however,   to  the   provisions  of  Section
2.02(B)(3)(b)  of the PILOT  Agreement,  the Company may in good faith  

                                       23
<PAGE>

actively  contest any such taxes,  assessments and other charges,  provided that
the Company shall have paid such taxes.

SECTION  6.3.  INSURANCE  REQUIRED.  At all times  that any Bond is  Outstanding
and/or  the  Issuer is the owner of the  Project  Facility,  the  Company  shall
maintain or, with respect to the insurance  required by  Subsection  (E) of this
Section 6.3, cause the general contractor to maintain, insurance with respect to
the Project  Facility against such risks and for such amounts as are customarily
insured against by businesses of like size and type,  paying, as the same become
due  and  payable,  all  premiums  with  respect  thereto,  including,  but  not
necessarily limited to:

                  (A)      (1)  Prior to  completion  of the  Project  Facility,
builder's  all-risk (or  equivalent  coverage)  insurance  upon any work done or
material  furnished in connection with the  reconstruction  and equipping of the
Project  Facility  with extended  coverage for  vandalism,  malicious  mischief,
debris removal and collapse insurance endorsements issued to the Company and the
Issuer as  insured,  and the Bank as  mortgagee  and loss payee under a New York
standard   mortgagee   clause,   and  written  in  one  hundred  percent  (100%)
non-reporting  completed  form with fire and  extended  coverage  in the  Stated
Amount,  and (2)  with  respect  to the  Project  Facility,  at such  time  that
builder's  risk  insurance  shall not be available due to the  completion of the
Project  Facility,  insurance  protecting  the  interests of the Company and the
Issuer as insured and the Bank and as mortgagee and loss payee,  as its interest
may appear,  against loss or damage to the Project Facility by fire,  lightning,
vandalism,  malicious  mischief and other perils normally insured against with a
uniform extended coverage  endorsement,  such insurance at all times to be in an
amount  not less than the  greater  of the total  principal  amount of the Bonds
Outstanding  or  the  total  cash  replacement  cost  of the  Project  Facility,
exclusive of footings and  foundations  as  determined at least once every three
(3)  years  by a  recognized  appraiser  or  insurer  selected  by the  Company;
provided,  however,  that the  Company  may,  with the consent of the Bank (such
consent not to be  unreasonably  withheld or delayed) insure all or a portion of
the Project Facility under a blanket  insurance policy or policies  covering not
only the Project Facility or portions thereof but other Property.

                  (B)      To  the  extent  applicable,   workers'  compensation
insurance, disability benefits insurance and such other forms of insurance which
the Company is required by law to provide,  covering loss resulting from injury,
sickness,  disability or death of employees of the Company who are located at or
assigned to the Project  Facility or who are responsible for the  reconstruction
and construction of the Facility or the installation of the Equipment.

                  (C)      Insurance  protecting the Company, the Issuer and the
Bank  against loss or losses from  liabilities  imposed by law or assumed in any
written  contract  (including,  without  limitation,  the contractual  liability
assumed by the Company under Sections 8.2, 8.12 and 8.13 of the Installment Sale
Agreement)  and arising from personal  injury or death or damage to the Property
of others  caused by any  accident or  occurrence,  with limits of not less than
$2,000,000 per person per accident or occurrence on account of personal  injury,
including death resulting  therefrom,  and $2,000,000 per accident or occurrence
on account of damage to the Property of others, excluding liability imposed upon
the Company by any applicable workers' compensation law, and a separate umbrella
liability policy with a limit of not less than $5,000,000.

                  (D)      If the  Project  Facility  is located  within an area
identified by the Secretary of Housing and Urban  Development  as having special
flood hazards,  insurance  against loss by floods in an amount at least equal to
the total principal  amount of the Bonds  Outstanding or to the maximum limit of
coverage made available, whichever is less.

                                       24
<PAGE>

                  (E)      During   the   Construction   Period,   the   general
contractor and any subcontractor constructing and equipping the Project Facility
shall be  required to carry  workers'  compensation  and  general  comprehensive
liability insurance containing  coverages for premises operations,  products and
completed  operations,   explosion,  collapse  and  underground  damage  hazard,
contractor's  protective,   owner's  protective  and  coverage  for  all  owned,
non-owned and hired  vehicles  with  non-ownership  protection  from the general
contractor or subcontractor's employees providing the following minimum limits:

                           (a)      Workers'    compensation    and   employer's
                                    liability - in  accordance  with  applicable
                                    law,  covering loss  resulting  from injury,
                                    sickness,  disability and death of employees
                                    located at or  assigned  to the  Facility or
                                    who are responsible for the  construction of
                                    the  Facility  or  the  installation  of the
                                    Equipment.

                           (b)      comprehensive general liability:

                                    (i)      Bodily   injury   liability  in  an
                                    amount  not less  than  $1,000,000  for each
                                    accident  and not less than  $5,000,000  for
                                    injuries sustained by two or more persons in
                                    any one accident.

                                    (ii)     Property  damage  liability  in  an
                                    amount  not less  than  $1,000,000  for each
                                    accident and not less than $5,000,000 in the
                                    aggregate   for  each  year  of  the  policy
                                    period.

                           (c)      Comprehensive automobile liability:

                                    (i)      Bodily   injury   liability  in  an
                                    amount  not less  than  $1,000,000  for each
                                    accident  and not less than  $5,000,000  for
                                    injuries sustained by two or more persons in
                                    any one accident.

                  (F)      Business   Interruption   insurance   in  an   amount
sufficient to cover any loss of income from the Project Facility for a period of
not less than twelve (12) months, to be reviewed and adjusted annually.

                  (G)      Other insurance coverage required by any Governmental
Authority in connection with any Requirement.

                  (H)      THE ISSUER DOES NOT IN ANY WAY  REPRESENT  OR WARRANT
THAT THE INSURANCE SPECIFIED HEREIN,  WHETHER IN SCOPE OR IN LIMITS OF COVERAGE,
IS ADEQUATE OR SUFFICIENT  TO PROTECT THE COMPANY'S OR THE TRUSTEE'S  RESPECTIVE
BUSINESS OR INTERESTS.

SECTION 6.4.  ADDITIONAL  PROVISIONS  RESPECTING  INSURANCE.  (A) All  insurance
required by Section 6.3 hereof shall be procured and  maintained in  financially
sound and generally recognized  responsible  insurance companies selected by the
Company and authorized to write such insurance in the State and  satisfactory to
the Issuer and the Bank. The company or companies  issuing the policies required
by  Sections  6.3(A) and 6.3(F)  shall be rated "A" or better by A.M.  Best Co.,
Inc. in the most recent  edition of Best's Key Rating Guide.  Such insurance may
be written  with  deductible  amounts  comparable  to those on similar  policies
carried by other companies engaged in businesses similar in size,  character and
other respects to those in which the Company is engaged. All policies evidencing
such  insurance  shall name the  Company  and the Issuer as  insureds,  policies
evidencing  insurance  as  required  by  Section  6.3(A)  shall name the Bank as
mortgagee and loss payee,  as its interest may appear,  and provide for at least
thirty (30) days' written  notice to the Company,  the Issuer and the Bank prior
to  


                                       25
<PAGE>

cancellation,  lapse,  reduction in policy limits or material change in coverage
thereof and shall contain a standard mortgagee  endorsement in favor of the Bank
as mortgagee and loss payee, as its interest may appear.  All insurance required
hereunder shall be in form, content and coverage  satisfactory to the Issuer and
the Bank. Binders  satisfactory in form and substance to the Issuer and the Bank
to evidence all insurance  required  hereby shall be delivered to the Issuer and
the Bank on or before the Closing Date.  The Company shall deliver to the Issuer
and the  Bank  on or  before  the  first  Business  Day of  each  calendar  year
thereafter a binder dated not earlier than the  immediately  preceding  November
15th  reciting  that there is in full force and effect,  with a term covering at
least the next  succeeding  calendar  year,  insurance in the amounts and of the
types  required by Sections 6.3 and 6.4 hereof.  At least thirty (30) days prior
to the  expiration  of any such policy,  the Company shall furnish to the Issuer
and the Bank  evidence  that the policy has been  renewed or  replaced  or is no
longer required by the Installment Sale Agreement.

                  (B)      All premiums with respect to the  insurance  required
by Section 6.3 hereof shall be paid by the Company; provided,  however, that, if
the premiums are not timely paid,  the Issuer or the Bank may pay such  premiums
and the Company  shall pay  immediately  upon demand all sums so expended by the
Issuer or the Bank  together with interest at a rate of one and one half percent
(1.5%) per month or the highest rate  permitted by law,  whichever is less.  All
amounts so paid by the Issuer or the Bank together  with interest  thereon shall
be deemed secured by the Financing Documents.

                  (C)      (1) The Company shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under Section 6.3 unless the Issuer and the Bank are included therein
as  a  named   insured   with  loss   payable  to  the  Bank  under  a  standard
non-contributory  mortgage  endorsement of the above  described  character.  The
Company shall immediately  notify the Bank whenever any such separate  insurance
is taken out and shall promptly deliver to the Bank and the Issuer the policy or
policies of such insurance.

                           (2) Each of the policies required pursuant to Section
6.3 hereof shall waive any right of subrogation against any Person insured under
such  policy,  and shall  waive  any right of the  insurers  to any  set-off  or
counterclaim  or any other  deduction,  whether by attachment  or otherwise,  in
respect of any liability of any Person insured under such policy.

SECTION 6.5.  APPLICATION OF NET PROCEEDS OF INSURANCE.  The Net Proceeds of the
insurance  carried  pursuant to the  provisions  of Section 6.3 hereof  shall be
applied as follows:  (A) the Net Proceeds of the  insurance  required by Section
6.3(A) and 6.3(D)  hereof  shall be paid to the Bank and  applied as provided in
Section 7.1 hereof,  (B) the Net Proceeds of the  insurance  required by Section
6.3(B),  6.3(C), 6.3(E) and 6.3(G) hereof shall be applied toward extinguishment
or satisfaction  of the liability with respect to which such insurance  proceeds
may be paid and (C) the Net Proceeds of the insurance required by Section 6.3(F)
shall be applied toward Debt Service Payments.

SECTION 6.6.  PAYMENTS IN LIEU OF TAXES.  (A) It is recognized  that,  under the
provisions  of the Act,  the Issuer is required  to pay no taxes or  assessments
upon any of the property  acquired by it or under its  jurisdiction,  control or
supervision or upon its  activities.  It is not the intention,  however,  of the
parties hereto that the Project Facility be treated as exempt from real property
taxation.  Accordingly,  the parties  acknowledge  that a Payment In Lieu of Tax
Agreement (the "PILOT  Agreement") has been executed with respect to the Project
Facility.  Until the expiration date of the PILOT Agreement,  the Issuer and the
Company  hereby  agree that the Company (or any  subsequent  user of the Project
Facility under this  Installment  Sale  Agreement)  shall be required to make or
cause to be made payments in lieu of real estate taxes in the amounts and in the
manner set forth in the PILOT Agreement.

                                       26
<PAGE>

                  (B)      In the event that (1) the Project  Facility  would be
subject to real  property  taxation  if owned by the Company but shall be deemed
exempt  from  real  property  taxation  due to  the  involvement  of the  Issuer
therewith,  and (2) the PILOT  Agreement shall not have been entered into by the
Issuer and the Company,  or, if entered into, the PILOT  Agreement shall for any
reason no longer be in effect,  the Issuer and the Company hereby agree that the
Company,  or any subsequent user of the Project  Facility under this Installment
Sale  Agreement,  shall in such  event be  required  to make or cause to be made
payments  in lieu of taxes to the school  district  or school  districts,  city,
town, county,  village and other political units wherein the Project Facility is
located having taxing powers (such political units are hereinafter  collectively
referred to as the "Taxing Entities") in such amounts as would result from taxes
being  levied on the  Project  Facility  by the Taxing  Entities  if the Project
Facility  were  privately  owned by the Company and not deemed owned by or under
the  jurisdiction,  control or supervision of the Issuer,  but with  appropriate
reductions  similar to the real  property tax  exemptions  and credits,  if any,
which  would be  afforded  to the  Company  if it were the owner of the  Project
Facility.  It is agreed that the Company,  in cooperation  with the Issuer,  (a)
shall cause the Project  Facility to be valued for purposes of  determining  the
amounts due hereunder as if owned by the Company as aforesaid by the appropriate
officer or  officers  of any of the Taxing  Entities as may from time to time be
charged with  responsibility  for making such valuations,  (b) shall cause to be
appropriately   applied  to  the  valuation  or  valuations  so  determined  the
respective tax rate or rates of the Taxing  Entities that would be applicable to
the Project  Facility if so  privately  owned,  (c) shall cause the  appropriate
officer or officers of the Taxing Entities  charged with the duty of levying and
collecting such taxes to submit to the Company,  when the respective  levies are
made for  purposes of such taxes upon  Property  privately  owned as  aforesaid,
statements  specifying  the amounts and due dates of such taxes which the Taxing
Entities  would receive if such Property were so privately  owned by the Company
and not deemed owned by or under the jurisdiction, control or supervision of the
Issuer, and (d) shall file with the appropriate officer or officers any accounts
or tax  returns  furnished  to the Issuer by the Company for the purpose of such
filing.

                  (C)      The  Company  shall  pay or  cause  to be paid to the
Taxing  Entities when due all such payments in lieu of taxes with respect to the
Project  Facility  required by Section 6.6(B) of this Installment Sale Agreement
to be paid to the Taxing  Entities,  subject in each case to the Company's right
to (a) obtain  exemptions  and  credits,  if any,  which  would be afforded to a
private owner of the Project Facility,  including any available  exemption under
Section  485-b of the New York Real Property Tax Law with respect to the Project
Facility, (b) contest valuations of the Project Facility made for the purpose of
determining such payments therefrom  (provided,  however,  no such contest shall
entitle  the  Company to defer  payments  in lieu of taxes by reason of any such
contest),  and (c) seek to obtain a refund  of any such  payments  made.  In the
event the  Company  shall fail to make or cause to be made any such  payments in
lieu of  taxes,  the  amount or  amounts  so in  default  shall  continue  as an
obligation of the Company until fully paid, and the Company hereby agrees to pay
or cause to be paid the same, together with late charges and interest thereon as
provided for in  subsection  (5) of Section 874 of the General  Municipal Law of
the State (or any successor provision).


                                       27
<PAGE>

                                   ARTICLE VII

                      DAMAGE, DESTRUCTION AND CONDEMNATION


SECTION 7.1. DAMAGE OR DESTRUCTION. (A) If the Project Facility shall be damaged
or destroyed, in whole or in part:

                  (1)      the  Issuer  shall  have no  obligation  to  replace,
         repair, rebuild or restore the Project Facility;

                  (2)      there  shall  be no  abatement  or  reduction  in the
         amounts  payable by the Company under the  Installment  Sale  Agreement
         (whether or not the Project Facility is replaced,  repaired, rebuilt or
         restored);

                  (3)      the Company shall promptly give notice of such damage
         or destruction to the Issuer, the Trustee and the Bank; and

                  (4)      except as  otherwise  provided in  subsection  (B) of
         this Section 7.1,

                           (a)      the Company shall promptly replace,  repair,
         rebuild or restore  the  Project  Facility  to  substantially  the same
         condition  and value as an  operating  entity as existed  prior to such
         damage or destruction, with such changes, alterations and modifications
         as may be desired by the  Company  and  consented  to in writing by the
         Issuer  and the  Bank,  provided  that  such  changes,  alterations  or
         modifications  do not (i) so change the nature of the Project  Facility
         that it does not constitute a "project", as such quoted term is defined
         in the Act, (ii) change the use of the Project Facility as specified in
         Section  3.2 hereof  without the prior  written  consent of the Issuer,
         which consent shall not be unreasonably  withheld or delayed,  or (iii)
         adversely  affect the exclusion of the interest on the Bonds from gross
         income for federal income tax purposes; and

                           (b)      pursuant to and in  accordance  with Section
         4.03 of the Indenture,  the Trustee shall make available to the Company
         (from the Net Proceeds of any insurance  settlement) such moneys as may
         be necessary to pay the costs of the replacement, repair, rebuilding or
         restoration of the Project Facility. In the event such Net Proceeds are
         not  sufficient to pay in full the costs of such  replacement,  repair,
         rebuilding or restoration,  the Company shall nonetheless complete such
         work and  shall  pay from its own  moneys  that  portion  of the  costs
         thereof  in  excess  of such  Net  Proceeds.  Any  balance  of such Net
         Proceeds   remaining  after  payment  of  all  of  the  costs  of  such
         replacement,  repair,  rebuilding  or  restoration  shall be applied as
         provided in Section 4.03 of the Indenture.

                  (B)      Notwithstanding anything to the contrary contained in
subsection  (A) of this Section 7.1, in the event that the damage to the Project
Facility  exceeds  the sum of all  indebtedness  then  secured  by a Lien on the
Project  Facility or any part  thereof,  the Company  shall not be  obligated to
replace, repair, rebuild or restore the Project Facility and the Net Proceeds of
any insurance  settlement  shall not be applied as provided in subsection (A) of
this Section 7.1 if the Company  shall  notify the Issuer and the Bank that,  in
the  Company's  sole  judgment,  the Company  does not deem it  practical  to so
replace,  repair,  rebuild or restore the Project  Facility and the Bank concurs
with such  determination.  In such event,  or if an Event of Default  shall have
occurred  and be  continuing,  the  lesser  of (1) the  total  amount of the Net
Proceeds  collected under any and all policies of insurance  covering the damage
to or destruction of the Project Facility, or (2) the amount necessary to redeem
the Bonds in whole and all interest  accrued  


                                       28
<PAGE>

thereon, together with any other sums payable to the Issuer, the Trustee and the
Bank pursuant to the Financing  Documents,  shall be  transferred by the Trustee
from the Insurance and  Condemnation  Fund to the Bond Fund to be applied to the
redemption  of the Bonds and  payment  of all such  amounts to the  Issuer,  the
Trustee and the Bank. If the Net Proceeds  collected  under any and all policies
of insurance are less than the amount  necessary to redeem the Bonds in full and
pay any and all  amounts  payable to the Issuer,  the Trustee and the Bank,  the
Company  shall pay the  difference  between such amounts and the Net Proceeds of
all insurance  settlements  so that all of the Bonds then  Outstanding  shall be
redeemed and any and all amounts  payable under the  Financing  Documents to the
Issuer, the Trustee and the Bank shall be paid in full.

                  (C)      If  there  are no  Bonds  Outstanding  and all  other
amounts  due under  the  Installment  Sale  Agreement  and the  other  Financing
Documents are paid in full,  all such Net Proceeds or the balance  thereof shall
be paid to the Company for its purposes.

                  (D)      The  Company  may not  adjust  any  claims  under any
policies of insurance  required by Section  6.3(A) through 6.3(D) hereof without
the prior written  consent of the Bank,  which consent shall not be unreasonably
withheld or delayed.

                  (E)      Notwithstanding  anything to the  contrary  set forth
herein, the Net Proceeds of any insurance settlement shall be transmitted to the
Trustee for deposit into the Insurance and Condemnation Fund.

SECTION  7.2.  CONDEMNATION.  (A)  If  title  to,  or  the  use  of,  less  than
substantially all of the Project Facility shall be taken by Condemnation:

                           (1)      the  Issuer  shall  have  no  obligation  to
                  restore the Project Facility;

                           (2)      there shall be no  abatement or reduction in
                  the amounts payable by the Company under the Installment  Sale
                  Agreement (whether or not the Project Facility is restored);

                           (3)      the Company  shall  promptly  give notice of
                  such Condemnation to the Issuer, the Trustee and the Bank; and

                           (4)      except as otherwise  provided in  subsection
                  (B) of this Section 7.2,

                                    (a)      the Company shall promptly  restore
                  the Project Facility (excluding any part of the Facility taken
                  by Condemnation) to substantially the same condition and value
                  as an operating entity as existed prior to such  Condemnation;
                  and

                                    (b)      pursuant to and in accordance  with
                  Section  4.03  of  the  Indenture,   the  Trustee  shall  make
                  available  to  the  Company  (from  the  Net  Proceeds  of any
                  Condemnation award) such moneys as may be necessary to pay the
                  costs of the restoration of the Project Facility. In the event
                  such Net Proceeds are not  sufficient to pay in full the costs
                  of such restoration,  the Company shall  nonetheless  complete
                  such  restoration  and  shall  pay  from its own  moneys  that
                  portion of the costs  thereof in excess of such Net  Proceeds.
                  Any balance of such Net Proceeds  remaining  after  payment of
                  all of the  costs  of such  restoration  shall be  applied  in
                  accordance with Section 4.03 of the Indenture.

                  (B)      Notwithstanding anything to the contrary contained in
subsection (A) of this Section 7.2, in the event that the Net Proceeds  received
in  conjunction  with the taking of the  Project  Facility  or any part  

                                       29
<PAGE>

thereof  exceeds  the  sum of all  indebtedness  then  secured  by a Lien on the
Project  Facility or any part  thereof,  the Company  shall not be  obligated to
restore the Project  Facility  and the Net  Proceeds of any  Condemnation  award
shall not be applied as provided in  subsection  (A) of this  Section 7.2 if the
Company shall notify the Issuer, the Trustee and the Bank that, in the Company's
sole judgment, the Company does not deem it practicable or desirable to replace,
repair,  rebuild or restore the Project  Facility and the Bank concurs with such
determination.  In such  event,  or if an  Event  of  Default  under  any of the
Financing Documents shall have occurred and be continuing, the lesser of (1) the
Net Proceeds of any  Condemnation  award, or (2) the amount  necessary to redeem
the Bonds in whole and all interest  accrued  thereon,  together  with any other
sums payable to the Issuer,  the Trustee and the Bank  pursuant to the Financing
Documents,   shall  be  transferred  by  the  Trustee  from  the  Insurance  and
Condemnation  Fund to the Bond Fund to be applied to the redemption of the Bonds
and the payment of all such amounts due the Issuer, the Trustee and the Bank. If
the Net Proceeds of any Condemnation award are less than the amount necessary to
redeem the Bonds in full and pay any and all amounts payable to the Issuer,  the
Trustee and the Bank, the Company shall pay the difference  between such amounts
and such Net Proceeds so that all of the Bonds Outstanding shall be redeemed and
any and all amounts  payable  under the Financing  Documents to the Issuer,  the
Trustee and the Bank shall be paid in full.

                  (C)      If title to, or use of, all or  substantially  all of
the Project Facility shall be taken by Condemnation:

                           (1)      neither  the  Issuer nor the  Company  shall
                  have any obligation to restore the Project Facility;

                           (2)      there shall be no  abatement or reduction in
                  the amounts payable by the Company under the Installment  Sale
                  Agreement; and

                           (3)      the Net Proceeds of any  Condemnation  award
                  shall be applied as provided in subsection (B) of this Section
                  7.2.

                  (D)      If  there  are no  Bonds  Outstanding  and all  other
amounts  due under  the  Installment  Sale  Agreement  and the  other  Financing
Documents have been paid in full,  all such Net Proceeds or the balance  thereof
shall be paid to the Company for its purposes.

                  (E)      Unless an Event of Default under any of the Financing
Documents  shall have  occurred and be  continuing,  the Company shall have sole
control of any  Condemnation  proceeding with respect to the Project Facility or
any part  thereof,  except that the prior  written  consent of the Bank shall be
required for  settlement of any such  proceeding,  which  consents  shall not be
unreasonably  withheld or  delayed.  The Company  shall  notify the Issuer,  the
Trustee and the Bank of the institution of any Condemnation  proceedings  within
seven (7) days after receipt of notice of such proceeding and the Company shall,
within  seven (7) days after any inquiry  from the  Issuer,  the Trustee and the
Bank,  inform the  Issuer,  the Trustee and the Bank in writing of the status of
such proceeding.

                  (F)      Notwithstanding  anything to the  contrary  set forth
herein,  the Net Proceeds of any Condemnation  award shall be transmitted to the
Trustee for deposit into the Insurance and Condemnation Fund.

SECTION  7.3.  ADDITIONS  TO  PROJECT  FACILITY.   All  replacements,   repairs,
rebuilding or restoration  made pursuant to Sections 7.1 or 7.2 hereof,  whether
or  not  requiring  the   expenditure   of  the  

                                       30
<PAGE>

Company's own moneys, shall automatically become part of the Project Facility as
if the same were specifically described herein.


                                       31
<PAGE>


                                  ARTICLE VIII

                                SPECIAL COVENANTS


SECTION 8.1. NO WARRANTY OF CONDITION OR SUITABILITY  BY ISSUER;  ACCEPTANCE "AS
IS".  THE  ISSUER  MAKES NO  WARRANTY,  EITHER  EXPRESS  OR  IMPLIED,  AS TO THE
CONDITION,  TITLE, DESIGN, OPERATION,  MERCHANTABILITY OR FITNESS OF THE PROJECT
FACILITY OR ANY PART THEREOF OR AS TO THE SUITABILITY OF THE PROJECT FACILITY OR
ANY PART THEREOF FOR THE COMPANY'S  PURPOSES OR NEEDS.  THE COMPANY SHALL ACCEPT
TITLE TO THE PROJECT  FACILITY "AS IS",  WITHOUT  RECOURSE OF ANY NATURE AGAINST
THE  ISSUER  FOR  ANY  CONDITION  NOW,  HERETOFORE  OR  HEREAFTER  EXISTING.  NO
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR  MERCHANTABILITY  ARE MADE. IN
THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE,  WHETHER  PATENT OR LATENT,
THE ISSUER SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO.

SECTION 8.2. HOLD HARLESS PROVISIONS. (A) The Company hereby releases the Issuer
and its members, officers, agents and employees from, agrees that the Issuer and
its members,  officers,  agents (other than the Company) and employees shall not
be liable  for and  agrees to  indemnify,  defend  and hold the  Issuer  and its
members,  officers,  agents (other than the Company) and employees harmless from
and  against  any and all  claims,  causes of  action,  judgments,  liabilities,
damages,  losses,  costs  and  expenses  arising  as a  result  of the  Issuer's
undertaking the Project,  including,  but not limited to, (1) liability for loss
or damage to Property or bodily  injury to or death of any and all Persons  that
may be occasioned, directly or indirectly, by any cause whatsoever pertaining to
the  Project  Facility  or  arising  by  reason  of or in  connection  with  the
occupation  or the use thereof or the  presence of any Person or Property on, in
or about the Project Facility, (2) liability arising from or expense incurred by
the Issuer's  financing,  acquiring,  constructing,  reconstructing,  equipping,
installing,  owning or selling the Project Facility, including, without limiting
the  generality  of the  foregoing,  any sales or use taxes which may be payable
with respect to goods supplied or services  rendered with respect to the Project
Facility,  all  liabilities  or  claims  arising  as a  result  of the  Issuer's
obligations  under the Installment  Sale Agreement or any of the other Financing
Documents or the  enforcement  of or defense of validity of any provision of any
Financing Documents,  and all liabilities or claims arising as a result of or in
connection  with the offering,  issuance,  sale or resale of the Bonds,  (3) all
claims arising from the exercise by the Company of the authority conferred on it
pursuant to Section 4.1(E)  hereof,  and (4) all causes of action and attorneys'
fees and other  expenses  incurred  in  connection  with any  suits,  actions or
proceedings  which may arise as a result of any of the foregoing;  provided that
any such claims,  causes of action,  judgments,  liabilities,  damages,  losses,
costs or  expenses  of the Issuer  are not  incurred  or do not result  from the
intentional  wrongdoing  of the Issuer or any of its members,  officers,  agents
(other than the Company) or  employees.  The foregoing  indemnities  shall apply
notwithstanding  the  fault or  negligence  in part of the  Issuer or any of its
officers,  members,  agents or employees and  notwithstanding  the breach of any
statutory obligation or any rule of comparative or apportioned liability.

                  (B)      In the event of any claim  against  the Issuer or its
members,  officers, agents (other than the Company) or employees by any employee
of the Company or any contractor of the Company or anyone directly or indirectly
employed by any of them or anyone for whose acts any of them may be liable,  the
obligations  of the  Company  hereunder  shall not be  limited in any way by any
limitation on the amount or type of damages, compensation or benefits payable by
or for  the  Company  or  such  contractor  under  workers'  compensation  laws,
disability benefits laws or other employee benefit laws.

                                       32
<PAGE>

                  (C)      To effectuate the provisions of this Section 8.2, the
Company agrees to provide for and insure, in the liability  policies required by
Section  6.3(C) of the  Installment  Sale  Agreement,  its  liabilities  assumed
pursuant to this Section 8.2.

                  (D)      Notwithstanding   any   other   provisions   of   the
Installment  Sale  Agreement,  the  obligations of the Company  pursuant to this
Section 8.2 shall remain in full force and effect after the  termination  of the
Installment  Sale  Agreement  until the  expiration  of the period stated in the
applicable  statute  of  limitations  during  which a claim,  cause of action or
prosecution  relating to the  matters  herein  described  may be brought and the
payment  in  full  or the  satisfaction  of  such  claim,  cause  of  action  or
prosecution  and the payment of all expenses,  charges and costs incurred by the
Issuer, or its officers, members, agents or employees, relating thereto.

SECTION 8.3.  RIGHT OF ACCESS TO PROJECT  FACILITY.  The Company agrees that the
Issuer, the Trustee and the Bank and their duly authorized agents shall have the
right at all reasonable times and upon reasonable prior notice to enter upon and
to examine and inspect the Project Facility.

SECTION 8.4. COMPANY NOT TO TERMINATE EXISTENCE OR DISPOSE OF ASSETS; CONDITIONS
UNDER WHICH EXCEPTIONS PERMITTED.  The Company agrees that, so long as the Bonds
are Outstanding,  it will maintain its corporate existence, will not dissolve or
otherwise  dispose  of all or  substantially  all of its  assets,  and  will not
consolidate  with or merge  into  another  corporation,  or  permit  one or more
corporations to consolidate with or merge into it; provided,  however,  that, if
no Event of Default  specified in Section 10.1 hereof shall have occurred and be
continuing,  the Company may  consolidate  with or merge into  another  domestic
corporation  organized  and existing  under the laws of one of the states of the
United States,  or permit one or more such domestic  corporations to consolidate
with or merge into it, or sell or  otherwise  transfer to another  Person all or
substantially all of its assets as an entirety and thereafter dissolve, provided
(A) that the Issuer  and the Bank give their  written  consent,  which  consents
shall  not be  unreasonably  withheld,  (B) that  the  surviving,  resulting  or
transferee  corporation  assumes  in  writing  all  of  the  obligations  of and
restrictions on the Company under this  Installment Sale Agreement and the other
Financing  Documents,  (C) that the  consummation of such  transaction  will not
adversely  affect the exclusions  from gross income of the interest on the Bonds
for federal income tax purposes and (D) that as of the date of such transaction,
the  Trustee,  the Issuer and the Bank shall be  furnished  with a  certificate,
dated  the  effective  date  of  such  transaction,   signed  by  an  Authorized
Representative  of the Company and of the  surviving,  resulting  or  transferee
corporation,  as the case may be, or the  transferee of its assets to the effect
that  immediately  after the  consummation  of the  transaction and after giving
effect thereto,  no Event of Default exists under the Installment Sale Agreement
and no event exists  which,  with notice or lapse of time or both,  would become
such an Event of Default.

SECTION 8.5.  AGREEMENT TO PROVIDE  INFORMATION.  The Company  agrees,  whenever
requested  by the Issuer or the  Trustee or the Bank,  to provide and certify or
cause to be provided and certified such information  concerning the Company, its
finances  and other topics  related to the Bonds and/or the Project  Facility as
the  Issuer  (in  carrying  out its  obligations  hereunder  and under the other
Financing  Documents  and under the Act) or the Trustee or the Bank from time to
time reasonably considers necessary or appropriate,  including,  but not limited
to, such  information as to enable the Issuer or the Trustee or the Bank to make
any reports required by law or governmental regulation.

SECTION  8.6.  BOOKS OF RECORD AND  ACCOUNT;  FINANCIAL  STATEMENTS;  COMPLIANCE
CERTIFICATES.  (A) The Company agrees to maintain proper  accounts,  records and


                                       33
<PAGE>

books in which  full and  correct  entries  shall be made,  in  accordance  with
generally  accepted  accounting  principles,  of all business and affairs of the
Company.

                  (B)      As soon as  possible  after the end of each  calendar
year , but in any event  within  ninety  (90) days after such date,  the Company
shall  furnish to the  Issuer,  the  Trustee  and the Bank a  certificate  of an
Authorized  Representative  of the  Company  stating  that no Event  of  Default
hereunder  has  occurred or is  continuing  or, if any Event of Default  exists,
specifying  the nature  and  period of  existence  thereof  and what  action the
Company has taken or proposes to take with respect thereto.

                  (A)      The Company agrees, for the benefit of the Issuer and
the Bank,  that it will,  during  any  period in which any Bond is  Outstanding,
promptly  comply with all  statutes,  codes,  laws,  acts,  ordinances,  orders,
judgments,   decrees,  injunctions,   rules,  regulations,   permits,  licenses,
authorizations,  directions and  requirements of all  Governmental  Authorities,
foreseen  or  unforeseen,  ordinary or  extraordinary,  which now or at any time
hereafter may be  applicable to the Company or the Project  Facility or any part
thereof,  or to any use,  manner of use or condition of the Project  Facility or
any  part  thereof  (the  applicability  of such  laws,  ordinances,  rules  and
regulations to be determined both as if the Issuer were the owner of the Project
Facility  and as if the Company and not the Issuer were the owner of the Project
Facility).

     (B)  Notwithstanding  the provisions of subsection (A) of this Section 8.7,
the Company may in good faith actively contest the validity or the applicability
of any requirement of the nature  referred to in such  subsection (A),  provided
that the  Company  (1) first  shall  have  notified  the  Issuer and the Bank in
writing  of such  contest,  (2) is not  otherwise  in  default  under any of the
Financing  Documents,  (3) shall have set aside  adequate  reserves for any such
requirement,  and (4) demonstrates to the reasonable  satisfaction of the Issuer
and the Bank  that  noncompliance  with  such  requirement  will not  materially
endanger  the Lien of the  Mortgage  as to the  Project  Facility or subject the
Project  Facility  or any part  thereof to loss or  forfeiture.  Otherwise,  the
Company  shall  promptly  take such  action  with  respect  thereto  as shall be
reasonably satisfactory to the Issuer and the Bank.

                  (C)      Notwithstanding  the  provisions of subsection (B) of
this  Section  8.7,  if the  Issuer  or any of its  members,  officers,  agents,
servants  or  employees  may be liable  for  prosecution  for  failure to comply
therewith,  the Company shall promptly take such action with respect  thereto as
shall be satisfactory to the Issuer.

SECTION  8.8.  DISCHARGE  OF LIENS  AND  ENCUMBRANCES.  (A) The  Company  hereby
covenants that the Mortgage is a valid Lien on the Project Facility subject only
to Permitted Encumbrances,  and the Company agrees not to create or suffer to be
created  any other  Lien,  except for  Permitted  Encumbrances,  on the  Project
Facility  or any part  thereof  or any  funds of the  Issuer  applicable  to the
Project Facility.

                  (B)      Notwithstanding  the  provisions of subsection (A) of
this Section 8.8, the Company may in good faith actively  contest any such Lien,
provided  that (1) the Company first shall have notified the Issuer and the Bank
in writing of such  contest,  (2) the Company is not in default under any of the
Financing  Documents,  (3) such Lien shall be removed  within sixty (60) days of
the date of such  notice by the  Company or secured by the  Company's  posting a
bond in form  and  substance  satisfactory  to the  Issuer  and the Bank and (4)
demonstrates to the reasonable  satisfaction of the Issuer and the Bank that the
contesting of such Lien and its non-discharge  will not materially  endanger the
Lien of the Mortgage as to the Project  Facility or subject the Project Facility
or any part thereof to loss or forfeiture.

                                       34
<PAGE>

SECTION 8.9. PERFORMANCE BY ISSUER OR TRUSTEE OF COMPANY'S  OBLIGATIONS.  Should
the Company  fail to make any payment or to do any act as herein  provided,  the
Issuer or the Trustee or the Bank may, but need not, without notice to or demand
on the Company and without  releasing  the Company from any  obligation  herein,
make or do the same, including,  without limitation,  appearing in and defending
any  action  purporting  to affect  the  rights or powers of the  Company or the
Issuer,  and paying all  expenses,  including,  without  limitation,  reasonable
attorneys'  fees; and the Company shall pay immediately  upon demand all sums so
incurred  or  expended  by the  Issuer  or the  Trustee  or the Bank  under  the
authority  hereof  and all fees,  costs and  expenses,  together  with  interest
thereon, at the rate of one and one half percent (1.5%) per month or the maximum
permitted by law, whichever is less.

SECTION 8.10. DEPRECIATION DEDUCTIONS AND TAX CREDITS. The parties agree that as
between them the Company shall be entitled to all  depreciation  deductions  and
accelerated  cost recovery system  deductions with respect to any portion of the
Project  Facility  pursuant  to  Sections  167  and 168 of the  Code  and to any
investment credit pursuant to Section 38 of the Code with respect to any portion
of the Project Facility which constitutes "Section 38 Property" and to all other
state and/or  federal  income tax  deductions and credits which may be available
with respect to the Project Facility.

SECTION 8.11.  IDENTIFICATION OF EQUIPMENT. All Equipment which is or may become
part of the Project Facility  pursuant to the provisions of the Installment Sale
Agreement  shall be  properly  identified  by the  Company  by such  appropriate
records,  including  computerized records, as may be approved by the Issuer, the
Trustee and the Bank.

SECTION  8.12.   INDEMNIFICATION  OF  TRUSTEE.  (A)  Notwithstanding  any  other
provisions of the Financing Documents,  the Company agrees to indemnify and hold
the Trustee, and its directors,  officers,  agents and employees,  harmless from
and  against  any and all  claims,  causes of  action,  judgments,  liabilities,
damages,  losses, costs and expenses,  including, but not limited to, reasonable
attorneys'  fees,  arising out of the execution,  delivery or performance of the
Financing  Documents,  provided that the same are not a result of the negligence
or willful misconduct of the Trustee.

                  (B)      Notwithstanding   any   other   provisions   of   the
Installment Sale Agreement or the other Financing Documents,  the obligations of
the Company  pursuant to this Section 8.12 shall remain in full force and effect
after the termination of the Installment  Sale Agreement until the expiration of
the period stated in the applicable statute of limitations during which a claim,
cause of action or prosecution  relating to the matters herein  described may be
brought and the  payment in full or the  satisfaction  of such  claim,  cause of
action or  prosecution  and the payment of all  reasonable  fees,  expenses  and
charges paid or incurred by the Trustee, or its directors,  officers,  agents or
employees, relating thereto.

                  (C)      To  effectuate  the  provisions of this Section 8.12,
the Company agrees to provide for and insure, in the liability policies required
by Section 6.3(C) of the  Installment  Sale Agreement,  its liabilities  assumed
pursuant to this Section 8.12.

SECTION  8.13.  COVENANT  AGAINST  ARBITRAGE  BONDS.  Notwithstanding  any other
provision  of the  Installment  Sale  Agreement,  so long as the Bonds  shall be
outstanding,  neither the Issuer nor the Company  shall use, or direct or permit
the use  of,  the  proceeds  of the  Bonds  or any  other  moneys  within  their
respective  control  (including without limitation the proceeds of any insurance
or any  Condemnation  award with respect to the Project  Facility) in any manner
which, if such use had been  reasonably  expected on the date of issuance of the
Bonds,  would have caused the bonds to be  "arbitrage  bonds" within the meaning
ascribed  to  such  quoted  term in  Section  148(a)  of the  Code.  The  Issuer
authorized 

                                       35
<PAGE>

the Company,  on the Issuer's behalf,  to calculate and make the rebate payments
required by Section 148(f) of the Code.

SECTION  8.14.  ENVIRONMENTAL  MATTERS.  (A) The Company shall keep or cause the
Project Facility to be kept free of Hazardous  Substances,  except for Hazardous
Substances which may be used in connection with the Company's operations, all of
which  have been and shall be  conducted  in  accordance  with  applicable  law.
Without  limiting  the  foregoing,  the  Company  shall not cause or permit  the
Project  Facility to be used to generate,  process,  store,  handle,  dispose or
transfer  Hazardous  Substances,   except  in  compliance  with  all  applicable
environmental  laws and  Permits,  nor shall the Company  cause or permit,  as a
result of any act or omission on the part of the Company, a Release of Hazardous
Substances  onto the Land or any other  Property.  The Company shall comply with
and ensure compliance by all tenants, if any, with all applicable laws, whenever
and  whomever  triggered  by, and obtain and comply with any and all  approvals,
registrations or Permits required thereunder.

                  (B)      The  Company  shall  (1)  conduct  and  complete  all
investigations,  studies,  sampling  and testing and all  remedial,  removal and
other actions necessary to clean up and remove all Hazardous Substances on, from
or  affecting  the  Project  Facility  (a) in  accordance  with  all  applicable
environmental  laws, (b) to the satisfaction of the Issuer and the Bank, and (c)
in accordance  with the orders and directives of all  Governmental  Authorities,
and (2) defend,  indemnify,  and hold harmless the Issuer and the Bank and their
respective  employees,  agents,  officers  and  directors  from and  against any
claims, demands, penalties, fines, liabilities,  settlements,  damages, costs or
expenses of whatever kind or nature, known or unknown,  contingent or otherwise,
arising out of or in any way related to (a) the presence,  disposal,  Release or
threatened Release of any Hazardous  Substance on, from or affecting the Project
Facility;  (b) any personal injury (including wrongful death) or property damage
arising  out of or  related  to such  Hazardous  Substance;  (c) any  lawsuit or
administrative   proceeding  brought  or  threatened,   settlement  reached,  or
government order relating to such Hazardous Substance;  and (d) any violation of
any law or regulation or demand of any Governmental Authority or any policies or
requirements  of the  Bank or the  Issuer  which  are  based  upon or in any way
related to such Hazardous Substances including,  without limitation,  reasonable
costs and expenses of or relating to attorneys, consultants,  investigations and
laboratory  fees,  and court  costs and  litigation  expenses.  In the event the
Mortgage is foreclosed or the Issuer  tenders deed in lieu of  foreclosure,  the
Company  shall  deliver  the  Project  Facility  to the Bank free of any and all
Hazardous Substances so that the condition of the Project Facility shall conform
with all  environmental  laws and Permits  affecting the Project  Facility.  The
provisions  of this  Section  8.14  shall be in  addition  to any and all  other
obligations  and  liabilities the Company may have to the Issuer and the Bank at
common law and under statute,  and shall survive the  transactions  contemplated
herein.

                  (C)      If  the  Company   fails  to  cause  any  Release  of
Hazardous  Substances  on,  at or from the  Project  Facility  to be  contained,
removed,  cleaned up or otherwise remediated within one hundred and twenty (120)
days  after  receiving  notice  thereof,  the Issuer and the Bank shall have the
right  (but not the  obligation),  upon ten (10)  days'  written  notice  to the
Company (or without notice in the case of  emergency),  to take or complete such
action on behalf of the Company. The contractors and subcontractors  selected by
the Issuer and the Bank shall have the right to enter the Project  Facility with
such Persons,  machinery  and equipment as shall be necessary,  and to undertake
such investigative, containment, removal, clean-up and other remedial actions as
they  shall  deem  necessary  and  appropriate  without  thereby  incurring  any
liability to the Company on account thereof,  except for the gross negligence or
willful  misconduct  of the  Issuer  and the Bank or the  negligence  or willful
misconduct  of  such  contractors  or  subcontractors.  The  Company  agrees  to
cooperate with all contractors and subcontractors engaged in such investigative,
containment,  removal,  clean-up or other remedial actions. The Company shall be
liable  to the  Issuer  and the  Bank for all  reasonable  costs  and  expenses,
including,

                                       36
<PAGE>

without  limitation,  attorneys' and experts' fees,  expenses and disbursements,
paid or incurred on account of such actions undertaken on behalf of the Company,
and shall  promptly  reimburse  the  Issuer  and the  Bank,  as the case may be,
therefor  on demand.  Until paid by the  Company,  all such costs and  expenses,
together  with the  interest  thereon  at the  rate of one and one half  percent
(1.5%) per month (or the highest rate permitted by law, whichever is less) shall
be deemed additional rent under this Installment Sale Agreement.

SECTION 8.15.  INDEMNIFICATION OF BANK. (A) Notwithstanding any other provisions
of the Financing  Documents,  the Company agrees to indemnify and hold the Bank,
and its directors, officers, agents and employees, harmless from and against any
and all claims, causes of action, judgments, liabilities, damages, losses, costs
and  expenses,  including,  but not limited to action,  judgments,  liabilities,
damages,  losses, costs and expenses,  including, but not limited to, reasonable
attorneys'  fees,  arising out of the execution,  delivery or performance of the
Financing  Documents,  provided that the same are not a result of the negligence
or willful misconduct of the Bank.

                  (B)      Notwithstanding   any   other   provisions   of  this
Installment Sale Agreement or other Financing Documents,  the obligations of the
Company  pursuant  to this  Section  8.15 shall  remain in full force and effect
after the termination of this Installment Sale Agreement until the expiration of
the period stated in the applicable statute of limitations during which a claim,
cause of action or prosecution  relating to the matters herein  described may be
brought and the  payment in full or the  satisfaction  of such  claim,  cause of
action or  prosecution  and the payment of all  reasonable  fees,  expenses  and
charges  paid or incurred by the Bank,  or its  directors,  officers,  agents or
employees, relating thereto.

                  (C)      To  effectuate  the  provisions of this Section 8.15,
the Company agrees to provide for and insure, in the liability policies required
by Section 6.3(C) of this Installment Sale Agreement, its liabilities assumed by
this Section 8.15.


                                       37
<PAGE>


                                   ARTICLE IX

                          ASSIGNMENTS; MERGER OF ISSUER


SECTION 9.1.  ASSIGNMENT OF INSTALLMENT  SAFE AGREEMENT.  The  Installment  Sale
Agreement may not be assigned by the Company,  in whole or in part,  without the
prior written  consent of the Issuer,  the Trustee and the Bank,  which consents
shall not be unreasonably withheld or delayed.

SECTION 9.2. PLEDGE AND ASSIGNMENT OF ISSUER'S INTERESTS TO TRUSTEE.  The Issuer
has  pledged  and  assigned,  pursuant  to the terms of the  Assignment  and the
Mortgage,  certain  of its  rights  and  interests  under  and  pursuant  to the
Installment  Sale  Agreement  to the Trustee  and the Bank as  security  for the
payment of the  principal,  premium,  if any,  and  interest on the Bonds.  Such
pledge and assignment  shall in no way impair or diminish any obligations of the
Issuer under the  Installment  Sale Agreement.  The Company hereby  acknowledges
receipt of notice of and consents to such pledge and assignment by the Issuer to
the Trustee and the Bank and  specifically  agrees to perform for the benefit of
the Trustee and the Bank all of its duties and  undertakings  hereunder  (except
duties undertaken with respect to the Unassigned Rights).

SECTION 9.3. MERGER OF ISSUER.  (A) Nothing  contained in the  Installment  Sale
Agreement shall prevent the  consolidation  of the Issuer with, or merger of the
Issuer into, or  assignment by the Issuer of its rights and interests  hereunder
to, any other public benefit  corporation of the State or political  subdivision
thereof which has the legal  authority to perform the  obligations of the Issuer
hereunder, provided that upon any such consolidation,  merger or assignment, the
due  and  punctual  performance  and  observance  of all of the  agreements  and
conditions of the Installment Sale Agreement,  the Bonds and the Indenture to be
kept and  performed by the Issuer  shall be expressly  assumed in writing by the
public  benefit  corporation  or  political   subdivision  resulting  from  such
consolidation  or  surviving  such  merger or to which the  Issuer's  rights and
interests hereunder or under the Installment Sale Agreement shall be assigned.

                  (B)      As of the date of any such  consolidation,  merger or
assignment,  the Issuer shall give notice  thereof in  reasonable  detail to the
Company,  the Trustee and the Bank.  The Issuer  shall  promptly  furnish to the
Trustee,  the Company and the Bank such additional  information  with respect to
any such consolidation, merger or assignment as the Trustee, the Company and the
Bank reasonably may request.

SECTION 9.4.  SALE OR LEASE OF PROJECT  FACILITY.  (A) The Company may not sell,
sublease,  transfer,  convey or otherwise dispose of the Project Facility or any
part thereof and without the prior written consent of the Issuer and the Bank.

                  (B)      Notwithstanding  anything  to  the  contrary  in  the
Installment Sale Agreement,  in any instance after the Completion Date where the
Company reasonably  determines that any item of Equipment has become inadequate,
obsolete,  worn out,  unsuitable,  undesirable or  unnecessary,  the Company may
remove such item of  Equipment  and may sell,  trade in,  exchange or  otherwise
dispose  of the  same,  as a whole or in part,  provided,  however  that no such
Equipment  having a value in excess of $100,000 shall be removed,  sold,  traded
in,  exchanged  or  otherwise  disposed of without the consent of the Bank which
consent shall not  unreasonably be withheld  provided that such removal will not
materially  impair  the value of the  Project  Facility  as  collateral.  At the
request of the Company,  the Issuer shall execute and deliver, and shall request
the Bank to execute and  deliver,  to the Company all  instruments  necessary or
appropriate to enable the Company to sell or otherwise  dispose of any such item
of Equipment free from 

                                       38
<PAGE>

the  Liens of the  Financing  Documents.  The  Company  shall  pay all costs and
expenses  (including  reasonable counsel fees) incurred in transferring title to
and releasing  from the Liens of the  Financing  Documents any item of Equipment
removed pursuant to this Section 9.4.


                                       39
<PAGE>


                                    ARTICLE X

                         EVENTS OF DEFAULT AND REMEDIES


SECTION 10.1.  EVENTS OF DEFAULT DEFINED.  (A) The following shall be "Events of
Default" under the Installment Sale Agreement,  and the terms "Event of Default"
or  "Default"  shall  mean,  whenever  they  are  used in the  Installment  Sale
Agreement, any one or more of the following events:

                  (1)      A  default  by the  Company  in the due and  punctual
         payment of the amounts  specified to be paid pursuant to Section 5.3(A)
         hereof.

                  (2)      A default in the  performance  or  observance  of any
         other of the  covenants,  conditions  or  agreements on the part of the
         Company in the Installment  Sale Agreement and the continuance  thereof
         for a period of thirty (30) days after  written  notice is given by the
         Issuer or the Trustee or the Bank to the Company, or, if such covenant,
         condition  or  agreement  is capable of cure but cannot be cured within
         such thirty (30) day period,  the failure of the Company to commence to
         cure  within  such  thirty  (30) day period and  thereafter  diligently
         proceed with all action  required to complete  said cure within  ninety
         (90) days of such written  notice unless such time to cure is otherwise
         extended by the Issuer and the Trustee and the Bank in writing.

                  (3)      The  occurrence of an "Event of Default" under any of
         the other Financing Documents.

                  (4)      Any  representation  or warranty  made by the Company
         herein or in any other Financing  Document proves to have been false in
         any material manner at the time it was made.

                  (5)      The Company shall generally not pay its debts as such
         debts  become  due or  admits  its  inability  to pay its debts as they
         become due.

                  (6)      The  Company  shall  conceal,  remove or permit to be
         concealed or removed any part of its  Property,  with intent to hinder,
         delay or defraud its  creditors,  or any one of them,  or shall make or
         suffer a transfer of any of its Property which is fraudulent  under any
         bankruptcy,  fraudulent  conveyance  or similar  law; or shall make any
         transfer of its  Property to or for the benefit of a creditor at a time
         when other  creditors  similarly  situated have not been paid; or shall
         suffer or permit,  while insolvent,  any creditor to obtain a Lien upon
         any of its Property through legal proceedings or distraint which is not
         vacated within sixty (60) days from the date thereof.

                  (7)      (a)  The  filing  by the  Company  (as  debtor)  of a
         voluntary  petition  under  Title 11 of the United  States  Code or any
         other  federal  or state  bankruptcy  statute;  (b) the  failure by the
         Company  within sixty (60) days to lift any  execution,  garnishment or
         attachment of such consequence as will impair the Company's  ability to
         carry out its  obligations  hereunder;  (c) the  commencement of a case
         under  Title 11 of the United  States  Code  against the Company as the
         debtor or  commencement  under any other  federal  or state  bankruptcy
         statute  of a case,  action  or  proceeding  against  the  Company  and
         continuation of such case, action or proceeding without dismissal for a
         period of sixty  (60)  days;  (d) the entry of an order for relief by a
         court of  competent  jurisdiction  under Title 11 of the United  States
         Code or any other federal or state  bankruptcy  statute with respect to
         the debts of the Company;  or (e) in connection  with any insolvency or
         bankruptcy  case,  action or  proceeding,  appointment  by final order,
         judgment or decree of a court of competent  jurisdiction  of a receiver
         or trustee of the whole or 

                                       40
<PAGE>

         a  substantial  portion of the  Property  of the  Company,  unless such
         order,  judgment or decree is vacated,  dismissed or  dissolved  within
         sixty (60) days of such appointment.

                  (8)      Final  judgment or judgments for the payment of money
         in excess of an  aggregate  of $100,000  shall be rendered  against the
         Company and the Company  shall not discharge the same or cause it to be
         bonded or discharged within sixty (60) days from the entry thereof,  or
         shall not appeal  therefrom  or from the order,  decree or process upon
         which or pursuant to which said judgment was granted,  based or entered
         and secure a stay of execution pending such appeal.

                  (9)      The  imposition  of a Lien  on the  Project  Facility
         other than a Lien being  contested as provided in Section 8.8(B) of the
         Installment Sale Agreement or a Permitted Encumbrance.

                  (10)     Subject to the  provisions of Section  9.4(B) hereof,
         the removal of the Equipment or any portion thereof outside the Town of
         Moreau, New York without the prior written consent of the Issuer.

                  (11)     The  occurrence  of an "Event of  Default"  under the
         PILOT Agreement.

                  (B)      Notwithstanding  the  provisions  of Section  10.1(A)
hereof,  if by reason of force  majeure (as  hereinafter  defined)  either party
hereto shall be unable,  in whole or in part, to carry out its obligations under
the  Installment  Sale  Agreement  and if such party  shall give notice and full
particulars  of such force  majeure  in  writing  to the other  party and to the
Trustee  within a reasonable  time after the  occurrence  of the event or causes
relied upon, the obligations  under the Installment  Sale Agreement of the party
giving such notice, so far as they are affected by such force majeure,  shall be
suspended  during  the  continuance  of the  inability,  which  shall  include a
reasonable  time for the removal of the effect  thereof.  The suspension of such
obligations  for such period pursuant to this subsection (B) shall not be deemed
an Event of Default under this Section 10.1 or under any of the other  Financing
Documents.  Notwithstanding  anything to the contrary in this subsection (B), an
event of force  majeure  shall  not  excuse,  delay or in any way  diminish  the
obligations  of the Company to make the payments  required by Sections 4.5, 5.3,
6.6,  8.4 and 8.14  hereof,  to obtain and continue in full force and effect the
insurance  required by Article VI hereof,  to provide the indemnity  required by
Section 8.2, 8.4 and 8.14 hereof and to comply with the  provisions  of Sections
2.2(E),  4.5, 6.6, 8.2, 8.4, 8.5, 8.7(C),  8.12, 8.13 and 8.14 hereof.  The term
"force majeure" as used herein shall include,  without limitation,  acts of God,
strikes,  lockouts or other industrial  disturbances,  acts of public,  enemies,
orders  of any kind of any  Governmental  Authority  or any  civil  or  military
authority,  insurrections,  riots,  epidemics,  landslides,  earthquakes,  fire,
hurricanes, storms, floods, washouts, droughts, arrests, restraint of government
and people, civil disturbances,  explosions,  breakage or accident to machinery,
transmission pipes or canals,  entire failure of utilities or any other cause or
event not reasonably within the control of the party claiming such inability. It
is  agreed  that the  settlement  of  strikes,  lockouts  and  other  industrial
disturbances  shall be  entirely  within  the  discretion  of the  party  having
difficulty and the party having  difficulty  shall not be required to settle any
strike,  lockout or other industrial  disturbances by acceding to the demands of
the opposing party or parties.

SECTION 10.2. REMEDIES ON DEFAULT.  (A) Whenever any Event of Default shall have
occurred,  the Issuer may, to the extent  permitted by law, take any one or more
of the following remedial steps:

                  (1)      declare,  by  written  notice to the  Company,  to be
         immediately   due  and  payable,   whereupon   the  same  shall  become
         immediately  due and payable,  (a) all unpaid rental  payments  

                                       41
<PAGE>

         payable  pursuant to Section 5.3(A) hereof,  and (b) all other payments
         due under the Installment  Sale Agreement or any of the other Financing
         Documents;

                  (2)      take any other  action at law or in equity  which may
         appear  necessary  or  desirable  to collect  any  amounts  then due or
         thereafter  to become due  hereunder  and to enforce  the  obligations,
         agreements  or  covenants  of the Company  under the  Installment  Sale
         Agreement; and

                  (3)      in the  event  of a  default  by the  Company  in the
         payment of any amounts due and owing under the PILOT Agreement and upon
         forty-five (45) days' prior written notice to the Company and the Bank,
         terminate the PILOT Agreement and reconvey the Project  Facility to the
         Company  subject to the Lien of the  Financing  Documents.  The Company
         hereby  consents  to said  reconveyance  and  appoints  the  Issuer its
         attorney-in-fact,  which appointment is coupled with an interest and is
         irrevocable,  to execute any and all  instruments  and documents in its
         name as may be  necessary,  in the sole  discretion  of the Issuer,  to
         effectuate such transfer.

                  (B)      Any sums paid to the Issuer as a  consequence  of any
action taken pursuant to this Section 10.2 (excepting sums payable to the Issuer
as a consequence of action taken to enforce the Unassigned Rights) shall be paid
to the Trustee and applied in accordance with the provisions of Section 10.11 of
the Indenture.

                  (C)      No  action  taken   pursuant  to  this  Section  10.2
(including  repossession of the Project Facility) shall relieve the Company from
its obligations to make all payments  required by the Installment Sale Agreement
and the other Financing Documents.

SECTION 10.3. REMEDIES  CUMULATIVE.  No remedy herein conferred upon or reserved
to the Issuer is intended to be exclusive  of any other  available  remedy,  but
each and every such remedy  shall be  cumulative  and in addition to every other
remedy given under the Installment  Sale Agreement or now or hereafter  existing
at law or in  equity.  No delay  or  omission  to  exercise  any  right or power
accruing  upon any  default  shall  impair  any such  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 to exercise any remedy reserved to it in this Article X, it shall not
be  necessary  to give any  notice,  other  than  such  notice  as may be herein
expressly required.

SECTION 10.4.  AGREEMENT TO PAY ATTORNEYS'  FEES AND EXPENSES.  In the event the
Company  should  default  under any of the  provisions of the  Installment  Sale
Agreement,  and the Issuer or the Trustee or the Bank should employ attorneys or
incur other  expenses for the  collection  of amounts  payable  hereunder or the
enforcement of performance or observance of any obligations or agreements on the
part of the Company herein contained, the Company shall, on demand therefor, pay
to the  Issuer or the  Trustee or the Bank,  as the case may be, the  reasonable
fees of such attorneys and such other expenses so incurred, whether an action is
commenced or not.

SECTION  10.5.  NO  ADDITIONAL  WAIVER  IMPLIED BY ONE WAIVER.  In the event any
agreement  contained  herein  should be breached by either party and  thereafter
such breach be waived by the other  party,  such waiver  shall be limited to the
particular  breach so waived  and shall not be deemed to waive any other  breach
hereunder.


                                       42
<PAGE>


                                   ARTICLE XI

                                  MISCELLANEOUS


SECTION  11.1.  NOTICES.  All  notices,  certificates  and other  communications
hereunder  shall be in  writing  and  shall be  sufficiently  given and shall be
deemed given when (A) sent to the applicable  address stated below by registered
or certified mail, return receipt requested,  postage prepaid,  or by such other
means (including, without limitation,  personal and overnight delivery) as shall
provide the sender with documentary  evidence of such delivery,  or (B) delivery
is refused by the  addressee,  as evidenced  by the  affidavit of the Person who
attempted to effect such delivery. The addresses to which notices,  certificates
and other communications hereunder shall be delivered are as follows:


     If to the Company:

     Spurlock Adhesives, Inc.
     5090 General Mahone Highway
     Waverly, Virginia  23890
     Attention:  Phillip S. Sumpter, Executive Vice President


     With a Copy to:

     Williams Mullen Christian & Dobbins, P.C.
     1021 East Cary Street
     Richmond, Virginia  23219
     Attention:  David L. Dallas, Jr., Esq.


     If to the Issuer:

     County of Saratoga Industrial Development Agency
     Saratoga County Municipal Center
     40 McMaster Street
     Ballston Spa, New York  12020
     Attention:  Administrator

     With a Copy to:

     Michael J. Toohey, Esq.
     Snyder, Kiley, Toohey & Corbett, LLP
     160 West Avenue
     P.O. Box 4367
     Saratoga Springs, New York  12866


                                       43
<PAGE>

     If to the Trustee:

     Star Bank, N.A.
     425 Walnut Street
     6th Floor
     Cincinnati, Ohio  45202
     Attention:  Trust Financial Services Group


     If to the Bank:

     KeyBank National Association
     66 South Pearl Street
     Albany, New York  12207-1501
     Attention:  Corporate Banking Division

     With a Copy to:

     KeyBank National Association
     66 South Pearl Street
     Albany, New York  12207
     Attention:  International Division, Letter of Credit Department

     and

     Crane Kelley Greene & Parente
     90 State Street
     Albany, New York  12207
     Attention:  Kevin J. Kelley, Esq.


The  Issuer,  the  Company,  the  Trustee  and the Bank  may,  by  notice  given
hereunder,  designate  any further or different  addresses  to which  subsequent
notices, certificates and other communications shall be sent.

SECTION 11.2.  BINDING EFFECT. The Installment Sale Agreement shall inure to the
benefit of the Issuer, the Company, the Trustee, the Bank and the holders of the
Bonds and shall be binding upon the Issuer, the Company and, as permitted by the
Installment Sale Agreement, their respective heirs, successors and assigns.

SECTION  11.3.  SEVERABILITY.  If any one or more of the covenants or agreements
provided herein on the part of the Issuer or the Company to be performed  shall,
for any reason,  be held or shall,  in fact, be  inoperative,  unenforceable  or
contrary to law in any particular case, such  circumstance  shall not render the
provision  in  question  inoperative  or  unenforceable  in any  other  case  or
circumstance.  Further, if any one or more of the phrases,  sentences,  clauses,
paragraphs  or sections  herein shall be contrary to law,  then such covenant or
covenants  or  agreement  or  agreements  shall  be  deemed  separable  from the
remaining  covenants  and  agreements  hereof  and  shall in no way  affect  the
validity of the other provisions of the Installment Sale Agreement.

                                       44
<PAGE>

SECTION  11.4.  AMENDMENTS,  CHANGES AND  MODIFICATIONS.  The  Installment  Sale
Agreement may not be amended, changed, modified,  altered or terminated,  except
by an  instrument  in writing  signed by the  parties  hereto,  with the written
consent of the Trustee and the Bank.

SECTION 11.5.  EXECUTION OF COUNTERPARTS.  The Installment Sale Agreement may be
executed in several counterparts,  each of which shall be an original and all of
which shall constitute but one and the same instrument.

SECTION 11.6.  APPLICABLE LAW. The Installment  Sale Agreement shall be governed
exclusively by the applicable laws of the State.

SECTION 11.7.  RECORDING AND FILING.  (A) The Assignment,  the Installment  Sale
Agreement,  the  Mortgage  and  financing  statements  perfecting  the  security
interests  created and/or  assigned  thereby shall be recorded or filed,  as the
case may be, by the Issuer in the office of the County Clerk of Saratoga County,
New York,  or in such other  office as may at the time be provided by law as the
proper place for the recordation or filing thereof,  and said statements as well
as continuation  statements may be filed without the signature of the Issuer and
the Company.  The Trustee shall be entitled to receive,  no less frequently than
each five (5) year  anniversary  of the date of the  issuance  of the Bonds,  an
opinion of Counsel  (as defined in the  Indenture),  addressed  to the  Trustee,
stating that all such necessary recordings and filings have been completed.

                  (B)      The Issuer and the Company  shall execute and deliver
all instruments and shall furnish all information  which the Trustee or the Bank
may deem necessary or appropriate to protect any Lien created or contemplated by
the Installment Sale Agreement, the Indenture and the Mortgage.

SECTION 11.8.  SURVIVAL OF  OBLIGATIONS.  (A) The  obligations of the Company to
make the payments required by Section 5.3(B) hereof and to provide the indemnity
required by Sections  8.2,  8.4,  8.12,  8.13 and 8.14 hereof shall  survive the
termination of the Installment Sale Agreement and the full payment of the Bonds,
and all such payments  after such  termination  shall be made upon demand of the
party to whom such payment is due.

                  (B)      The  obligations  of the Company  with respect to the
Unassigned  Rights  shall  survive  the  termination  of  the  Installment  Sale
Agreement until the expiration of the period stated in the applicable statute of
limitations during which a claim, cause of action or prosecution relating to the
Unassigned  Rights may be brought and the payment in full or the satisfaction of
such claim,  cause of action or prosecution  and the payment of all expenses and
charges incurred by the Issuer, or its officers,  members,  agents or employees,
relating thereto.

SECTION 11.9. TABLE OF CONTENTS AND SECTION HEADINGS NOT CONTROLLING.  The Table
of Contents and the  headings of the several  sections in the  Installment  Sale
Agreement  have been prepared for  convenience  of reference  only and shall not
control, affect the meaning of or be taken as an interpretation of any provision
of the Installment Sale Agreement.

SECTION 11.10. NO RECOURSE;  SPECIAL OBLIGATION.  The obligations and agreements
of the Issuer  contained  herein and in the other  Financing  Documents  and any
other instruments or documents executed in connection therewith or herewith, and
any other instrument or document supplemental thereto or hereto, shall be deemed
the  obligations and agreements of the Issuer,  and not of any member,  officer,
agent  (other than the  Company)  or  employee  of the Issuer in his  individual
capacity,  and the  members,  officers,  agents  (other  than the  Company)  and
employees of the Issuer shall not be liable  

                                       45
<PAGE>

personally  hereon  or  thereon  or be  subject  to any  personal  liability  or
accountability  based upon or in respect hereof or thereof or of any transaction
contemplated  hereby or thereby.  The  obligations  and agreements of the Issuer
contained  herein and therein shall not constitute or give rise to an obligation
of the State or of Saratoga County, New York, and neither the State nor Saratoga
County,  New York  shall  be  liable  hereon  or  thereon,  and,  further,  such
obligations  and  agreements  shall  not  constitute  or give  rise to a general
obligation  of  the  Issuer,  but  rather  shall  constitute  limited,   special
obligations of the Issuer payable solely from the revenues of the Issuer derived
and to be derived  from the sale or other  disposition  of the Project  Facility
(except  for  revenues  derived by the  Issuer  with  respect to the  Unassigned
Rights).  No order or decree of specific  performance with respect to any of the
obligations  of the Issuer  hereunder  shall be sought or  enforced  against the
Issuer  unless  (A) the party  seeking  such  order or decree  shall  first have
requested  the  Issuer in  writing  to take the  action  sought in such order or
decree of specific  performance,  and ten (10) days shall have  elapsed from the
date of receipt of such  request,  and the Issuer  shall have  refused to comply
with such request (or, if compliance  therewith would  reasonably be expected to
take longer than ten [10] days,  shall have failed to institute  and  diligently
pursue action to cause compliance with such request) or failed to respond within
such notice  period,  (B) if the Issuer  refuses to comply with such request and
the Issuer's  refusal to comply is based on its reasonable  expectation  that it
will incur fees and expenses,  the party seeking such order or decree shall have
placed in an account  with the  Issuer an amount or  undertaking  sufficient  to
cover such reasonable fees and expenses, and (C) if the Issuer refuses to comply
with such request and the Issuer's  refusal to comply is based on its reasonable
expectation  that it or any of its  members,  officers,  agents  (other than the
Company) or employees shall be subject to potential liability, the party seeking
such order or decree shall (1) agree to indemnify  and hold  harmless the Issuer
and its members, officers, agents (other than the Company) and employees against
any liability  incurred as a result of its compliance with such demand,  and (2)
if  requested  by the  Issuer,  furnish to the Issuer  satisfactory  security to
protect the Issuer and its members,  officers,  agents and employees against all
liability expected to be incurred as a result of compliance with such request.

SECTION 11.11. SUBORDINATION OT MORTGAGE AND ASSIGNMENT. (A) Except as set forth
below,  the  Installment  Sale  Agreement  and all rights of the Company and the
Issuer  hereunder are and shall be  subordinate to the Liens of the Mortgage and
the  Assignment.  The  subordination  of the  Installment  Sale Agreement to the
Mortgage and the  Assignment  shall be  automatic,  without the execution of any
further subordination  agreement by the Company or the Issuer.  Nonetheless,  if
the Trustee and/or the Bank requires a further written subordination  agreement,
the Company and the Issuer agree to execute, acknowledge and deliver the same.

                  (B)      Notwithstanding  anything to the  contrary  contained
herein or in any other Financing Document,  the Installment Sale Agreement shall
constitute a first priority lien on the Project  Facility in favor of the Issuer
to the extent of and as  security  for the payment by the Company of all amounts
due and owing to the Issuer under  Section 6.6 hereof,  including the payment of
all amounts due and owing under the PILOT  Agreement such that the rights of the
Trustee and the Bank under the Mortgage,  the Assignment and the other Financing
Documents shall be expressly subordinated thereto,  notwithstanding the relative
order of recordation of such documents.

SECTION 11.12.  SUBMISSION TO JURISDICTION.  The Company hereby  irrevocably and
unconditionally  agrees that any suit,  action or  proceeding  arising out of or
relating to this Installment Sale Agreement shall be brought in the state courts
of the State of New York or federal district court for the Northern  District of
New York and waives  any right to object to  jurisdiction  within  either of the
foregoing  forums by the Issuer.  Nothing  contained  herein  shall  prevent the
Issuer from bringing any suit,  action or  proceeding  or exercising  any rights
against  any  security  and  against  the  Company  personally,  

                                       46
<PAGE>

and against any property of the Company,  within any other  jurisdiction and the
initiation  of such suit,  action or  proceeding or taking of such action in any
such other  jurisdiction shall in no event constitute a waiver of the agreements
contained herein with respect to the laws of the State of New York governing the
rights and  obligations of the parties hereto or the agreement of the Company to
submit to personal jurisdiction within the State of New York.


                                       47
<PAGE>


     IN WITNESS WHEREOF,  the Issuer and the Company have caused the Installment
Sale  Agreement  to be executed in their  respective  names by their  respective
Authorized Representatives, all as of the day and year first above written.

                                     COUNTY OF SARATOGA INDUSTRIAL
                                     DEVELOPMENT AGENCY


                                     By: /s/ Floyd H. Rourke
                                         -----------------------------------
                                         Floyd H. Rourke, Chairman



                                     SPURLOCK ADHESIVES, INC.


                                     By: /s/ Phillip S. Sumpter
                                         -----------------------------------
                                     Name: Phillip S. Sumpter
                                           ---------------------------------
                                     Title: Executive Vice President
                                            ---------------------------------


STATE OF NEW YORK     )
                      ) SS.:
COUNTY OF SARATOGA    )

         On the 7th day of October,  1997,  before me  personally  came FLOYD H.
ROURKE,  to me known,  who being by me duly  sworn,  did  depose and say that he
resides in  Northumberland,  New York,  that he is the CHAIRMAN of the COUNTY OF
SARATOGA  INDUSTRIAL  DEVELOPMENT  AGENCY, the public benefit corporation of the
State of New York described in and which executed the foregoing instrument,  and
that he signed his name thereto by authority of said public benefit corporation.


                                             /s/ Theresa C. Priest
                                             -----------------------------------
                                             Notary Public

                                                      Theresa C. Priest
                                               Notary Public, State of New York
                                                Washington County #01PR4921971
                                               Commission Expires Feb. 28, 1998


STATE OF NEW YORK     )
                      ) SS.:
COUNTY OF SARATOGA    )

         On this 7th day of October,  1997, before me personally came Phillip S.
Sumpter,  to me known,  who being by me duly  sworn,  did depose and sat that he
resides in Waverly  Virginia,  that he is the Exec.  VP of  SPURLOCK  ADHESIVES,
INC., the corporation  described in and which executed the foregoing instrument,
and that he signed his name  thereto by order of the Board of  Directors of said
corporation.

                                             /s/ Theresa C. Priest
                                             -----------------------------------
                                             Notary Public

                                                      Theresa C. Priest
                                               Notary Public, State of New York
                                                Washington County #01PR4921971
                                               Commission Expires Feb. 28, 1998

<PAGE>




                                   EXHIBIT "A"

                            REAL PROPERTY DESCRIPTION


         THAT TRACT OR PARCEL OF LAND, situate in the Town of Moreau,  County of
Saratoga and State of New York more fully  described as Lot Number 3 as shown on
subdivision maps of Moreau  Industrial Park prepared by The Saratoga  Associates
and filed in the  Saratoga  County  Clerk's  Office on March 18,  1992 in drawer
#M-348 A-Z and AA-DD;  and as  modified  by revised  subdivision  maps of Moreau
Industrial  Park prepared by The Saratoga  Associates  and filed in the Saratoga
County  Clerk's  Office on  February  16, 1994 in drawer  #M-398,  A-S and being
further bounded and described as follows:

         BEGINNING  at a point  marked with a capped iron rod found at the point
of  intersection  of the easterly  line of Farnan Road with the common  division
line of Lot No. 4 to the  north and Lot No. 3 to the south as shown on said map;
thence  from  said  point of  beginning  along  said  common  division  line the
following five (5) courses and distances:
     1)  North 90 deg. 00 min. 00 sec. East,  347.86 feet to a point marked with
         a capped iron rod found;
     2)  South 00 deg. 00 min. 00 sec. West, 32.63 feet to a point marked with a
         capped iron rod found;
     3)  North 90 deg. 00 min. 00 sec. East,  191.52 feet to a point marked with
         a capped iron rod found;
     4)  North 00 deg. 00 min. 00 sec. East, 32.63 feet to a point marked with a
         capped iron rod found;
     5)  North  90 deg.  00 min.  00 sec.  East,  680.17  feet to the  point  of
intersection  of the westerly line of Lot No. 5 with the common division line of
Lot No. 4 to the north  and Lot No. 3 to the south as shown on said map;  thence
along said westerly line,  South 16 deg. 10 min. 56 sec. West,  102.04 feet to a
point in the  northwesterly  line of lands of The  State of New York as shown on
said map,  said point also being at the 145 foot  elevation;  thence  along said
northwesterly  and the  westerly  line of lands  of The  State of New York as it
winds and turns along the 145 foot  elevation in a southerly  direction  712 +/-
feet to the point of intersection of said westerly line of lands of The State of
New York with the common  division  line of Lot No. 3 to the north and Lot No. 2
to the south as shown on said map, the last course having a tie-line of South 33
deg. 02 min. 30 sec. West,  699.47 feet; thence along said common division line,
South 90 deg. 00 min. 00 sec. West,  865.65 feet to a point marked with a capped
iron rod found at the point of  intersection of the easterly line of Farnan Road
with the  common  division  line of Lot No. 3 to the  north and Lot No. 2 to the
south as shown on said map;  thence  along  said  easterly  line in a  northerly
direction the following four (4) courses and distances:

     1)  North  00  deg.  00 min.  00  sec.  West,  116.35  feet  to a point  of
         curvature;
     2)  Along a curve to the right an arc  length of 464.05  feet to a point of
         tangency, said curve having a radius of 2,773.32 feet and a delta angle
         of 09 deg. 35 min. 13 sec.;
     3)  North 09 deg. 35 min. 13 sec. East, 50.00 feet to a point of curvature;
     4)  Along a curve to the left an arc  length of 57.49  feet to the point or
place of  beginning,  said curve  having a radius of  2,294.42  feet and a delta
angle of 01 deg. 26 min. 08 sec., said parcel containing 16.37 +/- acres of land
and being Lot No. 3 as shown on said map.



                                      
<PAGE>





                                   EXHIBIT "B"

                            DESCRIPTION OF EQUIPMENT


         All articles of personal property and all  appurtenances  acquired with
the proceeds of the Bonds or any payment made by the Company pursuant to Section
4.5 of  the  Installment  Sale  Agreement  and  now or  hereafter  attached  to,
contained  in or used in  connection  with the  Facility  or  placed on any part
hereof,  though  not  attached  thereto,  including,  but not  limited  to,  all
equipment,  machinery,  pipes, screens, fixtures,  heating, lighting,  plumbing,
ventilation,  air conditioning,  compacting and elevator plants,  drapes, blinds
and accessories,  sprinkler  systems and other fire prevention and extinguishing
apparatus  and  materials;  and together with any and all products of any of the
above, all substitutions,  replacements,  additions or accessions therefor,  and
any and all cash proceeds or non-cash proceeds realized from the sale,  transfer
or conversion  of any of the above.  The  references to "proceeds"  shall not be
deemed  to be an  authorization  by the  Bank of the  disposition  of any of the
foregoing.


                                      B-1
<PAGE>





                                   EXHIBIT "C"

                             FORM OF DEED TO COMPANY


         THIS  INDENTURE  made  __________________,   ____,  between  COUNTY  OF
SARATOGA INDUSTRIAL  DEVELOPMENT AGENCY, a public benefit corporation  organized
under the laws of the State of New York,  with  offices at 40  McMaster  Street,
Ballston Spa, New York 12020, party of the first part, and

         SPURLOCK ADHESIVES,  INC., a Virginia  corporation having an address of
5090 General Mahone Highway, Waverly, Virginia 23890, party of the second part

         WITNESSETH  that the party of the first part, in  consideration  of One
and 00/100 dollars  ($1.00),  lawful money of the United States,  and other good
and valuable  consideration  paid by the party of the second part,  the heirs or
successors and assigns of the party of the second part forever, all

                [Insert description of Land from Deed to Issuer]

         TOGETHER  with the  appurtenances  and all the estate and rights of the
party of the first part in and to said premises,

         TO HAVE AND TO HOLD the premises  herein  granted unto the party of the
second part, the heirs or successors and assigns of the party of the second part
forever.

         The word "party"  shall be construed as if it read  "parties"  whenever
the sense of this Indenture so requires.

         IN WITNESS WHEREOF,  the party of the first part has duly executed this
deed the day and year first above written.



                                     COUNTY OF SARATOGA INDUSTRIAL
                                     DEVELOPMENT AGENCY


                                     BY:_________________________________


                                      C-1
<PAGE>




   
                                   EXHIBIT "D"

                       FORM OF BILL OF SALE TO THE COMPANY

         County of Saratoga  Industrial  Development  Agency,  a public  benefit
corporation  of the State of New York (the  "State")  having  its  office at the
Saratoga County Municipal  Center,  40 McMaster  Street,  Ballston Spa, New York
12020 (the "Grantor"), for the consideration of One Dollar ($1.00), cash in hand
paid,  and other good and  valuable  consideration  received by the Grantor from
Spurlock Adhesives,  Inc. a corporation organized and existing under the laws of
the State of Virginia having its office at 5090 General Mahone Highway, Waverly,
Virginia 23890 (the "Grantee"),  the receipt of which is hereby  acknowledged by
the Grantor,  hereby sells,  transfers  and delivers  unto the Grantee,  and its
successors and assigns, all those materials,  machinery,  equipment, fixtures or
furnishings  which are  described  in Exhibit  "A"  attached  hereto and by this
reference  made a part hereof,  now owned or  hereafter  acquired by the Grantor
with  proceeds  of the sale of the Bonds (as  defined  in the  installment  sale
agreement dated as of October 1, 1997, [the "Installment Sale Agreement"] by and
between the Grantor and the Grantee) or any payment made by the Grantee pursuant
to Section 4.5 of the Installment Sale Agreement, and such additions thereto and
substitutions therefor as may be made from time to time.

         TO HAVE AND TO HOLD the same unto the Grantee,  and its  successors and
assigns, forever.

         THE GRANTOR  MAKES NO WARRANTY,  EITHER  EXPRESS OR IMPLIED,  AS TO THE
CONDITION,  TITLE, DESIGN,  OPERATION,  MERCHANTABILITY OR FITNESS OF ANY OF THE
EQUIPMENT  DESCRIBED ABOVE. THE GRANTEE ACCEPTS TITLE TO SUCH EQUIPMENT "AS IS",
WITHOUT  RECOURSE  AGAINST  THE  GRANTOR  FOR  ANY  CONDITION  NOW OR  HEREAFTER
EXISTING. IN THE EVENT OF A DEFICIENCY OR DEFAULT OF ANY NATURE,  WHETHER PATENT
OR LATENT, THE GRANTOR SHALL HAVE NO RESPONSIBILITY OR LIABILITY WHATSOEVER WITH
RESPECT THERETO.

         IN WITNESS  WHEREOF,  the  Grantor  has caused  this bill of sale to be
executed  in its  name by its duly  authorized  officer  on the  date  indicated
beneath the signature of such officer and dated as of the _____ day of
__________, ____.



                                         COUNTY OF SARATOGA INDUSTRIAL
                                         DEVELOPMENT AGENCY



                                         By:______________________________
                                                     Chairman


                                      D-1