bank leumi USA

                                                              December 15, 2000


Elk Associates Funding Corporation ("Borrower)
747 Third Avenue
New York, NY 10017

Attn:  Mr. Gary Granoff, President


Dear Mr. Granoff:

     Reference  is  made to  promissory  note  dated  December  15,  2000 in the
principal amount of $8,000,000.

     You have agreed that for good and valuable consideration including, but not
limited to the extension and increase of credit  accommodations to Borrower,  in
the amount of  $8,000,000,  that letter  agreement  dated January 20, 1998 shall
continue  to be in full force and effect with  respect to credit  accommodations
now or in the future outstanding to Borrower.

     You have  agreed  that the first  paragraph  of such  letter is modified to
provide as follows:

     "In order to induce you to make  and/or  continue  loans for the account of
     the undersigned pursuant to Promissory Note (Grid) dated December 15, 2000,
     as such note is  hereafter  modified,  extended,  renewed or replaced  with
     other  notes,  the  Borrower  will,  and  will  cause  each  affiliate  and
     subsidiary (to the extent applicable) to:".

                      562 Fifth Avenue, New York, NY 10036
         Commercial Banking o Private Banking o International Banking o
              A Member of the Worldwide Bank Leumi le-Israel Group



<PAGE>


Elk Associates Funding Corporation
Page 2
December 15, 2000


     Please  confirm you  agreement to the  foregoing by signing and returning a
copy of this letter to the undersigned.



                                         Very truly yours,

                                         BANK LEUMI USA


                                         By:  /s/ Iris Schechter
                                            ------------------------------------
                                             Iris Schechter, Vice President


                                         By:  /s/ Fran Davis
                                            ------------------------------------
                                             Fran Davis, Vice President

Consented and Agreed to:

ELK ASSOCIATES FUNDING CORPORATION


By:  /s/ Sylvia M. Mullens, V.P.
   --------------------------------------
    Sylvia M. Mullens, Vice President


By:  /s/ Margaret Chance
   --------------------------------------
    Margaret Chance, Secretary


<PAGE>



"THIS NOTE SUPERSEDES AND REPLACES THAT CERTAIN PROMISSORY NOTE
(GRID) DATED OCTOBER 10, 2000 IN THE ORIGINAL PRINCIPAL AMOUNT OF
$8,000,000.00."

                             PROMISSORY NOTE (GRID)



New York, N.Y. DECEMBER 15, 2000                                      $8,000,000

     For Value  Received,  ELK ASSOCIATES  FUNDING CORP.  promises to pay to the
order of BANK LEUMI USA (the "Bank"),  at its offices at 579 Fifth  Avenue,  New
York, New York, the principal sum of Eight Million Dollars  ("Maximum  Principal
Amount") or, if less,  the aggregate  unpaid  principal sum of all loans made by
the Bank, in its sole  discretion,  to the maker of this Note from time to time.
The principal sum of each such loan shall be payable February 1, 2001.

     Within the limits of the Maximum  Principal  Amount,  the maker may borrow,
prepay, and reborrow in the manner provided herein.

     Each loan shall bear interest  (from the date of such loan),  at the option
of the  maker,  at a rate  per  annum  which  shall  be equal to (a) the rate of
interest  designated  by the  Bank,  and in  effect  from  time to time,  as its
"Reference Rate" minus 1/2% per annum, adjusted when said Reference Rate changes
(the maker  acknowledges  that the Reference Rate may not necessarily  represent
the lowest rate of interest  charged by the Bank to customers) or (b) 1 1/2% per
annum above the Libor Rate  (Reserve  Adjusted)*  for a one,  two or three month
term,  as  elected  by the  maker and  calculated  by the  Bank,  in the  manner
hereinafter provided, but in no event in excess


--------

*    "Libor Rate" means,  relative to any Interest Period (hereinafter  defined)
     for loans made  pursuant to this Note and which bear interest at the "Libor
     Rate (Reserve Adjusted)",  the rate of interest per annum determined by the
     Bank to be the arithmetic mean (rounded upward to the next 1/16th of 1%) of
     the rates of interest per annum at which dollar deposits in the approximate
     amount of the amount of the loan to be made or  continued  hereunder by the
     Bank and having a maturity  comparable  to such  Interest  Period  would be
     offered  to the Bank in the  London  Interbank  market  at its  request  at
     approximately  11:00  a.m.  (London  time) two  Business  Days prior to the
     commencement of such Interest Period.

     "Libor Reserve Percentage" means, relative to any Interest Period for loans
     hereunder,  the percentage  (expressed as a decimal,  rounded upward to the
     next 1/100th of 1%) in effect on such day (whether or not applicable to the
     Bank) under the regulations issued from time to time by the Federal Reserve
     System Board for determining the maximum reserve requirement (including any
     emergency, supplemental or other marginal reserve requirement) with respect
     to  Eurocurrency   funding  (currently   referred  to  as  a  "Eurocurrency
     Liabilities" in Regulation D of the Federal Reserve System Board).

     "Libor Rate (Reserve  Adjusted)" means,  relative to any loan to be made or
     continued hereunder for any Interest Period, the rate of interest per annum
     (rounded  upwards  to the  next  1/16th  of 1%)  determined  by the Bank as
     follows:

              Libor Rate           =                 Libor Rate
                                           ------------------------------
          (Reserve Adjusted)               1.00 - Libor Reserve Percentage


<PAGE>



of the maximum rate permitted by applicable law; provided, that in the event the
Bank shall have determined that by reason of  circumstances  affecting the Libor
Rate  (Reserve  Adjusted)  adequate  and  reasonable  means  do  not  exist  for
ascertaining  the Libor Rate  (Reserve  Adjusted) for any Interest  Period,  the
applicable  rate of interest  during such Interest  Period shall be equal to its
Reference  Rate minus 1/2% per annum  adjusted when said Reference Rate changes,
but in no event in excess of the maximum rate permitted by law; further provided
that if, at the end of any  Interest  Period,  the  maker  has  failed to timely
notify the Bank of its election of the choice of interest  rate for or length of
the next Interest Period,  then the interest rate in effect  thereafter shall be
at the Libor  Rate  (Reserve  Adjusted)  plus 1 1/2% per  annum for an  Interest
Period the length of which shall be the same length as the immediately preceding
Interest  Period unless such Interest Period would end after the stated maturity
date of this Note,  in which  case the  Interest  Period  shall be of a duration
equal  to the  next  longest  Interest  Period  which  would  end  prior to such
scheduled   maturity  date,   provided  further  that  no  Libor  Rate  (Reserve
Adjusted)-based  loan  shall be made  less  than one  month  before  the  stated
maturity date of this Note, or after the occurrence and  continuance of an Event
of  Default  or an event  which,  upon  notice,  passage  of time or both  would
constitute an Event of Default.  Interest hereunder shall be payable on the last
day of  each  Interest  Period  and at  maturity  (whether  by  acceleration  or
otherwise).  The term "Interest Period" as used in this Note shall mean a period
of one, two or three  month(s),  as elected by the maker by written or facsimile
notice to the Bank given not later than 12:00 noon three  Business Days prior to
the commencement of an Interest  Period.  No Interest Period shall extend beyond
the stated maturity date of this Note. The initial Interest Period for this Note
shall  begin on the day of the  initial  draw  down  under  the  Note,  and each
subsequent  Interest  Period  shall  begin on the  last  day of the  immediately
preceding  Interest  Period.  The Bank  shall  give  notice  to the maker of the
interest rate determined for each Interest Period as provided  herein,  and such
notice shall be  conclusive  and binding upon the maker for all purposes  absent
manifest  error.  The maker shall pay to the Bank to compensate it for any loss,
cost or expense that the Bank  determines is attributable to any prepayment of a
loan made by the Bank to the maker using the Libor Rate (Reserve Adjusted). Such
compensation  shall  include  an amount  equal to the excess (if any) of (i) the
amount of interest that otherwise would have accrued on the principal  amount so
prepaid for the period from the date of such  prepayment  to the last day of the
then current  Interest  Period for such loan at the applicable  rate of interest
for such loan provided  herein over (ii) the amount of interest  that  otherwise
would have  accrued to such  principal  amount at a rate per annum  equal to the
interest component of the amount the Bank would have bid in The London Interbank
market  for dollar  deposits  of leading  banks in  amounts  comparable  to such
principal  amount and with  maturities  comparable to such period (as reasonably
determined by the Bank).  The term "Business Day" shall mean any day of the year
on which the Bank is open for  business  (as  required  or  permitted  by law or
otherwise) and on which dealings in the U.S.  dollar  deposits are carried on in
London, England.

     If any  law,  treaty,  rule,  regulation  or  determination  of a court  or
governmental  authority  or  any  change  therein  or in the  interpretation  or
application  thereof  (each,  a "Change in Law") shall make it unlawful  for the
Bank to make Libor Rate (Reserve  Adjusted)-based loans, or to maintain interest
rates  based on Libor,  then in the former  event,  any  obligation  of the Bank
contained herein or in any agreement of the Bank to make available such unlawful
Libor Rate

                                       -2-

<PAGE>



(Reserve Adjusted)-based loans shall immediately be cancelled, and in the latter
event,  any  such  unlawful  Libor  Rate  (Reserve  Adjusted)-based  loans  then
outstanding  shall be converted,  at the Bank's option,  so that interest on the
outstanding  principal  balance  subject hereto is determined in relation to the
Reference  Rate as  hereinabove  provided;  provided  however,  that if any such
Change in Law shall  permit any Libor  Rate  (Reserve  Adjusted)-based  loans to
remain in effect until the expiration of the Interest Period applicable thereto,
then such permitted Libor Rate (Reserve  Adjusted)-based loans shall continue in
effect until the expiration of such Interest Period.  Upon the occurrence of any
of the foregoing  events,  maker shall pay to the Bank  immediately  upon demand
such  amounts as may be necessary to  compensate  the Bank for any fines,  fees,
charges,  penalties  or other costs  incurred or payable by the Bank as a result
thereof and which are attributable to any Libor Rate (Reserve  Adjusted) options
made available to maker  hereunder,  and any reasonable  allocation  made by the
Bank among its operations shall be conclusive and binding upon maker.

     If any  Change  in Law or  compliance  by the  Bank  with  any  request  or
directive  (whether  or not  having the force of law) from any  central  bank or
other governmental authority shall:

     (A)  subject the Bank to any tax,  duty or other charge with respect to any
          Libor Rate (Reserve Adjusted) options, or change the basis of taxation
          of  payments  to the Bank of  principal,  interest,  fees or any other
          amount payable hereunder (except for changes in the rate of tax on the
          overall net income of the Bank); or

     (B)  impose,  modify  or hold  applicable  any  reserve,  special  deposit,
          compulsory  loan  or  similar  requirement  against  assets  held  by,
          deposits or other  liabilities  in or for the account of,  advances or
          loans by, or any other acquisition of funds by any office of the Bank;
          or

     (C)  impose on the Bank any other condition;

and the result of any of the  foregoing  is to increase  the cost to the Bank of
making,  renewing or maintaining  any Libor Rate (Reserve  Adjusted)-based  loan
hereunder  and/or to reduce  any  amount  receivable  by the Bank in  connection
therewith,  then in any such case,  maker shall pay to the Bank immediately upon
demand  such  amounts  as may be  necessary  to  compensate  the  Bank  for  any
additional  costs  incurred by the Bank and/or  reductions  received by the Bank
which are  attributable  to such Libor Rate  (Reserve  Adjusted)-based  loan. In
determining  which  costs  incurred  by the Bank  and/or  reductions  in amounts
received by the Bank are attributable to any Libor Rate (Reserve Adjusted)-based
loan made to maker hereunder,  any reasonable  allocation made by the Bank among
its operations shall be conclusive and binding upon maker.

     The Bank is hereby  authorized to enter on the schedule attached hereto the
amount of each loan and each payment of principal  thereon,  without any further
authorization  on the part of the maker or any  endorser  or  guarantor  of this
Note,  but the Bank's  failure to make such entry  shall not limit or  otherwise
affect the  obligations  of the maker or any endorser or guarantor of this Note.
In the event that any Liabilities (as hereinafter  defined) of maker to the Bank
are due at

                                       -3-

<PAGE>



any time that the Bank  receives a payment from maker on account of this Note or
any such other Liabilities of maker, the Bank may apply such payments to amounts
due under this Note or any such other Liabilities in such manner as the Bank, in
its  discretion,  elects,  regardless  of any  instructions  from  maker  to the
contrary.

     The maker and each  endorser  and  guarantor of this Note  acknowledge  and
agree that the use of this form of Note is for their  convenience,  and there is
no obligation on the part of the Bank to make loans to the maker whatsoever.

     Interest shall be computed on the basis of a 360-day year.

     Each maker or endorser authorizes (but shall not require) the Bank to debit
any account  maintained  by the maker or endorser  with the Bank, at any date on
which the payment of principal or of interest on any of the  Liabilities is due,
in an  amount  equal to any  unpaid  portion  of such  payment.  If the time for
payment of principal of or interest on any of the Liabilities or any other money
payable hereunder or with respect to any of the Liabilities becomes due on a day
on which the Bank's  offices  are closed (as  required  or  permitted  by law or
otherwise),  such payment shall be made on the next succeeding business day, and
such extension  shall be included in computing  interest in connection with such
payment.  All  payments  by any maker or  endorser  of this Note on  account  of
principal,  interest  or fees  hereunder  shall be made in  lawful  money of the
United States of America, in immediately available funds.

     All Property (as hereinafter  defined) held by the Bank shall be subject to
a security  interest in favor of the Bank or holder  hereof as security  for any
and all Liabilities. The term "Property" shall mean the balance of every deposit
account of the maker with the Bank or any of the Bank's  nominees  or agents and
all other obligations of the Bank or any of its nominees or agents to the maker,
whether now existing or hereafter  arising,  and all other personal  property of
the  maker  (including   without   limitation  all  money,   accounts,   general
intangibles, goods, instruments, documents and chattel paper) which, or evidence
of which, are now or at any time in the future shall come into the possession or
under the  control  of or be in transit  to the Bank or any of its  nominees  or
agents for any  purpose,  whether or not  accepted for the purposes for which it
was delivered.  The term "Liabilities" shall mean the indebtedness  evidenced by
this Note and all other indebtedness, liabilities and obligations of any kind of
the maker (or any  partnership or other group of which the maker is a member) to
(a) the Bank,  (b) any  group of which  the Bank is a  member,  or (c) any other
person if the Bank has a participation  or other interest in such  indebtedness,
liabilities or  obligations,  whether (i) for the Bank's own account or as agent
for others,  (ii) acquired  directly or indirectly by the Bank from the maker or
others,  (iii) absolute or contingent,  joint or several,  secured or unsecured,
liquidated  or  unliquidated,  due or not  due,  contractual  or  tortious,  now
existing or  hereafter  arising,  or (iv)  incurred  by the maker as  principal,
surety,  endorser,  guarantor or otherwise, and including without limitation all
expenses, including attorneys' fees, incurred by the Bank in connection with any
indebtedness,  liabilities or obligations or any of the Property  (including any
sale or other disposition of the Property).


                                       -4-

<PAGE>



     Upon the  happening,  with  respect to any maker,  endorser or guarantor of
this Note or any assets of any such maker, endorser or guarantor,  of any of the
following events (each an "Event of Default"):  death of the maker,  endorser or
guarantor or any member of the maker,  endorser or guarantor (if a partnership);
the failure to furnish  the Bank with any  requested  information  or failing to
permit  inspection  of books or  records by the Bank or any of its  agents;  the
making of any misrepresentation to the Bank in obtaining credit for any of them;
dissolution  (if a  corporation  or  partnership);  the making of a mortgage  or
pledge; the commencement of a foreclosure proceeding;  default in the payment of
principal or interest on this Note or in the payment of any other  obligation of
any said maker,  endorser or guarantor  held by the Bank or holder  hereof or in
the  performance  or  observance  of any covenant or agreement  contained in the
instrument evidencing such obligation; default in the payment of principal of or
interest on any  indebtedness  for  borrowed  money owed to any other  person or
entity  (including any such indebtedness in the nature of a lease) or default in
the  performance or observance of the terms of any instrument  pursuant to which
such  indebtedness was created or is secured,  the effect of which default is to
cause or permit any hoder of any such  indebtedness  to cause the same to become
due prior to its stated  maturity  (and whether or not such default is waived by
the holder  thereof);  a change in the financial  condition or affairs of any of
them which in the opinion of the Bank or  subsequent  holder  hereof  materially
reduces  his,  their or its ability to pay all of his their or its  obligations;
the  suspension  of  business;  the making of an  assignment  for the benefit of
creditors,  or appointment  of a trustee,  receiver or liquidator for the maker,
endorser  or  guarantor  or  for  any of  his,  its or  their  property,  or the
commencement  of any  proceedings by the maker,  endorser or guarantor under any
bankruptcy,  reorganization,  arrangement of debt,  insolvency,  readjustment of
debt, receivership, liquidation or dissolution law or statute (including, if the
maker,  endorser or guarantor is a partnership,  its dissolution pursuant to any
agreement or statute),  or the commencement of any such proceedings  without the
consent  of the  maker,  endorser  or  guarantor,  as the case may be,  and such
proceedings shall continue  undischarged for a period of 30 days; the sending of
notice of an intended bulk sale; the entry of judgments or any attachment,  levy
or execution  against any of his, their or its properties shall not be released,
discharged  dismissed,  stayed or fully  bonded  for a period of 30 days or more
after its entry, issue or levy, as the case may be; or the issuance of a warrant
of distraint or assertion of a lien for unpaid taxes, this Note, if not then due
or payable on demand, shall become due and payable immediately without demand or
notice and all other debts or obligations of the makers and endorsers  hereof to
the  Bank  or  holder  hereof,  whether  due or not due and  whether  direct  or
contingent  and however  evidenced,  shall,  at the option of the Bank or holder
hereof, also become due and payable immediately without demand or notice.  After
this Note becomes due, at stated maturity or on acceleration, any unpaid balance
hereof shall bear interest from the date it becomes due until paid at a rate per
annum 3% above the rate borne by this Note when it becomes  due or, if such rate
shall not be lawful with respect to the undersigned,  then at the highest lawful
rate. The liability of any party to commercial  paper held by the Bank or holder
hereof,  other than the makers and  endorsers  hereof,  shall remain  unaffected
hereby and such  parties  shall remain  liable  thereon in  accordance  with the
original  tenor thereof.  Each maker and endorser  agrees that if an attorney is
retained to enforce or collect this Note or any other  obligations  by reason of
non-payment of this Note when due or made due hereunder, a reasonable attorneys'
fee shall be paid in addition, which fees shall be computed as follows:

                                       -5-

<PAGE>



15% of the principal,  interest and all other sums due and owing to the payee or
holder or the reasonable value of the attorneys' services, whichever is greater.

     This Note shall be  governed by the laws of the State of New York and shall
be binding upon the maker and each endorser and the maker's and each  endorser's
heirs,  administrators,  successors  and  assigns.  The maker and each  endorser
hereby irrevocably  consent to the jurisdiction of any New York State or Federal
court located in New York City over any action or proceeding  arising out of any
dispute  between the maker and each endorser and the Bank, and the maker further
irrevocably  consents to the service of process in any such action or proceeding
by the  mailing of a copy of such  process to the maker at the address set forth
below. In the event of litigation between the Bank and the maker over any matter
connected with this Note or resulting from the transactions hereunder, the right
to a trial by jury is hereby  waived by the Bank and the  maker.  The maker also
waives the right to interpose  any set-off or  counterclaim  of any nature.  The
Bank or any holder may accept late payments,  or partial  payments,  even though
marked  "payment  in  full"  or  containing  words of  similar  import  or other
conditions,  without  waiving any of its rights.  No amendment,  modification or
waiver of any  provision  of this Note nor  consent  to any  departure  by maker
therefrom shall be effective,  irrespective of any course of dealing, unless the
same shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given.

     The rights and remedies of the Bank provided for hereunder  (including  but
not limited to the right to  accelerate  Liabilities  of maker and to realize on
any  security  for any such  Liabilities)  are  cumulative  with the  rights and
remedies of the Bank available under any other  instrument or agreement or under
applicable law.

     The  undersigned,  if more than one, shall be jointly and severally  liable
hereunder.

                                       ELK ASSOCIATES FUNDING CORPORATION


                                       By:  /s/ Sylvia M. Mullens, V.P.
                                          -------------------------------------
                                           Sylvia M. Mullens, Vice President


                                       By:  /s/ Margaret Chance
                                          -------------------------------------
                                           Margaret Chance, Secretary

                                       (Address)

                                                747 Third Avenue
                                                New York, New York 10017

VALUE RECEIVED

                                       -6-

<PAGE>



bank leumi USA


                                                  October 10, 2000


Elk Associates Funding Corporation ("Borrower)
747 Third Avenue
New York, NY 10017

Attn:  Mr. Gary Granoff, President


Dear Mr. Granoff:

     Reference  is  made  to  promissory  note  dated  October  10,  2000 in the
principal amount of $8,000,000.

     You have agreed that for good and valuable consideration including, but not
limited to the extension and increase of credit  accommodations to Borrower,  in
the amount of  $8,000,000,  that letter  agreement  dated January 20, 1998 shall
continue  to be in full force and effect with  respect to credit  accommodations
now or in the future outstanding to Borrower.

     You have  agreed  that the first  paragraph  of such  letter is modified to
provide as follows:

     "In order to induce you to make  and/or  continue  loans for the account of
     the undersigned  pursuant to Promissory Note (Grid) dated October 10, 2000,
     as such note is  hereafter  modified,  extended,  renewed or replaced  with
     other  notes,  the  Borrower  will,  and  will  cause  each  affiliate  and
     subsidiary (to the extent applicable) to:".

                      562 Fifth Avenue, New York, NY 10036
         Commercial Banking o Private Banking o International Bankingo
              A Member of the Worldwide Bank Leumi le-Israel Group


<PAGE>


Elk Associates Funding Corporation
Page 2
October 10, 2000


     Please  confirm you  agreement to the  foregoing by signing and returning a
copy of this letter to the undersigned.



                                             Very truly yours,

                                             BANK LEUMI USA


                                             By:  /s/ Iris Schechter
                                                --------------------------------
                                                 Iris Schechter, Vice President


                                             By:  /s/ Fran Davis
                                                --------------------------------
                                                 Fran Davis, Vice President

Consented and Agreed to:

ELK ASSOCIATES FUNDING CORPORATION

By:  /s/ Gary Granoff
   ----------------------------
    Gary Granoff, President


By:  /s/ Margaret Chance
   ----------------------------
    Margaret Chance, Secretary


<PAGE>



"THIS NOTE SUPERSEDES AND REPLACES THAT CERTAIN PROMISSORY NOTE
(GRID) DATED MAY 8, 2000 IN THE ORIGINAL PRINCIPAL AMOUNT OF
$8,000,000.00."

                             PROMISSORY NOTE (GRID)


New York, N.Y. OCTOBER 10, 2000                                       $8,000,000

     For Value  Received,  ELK ASSOCIATES  FUNDING CORP.  promises to pay to the
order of BANK LEUMI USA (the "Bank"),  at its offices at 579 Fifth  Avenue,  New
York, New York, the principal sum of Eight Million Dollars  ("Maximum  Principal
Amount") or, if less,  the aggregate  unpaid  principal sum of all loans made by
the Bank, in its sole  discretion,  to the maker of this Note from time to time.
The principal sum of each such loan shall be payable February 1, 2001.

     Within the limits of the Maximum  Principal  Amount,  the maker may borrow,
prepay, and reborrow in the manner provided herein.

     Each loan shall bear interest  (from the date of such loan),  at the option
of the  maker,  at a rate  per  annum  which  shall  be equal to (a) the rate of
interest  designated  by the  Bank,  and in  effect  from  time to time,  as its
"Reference Rate" minus 1/2% per annum, adjusted when said Reference Rate changes
(the maker  acknowledges  that the Reference Rate may not necessarily  represent
the lowest rate of interest  charged by the Bank to customers) or (b) 1 1/2% per
annum above the Libor Rate  (Reserve  Adjusted)**  for a one, two or three month
term,  as  elected  by the  maker and  calculated  by the  Bank,  in the  manner
hereinafter provided, but in no event in excess

--------
**   "Libor Rate" means,  relative to any Interest Period (hereinafter  defined)
     for loans made  pursuant to this Note and which bear interest at the "Libor
     Rate (Reserve Adjusted)",  the rate of interest per annum determined by the
     Bank to be the arithmetic mean (rounded upward to the next 1/16th of 1%) of
     the rates of interest per annum at which dollar deposits in the approximate
     amount of the amount of the loan to be made or  continued  hereunder by the
     Bank and having a maturity  comparable  to such  Interest  Period  would be
     offered  to the Bank in the  London  Interbank  market  at its  request  at
     approximately  11:00  a.m.  (London  time) two  Business  Days prior to the
     commencement of such Interest Period.

     "Libor Reserve Percentage" means, relative to any Interest Period for loans
     hereunder,  the percentage  (expressed as a decimal,  rounded upward to the
     next 1/100th of 1%) in effect on such day (whether or not applicable to the
     Bank) under the regulations issued from time to time by the Federal Reserve
     System Board for determining the maximum reserve requirement (including any
     emergency, supplemental or other marginal reserve requirement) with respect
     to  Eurocurrency   funding  (currently   referred  to  as  a  "Eurocurrency
     Liabilities" in Regulation D of the Federal Reserve System Board).

     "Libor Rate (Reserve  Adjusted)" means,  relative to any loan to be made or
     continued hereunder for any Interest Period, the rate of interest per annum
     (rounded  upwards  to the  next  1/16th  of 1%)  determined  by the Bank as
     follows:

              Libor Rate          =                Libor Rate
                                         ------------------------------
          (Reserve Adjusted)             1.00 - Libor Reserve Percentage


<PAGE>



of the maximum rate permitted by applicable law; provided, that in the event the
Bank shall have determined that by reason of  circumstances  affecting the Libor
Rate  (Reserve  Adjusted)  adequate  and  reasonable  means  do  not  exist  for
ascertaining  the Libor Rate  (Reserve  Adjusted) for any Interest  Period,  the
applicable  rate of interest  during such Interest  Period shall be equal to its
Reference  Rate minus 1/2% per annum  adjusted when said Reference Rate changes,
but in no event in excess of the maximum rate permitted by law; further provided
that if, at the end of any  Interest  Period,  the  maker  has  failed to timely
notify the Bank of its election of the choice of interest  rate for or length of
the next Interest Period,  then the interest rate in effect  thereafter shall be
at the Libor  Rate  (Reserve  Adjusted)  plus 1 1/2% per  annum for an  Interest
Period the length of which shall be the same length as the immediately preceding
Interest  Period unless such Interest Period would end after the stated maturity
date of this Note,  in which  case the  Interest  Period  shall be of a duration
equal  to the  next  longest  Interest  Period  which  would  end  prior to such
scheduled   maturity  date,   provided  further  that  no  Libor  Rate  (Reserve
Adjusted)-based  loan  shall be made  less  than one  month  before  the  stated
maturity date of this Note, or after the occurrence and  continuance of an Event
of  Default  or an event  which,  upon  notice,  passage  of time or both  would
constitute an Event of Default.  Interest hereunder shall be payable on the last
day of  each  Interest  Period  and at  maturity  (whether  by  acceleration  or
otherwise).  The term "Interest Period" as used in this Note shall mean a period
of one, two or three  month(s),  as elected by the maker by written or facsimile
notice to the Bank given not later than 12:00 noon three  Business Days prior to
the commencement of an Interest  Period.  No Interest Period shall extend beyond
the stated maturity date of this Note. The initial Interest Period for this Note
shall  begin on the day of the  initial  draw  down  under  the  Note,  and each
subsequent  Interest  Period  shall  begin on the  last  day of the  immediately
preceding  Interest  Period.  The Bank  shall  give  notice  to the maker of the
interest rate determined for each Interest Period as provided  herein,  and such
notice shall be  conclusive  and binding upon the maker for all purposes  absent
manifest  error.  The maker shall pay to the Bank to compensate it for any loss,
cost or expense that the Bank  determines is attributable to any prepayment of a
loan made by the Bank to the maker using the Libor Rate (Reserve Adjusted). Such
compensation  shall  include  an amount  equal to the excess (if any) of (i) the
amount of interest that otherwise would have accrued on the principal  amount so
prepaid for the period from the date of such  prepayment  to the last day of the
then current  Interest  Period for such loan at the applicable  rate of interest
for such loan provided  herein over (ii) the amount of interest  that  otherwise
would have  accrued to such  principal  amount at a rate per annum  equal to the
interest component of the amount the Bank would have bid in The London Interbank
market  for dollar  deposits  of leading  banks in  amounts  comparable  to such
principal  amount and with  maturities  comparable to such period (as reasonably
determined by the Bank).  The term "Business Day" shall mean any day of the year
on which the Bank is open for  business  (as  required  or  permitted  by law or
otherwise) and on which dealings in the U.S.  dollar  deposits are carried on in
London, England.

     If any  law,  treaty,  rule,  regulation  or  determination  of a court  or
governmental  authority  or  any  change  therein  or in the  interpretation  or
application  thereof  (each,  a "Change in Law") shall make it unlawful  for the
Bank to make Libor Rate (Reserve  Adjusted)-based loans, or to maintain interest
rates  based on Libor,  then in the former  event,  any  obligation  of the Bank
contained herein or in any agreement of the Bank to make available such unlawful
Libor Rate

                                       -2-

<PAGE>



(Reserve Adjusted)-based loans shall immediately be cancelled, and in the latter
event,  any  such  unlawful  Libor  Rate  (Reserve  Adjusted)-based  loans  then
outstanding  shall be converted,  at the Bank's option,  so that interest on the
outstanding  principal  balance  subject hereto is determined in relation to the
Reference  Rate as  hereinabove  provided;  provided  however,  that if any such
Change in Law shall  permit any Libor  Rate  (Reserve  Adjusted)-based  loans to
remain in effect until the expiration of the Interest Period applicable thereto,
then such permitted Libor Rate (Reserve  Adjusted)-based loans shall continue in
effect until the expiration of such Interest Period.  Upon the occurrence of any
of the foregoing  events,  maker shall pay to the Bank  immediately  upon demand
such  amounts as may be necessary to  compensate  the Bank for any fines,  fees,
charges,  penalties  or other costs  incurred or payable by the Bank as a result
thereof and which are attributable to any Libor Rate (Reserve  Adjusted) options
made available to maker  hereunder,  and any reasonable  allocation  made by the
Bank among its operations shall be conclusive and binding upon maker.

     If any  Change  in Law or  compliance  by the  Bank  with  any  request  or
directive  (whether  or not  having the force of law) from any  central  bank or
other governmental authority shall:

     (A)  subject the Bank to any tax,  duty or other charge with respect to any
          Libor Rate (Reserve Adjusted) options, or change the basis of taxation
          of  payments  to the Bank of  principal,  interest,  fees or any other
          amount payable hereunder (except for changes in the rate of tax on the
          overall net income of the Bank); or

     (B)  impose,  modify  or hold  applicable  any  reserve,  special  deposit,
          compulsory  loan  or  similar  requirement  against  assets  held  by,
          deposits or other  liabilities  in or for the account of,  advances or
          loans by, or any other acquisition of funds by any office of the Bank;
          or

     (C)  impose on the Bank any other condition;

and the result of any of the  foregoing  is to increase  the cost to the Bank of
making,  renewing or maintaining  any Libor Rate (Reserve  Adjusted)-based  loan
hereunder  and/or to reduce  any  amount  receivable  by the Bank in  connection
therewith,  then in any such case,  maker shall pay to the Bank immediately upon
demand  such  amounts  as may be  necessary  to  compensate  the  Bank  for  any
additional  costs  incurred by the Bank and/or  reductions  received by the Bank
which are  attributable  to such Libor Rate  (Reserve  Adjusted)-based  loan. In
determining  which  costs  incurred  by the Bank  and/or  reductions  in amounts
received by the Bank are attributable to any Libor Rate (Reserve Adjusted)-based
loan made to maker hereunder,  any reasonable  allocation made by the Bank among
its operations shall be conclusive and binding upon maker.

     The Bank is hereby  authorized to enter on the schedule attached hereto the
amount of each loan and each payment of principal  thereon,  without any further
authorization  on the part of the maker or any  endorser  or  guarantor  of this
Note,  but the Bank's  failure to make such entry  shall not limit or  otherwise
affect the  obligations  of the maker or any endorser or guarantor of this Note.
In the event that any Liabilities (as hereinafter  defined) of maker to the Bank
are due at

                                       -3-

<PAGE>



any time that the Bank  receives a payment from maker on account of this Note or
any such other Liabilities of maker, the Bank may apply such payments to amounts
due under this Note or any such other Liabilities in such manner as the Bank, in
its  discretion,  elects,  regardless  of any  instructions  from  maker  to the
contrary.

     The maker and each  endorser  and  guarantor of this Note  acknowledge  and
agree that the use of this form of Note is for their  convenience,  and there is
no obligation on the part of the Bank to make loans to the maker whatsoever.

     Interest shall be computed on the basis of a 360-day year.

     Each maker or endorser authorizes (but shall not require) the Bank to debit
any account  maintained  by the maker or endorser  with the Bank, at any date on
which the payment of principal or of interest on any of the  Liabilities is due,
in an  amount  equal to any  unpaid  portion  of such  payment.  If the time for
payment of principal of or interest on any of the Liabilities or any other money
payable hereunder or with respect to any of the Liabilities becomes due on a day
on which the Bank's  offices  are closed (as  required  or  permitted  by law or
otherwise),  such payment shall be made on the next succeeding business day, and
such extension  shall be included in computing  interest in connection with such
payment.  All  payments  by any maker or  endorser  of this Note on  account  of
principal,  interest  or fees  hereunder  shall be made in  lawful  money of the
United States of America, in immediately available funds.

     All Property (as hereinafter  defined) held by the Bank shall be subject to
a security  interest in favor of the Bank or holder  hereof as security  for any
and all Liabilities. The term "Property" shall mean the balance of every deposit
account of the maker with the Bank or any of the Bank's  nominees  or agents and
all other obligations of the Bank or any of its nominees or agents to the maker,
whether now existing or hereafter  arising,  and all other personal  property of
the  maker  (including   without   limitation  all  money,   accounts,   general
intangibles, goods, instruments, documents and chattel paper) which, or evidence
of which, are now or at any time in the future shall come into the possession or
under the  control  of or be in transit  to the Bank or any of its  nominees  or
agents for any  purpose,  whether or not  accepted for the purposes for which it
was delivered.  The term "Liabilities" shall mean the indebtedness  evidenced by
this Note and all other indebtedness, liabilities and obligations of any kind of
the maker (or any  partnership or other group of which the maker is a member) to
(a) the Bank,  (b) any  group of which  the Bank is a  member,  or (c) any other
person if the Bank has a participation  or other interest in such  indebtedness,
liabilities or  obligations,  whether (i) for the Bank's own account or as agent
for others,  (ii) acquired  directly or indirectly by the Bank from the maker or
others,  (iii) absolute or contingent,  joint or several,  secured or unsecured,
liquidated  or  unliquidated,  due or not  due,  contractual  or  tortious,  now
existing or  hereafter  arising,  or (iv)  incurred  by the maker as  principal,
surety,  endorser,  guarantor or otherwise, and including without limitation all
expenses, including attorneys' fees, incurred by the Bank in connection with any
indebtedness,  liabilities or obligations or any of the Property  (including any
sale or other disposition of the Property).


                                       -4-

<PAGE>



     Upon the  happening,  with  respect to any maker,  endorser or guarantor of
this Note or any assets of any such maker, endorser or guarantor,  of any of the
following events (each an "Event of Default"):  death of the maker,  endorser or
guarantor or any member of the maker,  endorser or guarantor (if a partnership);
the failure to furnish  the Bank with any  requested  information  or failing to
permit  inspection  of books or  records by the Bank or any of its  agents;  the
making of any misrepresentation to the Bank in obtaining credit for any of them;
dissolution  (if a  corporation  or  partnership);  the making of a mortgage  or
pledge; the commencement of a foreclosure proceeding;  default in the payment of
principal or interest on this Note or in the payment of any other  obligation of
any said maker,  endorser or guarantor  held by the Bank or holder  hereof or in
the  performance  or  observance  of any covenant or agreement  contained in the
instrument evidencing such obligation; default in the payment of principal of or
interest on any  indebtedness  for  borrowed  money owed to any other  person or
entity  (including any such indebtedness in the nature of a lease) or default in
the  performance or observance of the terms of any instrument  pursuant to which
such  indebtedness was created or is secured,  the effect of which default is to
cause or permit any hoder of any such  indebtedness  to cause the same to become
due prior to its stated  maturity  (and whether or not such default is waived by
the holder  thereof);  a change in the financial  condition or affairs of any of
them which in the opinion of the Bank or  subsequent  holder  hereof  materially
reduces  his,  their or its ability to pay all of his their or its  obligations;
the  suspension  of  business;  the making of an  assignment  for the benefit of
creditors,  or appointment  of a trustee,  receiver or liquidator for the maker,
endorser  or  guarantor  or  for  any of  his,  its or  their  property,  or the
commencement  of any  proceedings by the maker,  endorser or guarantor under any
bankruptcy,  reorganization,  arrangement of debt,  insolvency,  readjustment of
debt, receivership, liquidation or dissolution law or statute (including, if the
maker,  endorser or guarantor is a partnership,  its dissolution pursuant to any
agreement or statute),  or the commencement of any such proceedings  without the
consent  of the  maker,  endorser  or  guarantor,  as the case may be,  and such
proceedings shall continue  undischarged for a period of 30 days; the sending of
notice of an intended bulk sale; the entry of judgments or any attachment,  levy
or execution  against any of his, their or its properties shall not be released,
discharged  dismissed,  stayed or fully  bonded  for a period of 30 days or more
after its entry, issue or levy, as the case may be; or the issuance of a warrant
of distraint or assertion of a lien for unpaid taxes, this Note, if not then due
or payable on demand, shall become due and payable immediately without demand or
notice and all other debts or obligations of the makers and endorsers  hereof to
the  Bank  or  holder  hereof,  whether  due or not due and  whether  direct  or
contingent  and however  evidenced,  shall,  at the option of the Bank or holder
hereof, also become due and payable immediately without demand or notice.  After
this Note becomes due, at stated maturity or on acceleration, any unpaid balance
hereof shall bear interest from the date it becomes due until paid at a rate per
annum 3% above the rate borne by this Note when it becomes  due or, if such rate
shall not be lawful with respect to the undersigned,  then at the highest lawful
rate. The liability of any party to commercial  paper held by the Bank or holder
hereof,  other than the makers and  endorsers  hereof,  shall remain  unaffected
hereby and such  parties  shall remain  liable  thereon in  accordance  with the
original  tenor thereof.  Each maker and endorser  agrees that if an attorney is
retained to enforce or collect this Note or any other  obligations  by reason of
non-payment of this Note when due or made due hereunder, a reasonable attorneys'
fee shall be paid in addition, which fees shall be computed as follows:

                                       -5-

<PAGE>


15% of the principal,  interest and all other sums due and owing to the payee or
holder or the reasonable value of the attorneys' services, whichever is greater.

     This Note shall be  governed by the laws of the State of New York and shall
be binding upon the maker and each endorser and the maker's and each  endorser's
heirs,  administrators,  successors  and  assigns.  The maker and each  endorser
hereby irrevocably  consent to the jurisdiction of any New York State or Federal
court located in New York City over any action or proceeding  arising out of any
dispute  between the maker and each endorser and the Bank, and the maker further
irrevocably  consents to the service of process in any such action or proceeding
by the  mailing of a copy of such  process to the maker at the address set forth
below. In the event of litigation between the Bank and the maker over any matter
connected with this Note or resulting from the transactions hereunder, the right
to a trial by jury is hereby  waived by the Bank and the  maker.  The maker also
waives the right to interpose  any set-off or  counterclaim  of any nature.  The
Bank or any holder may accept late payments,  or partial  payments,  even though
marked  "payment  in  full"  or  containing  words of  similar  import  or other
conditions,  without  waiving any of its rights.  No amendment,  modification or
waiver of any  provision  of this Note nor  consent  to any  departure  by maker
therefrom shall be effective,  irrespective of any course of dealing, unless the
same shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective  only in the specific  instance and for the specific  purpose
for which given.

     The rights and remedies of the Bank provided for hereunder  (including  but
not limited to the right to  accelerate  Liabilities  of maker and to realize on
any  security  for any such  Liabilities)  are  cumulative  with the  rights and
remedies of the Bank available under any other  instrument or agreement or under
applicable law.

     The  undersigned,  if more than one, shall be jointly and severally  liable
hereunder.

                                           ELK ASSOCIATES FUNDING CORPORATION


                                           By:  /s/ Gary Granoff
                                              ----------------------------------
                                               Gary Granoff, President


                                           By:  /s/ Margaret Chance
                                              ----------------------------------
                                               Margaret Chance, Secretary

                                           (Address)

                                                    747 Third Avenue
                                                    New York, New York 10017

VALUE RECEIVED

                                       -6-