Exhibit 4L

                          LOAN AGREEMENT
NWK3: 352223.02
                          BY AND BETWEEN

                     THE STATE OF NEW JERSEY,

               ACTING BY AND THROUGH THE NEW JERSEY
              DEPARTMENT OF ENVIRONMENTAL PROTECTION,

                                AND

                   THE MOUNT HOLLY WATER COMPANY





                   DATED AS OF NOVEMBER 1, 1998


<PAGE>
                               -ii-
                         TABLE OF CONTENTS

                                                               Page

EXHIBIT A  (1)    Description   of   Project   and    Environmental
Infrastructure System     A-1-1
           (2) Description of Loan  A-2-1

EXHIBIT B  Basis for Determination of Allowable Project Costs B-1

EXHIBIT C  Estimated Disbursement Schedule     C-1

EXHIBIT D  Specimen Borrower Bond   D-1

EXHIBIT E  Opinions of Borrower's Bond and General Counsels   E-1

EXHIBIT F  Additional Covenants and Requirements    F-1

EXHIBIT G  General Administrative Requirements for the State
                Environmental Infrastructure Financing ProgramG-1


<PAGE>
                                -3-
    NEW JERSEY ENVIRONMENTAL INFRASTRUCTURE FUND LOAN AGREEMENT

      THIS LOAN  AGREEMENT,  made and  entered  into as of this 1st
day of  November,  1998,  by and  between  THE STATE OF NEW JERSEY,
acting by and through the New Jersey  Department  of  Environmental
Protection,  and THE MOUNT HOLLY WATER COMPANY,  a corporation duly
created  and  validly  existing  under the laws of the State of New
Jersey;

                         WITNESSETH THAT:

      WHEREAS,   the   Borrower   has,  in   accordance   with  the
Regulations,  made  timely  application  to the State for a Loan to
finance  a  portion  of the  Cost of the  Project  (as  each of the
foregoing   terms  is   defined  in  Section   1.01   hereof;   all
capitalized  terms used in this Loan Agreement  shall have,  unless
the context  otherwise  requires,  the  meanings  set forth in said
Section 1.01);

      WHEREAS,  the State has approved the  Borrower's  application
for a  Loan  from  Federal  Funds,  if  and  when  received  by and
available  to the  State,  and  moneys  from  repayments  of  loans
previously  made  from such  Federal  Funds,  in an  amount  not to
exceed  Five  Million  Eight  Hundred  Ninety-Four   Thousand  Nine
Hundred  Nine  Dollars  ($5,894,909)  to  finance a portion  of the
Cost of the Project;

      WHEREAS,  the New Jersey  State  Legislature  has approved an
appropriations   act  that   authorizes  an   expenditure  of  said
proceeds,  Federal Funds or related  moneys to finance a portion of
the Cost of the Project;

      WHEREAS,  the  Borrower,  in  accordance  with  the  Business
Corporation  Law  and  all  other  applicable  law,  will  issue  a
Borrower  Bond  to the  State  evidencing  said  Loan  at the  Loan
Closing; and

      WHEREAS,  in  accordance  with the New  Jersey  Environmental
Infrastructure  Trust Act, P.L.  1985, c. 334, as amended,  and the
Regulations,  the  Borrower  has been  awarded  a Trust  Loan for a
portion  of the Cost of the  Project  plus,  if  applicable  to the
Borrower,  capitalized  interest on the Trust Loan,  certain  costs
of issuance and bond insurance premium related thereto.

      NOW, THEREFORE,  for and in consideration of the award of the
Loan by the State,  the  Borrower  agrees to  complete  the Project
and to perform  under this Loan  Agreement in  accordance  with the
conditions,   covenants  and   procedures   set  forth  herein  and
attached hereto as part hereof, as follows:


<PAGE>
                             ARTICLE I


                            DEFINITIONS

      SECTION 1.01.  Definitions.  The  following  terms as used in
this Loan  Agreement  shall,  unless the context  clearly  requires
otherwise, have the following meanings:

      "Administrative  Fee"  means  an  annual  fee  of up  to  one
percent  (1.0%)  of the  initial  principal  amount  of the Loan or
such  lesser  amount,  if any, as may be  authorized  by any act of
the New  Jersey  State  Legislature  and as the State  may  approve
from time to time.

      "Authorized Officer" means, in the case of the Borrower,  any
person  or  persons  authorized  pursuant  to a  resolution  of the
board of  directors  of the  Borrower to perform any act or execute
any document  relating to the Loan,  the Borrower Bond or this Loan
Agreement.

      "Borrower"  means the  corporation  that is a party to and is
described in the first  paragraph of this Loan  Agreement,  and its
successors and assigns.

      "Borrower  Bond" means the  general  obligation  bond,  note,
debenture or other evidence of indebtedness  authorized,  executed,
attested  and  delivered  by the  Borrower to the State to evidence
the Loan,  a specimen of which is attached  hereto as Exhibit D and
made a part hereof.

      "Borrowers"  means any other Local Government Unit or Private
Entity (as such terms are  defined in the  Regulations)  authorized
to  construct,  operate and maintain  Environmental  Infrastructure
Facilities  that have entered into Loan  Agreements  with the State
pursuant  to which the State  will  make  Loans to such  recipients
from Federal Funds.

      "Business  Corporation  Law" means the "New  Jersey  Business
Corporation  Act",  constituting  Chapter 263 of the Pamphlet  Laws
of 1968 of the State of New Jersey  (codified  at N.J.S.A.  14A:1-1
et  seq.),  as the  same  may  from  time to time  be  amended  and
supplemented.

      "Code" means the Internal  Revenue Code of 1986,  as the same
may from time to time be amended and  supplemented,  including  any
regulations  promulgated  thereunder,  any  successor  code thereto
and any administrative or judicial interpretations thereof.

      "Cost"  means  those  costs  that are  eligible,  reasonable,
necessary,  allocable  to the Project and  permitted  by  generally
accepted accounting  principles,  including Allowances and Building
Costs (as defined in the  Regulations),  as shall be  determined on
a  project-specific  basis in accordance  with the  Regulations  as
set  forth in  Exhibit  B  hereto,  as the same may be  amended  by
subsequent  eligible  costs as  evidenced  by a  certificate  of an
authorized officer of the State.

      "Environmental  Infrastructure Facilities" means Water Supply
Facilities (as such term is defined in the Regulations).

      "Environmental     Infrastructure     System"    means    the
Environmental    Infrastructure   Facilities   of   the   Borrower,
including  the Project,  described  in Exhibit A-1 attached  hereto
and made a part  hereof for which the  Borrower  is  borrowing  the
Loan under this Loan Agreement.

      "Event of Default"  means any  occurrence or event  specified
in Section 5.01 hereof.

      "Federal  Funds"  means  those  funds  awarded  to the  State
pursuant  to the Clean  Water Act (33 U.S.C.  1251 et seq.) or the
Safe  Drinking  Water Act (42  U.S.C.  300f et seq.),  as the same
may from time to time be amended and supplemented.

      "Guarantor" means  Elizabethtown  Water Company, a New Jersey
corporation.

      "Loan"  means the loan made by the State to the  Borrower  to
finance  or  refinance  a  portion  of  the  Cost  of  the  Project
pursuant  to this Loan  Agreement.  For all  purposes  of this Loan
Agreement,  the  principal  amount of the Loan at any time shall be
the  amount  of the  loan  commitment  set  forth  in  Exhibit  A-2
attached  hereto and made a part  hereof  (such  amount  being also
specified  as  the  initial  aggregate   principal  amount  of  the
Borrower  Bond) less any amount of such  principal  amount that has
been  repaid by the  Borrower  under this Loan  Agreement  and less
any  adjustment  made for low bid or final  building costs pursuant
to the  provisions  of N.J.A.C.  7:22-3.26  and the  appropriations
act  of  the  New  Jersey   State   Legislature   authorizing   the
expenditure  of  moneys to  finance  a  portion  of the Cost of the
Project.

      "Loan  Agreement"  means this Loan  Agreement,  including the
Exhibits  attached hereto,  as it may be supplemented,  modified or
amended from time to time in accordance with the terms hereof.

      "Loan  Agreements"  means any other loan  agreements  entered
into by and  between  the  State  and one or more of the  Borrowers
pursuant  to which the  State  will  make  Loans to such  Borrowers
from Federal Funds.

      "Loan  Closing"  means the date upon which the Borrower shall
deliver its Borrower Bond, as previously  authorized,  executed and
attested, to the State.

      "Loan  Repayments"  means  the  repayments  of the  principal
amount of the Loan  payable  by the  Borrower  pursuant  to Section
3.03 of this Loan Agreement,  including  payments payable under the
Borrower Bond, but excluding the Administrative Fee.

      "Loan Servicer" means, initially,  First Union National Bank,
the loan servicer for the Loan and the Trust Loan,  duly  appointed
and  designated as "Loan  Servicer"  pursuant to the Loan Servicing
and Trust  Bonds  Security  Agreement  dated as of November 1, 1998
by and among the  Trust,  the  State of New  Jersey,  acting by and
through the  Treasurer  of the State of New Jersey on behalf of the
New  Jersey  Department  of  Environmental  Protection,  and  First
Union National Bank,  and any successors as "Loan  Servicer"  under
such   agreement,   as  the  same  may  be  modified,   amended  or
supplemented from time to time in accordance with its terms.

      "Loan  Term" means the term of this Loan  Agreement  provided
in  Sections  3.01 and 3.03  hereof  and in  Exhibit  A-2  attached
hereto and made a part hereof.

      "Loans"  means the loans  made by the State to the  Borrowers
under the Loan Agreements from Federal Funds.

      "Master  Program Trust  Agreement"  means that certain Master
Program Trust  Agreement  dated as of November 1, 1995 by and among
the Trust,  the State of New Jersey,  United  States Trust  Company
of New York,  as Master  Program  Trustee  thereunder,  The Bank of
New  York  (NJ),  in  several  capacities  thereunder,   and  First
Fidelity Bank,  N.A.  (predecessor  to First Union National  Bank),
in several  capacities  thereunder,  as the same may be amended and
supplemented from time to time in accordance with its terms.

      "Prime Rate" means the  prevailing  commercial  interest rate
announced  by the Loan  Servicer  from time to time in the State of
New Jersey as its prime lending rate.

      "Project" means the Environmental  Infrastructure  Facilities
of the Borrower  described in Exhibit A-1 attached  hereto and made
a part hereof,  which  constitutes a project for which the State is
permitted  to  make  a  loan  to  the  Borrower   pursuant  to  the
Regulations,  all or a portion of the Cost of which is  financed or
refinanced  by the State  through the making of the Loan under this
Loan Agreement.

      "Regulations"   means   the   rules   and   regulations,   as
applicable,  now or hereafter promulgated under N.J.A.C.  7:22-3 et
seq.,  7:22-4 et seq.,  7:22-5 et seq.,  7:22-9 et seq. and 7:22-10
et  seq.,  as the  same  may  from  time  to time  be  amended  and
supplemented.

      "State"  means  the  State  of  New  Jersey,  acting,  unless
otherwise  specifically  indicated,  by and  through the New Jersey
Department of  Environmental  Protection,  and its  successors  and
assigns.

      "Trust"  means the New  Jersey  Environmental  Infrastructure
Trust,   a  public  body   corporate  and  politic  with  corporate
succession  duly created and validly  existing  under and by virtue
of P.L. 1985, c. 334, as amended (N.J.S.A. 58:11B-1 et seq.).

      "Trust  Loan"  means  the loan  made to the  Borrower  by the
Trust pursuant to the Trust Loan Agreement.

      "Trust  Loan  Agreement"  means  the  loan  agreement  by and
between  the  Borrower  and the Trust  dated as of November 1, 1998
to finance or refinance a portion of the Cost of the Project.

      Except as  otherwise  defined  herein  or where  the  context
otherwise  requires,  words  importing  the  singular  number shall
include  the plural  number  and vice  versa,  and words  importing
persons shall include firms, associations,  corporations,  agencies
and  districts.  Words  importing  one  gender  shall  include  the
other gender.


<PAGE>
                            ARTICLE II


             REPRESENTATIONS AND COVENANTS OF BORROWER

      SECTION  2.01.  Representations  of  Borrower.  The  Borrower
represents for the benefit of the State as follows:

      (a)  Organization and Authority.

           (i) The  Borrower  is a  corporation  duly  created  and
      validly  existing under and pursuant to the  Constitution and
      statutes of the State of New Jersey,  including  the Business
      Corporation Law.

           (ii)  The  acting  officers  of  the  Borrower  who  are
      contemporaneously  herewith  performing  or  have  previously
      performed  any  action  contemplated  in this Loan  Agreement
      either  are or, at the time any such  action  was  performed,
      were the duly appointed or elected  officers of such Borrower
      empowered by  applicable  New Jersey law and, if  applicable,
      authorized  by  resolution  of the  Borrower to perform  such
      actions.  To the extent any such action was  performed  by an
      officer no longer the duly acting  officer of such  Borrower,
      all such actions  previously taken by such official are still
      in full force and effect.

           (iii) The  Borrower  has full legal right and  authority
      and all  necessary  licenses  and permits  required as of the
      date hereof to own,  operate and maintain  its  Environmental
      Infrastructure  System,  to carry on its activities  relating
      thereto,  to execute,  attest and deliver this Loan Agreement
      and the  Borrower  Bond,  to sell  the  Borrower  Bond to the
      State,  to  undertake  and  complete the Project and to carry
      out and  consummate  all  transactions  contemplated  by this
      Loan Agreement.

           (iv) The  Borrower's  board of  directors  has taken all
      necessary action to authorize the execution,  attestation and
      delivery of this Loan  Agreement and the Borrower  Bond,  the
      sale of the  Borrower  Bond to the State  and the  Borrower's
      undertaking and completion of the Project.

           (v) The  Borrower  has  duly  authorized,  approved  and
      consented  to  all  necessary  action  to  be  taken  by  the
      Borrower for: (A) the  execution,  attestation,  delivery and
      performance  of this  Loan  Agreement  and  the  transactions
      contemplated  hereby;  (B) the issuance of the Borrower  Bond
      and the sale  thereof  to the State  upon the terms set forth
      herein;  and (C) the execution,  delivery and due performance
      of  any   and  all   other   certificates,   agreements   and
      instruments  that may be required to be  executed,  delivered
      and  performed  by the  Borrower in order to carry out,  give
      effect to and consummate  the  transactions  contemplated  by
      this Loan Agreement.

           (vi)  This Loan  Agreement  and the  Borrower  Bond have
      each been duly  authorized by the Borrower and duly executed,
      attested  and  delivered  by   Authorized   Officers  of  the
      Borrower,  and the  Borrower  Bond has been  duly sold by the
      Borrower to the State;  and  assuming  that the State has all
      the  requisite  power and  authority to  authorize,  execute,
      attest  and  deliver,  and  has  duly  authorized,  executed,
      attested and  delivered,  this Loan  Agreement,  and assuming
      further  that this Loan  Agreement  is the  legal,  valid and
      binding  obligation  of the State,  enforceable  against  the
      State  in  accordance  with  its  terms,  each of  this  Loan
      Agreement  and the Borrower Bond  constitutes a legal,  valid
      and binding obligation of the Borrower,  enforceable  against
      the Borrower in accordance with its respective terms,  except
      as the  enforcement  thereof may be  affected by  bankruptcy,
      insolvency  or other  laws or the  application  by a court of
      legal or equitable  principles  affecting  creditors' rights;
      and the information  contained under "Description of Loan" in
      Exhibit  A-2  attached  hereto and made a part hereof is true
      and accurate in all respects.

      (b)  Full  Disclosure.  There is no fact  that  the  Borrower
has  not  disclosed  to the  State  in  writing  on the  Borrower's
application  for the Loan or otherwise  that  materially  adversely
affects  or (so far as the  Borrower  can now  foresee)  that  will
materially adversely affect the properties,  activities,  prospects
or  condition  (financial  or  otherwise)  of the  Borrower  or its
Environmental   Infrastructure   System,  or  the  ability  of  the
Borrower to make all Loan  Repayments  or  otherwise to observe and
perform its duties,  covenants,  obligations  and agreements  under
this Loan Agreement and the Borrower Bond.

      (c)  Pending  Litigation.  There are no  proceedings  pending
or,  to  the  knowledge  of the  Borrower,  threatened  against  or
affecting  the  Borrower  in any court or before  any  governmental
authority  or  arbitration  board or tribunal  that,  if  adversely
determined,  would materially  adversely affect (i) the undertaking
or  completion  of the Project,  (ii) the  properties,  activities,
prospects or condition  (financial  or  otherwise)  of the Borrower
or its Environmental  Infrastructure  System,  (iii) the ability of
the Borrower to make all Loan Repayments,  (iv) the  authorization,
execution,  attestation  or delivery of this Loan  Agreement or the
Borrower  Bond,  (v) the issuance of the Borrower Bond and the sale
thereof to the State, or (vi) the Borrower's  ability  otherwise to
observe  and  perform  its  duties,   covenants,   obligations  and
agreements  under this Loan Agreement and the Borrower Bond,  which
proceedings  have not been  previously  disclosed in writing to the
State  either  in  the  Borrower's  application  for  the  Loan  or
otherwise.

      (d)  Compliance  with Existing Laws and  Agreements.  (i) The
authorization,  execution,  attestation  and  delivery of this Loan
Agreement and the Borrower  Bond by the Borrower,  (ii) the sale of
the  Borrower  Bond  to  the  State,   (iii)  the  observation  and
performance by the Borrower of its duties,  covenants,  obligations
and agreements  hereunder and thereunder,  (iv) the consummation of
the  transactions  provided  for in  this  Loan  Agreement  and the
Borrower  Bond,  and  (v) the  undertaking  and  completion  of the
Project  will not (A) other  than the lien,  charge or  encumbrance
created hereby,  by the Borrower Bond and by any other  outstanding
debt  obligations  of the  Borrower  that  are at  parity  with the
Borrower  Bond as to lien on, and source and  security  for payment
thereon  from,  the  revenues  of  the   Borrower's   Environmental
Infrastructure  System,  result in the  creation or  imposition  of
any lien,  charge or  encumbrance  upon any properties or assets of
the  Borrower  pursuant  to, (B) result in any breach of any of the
terms,  conditions  or provisions  of, or (C)  constitute a default
under,   any  existing   resolution,   outstanding  debt  or  lease
obligation,  trust agreement,  indenture,  mortgage, deed of trust,
loan  agreement  or other  instrument  to which the  Borrower  is a
party or by which the Borrower,  its  Environmental  Infrastructure
System or any of its  properties  or assets may be bound,  nor will
such  action  result  in any  violation  of the  provisions  of the
charter  or other  document  pursuant  to which  the  Borrower  was
established  or  any  laws,  ordinances,   injunctions,  judgments,
decrees,  rules,  regulations  or  existing  orders of any court or
governmental  or  administrative  agency,  authority  or  person to
which the  Borrower,  its  Environmental  Infrastructure  System or
its properties or operations is subject.

      (e)  No  Defaults.  No event has  occurred  and no  condition
exists that,  upon the  authorization,  execution,  attestation and
delivery  of  this  Loan  Agreement  and  the  Borrower  Bond,  the
issuance  of the  Borrower  Bond and the sale  thereof to the State
or the  receipt  of the  amount of the Loan,  would  constitute  an
Event of  Default  hereunder.  Since  December  31,  1975 and as of
the date of delivery of this Loan  Agreement,  the Borrower has not
been,  and is not now, in default in the  payment of the  principal
of  or  interest  on  any  of  its  bonds,  notes,  lease  purchase
agreements  or  other  debt  obligations.  The  Borrower  is not in
violation   of,  and  has  not  received   notice  of  any  claimed
violation  of, any term of any  agreement  or other  instrument  to
which   it  is  a  party  or  by  which   it,   its   Environmental
Infrastructure  System  or  its  properties  may  be  bound,  which
violation  would   materially   adversely  affect  the  properties,
activities,  prospects or condition  (financial  or  otherwise)  of
the  Borrower  or its  Environmental  Infrastructure  System or the
ability of the  Borrower  to make all Loan  Repayments,  to pay all
principal  of  the  Borrower  Bond  or  otherwise  to  observe  and
perform its duties,  covenants,  obligations  and agreements  under
this Loan Agreement and the Borrower Bond.

      (f)  Governmental  Consent.  The  Borrower  has  obtained all
permits and  approvals  required to date by any  governmental  body
or  officer  for  the  authorization,  execution,  attestation  and
delivery of this Loan  Agreement  and the  Borrower  Bond,  for the
issuance of the  Borrower  Bond and the sale  thereof to the State,
for the making,  observance and  performance by the Borrower of its
duties,  covenants,  obligations  and  agreements  under  this Loan
Agreement  and  the  Borrower  Bond  and  for  the  undertaking  or
completion  of  the  Project  and  the  financing  or   refinancing
thereof,  including,  but not limited  to, the  approval by the New
Jersey  Board of Public  Utilities  (the "BPU") of the  issuance by
the  Borrower  of the  Borrower  Bond to the  State  and any  other
approvals  required  therefor  by the  BPU;  and the  Borrower  has
complied  with  all  applicable  provisions  of law  requiring  any
notification,   declaration,   filing  or  registration   with  any
governmental  body  or  officer  in  connection  with  the  making,
observance   and   performance  by  the  Borrower  of  its  duties,
covenants,  obligations  and  agreements  under this Loan Agreement
and the Borrower  Bond or with the  undertaking  or  completion  of
the  Project  and  the  financing  or   refinancing   thereof.   No
consent,  approval or authorization of, or filing,  registration or
qualification  with, any governmental  body or officer that has not
been  obtained  is  required  on  the  part  of the  Borrower  as a
condition  to  the   authorization,   execution,   attestation  and
delivery  of  this  Loan  Agreement  and  the  Borrower  Bond,  the
issuance of the  Borrower  Bond and the sale  thereof to the State,
the  undertaking  or completion of the Project or the  consummation
of any transaction herein contemplated.

      (g)  Compliance with Law.  The Borrower:

           (i)  is  in  compliance   with  all  laws,   ordinances,
      governmental  rules and  regulations  to which it is subject,
      the failure to comply with which would  materially  adversely
      affect  (A)  the  ability  of the  Borrower  to  conduct  its
      activities  or to  undertake  or complete  the Project or (B)
      the  condition  (financial  or  otherwise) of the Borrower or
      its Environmental Infrastructure System; and

           (ii) has obtained all licenses,  permits,  franchises or
      other  governmental  authorizations  presently  necessary for
      the  ownership  of its  properties  or for the conduct of its
      activities that, if not obtained,  would materially adversely
      affect  (A)  the  ability  of the  Borrower  to  conduct  its
      activities  or to  undertake  or complete  the Project or (B)
      the  condition  (financial  or  otherwise) of the Borrower or
      its Environmental Infrastructure System.

      (h)  Use of Proceeds.  The  Borrower  will apply the proceeds
of the Loan  from the State as  described  in  Exhibit  B  attached
hereto  and  made a part  hereof  (i) to  finance  or  refinance  a
portion  of the Cost of the  Borrower's  Project;  and  (ii)  where
applicable,  to  reimburse  the  Borrower for a portion of the Cost
of the  Borrower's  Project,  which portion was paid or incurred in
anticipation  of  reimbursement  by the State and is  eligible  for
such  reimbursement  under and  pursuant  to the  Regulations,  the
Code and any other  applicable  law.  All of such costs  constitute
Costs  for  which  the  State is  authorized  to make  Loans to the
Borrower pursuant to the Regulations.

      SECTION 2.02.  Particular Covenants of Borrower.

      (a)  Promise to Pay.  The Borrower  unconditionally  promises
to make  punctual  payment  of the  principal  of the  Loan and the
Borrower Bond and all other  amounts due under this Loan  Agreement
and the Borrower Bond according to their respective terms.

      (b)  Performance   Under   Loan   Agreement.   The   Borrower
covenants  and agrees (i) to comply  with all  applicable  State of
New  Jersey  and  federal  laws,   rules  and  regulations  in  the
performance   of  this  Loan   Agreement;   (ii)  to  maintain  its
Environmental  Infrastructure  System in good repair and  operating
condition;   and  (iii)  to   cooperate   with  the  State  in  the
observance and  performance of the  respective  duties,  covenants,
obligations  and  agreements  of the  Borrower  and the State under
this Loan Agreement.

      (c)  Revenue  Obligation;  No  Prior  Pledges.  The  Borrower
shall not be required to make  payments  under this Loan  Agreement
except  from  the  revenues  of  its  Environmental  Infrastructure
System   and  from   such   other   funds  of  such   Environmental
Infrastructure  System  legally  available  therefor  and  from any
other sources  pledged to such payment  pursuant to subsection  (a)
of this  Section  2.02.  In no event shall the Borrower be required
to make  payments  under this Loan  Agreement  from any revenues or
receipts not derived from its Environmental  Infrastructure  System
or  pledged  pursuant  to  subsection  (a) of  this  Section  2.02.
Except for (i) loan  repayments  required with respect to the Trust
Loan,  (ii) the debt  service on any future  bonds of the  Borrower
issued  at  parity  with the  Borrower  Bond,  and  (iii)  the debt
service on any bonds,  notes or  evidences of  indebtedness  of the
Borrower  at  parity   with  the   Borrower   Bond  and   currently
outstanding or issued on the date hereof,  the revenues  derived by
the Borrower from its Environmental  Infrastructure  System,  after
the  payment  of  all  costs  of  operating  and   maintaining  the
Environmental  Infrastructure  System,  are and  will  be free  and
clear of any pledge,  lien,  charge or encumbrance  thereon or with
respect  thereto  prior to, or of equal rank with,  the  obligation
of the Borrower to make Loan  Repayments  under this Loan Agreement
and the  Borrower  Bond,  and all  corporate or other action on the
part of the  Borrower  to that  end has  been  and will be duly and
validly taken.

      (d)  Completion   of  Project  and   Provision   of  Moneys  
Therefor.  The  Borrower  covenants  and agrees (i) to exercise its
best   efforts   in   accordance    with   prudent    environmental
infrastructure  utility  practice  to  complete  the Project and to
accomplish  such  completion  on or before  the  estimated  Project
completion  date set  forth  in  Exhibit  G hereto  and made a part
hereof;  (ii) to comply with the terms and provisions  contained in
Exhibit  G  hereto;  and  (iii)  to  provide  from  its own  fiscal
resources  all  moneys,  in  excess  of the  total  amount  of loan
proceeds  it receives  under the Loan and Trust  Loan,  required to
complete the Project.

      (e)  Disposition  of  Environmental   Infrastructure  System.
Neither  the   Borrower   nor  the   Guarantor   shall  permit  the
disposition  of  all  or   substantially   all  of  the  Borrower's
Environmental   Infrastructure  System,   directly  or  indirectly,
including,   without   limitation,   by  means   of  sale,   lease,
abandonment,   sale  of  stock,   statutory   merger  or  otherwise
(collectively,  a  "Disposition"),  except  on  ninety  (90)  days'
prior  written  notice to the State,  and, in any event,  shall not
permit a  Disposition  unless the  Borrower  shall,  in  accordance
with  Section  4.02  hereof,  assign  this Loan  Agreement  and the
Borrower   Bond  and  its  rights  and   interests   hereunder  and
thereunder  to  the  purchaser  or  lessee  of  the   Environmental
Infrastructure  System,  and such  purchaser or lessee shall assume
all duties,  covenants,  obligations and agreements of the Borrower
under this Loan Agreement and the Borrower Bond.

      (f)  [Reserved.]

      (g)  Operation   and    Maintenance    of    Environmental   
Infrastructure  System.  The Borrower  covenants and agrees that it
shall,  in  accordance  with prudent  environmental  infrastructure
utility  practice,  (i) at all times operate the  properties of its
Environmental   Infrastructure   System   and   any   business   in
connection  therewith in an  efficient  manner,  (ii)  maintain its
Environmental  Infrastructure System in good repair,  working order
and  operating  condition,  and  (iii)  from  time to time make all
necessary and proper repairs,  renewals,  replacements,  additions,
betterments  and  improvements  with  respect to its  Environmental
Infrastructure  System so that at all times  the  business  carried
on in  connection  therewith  shall be properly and  advantageously
conducted.

      (h)  Records and Accounts.  The Borrower  shall keep accurate
records and accounts for its  Environmental  Infrastructure  System
(the "System  Records").  Such System  Records shall be part of the
annual  audit  of  the  general  records  of  the  Guarantor.  Such
System Records and general  records of the Guarantor  shall be made
available for inspection by the State at any  reasonable  time upon
prior written  notice,  and a copy of such annual audit,  including
all written  comments  and  recommendations,  shall be furnished to
the State  within  150 days of the close of the  fiscal  year being
so audited  or,  with the  consent of the  State,  such  additional
period as may be provided by law.

      (i)  Inspections;  Information.  The  Borrower  shall  permit
the State and any party  designated  by the  State,  at any and all
reasonable   times   during   construction   of  the   Project  and
thereafter  upon  prior  written  notice,  to  examine,  visit  and
inspect  the  property,  if any,  constituting  the  Project and to
inspect  and  make  copies  of any  accounts,  books  and  records,
including  (without  limitation)  its records  regarding  receipts,
disbursements,   contracts,   investments  and  any  other  matters
relating  thereto and to its financial  standing,  and shall supply
such reports and  information as the State may  reasonably  require
in connection therewith.

      (j)  Insurance.  The Borrower  shall  maintain or cause to be
maintained,   in  force,   insurance   policies  with   responsible
insurers  or  self-insurance  programs  providing  against  risk of
direct  physical loss,  damage or destruction of its  Environmental
Infrastructure   System  at  least  to  the  extent  that   similar
insurance is usually carried by utilities  constructing,  operating
and  maintaining  Environmental  Infrastructure  Facilities  of the
nature  of  the  Borrower's  Environmental  Infrastructure  System,
including  liability  coverage,  all to  the  extent  available  at
reasonable  cost  but  in  no  case  less  than  will  satisfy  all
applicable regulatory requirements.

      (k)  Cost  of  Project.   The  Borrower  certifies  that  the
building  cost of the  Project,  as listed in  Exhibit B hereto and
made  a  part  hereof,  is a  reasonable  and  accurate  estimation
thereof,  and it will  supply  to the  State a  certificate  from a
licensed  professional  engineer  authorized  to  practice  in  the
State  of  New  Jersey   stating  that  such  building  cost  is  a
reasonable  and  accurate  estimation  and that the useful  life of
the Project  exceeds  twenty (20) years from the  expected  date of
the Loan Closing.

      (l)  Delivery of  Documents.  Concurrently  with the delivery
of this Loan  Agreement  (as  previously  authorized,  executed and
attested)  at the  Loan  Closing,  the  Borrower  will  cause to be
delivered to the State each of the following items:

           (i)  an  opinion   of  the   Borrower's   bond   counsel
      substantially  in the form of  Exhibit  E  hereto;  provided,
      however,  that the State may permit  portions of such opinion
      to be rendered  by general  counsel to the  Borrower  and may
      permit  variances  in such opinion from the form set forth in
      Exhibit E if such variances are acceptable to the State;

           (ii)  counterparts  of this Loan Agreement as previously
      executed and attested by the parties hereto;

           (iii)  copies of those  resolutions  finally  adopted by
      the board of directors  of the Borrower and  requested by the
      State,  including,  without  limitation,  resolutions  of the
      Borrower authorizing the execution,  attestation and delivery
      of this Loan Agreement and the execution,  attestation,  sale
      and  delivery  of  the  Borrower  Bond  to  the  State,   and
      certified  copies of orders of the BPU approving the issuance
      by the  Borrower  of the  Borrower  Bond  to  the  State  and
      setting forth any other  approvals  required  therefor by the
      BPU; and

           (iv) the certificates of insurance  coverage as required
      pursuant  to the terms of  Section  3.06(c)  hereof  and such
      other  certificates,  documents,  opinions and information as
      the State may require in Exhibit F hereto, if any.
      (m)  Execution  and Delivery of Borrower  Bond.  Concurrently
with the delivery of this Loan  Agreement at the Loan Closing,  the
Borrower  shall also  deliver to the State the  Borrower  Bond,  as
previously executed and attested.

      (n)  Notice of Material  Adverse  Change.  The Borrower shall
promptly  notify the State of any  material  adverse  change in the
properties,   activities,  prospects  or  condition  (financial  or
otherwise)  of the  Borrower  or its  Environmental  Infrastructure
System,  or in the  ability  of  the  Borrower  to  make  all  Loan
Repayments  and  otherwise  to  observe  and  perform  its  duties,
covenants,  obligations  and  agreements  under this Loan Agreement
and the Borrower Bond.

      (o)  Continuing  Representations.  The representations of the
Borrower  contained  herein  shall  be  true  at  the  time  of the
execution of this Loan  Agreement  and at all times during the term
of this Loan Agreement.

      (p)  Additional  Covenants  and  Requirements.  No later than
the Loan Closing and, if necessary,  in connection  with the making
of the  Loan,  additional  covenants  and  requirements  have  been
included  in  Exhibit  F  hereto  and  made  a  part  hereof.  Such
covenants  and  requirements  may include,  but need not be limited
to,  the   maintenance   of  specified   levels  of   Environmental
Infrastructure  System rates,  the issuance of  additional  debt of
the Borrower  and the  transfer of revenues  and receipts  from the
Borrower's   Environmental   Infrastructure  System.  The  Borrower
agrees to observe  and comply  with each such  additional  covenant
and requirement, if any, included in Exhibit F hereto.


<PAGE>
                            ARTICLE III


       LOAN TO BORROWER; AMOUNTS PAYABLE; GENERAL AGREEMENTS

      SECTION  3.01.  Loan;  Loan Term.  The State hereby agrees to
make the Loan as  described  in Exhibit  A-2 hereof and to disburse
proceeds of the Loan to the  Borrower in  accordance  with  Section
3.02 and  Exhibit  C  hereof,  and the  Borrower  hereby  agrees to
borrow  and  accept  the Loan  from the  State  upon the  terms set
forth in  Exhibit  A-2  attached  hereto  and  made a part  hereof;
provided,  however,  that the State shall be under no obligation to
make the Loan if (a) at the Loan  Closing,  the  Borrower  does not
deliver  to the  State a  Borrower  Bond and such  other  documents
required under Section 2.02(l)  hereof,  or (b) an Event of Default
has  occurred  and  is  continuing   under  this  Loan   Agreement.
Although  the State  intends to  disburse  proceeds  of the Loan to
the  Borrower  at the  times  and up to the  amounts  set  forth in
Exhibit  C to pay a  portion  of the  Cost of the  Project,  due to
unforeseen  circumstances  there  may  not  be  sufficient  Federal
Funds  on  deposit  on any date to make  the  disbursement  in such
amount.  Nevertheless,  the  Borrower  agrees  that  the  aggregate
principal  amount set forth in Exhibit A-2 hereto shall  constitute
the  initial  principal  amount  of the  Loan  (as the  same may be
adjusted downward in accordance with the definition  thereof),  and
the  State  shall  have  no  obligation   thereafter  to  loan  any
additional amounts to the Borrower.

      The  Borrower  shall have no legal or  equitable  interest in
the  Federal  Funds  received by and  available  to the State or in
moneys  from  repayments  of loans  previously  made  from  Federal
Funds by the State.

      The Borrower  shall use the proceeds of the Loan  strictly in
accordance with Section 2.01(h) hereof.

      The payment  obligations  created  under this Loan  Agreement
and the  obligations  to pay the principal of and other amounts due
under the Borrower Bond are each direct,  general,  irrevocable and
unconditional  obligations of the Borrower  payable from any source
legally available to the Borrower.

      SECTION 3.02.  Disbursement  of Loan Proceeds.  (a) The State
shall  disburse  Federal  Funds  earmarked  for  the  Loan  to  the
Borrower  in  accordance  with the terms  hereof.  Before  each and
every  disbursement  of the  proceeds  of the Loan by the  State to
the  Borrower,   the  Borrower   shall  in   accordance   with  the
procedures  set  forth in the  Regulations  submit  to the  State a
requisition executed by an Authorized Officer of the Borrower.

      (b)  The State shall not be under any  obligation to disburse
any Loan  proceeds  to the  Borrower  under  this  Loan  Agreement,
unless:

           (i) the Loan  Closing  shall have  occurred  on the date
      established therefor by the State;

           (ii) there shall be Federal  Funds  available  from time
      to time to fund the Loan, as determined solely by the State;
           (iii) in accordance  with the "New Jersey  Environmental
      Infrastructure  Trust  Act",  P.L.  1985,  c. 334, as amended
      (N.J.S.A.  58:11B-1  et  seq.),  and  the  Regulations,   the
      Borrower  shall  have  timely  applied  for,  shall have been
      awarded  and,  prior  to  or  simultaneously  with  the  Loan
      Closing,  shall have closed a Trust Loan for a portion of the
      Allowable  Costs  (as  defined  in such  regulations)  of the
      Project  in  an  amount  not  in  excess  of  the  amount  of
      Allowable  Costs of the Project  covered by the Loan from the
      State,  plus the amount of: (i)  capitalized  interest during
      the Project  construction  period,  if any,  (ii) the cost of
      funding reserve capacity for the Project,  if any, as well as
      that portion of the Debt Service  Reserve Fund (as defined in
      the  Trust  Loan  Agreement)  attributable  to  the  cost  of
      funding  such reserve  capacity  for the  Project,  and (iii)
      certain  issuance  expenses related  thereto,  including,  if
      applicable, a municipal bond insurance policy premium;

           (iv)  the  Borrower  shall  have on  hand  or  otherwise
      available  moneys to pay for the greater of (A) that  portion
      of the total cost of the Project  that is not  eligible to be
      funded from the Loan or the Trust Loan,  or (B) that  portion
      of the total  cost of the  Project  that  exceeds  the actual
      amounts  of the loan  commitments  made by the  State and the
      Trust, respectively, for the Loan and the Trust Loan; and

           (v) no Event of  Default  nor any event  that,  with the
      passage  of  time  or  service  of  notice  or  both,   would
      constitute  an Event of Default  shall have  occurred  and be
      continuing hereunder.

      SECTION  3.03.  Amounts  Payable.   (a)  The  Borrower  shall
repay the Loan at zero-interest in principal  installments  payable
to the Loan  Servicer  semiannually  on  February  1 and  August 1,
commencing  August 1, 2000,  in  accordance  with the  schedule set
forth in Exhibit A-2  attached  hereto and made a part  hereof,  as
the same may be amended or  modified by the State,  in  particular,
without  limitation,  to make any  adjustments to the amount of the
Loan  in  accordance   with  the  definition   thereof;   provided,
however,  that the amount of any reduction in the principal  amount
of the Loan  pursuant  to N.J.A.C.  7:22-3.26  shall be credited to
the  principal  payments set forth in Exhibit A-2 in inverse  order
of their  maturity.  The  obligations  of the  Borrower  under  the
Borrower  Bond  shall be deemed to be  amounts  payable  under this
Section 3.03.  Each payment made to the Loan  Servicer  pursuant to
the  Borrower  Bond  shall be  deemed  to be a credit  against  the
corresponding  obligation of the Borrower  under this Section 3.03,
and any such payment made to the Loan  Servicer  shall  fulfill the
Borrower's  obligation  to pay such amount  hereunder and under the
Borrower  Bond.  Each  payment made to the Loan  Servicer  pursuant
to this  Section  3.03  shall be applied  to the  principal  of the
Loan.

      (b)  In  addition  to the  principal  payments  on  the  Loan
required by  subsection  (a) of this  Section  3.03,  the  Borrower
shall pay a late  charge for any such  payment  that is received by
the Loan  Servicer  later than the tenth (10th) day  following  its
due  date in an  amount  equal to the  greater  of  twelve  percent
(12%)  per annum or the  Prime  Rate  plus one half of one  percent
per  annum  on such  late  payment  from  its due  date to the date
actually  paid;  provided,  however,  that such late charge payable
on the Loan  shall not be in excess of the  maximum  interest  rate
permitted by law.

      (c)  In  addition  to  the  Loan  Repayments   payable  under
subsections  (a) and (b) of this Section 3.03,  the Borrower  shall
pay  one-half  of the  Administrative  Fee,  if  any,  to the  Loan
Servicer  semiannually  on each February 1 and August 1, commencing
February  1,  1999 or such  later  date  as the  State  authorizes,
during the term of the Loan.

      SECTION 3.04.  Unconditional  Obligations.  The obligation of
the  Borrower to make the Loan  Repayments  and all other  payments
required  hereunder  and the  obligation to perform and observe the
other duties,  covenants,  obligations  and  agreements on its part
contained  herein  shall be absolute and  unconditional,  and shall
not be abated, rebated,  set-off, reduced,  abrogated,  terminated,
waived,  diminished,  postponed or otherwise modified in any manner
or to any  extent  whatsoever  while  any  Loan  Repayments  remain
unpaid,  for any  reason,  regardless  of any  contingency,  act of
God,  event or cause  whatsoever,  including  (without  limitation)
any  acts  or   circumstances   that  may  constitute   failure  of
consideration,  eviction or  constructive  eviction,  the taking by
eminent  domain  or  destruction  of or damage  to the  Project  or
Environmental  Infrastructure  System,  commercial  frustration  of
the  purpose,  any  change  in the  laws of the  United  States  of
America   or  of  the  State  of  New   Jersey  or  any   political
subdivision  of  either  or in  the  rules  or  regulations  of any
governmental  authority,  any  failure of the State to perform  and
observe any  agreement,  whether  express or implied,  or any duty,
liability  or  obligation  arising  out of or  connected  with  the
Project  or  this  Loan  Agreement,   or  any  rights  of  set-off,
recoupment,  abatement  or  counterclaim  that the  Borrower  might
otherwise  have against the State,  the Loan  Servicer or any other
party  or  parties;  provided,  however,  that  payments  hereunder
shall not  constitute  a waiver of any such  rights.  The  Borrower
shall not be  obligated  to make any  payments  required to be made
by any other Borrowers under separate Loan Agreements.

      SECTION 3.05.  Loan  Agreement to Survive Loan.  The Borrower
acknowledges   that  its   duties,   covenants,   obligations   and
agreements  set forth in  Sections  3.06(a)  and (b)  hereof  shall
survive the payment in full of the Loan.

      SECTION    3.06.     Disclaimer     of     Warranties     and
Indemnification.  (a) The  Borrower  acknowledges  and agrees that:
(i) the  State  does  not  make  any  warranty  or  representation,
either  express or  implied,  as to the value,  design,  condition,
merchantability  or fitness for  particular  purpose or fitness for
any use of the Environmental  Infrastructure  System or the Project
or any  portions  thereof or any other  warranty or  representation
with  respect  thereto;  (ii) in no event  shall  the  State or its
agents be  liable  or  responsible  for any  incidental,  indirect,
special  or  consequential  damages in  connection  with or arising
out of  this  Loan  Agreement  or  the  Project  or the  existence,
furnishing,    functioning    or   use    of   the    Environmental
Infrastructure  System or the  Project or any item or  products  or
services  provided  for in this Loan  Agreement;  and (iii)  during
the  term  of  this  Loan  Agreement  and  to  the  fullest  extent
permitted by law, the Borrower  shall  indemnify and hold the State
harmless  against,   and  the  Borrower  shall  pay  any  and  all,
liability,  loss, cost, damage,  claim,  judgment or expense of any
and all kinds or nature and  however  arising  and  imposed by law,
which the State may  sustain,  be  subject to or be caused to incur
by  reason  of any  claim,  suit  or  action  based  upon  personal
injury,  death or damage to  property,  whether  real,  personal or
mixed,  or upon or arising  out of  contracts  entered  into by the
Borrower,   the   Borrower's   ownership   of   the   Environmental
Infrastructure   System  or  the  Project,   or  the   acquisition,
construction or installation of the Project.
      (b)  It is  mutually  agreed  by the  Borrower  and the State
that the State and its commissioners,  officers,  agents,  servants
or  employees  shall not be liable  for,  and shall be  indemnified
and saved  harmless by the  Borrower in any event from,  any action
performed  under  this  Loan  Agreement  and any  claim  or suit of
whatsoever   nature,   except  in  the  event  of  loss  or  damage
resulting from their own negligence or willful misconduct.

      (c)  In  connection   with  its  obligation  to  provide  the
insurance   required  under  Section   2.02(j)   hereof:   (i)  the
Borrower  shall  include,  or cause to be  included,  the State and
its employees and officers as  additional  "named  insureds" on (A)
any  certificate  of liability  insurance  procured by the Borrower
(or other  similar  document  evidencing  the  liability  insurance
coverage  procured  by the  Borrower)  and (B) any  certificate  of
liability  insurance  procured by any  contractor or  subcontractor
for the  Project,  and  from  the  latter  of the  date of the Loan
Closing  or the  date  of the  initiation  of  construction  of the
Project   until  the  date  the   Borrower   receives  the  written
certificate  of Project  completion  from the State,  the  Borrower
shall  maintain  said  liability  insurance  covering the State and
said  employees  and  officers  in  good  standing;  and  (ii)  the
Borrower shall include the State as an additional  "named  insured"
on any  certificate of insurance  providing  against risk of direct
physical  loss,   damage  or   destruction  of  the   Environmental
Infrastructure  System,  and  during  the Loan  Term  the  Borrower
shall maintain said insurance covering the State in good standing.

      The Borrower  shall  provide the State with a copy of each of
any   such   original,   supplemental,   amendatory   or   reissued
certificates  of insurance (or other similar  documents  evidencing
the insurance coverage) required pursuant to this Section 3.06(c).

      SECTION  3.07.   Option  to  Prepay  Loan   Repayments.   The
Borrower  may  prepay  the  Loan  Repayments,  in whole or in part,
upon not less than ninety (90) days'  prior  written  notice to the
State;   provided,   however,   that  any  such  full  or   partial
prepayment  may  only be made  (i) if the  Borrower  is not then in
arrears   on   its   Trust   Loan,   (ii)   if  the   Borrower   is
contemporaneously  making  a  full  or  partial  prepayment  of the
Trust  Loan such  that,  after the  prepayment  of the Loan and the
Trust  Loan,  the Trust gives its consent  required  under  Section
3.07(iii)  of the Trust  Loan  Agreement,  and (iii) upon the prior
written  approval  of the  State.  Prepayments  shall be applied to
the  principal  payments  on the  portion of the Loan to be prepaid
in inverse order of their maturity.

      SECTION  3.08.  Priority  of Loan  and  Trust  Loan.  (a) The
Borrower  hereby  agrees  that,  to  the  extent  allowed  by  law,
including,  without  limitation,  the appropriations act of the New
Jersey  State  Legislature  authorizing  the  expenditure  of Trust
bond  proceeds  to  finance a portion  of the Cost of the  Project,
any loan  repayments  then due and payable on the Borrower's  Trust
Loan,  including,  without limitation,  any administrative fees and
any late  payment  charges  then due and  payable  under  the Trust
Loan  Agreement,  shall be  satisfied  by the  Borrower  before any
Loan  Repayments  then due and payable  hereunder on the Loan shall
be satisfied by the Borrower.

      (b)  The Borrower hereby  acknowledges  that in the event the
Borrower  fails or is unable to pay  promptly  to the Trust in full
any loan  repayments  on the Trust Loan,  then any Loan  Repayments
paid by the  Borrower  on the Loan  under this Loan  Agreement  and
received  by the Loan  Servicer  during  the time of any such  loan
repayment  deficiency  under the Trust Loan  Agreement  shall first
be  applied  by the  Loan  Servicer  to  satisfy  such  Trust  Loan
Agreement  loan  repayment  deficiency  as  a  credit  against  the
obligations  of the  Borrower  to  make  loan  repayments  of  that
portion  of  interest  under  the  Trust  Loan  Agreement  that  is
allocable  to the  interest  payable on the Trust Bonds (as defined
in the Trust Loan  Agreement)  and to make payments of that portion
of  interest  under the bond  issued by the  Borrower  to the Trust
that is  allocable  to the  interest  payable  on the Trust  Bonds,
second,  to the  extent  available,  to  make  loan  repayments  of
principal   under  the  Trust  Loan   Agreement   and  payments  of
principal  on  the  bond  issued  by  the  Borrower  to  the  Trust
pursuant  to  the  Trust  Loan  Agreement,  third,  to  the  extent
available,  to the payment of the  administrative fee payable under
the Trust Loan  Agreement  and to make  payments of that portion of
interest  under the bond  issued by the  Borrower to the Trust that
is  allocable  to the  administrative  fee payable  under the Trust
Loan Agreement,  fourth,  to the extent  available,  to the payment
of late  charges  payable  under the Trust  Loan  Agreement  and to
make  payments of that  portion of  interest  under the bond issued
by  the  Borrower  to the  Trust  that  is  allocable  to the  late
charges payable under the Trust Loan Agreement,  and,  finally,  to
the extent available, to make Loan Repayments on the Loan.

      (c)  The Borrower hereby further  acknowledges  that any Loan
Repayments  paid  by the  Borrower  on the  Loan  under  this  Loan
Agreement  shall be applied (i)  according  to Section  3(c) of the
Loan  Servicing and Trust Bonds  Security  Agreement (as defined in
the  definition of Loan Servicer  herein) and (ii) according to the
provisions of the Master Program Trust Agreement.


<PAGE>
                            ARTICLE IV


          ASSIGNMENT OF LOAN AGREEMENT AND BORROWER BOND

      SECTION  4.01.   Assignment   and  Transfer  by  State.   The
Borrower   hereby  approves  and  consents  to  any  assignment  or
transfer  of this Loan  Agreement  and the  Borrower  Bond that the
State deems to be necessary in  connection  with the  environmental
infrastructure loan program of the State under the Regulations.

      SECTION  4.02.  Assignment  by  Borrower.  Neither  this Loan
Agreement  nor the  Borrower  Bond may be assigned by the  Borrower
(except to the  Guarantor,  which shall occur  pursuant to N.J.S.A.
14A:10-5.1 or such successor  provision,  upon notice to the State)
for  any  reason,   unless  the  following   conditions   shall  be
satisfied:  (i) the State shall have  approved  said  assignment in
writing;   (ii)  the  assignee  shall  have  expressly  assumed  in
writing the full and faithful  observance  and  performance  of the
Borrower's  duties,  covenants,  obligations  and agreements  under
this Loan Agreement and, to the extent  permitted under  applicable
law,  the  Borrower   Bond;  and  (iii)   immediately   after  such
assignment,   the   assignee   shall  not  be  in  default  in  the
observance or  performance  of any duties,  covenants,  obligations
or  agreements  of the  Borrower  under this Loan  Agreement or the
Borrower Bond.


<PAGE>
                             ARTICLE V


                  EVENTS OF DEFAULT AND REMEDIES

      SECTION  5.01.  Events of  Default.  If any of the  following
events  occur,  it is hereby  defined as and  declared to be and to
constitute an "Event of Default":

      (a)  failure  by the  Borrower  to pay,  or cause to be paid,
any Loan  Repayment  required to be paid  hereunder when due, which
failure shall continue for a period of fifteen (15) days;

      (b)  failure  by the  Borrower  to pay,  or cause to be paid,
any late charges  incurred  hereunder  or any portion  thereof when
due or to observe  and perform any duty,  covenant,  obligation  or
agreement on its part to be observed or  performed  under this Loan
Agreement,  other than as  referred  to in  subsection  (a) of this
Section  5.01  or  other  than  the  obligations  of  the  Borrower
contained  in Section  2.02(d)(ii)  hereof and in Exhibit F hereto,
which  failure  shall  continue  for a period of  thirty  (30) days
after written  notice,  specifying such failure and requesting that
it be remedied,  is given to the Borrower by the State,  unless the
State  shall  agree in writing to an  extension  of such time prior
to its expiration;  provided,  however,  that if the failure stated
in such notice is  correctable  but cannot be corrected  within the
applicable  period,  the State may not  unreasonably  withhold  its
consent  to an  extension  of such  time up to 120  days  from  the
delivery of the  written  notice  referred  to above if  corrective
action is instituted by the Borrower  within the applicable  period
and diligently pursued until the Event of Default is corrected;

      (c)  any representation  made by or on behalf of the Borrower
contained in this Loan  Agreement,  or in any instrument  furnished
in  compliance  with or with  reference  to this Loan  Agreement or
the Loan, is false or misleading in any material respect;

      (d)  a petition  is filed by or against  the  Borrower  under
any  federal  or  state  bankruptcy  or  insolvency  law  or  other
similar  law in  effect  on the  date of  this  Loan  Agreement  or
thereafter  enacted,  unless in the case of any such petition filed
against  the  Borrower  such  petition  shall be  dismissed  within
thirty  (30) days after such  filing  and such  dismissal  shall be
final and not  subject  to appeal;  or the  Borrower  shall  become
insolvent or bankrupt or shall make an  assignment  for the benefit
of its creditors;  or a custodian  (including,  without limitation,
a receiver,  liquidator  or trustee) of the  Borrower or any of its
property  shall be appointed by court order or take  possession  of
the  Borrower or its  property  or assets if such order  remains in
effect  or such  possession  continues  for more than  thirty  (30)
days;

      (e)  the Borrower  shall  generally  fail to pay its debts as
such debts become due; and

      (f)  failure of the  Borrower  to  observe  or  perform  such
additional   duties,   covenants,   obligations,    agreements   or
conditions  as are  required by the State and  specified in Exhibit
F attached hereto and made a part hereof.

      SECTION  5.02.  Notice of Default.  The  Borrower  shall give
the State prompt  telephonic  notice of the occurrence of any Event
of  Default  referred  to in  Section  5.01(d) or (e) hereof and of
the  occurrence  of any other event or condition  that  constitutes
an Event of Default at such time as any  senior  administrative  or
financial  officer of the Borrower  becomes  aware of the existence
thereof.

      SECTION  5.03.  Remedies  on  Default.  Whenever  an Event of
Default  referred  to in Section  5.01 hereof  shall have  occurred
and  be  continuing,  the  State  shall  have  the  right  to  take
whatever  action  at law  or in  equity  may  appear  necessary  or
desirable  to  collect  the  amounts  then  due and  thereafter  to
become due hereunder or to enforce the observance  and  performance
of any duty,  covenant,  obligation  or  agreement  of the Borrower
hereunder.

      In  addition,  if an Event of Default  referred to in Section
5.01(a)  hereof shall have  occurred and be  continuing,  the State
shall,  to the extent allowed by applicable  law, have the right to
declare all Loan  Repayments  and all other  amounts due  hereunder
(including,  without limitation,  payments under the Borrower Bond)
to  be  immediately  due  and  payable,  and  upon  notice  to  the
Borrower  the same shall  become due and  payable  without  further
notice or demand.

      SECTION  5.04.  Attorneys'  Fees  and  Other  Expenses.   The
Borrower shall on demand pay to the State the  reasonable  fees and
expenses of attorneys  and other  reasonable  expenses  (including,
without  limitation,  the  reasonably  allocated  costs of in-house
counsel and legal  staff)  incurred by the State in the  collection
of  Loan  Repayments  or any  other  sum  due  hereunder  or in the
enforcement  of  the   observation  or  performance  of  any  other
duties,  covenants,  obligations or agreements of the Borrower upon
an Event of Default.

      SECTION 5.05.  Application  of Moneys.  Any moneys  collected
by the State  pursuant to Section  5.03 hereof shall be applied (a)
first,  to pay any attorneys'  fees or other fees and expenses owed
by the Borrower  pursuant to Section 5.04  hereof,  (b) second,  to
the  extent  available,  to pay  principal  due and  payable on the
Loan,  (c)  third,  to  the  extent  available,  to pay  any  other
amounts due and payable  hereunder,  and (d) fourth,  to the extent
available,  to pay principal on the Loan and other amounts  payable
hereunder as such amounts become due and payable.

      SECTION  5.06.  No  Remedy  Exclusive;   Waiver;  Notice.  No
remedy herein  conferred  upon or reserved to the State is intended
to be  exclusive,  and every such remedy  shall be  cumulative  and
shall be in addition to every  other  remedy  given under this Loan
Agreement  or now or  hereafter  existing  at law or in equity.  No
delay or omission to exercise any right,  remedy or power  accruing
upon any Event of Default  shall  impair any such right,  remedy or
power or shall be  construed to be a waiver  thereof,  but any such
right,  remedy or power may be  exercised  from time to time and as
often as may be deemed  expedient.  In order to  entitle  the State
to exercise  any remedy  reserved to it in this Article V, it shall
not be  necessary  to give any notice other than such notice as may
be required in this Article V.

      SECTION 5.07.  Retention of State's  Rights.  Notwithstanding
any assignment or transfer of this Loan  Agreement  pursuant to the
provisions  hereof,  or  anything  else to the  contrary  contained
herein,  the State shall have the right upon the  occurrence  of an
Event  of  Default   to  take  any   action,   including   (without
limitation)  bringing an action  against the  Borrower at law or in
equity,  as the State may, in its  discretion,  deem  necessary  to
enforce the  obligations  of the Borrower to the State  pursuant to
Section 5.03 hereof.


<PAGE>
                            ARTICLE VI


                           MISCELLANEOUS

      SECTION 6.01.  Notices.  All notices,  certificates  or other
communications  hereunder shall be sufficiently  given and shall be
deemed  given  when  hand  delivered  or mailed  by  registered  or
certified  mail,  postage  prepaid,  to the Borrower at the address
specified  in Exhibit  A-1  attached  hereto and made a part hereof
and to the State and the Loan Servicer at the following addresses:

      (a)  State:

                New Jersey Department of Environmental Protection
                Municipal Finance and Construction Element
                401 East State Street  3rd Floor
                Trenton, New Jersey  08625-0425
                Attention:  Assistant Director

                New Jersey Department of the Treasury
                Office of Public Finance
                State Street Square  5th Floor
                Trenton, New Jersey  08625-0002
                Attention:  Director

      (b)  Loan Servicer:

      First Union National Bank
                765 Broad Street
                Newark, New Jersey  07102
                Attention:  Corporate Trust Department

      Any of the  foregoing  parties may  designate  any further or
different  addresses to which subsequent  notices,  certificates or
other  communications  shall be sent by notice in writing  given to
the others.

      SECTION  6.02.  Binding  Effect.  This Loan  Agreement  shall
inure to the  benefit  of and shall be  binding  upon the State and
the Borrower and their respective successors and assigns.

      SECTION  6.03.  Severability.  In the event any  provision of
this   Loan   Agreement   shall  be  held   illegal,   invalid   or
unenforceable  by  any  court  of  competent   jurisdiction,   such
holding shall not  invalidate,  render  unenforceable  or otherwise
affect any other provision hereof.

      SECTION  6.04.  Amendments,  Supplements  and  Modifications.
This Loan  Agreement may not be amended,  supplemented  or modified
without the prior written consent of the State and the Borrower.

      SECTION   6.05.   Execution   in   Counterparts.   This  Loan
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  6.06.  Applicable  Law and  Regulations.  This  Loan
Agreement  shall be governed by and  construed in  accordance  with
the laws of the State of New  Jersey,  including  the  Regulations,
which  Regulations  are, by this  reference  thereto,  incorporated
herein as part of this Loan Agreement.

      SECTION 6.07.  Consents and  Approvals.  Whenever the written
consent  or  approval  of the  State  shall be  required  under the
provisions  of this Loan  Agreement,  such  consent or approval may
only be given by the State.

      SECTION  6.08.  Captions.  The  captions  or headings in this
Loan  Agreement are for  convenience  only and shall not in any way
define,  limit or  describe  the scope or intent of any  provisions
or sections of this Loan Agreement.

      SECTION 6.09.  Further  Assurances.  The Borrower  shall,  at
the request of the State, authorize,  execute, attest,  acknowledge
and  deliver  such  further  resolutions,  conveyances,  transfers,
assurances,  financing  statements and other  instruments as may be
necessary or desirable for better  assuring,  conveying,  granting,
assigning  and  confirming  the  rights,   security  interests  and
agreements   granted  or  intended  to  be  granted  by  this  Loan
Agreement and the Borrower Bond.


<PAGE>
                         [Signature Page]
      IN WITNESS  WHEREOF,  the State and the Borrower  have caused
this Loan  Agreement  to be  executed,  sealed and  delivered as of
the date first above written.

                                    THE STATE OF NEW JERSEY,
                                    ACTING BY AND THROUGH THE
                                    NEW JERSEY DEPARTMENT OF
                                    ENVIRONMENTAL PROTECTION

[SEAL]

                                    By:________________________
ATTEST:                                   Robert C. Shinn, Jr.
                                          Commissioner,
Department of
                                          Environmental Protection

_____________________________
Nicholas G. Binder, P.E., P.P.
Assistant Director,
Municipal Finance and Construction Element,
Department of Environmental Protection

[SEAL]                              THE MOUNT HOLLY WATER
                                      COMPANY


ATTEST:
                                    By:________________________
                                          Authorized Officer

_____________________________
Authorized Officer


                                    Approval of New Jersey State
                                      Treasurer



                                    By:________________________
                                          James   A.   DiEleuterio,
Jr.
                                          New     Jersey      State
Treasurer


<PAGE>
                               A-1-1
                            EXHIBIT A-1


  Description of Project and Environmental Infrastructure System


<PAGE>
                               A-2-1
                            EXHIBIT A-2


                        Description of Loan


<PAGE>
                                B-1
                             EXHIBIT B


        Basis for Determination of Allowable Project Costs


<PAGE>
                                C-1
                             EXHIBIT C


                  Estimated Disbursement Schedule


<PAGE>
                               D-31
                             EXHIBIT D


                      Specimen Borrower Bond


<PAGE>
                   (To be supplied by Borrower's

         bond counsel in substantially the following form)


      IMPORTANT  NOTE:  The next two  pages  set  forth the form of
the  Borrower  Bond  prepared  by  the  Trust's  Bond  Counsel  for
municipal/county  Borrowers.  Although  the Trust  recognizes  that
each  corporate   Borrower  has  its  own  bond  form  as  required
pursuant to its Borrower Bond  Resolution,  please  incorporate  in
the   bond    form   the    pertinent    information    from   this
municipal/county   bond  form   (e.g.,   include   the  concept  of
principal  amount or lesser amount under  Section  3.01,  reference
to   payments   to  the  Loan   Servicer,   disbursement   process,
unconditional nature, prepayment, security and date).


<PAGE>
                 SEE IMPORTANT NOTE ON PRIOR PAGE


      FOR  VALUE  RECEIVED,   The  Mount  Holly  Water  Company,  a
corporation   duly   created   and  validly   existing   under  the
Constitution   and   laws  of  the   State  of  New   Jersey   (the
"Borrower"),  hereby  promises  to pay to the order of the State of
New Jersey  (the  "State")  the  principal  amount of Five  Million
Eight  Hundred  Ninety-Four  Thousand  Nine  Hundred  Nine  Dollars
($5,894,909),  or such  lesser  amount  as shall be  determined  in
accordance   with   Section   3.01  of  the  Loan   Agreement   (as
hereinafter  defined),  at the times and in the amounts  determined
as provided in the Loan  Agreement,  plus any other amounts due and
owing under the Loan  Agreement  at the times and in the amounts as
provided  therein.   The  Borrower  irrevocably  pledges  its  full
faith and credit for the  punctual  payment  of the  principal  of,
and all other  amounts due under,  this  Borrower Bond and the Loan
Agreement according to their respective terms.

      This Borrower Bond is issued  pursuant to the Loan  Agreement
dated as of November  1, 1998 by and  between the State,  acting by
and   through   the  New   Jersey   Department   of   Environmental
Protection,  and  the  Borrower  (the  "Loan  Agreement"),  and  is
issued in  consideration  of the loan made  thereunder (the "Loan")
and to evidence the payment  obligations  of the Borrower set forth
in Section  3.03(a)  thereof.  Payments  under this  Borrower  Bond
shall,  except as  otherwise  provided  in the Loan  Agreement,  be
made  directly  to the  Loan  Servicer  (as  defined  in  the  Loan
Agreement)  for the  account of the State.  This  Borrower  Bond is
subject to assignment or endorsement  in accordance  with the terms
of  the  Loan   Agreement.   All  of  the  terms,   conditions  and
provisions of the Loan Agreement  are, by this  reference  thereto,
incorporated herein as part of this Borrower Bond.

      Pursuant to the Loan Agreement,  disbursements  shall be made
by  the  State  to the  Borrower  upon  receipt  by  the  State  of
requisitions   from  the  Borrower   executed   and   delivered  in
accordance with the  requirements  set forth in Section 3.02 of the
Loan Agreement.

      This  Borrower  Bond  is  entitled  to  the  benefits  and is
subject to the conditions of the Loan  Agreement.  The  obligations
of the Borrower to make the payments  required  hereunder  shall be
absolute  and  unconditional,  without  any  defense  or  right  of
set-off,  counterclaim  or  recoupment  by reason of any default by
the State  under the Loan  Agreement  or under any other  agreement
between the  Borrower and the State or out of any  indebtedness  or
liability  at any time  owing to the  Borrower  by the State or for
any other reason.

      This  Borrower Bond is subject to optional  prepayment  under
the terms and conditions,  and in the amounts,  provided in Section
3.07 of the Loan  Agreement.  To the extent  allowed by  applicable
law, this Borrower  Bond may be subject to  acceleration  under the
terms and  conditions,  and in the  amounts,  provided  in  Section
5.03 of the Loan Agreement.

      To the extent  provided by law,  this Borrower Bond is junior
and  subordinate  in all  respects  to any  bonds  of the  Borrower
issued  on  even  date  herewith  to the New  Jersey  Environmental
Infrastructure  Trust as to lien on, and source  and  security  for
payment from, the revenues of the Borrower.

      IN WITNESS  WHEREOF,  the Borrower  has caused this  Borrower
Bond to be duly  executed,  sealed  and  delivered  as of this 15th
day of October, 1998.

                                    THE MOUNT HOLLY WATER
                                      COMPANY

[SEAL]

                                    By:_______________________
ATTEST:                                   _____________



_______________________
By:_______________________
_______________                          _____________


<PAGE>
                               E-35
                             EXHIBIT E


         Opinions of Borrower's Bond and General Counsels

                    See Closing Item No. 11.04


<PAGE>
                [LETTERHEAD OF COUNSEL TO BORROWER]



                                    November 5, 1998

State of New Jersey
Department of Environmental Protection
401 East State Street
Trenton, New Jersey  08625

Ladies and Gentlemen:

      I have acted as counsel to The Mount Holly Water  Company,  a
corporation  duly organized and validly  existing under the laws of
the State of New Jersey (the  "Borrower"),  which has entered  into
a Loan  Agreement  (as  hereinafter  defined) with the State of New
Jersey,  acting  by  and  through  the  New  Jersey  Department  of
Environmental  Protection (the "State"),  and have acted as such in
connection  with  the  authorization,  execution,  attestation  and
delivery by the Borrower of its Loan  Agreement  and Borrower  Bond
(as  hereinafter  defined)  pursuant  to the  New  Jersey  Business
Corporation  Act,  P.L.  1968,  c. 263, as amended  (the  "Business
Corporation  Law"),  and  resolutions  of the Board of Directors of
the Borrower  adopted on ________,  1998 (the  "Resolutions").  All
capitalized  terms  used  but not  defined  herein  shall  have the
meanings ascribed to such terms in the Loan Agreement.

      In so acting,  I have examined the  Constitution  and laws of
the  State  of  New  Jersey,  including,  without  limitation,  the
Business  Corporation  Law, and the  certificate  of  incorporation
and by-laws of the  Borrower.  I have also examined  originals,  or
copies  certified or otherwise  identified to my  satisfaction,  of
the following:

      (a)  the Loan  Agreement  dated as of  November  1, 1998 (the
"Loan Agreement") by and between the State and the Borrower;

      (b)  the  Resolutions  and the  proceedings  of the  Board of
Directors  of  the  Borrower   relating  to  the   undertaking  and
completion of the Project;

      (c)  the  Borrower  Bond  dated as of October  15,  1998 (the
"Borrower  Bond")  issued by the  Borrower to the State to evidence
the Loan; and

      (d)  the  proceedings  of  the  Board  of  Directors  of  the
Borrower,   including,   without   limitation,   the   Resolutions,
relating to the  authorization  of the Borrower  Bond and the sale,
execution,  attestation  and  delivery  thereof  to the State  (the
Loan  Agreement  and the  Borrower  Bond  are  referred  to  herein
collectively as the "Loan Documents").

      I have also  examined  and relied upon  originals,  or copies
certified or otherwise  authenticated to my  satisfaction,  of such
other records, documents,  certificates and other instruments,  and
have  made  such  investigation  of  law as in my  judgment  I have
deemed  necessary  or  appropriate,  to  enable  me to  render  the
opinions expressed below.
      I am of the opinion that:

      1.   The Borrower is a  corporation  duly created and validly
existing  under and  pursuant to the  Constitution  and statutes of
the State of New Jersey,  including the Business  Corporation  Law,
with  the   legal   right  to   carry  on  the   business   of  its
Environmental  Infrastructure  System as currently  being conducted
and as proposed to be conducted.

      2.   The  Borrower  has full  legal  right and  authority  to
execute,  attest  and  deliver  the  Loan  Documents,  to sell  the
Borrower  Bond to the State,  to observe  and  perform  its duties,
covenants,  obligations  and  agreements  under the Loan  Documents
and to undertake and complete the Project.

      3.   The   acting   officers   of  the   Borrower   who   are
contemporaneously    herewith   performing   or   have   previously
performed any action  contemplated  in the Loan  Agreement are, and
at  the  time  any  such  action  was  performed   were,  the  duly
appointed  or  elected  officers  of  the  Borrower   empowered  by
applicable  New  Jersey law and  authorized  by  resolution  of the
Borrower to perform such actions.

      4.   The  proceedings  of the  Borrower's  Board of Directors
(i)  approving  the  Loan   Documents,   (ii)   authorizing   their
execution,  attestation  and  delivery  on behalf of the  Borrower,
(iii) with  respect to the  Borrower  Bond  only,  authorizing  its
sale by the Borrower to the State,  (iv)  authorizing  the Borrower
to   consummate   the   transactions   contemplated   by  the  Loan
Documents,  (v)  authorizing the Borrower to undertake and complete
the Project,  and (vi)  authorizing  the  execution and delivery of
all other  certificates,  agreements,  documents and instruments in
connection  with the  execution,  attestation  and  delivery of the
Loan  Documents,  have  each  been duly and  lawfully  adopted  and
authorized in accordance with applicable  law,  including,  without
limitation, the Business Corporation Law.

      5.   The Loan Documents have been duly authorized,  executed,
attested and delivered by the  Authorized  Officers of the Borrower
and the  Borrower  Bond has been duly sold by the  Borrower  to the
State;  and  assuming  in the case of the Loan  Agreement  that the
State  has  the   requisite   power  and  authority  to  authorize,
execute,  attest and deliver,  and has duly  authorized,  executed,
attested and  delivered,  the Loan  Agreement,  the Loan  Documents
constitute  the  legal,  valid  and  binding   obligations  of  the
Borrower,  enforceable  against  the  Borrower in  accordance  with
their respective  terms,  subject,  however,  to the effect of, and
to  restrictions  and  limitations  imposed by or  resulting  from,
bankruptcy,   insolvency,   moratorium,   reorganization  or  other
similar laws  affecting  creditors'  rights  generally.  No opinion
is rendered as to the availability of any particular remedy.

      6.   The authorization,  execution,  attestation and delivery
of the  Loan  Documents  by the  Borrower  and,  in the case of the
Borrower   Bond  only,   the  sale   thereof  to  the  State,   the
observation   and  performance  by  the  Borrower  of  its  duties,
covenants,    obligations    and   agreements    thereunder,    the
consummation  of the  transactions  contemplated  therein,  and the
undertaking  and  completion of the Project do not and will not (i)
other  than the lien,  charge or  encumbrance  created  by the Loan
Documents  and by any other  outstanding  debt  obligations  of the
Borrower  that are at parity with the Borrower  Bond as to lien on,
and source and security for payment  thereon from,  the revenues of
the  Borrower,  result in the creation or  imposition  of any lien,
charge  or  encumbrance  upon  any  properties  or  assets  of  the
Borrower  pursuant  to,  (ii)  result  in any  breach of any of the
terms,  conditions or provisions of, or (iii)  constitute a default
under, any outstanding debt or lease  obligation,  trust agreement,
indenture,  mortgage,  deed  of  trust,  loan  agreement  or  other
instrument  to  which  the  Borrower  is a party  or by  which  the
Borrower,  its  Environmental  Infrastructure  System or any of its
properties  or assets may be bound,  nor will such action result in
any violation of the  provisions  of the charter or other  document
pursuant  to  which  the  Borrower  was  established  or any  laws,
ordinances,  injunctions,  judgments,  decrees, rules,  regulations
or existing orders of any court or  governmental or  administrative
agency,   authority   or  person  to  which   the   Borrower,   its
Environmental   Infrastructure   System   or  its   properties   or
operations is subject.

      7.   All  approvals,   consents  or  authorizations   of,  or
registrations  of or  filings  with,  any  governmental  or  public
agency,  authority  or person  required  to date on the part of the
Borrower  in   connection   with  the   authorization,   execution,
attestation,  delivery and performance of the Loan  Documents,  the
sale of the Borrower  Bond and the  undertaking  and  completion of
the Project have been obtained or made.

      8.   There is no litigation or other  proceeding  pending or,
to my  knowledge,  after due  inquiry,  threatened  in any court or
other   tribunal  of  competent   jurisdiction   (either  State  or
federal) (i)  questioning  the creation,  organization or existence
of  the  Borrower,  (ii)  questioning  the  validity,  legality  or
enforceability   of  the   Resolutions,   the   Loan  or  the  Loan
Documents,  (iii)  questioning the undertaking or completion of the
Project,  (iv)  otherwise  challenging  the  Borrower's  ability to
consummate the  transactions  contemplated  by the Loan or the Loan
Documents,  or  (v)  that,  if  adversely  decided,  would  have  a
materially  adverse  impact  on  the  financial  condition  of  the
Borrower.

      9.   Other than its bond dated as of October  15, 1998 issued
to  the  New  Jersey   Environmental   Infrastructure   Trust,  the
Borrower   has  no   bonds,   notes  or  other   debt   obligations
outstanding  that are  superior or senior to the  Borrower  Bond as
to lien on, and source and security for payment  thereof from,  the
revenues of the Borrower.

      I hereby  authorize  McCarter & English,  LLP, acting as bond
counsel  to  the  State  in  connection  with  the  Loan,  and  the
Attorney  General  of the State of New  Jersey,  acting as  general
counsel to the State in  connection  with the Loan, to rely on this
opinion as if I had  addressed  this opinion to them in addition to
you.

                                    Very truly yours,


<PAGE>
                               F-39
                             EXHIBIT F


               Additional Covenants and Requirements

Guaranty of Loan:

      The   repayment  of  the  Loan  will  be  guaranteed  by  the
Guarantor  pursuant  to the  terms and  conditions  as set forth in
that  certain  Guaranty  made and  delivered as of November 1, 1998
by the Guarantor, a copy of which is attached hereto.


<PAGE>
                               G-40
                             EXHIBIT G


            General Administrative Requirements for the
       State Environmental Infrastructure Financing Program