TERM LOAN AGREEMENT




                          Dated as of November 27, 1996



                                 By and Between

                          FIBERCORE, INC., as Borrower

                                       and

                           AMP INCORPORATED, as Lender

















<PAGE>



                               TERM LOAN AGREEMENT


         THIS TERM LOAN AGREEMENT ("Agreement") is made as of November 27, 1996,
by and between FIBERCORE,  INC., a Nevada corporation  ("Borrower"),  having its
chief  executive  office  at 174  Charlton  Road,  Sturbridge,  MA 01566 and AMP
INCORPORATED,  a Pennsylvania  corporation  ("Lender"),  having an office at 470
Friendship Road, M/S 176-034, Harrisburg, Pennsylvania 17111.


                                    SECTION I

                                   DEFINITIONS

         1.1      Definitions.

                  All capitalized terms used in this Agreement or in the Note or
in any certificate,  report or other document made or delivered pursuant to this
Agreement (unless otherwise defined therein) shall have the meanings assigned to
them below:

         Acquisition. Any transaction, or any series of related transactions, by
which  Borrower or any of its  Subsidiaries  directly or indirectly (a) acquires
all or substantially  all of any ongoing business or all or substantially all of
the assets of any firm,  partnership,  joint  venture,  corporation  or division
thereof,  whether  through  purchase  of  assets,  merger or  otherwise,  or (b)
acquires (in one  transaction  or as the most recent  transaction in a series of
transactions)  control  of at least a  majority  of the  stock of a  corporation
having ordinary voting power for the election of directors of such  corporation,
or (c)  acquires  control of more than fifty  percent  (50.0%) of the  ownership
interest in any partnership or joint venture.

         Affiliate.  With respect to any Person, (a) each Person that,  directly
or indirectly,  owns or controls, whether beneficially or as a trustee, guardian
or other  fiduciary,  five percent  (5.0%) or more of the stock having  ordinary
voting power in the  election of directors of such Person,  (b) each Person that
controls,  is controlled  by or is under common  control with such Person or any
Affiliate of such Person or (c) each of such Person's officers, directors, joint
venturers  and  partners;  provided,  however,  that in no case shall  Lender be
deemed to be an Affiliate of Borrower  for purposes of this  Agreement.  For the
purpose of this  definition,  "control" of a Person  shall mean the  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of its
management or policies,  whether through the ownership of voting securities,  by
contract or otherwise.

         ALT.  Automated Light Technologies, Inc., a Delaware corporation.

         AMP Affiliate.  With respect to Lender, (a) each Person that,  directly
or indirectly,  owns or controls, whether beneficially or as a trustee, guardian
or other fiduciary,  twenty percent (20.0%) or more of the stock having ordinary
voting power in the  election of directors of such Person,  (b) each Person that
controls,  is controlled  by or is under common  control with such Person or any
Affiliate of such Person or (c) each of such Person's officers, directors, joint
venturers  and  partners;  provided,  however,  that in no case shall  Lender be
deemed to be an Affiliate of Borrower  for purposes of this  Agreement.  For the
purpose of this  definition,  "control" of a Person  shall mean the  possession,
directly or  indirectly,  of the power to direct or cause the  direction  of its
management or policies,  whether through the ownership of voting securities,  by
contract or otherwise.


<PAGE>



         Berliner Bank Loan. The loan made by Berliner Bank to Borrower pursuant
to the loan documents attached hereto as Exhibit K.

         Business Day. Any day other than a Saturday,  Sunday,  legal holiday or
other day on which banks in  Massachusetts or New York are required or permitted
by law to close.

         Capital  Expenditures.  All payments made for  Acquisitions  or for any
fixed assets or improvements  or for  replacements,  substitutions  or additions
thereto,  that  have a useful  life of more  than one (1)  year  and  which  are
required to be capitalized under GAAP, including Capital Lease Obligations.

         Capital  Lease.  As to any  Person,  any lease of any  Property by such
Person as lessee that is, or should be in accordance  with Financial  Accounting
Standards  Board  Statement No. 13,  classified  and accounted for as a "capital
lease" on the balance sheet of such Person prepared in accordance with GAAP.

         Capital Lease Obligation. With respect to any Capital Lease, the amount
of the obligation of the lessee  thereunder that, in accordance with GAAP, would
appear on a balance  sheet of such  lessee in respect of such  Capital  Lease or
otherwise be disclosed in a note to such balance sheet.

         Cash Collateral.  Cash Collateral has the meaning given to such term in
Section 2.4.

         Change in Control.  Change in Control means the  occurrence,  after the
date of this  Agreement,  of any of the following  except in  furtherance of the
Voting  Agreement:  (i) any  person or two or more  persons  acting as a "group"
within the meaning of section  13(d) of the  Exchange Act  acquiring  beneficial
ownership  (within the meaning of Rule 13d-3 of the SEC under the Exchange Act),
directly  or  indirectly,   of  securities  of  Borrower  (or  other  securities
convertible  into  such  securities)  representing  40% of more of the  combined
voting  power of all  securities  (including  the  securities  so  acquired)  of
Borrower  entitled  to vote in the  election  of  directors;  or (ii) during any
period  of up to 12  consecutive  months,  commencing  after  the  date  hereof,
individuals  who at the  beginning  of such  12-month  period were  directors of
Borrower  ceasing  for any  reason  to  constitute  a  majority  of the Board of
Directors  of  Borrower  unless the  persons  replacing  such  individuals  were
nominated  by the Board of  Directors  of  Borrower  or by Lender;  or (iii) any
person or two or more persons  acting as a "group" within the meaning of section
13(d) of the Exchange Act acquiring by contract or otherwise, or entering into a
contract  or  arrangement  which upon  consummation  will result in its or their
acquisition  of, or control over,  securities  or Borrower (or other  securities
convertible  into  such  securities)  representing  40% or more of the  combined
voting  power  of all  securities  (including  the  securities  so  acquired  or
controlled) of Borrower entitled to vote in the election of directors.

         Closing Date.  The date of this Agreement.

         Code. The Internal  Revenue Code of 1986 and the rules and  regulations
thereunder,  collectively,  as the same may from time to time be supplemented or
amended and remain in effect.

         Collateral.  Collateral means all of the collateral  referred to in the
German Security Agreement.

         Commitment Amount.  Three Million United States Dollars (US$3,000,000).

         Common Stock.  Common Stock of Borrower.



                                       2.


<PAGE>



         Controlled   Group.   All  trades  or   businesses   (whether   or  not
incorporated) under common control that, together with Borrower,  are treated as
a single  employer under Section 414(b) or 414(c) of the Code or Section 4001 of
ERISA.

         Convertible  Debenture.  That certain Amended and Restated  Convertible
Debenture  dated as of April  17,  1995,  in the  original  principal  amount of
$2,000,000.

         Current  Assets.   On  a  consolidated   basis  for  Borrower  and  its
Subsidiaries,  as at any date of  determination,  all amounts  that  should,  in
accordance with GAAP, be included as current assets on the consolidated  balance
sheet of Borrower and its Subsidiaries.

         Current  Liabilities.  On a  consolidated  basis for  Borrower  and its
Subsidiaries,  as at any date of  determination,  all amounts  that  should,  in
accordance  with GAAP, be included as current  liabilities  on the  consolidated
balance sheet of Borrower and its Subsidiaries,  plus, to the extent not already
included  therein,  all  Indebtedness  that is payable upon demand or within one
year  from  the  date of  determination  thereof  unless  such  Indebtedness  is
renewable or  extendable  at the option of Borrower or any  Subsidiary to a date
more than one year from the date of determination.

         Debt  Conversion  Agreement.  Amendment No. 1 to Convertible  Debenture
Purchase Agreement, entered into by and between Borrower and Lender, dated as of
the date hereof.

         Default.  An Event of Default or event or condition  that,  but for the
requirement  that time elapse or notice be given, or both,  would  constitute an
Event of Default.

         EBITDA.  As  calculated  on a  consolidated  basis for Borrower and its
Subsidiaries for any period as of any date of determination,  the sum of (a) Net
Income,  plus (b) all  amounts  treated as  expenses  for  depreciation  and the
amortization  of  intangibles  of  any  kind  to  the  extent  included  in  the
determination of Net Income,  plus (c) all taxes on or measured by income to the
extent included in the determination of Net Income, plus (d) Interest Expense to
the extent included in the determination of Net Income.

         Encumbrances.  See Section 6.4

         Environmental Laws. Any and all applicable foreign,  federal, state and
local  environmental,  health  or safety  statutes,  laws,  regulations,  rules,
ordinances,  policies and rules or common law (whether now existing or hereafter
enacted or promulgated),  of all governmental  agencies,  bureaus or departments
which  may  now or  hereafter  have  jurisdiction  over  Borrower  or any of its
Subsidiaries  and all  applicable  judicial and  administrative  and  regulatory
decrees,  judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal  property or human
health or the  environment,  including,  without  limitation,  all  requirements
pertaining to reporting, licensing, permitting,  investigation,  remediation and
removal of emissions,  discharges,  releases or threatened releases of Hazardous
Materials, chemical substances, pollutants or contaminants whether solid, liquid
or gaseous in nature,  into the  environment  or  relating  to the  manufacture,
processing,  distribution,  use,  treatment,  storage,  disposal,  transport  or
handling  of  such  Hazardous  Materials,  chemical  substances,  pollutants  or
contaminants.

         Equity. On a consolidated  basis for Borrower and its Subsidiaries,  as
at any date of determination,  the consolidated total assets of Borrower and its
Subsidiaries minus, Total Liabilities.



                                       3.


<PAGE>



         ERISA.  The  Employee  Retirement  Income  Security Act of 1974 and the
rules and  regulations  thereunder,  collectively,  as the same may from time to
time be supplemented or amended and remain in effect.

         Event of Default.  Any event described in Section 8.1.

         Existing Loan Documents.  The Convertible Debenture Purchase Agreement,
dated as of April 17, 1995, by and between Borrower (as successor-in-interest to
FiberCore  Incorporated,  a  Nevada  corporation)  and  Lender  and the  related
Convertible Debenture in the original principal amount of $5,000,000, as amended
from time to time.

         Fiscal  Quarter.  Each fiscal quarter of Borrower  ending on each March
31, June 30,  September 30 and December 31 unless  quarters  ending on different
dates are consented to in writing in advance by Lender.

         Fiscal Year.  Each fiscal year of Borrower  ending on each  December 31
unless  fiscal years ending on  different  dates are  consented to in writing in
advance by Lender.

         GAAP.  Generally  accepted  accounting  principles  set  forth  in  the
opinions and  pronouncements of the Accounting  Principles Board of the American
Institute of Certified Public  Accountants and statements and  pronouncements of
the Financial  Accounting  Standards  Board or in such other  statements by such
other  Person as may be  approved  by a  significant  segment of the  accounting
profession,  which  are  applicable  to  the  circumstances  as of the  date  of
determination.

         German  Government  Grant.  The grant made by the German  government to
Guarantor pursuant to the documents attached hereto as Exhibit L.

         German  Guaranty.  That  certain  Subsidiary  Guaranty  in the  form of
Exhibit D executed by Guarantor in favor of Lender.

         German Security Agreement.  That certain Security Agreement in the form
of Exhibit E executed by Guarantor, pursuant to which Guarantor grants to Lender
a  security  interest  in all  equipment  owned by  Guarantor  as  security  for
Guarantor's obligations under the German Guaranty.

         Guaranties.   As  applied  to  Borrower  and  its   Subsidiaries,   all
guarantees,  endorsements or other contingent or surety obligations with respect
to obligations of others  whether or not reflected on the  consolidated  balance
sheet of Borrower and its  Subsidiaries,  including  any  obligation  to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other person or entity.

         Guarantor.  FiberCore  Glasfaser  Jena,  GmbH, a corporation  organized
under the laws of Germany and a wholly-owned subsidiary of Borrower.

         Hazardous Material. Any substance (i) the presence of which requires or
may hereafter  require  notification,  investigation  or  remediation  under any
Environmental  Law;  (ii) which is or becomes  defined  as a  "hazardous  waste"
"hazardous material" or "hazardous  substance" or "controlled  industrial waste"
or "pollutant" or "contaminant" under any present or future Environmental Law or
amendments thereto


                                       4.


<PAGE>



including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act  (42  U.S.C.  Section  9601 et  seq.)  and any
applicable  local statutes and the  regulations  promulgated  thereunder;  (iii)
which  is  toxic,  explosive,  corrosive,  flammable,  infectious,  radioactive,
carcinogenic,  mutagenic or otherwise  hazardous and is or becomes  regulated by
any governmental authority,  agency,  department,  commission,  board, agency or
instrumentality  of any foreign  country,  the United  States,  any state of the
United  States,  or any political  subdivision  thereof to the extent any of the
foregoing has or had  jurisdiction  over Borrower;  or (iv) without  limitation,
which contains gasoline,  diesel fuel or other petroleum  products,  asbestos or
polychlorinated biphenyls ("PCB's").

         Indebtedness.  As  applied to  Borrower  and its  Subsidiaries,  means,
without duplication,  (i) all obligations for borrowed money or other extensions
of  credit  whether  or  not  secured  or  unsecured,  absolute  or  contingent,
including, without limitation,  unmatured reimbursement obligations with respect
to letters  of credit or  guarantees  issued for the  account of or on behalf of
Borrower and its  Subsidiaries  and all  obligations  representing  the deferred
purchase price of property,  other than accounts payable arising in the ordinary
course of business,  (ii) all obligations evidenced by bonds, notes,  debentures
or other similar  instruments,  (iii) all  obligations  secured by any mortgage,
pledge,  security  interest  or other  lien on  property  owned or  acquired  by
Borrower  or any of its  Subsidiaries  whether  or not the  obligations  secured
thereby shall have been assumed,  (iv) that portion of all  obligations  arising
under  capital  leases that is required to be  capitalized  on the  consolidated
balance sheet of Borrower and its Subsidiaries, (v) all Guaranties, and (vi) all
obligations  that are  immediately  due and  payable  out of the  proceeds of or
production  from property now or hereafter  owned or acquired by Borrower or any
of its Subsidiaries.

         Interest  Expense.  As calculated on a consolidated  basis for Borrower
and its  Subsidiaries  for any  period  as at any  date of  determination,  cash
interest  expense  for  such  period   (including,   without   limitation,   all
commissions,  discounts,  fees and other  charges  under  letters  of credit and
similar instruments) classified and accounted for in accordance with GAAP.

         Interest Payment Date. The last day of each March, June,  September and
December.

         Interest Period.  A calendar quarter.

         Investment.  As applied to Borrower and its Subsidiaries,  the purchase
or acquisition of any share of capital stock, partnership interest,  evidence of
indebtedness or other equity  security of any other person or entity,  any loan,
advance or extension of credit to, or  contribution to the capital of, any other
person or entity,  any real estate held for sale or investment,  any commodities
futures  contracts  held  other  than  in  connection  with  bona  fide  hedging
transactions,  any Acquisition or commitment to make any Acquisition,  any other
investment  in any other person or entity,  and the making of any  commitment or
acquisition of any option to make an Investment.

         License.  Any copyright license,  Patent License,  trademark license or
other license of rights or interests now held or hereafter acquired by Borrower.

         Loan.  The loan made to  Borrower  by Lender  pursuant to Section II of
this Agreement.

         Loan  Documents.   This  Agreement,   the  Note,  the  Debt  Conversion
Agreement,  the Convertible  Debenture,  the Warrant,  the German Guaranty,  the
German  Security  Agreement,  the Voting  Agreement,  and any other  agreements,
documents,   financing   statements  or  instruments  executed  by  Borrower  in
connection  with  this  Agreement,  as  the  same  may  be  amended,   modified,
supplemented or renewed from time to time.



                                       5.

<PAGE>



         Long  Term  Debt.  On  a  consolidated   basis  for  Borrower  and  its
Subsidiaries,  as at any date of  determination,  all amounts  that  should,  in
accordance with GAAP, be included as long term debt on the consolidated  balance
sheet of Borrower and its Subsidiaries.

         Material  Adverse Effect.  Any set of circumstances or events which (a)
has or  could  reasonably  be  expected  to have  any  material  adverse  effect
whatsoever upon the validity or enforceability  of any Loan Document,  (b) is or
could  reasonably  be  expected  to be  material  and  adverse to the  financial
condition or business  operations  or prospects  of Borrower or  Guarantor,  (c)
materially  impairs or could  reasonably  be expected to  materially  impair the
ability of Borrower to perform timely its Obligations, (d) materially impairs or
could  reasonably be expected to  materially  impair the ability of Guarantor to
perform timely its obligations under the German Guaranty, (e) materially impairs
or could  reasonably be expected to  materially  impair the value or priority of
Lender's  security  interest  in the  collateral  (as  described  in the  German
Security Agreement) or (f) materially impairs or could reasonably be expected to
materially  impair the ability of Lender to enforce any of its  available  legal
remedies pursuant to the Loan Documents.

         Maturity Date.  November 27, 2006.

         Mission Statement.  Borrower's mission statement setforth in Exhibit H.

         Net Income. As calculated on a consolidated  basis for Borrower and its
Subsidiaries for any period as at any date of determination,  the net income (or
loss),  after  provision for taxes,  of Borrower and its  Subsidiaries  for such
period taken as a single accounting period.

         Note.  A  promissory  note of  Borrower,  substantially  in the form of
Exhibit A hereto,  evidencing  the obligation of Borrower to Lender to repay the
Loan.

         Obligations.  Any and all  obligations  of Borrower to Lender under the
Loan Documents or under the Purchase  Agreement,  of every kind and description,
direct or indirect,  absolute or  contingent,  primary or  secondary,  due or to
become due, now existing or hereafter arising, regardless of how they arise, and
including  obligations to perform acts and refrain from taking action as well as
obligations to pay money.

         Patent License. Any of the following now owned or hereafter acquired by
Borrower: any written agreement granting any right with respect to any invention
on which a Patent is in existence.

         Patents.  All of the following in which Borrower now holds or hereafter
acquires  any  interest:  (a) letters  patent of the United  States or any other
county,  all  registrations  and recordings  thereof,  and all  applications for
letters  patent of the United States or any other  country,  including,  without
limitation,  registrations,  recordings  and  applications  in the United States
Patent and  Trademark  Office or in any  similar  office or agency of the United
States, any State thereof or any other country; (b) all reissues, continuations,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals,
and patents of addition; and (d) all patents to issue in any such applications.

         PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

         Permitted Encumbrances.  See Section 6.4.


                                       6.



<PAGE>



         Person.  Any  individual,  sole  proprietorship,   partnership,   joint
venture, trust, unincorporated organization,  association,  corporation, limited
liability company,  institution,  public benefit corporation,  firm, joint stock
company, estate, entity or governmental agency.

         Plan.  At any time,  an employee  pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum  funding  standards under
Section 412 of the Code and is either (i)  maintained  by Borrower or any member
of  the  Controlled  Group  for  employees  of  Borrower  or any  member  of the
Controlled Group or (ii) if such Plan is established,  maintained  pursuant to a
collective  bargaining  agreement or any other arrangement under which more than
one  employer  makes  contributions  and to which  Borrower or any member of the
Controlled Group is then making or accruing an obligation to make  contributions
or has within the preceding five Plan years made contributions.

         Prime Rate.  The prime rate as quoted in the Wall Street Journal on the
Business Day immediately preceding the commencement of an Interest Period.

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

         Purchase Agreement.  That certain Purchase Agreement,  dated as of July
29, 1996, by and between  Lender and  Borrower,  regarding the purchase of glass
optical fiber by Lender from Borrower.

         Qualified  Investments.  As applied to Borrower  and its  Subsidiaries,
investments  in (i) notes,  bonds or other  obligations  of the United States of
America,  Germany,  or any agency  thereof  that as to  principal  and  interest
constitute  direct  obligations  of or are  guaranteed  by the United  States of
America or Germany; (ii) certificates of deposit or other deposit instruments or
accounts  of banks or trust  companies  organized  under the laws of the  United
States or any state  thereof,  or Germany,  that have  capital and surplus of at
least $100,000,000, (iii) commercial paper that is rated not less than prime-one
or A-1 or their  equivalents by Moody's  Investors  Service,  Inc. or Standard &
Poor's Corporation,  respectively,  or their successors, and (iv) any repurchase
agreement secured by any one or more of the foregoing.

         Recent ALT  Financing.  The  intercompany  loan  pursuant  to which ALT
extended a loan to Borrower in the original principal amount of $367,000.

         Subsidiary. Any corporation, association, joint stock company, business
trust or other similar  organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors or
other  governing  body of such  entity is held or  controlled  by  Borrower or a
Subsidiary of Borrower;  or any other such  organization the management of which
is directly or  indirectly  controlled  by Borrower or a Subsidiary  of Borrower
through the exercise of voting power or otherwise; or any joint venture, whether
incorporated or not, in which Borrower has a 50% ownership interest.

         Total Assets.  As calculated on a  consolidated  basis for Borrower and
its Subsidiaries as of any date of  determination,  the total assets of Borrower
and its Subsidiaries.

         Total  Liabilities.  As calculated on a consolidated basis for Borrower
and its Subsidiaries as of any date of  determination,  the total liabilities of
Borrower and its Subsidiaries.

         Voting  Agreement.  The voting agreement in  substantially  the form of
Exhibit I.



                                       7.


<PAGE>



         Warrant.  The warrant issued by Borrower to Lender in substantially the
form of Exhibit B.

         1.2 Accounting  Terms. All terms of an accounting  character shall have
the  meanings  assigned  thereto by  generally  accepted  accounting  principles
applied on a basis  consistent  with the  financial  statements  referred  to in
Section 4.6 of this Agreement,  modified to the extent,  but only to the extent,
that such meanings are specifically modified herein.


                                   SECTION II

                              DESCRIPTION OF CREDIT

         2.1  The  Term  Loan.  Subject  to the  terms  and  conditions  of this
Agreement,  Lender agrees to make a single term loan (the "Loan") to Borrower on
the  Closing  Date in an  aggregate  principal  amount  equal to the  Commitment
Amount. Amounts borrowed and repaid may not be reborrowed.

         2.2  The Note.  (a) The Loan shall be evidenced by the Note, payable to
the order of Lender and shall be due and payable in full on the  Maturity  Date.
The Note  shall be dated the  Closing  Date and shall  have the  blanks  therein
appropriately completed.

                  (b)  Lender  may enter in its  records  appropriate  notations
evidencing  the date and the  amount of the Loan and the date and amount of each
payment of principal made by Borrower with respect  thereto;  and in the absence
of manifest error, such notations shall constitute  conclusive evidence thereof.
No  failure  on the part of  Lender to make any  notation  as  provided  in this
subsection  (b) shall in any way affect any Loan or the rights or obligations of
Lender or Borrower with respect thereto.

         2.3 Interest Rates and Payments of Interest; Payments of Principal. (a)
The Loan shall bear interest on the  outstanding  principal  amount thereof at a
rate per annum initially equal to _______%; thereafter, on the first day of each
Interest  Period,  the interest  rate shall be adjusted to a fixed rate for such
Interest  Period  equal  to the  Prime  Rate  (as  quoted  on the  Business  Day
immediately preceding the commencement of such Interest Period) plus one percent
(1%).  Such  interest  shall be due and  payable  quarterly  in  arrears on each
Interest Payment Date and when such Loan is due (whether at maturity,  by reason
of acceleration or otherwise);  provided, however, that so long as no Default or
Event of Default has occurred and is  continuing,  (i) on each Interest  Payment
Date prior to  September  30,  2001,  the accrued and unpaid  interest  for such
Interest Period shall be added to principal and thereafter interest shall accrue
on such amount and (ii) on each Interest  Payment Date on or after September 30,
2001, the accrued  interest for such Interest Period shall be due and payable to
Lender in immediately available funds.

         2.4 Use of  Proceeds.  Lender  shall  advance the  proceeds of the Loan
directly  to  Guarantor's  deposit  account  with  Berliner  Bank,  as a capital
contribution from Borrower to Guarantor. DM 3,850,000 of the Loan proceeds shall
be held by Berliner Bank as collateral (the "Cash  Collateral") for the Berliner
Bank  Loan  and the  balance  will be used  (i) to  reimburse  Borrower  for its
corporate  allocation  in  accordance  with the 1996 annual  budget  approved by
Borrower's  board of directors and (ii) to prepay  indebtedness  owing to ALT in
connection with the Recent ALT Financing in an amount not to exceed $367,000.

         2.5 Voluntary  Prepayment of the Loan. Borrower may prepay the Loan, in
whole or in part,  at any time,  without  premium or  penalty,  upon thirty (30)
day's prior  written  notice to Lender.  Any interest  accrued on the amounts so
prepaid  to the  date of such  payment  must  be  paid at the  time of any  such
payment.


                                       8.


<PAGE>



         2.6 Mandatory Prepayment of the Loan. Borrower shall prepay the Loan in
full,  together with all accrued interest,  upon the earlier of (i) the Maturity
Date,  (ii) the  repayment of the Berliner  Bank Loan,  (iii) the release of the
Cash Collateral by the Berliner Bank, and (iv) acceleration of the Loan pursuant
to Section 8.2.

         2.7 Method of Payment.  All payments and  prepayments  of principal and
all  payments of  interest  shall be made by Borrower to Lender at its office in
immediately  available funds, on or before 1:00 p.m.  (Pennsylvania time) on the
due date  thereof,  without  set off and free and  clear  of,  and  without  any
deduction  or  withholding  for,  any  taxes  or  other  payments  of  any  kind
whatsoever.

         2.8 Overdue Payments. Overdue principal (whether at maturity, by reason
of acceleration  or otherwise)  and, to the extent  permitted by applicable law,
overdue  interest and fees or any other amounts  payable  hereunder or under the
Note shall bear  interest  from and  including  the due date thereof until paid,
payable  on  demand,  at a rate  per  annum  equal to 2%  above  the  rate  then
applicable to Loan.

         2.9  Computation  of Interest  and Fees.  Interest and all fees payable
hereunder  shall be  computed  daily on the basis of a year of 360 days and paid
for the actual  number of days for which due. If the due date for any payment of
principal is extended by operation  of law,  interest  shall be payable for such
extended time. If any payment  required by this  Agreement  becomes due on a day
that is not a  Business  Day such  payment  may be made on the  next  succeeding
Business  Day,  and such  extension,  if taken,  shall be included in  computing
interest in connection with such payment.

         2.10 Maximum  Interest.  Notwithstanding  any provision to the contrary
herein contained,  Lender shall not collect a rate of interest on any obligation
or  liability  due and owing by  Borrower  to  Lender  in excess of the  maximum
contract rate of interest  permitted by applicable law. Lender and Borrower have
agreed  that  the  interest  laws of the  State  of New York  shall  govern  the
relationship  between  them,  but in the  event of a final  adjudication  to the
contrary,  Borrower  shall be obligated  to pay to Lender only such  interest as
then shall be  permitted  by the laws of the state found to govern the  contract
relationship  between Lender and Borrower.  All interest found in excess of that
rate of  interest  allowed  and  collected  by Lender  shall be  applied  to the
principal  balance in such manner as to prevent the  payment and  collection  of
interest in excess of the rate permitted by applicable law.

                                   SECTION III

                               CONDITIONS OF LOAN

         3.1 Conditions  Precedent to Loan. The obligation of Lender to make its
initial  Loan is subject  to the  condition  precedent  that  Lender  shall have
received,  in form and  substance  satisfactory  to Lender and its counsel,  the
following:

             (a) this Agreement and the Note, duly executed by Borrower;

             (b) the Warrant, duly executed by Borrower in favor of Lender;

             (c) the Voting  Agreement,  duly  executed  by each of the  parties
thereto;

             (d) the Purchase  Agreement,  duly  executed by each of the parties
thereto;



                                       9.


<PAGE>



             (e) the German  Guaranty and the German  Security  Agreement,  duly
executed by each of the parties thereto;

             (f) evidence that  $3,000,000 of the principal  amount  outstanding
under the  Existing  Loan  Documents  plus  accrued  interest  thereon  has been
converted into shares of Common Stock at the rate of $1.15762 per share pursuant
to the terms of the Debt Conversion Agreement.

             (g) copies of the  documentation  evidencing the Berliner Bank Loan
and the German Government  Grant,  including (i) evidence that both the Berliner
Bank Loan and the German  Government Grant have funded,  will fund  concurrently
with the Loan from Lender, or are available to Borrower without the satisfaction
of any  further  conditions,  and  (ii)  verification  that  Lender  has a first
priority  perfected security  interest,  or substantial  equivalent under German
law, senior to both the Berliner Bank and the German  government,  in Collateral
having a book value  equal to or  exceeding  125% of the  aggregate  outstanding
principal amount of the Loan.

             (h) a  certificate  of the  Secretary or an Assistant  Secretary of
Borrower with respect to resolutions of the Board of Directors  authorizing  the
execution and delivery of this Agreement, the Note, and each other Loan Document
to which  Borrower is a party,  and  identifying  the  officer(s)  authorized to
execute,  deliver and take all other actions  required  under this Agreement and
the other Loan Documents, and providing specimen signatures of such officers;

             (i) a certificate of the Secretary or an Assistant Secretary of the
Guarantor with respect to resolutions of the Board of Directors  authorizing the
execution and delivery of the German Guaranty and the German Security  Agreement
and identifying the officer(s) authorized to execute, deliver and take all other
actions  required under the German Guaranty and the German  Security  Agreement,
and providing specimen signatures of such officers;

             (j) a copy of the  articles of  incorporation  of Borrower  and all
amendments  and  supplements  thereto,  filed with the Secretary of State of the
State of Nevada, each certified by the Nevada Secretary of State as being a true
and correct copy thereof;

             (k) the  Bylaws of  Borrower  and all  amendments  and  supplements
thereto,  certified by the  Secretary or an Assistant  Secretary as being a true
and correct copy thereof;

             (l) a  certificate  of the Secretary of State of Nevada as to legal
existence and good standing of Borrower in such State;

             (m) a certificate of the Secretary of State of  Massachusetts as to
good standing of Borrower in such State;

             (n) a certificate  of the State of Nevada and  Massachusetts  state
taxing authorities as to the tax good standing of Borrower;

             (o) an opinion addressed to it from Coleman & Rhine LLP, counsel to
Borrower, substantially in the form of Exhibit F-1 hereto;

             (p) an opinion  addressed  to it from  Rechtsanwalte  Hartmann  und
Partner,  special  German  counsel to  Guarantor,  substantially  in the form of
Exhibit F-2 hereto;


                                      10.



<PAGE>



             (q) such other documents,  and completion of such other matters, as
counsel for Lender may deem necessary or appropriate; and

             (r) the  representations  and  warranties  contained  in Section IV
shall be true and accurate in all material respects on and as of the date hereof
(except to the extent that such  representations and warranties expressly relate
to an earlier date),  and no Default shall have occurred and be  continuing,  or
would result from such Loan.


                                   SECTION IV

                   REPRESENTATIONS AND WARRANTIES OF BORROWER

         In order to induce Lender to enter into this  Agreement and to make the
Loan hereunder, Borrower represents and warrants to Lender that:

         4.1   Organization  and   Qualification.   Borrower  and  each  of  its
Subsidiaries (a) is a corporation  duly organized,  validly existing and in good
standing  under  the  laws of its  jurisdiction  of  incorporation,  (b) has all
requisite  corporate  power to own its  property and conduct its business as now
conducted and as presently  contemplated  and (c) is duly  qualified and in good
standing as a foreign  corporation and is duly authorized to do business in each
jurisdiction  where the  nature of its  properties  or  business  requires  such
qualification,  except  where the  failure to be so  qualified  would not have a
Material Adverse Effect.

         4.2 Corporate Authority. (a) The execution, delivery and performance of
this  Agreement,  the Note,  and each other Loan Document to which Borrower is a
party and the  transactions  contemplated  hereby are within the corporate power
and authority of Borrower and have been  authorized  by all necessary  corporate
proceedings,  and do not and will not (i) require any consent or approval of the
stockholders of Borrower other than what has been obtained,  (ii) contravene any
provision of the charter  documents  or by-laws of Borrower or any law,  rule or
regulation  applicable  to  Borrower,  (iii)  contravene  any  provision  of, or
constitute an event of default or event that, but for the requirement  that time
elapse or notice be given, or both,  would constitute an event of default under,
any other agreement, instrument, order or undertaking binding on Borrower, other
than such as have been  waived  in  writing  or (iv)  result in or  require  the
imposition  of any  Encumbrance  on any of the  properties,  assets or rights of
Borrower other than Permitted Encumbrances.

         (b) The execution, delivery and performance of the German Guaranty, the
German Security Agreement,  and each other Loan Document to which Guarantor is a
party and the  transactions  contemplated  hereby are within the corporate power
and authority of Guarantor and have been  authorized by all necessary  corporate
proceedings,  and do not and will not (i) require any consent or approval of the
stockholders of Borrower other than what has been obtained,  (ii) contravene any
provision of the charter  documents or by-laws of Guarantor or any law,  rule or
regulation  applicable  to  Guarantor,  (iii)  contravene  any  provision of, or
constitute an event of default or event that, but for the requirement  that time
elapse or notice be given, or both,  would constitute an event of default under,
any other  agreement,  instrument,  order or  undertaking  binding on Guarantor,
other than such as have been  waived in writing or (iv) result in or require the
imposition  of any  Encumbrance  on any of the  properties,  assets or rights of
Guarantor other than Permitted Encumbrances.



                                      11.


<PAGE>



         4.3 Valid  Obligations.  This Agreement,  the Note, and each other Loan
Document to which Borrower or Guarantor is a party,  and all of their respective
terms and  provisions are the legal,  valid and binding  obligations of Borrower
and Guarantor,  respectively,  enforceable in accordance  with their  respective
terms except as limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally,  and except
as the remedy of specific  performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.

         4.4 Consents or Approvals.  The execution,  delivery and performance of
this  Agreement,  the Note, and each other Loan Document,  and the  transactions
contemplated  herein do not  require  any  approval  or consent of, or filing or
registration  with, any governmental or other agency or authority,  or any other
party, other than such consents as have been obtained in writing.

         4.5 Title to Properties; Absence of Encumbrances.  Each of Borrower and
its Subsidiaries has good and marketable title to all of the Collateral, and all
of the  properties,  assets and rights of every name and nature now purported to
be owned by it,  including,  without  limitation,  such  properties,  assets and
rights as are reflected in the financial  statements  referred to in Section 4.6
(except  such  properties,  assets or rights  as have  been  disposed  of in the
ordinary course of business since the date thereof),  free from all Encumbrances
except Permitted  Encumbrances or those  Encumbrances  disclosed in Schedule 4.5
hereto,  and, except as so disclosed,  free from all defects of title that might
have a Material Adverse Effect.

         4.6 Financial  Statements.  Borrower has heretofore delivered to Lender
its  audited  consolidated  balance  sheet  as of  December  31,  1995,  and its
consolidated statements of income, changes in stockholders' equity and cash flow
for the Fiscal  Year then  ended,  and  related  footnotes.  All such  financial
statements  were  prepared in  accordance  with  generally  accepted  accounting
principles  applied on a consistent basis  throughout the periods  specified and
present  fairly the financial  position of Borrower and its  Subsidiaries  as of
such date and the results of the operations of Borrower and its Subsidiaries for
such period. There are no liabilities, contingent or otherwise, not disclosed in
such financial statements that involve a material amount.

         4.7 Changes.  Since the date of the financial statements referred to in
Section 4.6, there have been no changes in the properties,  operations, profits,
assets, liabilities,  financial condition,  business or prospects of Borrower or
any of its  Subsidiaries  other than changes in the ordinary course of business,
the effect of which has not, in the aggregate, had a Material Adverse Effect.

         4.8  Defaults.  Except as disclosed in Schedule  4.8, as of the date of
this Agreement, no Default exists.

         4.9 Taxes.  Borrower and each Subsidiary have filed all federal,  state
and other tax  returns  or  extensions  required  to be  filed,  and all  taxes,
assessments and other governmental charges due from Borrower and each Subsidiary
have been fully paid.  Borrower and each  Subsidiary  have  established on their
books  reserves  adequate  for the payment of all  federal,  state and other tax
liabilities.

         4.10 Litigation.  Except as set forth on Schedule 4.10 hereto, there is
no litigation,  arbitration,  proceeding or  investigation  pending,  or, to the
knowledge  of  Borrower's  or any  Subsidiary's  officers,  threatened,  against
Borrower or any  Subsidiary  that,  if adversely  determined,  could result in a
material  judgment not fully covered by insurance,  could result in a forfeiture
of all or any substantial part of the property of Borrower or its  Subsidiaries,
or could otherwise have a Material Adverse Effect.



                                      12.


<PAGE>



         4.11  Subsidiaries.   As  of  the  date  of  this  Agreement,  all  the
Subsidiaries  of Borrower  are listed on  Schedule  4.11  hereto.  Borrower or a
Subsidiary  of  Borrower  is  the  owner,  free  and  clear  of  all  liens  and
encumbrances, of all of the issued and outstanding stock of each Subsidiary.

         4.12 Compliance with ERISA.  Borrower and each member of the Controlled
Group have fulfilled their  obligations  under the minimum funding  standards of
ERISA  and the Code  with  respect  to each  Plan and are in  compliance  in all
material respects with the applicable provisions of ERISA and the Code, and have
not incurred any liability to the PBGC or a Plan under Title IV of ERISA; and no
"prohibited  transaction"  or  "reportable  event" (as such terms are defined in
ERISA) has occurred with respect to any Plan.

         4.13 Environmental  Matters.  (a) Borrower and each of its Subsidiaries
have obtained all permits,  licenses and other authorizations which are required
under all  Environmental  Laws,  except to the  extent  failure to have any such
permit,  license  or  authorization  would not have a Material  Adverse  Effect.
Borrower  and each of its  Subsidiaries  are in  compliance  with the  terms and
conditions of all such  permits,  licenses and  authorizations,  and are also in
compliance  with all other  limitations,  restrictions,  conditions,  standards,
prohibitions,  requirements,  obligations, schedules and timetables contained in
any  applicable  Environmental  Law or in any  regulation,  code,  plan,  order,
decree,  judgment,   injunction,   notice  or  demand  letter  issued,  entered,
promulgated or approved thereunder, except to the extent failure to comply would
not have a Material Adverse Effect.

                  (b) No notice, notification,  demand, request for information,
citation,  summons or order has been  issued,  no complaint  has been filed,  no
penalty  has  been  assessed  and no  investigation  or  review  is  pending  or
threatened  by any  governmental  or other  entity  with  respect to any alleged
failure by Borrower or any of its  Subsidiaries  to have any permit,  license or
authorization  required in  connection  with the conduct of its business or with
respect to any Environmental Laws, including, without limitation,  Environmental
Laws relating to the generation, treatment, storage, recycling,  transportation,
disposal or release of any Hazardous Materials.

                  (c) Neither Borrower nor any of its  Subsidiaries  nor, to the
best knowledge of Borrower, any previous owner, tenant,  occupant or user of any
property owned,  leased or used by Borrower or any of its  Subsidiaries  has (i)
engaged  in or  permitted  any  operations  or  activities  upon  or any  use or
occupancy of such property, or any portion thereof, for the purpose of or in any
way involving the handling,  manufacture,  treatment,  storage, use, generation,
release,  discharge,  refining,  dumping or disposal  (whether legal or illegal,
accidental or  intentional)  of any Hazardous  Materials on, under,  in or about
such property,  except to the extent  commonly used in day-to-day  operations of
such property and in such case only in compliance with all  Environmental  Laws,
or (ii)  transported  any  Hazardous  Materials to, from or across such property
except to the extent  commonly  used in  day-to-day  operations of such property
and, in such case, in compliance with, all  Environmental  Laws; nor to the best
knowledge  of  Borrower  have  any  Hazardous   Materials  migrated  from  other
properties upon,  about or beneath such property,  nor, to the best knowledge of
Borrower, are any Hazardous Materials presently constructed,  deposited,  stored
or otherwise  located on, under,  in or about such property except to the extent
commonly  used in  day-to-day  operations of such property and, in such case, in
compliance with, all Environmental Laws.

         4.14 Trademarks, Patents, Copyrights and Licenses. Each of Borrower and
Guarantor  possesses  and owns all  necessary  trademarks,  trademark  licenses,
copyrights,  copyright licenses, Patents, and Patent Licenses which are material
to the conduct of its business as now operated. Schedule 4.14



                                      13.

<PAGE>



contains  a true  and  complete  list  of all  trademarks,  trademark  licenses,
copyrights,  copyright licenses,  Patents, and Patent Licenses in which Borrower
or Guarantor has any right, title or interest.

         4.15 Name;  Location  of Chief  Executive  Office,  Principal  Place of
Business and Collateral.  Except as disclosed in Schedule 4.15, neither Borrower
nor Guarantor has done business  under any name other than that specified on the
signature  page  hereof or the  German  Guaranty,  as the case may be. The chief
executive office,  principal place of business, and the place where Borrower and
Guarantor  maintains their records  concerning the collateral (as defined in the
German  Security  Agreement,  the  "Collateral")  are  presently  located at the
addresses set forth on Schedule 4.15. The Collateral is presently located at the
addresses set forth on Schedule 4.15.

         4.16     Capitalization.

                  (a) The  authorized  capital  stock of  Borrower  consists  of
100,000,000  shares of Common Stock, of which  31,310,284  shares are issued and
outstanding.  Attached  hereto as Exhibit J is a copy of Borrower's  shareholder
list which  contain a true and correct  list of all holders of 2% or more of the
equity  securities  of Borrower on a fully  diluted  basis  (including,  without
limitation, all convertible debt, options, and warrants and other securities) of
Borrower  on the date of this  Agreement.  Of the  outstanding  shares of Common
Stock, no shares were subject to vesting restrictions,  as of November 27, 1996,
pursuant to  employee  stock  purchase  agreements  entered  into by and between
Borrower and various employees of Borrower.  Borrower has reserved 1,727,683 and
1,382,648   shares  of  its  Common  Stock  for  issuance  upon   conversion  of
Indebtedness  under the  Existing  Loan  Documents  and exercise of the Warrant,
respectively.  All issued and outstanding shares of capital stock have been duly
authorized and validly issued,  are fully paid and  nonassessable  and have been
issued in compliance  with  applicable  federal and state  securities  laws. The
Warrant,  when issued in accordance with the terms of this  Agreement,  shall be
duly and  validly  issued,  and the shares of Common  Stock  issuable  under the
Warrant,  when  issued  in  accordance  with the terms of the  Warrant  and this
Agreement,   shall  be  duly   authorized,   validly  issued,   fully  paid  and
nonassessable.

                  (b) Except as set forth in this  Agreement  and the  schedules
hereto, there are no options, warrants, conversion privileges or rights, written
or oral,  presently  outstanding to purchase or otherwise acquire any authorized
but unissued shares of Borrower's capital stock or other securities of Borrower.

                                    SECTION V

                              AFFIRMATIVE COVENANTS

         So long as any Loan or other Obligation under the Loan Documents (other
than the  Convertible  Debenture  and the  Debt  Conversion  Agreement)  remains
outstanding, Borrower covenants as follows:

         5.1 Financial  Statements and other  Reporting  Requirements.  Borrower
shall furnish to Lender:

                  (a) as soon as available to Borrower,  but in any event within
one  hundred  and  twenty  (120)  days  after  the end of each  Fiscal  Year,  a
consolidated  and  consolidating  balance  sheet as of the end of, and a related
consolidated  and  consolidating  statement of income,  changes in stockholders'
equity and cash flow for,  such year,  audited and  certified by Mottle  McGrath
Braney & Flynn, PC (or other


                                       14.


<PAGE>



independent certified public accountants reasonably acceptable to Lender) in the
case of such  consolidated  statements,  and  certified  by the chief  financial
officer in the case of such consolidating statements;

                  (b) as soon as available to Borrower,  but in any event within
forty-five  (45) days  after the end of each  quarter,  except  the last  fiscal
quarter  of the fiscal  year  which  shall be within 120 days of the end of such
quarter, a consolidated and consolidating  balance sheet as of the end of, and a
related consolidated and consolidating  statement of income for, the period then
ended,  certified  by the chief  financial  officer  of  Borrower  but  subject,
however,  to  normal,  recurring  year-end  adjustments  that  shall  not in the
aggregate be material in amount;

                  (c) as soon as available to Borrower,  but in any event within
forty-five  (45) days after the end of each month,  except the last month of the
fiscal  year  which  shall  be  within  120  days of the end of  such  month,  a
consolidated  and  consolidating  balance  sheet as of the end of, and a related
consolidated and consolidating  statement of income and cashflow for, the period
then ended,  certified by the chief  financial  officer of Borrower but subject,
however,  to  normal,  recurring  year-end  adjustments  that  shall  not in the
aggregate be material in amount;

                  (d)  together  with  each  delivery  of  financial  statements
pursuant to Section 5.1(a) or (b), a certificate of the chief financial  officer
in the form of Exhibit G:

                           (i) stating that to such officer's  knowledge,  based
on a  reasonable  examination  sufficient  to  enable  him to make  an  informed
statement,  no Default or Event of Default exists,  or, if such is not the case,
specifying  such  Default or Event of Default and its nature,  when it occurred,
whether it is continuing and the steps being taken by such Borrower with respect
to such Default or Event of Default;

                           (ii)  setting  forth  as at the  end of  such  Fiscal
Quarter  or  Fiscal  Year,  as the case may be,  the  calculations  required  to
establish  whether or not such  Borrower was in  compliance  with the  financial
covenants applicable to it set forth in Section VII hereof as at the end of each
respective period; and

                           (iii) stating that to such officer's  knowledge,  all
representations  and  warranties  contained in this Agreement and the other Loan
Documents  are true,  correct and  complete in all material  respects  except as
otherwise disclosed therein; that neither Borrower nor Guarantor is in violation
of  any of the  covenants  contained  in  this  Agreement  and  the  other  Loan
Documents.

                  (e) as soon as available to Borrower,  but in any event within
forty-five (45) days after the end of each Fiscal Year, the annual  forecasts of
Borrower,  including three-year projections broken down by quarter for the first
of the three years;  as soon as available  to  Borrower,  any  revisions to such
forecasts;

                  (f) as soon as  available  to  Borrower,  but in any  event no
later than  December 1 of each Fiscal Year,  the annual  budget of Borrower;  as
soon as available to Borrower, any revisions to such annual budget;

                  (g) as soon as available to Borrower,  but in any event within
forty-five (45) days after the end of each quarter,  a summary of changes in the
capital  structure  and, as soon as available to Borrower  after the end of each
month where there are material  changes to the capital  structure,  a summary of
any such changes;



                                      15.


<PAGE>



                  (h) promptly after the receipt thereof by Borrower,  copies of
any  reports  submitted  to  Borrower  by  independent   public  accountants  in
connection  with any interim  review of the  accounts  of Borrower  made by such
accountants;

                  (i) promptly after the same are available, copies of all Board
of Directors  meeting  packages,  proxy  statements,  financial  statements  and
reports as Borrower shall send to its directors or  stockholders  or as Borrower
may  file  with the  Securities  and  Exchange  Commission  or any  governmental
authority at any time having jurisdiction over Borrower or its Subsidiaries;

                  (j) if and when  Borrower  gives or is required to give notice
to the PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that any member of the Controlled Group or the
plan  administrator  of any Plan has given or is  required to give notice of any
such Reportable  Event, a copy of the notice of such  Reportable  Event given or
required to be given to the PBGC;

                  (k)  promptly  upon  becoming  aware of the  existence  of any
condition or event that constitutes a Default, written notice thereof specifying
the nature and  duration  thereof  and the action  being or proposed to be taken
with respect thereto;

                  (l) promptly upon becoming  aware of any  litigation or of any
investigative  proceedings  by a governmental  agency or authority  commenced or
threatened in writing  against  Borrower or any of its  Subsidiaries of which it
has notice,  the outcome of which might  reasonably  have a  materially  adverse
effect on the assets,  business  or  prospects  of Borrower or Borrower  and its
Subsidiaries  on a  consolidated  basis,  written  notice thereof and the action
being or proposed to be taken with respect thereto;

                  (m)  promptly  upon  becoming   aware  of  any   investigative
proceedings  by a  governmental  agency or  authority  commenced  or  threatened
against Borrower or any of its Subsidiaries regarding any potential violation of
Environmental Laws or any spill, release, discharge or disposal of any Hazardous
Material,  written  notice  thereof and the action being or proposed to be taken
with respect thereto;

                  (n)  from  time  to  time,   such  other  financial  data  and
information about Borrower or its Subsidiaries as Lender may reasonably request;
and

                  (o) upon Lender's  request,  and no less  frequently than once
per  calendar  quarter,  deliver  to  Lender  an  updated  list of all  Patents,
trademarks,  copyrights and licenses not previously disclosed to Lender in which
Borrower then has any right, title or interest.

         5.2  Conduct of Business.  Each of Borrower and its Subsidiaries shall:

                  (a) duly observe and comply in all material  respects with all
applicable laws and valid requirements of any governmental  authorities relative
to its  corporate  existence,  rights  and  franchises,  to the  conduct  of its
business  and to its property  and assets,  and shall  maintain and keep in full
force and effect all licenses and permits  necessary in any material  respect to
the proper conduct of its business;

                  (b) maintain its corporate existence; and

                  (c)  remain  engaged  substantially  in  the  business  of the
manufacture of optical fiber,  pre-forms,  and monitoring  systems and ancillary
products.



                                      16.

<PAGE>



         5.3  Maintenance  and  Insurance.  Except as provided in Schedule  5.3,
Borrower and each of its  Subsidiaries  shall  maintain the  Collateral  and its
properties  in good  repair,  working  order and  condition  as required for the
normal conduct of its business.  Borrower and each of its Subsidiaries  shall at
all times maintain  liability and casualty  insurance with financially sound and
reputable  insurers in such  amounts as the officers of Borrower in the exercise
of their  reasonable  judgment  deem to be adequate.  In the event of failure to
provide and maintain  insurance as herein  provided,  Lender may, at its option,
provide such  insurance and charge the amount thereof to the account of Borrower
or any of its  Subsidiaries  with  Lender.  Borrower  shall  furnish  to  Lender
certificates  or other evidence  satisfactory  to Lender of compliance  with the
foregoing insurance provisions.

         5.4  Taxes.  Borrower  shall  pay  or  cause  to  be  paid  all  taxes,
assessments or governmental  charges on or against it or any of its Subsidiaries
or its or  their  properties  on or  prior to the time  when  they  become  due;
provided  that this  covenant  shall not apply to any tax,  assessment or charge
that is being  contested  in good  faith  by  appropriate  proceedings  and with
respect  to  which  adequate  reserves  have  been  established  and  are  being
maintained in accordance  with generally  accepted  accounting  principles if no
lien shall have been filed to secure such tax, assessment or charge.

         5.5  Inspection  by  Lender.   Borrower  shall  permit  Lender  or  its
designees, at any reasonable time and reasonable frequency,  and upon reasonable
notice (or if a Default shall have occurred and is  continuing,  at any time and
without prior  notice),  to (i) visit and inspect the properties of Borrower and
its  Subsidiaries,  (ii) examine and make copies of and take  abstracts from the
books and records of  Borrower  and its  Subsidiaries,  (iii)  conduct  periodic
audits of the Collateral, and (iv) discuss the affairs, finances and accounts of
Borrower and its Subsidiaries  with their  appropriate  officers,  employees and
accountants.  In handling such information Lender shall exercise the same degree
of care that it exercises with respect to its own proprietary information of the
same types to maintain the confidentiality of any non-public information thereby
received or received  pursuant to Sections  5.1 except that  disclosure  of such
information  may be made (i) to the  subsidiaries of Lender or AMP Affiliates in
connection with their present or prospective  business  relations with Borrower,
(ii) to  prospective  transferees,  assignees  or  purchasers,  permitted  under
Section 9.8, of an interest in the Loan who execute a confidentiality  agreement
reasonably  acceptable  to Borrower,  and (iii) as required by law,  regulation,
rule or order, subpoena, judicial order or similar order.

         5.6  Maintenance  of  Books  and  Records.  Each  of  Borrower  and its
Subsidiaries shall keep adequate books and records of account, in which true and
complete  entries will be made  reflecting  all of its  business  and  financial
transactions,  and  such  entries  will  be made in  accordance  with  generally
accepted accounting principles consistently applied and applicable law.

         5.7  ALT.  If ALT  does not  remain  cash  neutral  to  Borrower  on an
operating basis,  Borrower will look to divest ALT in a commercially  reasonable
manner.

         5.8  Composition of Board of Directors.  Borrower's  Board of Directors
shall consist of seven directors,  (a) three of whom shall be "inside" directors
nominated by the current  board of  directors  of Borrower  and who,  initially,
shall be Dr. Mohd Aslami,  Mr. Chuck DeLuca,  and Mr. Hans  Moeller,  (b) one of
whom shall be nominated by Lender,  and (c) three of whom shall be designated as
"outside"  directors  (i.e.  directors who are not members of the  management of
Borrower or any  affiliate of Borrower)  nominated  and  acceptable to the other
four,  one of whom shall be M.  Mahud  Awan,  all to be  elected  by  Borrower's
shareholders.  Borrower  shall hold  meetings of its Board of  Directors no less
frequently than quarterly and shall distribute to each director promptly, and in
any event within three (3) weeks after the date of each  meeting,  copies of the
minutes of such meeting and of any reports or other materials


                                      17.


<PAGE>



distributed  at such meeting to the  directors.  Mr. Steven  Phillips may attend
meetings of the Board of Directors in an advisory capacity.

         5.9 Proceeds of Berliner  Bank Loan.  The proceeds of the Berliner Bank
Loan shall be used to purchase not less than  $2,000,000 of upgrades to existing
equipment  or  additional  equipment,  upon  which  Lender  shall  have a  first
priority,  perfected security interest,  except to the extent that Lender agrees
to subordinate its security interest pursuant to the terms and conditions of the
German Security Agreement.

         5.10 Post-closing covenant.  Within ten calendar days after the Closing
Date,  Borrower shall provide Lender with an English  translation of the list of
Collateral.

         5.11  Further  Assurances.  At any time and from time to time  Borrower
shall,  and shall cause each of its  Subsidiaries  to,  execute and deliver such
further  instruments and take such further action as may reasonably be requested
by Lender to effect the purposes of this Agreement, the Note, and the other Loan
Documents,  including without limitation,  to establish and maintain a perfected
first priority security interest in the Collateral.


                                   SECTION VI

                               NEGATIVE COVENANTS

         So long as the Loan or any other  Obligation  under the Loan  Documents
(other than the Convertible Debenture and the Debt Conversion Agreement) remains
outstanding, Borrower covenants as follows:

         6.1  Indebtedness.  Neither Borrower nor any of its Subsidiaries  shall
create,  incur,  assume,  guarantee  or be or remain  liable with respect to any
Indebtedness other than the following:

                  (a)  Indebtedness  of Borrower or any of its  Subsidiaries  to
Lender or any AMP Affiliate;

                  (b) Indebtedness existing as of the date of this Agreement and
specifically  disclosed  on Schedule 4.5 hereto or in the  financial  statements
referred to in Section 4.6;

                  (c) Indebtedness secured by Permitted Encumbrances; and

                  (d) other  Indebtedness of Borrower or any of its Subsidiaries
consistent with Borrower's  Mission Statement and which does not have a Material
Adverse Effect.

         6.2   Contingent   Liabilities.   Neither   Borrower  nor  any  of  its
Subsidiaries  shall  create,  incur,  assume,  guarantee  or remain  liable with
respect to any Guaranties other than the following:

                  (a) Guaranties in favor of Lender or any of its affiliates;

                  (b)  Guaranties  existing  on the date of this  Agreement  and
disclosed on Schedule 4.5 hereto or in the financial  statements  referred to in
Section 4.6;

                  (c) Guaranties  resulting  from the  endorsement of negotiable
instruments for collection in the ordinary course of business; and


                                      18.


<PAGE>



                  (d) Guaranties with respect to surety,  appeal performance and
return-of-money and other similar obligations incurred in the ordinary course of
business  (exclusive of  obligations  for the payment of borrowed money or which
are consistent with Borrower's Mission Statement) not exceeding in the aggregate
at any time $100,000.

         6.3 Sale and Leaseback.  Neither  Borrower nor any of its  Subsidiaries
shall enter into any arrangement,  directly or indirectly, whereby it shall sell
or transfer all or substantially all property owned by it in order to lease such
property or lease other property that Borrower or any such Subsidiary intends to
use  for   substantially  the  same  purpose  as  the  property  being  sold  or
transferred.

         6.4  Encumbrances.  Neither Borrower nor any of its Subsidiaries  shall
create,  incur,  assume  or  suffer  to exist  any  mortgage,  pledge,  security
interest,  lien or other charge or  encumbrance,  including the lien or retained
security  title  of a  conditional  vendor  upon or with  respect  to any of its
property or assets ("Encumbrances"),  or assign or otherwise convey any right to
receive  income,  including the sale or discount of accounts  receivable with or
without recourse, except the following ("Permitted Encumbrances"):

                  (a) Encumbrances in favor of Lender or any of its affiliates;

                  (b) Encumbrances existing as of the date of this Agreement and
specifically disclosed in Schedule 4.5 hereto;

                  (c) liens for taxes, fees,  assessments and other governmental
charges  to the  extent  that  payment  of the same may be  postponed  or is not
required in accordance with the provisions of Section 5.4;

                  (d)  landlords'  and lessors'  liens in respect of rent not in
default or liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds  incidental to litigation;
mechanics',  laborers' and  materialmen's  and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance of
bids,  tenders,  contracts (other than for the payment of money);  and statutory
obligations  incidental  to the conduct of its  business  and that do not in the
aggregate materially detract from the value of its property or materially impair
the use thereof in the operation of its business;

                  (e) judgment liens that shall not have been in existence for a
period longer than 30 days after the creation thereof or, if a stay of execution
shall have been obtained,  for a period longer than 30 days after the expiration
of such stay;

                  (f) rights of lessors under capital leases;

                  (g)  Subordinated  Liens  on  the  Collateral  to  the  extent
permitted under the German Security Agreement;

                  (h) Encumbrances in respect of any purchase money  obligations
for tangible  property  used in its  business  that at any time shall not exceed
$100,000  in  the  aggregate  unless  otherwise   consistent  with  the  Mission
Statement,  provided  that  any  such  Encumbrances  shall  not  extend  to  the
Collateral  or to property  and assets of Borrower  or any such  Subsidiary  not
financed by such a purchase money obligation; and



                                      19.


<PAGE>



                  (i) easements,  rights of way,  restrictions and other similar
charges or  Encumbrances  relating to real  property  and not  interfering  in a
material way with the ordinary conduct of its business.

         6.5 Merger;  Consolidation;  Sale or Lease of Assets; Change in Line of
Business.  Neither  Borrower nor any of its  Subsidiaries  shall sell,  lease or
otherwise dispose of assets or properties,  other than sales of inventory in the
ordinary  course  of  business  and  sales of worn and  obsolete  equipment;  or
liquidate,  merge  or  consolidate  into or with any  other  person  or  entity,
provided that any  Subsidiary of Borrower,  other than  Guarantor,  may merge or
consolidate  into or  with  (i)  Borrower  if no  Default  has  occurred  and is
continuing  or would  result from such  merger and if Borrower is the  surviving
company,  or (ii) any other wholly-owned  Subsidiary of Borrower;  or change its
line of business in any material respect from that set forth in Section 5.2(c).

         6.6 Equity  Distributions.  Borrower shall not pay any dividends on any
class of its capital stock or make any other  distribution or payment on account
of or in redemption, retirement or purchase of such capital stock; provided that
this Section shall not apply to (i) the issuance,  delivery or  distribution  by
Borrower of shares of its common stock pro rata to its existing shareholders and
(ii) the  purchase or  redemption  by  Borrower  of its  capital  stock with the
proceeds of the issuance of additional shares of capital stock.

         6.7 Investments.  Neither  Borrower nor any of its  Subsidiaries  shall
make or  maintain  any  Investments  other  than  (i)  existing  Investments  in
Subsidiaries,  (ii)  Qualified  Investments,  or  (iii)  Investments  which  are
consistent  with Borrower's  Mission  Statement and which do not have a Material
Adverse Effect.

         6.8 Capital Expenditures.  Neither Borrower nor any of its Subsidiaries
shall make or incur any Capital Expenditures in any Fiscal Year in excess of the
amount  included  for such  purposes  in the annual  budget,  and any  revisions
thereof, as approved by Borrower's Board of Directors.

         6.9 ERISA.  Neither  Borrower  nor any member of the  Controlled  Group
shall  permit  any  Plan  maintained  by it to (i)  engage  in  any  "prohibited
transaction"   (as  defined  in  Section  4975  of  the  Code,  (ii)  incur  any
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether or
not waived,  or (iii)  terminate  any Plan in a manner that could  result in the
imposition  of a lien or  encumbrance  on the assets of  Borrower  or any of its
Subsidiaries pursuant to Section 4068 of ERISA.

         6.10 Loans or  Advances to ALT.  Neither  Borrower  nor any  subsidiary
shall use the  proceeds of the Loan to make loans or advances to ALT,  except to
the extent  that money  borrowed  by Borrower  from ALT in  connection  with the
Recent ALT Financing shall be repaid to ALT.

         6.11 Collateral  Coverage.  Neither Borrower nor Guarantor shall permit
the  aggregate  book  value of the  Collateral  upon  which  Lender  has a first
priority  perfected  Lien, to equal an amount which is less than 125% of the sum
of (a) the  aggregate  outstanding  principal  amount  of the  Loan  and (b) the
aggregate accrued but unpaid interest on the Loan.

         6.12 Change in Key  Management.  Neither  Borrower nor Guarantor  shall
permit any  changes in key  management,  except as  approved  by  Borrower's  or
Guarantor's Board of Directors, respectively.

         6.13  Transactions  with Affiliates.  Borrower shall not, and shall not
permit  any of  Borrower's  Subsidiaries  to,  enter  into or be a party  to any
agreement or transaction  with any Affiliate of Borrower,  unless (i) consistent
with Borrower's Mission Statement or (ii) in the ordinary course of and pursuant
to


                                      20.


<PAGE>



the reasonable requirements of Borrower's or Borrower's  Subsidiaries' business,
and,  in each  case,  upon  fair  and  reasonable  terms  that are  approved  by
Borrower's  Board  of  Directors,  and no less  favorable  to such  Borrower  or
Borrower's Subsidiary than would obtain in a comparable arm's length transaction
with a Person not an Affiliate of Borrower of equal bargaining power.

         6.14 No Amendment or Waiver of Charter  Documents.  Borrower  shall not
amend, alter, repeal or terminate, and shall not permit any Subsidiary to amend,
alter,  repeal or terminate,  its respective  Certificate of  Incorporation  (or
comparable charter documents) without the prior written consent of Lender if the
effect of such amendment,  alteration,  repeal, or termination is adverse to the
interests of the Lender, as determined by Lender in its sole discretion.


                                   SECTION VII

                               FINANCIAL COVENANTS

         So long as the Loan or any other  Obligation  under the Loan  Documents
(other than the Convertible Debenture and the Debt Conversion Agreement) remains
outstanding,  Borrower covenants as follows,  tested annually on the last day of
each fiscal year of Borrower, beginning December 31, 1997:

         7.1 Minimum Assets to Equity.  Borrower shall maintain a ratio of Total
Assets to Equity of at least 4.0 to 1.0

         7.2 Maximum Total  Liabilities  to Equity.  Borrower  shall  maintain a
ratio of Total Liabilities to Equity of not more than 3.5 to 1.0.

         7.3 Maximum Long Term Debt to Equity.  Borrower  shall maintain a ratio
of Long Term Debt to Equity of not more than 3.0 to 1.0

         7.4 Minimum  Current Ratio.  Borrower shall maintain a ratio of Current
Assets to Current Liabilities of at least 1.0 to 1.0.


                                  SECTION VIII

                                    DEFAULTS

         8.1 Events of Default.  There shall be an Event of Default hereunder if
any of the following events occurs:

                  (a)  Borrower  shall  fail to pay when due (i) any  amount  of
principal  of the Loan,  or (ii) any amount of  interest  thereon or any fees or
expenses payable hereunder or under the Note and such failure shall continue for
three (3) business days after written  notice of such default is given by Lender
to Borrower; or

                  (b)  Borrower  shall fail to  perform  any term,  covenant  or
agreement  contained in Sections 5.1(j), 5.3, 5.5, 5.9, 6.1 through 6.14, or 7.1
through 7.4; or



                                      21.


<PAGE>



                  (c)  Borrower  or  Guarantor  shall fail to perform  any term,
covenant or agreement  (other than in respect of Sections 8.1(a) and (b) hereof)
contained in this  Agreement,  any other Loan Document,  or any other  agreement
between  Borrower  and Lender or Guarantor  and Lender,  as the case may be, and
such default shall  continue for twenty (20) days after  written  notice of such
default is given by Lender to Borrower and Guarantor; or

                  (d) any  representation  or warranty of Borrower or  Guarantor
made in this  Agreement,  the Note or in any other  Loan  Document  or any other
documents  or   agreements   executed  in  connection   with  the   transactions
contemplated by this Agreement or in any certificate  delivered  hereunder shall
prove to have  been  false in any  material  respect  upon the date when made or
deemed to have been made; or

                  (e) there  shall  occur  any  material  adverse  change in the
assets, liabilities, financial condition, or business of Borrower, Guarantor, or
Borrower and its Subsidiaries, taken as a whole; or

                  (f) Borrower or any of its  Subsidiaries  shall fail to pay at
maturity, or within any applicable period of grace, any obligations for borrowed
monies or  advances,  or for the use of real or  personal  property,  or fail to
observe or perform any term,  covenant or agreement  evidencing or securing such
obligations  for  borrowed  monies or advances,  all in excess of  $100,000,  or
relating to such use of real or personal  property,  the result of which failure
is to  permit  the  holder  or  holders  of  such  Indebtedness  to  cause  such
Indebtedness  to become  due  prior to its  stated  maturity  upon  delivery  of
required notice, if any; or

                  (g) Borrower or any of its Subsidiaries shall (i) apply for or
consent to the  appointment  of, or the  taking of  possession  by, a  receiver,
custodian,  trustee,  liquidator  or similar  official  of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts  become  due,  (iii)  make a general  assignment  for the  benefit  of its
creditors,  (iv) commence a voluntary case under the Federal Bankruptcy Code (as
now or  hereafter  in  effect),  (v) take any  action  or  commence  any case or
proceeding  under any law relating to  bankruptcy,  insolvency,  reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors,  (vi) fail to contest in a timely or appropriate  manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
under the Federal  Bankruptcy Code or other law, (vii) take any action under the
laws of its jurisdiction of incorporation or organization  similar to any of the
foregoing,  or (viii) take any corporate action for the purpose of effecting any
of the foregoing; or

                  (h) a  proceeding  or case  shall be  commenced,  without  the
application  or consent of Borrower or any of its  Subsidiaries  in any court of
competent   jurisdiction,   seeking   (i)   the   liquidation,   reorganization,
dissolution,  winding up, or composition or readjustment of its debts,  (ii) the
appointment of a trustee, receiver,  custodian,  liquidator or the like of it or
of all or any substantial part of its assets, or (iii) similar relief in respect
of it,  under  any  law  relating  to  bankruptcy,  insolvency,  reorganization,
winding-up or  composition or adjustment of debts or any other law providing for
the relief of debtors,  and such proceeding or case shall continue  undismissed,
or unstayed and in effect, for a period of 30 days; or an order for relief shall
be entered in an involuntary  case under the Federal  Bankruptcy  Code,  against
Borrower or such  Subsidiary;  or action under the laws of the  jurisdiction  of
incorporation or organization of Borrower or any of its Subsidiaries  similar to
any of the foregoing  shall be taken with respect to Borrower or such Subsidiary
and shall continue unstayed and in effect for any period of 30 days; or

                  (i) a  judgment  or order for the  payment  of money  shall be
entered against  Borrower or any of its  Subsidiaries by any court, or a warrant
of attachment or execution or similar  process shall be issued or levied against
property of Borrower or such Subsidiary, that in the aggregate exceeds $100,000


                                      22.


<PAGE>



in  value  and  such  judgment,   order,   warrant  or  process  shall  continue
undischarged or unstayed for 30 days; or

                  (j)  a  material   breach  by  Borrower   under  the  Purchase
Agreement; or

                  (k) any Change in Control shall have occurred; or

                  (l) Lender's nominee to the Board of Directors, if any, should
fail to be elected to the Board of Directors of Borrower; or

                  (m) at least a majority of the Board of Directors  should fail
to be "Outside Directors" (as defined in the Voting Agreement).

         8.2 Remedies.  Upon the occurrence of an Event of Default  described in
Sections 8.1(g) and (h), immediately and automatically,  and upon the occurrence
of any other  Event of  Default,  at any time  thereafter  while  such  Event of
Default is  continuing,  at Lender's  election,  without  notice of election and
without demand:

                  (a) the  unpaid  principal  amount of the Loan  together  with
accrued  interest and all other  Obligations  shall become  immediately  due and
payable without presentment,  demand, protest or further notice of any kind, all
of which are hereby expressly waived; and

                  (b) Lender may  exercise  any and all rights it has under this
Agreement,  the Note,  any  other  Loan  Document,  or any  other  documents  or
agreements executed in connection herewith,  or at law or in equity, and proceed
to protect and enforce  Lender's rights by any action at law, in equity or other
appropriate proceeding.

                  (c)  Without  notice  to  Borrower,  set off and  apply to the
Obligations  any and all  indebtedness at any time owing to or for the credit or
the account of Borrower.

                                   SECTION IX

                                  MISCELLANEOUS

         9.1 Notices.  Unless otherwise  specified herein, all notices hereunder
to any party  hereto  shall be in writing and shall be deemed to have been given
when delivered by hand,  when properly  deposited in the mails postage  prepaid,
when sent by telex,  answerback received, or electronic facsimile  transmission,
or when  delivered  to the  overnight  courier,  addressed  to such party at its
address indicated below:

         If to Borrower, at

         FiberCore, Inc.

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

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

         --------------------
         Phone: (508) 347-7744
         Fax: (508) 347-2778

         with a copy to:


                                      23.


<PAGE>



         Coleman & Rhine
         1120 Avenue of the Americas
         New York, N.Y.  10036-6700
         Phone: (212) 840-3330
         Fax: (212) 840-3744
         Attention: Bruce S. Coleman, Esq.


         If to Lender, at

         AMP Incorporated
         470 Friendship Road
         M/S 176-034
         Harrisburg, PA  17111
         Phone: (717) 592-6651
         Fax: (717) 592-6655

or at any other address specified by such party in writing.

         9.2 Expenses. Borrower will pay within 30 days of demand all reasonable
expenses  of Lender in  connection  with (a) the  waiver  or  amendment  of this
Agreement,  the  Note,  the Loan  Documents,  or  other  documents  executed  in
connection  therewith,  (b) or the  default or  collection  of the Loan or other
Obligations under the Loan Documents, or default,  collection in connection with
Lender's exercise, preservation or enforcement of any of its rights, remedies or
options thereunder,  including,  without limitation,  reasonable fees of outside
legal counsel, accounting,  consulting,  brokerage or other similar professional
fees or expenses,  and any fees or expenses  associated with any travel or other
costs relating to any appraisals or  examinations  conducted in connection  with
the Obligations or any collateral therefor,  and the amount of all such expenses
shall,  until paid, bear interest at the rate applicable to principal  hereunder
(including any default rate).

         9.3  Set-Off.  Regardless  of the adequacy of any  collateral  or other
means of  obtaining  repayment of the  Obligations,  any sums due from Lender to
Borrower may, at any time and from time to time after the occurrence of an Event
of Default  hereunder,  without notice to Borrower or compliance  with any other
condition  precedent  now or  hereafter  imposed  by  statute,  rule of law,  or
otherwise (all of which are hereby expressly  waived) be set off,  appropriated,
and applied by Lender  against any and all  obligations of Borrower to Lender or
any of its  affiliates  in such  manner  as Lender  in its sole  discretion  may
determine,  and Borrower hereby grants Lender a continuing  security interest in
such sums for the payment and performance of all such obligations.

         9.4 Term of  Agreement.  This  Agreement  shall  continue  in force and
effect so long as the Loan or any  Obligation  under the Loan  Documents  (other
than the  Convertible  Debenture  and the Debt  Conversion  Agreement)  shall be
outstanding.

         9.5 No Waivers.  No failure or delay by Lender in exercising any right,
power or privilege  hereunder or under the Note or under any other  documents or
agreements  executed in connection  herewith shall operate as a waiver  thereof;
nor shall any single or partial  exercise  thereof preclude any other or further
exercise  thereof or the exercise of any other right,  power or  privilege.  The
rights and  remedies  herein and in the Note  provided  are  cumulative  and not
exclusive of any rights or remedies otherwise provided by agreement or law.


                                      24.


<PAGE>



         9.6 Governing Law. THIS AGREEMENT,  THE GERMAN  GUARANTY,  AND THE NOTE
SHALL BE DEEMED TO BE  CONTRACTS  MADE  UNDER  SEAL AND  SHALL BE  CONSTRUED  IN
ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF NEW YORK (WITHOUT  GIVING EFFECT TO
ANY CONFLICTS OF LAWS PROVISIONS CONTAINED THEREIN); PROVIDED, HOWEVER, THAT THE
GERMAN SECURITY AGREEMENT SHALL BE GOVERNED BY THE LAWS OF GERMANY.

         9.7  Amendments.  Neither  this  Agreement,  the Note,  any other  Loan
Document, nor any provision hereof or thereof may be amended, waived, discharged
or terminated  except by a written  instrument signed by Lender and, in the case
of amendments, by Borrower.

         9.8 Binding Effect of Agreement.  This Agreement  shall be binding upon
and inure to the benefit of Borrower and Lender and their respective  successors
and  assigns;  provided  that  Borrower may not assign or transfer its rights or
obligations hereunder.  Lender may sell, transfer or grant participations in the
Note to any AMP  Affiliate  of Lender  without  the  prior  written  consent  of
Borrower,  and  Borrower  agrees that any  transferee  or  participant  shall be
entitled  to the  benefits  of this  Agreement  to the  same  extent  as if such
transferee or participant were Lender hereunder;  provided that  notwithstanding
any such  transfer or  participation,  Borrower  may,  for all  purposes of this
Agreement,  treat Lender as the person entitled to exercise all rights hereunder
and under the Note and to receive all payments with respect thereto.

         9.9  Counterparts.  This  Agreement  may be  signed  in any  number  of
counterparts  with the same effect as if the signatures  hereto and thereto were
upon the same instrument.

         9.10 Partial Invalidity.  The invalidity or unenforceability of any one
or more  phrases,  clauses or  sections of this  Agreement  shall not affect the
validity or enforceability of the remaining portions of it.

         9.11  Captions.  The captions and headings of the various  sections and
subsections of this Agreement are provided for convenience only and shall not be
construed to modify the meaning of such sections or subsections.

         9.12  Arbitration.  Any  dispute  that  cannot be settled  amicably  by
mediation will be heard,  settled and decided under the Commercial  Rules of the
American Arbitration  Association by three arbitrators chosen in accordance with
such Rules.  Service of any matters in  reference  to such  arbitration  will be
given in the manner described in Section 9.1. Such arbitration will be conducted
in New  York,  New  York.  The  award  in such  arbitration  will be  final  and
enforceable  in any court of competent  jurisdiction.  The costs of  arbitration
will be paid as directed by the arbitrators.

         9.13 Entire Agreement.  This Agreement,  the Note and the documents and
agreements executed in connection herewith constitute the final agreement of the
parties hereto and supersede any prior  agreement or  understanding,  written or
oral, with respect to the matters contained herein and therein.



                                      25.


<PAGE>



         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed  by their duly  authorized  officers as of the day and year first above
written.

Borrower:                                          FIBERCORE, INC.



                                                   By: /s/ Mohd Aslami
                                                       -------------------------
                                                   Name:   Mohd Aslami
                                                   Title:  Chairman and CEO


Lender:                                            AMP INCORPORATED


                                                   By: /s/ James E. Marley
                                                       -------------------------
                                                   Name:   James E. Marley
                                                   Title: Chairman of the Board





                                      26.


<PAGE>



                                    EXHIBITS


EXHIBIT A         -        Form of Promissory Note

EXHIBIT B         -        Form of Warrant

EXHIBIT C         -        Intentionally omitted.

EXHIBIT D         -        Form of German Guaranty

EXHIBIT E         -        Form of German Security Agreement

EXHIBIT F         -        Form of Opinion of Counsel to Lender

EXHIBIT G         -        Form of Compliance Certificate

EXHIBIT H         -        Borrower's Mission Statement

EXHIBIT I         -        Form of Voting Agreement

EXHIBIT J         -        Capitalization Table

EXHIBIT K         -        Berliner Bank Loan Documents

EXHIBIT L         -        German Government Grant Documents


                                    SCHEDULES


SCHEDULE 4.5               -        Indebtedness; Encumbrances

SCHEDULE 4.8               -        Defaults

SCHEDULE 4.10              -        Litigation

SCHEDULE 4.11              -        Subsidiaries

SCHEDULE 4.14              -        Trademarks,   Trademark  Licenses,  Patents,
                                    Patent Licenses,  Copyrights,  and Copyright
                                    Licenses

SCHEDULE 4.15              -        Borrower's   Trade   Names;    Location   of
                                    Collateral

SCHEDULE 5.3               -        Maintenance and Insurance



                                        i


<PAGE>



                                  SCHEDULE 4.5

                           INDEBTEDNESS; ENCUMBRANCES



ALL EQUIPMENT AND PATENTS PURCHASED FROM SICO  QUARZSCHMELZE  JENA GMBH ("SICO")
COULD  REVERT TO SICO IN THE EVENT THE  COMPANY  MOVES OUT OF THE JENA  FACILITY
PRIOR TO THE YEAR 2001.

ALL OTHER  EQUIPMENT  AND PATENTS ARE  SUBJECT TO THE  SECURITY  INTEREST OF AMP
INCORPORATED,  UNDER THIS LOAN  AGREEMENT  AND A PREVIOUS LOAN  AGREEMENT  DATED
APRIL 17, 1995.



                                       ii.


<PAGE>



                                  SCHEDULE 4.8

                           INDEBTEDNESS; ENCUMBRANCES


                                      NONE



                                      iii.

<PAGE>



                                  SCHEDULE 4.10

                                   LITIGATION



                       Litigation against FiberCore, Inc.

                                      None


                         Litigation against Subsidiaries

                  1. COIA GmbH v. Fibercore Glasfaser Jena GmbH





                                       iv.

<PAGE>



                                  SCHEDULE 4.11

                                  SUBSIDIARIES



Automated Light Technologies (Delaware)

Fibercore Glasfaser Jena GmbH (Germany)

FiberCore Mid East Ltd. (Cayman Islands)

Infoglass Incorporated (Delaware)






                                       v.


<PAGE>



                                  SCHEDULE 4.15

          SCHEDULE OF BORROWER'S TRADE NAMES AND LOCATION OF COLLATERAL




THE BORROWER HAS BEEN PREVIOUSLY  KNOWN BY THE NAMES FIBERCORE  INCORPORATED AND
VENTURECAP, INC.

THE COLLATERAL IS LOCATED AT THE JENA FACILITY IN JENA, GERMANY.
THE ADDRESS OF THE JENA FACILITY IS

         FiberCore Jena GmbH
         Goschwitzer Str. 20, D-07745
         Jena




                                       vi.

<PAGE>


                                  SCHEDULE 5.13

               SCHEDULE OF EXCEPTIONS TO MAINTENANCE AND INSURANCE



                                      NONE




                                      vii.