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                                 LOAN AGREEMENT

                                 BY AND BETWEEN

                    NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

                                       AND

                           ELITE PHARMACEUTICALS, INC.

                           DATED AS OF AUGUST 15, 2005

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<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

                                    ARTICLE I

                                   DEFINITIONS

Section 1.01.  Definitions...................................................  2

                                   ARTICLE II

                                    THE LOANS

Section 2.01.  The Loans....................................................  10
Section 2.02.  The Notes....................................................  10
Section 2.03.  Acceleration of Payment of Redeemed Bonds..................... 10
Section 2.04.  No Defense or Set-Off......................................... 11
Section 2.05.  Deficiencies in Revenues...................................... 11
Section 2.06.  Manner of Payment............................................. 11
Section 2.07.  Security for the Loans........................................ 11
Section 2.08.  Cancellation of Bonds Upon Payment in Full.................... 11
Section 2.09.  Prepayment of Loans Upon Certain Conditions................... 12
Section 2.10.  Damage, Destruction or Condemnation............................12
Section 2.11.  No Personal Recourse...........................................13

                                   ARTICLE III

                             ESTABLISHMENT OF FUNDS
                           AND APPLICATION OF PROCEEDS

Section 3.01.  Application of Bond Proceeds.................................. 14
Section 3.02.  Disbursements from the Project Fund........................... 14
Section 3.03.  No Liability of Authority or Trustee.......................... 15
Section 3.04.  Establishment of Completion Date.............................. 15
Section 3.05.  Company Required to Pay if Project Fund Insufficient.......... 16
Section 3.06      Restriction on Use of Project Fund......................... 16
Section 3.07      Completion of Project Facilities; Excess Bond Proceeds..... 16
Section 3.08.  The Trustee................................................... 16

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

Section 4.01.  Representations and Warranties.................................18
Section 4.02.  Organization, Powers, etc..................................... 24
Section 4.03.  Execution of Loan Documents................................... 24
Section 4.04.  Title to Collateral........................................... 24
Section 4.05.  Litigation.................................................... 24

<PAGE>

Section 4.06.  Payment of Taxes.............................................. 25
Section 4.07.  No Defaults................................................... 25
Section 4.08.  No Material Adverse Change.................................... 25
Section 4.09.  Intentionally Omitted......................................... 25
Section 4.10.  Obligations of the Company.................................... 25
Section 4.11.  No Untrue Statements.......................................... 25
Section 4.12.  No Action..................................................... 25
Section 4.13.  Design of the Project......................................... 26
Section 4.14.  Commencement of Project; Proper Charges....................... 26
Section 4.15.  Limitation on Expenditures; Principal User.................... 26
Section 4.16.  Outstanding Tax-Exempt Bonds.................................. 27
Section 4.17.  Project Municipality.......................................... 27
Section 4.18.  No Tenancies.................................................. 27
Section 4.19.  Substantial Users............................................. 27
Section 4.20.  Placement in Service.......................................... 27
Section 4.21.  No Common Plan of Financing................................... 27
Section 4.22.  Use of Proceeds............................................... 28
Section 4.23.  Economic Life................................................. 28
Section 4.24.  Aggregation of Issue for Single Project....................... 28
Section 4.25.  Environmental Representation.................................. 29
Section 4.26.  Company's Interest in the Collateral.......................... 29

                                    ARTICLE V

                              CONDITIONS OF LENDING

Section 5.01.  Opinion of Counsel for the Company............................ 30
Section 5.02.  Opinion of Bond Counsel....................................... 30
Section 5.03.  Loan and Other Documents...................................... 30
Section 5.04.  Legal Matters................................................. 30
Section 5.05.  Bond Issuance Fee............................................. 31

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

Section 6.01.  Preservation of Property and the Collateral................... 32
Section 6.02.  Insurance Required............................................ 32
Section 6.03.  Payment of Taxes, etc......................................... 35
Section 6.04.  Concerning the Project........................................ 35
Section 6.05.  Compliance with Code and Arbitrage Regulations................ 35
Section 6.06.  Compliance With Applicable Laws............................... 35
Section 6.07.  Compliance With Department of Environmental Protection........ 35
Section 6.08.  Financial Statements.......................................... 36
Section 6.09.  Intentionally Omitted......................................... 36
Section 6.10.  Indemnification............................................... 37
Section 6.11.  Intentionally Omitted......................................... 39
Section 6.12.  Report of Number of Employees................................. 39

                                       ii
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Section 6.13.  Intentionally Omitted......................................... 39
Section 6.14.  Inspection of the Project..................................... 39
Section 6.15.  Continuation Statements....................................... 39
Section 6.16.  Additional Covenants Concerning the Collateral................ 39
Section 6.17.  Payment of Obligations........................................ 40
Section 6.18.  Intentionally Omitted......................................... 40
Section 6.19.  Intentionally Omitted......................................... 40
Section 6.20.  Project Sign.................................................. 40
Section 6.21.  Brokerage Fee................................................. 40
Section 6.22.  Cost Recovery................................................. 40
Section 6.23.  Rehabilitation Requirement.................................... 40
Section 6.24.  Covenant by Company as to Compliance with Indenture........... 41
Section 6.25.  Continuing Disclosure..........................................41

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

Section 7.01.  Events of Default............................................. 42
Section 7.02.  Remedies...................................................... 43
Section 7.03.  No Remedy Exclusive........................................... 45
Section 7.04.  Additional Remedies........................................... 45
Section 7.05.  Agreement to Pay Attorneys' Fees and Expenses................. 45
Section 7.06.  No Additional Waiver Implied by One Waiver.................... 45
Section 7.07.  Additional Authority's Remedies............................... 46

                                  ARTICLE VIII

                                  MISCELLANEOUS

Section 8.01.  Notice........................................................ 47
Section 8.02.  Concerning Successors and Assigns............................. 47
Section 8.03.  Payment of Fees and Expenses.................................. 47
Section 8.04.  Payment of Trustee's and Paying Agent's
                   Compensation and Expenses................................. 48
Section 8.05.  New Jersey Law Governs........................................ 48
Section 8.06.  Modifications, Waivers or Amendments.......................... 48
Section 8.07.  Failure to Exercise Rights.................................... 48
Section 8.08.  Authority's Assignment........................................ 48
Section 8.09.  Further Assurances and Corrective Instruments................. 48
Section 8.10.  Captions...................................................... 49
Section 8.11.  Severability.................................................. 49
Section 8.12.  Counterparts.................................................. 49
Section 8.13.  Special Limited Obligations................................... 49
Section 8.14.  Effective Date and Term....................................... 49

SCHEDULE A - List of Collateral

                                      iii
<PAGE>

EXHIBIT A - Company Completion Certificate
EXHIBIT B - Addendum to Construction Contract
EXHIBIT C - Contractor's Certificate
EXHIBIT D - Contractor's Completion Certificate
EXHIBIT E - Forms of Requisition

                                       iv
<PAGE>

                                 LOAN AGREEMENT

         THIS LOAN  AGREEMENT,  dated as of the 1st day of August,  2005, by and
between the NEW JERSEY  ECONOMIC  DEVELOPMENT  AUTHORITY  (the  "Authority"),  a
public body corporate and politic  constituting an  instrumentality of the State
of New Jersey and ELITE PHARMACEUTICALS, INC., a corporation organized under the
laws of the State of Delaware (the "Company").

         WHEREAS,  the Act (this term and  certain  other  terms used herein are
defined in Section 1.01) declares it to be in the public  interest and to be the
policy of the State to foster and  promote  the  economy of the State,  increase
opportunities for gainful  employment and improve living  conditions,  assist in
the economic  development or redevelopment of political  subdivisions within the
State, and otherwise contribute to the prosperity, health and general welfare of
the State and its inhabitants by inducing manufacturing, industrial, commercial,
recreational,  retail,  service and other  employment  promoting  enterprises to
locate,  remain  or  expand  within  the  State by  making  available  financial
assistance; and

         WHEREAS,  Authority is authorized  and empowered  under the laws of the
State,  including the Ac, to issue economic  development bonds and to enter into
loan  agreements,  contracts and other  instruments  and documents  necessary or
convenient  to obtain  loans for the purpose of  facilitating  the  financing of
certain projects as described in the Act; and

         WHEREAS,  on  September  2, 1999,  the  Authority  issued its  Economic
Development Bonds (Elite Pharmaceuticals,  Inc. - 1999 Project) in the aggregate
principal  amount of  $3,000,000  (the  "1999  Bonds")  for the  purpose  of the
acquisition of land and an existing  approximately  15,000 sq. ft.  building and
the acquisition of equipment,  to be used in the manufacturing of pharmaceutical
products to be located in the municipality of Northvale, County of Bergen, State
of New Jersey (the "Project Site"); and

         WHEREAS, the Company has requested, and the Authority has determined to
issue,  its  Economic  Development  Bonds  (Elite  Pharmaceuticals,  Inc. - 2005
Project),  Series A in the aggregate principal amount of $3,660,000 (the "Series
A Bonds") for the purpose of currently  refunding  and  redeeming the 1999 Bonds
and to  finance  the  acquisition  of  additional  equipment  to be  used in the
manufacturing of pharmaceutical products at the Project Site (the "Project") and
its Economic  Development  Bonds (Elite  Pharmaceuticals,  Inc. - 2005 Project),
Federally  Taxable Series B, in the aggregate  principal amount of $495,000 (the
"Series B Bonds"; together with the Series A Bonds, the "Initial Bonds") for the
purpose of refinancing the purchase of equipment used at the Project Site and to
finance  costs of  issuance  incurred  in  connection  with the  issuance of the
Initial Bonds; and

         WHEREAS,  the execution and delivery of this Loan  Agreement  have been
duly authorized by the Authority, and all conditions,  acts and things necessary

<PAGE>

and  required by the  Constitution  or statutes  of the State or  otherwise,  to
exist,  to have  happened,  or to have  been  performed  precedent  to or in the
execution and delivery of this Loan  Agreement do exist,  have happened and have
been performed in regular form, time and manner.

         NOW THEREFORE,  for and in consideration of the premises and the mutual
covenants and representations hereinafter contained, the parties hereto agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

         SECTION 1.01.  DEFINITIONS.  As used herein,  the following terms shall
have the following meanings:

         "Act" shall mean the New Jersey  Economic  Development  Authority  Act,
constituting  Chapter 80 of the Pamphlet Laws of 1974 of the State,  approved on
August 7, 1974, as amended and supplemented;

         "Affirmative  Action Program" shall mean the provisions of the Act, and
the resolutions, rules and regulations of the Authority, as adopted, amended and
supplemented  from time to time,  requiring that the Company and all Contractors
make every effort to hire minority  workers or to cause  minority  workers to be
hired for employment in performance of Construction  Contracts in fulfillment of
the minority  employment goals fixed by the Authority,  and that the Company and
all  Contractors  file  such  certificates,  reports  and  records  and do other
prescribed acts as are necessary to demonstrate or assure compliance;

         "Applications" shall mean the Company's  applications to the Authority,
dated May 1, 2005, as amended, seeking financial assistance for the Project, and
all attachments, exhibits, correspondence and modifications submitted in writing
to the Authority in connection therewith;

         "Assignment of Leases" means the assignment dated the Closing Date from
the Company to the  Authority,  which is made part of the record of  proceedings
and  assigning  to the  Authority  on a first  priority  basis the  benefits  of
existing and future leases on the Project;

         "Authority" shall mean the New Jersey Economic Development Authority, a
public body corporate and politic  constituting an instrumentality of the State,
organized  and  subsisting  under  the  Act  exercising   public  and  essential
governmental functions and its successors or assigns;

         "Authorized  Authority  Representative"  shall mean any  individual  or
individuals duly authorized by the Authority to act on its behalf;

                                        2
<PAGE>

         "Authorized  Company  Representative"  shall  mean  any  individual  or
individuals duly authorized by the Company to act on its behalf;

         "Bond"  or  "Bonds"  shall  mean  any of  the  bonds  of the  Authority
authenticated  and delivered  under and pursuant to the Indenture  including the
Initial Bonds. Such Bonds may be Taxable Bonds or Tax-exempt Bonds;

         "Bond Counsel" shall mean the law firm of McManimon & Scotland, L.L.C.,
One Riverfront Plaza,  Newark, New Jersey or an attorney or firm of attorneys of
nationally recognized standing on the subject of municipal bonds;

         "Bond Fund" shall mean the fund so designated and established  pursuant
to Section 4.01 of the Indenture;

         "Bond Proceeds" shall mean the amount,  including any accrued interest,
paid to the  Authority by the  Placement  Agent  pursuant to the Bond  Placement
Agreement as the purchase price of the Bonds, and interest income earned thereon
prior to the Completion Date;

         "Bond Placement  Agreement" shall mean the agreement by and between the
Placement  Agent and the Authority  executed in connection with the placement of
the Bonds;

         "Bond Year" shall mean the period  beginning on the date the Tax-exempt
Bonds are issued and ending one (1) year later or the close of  business of such
earlier date selected by the Company.  Each subsequent Bond Year is the one year
(1) period beginning on the day after the expiration of the previous Bond Year;

         "Business Day" shall mean a day of the year, other than a (a) Saturday,
Sunday or legal holiday on which banks located in the  municipality in which the
principal  offices of the  Trustee  and any  Paying  Agent are  located  are not
required or authorized  to remain  closed and (b) a day on which the  Depository
Trust Company is closed;

         "Closing Date" shall mean August 31, 2005;

         "Code" shall mean the Internal  Revenue Code of 1986,  as amended,  and
the regulations in effect thereunder;

         "Collateral"  shall  mean  the  land,  building,   fixtures  and  other
facilities in which the  Authority is granted a lien by the Mortgage,  the lease
and revenues  assigned by the  Assignment of Leases,  the assets  subject to the
security  interest created by the Security  Agreement and the security  interest
under Section 2.07 of this Agreement;

         "Company"  shall  mean  Elite  Pharmaceuticals,   Inc.,  a  corporation
organized under the laws of the State of Delaware;

                                       3
<PAGE>

         "Company's Completion  Certificate" shall mean the certificate executed
by the Company, substantially to the effect set forth in Section 3.04;

         "Completion  Date" shall mean the date of  completion of the Project as
stated in the  Certificate  described  in Section  3.04  hereof and  attached as
Exhibit A hereto;

         "Construction Contract" shall mean, for purposes of the Prevailing Wage
Provision,  any  contract  or  subcontract  in the  amount of $2,000 or more for
construction,  reconstruction,  demolition,  alteration,  repair, or maintenance
work,  including  painting and  decorating,  undertaken in  connection  with the
Project and shall mean,  for purposes of the  Affirmative  Action  Program,  any
contract  or  subcontract  for  construction,   reconstruction,   renovation  or
rehabilitation undertaken in connection with the Project;

         "Contractor"   shall  mean  the  principal  or  general  contractor  or
contractors  engaged  by  the  Company  in  the  performance  of a  Construction
Contract;

         "Contractor's  Certificate"  shall mean the instrument  executed by the
Contractor  in form and  substance  acceptable  to the  Authority,  wherein  the
Contractor  agrees to undertake or perform such  obligations and certifies as to
such matters as the Authority shall require, including, without limitation, that
for  purposes  of the  Prevailing  Wage  Provision  all  workers  engaged in the
performance of  Construction  Contracts  shall be paid a wage rate not less than
the Prevailing Wage Rate and that all Construction Contracts will so provide and
that for purposes of the  Affirmative  Action Program the  Contractor  will make
every  effort to hire or cause to be hired  minority  workers  so as to meet the
minority  employment  goals  of the  Affirmative  Action  Program  and  that all
Construction Contracts will so provide;

         "Contractor's  Completion  Certificate"  shall mean the  certificate or
certificates executed by the Contractor and any Subcontractors, upon substantial
completion  of Project  construction,  in form and  substance  acceptable to the
Authority,  wherein the Contractor certifies as to such matters as the Authority
shall require, including, without limitation, that the Contractor has made every
effort to satisfy the minority  employment goals  established in the Affirmative
Action Program and that the Contractor has submitted all certificates,  reports,
and records required by the Authority;

         "Cost" or "Costs" as used herein shall include those items set forth in
Section  3(c)  of the Act as may be  necessary  or  incident  to  acquiring  and
renovating the Project;

         "Counsel  for the  Company"  shall  mean the law firm of Gallo  Geffner
Fenster, P.C., Hackensack, New Jersey;

                                       4
<PAGE>

         "Debt  Service"  shall  mean  the  scheduled  amount  of  interest  and
amortization  of  principal  payable  for any  Bond  Year  with  respect  to the
Tax-exempt Bonds as defined in Section 148(d)(3)(D) of the Code;

         "Determination   of   Taxability"   means   a   final,   non-appealable
determination  by a court of  competent  jurisdiction  in the  United  States of
America in (a) a proceeding for a declaratory  judgment in which the Company has
participated  or has been  offered  the  opportunity  to  participate,  or (b) a
proceeding in which an owner or former owner of any  Tax-exempt  Bond is a party
and has  offered  the  Company  the  opportunity  to  assist  in or  assume  the
preparation of such owner's  defense or case, or (c) the issuance of a statutory
notice of deficiency (or its equivalent) by the Internal Revenue Service,  which
has not been revoked or  rescinded  or overruled by a final  judgment of federal
court  within a period of 6 months from the date an owner or former owner of any
such Tax-exempt  Bond with respect to which such statutory  notice of deficiency
(or its  equivalent)  is issued  notifies  the Company of such  issuance or such
shorter  period as may be designated  by the Company to the Trustee),  in either
case to the effect  that  interest  on any Tax-  exempt  Bond  previously  paid,
accrued or to accrue in the future is directly  includable  in the gross  income
for federal income tax purposes of any owner or former owner  thereof;  provided
that if any of the  foregoing  is based upon  certain  federal  income taxes not
solely based on items includable in gross income including,  among other things,
(1) the  inclusion  of interest on any Tax- exempt  Bonds in the  determination,
with respect to the owner  thereof,  of (A) the "branch  profits tax" imposed on
certain  foreign  corporations  or (B) the  alternative  minimum  tax imposed on
individuals or corporations or (2) the conclusion that any owner or former owner
is or was a Substantial User, or a Related Person,  the same shall not be deemed
a Determination of Taxability;

         "Event of  Default"  shall  mean any Event of  Default  as  defined  in
Section 7.01 hereof;

         "Financing  Statements"  shall  mean  the  UCC-1  Financing  Statements
executed by the Company and the Guarantor  perfecting the  Authority's  security
interest in the Collateral;

         "Fiscal Year" shall mean the twelve (12) months ending March 31 for the
Company;

         "Gross  Proceeds" shall have the meaning given in Section  148(f)(6)(b)
of the Code, presently including,  without limitation,  the original proceeds of
the  Tax-exempt  Bonds,  investment  proceeds,  amounts held in a sinking  fund,
amounts  invested  in a  reasonably  required  reserve or  replacement  fund (as
defined in Section 148(d) of the Code),  any amounts used to pay debt service on
the Tax-exempt Bonds and any amounts received as a result of investing in any of
the foregoing;

         "Guarantor"  shall  mean Elite  Laboratories,  Inc.  and any  successor
guarantor of the Loans;

                                       5
<PAGE>

         "Guaranty"  shall mean the Agreement of Guaranty dated as of August 15,
2005 made by the Guarantor in favor of the Authority  guarantying the payment of
the Loans;

         "Indemnified Parties" shall mean the State, the Trustee, the Authority,
the Placement  Agent,  any person who "controls" the Authority,  the State,  the
Placement  Agent  or  the  Trustee  within  the  meaning  of  Section  15 of the
Securities Act of 1933, as amended or Section 20 of the Securities  Exchange Act
of 1934,  as  amended,  and any  member,  director,  officer,  agent,  official,
employee or attorney of the  Authority,  the State,  the Placement  Agent or the
Trustee;

         "Indenture"  shall mean the  Indenture by and between the Authority and
The Bank of New York, as Trustee, dated as of August 15, 2005;

         "Initial Bonds" shall have the meaning given in the recitals hereto;

         "Investment  Property"  shall mean any security  (within the meaning of
Section 165(g)(2)(A) or (B) of the Code), any obligation,  any annuity contract,
or any investment-type property as defined in Section 1.148-1 of the Regulations
promulgated by the Internal Revenue Service under the Code;

         "Loans" shall mean the Series A Loan and the Series B Loan;

         "Loan Agreement" or "Agreement"  shall mean this Loan Agreement and any
amendments  and  supplements  thereto made in  conformity  herewith and with the
Indenture;

         "Loan Documents" shall mean, the Notes, the Mortgage, the Assignment of
Leases, the Guaranty, the Security Agreement, this Loan Agreement, the Indenture
and all documents and instruments executed in connection therewith;

         "Mortgage" shall mean the first lien mortgage on the Project,  which is
made part of the record of  proceedings,  executed by the Company,  as Mortgagor
and given to the Authority, as Mortgagee;

         "Net Proceeds"  shall mean the Bond Proceeds less any amounts placed in
a reasonably  required reserve or replacement fund within the meaning of Section
148 of the Code;

         "1999 Bonds" shall have the meaning given in the recitals hereto;

         "Non-Purpose  Obligations" shall mean any "investment property" (within
the meaning of Section  148(b)(2)  of the Code) which is (i)  acquired  with the
Gross Proceeds of the  Tax-exempt  Bonds and (ii) not acquired in order to carry
out the governmental purpose of the Tax-exempt Bonds;

         "Notes" shall mean the Series A Note and the Series B Note;

                                       6
<PAGE>

         "Permitted Encumbrances" shall mean those exceptions to title and liens
which  individually and in the aggregate are immaterial to the use,  saleability
and  value of the  Collateral,  including  a second  lien  upon the  Collateral,
provided  that the  Company  continue  to meet the cash  flow  test set forth in
Section 3.04 of the Indenture;

         "Person"  or  "Persons"   shall  mean  any   individual,   corporation,
partnership,   joint  venture,  trust,  or  unincorporated  organization,  or  a
governmental agency or any political subdivision thereof;

         "Placement Agent" shall mean Ryan Beck & Co., Shrewsbury, New Jersey;

         "Placement   Memorandum"   shall   collectively  mean  the  preliminary
placement  memorandum  of the  Authority  relating  to the  Bonds  and the final
placement memorandum of the Authority relating to the Bonds;

         "Premises" shall mean the premises and all improvements thereon located
in the Project Municipality, as described in Schedule A of the Mortgage;

         "Prevailing  Wage  Provision"  shall mean the provisions of the Act and
the resolutions, rules and regulations of the Authority, as adopted, amended and
supplemented  from time to time,  requiring that workers engaged in Construction
Contracts be paid a wage rate not less than the  Prevailing  Wage Rate, and that
the Company and all Contractors file such certificates,  reports and records and
do other prescribed acts as are necessary to demonstrate or assure compliance;

         "Prevailing  Wage Rate" shall mean the prevailing wage rate established
by the Commissioner of the New Jersey Department of Labor and Industry from time
to time in  accordance  with the  provisions  of  N.J.S.A.  34:11-56.30  for the
locality in which the Project is located;

         "Principal  User" shall mean any  principal  user within the meaning of
the proposed  amendments to Treas. Reg. Sec. 1.103-10  published by the Internal
Revenue  Service in the Federal  Register  on  February  21, 1986 or any Related
Person to a Principal User within the meaning of Section 144(a) of the Code;

         "Project" shall have the meaning given in the recitals hereto.

         "Project Facilities" shall mean the building, machinery,  equipment and
other facilities constructed or acquired with the proceeds of the Bonds;

         "Project  Fund"  shall  mean the  fund so  designated  and  established
pursuant to Section 4.01 of the Indenture;

         "Project Municipality" shall mean the municipality of Northvale, County
of Bergen, New Jersey;

                                       7
<PAGE>

         "Project Site" shall have the meaning given in the recitals hereto;

         "Proper  Charge" means (i) those costs which (a) are incurred after the
date  which is sixty  (60)  days  prior to June 14,  2005,  the date on which an
inducement  resolution  was  adopted  by  the  Authority  for  the  acquisition,
construction or improvement of either land or property  subject to the allowance
for  depreciation  provided  by Section  167 of the Code  within the  meaning of
Treas. Reg.  1.103-10(b)(1)(ii)  (provided that the acquisition of land shall at
no time exceed 25% of the Net Proceeds of the Tax-exempt  Bonds) and (b) may, by
a proper  election  under the Code (or may, but for a proper  election under the
Code to deduct such item), be capitalized for federal income tax purposes on the
books of the Company, (ii) costs of issuance of the Tax-exempt Bonds, attorneys'
fees, printing costs,  Authority's fees, agents' fees and other similar expenses
(subject  to the  limitations  hereinafter  set forth) or (iii) any  expenditure
which when added to all previous  expenditures  from the Project Fund,  will not
result in more than five  percent  (5%) of the  aggregate  amount of the  moneys
theretofore  disbursed  from the Project Fund (after  deducting from that amount
the costs  referred to in (ii) above) being  expended  for  purposes  other than
those  permitted by (i) above,  provided that any expenditure of Tax-exempt Bond
Proceeds  that,  when added to all  previous  expenditures  of  Tax-exempt  Bond
Proceeds for the payment of costs in (ii) above, would cause the total amount of
such costs to exceed 2% of the Tax-exempt Bond Proceeds, shall not be considered
a Proper Charge for purposes of this definition;

         "Rebatable  Arbitrage" shall mean the excess of the future value, as of
a date, of all receipts on nonpurpose  investments  over the future value, as of
that date, of all payments on nonpurpose investments, as more fully described in
Code Section 148(f) and Regulations Section 1.148-3;

         "Rebate  Fund"  shall  mean  the  fund so  designated  and  established
pursuant to Section 4.07 of the Indenture;

         "Record of Proceedings"  shall mean the Loan  Documents,  certificates,
affidavits, opinions or other documentation executed in connection with the sale
of the Bonds and the making of the Loans;

         "Related Person," when used with reference to any Principal User or any
Substantial  User,  means a  "related  person"  within  the  meaning  of Section
144(a)(3) of the Code;

         "Requisition  Form" shall mean the  requisitions  in the forms attached
hereto as Exhibit E;

         "Resolutions"  shall mean the  resolutions of the Authority  dated July
12, 2005 approving the Company's  application  and  authorizing the issuance and
sale of the Initial Bonds and  determining  other matters in connection with the
Project;

                                       8
<PAGE>

         "Security  Agreement"  shall mean the  Security  Agreement  dated as of
August 15, 2005 by and  between the  Guarantor  and the  Authority  in which the
Guarantor grants a security interest in certain assets described therein;

         "Series A Bonds" shall have the meaning given in the recitals hereto;

         "Series A Loan" shall mean the loan from the  Authority  to the Company
of the proceeds of the Series A Bonds;

         "Series A Note" shall mean the promissory  note dated the Closing Date,
executed and delivered by the Company to the Authority  evidencing  the Series A
Loan;

         "Series B Bonds" shall have the meaning given in the recitals hereto;

         "Series B Loan" shall mean the loan from the  Authority  to the Company
of the proceeds of the Series B Bonds;

         "Series B Note" shall mean the promissory  note dated the Closing Date,
executed and delivered by the Company to the Authority  evidencing  the Series B
Loan;

         "State" shall mean the State of New Jersey;

         "Subcontractor"  shall mean any Person  engaged  by a  Contractor  or a
Subcontractor in the performance of any Construction Contract;

         "Substantial User" means, with respect to any "facilities" (as the term
"facilities" is used in Section  144(a)(4)(B) of the Code), a "substantial user"
of such "facilities" within the meaning of Section 147(a) of the Code;

         "Tax Certificate" shall mean the arbitrage and tax certificate executed
by the Company in form and substance  acceptable to the  Authority,  wherein the
Company certifies as to such matters as the Authority shall require;

         "Taxable  Bonds" shall mean Bonds,  including  the Series B Bonds,  the
interest on which is includable  in the gross income of the holders  thereof for
federal income tax purposes;

         "Tax-exempt Bonds" shall mean Bonds,  including the Series A Bonds, the
interest on which is not  includable in the gross income of the holders  thereof
for federal income tax purposes;

         "Trustee"  shall mean The Bank of New York, and its successors in trust
pursuant to the Indenture;

                                       9
<PAGE>

         "Yield" shall mean a yield as shall be determined under Section 1.148-4
of the Treasury  Regulations  in the case of the Tax-exempt  Bonds,  and Section
1.148-5 of the Treasury Regulations in the case of investments.

         The terms "herein", "hereunder",  "hereby", "hereto", "hereof", and any
similar terms, refer to this Loan Agreement;  the term "heretofore" means before
the date of execution of this Loan  Agreement;  and the term  "hereafter"  means
after the date of execution of this Loan Agreement;

         Terms defined in the Indenture are incorporated  herein by reference as
though set forth in full.

                                       10
<PAGE>

                                   ARTICLE II

                                    THE LOANS

         SECTION  2.01.  THE LOANS.  The  Authority  agrees,  upon the terms and
subject  to the  conditions  hereinafter  set  forth,  to make the  Loans to the
Company  from the  proceeds  received  from the sale of the Initial  Bonds.  The
Company  shall repay the Loans made  pursuant to this Loan  Agreement  by making
payments  to the  Trustee  for  deposit in the Bond Fund for the  account of the
Authority,  in accordance with the Notes in order to meet the payments  required
in respect of the  Initial  Bonds  (whether  at  maturity,  upon  redemption  or
acceleration  pursuant to any optional or mandatory  prepayment  requirements or
otherwise),  in amounts which, when added to the balance of available funds then
on deposit in the Bond Fund and available  for such  purpose,  shall be equal to
the amounts payable as principal of and redemption premium, if any, and interest
on the Bonds.

         SECTION  2.02.  THE NOTES.  To evidence the Loans to the  Company,  the
Company  shall  herewith  execute and deliver the Notes.  The Notes  provide for
monthly  payments of interest in amounts,  when  aggregated in each  semi-annual
payment  period,  will be equal to the  payments of interest on the Bonds except
that the Company  shall receive a cash credit  against its interest  obligations
equal to (i)  accrued  interest on the Bonds  deposited  with the Trustee at the
time of  issuance  of the Bonds and (ii) such other  moneys  held at the time of
such interest payment date by the Trustee in the Bond Fund and available for the
payment  of  interest  on  the  Bonds.  The  Notes  incorporate  the  redemption
provisions  of the  Bonds,  or  provisions  in respect  of the  acceleration  or
prepayment of principal and premium,  if any,  corresponding  to the  redemption
provisions of the Bonds.

         The Company shall make all payments on the Notes on or prior to the due
date scheduled therein,  and otherwise cause sufficient funds to be available on
the due date for the corresponding payment to be made on the Bonds.

         In the event  moneys on deposit  with the Trustee on the  Business  Day
prior to any Interest  Payment Date are  insufficient to pay the principal of or
interest on the Bonds on such Interest  Payment  Date,  moneys on deposit in the
Debt Service Reserve Fund shall be used to meet such deficiency.  In such event,
it shall be the  Company's  obligation  to repay such amount to the Debt Service
Reserve Fund in substantially equal monthly installments over a six-month period
as more specifically provided in the Notes and Section 4.10 of the Indenture.

         SECTION 2.03.  ACCELERATION OF PAYMENT OF REDEEMED BONDS. The Authority
will  redeem any or all series of Bonds upon the  occurrence  of an event  which
gives rise to any optional or mandatory redemption thereof.  Whenever any series
of any Bonds is called for Optional  Redemption  or is subject to  Extraordinary
Optional  Redemption  under  certain  circumstances  in whole  or in  part,  the
Authority  will,  but only  upon  request  of the  Company,

                                       11
<PAGE>

redeem the same in  accordance  with such  request.  In either such  event,  the
Company will pay an amount equal to the then  applicable  redemption  price as a
redemption  of, or  prepayment  on, an equal  amount of  principal  of the Notes
relating to such series of Bonds, plus interest accrued to the redemption date.

         SECTION 2.04. NO DEFENSE OR SET-OFF.  The  obligation of the Company to
make the  payments  required  under the Notes and this Loan  Agreement  shall be
absolute and  unconditional  without defense or set-off by reason of any default
by the Authority under this Loan Agreement, or under any other agreement between
the Company and the Authority,  or for any other reason,  it being the intention
of the parties that the payments  required by the Notes and this Loan  Agreement
will be paid in full when due without any delay or diminution whatsoever.

         SECTION 2.05.  DEFICIENCIES  IN REVENUES.  If, for any reason,  amounts
paid to the Trustee on the Notes, together with other moneys held by the Trustee
and then  available,  would not be  sufficient  to make payments of principal or
redemption  price of, and interest on, the Bonds when such payments are due, the
Company  will pay the  amounts  required  from  time to time to make up any such
deficiency.

         SECTION 2.06. MANNER OF PAYMENT. The payments provided for herein shall
be paid in  immediately  available  funds,  on the date on which such payment is
due,  directly  to the Trustee  for the  account of the  Authority  and shall be
deposited in the Bond Fund, except that payments made pursuant to Sections 7.05,
8.03 and 8.04 hereof shall be made directly to the party to whom such payment is
due and owing.

         SECTION  2.07.  SECURITY FOR THE LOANS.  As security for the  Company's
obligation  to make the payments  required  hereunder and under the Notes and to
secure its performance of all obligations and liabilities  under the Notes, this
Loan  Agreement and the other Loan  Documents,  the Company hereby grants to the
Authority a  continuing  first lien  security  interest in all of the  Company's
right, title and interest in and to the fixtures or equipment acquired, or to be
acquired,  with the Loan  proceeds  now owned by the Company as set forth in the
attached  SCHEDULE A, or hereafter  acquired by the Company,  including  without
limitation, those articles of personal property and all rights of the Company in
any warranty or service agreement pertaining to such fixtures and equipment, now
or hereinafter in effect, together with all additions and accretions thereto and
all replacements or substitutions therefor  (collectively the "Collateral").  It
is the  intent  of the  Company  and the  Authority  that  this  Loan  Agreement
constitute a security agreement as defined in N.J.S.A. 12A:9-105.

         In the Mortgage and the  Assignment of Leases,  the Company has granted
the Authority a first lien on the Premises and a first priority right to collect
the rents  and  revenues  from the  Premises.  In the  Security  Agreement,  the
Guarantor  has granted the Authority a first lien on the equipment and machinery
described therein.

                                       12
<PAGE>

         SECTION 2.08.  CANCELLATION OF BONDS UPON PAYMENT IN FULL. Upon payment
in full of the  principal  of,  premium,  if any and interest on the Bonds,  the
Holders  shall  surrender  the Bonds to the  Trustee for  cancellation,  and the
Trustee shall  thereupon  deliver a certificate of  cancellation of the Bonds to
the Authority.

         SECTION 2.09.  PREPAYMENT OF LOANS UPON CERTAIN  CONDITIONS.  The Loans
may be prepaid by the Company only as permitted in the Notes and this Agreement.
The Bonds are subject to redemption as provided in the Indenture.

         SECTION 2.10.  DAMAGE,  DESTRUCTION OR CONDEMNATION.  In the event that
the Project is damaged or destroyed or title to or temporary use of a portion of
the Project shall be taken under the exercise of the power of eminent  domain by
any  governmental   authority  or  person,  firm  or  corporation  acting  under
governmental  authority,  the Company  shall  rebuild,  restore or replace  such
damaged,  destroyed or condemned  portion of the Project to a condition which is
of  comparable  usefulness  to that  existing  prior  to such  event,  provided,
however,  (a)  that  prior  to  utilizing  the  proceeds  of  any  insurance  or
condemnation  award, the Company shall,  within twelve months of the destruction
or  condemnation  provide the Trustee  with (i) a cost  estimate of the costs of
restoration  prepared by an  engineering  or  architectural  firm of  recognized
standing,  (ii) the proceeds of the award,  and (iii) cash or a letter of credit
from a bank in an amount equal to the  difference  between the cost estimate and
the proceeds, and (b) provided,  however, that the Company shall have the option
to prepay or in the event the Company fails to meet the conditions in (a) above,
shall prepay the Loans in full (without  prepayment penalty or premium) upon the
following conditions:

                  1.       the Project  shall have been  damaged or destroyed to
         the extent that either (i) the Project  cannot be  reasonably  restored
         within  a  period  of  eighteen  (18)  months  from  the  date  of such
         destruction  or  condemnation  to  the  condition  thereof  immediately
         preceding  such damage or  destruction or (ii) the Company is prevented
         from carrying on its normal  operations in connection  with the Project
         for a period of eighteen  (18)  months,  and the Company  abandons  the
         Project; or

                  2.       upon a condemnation  of all or a substantial  portion
         of the  site of the  Project  and  either  (i) the  Project  cannot  be
         reasonably  restored  within a period of eighteen  (18) months from the
         date of such  destruction or  condemnation to a condition of comparable
         usefulness  to that  existing  prior to such taking or (ii) such taking
         results in the  Company  being  prevented  from  carrying on its normal
         operations in connection therewith for a period of eighteen (18) months
         and the Company abandons the Project.

         In the event that the Company  does not  exercise  its option to prepay
the Loans,  the proceeds from any insurance  settlement  or  condemnation  award
shall be applied to rebuild,  restore or replace the Project,  and shall be paid

                                       13
<PAGE>

to the Trustee for deposit in the Project  Fund,  to be disbursed in  accordance
with Section 3.02 of this Agreement.

         The  Company  shall also have the right to prepay  the  Loans,  without
penalty  or  premium,  in  the  event  that  the  Loans  shall  become  void  or
unenforceable  or impossible of  performance  in accordance  with the intent and
purpose of the parties as expressed in this Agreement as a result of any changes
in the  Constitution  of the State or the  Constitution  of the United States of
America or of legislative or administrative action (whether State or federal) or
by final decree,  judgment or order of any court or administrative body (whether
State or federal)  entered  after the contest  thereof by the  Authority  or the
Company in good faith.

         Upon any such prepayment,  or any prepayment permitted under the Notes,
the Company shall furnish the Trustee with written notice of such  redemption at
least sixty (60) days prior to the intended redemption date.

         SECTION 2.11. NO PERSONAL RECOURSE.  No covenant or agreement contained
in this Loan  Agreement or in any other Loan Document  shall be deemed to be the
covenant  or  agreement  of any  officer,  director,  agent,  or employee of the
Company in his individual  capacity,  and no person executing the Loan Documents
on behalf of the Company shall be liable personally  thereunder or be subject to
any personal liability or accountability by reason of the execution thereof.

                                       14
<PAGE>

                                   ARTICLE III

                             ESTABLISHMENT OF FUNDS
                           AND APPLICATION OF PROCEEDS

         SECTION 3.01.  APPLICATION OF BOND PROCEEDS.  In order to provide funds
for the Loans,  the Authority,  concurrently  with the execution and delivery of
this Loan  Agreement,  will sell,  issue and deliver  the  Initial  Bonds to the
Placement  Agent and  deposit all of the  proceeds  of the Bonds  (less  accrued
interest received from the Placement Agent and the Placement Agent's fee) in the
applicable account in the Project Fund in accordance with the Authority's letter
of  instructions to the Trustee.  Bond Proceeds  representing  accrued  interest
shall be deposited into the Bond Fund in accordance with the Authority's  letter
of instructions to the Trustee.

         SECTION  3.02.  DISBURSEMENTS  FROM THE  PROJECT  FUND.  The  Authority
authorizes and directs the Trustee to make  disbursements  from the Project Fund
of Bond Proceeds or any funds deposited in the Project Fund from the proceeds of
any insurance  settlement or condemnation award to Persons for work performed on
the  Project or to  reimburse  the  Company  for any costs and  expenses  of the
Project paid by it. Each disbursement shall be made upon delivery to the Trustee
of the following:

         (a)      A   Requisition   Form   signed  by  an   Authorized   Company
Representative.

         (b)      Either   (1)   a   certificate   of  an   Authorized   Company
Representative  stating that, for purposes of the Prevailing  Wage Provision and
the Affirmative  Action Program,  none of the moneys  disbursed at any time from
the  Project  Fund will be used to pay or  reimburse  a payment for work done in
performance  of any  Construction  Contract  unless prior thereto there shall be
submitted  to  the  Trustee  an  executed  Contractor's  Certificate  or  (2)  a
Contractor's Certificate executed by the Contractor.  Nevertheless, prior to the
initial  disbursement  from the  Project  Fund for  payment of any  Construction
Contract,  if not theretofore  furnished,  a Contractor's  Certificate  shall be
submitted;  provided that the foregoing  shall not apply to the  disbursement of
the Proceeds of the Bonds.

         (c)      With  respect  to any  requisition  for  monies to be  applied
toward the purchase or reimbursement for the purchase of fixtures or any item of
machinery,  equipment or other tangible personal property,  Financing Statements
to be filed with the Clerk of Bergen County and the Secretary of the Treasury of
the State including a description of each item of such Collateral sufficient for
the creation and  perfection  of a security  interest  therein under the Uniform
Commercial  Code of the State.  The Company  shall not be entitled to any moneys
for any item of property which  constitutes  collateral under any other security
agreement without first obtaining the consent of the Authority and obtaining and
properly  filing the consent of the secured party under such security  agreement
that such security  interest

                                       15
<PAGE>

thereunder shall be subordinate to the security  interest granted by the Company
herein.

         (d)      Such  additional  documents,   affidavits,   certificates  and
opinions as the Authority may reasonably require.

         There shall be retained in the Project  Fund an amount equal to ten per
centum (10%) of each sum  requisitioned for payment or reimbursement for payment
of a  Construction  Contract for purposes of the  Affirmative  Action Program (a
"holdback");  provided, however, if any such requisitioned sum is for payment or
reimbursement  of a payment by the Company,  which payment  itself is or was for
only  ninety per centum  (90%) of the payment  requested  by the  Contractor  or
Subcontractor  pursuant to such Construction  Contract,  then such requisitioned
sum may be paid or reimbursed without regard to the aforementioned holdback, but
the remaining ten per centum (10%),  when  requisitioned  by the Company,  shall
only be disbursed upon the satisfaction of the holdback  conditions  hereinafter
set  forth.  Said  holdback  shall be  disbursed  from  the  Project  Fund  upon
compliance  with the preceding  terms and conditions of this Section and (i) the
execution  and  filing  of the  Contractor's  Completion  Certificate,  (ii) the
execution and filing of the Company's Completion  Certificate,  (iii) receipt by
the Company of a written notice issued by the Authority's  Office of Affirmative
Action that the Contractor has complied with the requirements of the Affirmative
Action  Program  and  (iv)   certification  to  the  Trustee  by  an  Authorized
Representative  of the  Company  of  compliance  with the  conditions  stated in
clauses (i) through (iii) above.

         Upon receipt of each such requisition and accompanying certificate, the
Trustee  shall  make  payment  from the  Project  Fund in  accordance  with such
requisition.

         SECTION 3.03. NO LIABILITY OF AUTHORITY OR TRUSTEE.  Nothing  contained
herein or in any documents and  agreements  contemplated  hereby or in any other
Loan Document  shall impose upon the Trustee or the Authority any  obligation to
ensure the proper  application of such disbursements by the Company or any other
recipient  thereof.  The  Trustee  and the  Authority  shall be  relieved of any
liability  with  respect to making such  disbursements  in  accordance  with the
foregoing.

         SECTION 3.04.  ESTABLISHMENT  OF COMPLETION DATE. The completion of the
Project  shall  be  evidenced  to  the  Trustee  by  the  Company's   Completion
Certificate signed by an Authorized Company  Representative  stating the date of
completion of the Project and that, as of such date, except for amounts retained
by the Trustee at the Company's written direction for any Project Costs not then
due and payable or if due and  payable  not then paid,  (i) the Project has been
completed, (ii) all labor, services,  materials and supplies used in the Project
have been paid for,  (iii) the  equipment  necessary  for the  Project  has been
installed to the Company's satisfaction, such equipment so installed is suitable
and  sufficient  for the  efficient  operation  of the Project for the  intended
purposes and all costs and expenses incurred in the

                                       16
<PAGE>

acquisition  and  installation  of such  equipment  have  been paid and (iv) the
Project is being operated as contemplated  herein.  Any moneys  remaining in the
Project Fund upon  submission of the Completion  Certificate not required by the
written direction of the Company to be held to pay any outstanding invoice shall
be  transferred  by the Trustee to the Principal  Account in the Bond Fund or as
otherwise  permitted in Section 4.09 of the Indenture.  The Company shall direct
the  Trustee  in writing to apply  such  moneys in  increments  of $5,000 to the
redemption of the Bonds. For any moneys not in increments of $5,000, the Company
shall  direct the Trustee in writing to apply such moneys to the next  principal
and/or interest payments coming due on the Bonds.

         SECTION 3.05. COMPANY REQUIRED TO PAY IF PROJECT FUND INSUFFICIENT.  In
the event the moneys in the Project Fund  available for payment of the Costs are
not  sufficient to pay all Costs of the Project in full,  the Company  agrees to
complete  the  Project  and to pay that  portion  of the  Costs in excess of the
moneys  available  therefor in the Project Fund. The Authority does not make any
warranty,  either express or implied, that the moneys paid into the Project Fund
and  available for payment of Project Costs will be sufficient to pay all of the
Costs.  The Company agrees that if, after  disbursement of all the moneys in the
Project Fund,  the Company  should pay any portion of the Costs  pursuant to the
provisions  of this  Section,  it shall  not be  entitled  to any  reimbursement
therefor from the Authority, the Trustee or the holders of the Bonds.

         SECTION 3.06  RESTRICTION ON USE OF PROJECT FUND. The Company (i) shall
not use or direct the use of moneys from the Project Fund in any way, or take or
omit to take any other  action,  so as to cause the  interest on any  Tax-exempt
Bonds to become  subject to federal  income tax, (ii) shall not use more than 2%
of the proceeds of the  Tax-exempt  Bonds for costs of issuance  thereof,  (iii)
shall not use more than 25% of the Net Proceeds of the Tax-exempt  Bonds for the
acquisition  of land,  (iv)  shall use at least 95% of the Net  Proceeds  of the
Tax-exempt  Bonds,  including any interest  earnings  thereon not rebated to the
United States, for Project Costs constituting land (subject to the limitation in
(iii) above) or property of a character subject to an allowance for depreciation
for federal  tax  purposes  within the  meaning of Section 167 of the Code,  and
shall use at least 95% of the Net Proceeds to provide a "manufacturing facility"
within the meaning of Section 144(a)(12)(C) of the Code.

         SECTION 3.07  COMPLETION OF PROJECT  FACILITIES;  EXCESS BOND PROCEEDS.
When the  Company  certifies  to the Trustee  and the  Authority,  in the manner
provided in Section 3.04 hereof,  that the acquisition of the Project Facilities
is complete,  any amounts  remaining in the Project Fund will be  transferred to
the Bond Fund and  applied by the  Trustee in  accordance  with or as  otherwise
permitted by Section 4.09 of the Indenture.  If for any reason the amount in the
Project Fund proves  insufficient  to pay all Costs of the Project,  the Company
will pay the remainder of such Costs.

         SECTION  3.08.  THE  TRUSTEE.  The  Trustee  shall act on behalf of the
Bondholders  under the  Indenture  only insofar as its duties are  expressly set

                                       17
<PAGE>

forth and shall not have any implied  duties but may  exercise  such  additional
powers as are reasonably incidental thereto.  Neither the Trustee nor any of its
officers, directors, agents or employees shall be liable for any action taken or
omitted to be taken by it hereunder or in connection  herewith except for its or
their own  negligence  or willful  misconduct.  The Trustee shall not be under a
duty to examine or pass upon the validity,  effectiveness  or genuineness of any
Loan Document or any direction, report, affidavit, certificate, opinion or other
instrument,  document or  agreement  related  thereto,  and shall be entitled to
assume that the same are valid, effective,  genuine and what they purport to be.
The Trustee may consult with legal counsel  selected by it, and any action taken
or suffered by it in  accordance  with the opinion of such counsel shall be full
justification  and  protection to it. The Trustee shall have the same rights and
powers as any other bank or lender and may  exercise  the same as though it were
not the Trustee;  and it may accept  deposits from,  lend money to and generally
engage  in any kind of  business  with the  Company  as  though  it were not the
Trustee.

                                       18
<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         SECTION 4.01.  REPRESENTATIONS  AND WARRANTIES.  The Company represents
and warrants to the Authority that:

         (a)      The availability of financial assistance from the Authority as
provided for herein has been an important inducement to the Company to undertake
the Project and to locate the Project in the State.

         (b)      The Company covenants that the representations, statements and
warranties of the Company set forth in the Applications,  this Agreement, or any
other Loan Document (1) are true,  correct and complete,  (2) do not contain any
untrue  statement  of a material  fact,  and (3) do not omit to state a material
fact necessary to make the statements contained herein or therein not misleading
or incomplete. The Company understands that all such statements, representations
and warranties  have been relied upon as an inducement by the Authority to issue
the Bond.

         (c)      (1)  Prior  to  leasing,   subleasing  or  consenting  to  the
subleasing or assignment of any lease of all or any part of the Project,  during
the  period  commencing  on the date  hereof  and (2) upon  the  request  of the
Authority  the Company  shall cause a Project  Occupant  Information  Form to be
submitted  to the  Authority  by every  prospective  lessee,  sublessee or lease
assignee of the Project.  The Company shall provide an Occupant  Application  to
the Authority for the approval of a new tenant. The Company shall not permit any
such  leasing,   subleasing  or  assigning  of  leases  that  would  impair  the
excludability  of interest paid on the Tax-exempt Bonds from the gross income of
the holder thereof for purposes of federal income taxation, or that would impair
the ability of the Company to operate the Project or cause the Project not to be
operated as an  authorized  project  under the Act or a  manufacturing  facility
under Section 144(a)(12)(c) of the Code.

         (d)      The Company shall maintain its existence as a legal entity and
shall  not sell,  assign,  transfer  or  otherwise  dispose  of the  Project  or
substantially  all of its assets without the consent of the Authority;  provided
however  that the Company  may merge with or into or  consolidate  with  another
entity,  and the Project or this Agreement may be  transferred  pursuant to such
merger or consolidation  without violating this section provided (1) the Company
causes the proposed  surviving,  resulting or transferee  company to furnish the
Authority with a Change of Ownership  Information Form; (2) the net worth of the
surviving,  resulting or transferee company following the merger,  consolidation
or transfer is equal to or greater than the net worth of the Company immediately
preceding  the  merger,   consolidation  or  transfer;  (3)  any  litigation  or
investigations  in which the surviving,  resulting or transferee

                                       19
<PAGE>

company  or  its  officers  and   directors   are   involved,   and  any  court,
administrative  or other orders to which the surviving,  resulting or transferee
company or its officers and directors are subject,  relate to matters arising in
the ordinary course of business; (4) the merger, consolidation or transfer shall
not impair the  excludability  of interest paid on the Tax-exempt Bonds from the
gross income of the holder  thereof for purposes of federal  income  taxation or
cause a  reissuance  pursuant  to an opinion  of a  nationally  recognized  Bond
counsel;  (5) the surviving,  resulting or transferee company assumes in writing
the obligations of the Company under this Agreement and the Notes; (6) after the
merger,  consolidation  or  transfer,  the  Project  shall  be  operated  as  an
authorized project under the Act; and (7) no Event of Default will have occurred
by reason of such  merger,  consolidation  or  transfer,  and no event will have
occurred by reason of such  merger,  consolidation  or  transfer  which with the
passage of time or giving of notice, would constitute an Event of Default.

         (e)      The Company shall not relocate the Project or any part thereof
(i) out of the State or (ii) within the State without the prior written  consent
of the Authority.

         (f)      The Company  shall operate or cause the Project to be operated
as an  authorized  project for a purpose  and use as provided  for under the Act
until  the  expiration  or  earlier  termination  of  this  Agreement  and  as a
manufacturing  facility under Section  144(a)(12)(c)  of the Code for so long as
the Tax-exempt Bonds are Outstanding.

         (g)      On each anniversary  hereof,  the Company shall furnish to the
Authority the following:

                  (i)      a certification indicating whether or not the Company
         is aware of any condition,  event or act which  constitutes an Event of
         Default,  or which would constitute an Event of Default with the giving
         of notice or passage of time, or both, under any of the Loan Documents;

                  (ii)     a  written  description  of  the  present  use of the
         Project and a description of any anticipated material change in the use
         of the Project or in the number of  employees  employed at the Project;
         and

                  (iii)    a report  from every  entity  that leases or occupies
         space at the  Project  indicating  the  number of  persons  the  entity
         employs at the Project.

         (h)      The  Company  shall  comply with the  Authority's  Affirmative
Action and Prevailing Wage Rate Regulations and to that end:

                  (i)      insert in all construction bid specifications for any
         Construction Contract the following provisions:

                  Construction  of  this  project  is  subject  to  the
                  Affirmative  Action  Regulations  of the  New  Jersey
                  Economic  Development   Authority  which  establishes

                                       20
<PAGE>

                  hiring  goals for minority  and female  workers.  Any
                  contractor or subcontractor  must agree to make every
                  effort  to meet the  established  goals and to submit
                  certified   reports  and  records   required  by  the
                  Authority.   Copies   of   the   Affirmation   Action
                  Regulations  may be obtained by writing to: Office of
                  Affirmative  Action, New Jersey Economic  Development
                  Authority,  One Gateway Center,  Suite 2403,  Newark,
                  New Jersey 07102;

                  Submission of a bid  signifies  that the bidder knows
                  the   requirements   of   the   Affirmative    Action
                  Regulations  and signifies the bidder's  intention to
                  comply.  Construction  of this  project is subject to
                  N.J.A.C.   19:30-3.1  ET  SEQ.  Workers  employed  in
                  construction  of this  project must be paid at a rate
                  not less than the prevailing wage rate established by
                  the New Jersey Commissioner of Labor;

                  (ii)     Include   in   all   Construction   Contracts   those
         provisions which are set forth in the Addendum to Construction Contract
         annexed hereto as EXHIBIT B;

                  (iii)    Obtain  from  all   contractors  and  submit  to  the
         Authority a  Contractor's  Certificate  in the form  annexed  hereto as
         EXHIBIT  C within  three  (3)  Business  Days of the  execution  of any
         Construction Contract;

                  (iv)     Create  an  office  of  Company   Affirmative  Action
         Officer  and  maintain  in that  office  until the  completion  date an
         individual  having  responsibility  to  coordinate  compliance  by  the
         Company with the Authority's  Affirmative Action Regulations and to act
         as liaison with the Authority's Office of Affirmative Action;

                  (v)      Submit to the  Authority  on the  completion  date, a
         Completion Certificate in the form annexed hereto as EXHIBIT D; and

                  (vi)     Furnish  to  the  Authority  all  other  reports  and
         certificates  required  under the  Authority's  Affirmative  Action and
         Prevailing Wage Rate Regulations.

         (i)      (1) The  Company  will at all times  preserve  and protect the
Project in good repair, working order and safe condition,  and from time to time
will make, or will cause to be made,  all needed and proper  repairs,  renewals,
replacements,  betterments  and  improvements  thereto  including those required
after a casualty  loss.  The  Company  shall pay all  operating  costs,  utility
charges and other costs and expenses arising out of ownership,  possession,  use
or operation of the Project, The Authority shall have no obligation and makes no
warranties respecting the condition or operation of the Project.

                                       21
<PAGE>

                  (2) The  Company  will not use as a basis for  contesting  any
assessment  or levy of any tax the  financing  under the Loan  Agreement  or the
issuance of the Bonds by the Authority and, if any administrative  body or court
of competent  jurisdiction  shall hold for any reason that the Project is exempt
from taxation by reason of the financing  under this Loan  Agreement or issuance
of the Bonds by the Authority or other Authority action in respect thereto,  the
Company  covenants to make payments in lieu of all such taxes in an amount equal
to such taxes and, if applicable, interest and penalties.

         (j)      (1) The Company covenants that it will not take any action, or
fail to take any  action,  if any such  action or failure to take  action  would
adversely  affect  the  exclusion  from  gross  income  of the  interest  on any
Tax-exempt Bonds under Section 103 of the Code. The Company will not directly or
indirectly use or permit the use (including the making of any investment) of any
proceeds  of the  Tax-exempt  Bonds or any other funds of the  Authority  or the
Company,  or take or omit to take any action,  that would  cause the  Tax-exempt
Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code.

                  (2) The  Company  hereby  covenants  that in  connection  with
complying  with the  requirement  for payment of the Rebatable  Arbitrage to the
United  States with  respect to the Tax- exempt  Bonds the Company will take the
following actions:

                  (i)      Six (6) months  after  closing,  the Company
         will provide a written  certification to the Authority and the
         Trustee  indicating  whether the Company complied with the six
         (6) month  exception to the arbitrage  rebate  requirement set
         forth in Section 148(f)(4)(B) of the Code,

                  (ii)     Unless the Company has complied with the six
         (6) month  exception,  it will retain a Rebate Expert  (Rebate
         Expert means any of the following  chosen by the Company:  (a)
         Bond Counsel, (b) any nationally  recognized firm of certified
         public accountants, (c) any reputable firm which offers to the
         tax-exempt bond industry rebate calculation services and holds
         itself out as having expertise in that area, or (d) such other
         person as is  approved by Bond  Counsel)  on or within  thirty
         (30) days before the Initial  Rebate  Computation  Date and on
         each Rebate  Computation Date  thereafter,  (A) to compute the
         Rebatable  Arbitrage with respect to the Tax-exempt  Bonds for
         the period ending on Initial Rebate  Computation  Date, (B) to
         deliver an opinion to the  Authority  and Trustee,  concerning
         its  conclusions  with  respect to the amount (if any) of such
         Rebatable Arbitrage together with a written report providing a
         summary of the calculations  relating thereto.  If the Company
         has  complied  with the six (6) month  exception,  the Company
         will  retain a Rebate  Expert to  deliver  an  opinion  to the
         Authority  and Trustee  that all of the gross  proceeds of the
         Tax-exempt  Bonds (within the meaning of Section 148(f) of the
         Code),  other than gross proceeds of the  Tax-exempt  Bonds on
         deposit in a bona fide

                                       22
<PAGE>

         debt service fund (within the meaning of Section  148(f)(4) of
         the Code), have been expended on or prior to the expiration of
         such six (6) month period.

                  (iii)    In the event the amount in the Project  Fund
         is  insufficient  to fund the Rebate Fund,  the Company  shall
         within ten (10) days of receipt of the report furnished by the
         Rebate  Expert  pursuant to  subparagraph  (ii) above,  pay or
         cause to be paid to the Trustee  for  deposit  into the Rebate
         Fund the  difference  between the amount  required to fund the
         Rebatable Arbitrage. If the Company fails to make or causes to
         be made any payment  required  pursuant  to this  subparagraph
         (iii) when due, the Authority shall have the right,  but shall
         not be required, to make such payment to the Trustee on behalf
         of the Company.  Any amount advanced by the Authority pursuant
         to this subparagraph  (iii) shall be added to the moneys owing
         by the Company  under this  Agreement  and shall be payable on
         demand with interest at the higher of the interest rate of the
         Tax-exempt Bonds or the default rate provided in the Notes, if
         any.

                  (iv)     Each  payment of  Rebatable  Arbitrage to be
         paid to the United  States  shall be filed  with the  Internal
         Revenue  Service  Center,  Ogden,  Utah, or such other address
         that may be specified by the Internal  Revenue  Service.  Each
         payment  shall be  accompanied  by Form  8038-T (or such other
         form required by the Internal Revenue Service furnished by the
         Company or the  Authority),  executed by the Authority,  and a
         statement  identifying  the Authority,  the date of the issue,
         the CUSIP  number for the  Tax-exempt  Bonds with the  longest
         maturity (if any) and a copy of the applicable Form 8038.

                  (v)      In the event Rebatable  Arbitrage is due the
         Company  will direct the  Trustee to withdraw  from the Rebate
         Fund and pay over to the United States the Rebatable Arbitrage
         with  respect  to the  Tax-exempt  Bonds  in  installments  as
         follows:  each payment shall be made not later than sixty (60)
         days after the then current Rebate  Computation Date and shall
         be in an amount  which  ensures that the  Rebatable  Arbitrage
         with  respect  to the  Bond,  as of the  then  current  Rebate
         Computation Date, will have been paid to the United States.

                  (vi)     The Company  acknowledges that the Authority
         shall have the right at any time and in the sole and  absolute
         discretion of the Authority to obtain from the Company and the
         Trustee the  information  necessary  to  determine  the amount
         required to be paid to the United  States  pursuant to Section
         148(f) of the Code.  Additionally,  the  Authority  may,  with
         reasonable  cause,  (A)  review  or cause to be  reviewed  any
         determination  of the amount to be paid to the  United  States
         made by or on behalf of the  Company  and (B)

                                       23
<PAGE>

         make or retain a Rebate  Expert to make the  determination  of
         the amount to be paid to the United States. The Company hereby
         agrees to be bound by any such review or determination, absent
         manifest  error,  to pay the costs of such  review,  including
         without limitation the reasonable fees and expenses of counsel
         or a Rebate Expert  retained by the  Authority,  and to pay to
         the Trustee any  additional  amounts for deposit in the Rebate
         Fund   required   as  the   result  of  any  such   review  or
         determination.

                  (vii)    Notwithstanding   any   provision   of  this
         Subection to the contrary,  the Company  shall be liable,  and
         shall  indemnify  and  hold  the  Authority  and  the  Trustee
         harmless against any liability, for payments due to the United
         States  pursuant to Section 148(f) of the Code.  Further,  the
         Company specifically agrees that neither the Authority nor the
         Trustee shall be held liable,  or in any way responsible,  and
         the Company shall  indemnify and hold harmless the Trustee (or
         Agent) and Authority against any liability, for any mistake or
         error in the filing of the payment or the determination of the
         amount  due to the  United  States  or  for  any  consequences
         resulting  from any such mistake or error.  The  provisions of
         this  subparagraph  (vii) shall  survive  termination  of this
         Agreement and the resignation or removal of the Trustee.

                  (viii)   The  Authority,  the Trustee and the Company
         acknowledges  that  the  provisions  of  this  Subsection  are
         intended  to comply  with  Section  148(f) of the Code and the
         regulations  promulgated  thereunder  and if as a result  of a
         change  in  such  Section  of  the  Code  or  the  promulgated
         regulations  thereunder or in the  interpretation  thereof,  a
         change in this  Subsection  shall be permitted or necessary to
         assure  continued  compliance  with Section 148(f) of the Code
         and the promulgated regulations thereunder,  then with written
         notice to the Trustee,  the Authority and the Company shall be
         empowered  to amend  this  Subsection  and the  Authority  may
         require, by written notice to the Company and the Trustee, the
         Company to amend this  Subsection  to the extent  necessary or
         desirable to assure  compliance with the provisions of Section
         148 of the Code and the  regulations  promulgated  thereunder;
         provided  that  either  the  Authority  or the  Trustee  shall
         require,  prior to any such amendment becoming  effective,  at
         the sole cost and expense of the  Company,  an opinion of Bond
         Counsel  satisfactory  to the  Authority  to the  effect  that
         either  (A)  such   amendment  is  required  to  maintain  the
         exclusion  from gross income under  Section 103 of the Code of
         interest paid and payable on the Tax-exempt  Bonds or (B) such
         amendment shall not adversely  affect the exclusion from gross
         income under  Section 103 of the Code of the interest  paid or
         payable on the Tax-exempt Bonds.

                                       24
<PAGE>

                  (ix)     The term "Initial Rebate  Computation  Date"
         shall  mean the  first  Computation  Date.  The  term  "Rebate
         Computation Date" shall mean the subsequent  Computation Date.
         The term "Computation Date" shall have the meaning assigned to
         such term as set forth in Treasury  Regulation  Section 1.148-
         3(e).

         (k)      All expenses in connection  with the  preparation,  execution,
delivery,  recording and filing of this Loan Agreement,  the Notes, the Mortgage
and other collateral documents and in connection with the preparation,  issuance
and  delivery  of the Bonds,  the  Authority's  fees,  the fees and  expenses of
McManimon & Scotland, L.L.C., the fees and expenses of the Trustee, the fees and
expenses  of  Trustee's  counsel  and the fees and  expenses  of  counsel to the
initial  beneficial  owners of the Bonds shall be paid  directly by the Company.
The  Company  shall also pay  throughout  the term of the Bonds the  Authority's
annual fees and expenses and the Trustee's  annual and special fees and expenses
under the Indenture, the Loan Agreement, the Notes and the Mortgage,  including,
but not  limited  to,  reasonable  attorney's  fees and all  costs  of  issuing,
marketing,  collecting  payment on and redeeming the Bonds  thereunder,  and any
costs and expenses of any Bond holder (or beneficial  holder) in connection with
any approval, consent or waiver under, or modification of, any such document.

         (l)      The  parties  hereto  shall  execute,  at the  request  of the
Company,  and the Company shall file such other  documents  necessary to perfect
all security interests created pursuant to the terms of this Loan Agreement, the
Mortgage  and  the  Indenture  and  relevant  continuation  statements  and  the
Authority shall have no responsibilities for such filings whatsoever, other than
executing the documents requested by the Company.

         (m)      The Tax-exempt Bonds will not be federally  guaranteed  within
the meaning of Section 149(b) of the Code. For purposes of this  representation,
no Principal  User of the Project has entered into any leases of the Project to,
or any sales or service  contracts with, any federal  government agency with the
result that the Tax-exempt Bonds are so federally  guaranteed within the meaning
of Section 149(b) of the Code.

         SECTION 4.02.  ORGANIZATION,  POWERS, ETC. The Company is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of  Delaware,  is  authorized  to do  business  in the  State  and has the
authority to own its  properties  and assets and to carry on its business as now
being  conducted (and as now  contemplated  by the Company) and has the power to
perform all the  undertakings of the Loan Documents,  to borrow hereunder and to
execute and deliver the Loan Documents.

         SECTION 4.03. EXECUTION OF LOAN DOCUMENTS. The execution,  delivery and
performance by the Company of the Loan Documents and other instruments  required
by this Agreement:

         (a)      have been duly authorized by all requisite action;

                                       25
<PAGE>

         (b)      do not and will not conflict  with or violate any provision of
law, rule or regulation, any order of any court or other agency of government;

         (c)      do not and will not conflict  with or violate any provision of
any corporate agreement of the Company;

         (d)      do not and will not  violate or result in a default  under any
provision of, or, result in any material default under any indenture,  agreement
or other instrument; and

         (e)      do not and will not result in the  creation or  imposition  of
any lien,  charge or encumbrance of any nature,  other than the liens created or
permitted by the Loan Documents.

         SECTION 4.04.  TITLE TO  COLLATERAL.  The Company has or will have good
and marketable title to the Collateral free and clear of any lien or encumbrance
except for the Permitted  Encumbrances.  Upon filing the Financing Statements in
the  appropriate  offices,  the Authority will have a prior  perfected  security
interest in the property listed therein and on the SCHEDULE A attached hereto.

         SECTION 4.05. LITIGATION. There is no action, suit or proceeding at law
or in equity or by or before any  governmental  instrumentality  or other agency
now pending or, to the knowledge of the Company, threatened against or affecting
it or any of its properties or rights which, if adversely determined,  would (i)
materially affect the transactions contemplated hereby, (ii) affect the validity
or enforceability of the Loan Documents, (iii) affect the ability of the Company
to perform its obligations under the Loan Documents,  (iv) materially impair the
value of the Collateral,  (v) materially  impair the Company's right to carry on
its business  substantially  as now conducted  (and as now  contemplated  by the
Company)  or (vi) have a  material  adverse  effect on the  Company's  financial
condition.

         SECTION 4.06.  PAYMENT OF TAXES.  The Company has filed or caused to be
filed all federal,  State and local tax returns  which are required to be filed,
and has paid or caused to be paid all taxes as shown on said  returns  or on any
assessment received by it, to the extent that such taxes have become due.

         SECTION  4.07.  NO  DEFAULTS.  The  Company  is not in  default  in the
performance,  observance  or  fulfillment  of any of the  material  obligations,
covenants or  conditions  contained in any material  agreement or  instrument to
which it is a party or by which it is bound.  The Company is not now in default,
nor has it at any  time  been in  default  in the  payment  of  principal  of or
interest on any of its  obligations to the Authority or the payment of principal
of or interest on any other debt obligations.

                                       26
<PAGE>

         SECTION 4.08. NO MATERIAL  ADVERSE  CHANGE.  There has been no material
adverse  change in the financial  condition of the Company since the date of the
financial statements submitted with the Applications.

         SECTION 4.09.  INTENTIONALLY OMITTED.

         SECTION 4.10.  OBLIGATIONS OF THE COMPANY. The Loan Documents have been
duly executed and delivered and are legal, valid and binding  obligations of the
Company enforceable against it in accordance with their respective terms.

         SECTION  4.11.  NO  UNTRUE   STATEMENTS.   The  Loan   Documents,   the
Applications,  or any other document,  certificate or statement furnished to the
Trustee  or the  Authority  by or on behalf of the  Company do not  contain  any
untrue  statement of a material fact or omit to state a material fact  necessary
in order to make the statements  contained  herein and therein not misleading or
incomplete.  It is specifically  represented that the Company is not involved in
any  litigation  nor  is the  subject  of any  investigation  or  administrative
proceeding  except  as  disclosed  in  the  Applications.   It  is  specifically
understood  by  the  Company  that  all  such  statements,  representations  and
warranties  shall be deemed  to have been  relied  upon by the  Authority  as an
inducement  to make the Loans and that if any such  statements,  representations
and warranties were false at the time they were made,  they shall  constitute an
Event of Default as defined in Section 7.01 and the  Authority may then exercise
the remedies provided for in this Agreement.

         SECTION  4.12.  NO ACTION.  The Company has not taken and will not take
any action and knows of no action that any other  Person has taken or intends to
take, which would cause interest income on the Tax-exempt Bonds to be includable
in the gross income of the recipients thereof for federal income tax purposes.

         SECTION  4.13.  DESIGN OF THE PROJECT.  The operation of the Project in
the manner presently  contemplated and as described in the Applications will not
conflict with any current  zoning,  water,  air  pollution or other  ordinances,
orders,  laws or  regulations  applicable  thereto.  The  Company has caused the
Project to be designed in accordance  with all federal,  State and local laws or
ordinances  (including  rules and  regulations)  relating  to zoning,  building,
safety and environmental quality. The Company will complete the Project pursuant
to this Agreement.

         SECTION 4.14.  COMMENCEMENT OF PROJECT; PROPER CHARGES. Other than that
portion of the Project  funded with the proceeds of the 1999 Bonds,  the Project
commenced  subsequent to sixty (60) days prior to June 14, 2005. The Company has
not paid any  expense  prior to such date for which it shall seek  reimbursement
from the Project Fund, other than a Proper Charge.

         SECTION 4.15.  LIMITATION ON  EXPENDITURES;  PRINCIPAL USER. The sum of
the following does not exceed $10,000,000:

                                       27
<PAGE>

         (a)      the aggregate amount of any outstanding  issues of obligations
(other than the Tax- exempt Bonds) exempt from taxation under Section  144(a)(4)
of the Code,  the proceeds of which were or will be used  primarily with respect
to facilities (i) located within the Project  Municipality  or  "contiguous"  or
"integrated"  facilities located in any adjacent political jurisdiction and (ii)
the  Principal  User of which is or will be the  Company or any other  Principal
User of the Project or any Related Person;

         (b)      the  aggregate  amount  of any  capital  expenditures  paid or
incurred  by the Company or other  Principal  User of the Project or any Related
Person to the Company or other  Principal  User of the Project (other than those
financed out of the proceeds of the  Tax-exempt  Bonds or a bond  referred to in
subparagraph  (a) above) within the meaning of Treas.  Reg. Sec.  1.103-10(b)(2)
(ii) and (iii) and  Treas.  Reg.  Sec.  1.103-10(d)(2),  during the six (6) year
period beginning three (3) years prior to the date of issuance of the Tax-exempt
Bonds and ending  three (3) years  after such date of issuance  with  respect to
facilities   located  within  the  Project   Municipality   or  "contiguous"  or
"integrated" facilities located in any adjacent political jurisdiction;

         (c)      the  aggregate  amount  of all  capital  expenditures  paid or
incurred  for the three (3) year  period  prior to the date of  issuance  of the
Tax-exempt Bonds by any Person other than the Company or other Principal User of
the Project or a Related  Person to the Company or other  Principal  User of the
Project (e.g., a landlord or other lessor),  with respect to and for the benefit
of  facilities  located  within the  Project  Municipality  or  "contiguous"  or
"integrated"  facilities located in any adjacent political jurisdiction of which
a Principal User of the Project or any Related Person is a Principal User; and

         (d)      the aggregate principal amount of the Tax-exempt Bonds.

         As of the date hereof,  the Company is the only user and Principal User
of the Project.

         SECTION 4.16.  OUTSTANDING TAX-EXEMPT BONDS.

         (a)      Except for the Tax-exempt Bonds, there is outstanding no issue
of tax-exempt  bonds (including  industrial  development  bonds),  as defined in
Section 103 of the Code,  the proceeds  from the sale of which have been or will
be used with respect to  facilities,  the Principal  User of which is or will be
the Company or any Principal User of the Project and which are or will be wholly
or partially located in the Project Municipality.

         (b)      The aggregate face amount of the  Tax-exempt  Bonds when added
to the tax-exempt  facility-related  bonds (as defined in Section 144(a) (10)(B)
of the Code) allocated to the Company or any other Test Period Beneficiary which
are  outstanding  at the time of the  issuance  of the Tax-  exempt  Bonds  (not
including any tax-exempt  bonds to be redeemed from the Net Proceeds),  does not
exceed $40,000,000.

                                       28
<PAGE>

         SECTION  4.17.  PROJECT  MUNICIPALITY.  The  Project is located  wholly
within  the  borders  of the  Project  Municipality  and  the  Premises  are not
contiguous  with the  borders of any portion of the  Project  Municipality.  The
operation  of the  Project  is not  integrated  with any other  facility  in any
neighboring  municipality  operated by any Principal User of the Project. All of
the facilities financed by the Bond Proceeds of the Tax-exempt Bonds are located
within one state,  and neither  the Company nor any Related  Person is a user of
any  facility  financed by the  proceeds of the Tax- exempt Bonds other than the
Project.

         SECTION  4.18.  NO  TENANCIES.  No  Principal  User of the Project is a
tenant in any facility in the Project  Municipality,  the landlord of which is a
Person other than a Principal User of the Project.

         SECTION  4.19.  SUBSTANTIAL  USERS.  No Person (or any  Related  Person
within the meaning of Section  144(a)(3) of the Code) who was a substantial user
of the Project, within the meaning of Treas. Reg. Sec. 1.103-8(a)(5)(iv), at any
time during the five (5) year period immediately  preceding the date hereof, and
who will receive,  directly or indirectly,  proceeds of the Tax- exempt Bonds in
an amount  equal to five per centum  (5%) or more of the face amount of the Tax-
exempt Bonds in payment for his interest in the Project,  will be a  Substantial
User of the  Project  or a Related  Person at any time  during the five (5) year
period beginning on the date of issuance of the Tax-exempt Bonds.

         SECTION  4.20.  PLACEMENT  IN SERVICE.  The Project was not acquired or
placed in service by the Company  (determined in accordance  with the provisions
of Section 103 of the Code and applicable regulations  thereunder) more than one
(1) year prior to the date of issuance of the Tax- exempt Bonds.

         SECTION 4.21.  NO COMMON PLAN OF FINANCING.  Subsequent to sixteen (16)
days prior to the date  hereof,  the Company or any Related  Person (or group of
related  persons  which  includes  the Company)  has not  guarantied,  arranged,
participated in, assisted with,  borrowed the proceeds of, or leased  facilities
financed by  obligations  issued  under  Section 103 of the Code by any state or
local  governmental  unit  or  any  constituted  authority  empowered  to  issue
obligations by or on behalf of any state or local  governmental  unit other than
the  Authority.  During the period  commencing  on the date of  issuance  of the
Tax-exempt  Bonds and  ending  sixteen  (16) days  thereafter,  there will be no
obligations  issued under  Section 103 of the Code which are  guarantied  by the
Company or any Related  Person (or group of related  persons which  includes the
Company)  or which are issued with the  assistance  or  participation  of, or by
arrangement  with the Company or any Related Person (or group of related persons
which includes the Company) without the written opinion of McManimon & Scotland,
L.L.C.,  or other nationally  recognized Bond Counsel  acceptable to McManimon &
Scotland,  L.L.C.  to the effect that the issuance of such  obligation  will not
adversely affect their opinion as to exemption from present federal income taxes
of  interest  on the  Tax-exempt  Bonds.  Other than the  Company or any Related
Person (or group of related  persons  including the Company),  no person has (i)
guarantied,  arranged,  participated  in, assisted with

                                       29
<PAGE>

the  issuance  of,  or paid  any  portion  of the  cost of the  issuance  of the
Tax-exempt  Bonds, or (ii) provided any property or any franchise,  trademark or
trade name  (within  the  meaning of Code  Section  1253) which is to be used in
connection with the Project.

         SECTION 4.22.  USE OF PROCEEDS.

         (a)      Less than  twenty-five per centum (25%) of the Net Proceeds of
the  Tax-exempt  Bonds will be used directly or indirectly to acquire land or an
interest therein.

         (b)      No more than  twenty-five per centum (25%) of the Net Proceeds
of the Tax-exempt  Bonds will be used to provide  facilities the primary purpose
of which is: (i) retail food and beverage  services,  (ii)  automobile  sales or
service and (iii) the provision of recreation or entertainment.

         (c)      No portion of the  proceeds  of the  Tax-exempt  Bonds will be
used to provide any private or commercial  golf course,  country  club,  massage
parlor, tennis club, skating facility (including roller skating,  skateboard and
ice skating),  racquet  sports  facility  (including any handball or racquetball
court), hot tub facility, suntan facility, racetrack, airplane, skybox (or other
private  luxury  box),  any health club  facility,  gambling  facility or liquor
store.

         SECTION  4.23.  ECONOMIC  LIFE.  The  information  contained in the Tax
Certificate,  setting forth the  respective  cost,  economic  life, ADR midpoint
life, if any,  under Rev.  Proc.  72-10,  1972-1 C.B. 721, as  supplemented  and
amended from time to time, and guideline  life, if any, under Rev. Proc.  62-21,
1962-2 C.B.  118, as  supplemented  and amended from time to time, of each asset
constituting  the Project to be  financed  with the  proceeds of the  Tax-exempt
Bonds is true, accurate and complete.

         SECTION 4.24. AGGREGATION OF ISSUE FOR SINGLE PROJECT. The Project does
not share  "substantial  common  facilities",  within  the  meaning  of  Section
144(a)(9)  of the Code,  with any other  facility  financed  by any  outstanding
tax-exempt bonds.

         SECTION 4.25.  ENVIRONMENTAL REPRESENTATION.

         (a)      There   have  been  no  claims,   litigation,   administrative
proceedings,  whether actual or threatened,  or judgments or orders, relating to
any hazardous substances, hazardous wastes, discharges, emissions or other forms
of pollution  relating in any way to any property or  activities of the Company,
including without limitation,  the real property and improvements located at the
Premises.

         (b)      To the best of the Company's knowledge,  after due inquiry and
investigation,  there have been no hazardous  substances or hazardous wastes, as
defined by the Environmental  Cleanup  Responsibility  Act (N.J.S.A.  13:1k-6 ET
SEQ.),  as  amended  by  the  Industrial  Site  Recovery  Act  ("ISRA"),   Spill

                                       30
<PAGE>

Compensation   and  Control  Act  (N.J.S.A.   58:10-23.11  ET  SEQ.),   Resource
Conservation  and  Recovery  Act (42  U.S.C.  Subsection  6901 ET SEQ.)  and the
Comprehensive  Environmental  Responsibility  Compensation and Liability Act (42
U.S.C. Subsection 9601 ET SEQ.) generated,  manufactured,  refined, transported,
treated, stored, handled or disposed of on the Premises by the Company or at any
other location owned by the Company in the State.

         (c)      To the best of the Company's knowledge,  after due inquiry and
investigation,  there  have  been  no  discharges,  spillages  or  disposals  of
hazardous  substances or hazardous  wastes (as described in the prior paragraph)
on the Premises or at any other location owned by the Company in the State other
than as disclosed in the Placement Memorandum.

         (d)      The  Project  is not  subject to the  requirements  of Section
13:1k-9  of ISRA,  or, if it is  subject to such  requirements,  the  Company or
Company's transferor has complied with such provisions.

         SECTION  4.26.  COMPANY'S  INTEREST IN THE  COLLATERAL.  Subject to the
Permitted Encumbrances,  (a) it is the sole owner of each item of the Collateral
and it has  good  and  marketable  title  thereto,  free of all  other  security
interests,  liens,  encumbrances and claims or rights of others;  (b) it has the
full power and  authority to subject the  Collateral  to the security  interests
created  hereby and the Authority and the Trustee are being granted a first lien
security interest  therein;  (c) no dispute,  right of set-off,  counterclaim or
defenses  exist with  respect to any part of the  Collateral;  (d) the  security
interests  granted  to the  Authority  pursuant  to this Loan  Agreement,  are a
continuing first lien security  interest in the Collateral;  and (e) no mortgage
lien, security agreement,  equivalent  security,  financing  statement,  or lien
instrument  covering all or any part of the  Collateral is on file in any public
filing or recording office, and the filing of the Financing  Statements covering
the  security  interest  created  hereby  shall  continue in effect,  subject to
renewal  requirements,  if  any,  until  the  full  and  final  payment  of  the
indebtedness secured by this Agreement.

                                       31
<PAGE>

                                    ARTICLE V

                              CONDITIONS OF LENDING

         The  Authority's  obligation  to  lend  hereunder  is  subject  to  the
following conditions precedent:

         SECTION  5.01.  OPINION OF COUNSEL FOR THE COMPANY.  On or prior to the
date of the borrowing  hereunder,  the Authority shall have received the opinion
of Counsel for the Company,  dated the date of such borrowing,  addressed to the
Authority  and the  Trustee,  and  satisfactory  in form and  substance  to Bond
Counsel.

         SECTION  5.02.  OPINION  OF BOND  COUNSEL.  The  Authority  shall  have
received and  delivered to the Trustee the opinion of Bond Counsel  addressed to
the Authority and the Trustee that interest  income on the  Tax-exempt  Bonds is
exempt  from  inclusion  as gross  income  under  Section 103 of the Code and is
exempt  from  taxation  under the New  Jersey  Gross  Income  Tax Act;  that the
offering of the Bonds is not required to be registered  under the Securities Act
of 1933, as amended, or under the rules and regulations  promulgated thereunder;
that the Indenture is not required to be qualified under the Trust Indenture Act
of 1939,  as amended;  and that the Bonds have been duly  authorized  and issued
under the provisions of the Act.

         SECTION  5.03.  LOAN AND OTHER  DOCUMENTS.  The  Authority  shall  have
received and shall have delivered to the Trustee:

         (a)      This Loan Agreement duly executed by all parties thereto;

         (b)      The Indenture duly executed by all parties thereto;

         (c)      The original Notes executed by the Company;

         (d)      Certificates,   in  form  and  substance   acceptable  to  the
Authority,  evidencing  the insurance  required to be maintained by Section 6.02
hereof;

         (e)      The Mortgage executed by the Company;

         (f)      The Assignment of Leases executed by the Company; and

         (g)      All other documents  reasonably  required by the Authority and
the Trustee.

         SECTION 5.04.  LEGAL  MATTERS.  Legal  matters in  connection  with the
making of the Loans shall be satisfactory to Bond Counsel.

                                       32
<PAGE>

         SECTION 5.05. BOND ISSUANCE FEE. The Authority shall have received from
the Company the Bond issuance fee of $13,287.50.

                                       33
<PAGE>

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

         The Company  covenants and agrees, so long as this Loan Agreement shall
remain in effect or the Bonds shall be Outstanding, as follows:

         SECTION 6.01.  PRESERVATION OF PROPERTY AND THE COLLATERAL.

         (a)      The Company will at all times preserve and protect the Project
Facilities in good repair,  working order and  condition,  and from time to time
will make, or will cause to be made,  all needed and proper  repairs,  renewals,
replacements, betterments and improvements thereto.

         (b)      The Company will deliver to the  Authority,  at such intervals
as the Authority may require, such documents, lists, descriptions, certificates,
and other  information as may be necessary or proper to keep the Authority fully
informed with respect to the description of the Collateral.

         (c)      From  time to time  the  Company  will  promptly  execute  and
deliver to the  Authority,  at the sole expense of the  Company,  all such other
assignments, certificates, supplemental documents, and Financing Statements, and
do all other acts or things,  as the latter may  reasonably  request in order to
more fully evidence and perfect the security interest herein created.

         (d)      The Company will give written  notice to the  Authority of the
removal of the  Company's  principal  place of business,  from a county or state
where it is now located,  which notice shall be given not less than fifteen (15)
days before such removal and will promptly notify the Authority of any change in
any fact or  circumstances  (other  than the removal  referred  to herein  which
required the advance  notice  provided for therein)  warranted or represented by
the Company in this Loan  Agreement  or in any other  document  furnished by the
Company to the Authority in connection with the Collateral or the Loans and will
promptly notify the Authority of any claim,  action, or proceeding affecting the
Collateral,  or any part thereof,  or the security interest herein,  and, at the
request of the Authority, to appear in and defend, at the Company's expense, any
such  action or  proceeding.  The  foregoing  provisions  are subject to Section
4.01(e) hereof.

         (e)      The  Company  covenants  and  agrees,  except as  provided  in
Section  6.16 hereof and subject to  Permitted  Encumbrances,  that  without the
prior express written consent of the Authority,  the Company shall not (1) sell,
assign,  or transfer any of the  Collateral to any person,  firm or  corporation
(except the Authority), (2) create in favor of anyone, except the Authority, any
other security interest in the Collateral,  or in any part thereof, or otherwise
encumber  or  permit  the  same  to  become  subject  to any  lien,  attachment,
execution, sequestration, or other legal or equitable process; or (3) remove,

                                       34
<PAGE>

or permit to be removed,  the Company's records  concerning  Collateral from the
State.

         SECTION 6.02.  INSURANCE REQUIRED.

         (a)      Until  payment of the Bonds shall be made,  the Company  shall
maintain  insurance  on the  Project  with  insurance  companies  licensed to do
business  in the State and the  claims  paying  ability  of which is rated in at
least one of the two highest Best categories  ("Eligible Insurer") of such kinds
and in such  scope and  amounts as is  customary  with  entities  similar to the
Company  located  in similar  areas.  Without  limiting  the  generality  of the
foregoing,  the Company shall at all times during the term of the Loans maintain
with Eligible Insurers;

                  (i)      maintain general  comprehensive  liability  insurance
against claims for bodily injury,  death or property damage  occurring on, in or
about the  Project or the  Project  Site (such  coverage  to include  provisions
waiving  subrogation  against the Authority) in amounts not less than $3,000,000
with  respect to bodily  injury to any one Person,  $3,000,000  with  respect to
bodily  injury to two or more Persons in any one accident and,  $3,000,000  with
respect  to  property  damage  resulting  from  any one  occurrence  naming  the
Authority, as an additional insured.

                  (ii)     comprehensive  casualty  insurance  insuring  loss by
reason of casualty of any kind (except  only as limited by the standard  form of
extended  coverage  endorsement  used  in  the  State)  to  the  Project  or the
Collateral  in a minimum  amount  equal to the  greater  of (x) the  outstanding
principal amount of the Bonds or (y) the replacement value thereof;

                  (iii)    during a construction  period, if any,  Builders' All
Risk Insurance  written in "100% builders risk  completed  value,  non-reporting
form" including  coverage  therein for "completion  and/or premises  occupancy",
such insurance to be in the amounts specified in subparagraph (ii) above;

                  (iv)     business  interruption  insurance  providing benefits
for a minimum of the highest annual debt service payable on the Bonds; and

                  (v)      such other insurance in such amounts and against such
insurable  hazards  as the  Authority  or the  Trustee  from  time to  time  may
reasonably request.

         (b)      Each  insurance   policy   obtained  in  satisfaction  of  the
requirement of this section hereof:

                  (i)      shall be by such  insurer (or  insurers)  as shall be
financially responsible, qualified to do business in the State and of recognized
standing;

                  (ii)     shall be in such form and have such provisions as are
generally considered standard provisions for the type of insurance involved;

                                       35
<PAGE>

                  (iii)    shall    prohibit    cancellation    or   substantial
modification,  termination or lapse in coverage by the insurer  without at least
thirty (30) days prior written notice to the Authority;

                  (iv)     without  limiting the  generality  of the  foregoing,
policies carried on the Project and the Project Site shall name the Authority as
an additional insured;

                  (v)      prior to expiration  of any such policy,  the Company
shall furnish the Authority with evidence satisfactory to the Authority that the
policy or  certificates  has been  renewed or replaced in  compliance  with this
Agreement.

         (c)      In the event the Company  shall fail to maintain the insurance
coverage required by this Agreement, the Authority or the Trustee may (but shall
be under no obligation  to),  after ten (10) days written  notice to the Company
unless  cured within such ten (10) days,  contract for the required  policies of
insurance  and pay the premiums on the same and the Company  agrees to reimburse
the  Authority  or the  Trustee to the extent of the  amounts so  advanced  with
interest thereon at the maximum rate permitted by law.

         (d)      At all  times  during  the term of this  Loan  Agreement,  the
Company  shall  comply  with  the  laws  of  the  State   relating  to  workers'
compensation with respect to the Project.

         (e)      At all  times  during  the term of this  Loan  Agreement,  the
Company  shall  keep in effect a policy of flood  insurance  for any part of the
Premises  and any  improvements  upon  the  Premises  lying  or  being  within a
designated  flood-plain  in  the  amount  and  with  the  insurer  specified  in
subparagraph (a) above.

         (f)      Each of the  policies  or  binders  evidencing  the  insurance
required above to be obtained shall:

                  (i)      designate the Trustee and the Authority as additional
insureds as their respective interests may appear;

                  (ii)     provide that all  insurance  proceeds with respect to
loss or damage to the property of the Project or the  Collateral be endorsed and
made payable to the Trustee and shall name the Trustee as a loss payee under the
standard loss payee clause,  which insurance  proceeds shall be paid over to the
Trustee;

                  (iii)    provide  that there shall be no recourse  against the
Authority or the Trustee for the payment of premiums or  commissions or (if such
policies  or binders  provide for the payment  thereof)  additional  premiums or
assessments;

                                       36
<PAGE>

                  (iv)     provide that in respect of the  respective  interests
of the Authority and the Trustee in such  policies,  the insurance  shall not be
invalidated  by any action or inaction  of the  Company or any other  Person and
shall insure the Authority and the Trustee  regardless  of, and any losses shall
be payable notwithstanding, any such action or inaction;

                  (v)      provide   that  such   insurance   shall  be  primary
insurance  without any right of contribution from any other insurance carried by
the  Authority or the Trustee to the extent that such other  insurance  provides
the Authority or the Trustee,  as the case may be, with contingent and/or excess
liability insurance with respect to its respective interest as such;

                  (vi)     provide  that if the insurers  cancel such  insurance
for any reason  whatsoever,  including the insured's  failure to pay any accrued
premium, or the same is allowed to lapse or expire, or there be any reduction in
amount,  or any  material  change is made in the  coverage,  such  cancellation,
lapse,  expiration,  reduction  or  change  shall  not  be  effective  as to the
Authority,  or the Trustee  until at least thirty (30) days after receipt by the
Authority and the Trustee,  respectively,  of written notice by such insurers of
such cancellation, lapse, expiration or change;

                  (vii)    waive  any  right  of  subrogation  of  the  insurers
thereunder  against any Person insured under such policy, and waive any right of
the insurers to any setoff or  counterclaim or any other  deduction,  whether by
attachment or otherwise, in respect of any liability of any Person insured under
such policy; and

                  (viii)   contain such other terms and  provisions as any owner
or  operator  of  facilities  similar to the  Company's  would,  in the  prudent
management of its  properties,  require to be contained in policies,  binders or
interim  insurance  contracts with respect to facilities  similar to the Project
owned or operated by it.

         (g)      Concurrently  with the  original  issuance  of the Bonds,  the
Company  shall deliver or cause to be delivered to the Authority and the Trustee
duplicate copies of insurance policies and/or binders evidencing compliance with
the insurance  requirements of this Section.  At least thirty (30) Business Days
prior to the  expiration  of any such  policy,  the  Company  shall  furnish the
Authority  and the Trustee  with  evidence  that such policy has been renewed or
replaced or is no longer required by this Agreement.

         (h)      The  Company  shall,  at its own  cost and  expense,  make all
proofs of loss and take all other steps necessary or reasonably requested by the
Authority  or the Trustee to collect  from  insurers for any loss covered by any
insurance required to be obtained by this Section.  The Company shall not do any
act, or suffer or permit any act to be done,  whereby any insurance  required by
this Section would or might be suspended or impaired.

                                       37
<PAGE>

         (i)      The  Trustee  shall be  supplied  with an annual  certificate,
within thirty (30) days after the close of the Company's Fiscal Year, certifying
that the Company is in compliance  with this Section 6.02 and that the insurance
policies  required to be  maintained by the Company under this Section are still
in force and effect.

         SECTION 6.03.  PAYMENT OF TAXES, ETC. The Company will promptly pay and
discharge or cause to be paid and  discharged  promptly all taxes,  assessments,
payments in lieu of taxes and governmental  charges or levies imposed upon it or
in respect of any of its  property  and assets  before the same shall  become in
default,  as well as all lawful claims which, if unpaid,  might become a lien or
charge upon such property and assets or any part  thereof,  except such that are
contested  in good faith by the Company  for which the  Company  has  maintained
reserves, if any, deemed adequate by its independent accountants.

         SECTION  6.04.  CONCERNING  THE PROJECT.  The Company  shall operate or
cause the Project to be operated as an authorized  project for a purpose and use
as provided for under the Act until the  expiration  or earlier  termination  of
this  Agreement.  The Project is of character  included within the definition of
the  "project"  in the Act.  The Company  will  complete and operate the Project
substantially  in the form  represented in the Applications and will neither (a)
materially  alter the operation of the Project without the prior written consent
of the Authority, nor (b) cause a change in the use of the Project such that the
Tax-exempt  Bonds would  cease to be  qualified  small  issue bonds  (within the
meaning of Section 144(a) of the Code).

         SECTION  6.05.  COMPLIANCE  WITH CODE AND  ARBITRAGE  REGULATIONS.  The
Company  shall at all times do and  perform  all acts and  things  necessary  or
desirable in order to assure that interest paid on the  Tax-exempt  Bonds shall,
for the purposes of federal income taxation, be excludable from the gross income
of the holders  thereof and exempt from such taxation,  except in the event that
such holder is a Substantial User or Related Person to a Substantial User.

         SECTION 6.06.  COMPLIANCE WITH APPLICABLE LAWS. The Company shall cause
all work performed in connection  with the Project to be performed in compliance
with all applicable federal, state, county and municipal laws, ordinances, rules
and  regulations  now in force or that may be enacted  hereafter.  The  existing
improvements  at the Project and the  operation of the Project shall also comply
with all applicable federal, state, county and municipal laws, ordinances, rules
and regulations now in force or that may be enacted  hereafter,  including,  but
not limited to such environmental protection,  workers' compensation,  sanitary,
safety, non-discrimination and zoning laws, ordinances, rules and regulations as
shall be binding upon the Company.  The Company  shall have the right to contest
any such laws,  rules,  regulations  and the like as long as to it is contesting
the same in good faith.

                                       38
<PAGE>

         SECTION 6.07.  COMPLIANCE WITH DEPARTMENT OF ENVIRONMENTAL  PROTECTION.
The Company  shall  operate the Project or cause it to be operated in compliance
with  all  applicable  rules  and  regulations  promulgated  by the  New  Jersey
Department  of  Environmental  Protection or any  successor  agency  thereto and
agrees to comply,  and cause any  tenant in the  Premises  to  comply,  with the
provisions of Section 20 in Article I of the Mortgage.

         SECTION  6.08.  FINANCIAL  STATEMENTS.  The Company  shall  furnish the
Trustee  and the  Placement  Agent  and to the  Authority  upon the  Authority's
request,  or cause to be furnished to the Trustee,  the Placement  Agent and the
Authority,  annual  consolidated  financial  statements  of the  Company and the
Guarantor  audited by an  independent  certified  public  accountant  within one
hundred twenty (120) days after the close of its Fiscal Year.

         SECTION 6.09.  INTENTIONALLY OMITTED.

         SECTION 6.10.  INDEMNIFICATION.  The Company  agrees to and does hereby
indemnify and hold harmless the Indemnified  Parties against any and all losses,
claims,  damages or liabilities  (including  all costs,  expenses and reasonable
counsel fees incurred in  investigating or defending such claim) suffered by any
of the Indemnified Parties and caused by, relating to, arising out of, resulting
from, or in any way connected with (a) the condition, use, possession,  conduct,
management, planning, design, acquisition, construction, installation, financing
or sale of the Project or any part  thereof  including  the payment of rebate to
the federal government; or (b) any untrue statement of a material fact contained
in  information  provided  by the  Company  with  respect  to  the  transactions
contemplated  hereby;  or (c) any  omission of a material  fact  necessary to be
stated therein in order to make such statement not misleading or incomplete;  or
(d) the  acceptance or  administration  by the Authority of its duties under the
Trust Indenture.  In case any action shall be brought against one or more of the
Indemnified  Parties  based  upon  any of the  above  and in  respect  to  which
indemnity  may be sought  against  the  Company,  such  Indemnified  Party shall
promptly notify the Company in writing, and the Company shall assume the defense
thereof,  including the employment of counsel  satisfactory  to the  Indemnified
Party,  the payment of all costs and  expenses  and the right to  negotiate  and
consent to settlement. Any one or more of the Indemnified Parties shall have the
right to employ separate counsel at the Company's expense in any such action and
to  participate  in the defense  thereof if such  Indemnified  Party  reasonably
determines that a conflict of interest would exist if separate  counsel were not
employed.  The Company shall not be liable for any settlement of any such action
effected  without  Company's  consent,  but if settled  with the  consent of the
Company,  or if there is a final  judgment  for the claimant on any such action,
the Company agrees to indemnify and hold harmless the  Indemnified  Parties from
and against any loss or  liability  by reason of such  settlement  or  judgment.
Notwithstanding  anything  in this  Agreement  to the  contrary  which may limit
recourse  to the  Company  or may  otherwise  purport  to  limit  the  Company's
liability,   the   provisions  of  this  Section  shall  control  the  Company's
obligations  and shall  survive  repayment  of the Bond and the  resignation  or
removal of the Trustee.

                                       39
<PAGE>

         The Company  agrees to and does hereby  indemnify and hold harmless the
Indemnified Parties against any and all losses,  claims,  damages or liabilities
(including  all  costs,  expenses,  and  reasonable  counsel  fees  incurred  in
investigating  or  defending  such  claim)  suffered  by any of the  Indemnified
Parties and caused by relating to, arising out of, resulting from, or in any way
connected to an examination, investigation or audit of the Bonds by the Internal
Revenue Service (the "IRS"). In the event of such examination,  investigation or
audit,  the  Indemnified  Parties shall have the right to employ  counsel at the
Company's  expense.  In such event, the Company shall assume the primary role in
responding  to and  negotiating  with the IRS, but shall inform the  Indemnified
Parties  of the  status  of the  investigation.  In the event  Company  fails to
respond  adequately and promptly to the IRS, the Authority  shall have the right
to assume the primary role in  responding  to and  negotiating  with the IRS and
shall have the right to enter into a closing agreement,  for which Company shall
be liable.

         The  Company  covenants  and  agrees,  at its  expense,  to pay  and to
indemnify and save the Indemnified  Parties  harmless of, from and against,  any
and all losses,  claims,  damages,  expenses or liabilities caused by any untrue
statement of a material fact contained in the Applications or other  information
submitted to the Authority or to the Trustee by or on behalf of the Company with
respect to the  issuance  and purchase of the Bonds or caused by any omission of
any  material  fact  necessary  to be  stated  therein  in  order  to make  such
statements to the Authority or the Trustee not misleading or incomplete.

         The  Company  covenants  and  agrees,  at its  expense,  to pay  and to
indemnify  and  save  the  Indemnified  Parties  and  their  members,  officers,
employees and agents harmless of, from and against, any and all claims, damages,
demands,  expenses,  liabilities and losses of every kind,  character and nature
asserted  by or on behalf  of any  person,  firm,  corporation  or  governmental
authority  including  reasonable  counsel  fees  incurred  in  investigating  or
defending  such  claim,  suffered  by any of them and  caused by,  relating  to,
arising out of,  resulting  from, or in any way connected with the Loans and the
transactions  contemplated herein, including,  without limitation,  (i) disputes
between  any  architect,  general  contractor,  subcontractor,   materialman  or
supplier,  or on account of any act or omission to act by the  Authority  or the
Trustee in  connection  with the Loans,  or (ii)  losses,  damages,  expenses or
liabilities  sustained  by  the  Indemnified  Parties  in  connection  with  any
environmental  sampling or cleanup of the  Premises  required or mandated by any
federal, state or local law, ordinance, rule or regulation,  including,  without
limitation,  (a) the New Jersey Spill  Compensation and Control Act, as amended,
N.J.S.A.  58:10-23.11 ET SEQ.; (b) ISRA; (c) the New Jersey Leaking  Underground
Storage Tank Act, as amended, N.J.S.A.  58:10A-21 ET SEQ.; (d) the Comprehensive
Environmental  Response,  Compensation  & Liability  Act, as amended,  42 U.S.C.
Section  9601 ET SEQ.;  (e) the  Resource  Conservation  and  Recovery  Act,  as
amended, 42 U.S.C.  Section 6901 ET SEQ.; or (f) any and all federal,  state and
local laws,  regulations,  and executive  orders,  pertaining  to  environmental
matters,  as the  same  may  be  amended  or  supplemented  from  time  to  time
(hereinafter  collectively referred to as the "Applicable  Environmental

                                       40
<PAGE>

Laws").  In case any action  shall be brought  against the  Indemnified  Parties
based  upon any of the above and in  respect  to which  indemnity  may be sought
against the Company,  the Indemnified  Parties shall promptly notify the Company
in writing,  and the Company  shall assume the defense  thereof,  including  the
employment of counsel selected by the Company and reasonably satisfactory to the
Indemnified  Parties,  the  payment of all costs and  expenses  and the right to
negotiate and consent to  settlement.  Further,  the Company agrees to indemnify
and save the Trustee harmless against any costs,  expenses,  losses,  legal fees
and liabilities which it may incur in the exercise and performance of its powers
and duties  under the Loan  Documents,  which are not due to its  negligence  or
willful  misconduct.  Upon  reasonable  determination  made  by the  Indemnified
Parties, the Indemnified Parties shall have the right to employ separate counsel
in any such action and to participate in the defense thereof.  The Company shall
not be  liable  for any  settlement  of any such  action  effected  without  the
Company's consent,  but if settled with the Company's consent,  or if there be a
final  judgment  for the  claimant in any such  action,  the  Company  agrees to
indemnify and save harmless the Indemnified Parties from and against any loss or
liability by reason of such  settlement  or  judgment.  The  provisions  of this
Section  shall  survive the  termination  of the Loans and the  repayment of the
Notes.  The  provisions  of this Section 6.10 shall  survive the  redemption  or
defeasance of the Bonds.

         The Company also covenants and agrees,  at its expense,  to pay, and to
indemnify  and save the  Indemnified  Parties  harmless of, from and against all
costs,  reasonable counsel fees, expenses and liabilities incurred in any action
or proceeding brought by reason of the above.

         The foregoing indemnities shall not apply to losses, claims, damages or
liabilities  caused  by  the  wilful  misconduct  or  gross  negligence  of  the
Indemnified Party seeking such indemnification.

         SECTION 6.11.  INTENTIONALLY OMITTED.

         SECTION 6.12.  REPORT OF NUMBER OF  EMPLOYEES.  The Company must submit
annually to the  Authority,  a report showing the number and  classification  of
employees  employed  at the  Project,  on a form  provided to the Company by the
Authority.

         SECTION 6.13.  INTENTIONALLY OMITTED.

         SECTION 6.14.  INSPECTION OF THE PROJECT.  The Company  agrees that the
Trustee,  the Authority and their  respective duly authorized  agents shall have
the right at all reasonable times during normal business hours,  upon reasonable
notice, to enter upon and to examine and inspect the Project. The Authority, the
Trustee and their respective  officers and agents shall also be permitted at all
reasonable  times during normal  business  hours,  upon  reasonable  notice,  to
examine the books and records of the Company  with respect to the Project and to
make copies or abstracts thereof.

                                       41
<PAGE>

         SECTION 6.15.  CONTINUATION  STATEMENTS.  The Trustee shall prepare and
file Uniform  Commercial Code continuation  statements,  as necessary to protect
the  security of the Holders of Bonds and the right,  title and  interest of the
Trustee in and to the Trust Estate pursuant to the Indenture.

         SECTION 6.16.  ADDITIONAL  COVENANTS  CONCERNING  THE  COLLATERAL.  The
Company further  covenants and agrees (a) to retain possession of the Collateral
during the existence of this Loan Agreement and not to sell,  exchange,  assign,
loan,  deliver,  lease,  mortgage or otherwise dispose of same without the prior
express written consent of the Authority,  except for Permitted  Encumbrances or
as may otherwise be permitted herein;  (b) to keep the Collateral located at the
Premises,  and not to remove same from said location (except as permitted below)
without  the  prior  express  written  consent  of  the  Authority,  unless  the
Collateral is replaced  with items of equal or greater  utility and value (which
shall then be  included as  Collateral);  (c) at its own cost and expense (i) to
maintain,  preserve  and keep the  Collateral  in a manner  consistent  with the
standard operating practices applicable to a first class operation,  in good and
substantial  repair,  working  order  and  condition,  ordinary  wear  and  tear
excepted,  (ii) from time to time to make or cause to be made, all necessary and
proper repairs,  replacements,  renewals,  improvements and betterments thereto,
and  (iii)  from  time  to  time,   to  make  such   substitutions,   additions,
modifications  and  improvements as may be necessary and as shall not impair the
structural integrity, operating efficiency and economic value of the Collateral;
(d) the Company will comply,  in all material  respects,  with all acts,  rules,
regulations,  orders,  decrees and  directions  of any  governmental  authority,
applicable  to the  Collateral  or any part  thereof or to the  operation of the
Company's  business;  provided,  however,  that the Company may contest any act,
regulation,  order, decree or direction in any reasonable manner which shall not
in the sole opinion of the Authority  adversely affect the Authority's rights or
the first priority of its security interest in the Collateral.  All alterations,
replacements,  renewals or additions made pursuant to clause (c) of this Section
6.16 shall become and constitute a part of the Collateral. The Company shall not
remove,  demolish,  materially  alter,  discontinue the use of, sell,  transfer,
assign,  hypothecate  or  otherwise  dispose  of  to  any  Person,  any  of  the
Collateral,  other than in the ordinary  course of the Company's  business.  All
Collateral which has been  substituted for any removed,  replaced or disposed of
Collateral  shall  be of a value  and  quality  at  least  equal  to that of the
removed,  replaced or disposed of Collateral,  and shall be subject to the liens
of the security interest granted to the Authority hereunder.

         SECTION  6.17.  PAYMENT  OF  OBLIGATIONS.  The  Company  will  pay  and
discharge at or before  maturity all material  contractual  obligations  and all
other material debts and liabilities,  including  without  limitation all taxes,
charges and levies imposed on it or any of its property  other than  obligations
contested in good faith and in accordance with applicable law and which will not
affect the priority of the liens created hereunder.

         SECTION 6.18.  INTENTIONALLY OMITTED.

                                       42
<PAGE>

         SECTION 6.19.  INTENTIONALLY OMITTED.

         SECTION 6.20.  PROJECT SIGN.  During the period from the effective date
of this  Agreement  and until thirty (30) days after the  Completion  Date,  the
Company shall cause to be posted and  maintained  at the site of the Project,  a
sign to be provided to the Company by the Authority  indicating  that  financial
assistance for the Project has been provided by the  Authority.  The cost of the
sign and the maintenance of the sign shall be at the expense of the Company.

         SECTION 6.21.  BROKERAGE FEE. The Authority  shall not be liable to the
Company  for any  brokerage  fee,  finders  fee, or loan  servicing  fee and the
Company shall hold the Authority harmless from any such fees or claims.

         SECTION  6.22.  COST  RECOVERY.  To the  extent  that any  property  is
financed  by the Bond  Proceeds  of the  Tax-exempt  Bonds,  the  cost  recovery
deduction allowed for such property shall be determined by using the alternative
depreciation system determined in accordance with Section 168(g) of the Code.

         SECTION 6.23.  REHABILITATION  REQUIREMENT.  The Company shall spend or
cause to be spent an amount equal to not less than one hundred percent (100%) of
the portion of the cost of acquiring  the existing  equipment  and not less than
fifteen  percent  (15%) for  facilities  or other  structures  financed with the
Proceeds of the Tax-exempt Bonds for "rehabilitation  expenditures",  as defined
in Section  147(d)(3) of the Code, within two (2) years of the Issue Date or the
date of acquisition of such facility, structure or existing equipment, whichever
is later.

         SECTION 6.24. COVENANT BY COMPANY AS TO COMPLIANCE WITH INDENTURE.  The
Company covenants and agrees that it will not interfere with the exercise of the
power and authority granted to the Trustee in the Indenture. The Company further
agrees, at the expense of the Company,  to aid in furnishing to the Authority or
the Trustee any documents,  certificates  or opinions that may be required under
the Indenture.

         SECTION 6.25.  CONTINUING  DISCLOSURE.  The Company hereby covenants to
deliver to the Trustee and the Authority a written  undertaking (the "Continuing
Disclosure  Agreement"),  in a form  acceptable to the Trustee and the Authority
and satisfying the  requirements  of Rule 15c2- 12(b)(5)  (codified at 17 C.F.R.
Section  240.15c2-12),  as the same may be  further  amended,  supplemented  and
officially  interpreted  from time to time, or any successor  provision  thereto
("Rule 15c2-12"), promulgated by the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended and supplemented (codified as
of the date  hereof at 15  U.S.C.  77 ET SEQ.) in the  event  that Rule  15c2-12
requires such an undertaking.  The Trustee has covenanted in Section 7.09 of the
Indenture that it will execute and deliver the Continuing  Disclosure  Agreement
to the Company and the  Authority.  Neither the  Authority nor the Trustee shall
have  any  duty  to  determine  the  sufficiency  of the  Continuing  Disclosure
Agreement  under Rule 15c2-12 and

                                       43
<PAGE>

neither the Authority  nor the Trustee shall incur any liability  arising in any
way out of their acceptance of the form of the Continuing Disclosure Agreement.

                                       44
<PAGE>

                                   ARTICLE VII

                         EVENTS OF DEFAULT AND REMEDIES

         SECTION  7.01.  EVENTS  OF  DEFAULT.  Any one or more of the  following
events, shall constitute an event of default hereunder (an "Event of Default"):

         (a)      default in the payment of any  installment of the principal or
interest on a Note within ten (10) days of the date when due;

         (b)      failure by the  Company to make any payment  required  under a
Note to replenish any moneys withdrawn from the Debt Service Reserve Fund within
ten  (10)  days of the date  when  due and  payable  under  Section  4.10 of the
Indenture;

         (c)      failure by the Company to pay when due any payment required to
be made under  this  Agreement  other than  payments  to the  Authority  for the
payment of the principal,  redemption premium,  and interest on the Bonds, which
failure  shall  continue  for a period of ten (10) days  after  written  notice,
specifying  such failure and  requesting  that it be  remedied,  is given to the
Company by the Authority by registered mail;

         (d)      if any representation or warranty of a material nature made in
this  Agreement  or in any other Loan  Document or in any  report,  certificate,
financial  statement  or other  instrument  furnished  in  connection  with this
Agreement  shall prove to be false or  misleading  in any material  respect when
made;

         (e)      failure by the Company to observe  and  perform any  covenant,
condition or agreement  on its part to be observed or  performed,  other than as
referred to in Section  4.01(j) of this Agreement  (relating to compliance  with
the Code and arbitrage regulations,),  or in subparagraphs (a), (b), (c) and (d)
of this Section 7.01,  which failure shall  continue for a period of thirty (30)
days after written  notice,  specifying  such failure and requesting  that it be
remedied,  is given to the Company by the Authority by registered  mail,  unless
such failure is incapable of being cured within  thirty (30) days after  written
notice  and the  Company is making a  diligent  pursuit to cure such  failure in
which case the Company shall be granted such  additional time as is necessary to
effect such a cure;

         (f)      the dissolution or liquidation of the Company;

         (g)      the  Company  shall  have  applied  for  or  consented  to the
appointment  of a  custodian,  receiver,  trustee  or  liquidator  of  all  or a
substantial part of its assets; or shall have made a general  assignment for the
benefit of creditors;  or shall have  submitted a petition or an answer  seeking
reorganization  or an arrangement with creditors;  or shall have taken advantage
of any insolvency law, or submitted an answer admitting the material allegations
of a petition in  bankruptcy,  reorganization  or insolvency  proceeding;  or an
order,  judgment or decree  shall have been  entered,  without

                                       45
<PAGE>

the  application,  approval or consent of the Company by any court of  competent
jurisdiction  approving a petition  seeking  reorganization  of the Company,  or
appointing a custodian,  receiver,  trustee or liquidator of the Company or of a
substantial  part of any of its  respective  assets and such order,  judgment or
decree  shall  continue  unstayed  and in effect for any  period of one  hundred
twenty  (120)  consecutive  days;  or the  Company  shall have filed a voluntary
petition in bankruptcy; or

         (h)      the  occurrence  of an "Event of Default"  under the Mortgage,
the Assignment of Leases,  the Indenture or any other Loan  Document,  after the
expiration of any applicable notice and/or grace period.

         The Company  shall  prepay the Notes in full,  together  with  interest
accrued and to accrue to the  Redemption  Date upon the occurrence of one of the
following events:  (a) the Company ceases to operate the Project or to cause the
Project to be operated as an  authorized  project  under the Act for twelve (12)
consecutive  months,  without first  obtaining the prior written  consent of the
Authority,  or (b) any  representation  or warranty  made by the Company in this
Agreement or in any document  furnished in connection with this Agreement proves
to have  been  false or  misleading  in any  material  respect  when  made.  The
Authority  shall give  written  notice to the  Company  and the  Trustee of such
occurrence;  whereupon the Trustee shall give notice to the  Bondholders  of the
redemption of the Bonds pursuant to Section 6.04 of the Indenture and will set a
Redemption Date according to section, but in no event later from sixty (60) days
after  the  Authority  gives  notice  to  the  Trustee  of the  occurrence.  The
prepayment  of the Notes shall be due and payable on the Business Day  preceding
the  Redemption  Date.  Payment  on the Notes by the  Company  pursuant  to this
Section shall be in an amount  sufficient,  together with other funds on deposit
with the Trustee which are available for such purpose,  to redeem the Bonds then
Outstanding,  and to pay (i) all  administrative  expenses accrued and to accrue
through the  Redemption  Date and (ii) any other  expenses and fees  required to
satisfy and discharge the Indenture,

         In addition to the above remedies,  if the Company commits a breach, or
threatens to commit a breach of this  Agreement,  or of any other Loan Document,
the  Authority  shall have the right and remedy,  without  posting bond or other
security, to have the provisions of this Agreement  specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened  breach will cause immediate and irreparable  injury to the
Authority and that money damages will not provide an adequate remedy therefor.

         SECTION 7.02.  REMEDIES.  Whenever any Event of Default  referred to in
Section 7.01 hereof shall have happened and be existing,  any one or more of the
following remedial steps may be taken,  provided, (i) that written notice of the
default  has been  given to the  Company  by the  Trustee  or the  Authority  by
overnight  delivery and registered mail and the Default has not theretofore been
cured,  and (ii) that no  remedial  steps  shall be taken by the  Trustee or

                                       46
<PAGE>

the  Authority  the effect of which would be to entitle the  Authority  to funds
necessary  for the payment of principal and interest on Bonds which have not yet
matured  unless such  principal  and interest  shall have been  declared due and
payable in accordance  with the Indenture  and such  declaration  shall not have
been rescinded:

         (a)      The Authority may at its option  require  acceleration  of the
Notes,  together with interest then due thereon, such payments to be immediately
due and payable;

         (b)      The  Authority  may take any  action  at law or in  equity  to
collect  the  payments  then due and  thereafter  to  become  due or to  enforce
performance  and  observance  of any  obligation,  agreement  or covenant of the
Company under this Loan Agreement;

         (c)      The Authority may exercise in addition to all other rights and
remedies granted to it in this Loan Agreement and the other Loan Documents,  all
rights and  remedies  of a secured  party  under the  Uniform  Commercial  Code.
Without limiting the generality of the foregoing,  the Company  expressly agrees
that in any such event the  Authority,  without  demand of  performance or other
demand,  advertisement  or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Company or any other
person (all and each of which demands,  advertisements and/or notices are hereby
expressly waived),  may forthwith  collect,  receive  appropriate  indemnity and
realize upon the  Collateral,  or any part thereof,  and/or may forthwith  sell,
lease, assign, give option or options to purchase,  or sell or otherwise dispose
of and deliver said  Collateral (or contract to do so), or any part thereof,  in
one or more parcels at public or private sale or sales, at any exchange broker's
board or at any of the Authority's offices or elsewhere at such prices as it may
deem best, for cash or on credit or for future  delivery  without  assumption of
any credit risk. The Authority shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or sales,
to purchase the whole or any part of said  Collateral so sold, free of any right
or  equity  of  redemption  in the  Company,  which  right or  equity  is hereby
expressly released.  The Company further agrees, at the Authority's  request, to
assemble the Collateral,  make it available to the Authority at places which the
Authority  reasonably  shall  select,  whether  at  the  Company's  premises  or
elsewhere,  at Company's cost and expense.  Subject to the provisions of Section
7.07 hereof,  the Authority shall apply the net proceeds of any such collection,
recovery,  receipt,  appropriation,  realization  or sale,  after  deducting all
reasonable  costs and expenses of every kind  incurred  therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any way
relating  to  the  rights  of  the  Authority  hereunder,  including  reasonable
attorneys'  fees and legal  expenses,  to the payment in whole or in part of the
Company's  obligations  hereunder  and under  the  Notes,  in such  order as the
Authority may elect, the Company  remaining liable for any deficiency  remaining
unpaid  after such  application  and only after so paying over such net proceeds
and after the  payment by the  Authority  of any other  amount  required  by any
provision of law,

                                       47
<PAGE>

need the  Authority  account for the  surplus,  if any, to the  Company.  To the
extent permitted by applicable law, the Company waives all claims,  damages, and
demands against the Authority arising out the repossession, retention or sale of
the  Collateral.  The Company  agrees that the Authority need not give more than
thirty (30) days' notice (which  notification shall be deemed given when mailed,
postage  prepaid,  addressed  to the Company at its address set forth in Section
8.01 hereof) of the time and place of any public sale or of the time after which
a private sale may take place and that such notice is reasonable notification of
such matters. The Company shall remain liable for any deficiency if the proceeds
of any sale or disposition of the Collateral are insufficient to pay all amounts
to which the  Authority is entitled,  the Company also being liable for the fees
of any attorneys employed by the Authority to collect such deficiency; and

         (d)      The Company also agrees to pay all costs of the  Authority and
the Trustee,  including reasonable attorneys' fees, incurred with respect to the
collection of any of the Company's  obligations  and the  enforcement  of any of
their respective rights hereunder.

Any amounts collected  pursuant to action taken under this Section 7.02 shall be
applied in accordance with the Indenture.

         SECTION 7.03. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved
to the Authority by this Loan Agreement is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy  given under this Loan  Agreement
or now or  hereafter  existing  at law or in equity or by  statute.  No delay or
omission to exercise any right or power  accruing  upon any default shall impair
any such right or power or shall be  construed to be a waiver  thereof,  but any
such right and power may be  exercised  from time to time and as often as may be
deemed  expedient.  In order to entitle the  Authority  to  exercise  any remedy
reserved  to it in this  Article  VII,  it shall  not be  necessary  to give any
notice, other than such notice as may be herein expressly required.

         SECTION 7.04.  ADDITIONAL REMEDIES.  In addition to the above remedies,
if the Company  commits a breach,  or  threatens to commit a breach of this Loan
Agreement,  the Authority shall have the right and remedy,  without posting bond
or other  security,  to have the provisions of this Loan Agreement  specifically
enforced by any court having  equity  jurisdiction,  it being  acknowledged  and
agreed that any such breach or threatened breach will cause  irreparable  injury
to the  Authority  and that money  damages  will not provide an adequate  remedy
therefor.

         SECTION 7.05.  AGREEMENT TO PAY  ATTORNEYS'  FEES AND EXPENSES.  If the
Company shall default under any of the provisions of this Loan Agreement and the
Authority or the Trustee shall employ  attorneys or incur other expenses for the
collection of the Loans or for the  enforcement  of performance or observance of
any  obligation  or agreement on the part of the

                                       48
<PAGE>

Company contained in this Loan Agreement,  the Company will, on demand therefor,
pay the  reasonable  fees and expenses of the  Authority,  the Trustee and their
attorneys as they are incurred.

         SECTION 7.06. NO ADDITIONAL  WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement contained in this Loan Agreement shall be breached and such breach
shall  thereafter  be waived,  such  waiver  shall be limited to the  particular
breach so waived and shall not be deemed to waive any other breach hereunder. In
view  of the  assignment  of the  Authority's  rights  in and  under  this  Loan
Agreement to the Trustee (provided,  however, the Authority retains the Reserved
Rights), the Authority shall have no power to waive any default hereunder by the
Company without the consent of the Trustee.  Notwithstanding the foregoing,  if,
after the maturity of the Outstanding  Bonds shall have been  accelerated by the
Trustee upon the  occurrence  of any Event of Default under the  Indenture,  all
arrears  of  interest  on  the   Outstanding   Bonds  and  interest  on  overdue
installments  of interest  (to the extent  permitted by law) at a rate per annum
which is equal to the rate per annum  borne by the Bonds and the  principal  and
premium (if any) on all Bonds then Outstanding which have become due and payable
otherwise than by acceleration,  and all other sums payable under the Indenture,
except  the  principal  of  and  the  interest  on  such  Bonds  which  by  such
acceleration shall have become due and payable,  shall have been paid, all other
things  shall have been  performed  in  respect  of which  there was an Event of
Default,  there  shall have been paid the  reasonable  fees and  expenses of the
Trustee and of the holders of such Bonds,  including reasonable  attorneys' fees
paid or incurred  and such Event of Default  shall be waived by the Trustee with
the  consequence  under Section 8.01 of the Indenture that such  acceleration is
rescinded,  then the Company's  default hereunder shall be deemed waived without
further action by the Trustee or the Authority.

         SECTION 7.07. ADDITIONAL AUTHORITY'S REMEDIES. The Company shall prepay
the  Notes  in  full,  together  with  interest  accrued  and to  accrue  to the
Redemption  Date  (as  determined  below)  upon  the  occurrence  of  one of the
following events:

         (a)      The Company ceases to operate the Project or cause the Project
to  be  operated  as an  authorized  project  under  the  Act  for  twelve  (12)
consecutive  months,  without first  obtaining the prior written  consent of the
Authority,  or (b) upon an Event of Default under Section  7.01(d)  hereof.  The
Authority  shall give notice to the Company and the Trustee of such  occurrence;
whereupon the Trustee shall give notice to the  Bondholders of the redemption of
the Bonds pursuant to Section 6.03 of the Indenture. The prepayment shall be due
and payable on the Business Day preceding the  Redemption  Date, but in no event
later than sixty (60) days after the Authority gives notice to the Trustee of an
Event of Default.  Payment on the Notes by the Company  pursuant to this Section
shall be in an amount sufficient,  together with other funds on deposit with the
Trustee  which  are  available  for such  purpose,  to  redeem  the  Bonds  then
Outstanding,  and to pay (i) all  administrative  expenses accrued and to

                                       49
<PAGE>

accrue through the Redemption Date and (ii) any other expenses and fees required
to satisfy and discharge the Indenture.

         (b)      If the  Company  commits a breach,  or  threatens  to commit a
breach,  of any of the  provisions of this  Agreement,  at any time prior to the
maturity or  prepayment  of the Bonds,  the  Authority  shall have the right and
remedy,  without  posting bond or other  security to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction in order
to accomplish the objectives and purposes of the Act, it being  acknowledged and
agreed that any such breach or threatened breach will cause  irreparable  injury
to the  Authority  and that money  damages  will not provide an adequate  remedy
thereto.

                                       50
<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 8.01.  NOTICE.  Any notice to the Company shall be conclusively
deemed  to have  been  received  by,  and to be  effective  on the date on which
delivered to it, at 165 Ludlow Avenue,  Northvale,  New Jersey 07647, Attention:
Mark Gittelman,  Chief Financial Officer,  or, if sent by overnight courier,  on
the first  Business  Day after  and,  if sent by  certified  mail,  on the third
Business  Day after the day on which  mailed,  addressed  to the Company at said
address with a copy to Gallo Geffner & Fenster,  P.C.,  Country Club Plaza, West
115 Century Road, Paramus, New Jersey 07652, Attention:  Michael L. Messer, Esq.
Any notice to the Authority shall be  conclusively  deemed to have been received
by and to be  effective on the date on which  delivered to the  Authority at its
offices at 36 West State  Street,  P.O.  Box 990,  Trenton,  New Jersey,  08625,
Attention:  Director of Investment Banking or, if sent by overnight courier,  on
the first  Business  Day after  and,  if sent by  certified  mail,  on the third
Business Day after the day on which  mailed,  addressed to the Authority at said
address, copy to McManimon & Scotland, L.L.C., One Riverfront Plaza, Newark, New
Jersey 07102, Attention: John V. Cavaliere, Esq. Any notice to the Trustee shall
be conclusively  deemed to have been received by and to be effective on the date
on which  delivered to the Trustee at 385 Rifle Camp Road,  West  Paterson,  New
Jersey 07424,  Attention:  Corporate  Trust  Department or, if sent by overnight
courier,  on the first Business Day after and, if sent by certified mail, on the
third  Business Day after the day on which  mailed,  addressed to the Trustee at
said  address.  A duplicate  copy of each notice  given  hereunder by either the
Authority  or the Company to the other shall also be given to the Trustee by the
same means used to give such  notice.  Any party  hereto  may,  by notice  given
hereunder,  designate  any further or different  addresses  to which  subsequent
notices shall be sent.

         SECTION  8.02.  CONCERNING  SUCCESSORS  AND  ASSIGNS.  Subject  to  the
provisions  of Sections  4.01(j) and 6.10  hereof,  all  covenants,  agreements,
representations  and warranties made herein,  in the other Loan Documents and in
the certificates  delivered pursuant hereto and thereto shall survive the making
of the Loans herein contemplated and the execution and delivery of the Notes and
shall continue in full force and effect so long as the Loans are outstanding and
unpaid.  Whenever in this Loan  Agreement any of the parties  hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party;  and all covenants,  promises and agreements  made by or on behalf of the
Company which are contained in this Loan Agreement shall bind its successors and
assigns and inure to the benefit of the successors and assigns of the Authority.

         SECTION 8.03.  PAYMENT OF FEES AND  EXPENSES.  The Company will pay all
out-of-pocket  expenses  incurred  by  the  Authority  in  connection  with  the
preparation of this Loan Agreement and the other Loan Documents  (whether or not
the transactions  hereby  contemplated shall be consummated),  the making of the
Loans  hereunder,  and  the  enforcement  of  the  rights  of the  Authority  in

                                       51
<PAGE>

connection with this Loan Agreement and the other Loan Documents,  including the
Authority's  bond issuance fee as established at the time of the issuance of the
Bonds, and the fees, disbursements and expenses of Bond Counsel.

         SECTION 8.04. PAYMENT OF TRUSTEE'S AND PAYING AGENT'S  COMPENSATION AND
EXPENSES.  The Company will pay the compensation and expenses of the Trustee and
the Paying Agent under the  Indenture  and this Loan  Agreement,  including  all
costs of enforcing the  provisions of this Loan  Agreement and the redemption of
the  Bonds,  upon  receipt of an invoice  setting  forth the same in  reasonable
detail.

         SECTION 8.05. NEW JERSEY LAW GOVERNS. This Loan Agreement and the other
Loan Documents shall be construed in accordance with and governed by the laws of
the State.

         SECTION 8.06. MODIFICATIONS, WAIVERS OR AMENDMENTS. Modification or the
waiver of any provisions of this Loan Agreement or any other Loan Documents,  or
consent  to any  departure  by the  Company  therefrom,  shall  in no  event  be
effective  unless the same shall be in writing and signed by the  Authority  and
the Trustee. Any such modification, waiver or consent shall be effective only in
the  specific  instance  and for the  purpose for which  given.  No notice to or
demand on the  Company  in any case  shall  entitle  it to any other or  further
notice or demand in the same circumstances.

         This Loan  Agreement  may be amended only with the  concurring  written
consent of the Trustee given in accordance with the provisions of the Indenture.

         SECTION 8.07.  FAILURE TO EXERCISE RIGHTS.  Neither any failure nor any
delay on the part of the Authority in exercising  any right,  power or privilege
hereunder or under any other Loan  Document  shall operate as a waiver hereof or
thereof,  nor shall a single or partial  exercise  thereof preclude any other or
further exercise of any other right, power or privilege.

         SECTION 8.08.  AUTHORITY'S  ASSIGNMENT.  The Company  acknowledges that
this Loan Agreement,  the Notes, the Mortgage, the Assignment of Leases, and the
other Loan Documents and all rights created by all of the foregoing  instruments
and the benefit of all representations, warranties and covenants made herein and
in all of the other Loan  Documents  have been  assigned by the Authority to the
Trustee as security  for the Bonds as provided in and subject to the  provisions
of the Indenture;  provided, however, the Authority retains the Reserved Rights.
The  Company  assents to such  assignment  and  hereby  agrees  that,  as to the
Trustee,  its obligation to make payments under the Loan Documents and the Notes
shall be  absolute  and  shall not be  subject  to any  defense  or any right of
set-off,  counterclaim or recoupment  arising out of any breach by the Authority
of any duty or obligation to the Company, whether hereunder or otherwise, or out
of any  indebtedness  or  liability  at any  time  owing to the  Company  by the
Authority.

                                       52
<PAGE>

         SECTION  8.09.  FURTHER  ASSURANCES  AND  CORRECTIVE  INSTRUMENTS.  The
Company agrees that from time to time it will execute,  acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such supplements hereto and
such  further  instruments  as may  reasonably  be required for  correcting  any
inadequate  or  incorrect  description  of the Project or for  carrying  out the
intention of or facilitating the performance of this Loan Agreement.

         SECTION 8.10.  CAPTIONS.  The section headings contained herein are for
reference  purposes  only  and  shall  not in any  way  affect  the  meaning  or
interpretation of this Loan Agreement.

         SECTION  8.11.  SEVERABILITY.  In the event any  provision of this Loan
Agreement  shall be held  invalid  or  unenforceable  by any court of  competent
jurisdiction,  such holding  shall not  invalidate or render  unenforceable  any
other provision hereof.

         SECTION 8.12.  COUNTERPARTS.  This Loan  Agreement may be signed in any
number of  counterparts  with the same effect as if the  signatures  thereto and
hereto were upon the same instrument.

         SECTION 8.13. SPECIAL LIMITED  OBLIGATIONS.  THE STATE IS NOT OBLIGATED
TO PAY,  AND  NEITHER  THE FAITH AND  CREDIT  NOR  TAXING  POWER OF THE STATE IS
PLEDGED TO THE PAYMENT OF, THE  PRINCIPAL  OR  REDEMPTION  PRICE,  IF ANY, OF OR
INTEREST  ON THE  BONDS.  THE  BONDS  ARE  SPECIAL  LIMITED  OBLIGATIONS  OF THE
AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS
OF THE AUTHORITY  PLEDGED  UNDER THE  INDENTURE  AND FROM ANY AMOUNTS  OTHERWISE
AVAILABLE UNDER THE INDENTURE FOR THE PAYMENT OF THE BONDS. THE BONDS DO NOT NOW
AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY.
THE AUTHORITY HAS NO TAXING POWER.

         SECTION 8.14. EFFECTIVE DATE AND TERM. This Loan Agreement shall become
effective upon its execution and delivery by the parties hereto, shall remain in
full force from the date hereof and,  subject to the  provisions  hereof,  shall
expire  on such  date as the  Bonds  and the  interest  thereon,  and all  other
expenses or sums to which the  Authority,  the Trustee and any Paying  Agent are
entitled, have been fully paid in accordance with the Indenture.

                                       53
<PAGE>

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this  Loan
Agreement and the Authority has caused its corporate  seal to be affixed  hereto
and to be attested, as of the day first above written.

{SEAL}                                NEW JERSEY ECONOMIC
ATTEST:                               DEVELOPMENT AUTHORITY

/s/Lawrence G. Cier                  By: ./s/  Gregory Ritz
--------------------------------         ---------------------------------------
Lawrence G. Cier                               Gregory Ritz
Assistant Secretary                            Chief Financial Officer

                                       54
<PAGE>

                 (COUNTERPART SIGNATURE PAGE TO LOAN AGREEMENT)

ATTEST:                               ELITE PHARMACEUTICALS, INC.

/s/ Mark I. Gittelman                By: /s/ Bernard J. Berk
--------------------------------         ---------------------------------------
Mark I. Gittelman                        Bernard J. Berk
Secretary                                Chief Executive Officer and
                                         Chairman

                                       55
<PAGE>

                                   SCHEDULE A

                            DESCRIPTION OF COLLATERAL

<PAGE>

                                    EXHIBIT A

The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424

                        COMPANY'S COMPLETION CERTIFICATE

Pursuant to Section 3.04 of the Loan  Agreement by and between the Authority and
Elite  Pharmaceuticals,  Inc. (the  "Company")  dated as of August 15, 2005 (the
"Loan Agreement"),  the undersigned,  an Authorized Company  Representative (all
undefined terms used herein shall have the same meaning  ascribed to them in the
Loan Agreement), as of the date hereof, certifies that:

                  (i)      the    Project   was    completed    as   of
         ______________, 19__;

                  (ii)     the cost of all labor,  services,  materials
         and supplies  used in the Project  have been paid,  or will be
         paid  from  amounts  retained  by The  Bank of New  York,  the
         Trustee,  at the  Company's  direction  for  any  cost  of the
         Project not now due and payable  or, if due and  payable,  not
         presently paid;

                  (iii)    the  Project  Facilities  necessary  for the
         Project,  if any,  have been  constructed  or installed to the
         Company's satisfaction; such Project Facilities so constructed
         or installed  are suitable and  sufficient  for the  efficient
         operation  of the Project for the  intended  purposes  and all
         costs and expenses,  if any,  incurred in the  acquisition and
         installation  of such Project  Facilities  have been paid,  or
         will be paid  from  amounts  retained  by the  Trustee  at the
         Company's  direction  for any cost of the  Project not now due
         and payable or, if due and payable, not presently paid;

                  (iv)     the   Project  is  being   operated   as  an
         authorized  "project"  under  the  Act  and  substantially  as
         proposed in the Applications of the Company dated May 1, 2005,
         as amended and supplemented in writing;

                  (v)      in   the   event   the   Project    included
         construction  (a) the Company has  reviewed  the  Contractor's
         Completion  Certificate  and the Company has no  knowledge  or
         information  that the  representations  contained  therein are
         false  or  misleading  and (b)  the  Company  required  in all
         Construction  Contracts that wages paid to workers employed in
         the  performance of  Construction  Contracts be paid at a rate
         not less than the Prevailing Wage Rate.

         I acknowledge that of the amounts remaining in the Project Fund (except
amounts therein sufficient to cover costs of the Project not now due and payable
or not  presently  paid and except for interest or other income  earned from the
investment of the moneys held in the Bond Fund, if any,)  $____________ shall be
transferred to the Principal Account in the Bond Fund and applied by the Trustee
in accordance with, or as otherwise permitted by, Section 4.09 of the  Indenture
and  shall  not  be  invested at a yield materially higher than the yield on the
Tax-exempt Bonds.

         This certificate is given without prejudice to any rights against third
parties  which  exist on the date  hereof  or which may  subsequently  come into
being.

                              Elite Pharmaceuticals, Inc.

                              By:
                                 -----------------------------------------------

                                Authorized Company Representative

Dated:               , 20
      ---------------    --

<PAGE>

                                    EXHIBIT E

TO:
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424

                               REQUISITION NO. ___

                               (SERIES A ACCOUNT)

         The undersigned,  an authorized officer of Elite Pharmaceuticals,  Inc.
(the  "Company),  pursuant to the Loan  Agreement by and between the Company and
the New Jersey  Economic  Development  Authority (the  "Authority")  dated as of
August 15,  2005 (the "Loan  Agreement")  makes the  following  requisition  for
payment  from the Series A Account of the Project Fund  established  pursuant to
the Indenture  dated as of August 15, 2005 between the Authority and The Bank of
New York (the "Indenture").

         Payment to (name and address)*:

         Amount:

         Reason for Payment:

         Such amount is based on an obligation properly incurred pursuant to the
provisions of the Loan Agreement and the  Indenture,  is a Proper Charge against
said Project Fund, is unpaid or  unreimbursed  from the Project Fund and has not
been the basis of any previous withdrawal.  The amount requested,  to the extent
it  represents  work  performed  or  supervised  by officers or employees of the
Company,  does not exceed the actual  cost to the Company of any cost or expense
incurred by reason of work  performed or  supervised by officers or employees of
the Company or any of its  affiliates.  The Company is not in default  under any
provision of the Loan  Agreement.  There has not been any casualty damage to any
part of the Project to date and there has not been any  condemnation  or eminent
domain   proceedings   commenced   against   any  part  of  the   Project.   All
representations  and warranties of the Company  contained in the Loan Documents,
are true and correct and no default exists under the Loan Documents and no event
has occurred which but for notice,  a lapse of time, or both, would constitute a
default under the Loan Documents.

         I further  certify that no written  notice of any lien,  right to lien,
attachment  upon or claim  affecting the right to receive  payment of any of the
moneys payable under this requisition has been received or, if any notice of any
such lien, attachment or claim has been received, such lien, attachment or claim
has been released or  discharged or will be released or discharged  upon payment
of this requisition.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand  this  ______  day
of________________.

                          Elite Pharmaceuticals, Inc.

                          By:
                             ---------------------------------------------------
                          Name:

                          Title:

*if the payment is to be made to the Company for a reimbursable advance,  insert
the name and  address  of the  Person to whom such  advance  was made and attach
proof of payment by the Company

<PAGE>

TO:
The Bank of New York
385 Rifle Camp Road
West Paterson, New Jersey 07424

                               REQUISITION NO. ___

                               (SERIES B ACCOUNT)

         The undersigned,  an authorized officer of Elite Pharmaceuticals,  Inc.
(the  "Company),  pursuant to the Loan  Agreement by and between the Company and
the New Jersey  Economic  Development  Authority (the  "Authority")  dated as of
August 15,  2005 (the "Loan  Agreement")  makes the  following  requisition  for
payment  from the Series B Account of the Project Fund  established  pursuant to
the Indenture  dated as of August 15, 2005 between the Authority and The Bank of
New York (the "Indenture").

         Payment to (name and address)*:

         Amount:

         Reason for Payment**:

         Such amount is based on an obligation properly incurred pursuant to the
provisions of the Loan  Agreement and the Indenture,  is unpaid or  unreimbursed
from the Project Fund and has not been the basis of any previous withdrawal. The
amount  requested,  to the extent it represents  work performed or supervised by
officers or  employees  of the  Company,  does not exceed the actual cost to the
Company  of any  cost  or  expense  incurred  by  reason  of work  performed  or
supervised by officers or employees of the Company or any of its affiliates. The
Company is not in default under any provision of the Loan  Agreement.  There has
not been any  casualty  damage to any part of the  Project to date and there has
not been any condemnation or eminent domain  proceedings  commenced  against any
part of the Project. All representations and warranties of the Company contained
in the Loan Documents, are true and correct and no default exists under the Loan
Documents  and no event has occurred  which but for notice,  a lapse of time, or
both, would constitute a default under the Loan Documents.

         I further  certify that no written  notice of any lien,  right to lien,
attachment  upon or claim  affecting the right to receive  payment of any of the
moneys payable under this requisition has been received or, if any notice of any
such lien, attachment or claim has been received, such lien, attachment or claim
has been released or  discharged or will be released or discharged  upon payment
of this requisition.

         IN  WITNESS  WHEREOF,  I have  hereunto  set my hand  this  ______  day
of________________.

                          Elite Pharmaceuticals, Inc.

                          By:
                             ---------------------------------------------------
                          Name:

                          Title:

* if the payment is to be made to the Company for a reimbursable advance, insert
the name and  address  of the  Person to whom such  advance  was made and attach
proof of payment by the Company

** if the payment is to be made for the acquisition of equipment,  attached is a
list of such  equipment;  you are  authorized to file a UCC Financing  Statement
with the Delaware Department of State in order to perfect your security interest
in such equipment naming Elite Laboratories, Inc. as debtor; Elite Laboratories,
Inc. joins in this requisition for the purpose of authorizing such filing.

                        Elite Laboratories, Inc.

                        By:
                           ---------------------------------------------------
                        Name:

                        Title:NOTE
                                   (Series A)

$3,660,000.00                                                    August 31, 2005
                                                              Newark, New Jersey

         Elite  Pharmaceuticals,   Inc.  (the  "Borrower")  acknowledges  itself
indebted to, and for value received  hereby promises to pay to the order of, the
NEW JERSEY ECONOMIC  DEVELOPMENT  AUTHORITY (the "Authority") and its successors
and assigns,  the principal sum of THREE MILLION SIX HUNDRED SIXTY  THOUSAND and
00/100  dollars  ($3,660,000.00)  and to pay  interest  on the unpaid  principal
amount  hereof  from  the date of this  Note  calculated  on the  same  basis as
interest  is  calculated  on the  Bonds (as  hereinafter  defined).  The  unpaid
principal  amount hereof shall be equal to the outstanding  aggregate  principal
amount of the Bonds.  Principal and interest  hereunder  shall be payable in the
amounts and on the dates set forth in the Bonds.

         This Note is issued to evidence  the  obligation  of the  Borrower  and
pursuant to, and shall be governed by and  construed  in  accordance  with,  the
terms and  conditions  of the Loan  Agreement (as  hereinafter  defined) for the
repayment of the Loan in the amount of  $3,660,000  made by the Authority to the
Borrower  thereunder  from the proceeds of the Authority's  $3,660,000  Economic
Development Bonds (Elite  Pharmaceuticals,  Inc. - 2005 Project),  Series A (the
"Bonds") and the payment of interest thereon,  including provision for repayment
of the Loan in certain cases. All capitalized words and terms not defined herein
shall have the  respective  meanings and be construed  herein as provided in the
Loan Agreement.

         The Authority has assigned the Loan Agreement (together with this Note)
to the  Trustee  pursuant  to the  Indenture,  reserving  certain  of its rights
thereunder.  Such  assignment  is made as security  for the payment of the Bonds
issued by the  Authority  pursuant to the  Resolution  adopted by it on July 12,
2005 and the Indenture.

         This Note is entitled to all of the  benefits  and is subject to all of
the provisions of the Loan Agreement,  which provisions are hereby  incorporated
herein by reference  thereto.  Subject to the provisions hereof, the obligations
of the  Borrower  to make or cause  the  payments  required  hereunder  shall be
absolute and unconditional  without defense or setoff as more fully set forth in
the Loan Agreement.

         This Note is subject to  prepayment  in whole or in part as provided in
the Loan Agreement.

         If an "Event of Default" occurs under the Loan Agreement, the principal
of this Note may be  declared  due and payable in the manner and with the effect
provided in the Loan Agreement.

<PAGE>

         Whenever  payment or provision  thereof has been made in respect of the
principal of, premium,  if any, and interest on all Bonds in accordance with the
Loan Agreement, this Note shall be deemed paid in full and shall be canceled and
returned to the Borrower.

         All payments of principal,  premium, if any, and interest shall be made
to the  Trustee at its  Principal  Office in such coin or currency of the United
States  of  America  as at the time of  payment  shall be legal  tender  for the
payment of public and private  debts.  All payments  shall be in the full amount
required hereunder unless and to the extent the Borrower is entitled to a credit
under the Loan Agreement or the Indenture.

         Payment of the  redemption  price of any of the Bonds  pursuant  to the
provisions  for  redemption  in  the  Indenture  shall  constitute   payment  of
principal,  or any portion  thereof,  any premium  thereon and accrued  interest
thereon due on this Note.  Any payment of interest on or principal or redemption
price  of  the  Bonds  pursuant  to  the  Loan  Agreement  shall   constitute  a
corresponding interest or principal payment on this Note.

         In case the Trustee or the  Authority  shall have  proceeded to enforce
its rights under this Note,  the Loan  Agreement  and/or the  Indenture and such
proceedings  shall have been  discontinued  or abandoned for any reason or shall
have been  determined  adversely  to the Trustee or the  Authority,  then and in
every case the  Borrower  and the  Trustee or the  Authority  shall be  restored
respectively to their respective positions and rights hereunder, and all rights,
remedies  and powers of the  Borrower  and the  Trustee or the  Authority  shall
continue as though no such proceedings had been taken.

         In case there shall be pending  proceedings  for the  bankruptcy or for
the  reorganization  of the Borrower  under the Federal  bankruptcy  laws or any
other applicable law, or in case a receiver or trustee shall have been appointed
for the  property of the Borrower or in the case of any other  similar  judicial
proceedings  relating to the  Borrower,  or to the  creditors or property of the
Borrower,  the Trustee and the  Authority  shall be entitled and  empowered,  by
intervention  in such  proceedings or otherwise,  to file and provide a claim or
claims for the amounts  owing and unpaid in respect of this Note and, in case of
any  judicial  proceedings  relative  to the  Borrower,  its  creditors,  or its
property,  and to collect and receive  any moneys or other  property  payable or
deliverable  on any such claims,  and to distribute the same after the deduction
of its charges and expenses; and any receiver, assignee or trustee in bankruptcy
or  reorganization is hereby authorized to make such payments to the Trustee and
the  Authority,  as the case may be, and to pay to the Trustee and the Authority
any amount due it for compensation and expenses, including counsel fees incurred
by it up to the date of such distribution.

         This Note shall be governed by the laws of the State of New Jersey.

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