LOAN AGREEMENT

BY AND BETWEEN

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

AND

ELITE PHARMACEUTICALS, INC.

DATED AS OF AUGUST 15, 2005

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

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

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

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

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

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

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

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

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

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

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

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;

"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;

"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;

"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;

"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;

"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;

"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;

"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;

"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.

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,

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.

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

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.

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

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

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

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.

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

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

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.

(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

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)

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.

(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;

(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.

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:

(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.

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

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

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.

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.

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

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,

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;

(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;

(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.

(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.

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.

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

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.

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.

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

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.

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

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

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,

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

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

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.

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

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.

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.

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

(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

SCHEDULE A

DESCRIPTION OF COLLATERAL

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

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.

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

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.

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.

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.

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.

NOTE

(Series B)

$495,000.00 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 FOUR HUNDRED NINETY FIVE THOUSAND and 00/100 dollars ($495,000.00) 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 $495,000 made by the Authority to the Borrower thereunder from the proceeds of the Authority's $495,000 Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project), Federally Taxable Series B (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.

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.

MORTGAGE

FROM

ELITE PHARMACEUTICALS, INC.

TO THE

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

DATED: AUGUST 31, 2005

Record and Return to:

John V. Cavaliere, Esq.
McMANIMON & SCOTLAND, L.L.C.
One Riverfront Plaza, 4th Floor
Newark, New Jersey 07102

MORTGAGE

THIS MORTGAGE made as of August 15, 2005, from ELITE PHARMACEUTICALS, INC., having an office or located at 165 Ludlow Avenue, Northvale, New Jersey 07647 (the "Mortgagor") to the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic constituting an instrumentality of the State of New Jersey, having an office at 36 West State Street, P.O. Box 990, Trenton, New Jersey 08625 (the "Mortgagee").

WHEREAS, the Mortgagor has entered into a Loan Agreement with the Mortgagee dated as of August 15, 2005 (the "Agreement"), under which the Mortgagee has agreed to provide the Mortgagor with funds to undertake the financing and refinancing of the acquisition of land and an existing approximately 15,000 sq. ft. building, with renovations thereto, 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"); and

WHEREAS, the Mortgagor is obligated under the Agreement and two notes of the Mortgagor of even date herewith (collectively, the "Note") in the aggregate principal sum of FOUR MILLION ONE HUNDRED FIFTY FIVE THOUSAND and 00/100 Dollars ($4,155,000.00) (collectively, the "Loan") lawful money of the United States with interest thereon to be computed from the date thereof at the rate provided for in the Agreement and the Note and this Mortgage shall serve as security for the repayment of the Loan.

NOW, THEREFORE, to secure the payment of the Loan and to secure the performance by the Mortgagor of all of its other obligations and covenants pursuant to the Agreement, and to assure payment of all other indebtedness, monetary obligations, liabilities and duties of any kind of the Mortgagor, direct or indirect, absolute or contingent, joint or several, due or not due, liquidated or unliquidated, arising under the Agreement or this Mortgage, the Mortgagor has given, granted, released, assigned, transferred and set over unto the Mortgagee and by these presents does give, grant, release, assign, transfer, and set over unto the Mortgagee, its successors and assigns forever, the following described property and rights:

ALL that certain lot, piece or parcel of land, together with the buildings, structures and improvements thereon now or at anytime hereafter erected or constructed, lying and being in the municipality of Northvale, the County of Bergen and the State of New Jersey, more particularly described in SCHEDULE A attached hereto and made a part hereof (the "Premises").

TOGETHER with all and singular the tenements, hereditaments, woods, waters, watercourses, liberties, privileges, rights-of-way, easements, riparian rights and appurtenances thereunto belonging, or in any wise appertaining, and any reversion and remainders, rents, issues and profits thereof.

TOGETHER with all right, title and interest of the Mortgagor in and to any streets, roads, public places, opened or proposed, adjoining the Premises, and all easements and rights-of-way, public or private, all sidewalks and alleys, now or hereafter used in connection with the Premises or abutting the Premises.

TOGETHER with all fixtures and articles of personal property now or hereafter attached to or used in connection with, or with the operation of, said Premises (except those fixtures and articles of personal property now or hereafter owned by any tenants of the Premises), as to which this Mortgage

constitutes a fixture filing and security agreement under the Uniform Commercial Code of the State of New Jersey (in addition to and not in lieu of any other security agreement between the parties), including, but not limited to, partitions, elevators, steam and hot water boilers, dynamos, kitchen cabinets, incinerators, plants and shrubbery, furnaces, heating, air conditioning, lighting and power plants, coal and oil burning apparatus, pipes, plumbing, radiators, sinks, bath tubs, water closets, refrigerators, gas and electrical fixtures, stoves, ranges, shades, screens, awnings, vacuum cleaning systems, sprinkler systems or other fire prevention or extinguishing apparatus and materials, including additions thereto, replacements thereof and proceeds therefrom, all of which shall be deemed to be and remain and form a part of the realty and are covered by the lien of this Mortgage. Pursuant to N.J.S.A. 12A:9-402(b), this Mortgage shall be filed in the real estate record office in the County of Bergen and shall be effective as a financing statement filed as a fixture filing from the date of its recording. If the lien of this Mortgage is subject to a conditional bill of sale, chattel mortgage, or other security interest covering any such property, then all the right, title and interest of Mortgagor in and to such property, together with the benefits of any deposits or payments now or hereafter made thereon, are and shall be covered by the lien of this Mortgage.

TOGETHER with any and all awards, damages, payments and other compensation, and any and all claims therefor and rights thereto, which may result from taking or injury by virtue of the exercise of the power of eminent domain, or any damage, injury or destruction in any manner caused to the Premises or improvements thereon, or any part thereof; subject, however, to the provisions of the Agreement relating to damage, destruction, taking or condemnation, which provisions are incorporated herein by reference.

AND ALSO, all the estate, right, title, interest, property, possession, claim and demand whatsoever of the Mortgagor, in law and in equity, of, in and to the same and every part and parcel thereof with the appurtenances.

All of the foregoing, including the Premises, shall be known herein as the "Mortgaged Property."

TO HAVE AND TO HOLD the above granted Mortgaged Property unto the Mortgagee, its successors and assigns, to its and their own proper use, benefit and behoof forever.

PROVIDED THAT if the Mortgagor shall well and truly pay or there shall otherwise be paid to the Mortgagee the indebtedness secured hereby at the time and in the manner provided in the Agreement and this Mortgage and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Agreement, then these presents and the lien and interest hereby transferred and assigned shall cease, terminate and be void. The Mortgagee hereby covenants to release the Mortgaged Property and renounce any other rights granted to it herein, and to execute at the request of the Mortgagor, a "Release of Mortgage" and any other instrument to that effect deemed necessary or desirable, upon payment and performance being made on the indebtedness and covenants secured hereby.

I. THE MORTGAGOR REPRESENTS, WARRANTS, COVENANTS AND AGREES WITH MORTGAGEE AS FOLLOWS:

Section 1. That all words and terms not defined herein shall have the respective meanings and be construed herein as provided in the Agreement.

Section 2. That the Mortgagor will pay the Loan at the time and in the manner provided for in the Agreement and in this Mortgage.

Section 3. That the Mortgagor hereby covenants to the Mortgagee that no owner of the Premises shall be entitled to any credit against payments due hereunder by reason of the payment of any taxes or assessments levied thereon.

Section 4. That the Mortgagor is seized of an indefeasible estate in fee simple in the Mortgaged Property, and Mortgagor warrants the title to the Mortgaged Property.

Section 5. That the Mortgaged Property shall be kept insured against loss or damage by fire and such other hazards as Mortgagee may specify, for the benefit of the Mortgagee, all in accordance with the provisions of the Agreement.

Section 6. That any buildings, structures and other improvements erected and to be erected upon the Premises, including fixtures and equipment shall be kept in good and substantial repair and shall not be removed, demolished or materially altered without the prior express written consent of the Mortgagee, which consent shall not be unreasonably withheld or delayed. The Mortgagor shall not do, and shall not permit to be done, any act which may in any way impair or weaken the security under this Mortgage.

Section 7. That the Mortgagor represents to the Mortgagee that it has no knowledge of any offsets, counterclaims or defenses to the principal indebtedness secured hereby, or to any part thereof, or the interest thereon, either at law or in equity. The Mortgagor will, within three (3) days upon request in person or within ten (10) days upon request by mail, furnish a duly acknowledged written statement in form reasonably satisfactory to the Mortgagee stating either that the Mortgagor knows of no offsets or defenses existing against such indebtedness, or if such offsets or defenses are alleged to exist, the nature and extent thereof, and in either case, such statement shall set forth the amount due hereunder.

Section 8. That the Mortgagor will not remove or suffer to be removed from the Premises or the improvements thereon any fixtures as defined by the law in New Jersey (unless such fixtures have been replaced with similar fixtures of equal or greater utility and value), presently or in the future to be incorporated into, installed in, annexed or affixed to the Premises or the improvements; nor will the Mortgagor execute or cause to be executed, any security interest upon any such fixtures, additions to, substitutions or replacements thereof or upon any fixtures in the future to be installed in, annexed or affixed to the Premises, without the prior express written consent of the Mortgagee.

Section 9. That the Mortgagor will perform and abide by the terms and covenants herein and the terms and covenants in the Agreement contained therein which are made a part hereof as though set forth herein at length.

Section 10. That the acceptance by the Mortgagee of any payments hereunder, after default, or the failure of the Mortgagee, in any one or more instances to insist upon strict performance by the Mortgagor of any terms and covenants of this Mortgage or to exercise any option or election herein conferred, shall not be deemed to be a waiver or relinquishment for the future of any such terms, covenants, elections or options.

Section 11. That all the covenants hereof shall be construed in accordance with the laws of the State of New Jersey.

Section 12. That the terms of this Mortgage may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

Section 13. The date of this Mortgage shall be for identification purposes only and shall not be construed to imply that this Mortgage was executed on any date other than the respective dates of the acknowledgments of the parties hereto. This Mortgage shall become effective upon its delivery.

Section 14. The Mortgagor shall prepare and timely file all Federal, state and local tax returns required to be filed by it and promptly pay and discharge or cause to be promptly paid and discharged all taxes, assessments, municipal or governmental rates, charges, impositions, liens and water and sewer rents or any part thereof, heretofore or hereafter 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 for those taxes, assessments and other governmental charges then being contested in good faith by the Mortgagor by appropriate proceedings (provided that such contest shall not result in a new lien being placed on any of the Mortgagor's properties or assets or result in any of the Mortgagor's properties or assets being subject to loss or forfeiture as a result of the nonpayment of such items during the continuance of said contest) and for which the Mortgagor has maintained adequate reserves or accrued the estimated liability on the Mortgagor's balance sheets for payment thereof. The Mortgagor shall submit to the Mortgagee receipted bills showing payment of all taxes, assessments, governmental charges or levies and lawful claims which, if unpaid, would become a lien or claim on the Premises, as same shall be paid.

Section 15. During the term of the Agreement, in the event of the passage after the date of this Mortgage of any law of the State of New Jersey, or any other governmental entity, changing in any way the laws now in force for the taxation of mortgages, or debts secured thereby, for state or local purposes, or the manner of the operation of any such taxes, so as to affect the interest of the Mortgagee, then and in such event, the Mortgagor shall bear and pay the full amount of such taxes,

provided that if for any reason payment by the Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the Loan or indebtedness secured hereby wholly or partially usurious under any of the terms or provisions of the obligation secured hereunder, or this Mortgage, or otherwise, the Mortgagee may, at the Mortgagee's option, declare the whole sum secured by this Mortgage, with interest thereon, to be immediately due and payable and Mortgagor shall have one hundred and twenty (120) days to pay such Mortgage, or the Mortgagee may, at the Mortgagee's option, pay that amount or portion of such taxes as renders the Loan or indebtedness secured hereby unlawful or usurious, in which event the Mortgagor shall concurrently therewith pay the remaining lawful and nonusurious portion or balance of said taxes.

Section 16. The Mortgagor agrees to comply with all laws, rules, regulations and ordinances made or promulgated by lawful authority and now or hereafter applicable to the Mortgaged Property within such time as may be required by law. The Mortgagor shall have the right to contest any such law, rule, regulation or the like as long as it is contesting the same in good faith.

Section 17. That if any action or proceeding be commenced to which action or proceeding the holder of this Mortgage is made a party, or in which it becomes necessary to defend or uphold the lien of this Mortgage, the expense of any litigation to prosecute or defend the rights and lien created by this Mortgage (including reasonable attorney's fees), shall be paid by the Mortgagor, and any such sum and the interest thereon shall be a lien on the Mortgaged Property, prior to any right, or title to, interest in or claim upon the Mortgaged Property attaching or accruing subsequent to the lien of this Mortgage, and shall be deemed to be secured by this Mortgage. In any action or proceeding to foreclose this Mortgage, or to recover or collect the debt secured hereby, the provisions of law respecting the recovery of costs, disbursements and allowance shall prevail unaffected by this covenant.

Section 18. The Mortgagor has assigned to the Mortgagee the rents, issues and profits arising out of or from the above described Premises as further security for the payment of the debt secured hereby, as set forth in the Assignment of Leases from the Mortgagor to the Mortgagee of even date herewith.

Section 19. That upon default by the Mortgagor in the compliance with, or performance of, any of the terms, covenants, or conditions of this Mortgage or the Agreement (and upon the lapse of the applicable grace periods as set forth herein and therein), the Mortgagee may, at its option, remedy such default; that all payments made by the Mortgagee to remedy a default by the Mortgagor (including reasonable attorneys' fees) and the total of any payment or payments due from the Mortgagor to the Mortgagee and in default, together with interest thereon at the rate equal to the rate of interest set forth in the Agreement (such interest to be calculated from the date of such advancement to the date of payment thereof by Mortgagor), shall be added to the debt secured by this Mortgage until paid and the Mortgagor covenants to repay the same to the Mortgagee on the next payment date on the Note. Any such sums and the interest thereon shall be a lien on the Premises prior to any other lien attaching to or accruing subsequent to the lien of this Mortgage.

Section 20. (i) To the best of the Mortgagor's knowledge and other than as disclosed in the offering statement, after due inquiry and investigation, none of the real property owned and/or occupied by the Mortgagor and located in the State of New Jersey, including, without limitation, the Mortgaged Premises has ever been used by previous owners and/or operators to refine, produce, store, handle, transfer, process or transport "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws except for substances resulting from the prior operation of the Premises as a farm, and (b) the Mortgagor has not used in the past, nor does the Mortgagor intend to use in the future, said real property, including, without limitation, the Mortgaged Premises, for the purpose of refining, producing, storing, handling, transferring, processing or transporting said "Hazardous Substances" or "Hazardous Wastes" except as are normally used in the construction of homes and in such case in compliance with the Applicable Environmental Laws.

(ii) None of the real property owned and/or occupied by the Mortgagor and located in the State of New Jersey, including, without limitation, the Mortgaged Premises, has or is now being used as a "Major Facility", as such term is defined in N.J.S.A. 58:10-23.11b(l), and said real property, including, without limitation, the Mortgaged Premises, will not be used as a "Major Facility" without the prior express written consent of Mortgagee but if the Mortgagor ever becomes such an owner or operator, then the Mortgagor shall furnish the New Jersey Department of Environmental Protection with all the information required by N.J.S.A. 58:10-23.11d.

(iii) Should the Mortgagor or any other Person cause or permit any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the lands, waters, fish, shellfish, wildlife, biota, air or other resources owned, managed or held in trust or otherwise controlled by the State of New Jersey, without having obtained a permit issued by the appropriate governmental authorities, the Mortgagor shall promptly clean up such spill, leak, etc., in accordance with the provisions of the Applicable Environmental Laws.

(iv) To the best of the Mortgagor's knowledge and other than as disclosed in the Placement Memorandum, after due inquiry and investigation, no lien has been attached to any revenues or any real or personal property owned by the Mortgagor and located in the State of New Jersey, including, without limitation, the Mortgaged Premises, as a result of the administrator of the New Jersey Spill Compensation Fund expending monies from said fund to pay for "Damages", as such term is described in N.J.S.A. 58:10-23.11(g) and/or "Cleanup and Removal Costs", as such term is defined in N.J.S.A. 58:10-23.11b(d), arising from an intentional or unintentional action or omission of the Mortgagor or any previous owner and/or operator of said real property, including, without limitation, the Mortgaged Premises, resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into the waters or onto the lands of the State of New Jersey, or into waters outside the jurisdiction of the State of New Jersey where damage may have resulted to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust

or otherwise controlled by the State of New Jersey.

(v) The Mortgagor is not, and has not been, required to furnish the New Jersey Department of Environmental Protection with information required by N.J.S.A. 58:10-23.11d with respect to the Mortgaged Premises and any other real property owned and/or operated by Mortgagor and located in New Jersey, if any, which is used as a "Major Facility", as such term is defined in N.J.S.A. 58:10-23.11b(l).

(vi) The Mortgagor has not received a summons, citation, directive, letter or other communication, written or oral, from the New Jersey Department of Environmental Protection concerning any intentional or unintentional action or omission on the Mortgagor's part resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into the waters or onto the lands of the State of New Jersey, or into the waters outside the jurisdiction of the State of New Jersey resulting in damage to the land, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey.

(vii) In connection with the purchase of the Mortgaged Premises if acquired by the Mortgagor on or after February 1, 1984, such acquisition was not subject to compliance with, or the Mortgagor required that the seller of said real property, including the Mortgaged Premises, comply with the provisions of the New Jersey Environmental Cleanup Responsibility Act (N.J.S.A. 13:1K-6 ET SEQ.) as amended by the Industrial Site Recovery Act, and the seller did comply therewith.

(viii) The Mortgagor shall not cause or permit to exist, as a result of an intentional or unintentional action or omission on the part of the Mortgagor, a releasing, spilling, leaking, pumping, emitting, pouring, emptying or dumping of a "Hazardous Substance" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into waters or onto the lands of the State of New Jersey, or into waters outside the jurisdiction of the State of New Jersey, where damage may result to the lands, waters, fish, shellfish, wildlife, biota, air and other resources owned, managed, held in trust or otherwise controlled by the State of New Jersey, unless said release, spill, leak, etc., is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal or state governmental authorities.

(ix) So long as the Mortgagor shall own or operate any real property located in the State of New Jersey, which is used as a "Major Facility", as such term is defined in N.J.S.A. 58:10-23. 11b(1), the Mortgagor shall duly file or cause to be duly filed with the Director of the Division of Taxation in the New Jersey Department of the Treasury, a tax report or return and shall pay or make provision for the payment of all taxes due therewith, all in accordance with and pursuant to N.J.S.A. 58:10-23.11h.

(x) In the event that there shall be filed a lien against the Mortgaged Premises by the New Jersey Department of Environmental Protection pursuant to and in accordance with the provisions of

N.J.S.A. 58:10-23.11f(f) as a result of the administrator of the New Jersey Spill Compensation Fund having expended monies from said fund to pay for "Damages", as such term is described in N.J.S.A. 58:10-23.11g, and/or "Cleanup and Removal Costs", as such term is defined in N.J.S.A. 58:10-23.11b(d), arising from an intentional or unintentional action or omission of the Mortgagor, any tenant of the Mortgaged Premises or any other Person resulting in the releasing, spilling, pumping, pouring, emitting, emptying or dumping of "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into the waters or onto the lands of the State of New Jersey or into waters outside the jurisdiction of the State of New Jersey where damage resulted to the lands, waters, or natural resources within the jurisdiction of the State of New Jersey, then the Mortgagor shall, within thirty (30) days from the date that the Mortgagor is given notice that the lien has been placed against the Mortgaged Premises or within such shorter period of time in the event that the State of New Jersey has commenced steps to cause the Mortgaged Premises to be sold pursuant to the lien, either (a) pay the claim and remove the lien from the Mortgaged Premises, or (b) furnish (1) a bond satisfactory to Commonwealth Land Title Insurance Company and the Mortgagee in the amount of the claim out of which the lien arises, (2) a cash deposit in the amount of the claim out of which the lien arises, or (3) other security reasonably satisfactory to the Mortgagee in an amount sufficient to discharge the claim out of which the lien arises (subject to the Mortgagee's agreement which agreement shall not be unreasonably withheld or delayed, that the commitment of Commonwealth Land Title Insurance Company to affirmatively insure over or omit such claim shall constitute such reasonably satisfactory security).

(xi) The Mortgagor hereby agrees that in the event the provisions of the New Jersey Environmental Cleanup Responsibility Act, as amended by the Industrial Site Recovery Act, become applicable to the Mortgaged Premises subsequent to the date hereof, the Mortgagor shall give prompt written notice thereof to the Mortgagee and shall take immediate requisite action to insure full compliance with such Act.

(xii) The Mortgagor agrees that the Mortgagee shall have the right to conduct or have conducted by its agents or contractors, such environmental inspections as the Mortgagee shall reasonably deem necessary or advisable from time to time at the sole cost and expense of the Mortgagor. Mortgagor shall, and shall cause each tenant of the Mortgaged Premises to, cooperate with such inspection efforts; such cooperation shall include, without limitation, supplying such information concerning the operations conducted, and "Hazardous Substances" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, located at the Mortgaged Premises.

(xiii) To the best of the Mortgagor's knowledge and other than as disclosed in the Placement Memorandum, after due inquiry and investigation, no lien has been attached to any real property owned by the Mortgagor and located within the State of New Jersey, including, without limitation, the Mortgaged Premises, as a result of the Administrator of the United States Environmental Protection Agency expending monies from the Hazardous Substance Superfund for "Damages" and/or "Response Action Costs" as such terms are described in 42 U.S.C. ss.9607(a), arising from an intentional or unintentional action or omission of the Mortgagor or any previous owner and/or

operator of said real property, including, without limitation, the Mortgaged Premises, resulting in any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any "Hazardous Substance" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into the navigable waters, the waters of the contiguous zone, or the ocean waters of which the natural resources are under exclusive managing authority of the United States under the Magnuson Fishery Conservation and Management Act (16 U.S.C. ss.1801 ET SEQ.), or any other surface water, ground water, drinking water supply, land surface or subsurface strata, or ambient air within the United States or under the jurisdiction of the United States when damage may have resulted to the land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to or otherwise controlled by the United States and any State or local government.

(xiv) In the event that there shall be filed a lien against the Mortgaged Premises by the United States Environmental Protection Agency pursuant to and in accordance with the provisions of 42 U.S.C. ss.9607(1), as a result of the Administrator of the Hazardous Substance Superfund having expended monies from said fund to pay for "Damages" and "Response Action Costs", as such terms are described in 42 U.S.C.ss.9607(a), arising from an intentional or unintentional action of the Mortgagor, resulting in any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing of any "Hazardous Substance" or "Hazardous Wastes", as such terms are defined in the Applicable Environmental Laws, into the navigable waters, the waters of the contiguous zone, or the ocean waters of which the natural resources are under exclusive managing authority of the United States under the Magnuson Fishery Conservation and Management Act (16 U.S.C. ss.1801 ET SEQ.), or any other surface water, ground water, drinking water supply, land surface or subsurface strata or ambient air within the United States or under the jurisdiction of the United States where damage resulted to the lands, waters, or natural resources of the United States, then the Mortgagor shall, within thirty (30) days from the date that the Mortgagor is given notice that the lien has been placed against the Mortgaged Premises, or within such shorter period of time in the event that the United States Government has commenced steps to cause the Mortgaged Premises to be sold pursuant to the lien, either (a) pay the claim and remove the lien from the Mortgaged Premises, or (b) furnish (1) a bond satisfactory to Mortgagee in the amount of the claim out of which the lien arises, (2) a cash deposit in the amount of the claim out of which the lien arises, or (3) other security reasonably satisfactory to Mortgagee in an amount sufficient to discharge the claim out of which the lien arises (subject to the Mortgagee's agreement, which agreement shall not be unreasonably withheld or delayed, that the commitment of a title insurance company reasonably acceptable to Mortgagee to affirmatively insure over or omit such claim shall constitute such reasonably satisfactory security).

(xv) The Mortgagor represents and warrants that neither the Mortgagor nor the Mortgaged Premises are in violation of or subject to any existing, pending or threatened investigation or inquiry by any governmental authority pertaining to any Applicable Environmental Law (other than as to monitoring currently in effect). The Mortgagor shall not cause or permit the Mortgaged Premises to be in violation of, or do anything which would subject the Mortgaged Premises to any remedial obligations under, any Applicable Environmental Law, and shall promptly notify the Mortgagee, in

writing, of any existing, pending or threatened investigation or inquiry by any governmental authority in connection with any Applicable Environmental Law.

II. THE MORTGAGOR SHALL BE IN DEFAULT OF THIS MORTGAGE UPON THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:

Section 1. The occurrence of any Event of Default under the Agreement, after the expiration of any applicable notice and/or grace period.

Section 2. Other than Permitted Encumbrances (as defined in the Agreement), in the event of a subsequent encumbrance of the Premises or, other than to an entity which is owned by the Mortgagor or is owned by at least 80% of the owners of the Mortgagor, any change in the ownership of the Premises.

Section 3. In the event that the Mortgagor shall have encumbered, mortgaged or given a security interest in any fixture or fixtures which is not removed, satisfied or discharged within ninety (90) days, or shall have, without the consent of the Mortgagee, removed or replaced any fixtures other than for replacement of fixtures in the ordinary course of business.

Section 4. In the event of default as to, or in the event that proceedings be instituted for foreclosure or collection of, any mortgage, judgment, or lien affecting the Premises.

Section 5. In the event that the Mortgagor shall be unable to retain an insurance company authorized to do business in the State of New Jersey to insure the Premises in the form of policy approved by the Mortgagee for a sum equal to the full amount of the Loan.

Section 6. The Mortgagor shall have caused or permitted a security interest, perfected or otherwise, other than the security interest specifically provided for or permitted hereunder, to be created in any of the Mortgaged Property, or shall have failed to take any action requested by the Mortgagee to perfect or protect the security interest provided for herein.

III. SHOULD ANY DEFAULT BE MADE BY THE MORTGAGOR, THE MORTGAGEE MAY TAKE ANY OR ALL OF THE FOLLOWING ACTIONS, AT THE SAME OR AT DIFFERENT TIMES:

Section 1. Declare the entire amount of unpaid principal and accrued interest and other money due under this Mortgage, the Agreement and the Note immediately due and payable.

Section 2. Enter upon, and take possession of, the Mortgaged Property, and to lease and let the said Mortgaged Property, and to receive all the rents, issues and profits thereof which are overdue, due or to become due, and to apply the same, after payment of all necessary charges and expenses, on account of the amounts hereby secured and the holder of this Mortgage is given and granted full power and authority to do any act or thing in connection with the management and

operation of the Premises. This remedy becomes effective either with or without any action brought to foreclose this Mortgage and without applying at any time for a receiver of such rents. Should said rents or any part thereof be assigned without the consent of the holder of this Mortgage, then the Note shall, at the option of the holder hereof, become due and payable immediately, anything herein contained to the contrary notwithstanding.

Section 3. Institute an action of mortgage foreclosure, or take other action as the law may allow, at law or in equity, for the enforcement of this Mortgage, and proceed thereon to final judgment and execution of the entire unpaid balance of the Loan, including costs of suit, interest and reasonable attorney's fees. In case of any sale of the Mortgaged Property by virtue of judicial proceedings, the Mortgaged Property may be sold in one parcel and as an entirety or in such parcels, manner or order as the Mortgagee, in its sole discretion, may elect. The failure to make any tenants parties defendant to a foreclosure proceeding and to foreclose their rights will not be asserted by the Mortgagor as a defense in any proceeding instituted by the Mortgagee to collect the obligations secured hereby or any deficiency remaining unpaid after the foreclosure sale of the Premises.

Section 4. Appoint a receiver of the rents, issues and profits of the Mortgaged Property without the necessity of proving either the depreciation or the inadequacy of the value of the security or the insolvency of the Mortgagor or any person who may be legally or equitably liable to pay moneys secured hereby and the Mortgagor and each such person waive such proof and consent to the appointment of a receiver.

Section 5. If the Mortgagor or any subsequent owner is occupying the Premises or any part thereof, it is hereby agreed that the said occupants shall pay such reasonable rental monthly in advance as the Mortgagee shall demand for the Premises or the part so occupied, and for the use of the Mortgaged Property covered by this Mortgage or any chattel mortgage.

Section 6. Apply on account of the unpaid indebtedness and the interest thereon or on account of any arrearages of interest thereon, or on account of any balance due to the Mortgagee after a foreclosure sale of the Mortgaged Property whether or not a deficiency action shall have been instituted, any unexpended moneys still retained by the Mortgagee that were paid by the Mortgagor to the Mortgagee for the payment of, or as security for the payment of taxes, assessments, municipal or governmental rates, charges, impositions, liens, water or sewer rents, or insurance premiums, if any, or in order to secure the performance of some act by the Mortgagor.

IV. MISCELLANEOUS:

Section 1. The rights and remedies herein expressed to be vested in or conferred upon the Mortgagee shall be cumulative and shall be in addition to and not in substitution for or in derogation of the rights and remedies conferred by any applicable law. The failure, at any one or more times, of the Mortgagee to assert the right to declare the principal indebtedness due or the granting of any extension or extensions of time of payment of the Loan either to the Mortgagor or to any other person, or taking of other or additional security for the payment thereof, or releasing any security, or

changing any of the terms of the within Mortgage or the Agreement, or other obligation accompanying this Mortgage, or waiver of or failure to exercise any right under any covenant or stipulation herein contained shall not in any way affect this Mortgage nor the rights of the Mortgagee hereunder nor operate as a release from any personal liability upon the Loan or obligation accompanying this Mortgage, nor upon any covenant or stipulation therein contained, nor under any agreement assuming the payment of said Loan or obligation.

Section 2. All notices to be given hereunder shall be given by certified mail directed to the Mortgagor or to the Mortgagee at the respective addresses shown at the head of this Mortgage, or to such other address as either party may notify the other.

Section 3. All of the terms, covenants, provisions and conditions herein contained shall be for the benefit of, apply to, and bind the heirs, executors, administrators, successors and assigns of the Mortgagor and the Mortgagee, and are intended and shall be held to be real covenants running with the land, and the term "Mortgagor" shall also include any and all subsequent owners and successors in title of the Premises.

Section 4. When such interpretation is appropriate, any word denoting gender used herein shall include all persons, natural or artificial, and words used in the singular shall include the plural.

Section 5. This Mortgage is the Mortgage referred to in the Agreement and is subject to all the terms and provisions of said Agreement. Should any provision of the Agreement be inconsistent or contrary to the provisions of this Mortgage, the provisions of the Agreement shall control. The Agreement is hereby incorporated by reference as though fully set forth herein and made a part hereof, and is on file for inspection at the offices of the Mortgagee.

{THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK}

IN WITNESS WHEREOF, the Mortgagor has caused these presents to be signed by its proper officers the day and year contained in the acknowledgment hereof.

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

STATE OF NEW JERSEY :

: SS.:

COUNTY OF ESSEX :

BE IT REMEMBERED, that on August 29, 2005, before me, the subscriber, an Attorney-at-Law of New Jersey, and I hereby certify that I am such an Attorney-at-Law as witness my hand, personally appeared Bernard J. Berk, Chief Executive Officer and Chairman of Elite Pharmaceuticals, Inc., who, I am satisfied is the person who executed the foregoing Instrument on behalf of said corporation and who thereupon acknowledged that he signed and delivered said Instrument as the voluntary act and deed of said corporation.

Michael L. Messer An Attorney at Law of New Jersey

INDENTURE

BETWEEN

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

AND

THE BANK OF NEW YORK, AS TRUSTEE

DATED AS OF AUGUST 15, 2005

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

                                                                                        PAGE
                                                                                        ----
Section 1.01    Definitions................................................................5

                                                  ARTICLE II

                                  AUTHORIZATION, TERMS AND EXECUTION OF BONDS

Section 2.01    Issuance of Bonds in One or More Series...................................11
Section 2.02    Particular Terms of the Initial Bonds.....................................11
Section 2.03    General Terms of Bonds....................................................11
Section 2.04    Execution of Bonds........................................................14
Section 2.05    Authentication of Bonds...................................................14
Section 2.06    Interchangeability of Bonds...............................................15
Section 2.07    Transfer and Registry of Bonds and Agency Therefor........................15
Section 2.08    Transfer of Bonds.........................................................15
Section 2.09    Ownership of Bonds and Effect of Registration.............................15
Section 2.10    Mutilated, Destroyed, Stolen or Lost Bonds................................15
Section 2.11    Regulations with Respect to Registration, Exchanges and Transfers.........16
Section 2.12    Cancellation and Destruction of Surrendered Bonds.........................16

                                                  ARTICLE III

                                     AUTHENTICATION AND DELIVERY OF BONDS

Section 3.01    Authorization of Bonds....................................................17
Section 3.02    Issuance of Initial Bonds.................................................17
Section 3.03    Disposition of Proceeds of Bonds..........................................17
Section 3.04    Issuance of Additional Bonds..............................................17

Section 4.01    Establishment of Funds and Accounts.......................................20
Section 4.02    Payments into the Bond Fund...............................................20
Section 4.03    Application of the Bond Fund..............................................20
Section 4.04    Moneys to be Held in Trust................................................21
Section 4.05    No Further Payments Needed................................................21
Section 4.06    Funds Held for Bonds......................................................21
Section 4.07    Rebate Fund...............................................................22
Section 4.08    Payments into the Project Fund; Disbursements.............................22
Section 4.09    Completion of the Project.................................................22
Section 4.10    Debt Service Reserve Fund.................................................23

                                                   ARTICLE V

                                       INVESTMENT AND DEPOSIT OF MONIES

Section 5.01    Deposits..................................................................24
Section 5.02    Investments...............................................................24

                                                  ARTICLE VI

                                              REDEMPTION OF BONDS

Section 6.01    Bonds Subject to Redemption...............................................26
Section 6.02    Bonds Subject to Redemption; Selection of Bonds to be
                Called for Redemption.....................................................26
Section 6.03    Special Mandatory Redemption - Breach of Certain Public
                 Purpose Covenants........................................................27
Section 6.04    Procedure for Redemption .................................................28
Section 6.05    Payment of Redemption Price...............................................29


                                                  ARTICLE VII

                                          COVENANTS OF THE AUTHORITY

Section 7.01    Payment of Principal of and Interest on Bonds.............................30
Section 7.02    Corporate Existence; Compliance with Laws.................................30
Section 7.03    Enforcement of Agreement; Notice of Default...............................30
Section 7.04    Further Assurances........................................................30
Section 7.05    Financing Statements......................................................30
Section 7.06    Intentionally Omitted.....................................................31

Section 7.07    Creation of Liens.........................................................31
Section 7.08    Exclusion of Interest on the Bonds from Gross Income......................31
Section 7.09    Continuing Disclosure.....................................................31
Section 7.10    Event of Default..........................................................31
Section 7.11    Immunity of Authority.....................................................31
Section 7.12    Authority and Trustee Entitled to Indemnity...............................32
Section 7.13    Neither Authority Nor Trustee Responsible for Insurance,
                Taxes, Execution of Indenture, Acts of the Authority or Application
                of Moneys Applied in Accordance with this Indenture.......................32
Section 7.14    Authority and Trustee May Rely on Certificates............................33
Section 7.15    Further Assurances........................................................33

                                                 ARTICLE VIII

                                             DEFAULTS AND REMEDIES

Section 8.01    Events of Default.........................................................34
Section 8.02    Enforcement of Agreement..................................................35
Section 8.03    Judicial Proceedings by Trustee...........................................35
Section 8.04    Discontinuance or Abandonment of Proceedings..............................36
Section 8.05    Bondholders May Direct Proceedings........................................36
Section 8.06    Limitations on Actions by Bondholders.....................................36
Section 8.07    Trustee May Enforce Rights Without Possession of Bonds....................37
Section 8.08    Remedies Not Exclusive....................................................37
Section 8.09    Delays and Omissions Not to Impair Rights.................................37
Section 8.10    Application of Moneys in Event of Default.................................37
Section 8.11    Trustee's Right to Receiver; Compliance with Act..........................38
Section 8.12    Trustee and Bondholders Entitled to All Remedies Under Act................38

                                                  ARTICLE IX

                                                  THE TRUSTEE

Section 9.01    Acceptance of Trust.......................................................39
Section 9.02    No Responsibility, Etc....................................................39
Section 9.03    Trustee May Act Through Agents; Answerable Only for Willful
                Misconduct or Negligence..................................................39
Section 9.04    Compensation..............................................................39
Section 9.05    Notice of Default; Right to Investigate...................................39
Section 9.06    Obligation to Act on Defaults.............................................40
Section 9.07    Reliance on Requisition, Etc..............................................40

Section 9.08    Trustee May Deal in Bonds; Other Financial Transactions...................40
Section 9.09    No Duty to Renew Insurance................................................40
Section 9.10    Intentionally Omitted.....................................................40
Section 9.11    Resignation of Trustee....................................................40
Section 9.12    Removal of Trustee........................................................40
Section 9.13    Appointment of Successor Trustee..........................................41
Section 9.14    Qualification of Successor................................................41
Section 9.15    Instruments of Succession.................................................41
Section 9.16    Merger of Trustee.........................................................41

                                                     ARTICLE X

                                      EXECUTION OF INSTRUMENTS BY BONDHOLDERS
                                          AND PROOF OF OWNERSHIP OF BONDS

Section 10.01     Ownership of Bonds......................................................43

                                                    ARTICLE XI

                                            AMENDMENTS AND SUPPLEMENTS

Section 11.01     Amendments and Supplements Without Bondholders' Consent.................44
Section 11.02     Amendments with Bondholders' Consent....................................44
Section 11.03     Company Consent Required................................................44
Section 11.04     Amendment of Agreement..................................................44
Section 11.05     Trustee Authorized to Join in Amendments and Supplements;
                  Reliance on Counsel.....................................................45

                                                    ARTICLE XII

                                                    DEFEASANCE

Section 12.01     Defeasance..............................................................46
                                                   ARTICLE XIII

                                                   MISCELLANEOUS

Section 13.01     Dissolution.............................................................47
Section 13.02     No Rights Conferred on Others...........................................47
Section 13.03     Deposit of Funds for Payment of Bonds...................................47
Section 13.04     Severability of Invalid Provisions......................................47

Section 13.05     No Personal Recourse....................................................48
Section 13.06     Notice..................................................................48
Section 13.07     Execution in Several Counterparts.......................................48
Section 13.08     Laws Governing Indenture................................................49
Section 13.09     Successors and Assigns..................................................49
Section 13.10     Headings for Convenience Only...........................................49
Section 13.11     Credits on the Notes....................................................49
Section 13.12     Payments Due on Saturdays, Sundays and Holidays.........................49


Section 13.13     Form of Bonds...........................................................49

EXHIBIT A - FORM OF SERIES A BOND
EXHIBIT B - FORM OF SERIES B BOND

INDENTURE

THIS INDENTURE, dated as of August 15, 2005, 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 THE BANK OF NEW YORK, as Trustee (the "Trustee"), a state banking corporation organized and existing under the laws of the State of New York, with fiduciary and corporate trust powers in New Jersey, having a corporate trust office and place of business in West Paterson, New Jersey.

W I T N E S S E T H:

WHEREAS, The New Jersey Economic Development Authority Act, constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey (the "State"), approved on August 7, 1974 as amended and supplemented, (the "Act") 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 by making available financial assistance, to locate, remain or expand within the State; and

WHEREAS, the Authority was created to aid in remedying the aforesaid conditions and further to implement the purposes of the Act, and the Legislature has determined and declared as a matter of express legislative determination that the authority and powers conferred upon the Authority under the Act and the expenditure of moneys pursuant thereto constitutes a serving of a valid public purpose and that the enactment of the provisions set forth in the Act is in the public interest and for the public benefit and good; and

WHEREAS, the Authority, to accomplish the purposes of the Act, is empowered to extend credit to such employment promoting enterprises in the name of the Authority, on such terms and conditions and in such manner as it may deem proper for such consideration and upon such terms and conditions as the Authority may determine to be reasonable; 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, Elite Pharmaceuticals, Inc. (the "Company") has requested, and the Authority has determined to issue, its Economic Development Bonds

(Elite Pharmaceuticals, Inc. - 2005 Project) 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, all pursuant to a Loan Agreement by and between the Authority and the Company dated as of August 15, 2005 (the "Agreement"); and

WHEREAS, the Authority at a meeting thereof duly convened and held on July 12, 2005, has duly authorized the execution and delivery of this Indenture and the issuance thereunder of the Initial Bonds upon and subject to the terms and conditions hereinafter set forth; and

WHEREAS, all acts and things have been done and performed, which are necessary to make the Initial Bonds, when executed and issued by the Authority, authenticated by the Trustee and delivered, the valid and binding legal obligations of the Authority in accordance with their terms and to make this Indenture a valid and binding agreement for the security of the Bonds authenticated and delivered under this Indenture.

NOW THEREFORE, THIS INDENTURE WITNESSETH: That, to provide for the payment of principal or Redemption Price, as the case may be and interest in respect of the Bonds, issued and outstanding under this Indenture, together with interest thereon, the rights of the bondholders and the performance of the covenants contained in said Bonds and herein, the Authority has caused the Company to deliver the Agreement, the Mortgage, the Assignment of Leases and the Notes (as hereinafter defined) and as otherwise set forth in the Agreement and does hereby sell, assign, transfer, set over and pledge unto the Trustee, its successors in the trust and its assigns forever, all the right, title and interest of the Authority in and to, and remedies under, the Notes, the Mortgage, the Assignment of Leases and the Agreement and all the right, title and interest of the Authority in and to the Revenues, the Collateral, the Project, the Project Fund, the Bond Fund and all other funds under this Indenture (other than the Rebate Fund) (as such terms are hereinafter defined) (hereafter referred to as the "Trust Estate").

TO HAVE AND TO HOLD all and singular said Trust Estate; granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, aliened, remised, released, confirmed and set over by the Authority as aforesaid or intended so to be, unto the said Trustee, its successors and assigns, forever.

IN TRUST, NEVERTHELESS, under and subject to the terms and conditions hereinafter set forth, for the equal benefit, protection and security of the Holders of any and all of the Bonds, all of which regardless

of the time or times of their issuance or maturity, shall be of equal rank, without preference, priority or distinction of any of the Bonds over any other thereof, except as otherwise provided in or pursuant to this Indenture, and for securing the observance and performance of all the conditions, covenants, promises, stipulations, agreements and terms and provisions of this Indenture and the uses and purposes herein expressed and declared.

EXPRESSLY RESERVING to the Authority the concurrent right:

(a) to receive notices under this Indenture and the Agreement;

(b) to consent to any amendments, modifications or supplements to the Agreement and this Indenture;

(c) to receive payments under and to enforce pursuant to Article VII of the Agreement all provisions or covenants in the Agreement under and in accordance with the terms of the following sections:

Section 3.02 relating to disbursements from the Project Fund;

Section 3.03 relating to the limitations of the Authority's liability;

Section 4.01 relating to certain representations and warranties of the Company;

Section 4.11 relating to untrue statements of the Company;

Section 6.01 relating to the preservation of property and the Collateral;

Section 6.02 relating to insurance;

Section 6.04 relating to the Project;

Section 6.05 relating to compliance with the Code and arbitrage regulations;

Section 6.07 relating to compliance with the Department of Environmental Protection;

Section 6.08 relating to financial statements;

Section 6.10 relating to indemnification;

Section 6.12 relating to reporting the number of employees;

Section 6.14 relating to inspection of the Project;

Section 6.20 relating to a Project sign;

Section 6.21 relating to brokerage fees;

Section 6.24 relating to compliance with the Indenture;

Section 7.05 relating to the payment of attorneys' fees and expenses;

Section 7.07 relating to certain remedies of the Authority;

Section 8.03 relating to the payment of fees and expenses;

Section 8.06 relating to modifications, waivers and amendments;

Section 8.08 relating to the Authority's assignment;

Section 8.09 relating to further assurances and corrective instruments; and

Section 8.13 relating to the special, limited obligations of the Authority;

(d) the concurrent right to receive any and all reports, notices, surveys, certificates and evidences of performance which the Company may be required to furnish pursuant to the terms of the Agreement and the right to exercise any rights of inspection granted to it pursuant to the terms of the Agreement, whether or not the Trustee shall have exercised or shall have purported to exercise such rights and remedies, without limiting the obligation of the Trustee to do so;

(e) to receive indemnification and to be held harmless by the Company;

(f) to redeem or cancel the Bonds in accordance with the Agreement and this Indenture;

whether or not the Trustee shall have exercised or shall have purported to exercise such rights and remedies, without limiting the obligation of the Trustee to do so (the foregoing rights being referred to as the "Reserved Rights").

ARTICLE I

DEFINITIONS AND INTERPRETATIONS

SECTION 1.01. DEFINITIONS. As used or referred to in this Indenture, unless a different meaning clearly appears from the context:

"Act" shall have the meaning given in the recitals hereto;

"Additional Bonds" shall mean any series of Bonds issued pursuant to
Section 3.04 hereof subsequent to the Initial Bonds;

"Additional Notice" shall mean the notice of redemption required by
Section 6.03;

"Agreement" shall have such meaning given in the recitals hereto;

Articles and Sections mentioned by number are the respective Articles and Sections of this Indenture so numbered;

"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 the benefits of existing and future leases on the Project;

"Authority" shall have the meaning given in the recitals hereto;

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

"Authorized Denominations" means denominations of $5,000 or any integral multiple thereof;

"Bond" or "Bonds" means any of the bonds of the Authority authenticated and delivered under and pursuant to this Indenture, including the Initial Bonds and Additional Bonds, if any. Such Bonds may be Taxable Bonds or Tax-exempt Bonds;

"Bondholder" or the term "Holder" or any similar term, when used with reference to a Bond or Bonds, means any person who shall be the registered owner of any Bond or Bonds;

"Bond Counsel" means McManimon & Scotland, L.L.C., or an attorney or firm of attorneys of nationally recognized standing on the subject of municipal bonds;

"Bond Fund" means the fund so designated which is established and created by Section 4.01 hereof;

"Bond Year" shall have the same meaning as that in the Agreement;

"Certified Resolution" means a copy of one or more resolutions or amending resolutions certified by the Secretary or Assistant Secretary of the Authority under its seal to have been duly adopted by the Authority and to be in effect on the date of such certification;

"Closing Date" means August 31, 2005;

"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 the Agreement;

"Company" shall have the meaning given in the recitals hereto;

"Cost" or "Costs"shall have the same meaning as that in the Agreement;

"Counsel" means an attorney at law or law firm serving as counsel for the Authority, the Trustee or the Company;

"Debt Service Reserve Fund" shall mean the Fund established by Section 4.10 hereof;

"Event of Default" means any of the events specified in Section 8.01 hereof to be an Event of Default;

"Government Obligations" means (a) direct obligations of the United States for which its full faith and credit are pledged for the full and timely payment thereof, (b) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States for the full and timely payment thereof or (c) securities or receipts evidencing ownership interests in obligations or specified portions (such as principal or interest) of obligations described in (a) or (b).

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

"Indenture" means this Trust Indenture as amended or supplemented at the time in question;

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

"Interest Account" means the account so designated which is established and created by Section 4.01 hereof;

"Interest Payment Date" means March 1 and September 1 of each Bond Year, commencing March 1, 2006;

"Investment Obligations" means, to the extent permitted by law (i) Government Obligations, (ii) obligations rated in one of the two highest rating categories by Moody's Investors Service, Inc. or Standard & Poor's Rating Group, a division of McGraw Hill, Inc., the interest on which is excludable from gross income under Section 103 of the Code, (iii) money market funds investing exclusively in the obligations listed in (i) or (ii) or repurchase agreements secured by such obligations rated AAA or better which may include funds as to which the Trustee or any affiliate of the Trustee provides and earns compensation for managerial, investment and/or custodial services, (iv) repurchase agreements secured exclusively by obligations listed in (i) or (ii),
(v) commercial paper of a quality rated either A-1 or P-1 by Standard & Poor's Rating Group, a division of McGraw Hill, Inc. or Moody's Investors Service, Inc., (vi) shares of an Investment Company, organized under the Investment Company Act of 1940, as amended, including an Investment Company for which the Trustee or any affiliate provides and is compensated for managerial, investment and/or custodial services, which invests its assets substantially in obligations of the type described in clauses (i) and (ii) or repurchase agreements secured by such obligations rated AAA or better, (vii) bank deposits or certificates, if such deposits or certificates are insured by FDIC or FSLIC, (viii) banker's acceptances of any bank (including the Trustee) organized under the laws of the State or the United States or any foreign bank having a branch organized and existing under the laws of the State or of the State of New York rated A or higher by Standard & Poor's Rating Group, a division of McGraw Hill, Inc. or Moody's Investors Service, Inc., and (ix) guaranteed investment contracts (GICs) rated BBB or higher by Standard & Poor's Rating Group, a division of McGraw Hill, Inc. or Moody's Investors Service, Inc.;

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

"Majority of Owners" means collectively, the owners of more than fifty percent (50%) of the Bonds Outstanding;

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

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

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

"Outstanding", when used with reference to Bonds and as of any particular date, describes all Bonds theretofore and thereupon being authenticated and delivered except (a) any Bond canceled by the Trustee at or before said date, (b) any Bond for the payment or redemption of which cash, equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall have theretofore been deposited with the Trustee in trust whether upon or prior to maturity or the redemption date of such Bonds and, except in the case of a Bond to be paid at maturity, of which notice of redemption shall have been given or provided for in accordance with Article VI, and (c) any Bond in lieu of or in substitution for which another Bond shall have been authenticated and delivered pursuant to the provisions of this Indenture;

"Paying Agent" means any paying agent appointed pursuant to this Indenture, and its successor or successors of any other corporation or association which may at any time be substituted in its place pursuant to this Indenture;

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

"Premises" shall mean the premises and all improvements thereon located in the municipality of Northvale, County of Bergen, in the State, as described in Schedule A to the Mortgage;

"Principal Account" means the account so designated which is established and created by Section 4.01 hereof;

"Principal Installment Date" means any date on which the principal of any Bonds shall mature;

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

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

"Rebatable Arbitrage" shall have the meaning given to such term in the Agreement;

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

"Redemption Price", when used with respect to a Bond, means the principal amount of such Bond plus the applicable premium, if any, and accrued interest payable upon redemption thereof in the manner contemplated in accordance with its terms pursuant to this Indenture;

"Reserved Rights" shall have the meaning given in the recitals hereto;

"Revenues" means (i) all amounts payable in respect of the Notes which may in the future be delivered to the Trustee, (ii) investment income in respect

of any money held by the Trustee, and (iii) any other amounts paid by the Company to the Trustee pursuant to the Agreement (subject, however, to the Reserved Rights of the Authority);

"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;

"Significant Bondholder" means any bond fund or bondholder which owns, manages, controls or the like more than One Million Dollars ($1,000,000) of Bonds Outstanding;

"State" shall have the meaning given in the recitals hereto;

"Supplemental Indenture" means any Indenture amending, modifying or supplementing this Indenture made, signed and becoming effective in accordance with the terms of Article XI hereof;

"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;

"Trust Estate" shall have the meaning given in the recitals hereto;

"Trustee"shall have the meaning given in the recitals hereto;

The words "hereof", "herein", "hereto", "hereby" and "hereunder" (except in the form of Bonds) refer to this entire Indenture.

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

ARTICLE II

AUTHORIZATION, TERMS AND EXECUTION OF BONDS

SECTION 2.01. ISSUANCE OF BONDS IN ONE OR MORE SERIES. The Bonds may, at the election of the Authority, be issued in one or more series and, except as hereinafter provided, shall be designated generally as "Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project)" with such further appropriate particular designations added to or incorporated in such title for the Bonds of any particular series as the Authority may determine. Each Bond shall bear upon the face thereof the designation so selected for the series to which it belongs.

SECTION 2.02. PARTICULAR TERMS OF THE INITIAL BONDS. There shall be issued under and secured by this Indenture a series of Bonds for the purpose of financing the Project to be designated "Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project), Series A" in the aggregate principal amount of $3,660,000 and a series of 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 to be designated "Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project), Federally Taxable Series B" in the aggregate principal amount of $495,000, and shall contain substantially the terms recited in the form of the Bonds in
Section 13.13 hereof. The Initial Bonds shall provide that principal or Redemption Price, and interest in respect thereof, shall be payable only out of Revenues.

SECTION 2.03. GENERAL TERMS OF BONDS. Every Bond shall bear such designation or title, including the words "Economic Development Bond" with a series designation as may be fixed herein or by Supplemental Indenture prior to its authentication on original issuance by the Trustee. Every Bond shall be payable, with respect to principal or Redemption Price, and interest, in any coin or currency of the United States of America which, at the respective dates of payment thereof, is legal tender for payment of public and private debts. Every Bond shall be issued as fully registered bonds in the form of a Bond or in the form of book entry and payable to Cede & Co. or to a named person or registered assigns, shall be substantially in the form as provided in this Indenture, with such omissions, insertions and variations as are properly required and as specified in a Supplemental Indenture. The Bonds shall be authenticated on or after the date of this Indenture, but may be dated a date preceding the date of this Indenture for the purposes of calculating accrued interest and the interest payable on the Initial Interest Payment Date. Interest on the Bonds shall be calculated on the basis of a 360-day year of twelve thirty day months. Interest on each Initial Bond shall be payable from and after its date first on March 1, 2006 and on March 1 and September 1 in each year thereafter to any Holder of Bonds as of the close of business on the record date next preceding such Interest Payment Date until the Authority's obligation with respect to the payment of the principal sum thereof shall be paid. Payments of principal, Redemption Price or interest due on the Bonds may

also be payable by electronic funds transfer to any Holder of Bonds in the aggregate principal amount of $1,000,000 or more; provided such Holder requests such electronic funds transfer and delivers to the Trustee in writing, in the case of an interest payment, not later than the close of business on the December15 or June 15 (each a "Record Date") preceding such transfer or in the case of a payment of principal or Redemption Price, and not later than the close of business on June 15 preceding such transfer, the following information needed to make such transfer: the name of the bank to receive such transfer, wiring code of said bank, ABA number, account number of the Holder and name of a contact person at the bank. Any interest on any Bond which is payable, but is not punctually paid or provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered owner on the relevant Record Date by virtue of having been such owner, and such Defaulted Interest shall be paid to the registered owner in whose name the Bond is registered at the close of business on a special Record Date (the "Special Record Date") to be fixed by the Trustee, such Special Record Date to be not more than fifteen (15) nor less than ten (10) days prior to the date of proposed payment. The Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Bondholder, at such Bondholder's address as it appears in the Bond Register, not less than ten (10) days prior to such Special Record Date.

All Initial Bonds shall each be of the minimum denomination of $5,000 or any integral multiple of $5,000 and shall each be in substantially the form provided for in Section 13.13. The Bonds of any series may contain or have endorsed thereon such provisions, specifications and descriptive words as are
(a) not inconsistent with the provisions of this Indenture, (b) necessary or desirable to comply with custom or the rules of any securities exchange or commission or brokerage board, and (c) authorized by a supplemental resolution adopted by the Authority prior to the authentication and delivery thereof by the Trustee. The Initial Bonds shall be dated August 15, 2005. Thereafter, each Bond shall be dated as of the date six (6)months preceding the interest payment date next following the date of delivery thereof by the Trustee, except that (a) if such date of such delivery shall be an interest payment date, said Bond shall be dated as of such date of delivery, or (b) if interest on such Bond shall not have been paid in full in accordance with its terms, then, notwithstanding any of the foregoing provisions of this Section, such Bond shall be dated as of the date to which interest has been paid in full on such Bond. Temporary Bonds in denominations specified by the Placement Agent are authorized to be issued, authenticated and delivered to the Placement Agent thereof in lieu of and until such time as Bonds in definitive form are available for authentication and delivery. The Initial Bonds shall be in the principal amounts set forth below and shall mature on the dates set forth below and shall bear interest at the rate of interest set forth below.

SERIES A BONDS:

         MATURITY                      AMOUNT               INTEREST RATE
         --------                      ------               -------------

         September 1, 2030             $3,660,000               6.50%

The Series A Bonds are subject to the following sinking fund redemption payments:

                           YEAR                              AMOUNT
                           ----                              ------

                           2006                            $120,000
                           2007                             125,000
                           2008                             135,000
                           2009                             140,000
                           2010                             150,000
                           2011                             165,000
                           2012                             170,000
                           2013                             185,000
                           2014                             195,000
                           2015                             210,000
                           2016                             220,000
                           2017                              85,000
                           2018                              90,000
                           2019                              95,000
                           2020                             105,000
                           2021                             110,000
                           2022                             115,000
                           2023                             125,000
                           2024                             130,000
                           2025                             140,000
                           2026                             150,000
                           2027                             160,000
                           2028                             170,000
                           2029                             180,000
                           2030*                            190,000

         *Final Maturity

SERIES B BONDS:

         MATURITY                    AMOUNT               INTEREST RATE
         --------                    ------               -------------

         September 1, 2012           $495,000                 9.00%

The Series B Bonds are subject to the following sinking fund redemption payments:

YEAR                         AMOUNT
----                         ------

2006                        $55,000
2007                         60,000
2008                         65,000
2009                         70,000
2010                         75,000
2011                         80,000
2012*                        90,000

*Final Maturity

In lieu of the mandatory sinking fund redemption of the Bonds in any year, the Company may deliver to the Trustee for cancellation Bonds in an amount up to but not exceeding the principal amount of Bonds scheduled for sinking fund redemption in such year, a notice of such forthcoming delivery to be provided by the Company to the Trustee in writing at least sixty (60) days prior to the redemption date. The Trustee shall reduce the principal amount of such Bonds subject to mandatory sinking fund redemption on the next succeeding redemption date by the principal amount of the Bonds so presented for cancellation.

SECTION 2.04. EXECUTION OF BONDS. Each Bond shall be executed in the name of the Authority by the manual or facsimile signature of its Chairman, Vice Chairman, Chief Executive Officer or Chief Financial Officer and its corporate seal shall be thereunto affixed, imprinted or otherwise reproduced and attested by the manual or facsimile signature of the Secretary or Assistant Secretary. In case any officer who shall have signed, sealed or attested any of the Bonds shall cease to be such officer of the Authority before the Bonds so signed, sealed or attested shall have been authenticated and delivered by the Trustee, such Bonds may nevertheless be authenticated and delivered as herein provided as if the person who so signed, sealed or attested such Bonds had not ceased to be such officer. Any Bond may be signed, sealed or attested on behalf of the Authority by any person who, at the date of such act, shall hold the proper office, notwithstanding that at the date of such Bond such person may not have held such office.

SECTION 2.05. AUTHENTICATION OF BONDS. The Bonds shall bear thereon a certificate of authentication, substantially in the form set forth hereinafter in this Indenture, duly executed by the Trustee. Only such Bonds shall be entitled to any right or benefit under this Indenture. No Bond shall be valid or obligatory for any purpose unless such certificate of authentication upon such Bond shall have been duly executed by the Trustee, and such certificate of authentication by the Trustee upon any Bond executed on behalf of the Authority shall be conclusive and the only evidence that the Bond so authenticated has been duly authenticated and delivered under this

Indenture and that the holder thereof is entitled to the benefit of this Indenture.

SECTION 2.06. INTERCHANGEABILITY OF BONDS. Bonds, upon surrender thereof at the corporate trust office of the Trustee with a written instrument or instruments of transfer satisfactory to the Trustee duly executed by the registered owner or owners thereof or his attorney duly authorized in writing, may, at the option and expense of such registered owner, be exchanged for an equal aggregate principal amount of Bonds of the same series, designation, maturity and interest rate of any other authorized denominations.

SECTION 2.07. TRANSFER AND REGISTRY OF BONDS AND AGENCY THEREFOR. The Authority shall cause the Trustee to maintain and keep registry books for the registration and transfer of Bonds (the "Bond Register"), and, upon presentation thereof for such purpose at the designated office of the Trustee, the Trustee shall register or cause to be registered therein, and permit to be transferred thereon or to be exchanged, under such reasonable regulations as the Authority or the Trustee may prescribe, any Bond entitled to registration, transfer or exchange. The Trustee is hereby appointed the agent of the Authority for such registration, transfer and exchange of Bonds.

SECTION 2.08. TRANSFER OF BONDS. Each Bond shall be transferable only upon the books of the Authority at the designated office of the Trustee, by the registered owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or such duly authorized attorney. Upon the transfer of any such Bond, the Authority shall execute, and the Trustee shall authenticate and deliver, a new Bond or Bonds registered in the name of the transferee of the same aggregate principal amount and series, designation, maturity and interest rate as the surrendered Bond.

SECTION 2.09. OWNERSHIP OF BONDS AND EFFECT OF REGISTRATION. The Authority, the Trustee and any Paying Agent may treat and consider the person in whose name any Bond shall be registered as the holder and absolute owner thereof, whether such Bond shall be overdue or not, for the purpose of receiving payment of the principal or Redemption Price thereof or interest thereon and for all other purposes whatsoever; and payment of, or on account of, the principal or Redemption Price of or interest on such Bond shall be made only to, or upon the order of, such registered owner thereof, but such registration may be changed or discharged as herein provided. All payments made as in this Section provided shall be valid and effectual to satisfy and discharge the liability upon the several Bonds to the extent of the sum or sums so paid.

SECTION 2.10. MUTILATED, DESTROYED, STOLEN OR LOST BONDS. In case any Outstanding Bond shall become mutilated or be destroyed, stolen, or lost, the Trustee shall authenticate and deliver a new Bond of like tenor, number

and amount as the Bond so mutilated, destroyed, stolen or lost, in exchange and substitution for such mutilated Bond and upon surrender of such mutilated Bond or, in lieu of and substitution for the Bond destroyed, stolen or lost, upon filing with the Trustee evidence satisfactory to the Authority and the Trustee that such Bond has been destroyed, stolen or lost and proof of ownership thereof, and upon furnishing the Authority and the Trustee with indemnity satisfactory to them and complying with such other reasonable regulations as the Authority and the Trustee may prescribe in connection therewith and upon payment to the Trustee of any charge, fee or expense incurred by the Authority or the Trustee with respect to such authentication and delivery. In lieu of authenticating and delivering a new Bond in substitution for a mutilated, destroyed, lost or stolen Bond which is due and payable, the Trustee may pay the amount due on such Bond to the owner or Holder thereof, provided all the other requirements of this Section have been met.

SECTION 2.11. REGULATIONS WITH RESPECT TO REGISTRATION, EXCHANGES AND TRANSFERS. In all cases in which the privilege of transferring Bonds is exercised, the Authority shall execute and the Trustee shall authenticate Bonds in accordance with the provisions of this Indenture. For every transfer of Bonds, the Authority and the Trustee may charge a sum sufficient to reimburse them for any tax, fee or other governmental charge required to be paid and any mailing, delivery or insurance expense incurred with respect to such transfer, which sum shall be paid by the person requesting such transfer as a condition precedent to the exercise of the privilege of effecting such transfer. Neither the Authority nor the Trustee shall be required to exchange or transfer any Bond after the close of business on the Record Date next preceding any Interest Payment Date and will not be required to exchange or transfer any Bond selected for redemption in whole or in part after the mailing of notice calling such Bond or portion thereof for redemption nor during the fifteen (15) days before mailing of notice of redemption.

SECTION 2.12. CANCELLATION AND DESTRUCTION OF SURRENDERED BONDS. Bonds surrendered for payment, redemption or transfer and Bonds purchased from any moneys held by the Trustee hereunder or surrendered to the Trustee by the Authority or by the Company shall be canceled and destroyed by the Trustee or delivered to the Authority for destruction. No such Bonds shall be deemed Outstanding under this Indenture and no Bonds shall be issued in lieu thereof (except for a Bond transferred pursuant to Section 2.08 hereof).

ARTICLE III

AUTHENTICATION AND DELIVERY OF BONDS

SECTION 3.01. AUTHORIZATION OF BONDS. The aggregate principal amount of Bonds which may be executed by the Authority and authenticated by the Trustee and delivered and secured by this Indenture is not limited, except as is or may hereafter be provided in this Indenture or the Agreement or as may be limited by law. This Indenture creates and shall be and constitute a continuing, irrevocable and exclusive lien upon, and pledge of, the Revenues, and the income earned by the investment of funds under this Indenture to the extent provided in this Indenture. All Bonds issued and to be issued hereunder are, and are to be, to the extent provided in this Indenture, equally and ratably secured by this Indenture without preference, priority or distinction on account of the actual time or times of the authentication or delivery or maturity of the Bonds or any of them, so that subject as aforesaid, all Bonds at any time outstanding hereunder shall have the same right, lien and preference under and by virtue of this Indenture and shall all be equally and ratably secured hereby with like effect as if they had all been executed, authenticated and delivered simultaneously on the date hereof, whether the same or any of them shall actually be disposed of at such date, or whether they, or any of them, shall be disposed of at some future date.

SECTION 3.02. ISSUANCE OF INITIAL BONDS. Initial Bonds, consisting of Series A Bonds in the aggregate principal amount of $3,660,000 and Series B Bonds in the aggregate principal amount of $495,000, being Bonds issued under this Indenture, shall forthwith be executed by the Authority and delivered to the Trustee for authentication, together with a statement as to the amount and disposition of the proceeds of the sale of such principal amount of said Bonds, and thereupon the Initial Bonds shall be authenticated by the Trustee and shall be delivered to or upon the written order of an Authorized Authority Representative. Prior to authentication and delivery of the Bonds by the Trustee, the Trustee shall also have received the documents described in Section 5.03 of the Agreement.

SECTION 3.03. DISPOSITION OF PROCEEDS OF BONDS. Simultaneously with the delivery of the Initial Bonds by the Trustee, the amount received as accrued interest on the Series A Bonds shall be deposited in the Series A Interest Account of the Bond Fund and the amount received as accrued interest on the Series B Bonds shall be deposited in the Series B Interest Account of the Bond Fund. The remaining proceeds of the Series A Bonds shall be deposited by the Trustee in the Series A Account of the Project Fund and the remaining proceeds of the Series B Bonds shall be deposited by the Trustee in the Series B Account of the Project Fund, to be disbursed in accordance with Section 3.02 of the Agreement.

SECTION 3.04. ISSUANCE OF ADDITIONAL BONDS. So long as the Agreement is in effect and no Event of Default shall have occurred thereunder and there is no Event of Default hereunder, one or more series of Additional Bonds may be authorized by resolution of the Authority to pay Costs or for the

purpose of refunding any prior issue of Bonds. Such Additional Bonds shall be issued in such series and principal amounts, shall be subject to redemption at such times and at such prices, shall bear interest at such rate or rates, shall mature in such amounts as the Supplemental Indenture authorizing the issuance thereof and the resolution of the Authority in connection therewith shall fix and determine not inconsistent with this Indenture. Such Supplemental Indenture shall specify and determine the purpose for which such Additional Bonds are to be issued (but no purpose shall be authorized other than paying Costs of the Project, including any addition to the Project) or for the purpose of refunding any prior issue of Bonds, and such other matters and things as may be deemed necessary or appropriate by the Authority or as may be required by the Act, the Agreement or this Indenture for authorization and issuance of such Additional Bonds not inconsistent with this Indenture. Prior to the issuance of Additional Bonds and the execution and delivery of a Supplemental Indenture in connection therewith, the Authority and the Company shall enter into an amendment to the Agreement pursuant to Article XI hereof which shall provide that the payments due under the Agreement shall be increased and computed so as to provide for payments sufficient to pay in full the principal of and interest on such Additional Bonds and any other costs in connection therewith.

For the issuance of Additional Bonds to pay for Costs of the Project, the Company is also required to deliver to the Trustee the following:

(a) a cost estimate of the Costs of the Project proposed to be constructed from the proceeds of such Additional Bonds prepared by an architect or engineering firm or a list of equipment with cost estimates prepared by the Company and substantiated by estimates from vendors;

(b) a feasibility report prepared in accordance with GAAP by an independent certified public accountant certifying that monies available for debt service for the Company, upon completion of the proposed addition to the Project, is equal to 125% of the debt service necessary for the Bonds. For purposes hereof, monies available for debt service means cash flow of the Company from operations less operating expenses (minus depreciation); and

(c) an MAI (Member, Appraisal Institute) appraisal certifying that the fair market value of the bond financed facility, including additions thereto and equipment financed with the Additional Bonds, is equal to 125% of the principal amount of the Bonds Outstanding, after the issue of the Additional Bonds.

Each series of Additional Bonds shall be equally and ratably secured under the Indenture with the Initial Bonds and all other series of Additional Bonds, if any, without preference, priority or a distinction of any Bonds over any other thereof except as expressly provided in or permitted by the Indenture or any Supplemental Indenture.

The Additional Bonds shall be deposited with the Trustee and thereupon shall be authenticated by the Trustee. Upon payment to the Trustee of the

proceeds of sale of Additional Bonds, they shall be delivered by the Trustee to or upon the order of the purchasers thereof, but only upon receipt by the Trustee of:

(a) A copy of the resolution, duly certified by the Secretary or the Assistant Secretary of the Authority, authorizing the execution and delivery of the Supplemental Indenture and authorizing and awarding the Additional Bonds and providing the terms thereof; and

(b) Original executed counterparts of the Supplemental Indenture, together with an original executed counterpart amendment of, or supplement to, the Agreement, and the other Loan Documents reflecting the increase in the amount of Bonds Outstanding in the amount of the Loans; and

(c) A written opinion by an attorney or firm of attorneys of recognized standing on the subject of municipal bonds, to the effect that the issuance of the Additional Bonds and the execution thereof have been duly authorized and that all conditions precedent to the delivery thereof as required hereunder have been fulfilled and that the Additional Bonds constitute legal, valid and binding obligations of the Authority enforceable in accordance with their terms and that the issuance of the Additional Bonds will not adversely affect the exclusion of interest on the Tax- exempt Bonds from gross income for federal income tax purposes and with a reliance letter to the Trustee confirming the above; and

(d) A written order to the Trustee executed by an Authorized Authority Representative to authenticate and deliver the Additional Bonds to the purchaser or purchasers therein identified upon payment to the Trustee of a specified sum; and

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

ARTICLE IV

CREATION OF FUNDS

SECTION 4.01. ESTABLISHMENT OF FUNDS AND ACCOUNTS. The Authority hereby establishes the following funds and accounts within such funds:

BOND FUND AND WITHIN THE BOND FUND,
THE SERIES A PRINCIPAL ACCOUNT,
THE SERIES B PRINCIPAL ACCOUNT,
THE SERIES A INTEREST ACCOUNT AND
THE SERIES B INTEREST ACCOUNT;

DEBT SERVICE RESERVE FUND;
REBATE FUND; AND
PROJECT FUND AND WITHIN THE PROJECT FUND,
THE SERIES A ACCOUNT AND
THE SERIES B ACCOUNT

SECTION 4.02. PAYMENTS INTO THE BOND FUND. There shall be deposited in the Series A Interest Account all accrued interest received from the Placement Agent at the time of the issuance and delivery of the Series A Bonds. There shall be deposited in the Series B Interest Account all accrued interest received from the Placement Agent at the time of the issuance and delivery of the Series B Bonds. In addition, there shall be deposited into the applicable Account of the Bond Fund on a pro rata basis based on the Outstanding principal amount of each series of Bonds, as and when received, (a) all payments made under the applicable Note and as specified in Section 2.01 of the Agreement, (b) moneys transferred from the Debt Service Reserve Fund pursuant to Section 5.02 hereof, and (c) all other moneys, including any prepayments received by the Trustee under and pursuant to any of the provisions of the Agreement, which are required or which are accompanied by directions that such moneys are to be paid into a specific Account in the Bond Fund. The Authority hereby covenants and agrees that, so long as any of the Bonds issued hereunder are Outstanding, it will deposit, or cause to be paid to the Trustee for deposit in the Bond Fund for its account, sufficient sums from Revenues and other moneys derived and to be derived from the Loans to the Company, promptly to meet and pay the principal or Redemption Price of, or interest on the Bonds as the same become due and payable. Nothing herein shall be construed as requiring the Authority or the Trustee to operate the Project or to use any funds or revenues from any source other than funds and Revenues derived from the Trust Estate.

SECTION 4.03. APPLICATION OF THE BOND FUND. Except as provided in
Section 4.06 hereof, moneys in the Bond Fund shall be used solely for the payment of the principal or Redemption Price of and interest on the Bonds and for the redemption of the Bonds prior to maturity; provided, investment income earned on any such amount may be applied to the payment of interest on the Bonds. Any moneys in the Bond Fund in excess of the moneys required for payment of the Bonds theretofore matured, called at maturity or called for redemption and past due interest shall be used, upon the written request of

the Company, to the extent permitted by this Indenture to redeem a part of the Bonds Outstanding (except for Bonds matured or called for redemption which have not yet been presented for payment) so long as the Company is not in default with respect to any payments under Section 2.01 of the Agreement or the Notes.

The Trustee, without further authorization than is in this Section 4.03 contained, shall pay to the Paying Agent from the moneys in the Bond Fund, (i) the interest on the Bonds as and when the same shall become due, and (ii) the principal of or Redemption Price of the Bonds as and when the same shall mature or are called for redemption, as the case may be, provided that such payment of principal or Redemption Price shall be made only upon presentation and surrender of such Bonds as they severally mature or on or after the redemption date.

SECTION 4.04. MONEYS TO BE HELD IN TRUST. All moneys required to be deposited with or paid to the Trustee for the account of any fund (except moneys in the Rebate Fund) under any provision of this Indenture shall be held by the Trustee in trust, and except for moneys deposited with or paid to the Trustee for the redemption of Bonds, notice of the redemption of which has been duly given, shall, while held by the Trustee, constitute part of the Trust Estate and be subject to the lien or security interest created hereby. The Trustee shall be required to render a monthly statement of account to the Authority, any Significant Bondholder and the Company of the funds held in the Bond Fund and the Project Fund, so long as there are any funds therein.

SECTION 4.05. NO FURTHER PAYMENTS NEEDED. For so long as the aggregate of the amounts then on deposit in the Bond Fund is sufficient to redeem all of the Bonds then Outstanding, together with accrued interest thereon, or the Redemption Price, as applicable and all expenses of the Trustee and the Authority have been paid, the Company shall notify the Trustee and the Authority in writing that no additional or further payments need be made under this Indenture and the Authority, at the written direction of the Company, shall instruct the Trustee in writing to apply the moneys then in said fund to the payment of the principal of and interest and Redemption Price (if any) on the Bonds on the next succeeding redemption date for which the required redemption notice may be given and to the payments of the amounts, if any, payable to itself as Trustee and to the Authority.

SECTION 4.06. FUNDS HELD FOR BONDS. The amounts held or applied by the Trustee or Paying Agent for the payment of interest, principal or Redemption Price, due on any date with respect to particular Bonds shall, pending such payment, be set aside and held in trust for the Holders of the Bonds, and for the purposes of this Indenture such principal, interest or Redemption Price, after the due date thereof, shall no longer be considered to be unpaid. Any amounts remaining in the Bond Fund after payment in full of the Bonds, the fees, charges and expenses of the Trustee and all other amounts required to be paid hereunder and under the Agreement shall be paid to the Company upon the expiration or sooner termination of the term of the Agreement as provided therein.

SECTION 4.07. REBATE FUND. There is hereby established with the Trustee a Rebate Fund which shall be held separate and apart from all other funds established under this Indenture. The Company shall comply with the provisions of Sections 4.01(j) and 6.05 of the Agreement and instruct the Trustee in writing to transfer from the Bond Fund to the Rebate Fund, or shall otherwise pay to the Trustee for deposit into the Rebate Fund, such amounts as shall be necessary to cause the aggregate amount transferred to or otherwise deposited in the Rebate Fund to equal the Rebatable Arbitrage; provided that no such transfers or deposits shall be necessary if the Gross Proceeds (within the meaning of Section 148(f)(4)(B) of the Code) of the Tax-exempt Bonds, are fully expended within six months of the date of issue. Withdrawals from the Rebate Fund may be made only pursuant to written directions of the Company given in accordance with Sections 4.01(j) and 6.05 of the Agreement. All amounts in the Rebate Fund, including income earned from investment of the Rebate Fund, shall be held by the Trustee free and clear of the lien of this Indenture, and the Trustee shall pay said amounts over to the United States from time to time as the Trustee shall be instructed in writing by the Company, provided that the Trustee shall so pay over to the United States not less frequently than once each five Bond Years after the date of original delivery and payment for the Tax-exempt Bonds, an amount sufficient to assure that at least ninety percent (90%) of the sum of the amount of the Rebatable Arbitrage with respect to the Tax-exempt Bonds plus all previous rebate payments as of the close of the period ending on the most recent Computation Date is paid not later than sixty (60) days after such Computation Date. Not later than sixty (60) days after the retirement of the last obligation of the Tax-exempt Bonds, the Company shall direct the Trustee in writing to pay to the United States of America one hundred percent (100%) of the Rebatable Arbitrage (as calculated by the Company) with respect to the Tax-exempt Bonds.

The Trustee agrees to furnish the Company and the Authority with notice of the Company's obligation to file a written certification to the Authority and the Trustee indicating whether the Company has complied with the six (6) month exception to the arbitrage rebate requirement. In addition, the Trustee agrees to furnish the Company and the Authority with notice of the Company's obligation to prepare its rebate calculation and make its rebate payment, if any, to the Internal Revenue Service. Such reminder notice shall be furnished to the Company and the Authority at least ninety (90) days prior to each fifth Bond Year and within thirty (30) days following the redemption or final payment of the Tax-exempt Bonds.

Moneys held in the Rebate Fund shall be held by the Trustee for a period of not less than seventy-five (75) days following the redemption or final maturity of the Tax-exempt Bonds.

SECTION 4.08. PAYMENTS INTO THE PROJECT FUND; DISBURSEMENTS.

(a) The balance of the proceeds of the issuance and delivery of the Series A Bonds and Series B Bonds remaining after the deductions provided by the first sentence of Section 4.02 hereof and the first paragraph of Section

4.10 hereof have been made shall be deposited in the Series A Account and the Series B Account of the Project Fund, respectively.

(B) The Trustee is hereby authorized and directed to make each disbursement required by the provisions of the Agreement and to issue its checks therefor. The Trustee shall keep and maintain adequate records pertaining to the Project Fund and all such payments therefrom, and after the Project has been completed and a certificate of payment of all costs is or has been filed as provided in Section 4.09 hereof, the Trustee shall file a final monthly statement of account thereof with the Authority, any Significant Bondholder and the Company as required by Section 4.04 hereof.

SECTION 4.09. COMPLETION OF THE PROJECT. The completion of the Project and payment or provision made for payment of all Costs shall be evidenced by the filing with the Trustee of the Company's Completion Certificate required by the provisions of Section 3.04 of the Agreement. As soon as practicable and in any event not more than sixty (60) days from the date of receipt of the Company's Completion Certificate, any balance remaining in the Project Fund (except amounts the Company shall have directed the Trustee in writing to retain for any Costs of the Project not then due or payable or not then paid) shall, at the written direction of the Company, be deposited in the applicable series Principal Account in the Bond Fund by the Trustee and, in accordance with written direction provided to the Trustee by the Company as provided in Section 3.04, used to pay principal on the applicable series of Bonds or in any manner requested by the Company which preserves the exclusion of interest on the Tax-exempt Bonds from federal income taxation, provided there is delivered to the Trustee an opinion of Counsel by an attorney or firm of attorneys of nationally recognized standing on the subject of municipal bonds to the effect that the use requested by the Company of such monies is permitted by law and will not adversely affect the exclusion from federal income taxation of interest on the Tax-exempt Bonds. The Trustee may rely conclusively on such opinion in any disbursement of funds pursuant to this Section 4.09. Such balance of the proceeds of Tax-exempt Bonds after the Completion Date shall not be invested at a yield materially higher than the yield on the Tax-exempt Bonds beyond any applicable temporary period or otherwise in contravention of Sections 103 and 148 of the Code. The Company shall provide written instruction to the Trustee regarding such investment.

SECTION 4.10. DEBT SERVICE RESERVE FUND. There is hereby established with the Trustee a Debt Service Reserve Fund which shall be maintained by the Company at a level of $388,990 (the "Reserve Requirement"). $339,490 from the proceeds of the issuance and delivery of the Series A Bonds and $49,500 from the proceeds of the Series B Bonds shall be deposited into the Debt Service Reserve Fund.

On the Business Day prior to an Interest Payment Date, the Trustee shall withdraw from the Debt Service Reserve Fund for deposit in the Bond Fund, the amount necessary to meet the deficiency, if any, in the applicable Principal Account or Interest Account, in order to provide the moneys necessary to pay the principal of and interest on the Bonds. Such amount shall be deposited in

the applicable Bond Fund Principal Account and/or Interest Account, as the case may be. Beginning on the fifteenth day of the month of such Interest Payment Date, the Company is required to promptly deposit an amount equal to one-sixth (1/6th) of the amount withdrawn from the Debt Service Reserve Fund with the Trustee and a similar amount on the fifteenth day of each month thereafter until the amount in the Debt Service Reserve Fund equals the Reserve Requirement. Within fifteen (15) days after notice from the Trustee to the Company that the amount in the Debt Service Reserve Fund is less than the Reserve Requirement pursuant to a valuation under Section 5.02 hereof, the Company is required to deposit the amount of such deficiency with the Trustee.

ARTICLE V

INVESTMENT AND DEPOSIT OF MONEYS

SECTION 5.01. DEPOSITS. All moneys received by the Trustee under this Indenture shall, except as hereinafter provided, be deposited with the Trustee, until or unless invested as provided in Section 5.02 hereof. The Trustee may deposit such moneys with any other depository which is authorized to receive them and is subject to supervision by public banking authorities.

SECTION 5.02. INVESTMENTS. The Trustee, at the written request and written direction of the Company, shall invest any moneys held by it and not needed for immediate application in Investment Obligations; provided that specified amounts of Investment Obligations shall mature no later than required to apply such amounts for purposes of this Indenture. The Trustee shall have no liability with respect to making, holding, redeeming or selling any investments made in accordance with such written directions.

Any such investments shall be held by or under the control of the Trustee and, except as provided below shall be deemed at all times a part of the fund for which they were made. The interest thereon and any profit realized from such investments shall be credited to such fund, and any loss resulting from such investments shall be charged to such fund. The Trustee shall sell and reduce to cash a sufficient amount of such investments whenever (i) at the written direction of the Company, the cash balance in the Project Fund is insufficient to pay a requisition when presented or (ii) whenever the cash balance in the Bond Fund is insufficient to pay the principal of, premium, if any, and interest on the Bonds when due.

On the Business Day following the September 1st principal and interest payment on the Bonds, the Trustee shall withdraw from the Debt Service Reserve Fund, after determining the amount necessary to meet the Reserve Requirement, the amount of investment earnings in the Fund and deposit the same in the applicable Interest Account in the Bond Fund. In making its determination as to the value of the Investment Obligations in the Debt Service Reserve Fund, the Trustee shall value the investments marked to market value. Should the Trustee determine that the amount in the Debt Service Reserve Fund is less than the Reserve Requirement pursuant to a valuation described in this paragraph, the Trustee shall promptly notify the

Company in writing of the amount of such deficiency and the Company shall deposit the amount of such deficiency with the Trustee in accordance with
Section 4.10 hereof. Should the Trustee determine that the amount in the Debt Service Reserve Fund exceeds the Reserve Requirement, the Trustee shall transfer such excess to the Bond Fund.

In the absence of written instructions from the Company, the Trustee shall invest any moneys held by it under the Indenture in the money market mutual funds customarily utilized by the Trustee's corporate trust department in the ordinary course of its corporate trust duties.

                  DATE                                 REDEMPTION PRICE
                  ----                                 ----------------

September 1, 2015 to August 31, 2016                          102%
September 1, 2016 to August 31, 2017                          101%
Thereafter                                                    100%

If less than all the Series A Bonds are to be redeemed, the Series A Bonds shall be selected by the Trustee by lot, or in such other manner as the Trustee may determine, for redemption.

The Authority shall direct the Trustee in writing to call the Series A Bonds for optional redemption when and only when and to the extent that (a) the Company has itself notified the Trustee and the Authority in writing of a corresponding prepayment made or proposed to be made by redemption or otherwise on the Series A Note, or (b) the Series A Note held by the Trustee has been surrendered to the Company pursuant to Article XII hereof. The Authority shall furnish the Company with a copy of the written direction to the Trustee.

The Series B Bonds are not subject to optional redemption.

(b) The Series A Bonds are subject to mandatory sinking fund redemption prior to maturity, at a redemption price equal to 100% of the principal amount thereof on September 1 of the years and in the amounts set forth below:

YEAR                         AMOUNT
----                         ------

2006                        $120,000
2007                         125,000
2008                         135,000
2009                         140,000
2010                         150,000

2011                          165,000
2012                          170,000
2013                          185,000
2014                          195,000
2015                          210,000
2016                          220,000
2017                           85,000
2018                           90,000
2019                           95,000
2020                          105,000
2021                          110,000
2022                          115,000
2023                          125,000
2024                          130,000
2025                          140,000
2026                          150,000
2027                          160,000
2028                          170,000
2029                          180,000
2030*                         190,000

YEAR                           AMOUNT
----                           ------

2006                          $55,000
2007                           60,000
2008                           65,000
2009                           70,000
2010                           75,000
2011                           80,000
2012*                          90,000

*Final Maturity

SECTION 6.03. SPECIAL MANDATORY REDEMPTION - BREACH OF CERTAIN PUBLIC PURPOSE COVENANTS. The Bonds are subject to special mandatory redemption in whole as soon as practicable but no later than the 90th day following the Authority's written notice to the Trustee and the Company that (i) the Company has ceased to operate the Project or ceased 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 (ii) any representation or warranty of the Company contained in the Agreement or in any other document furnished to the Authority in connection with the Bonds proves to have been false or misleading in any material respect when made. Upon the occurrence of any such event, the Bonds

shall be redeemed by the Authority at a redemption price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date.

SECTION 6.04. PROCEDURE FOR REDEMPTION. When the Trustee shall be required or authorized to redeem Bonds, upon sixty (60) days written notice by the Authority or the Company (or such shorter period agreeable to the Trustee) the Trustee shall, in accordance with the terms and provisions of the Bonds and of this Indenture, select the Bonds to be redeemed and shall give notice, in the name of the Authority or the Company, as the case may be, of the redemption of Bonds, which notice shall specify the series, CUSIP numbers (if any), maturities of and the interest rate borne by the Bonds to be redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable and, if less than all of the Bonds of any like series and maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Bonds so to be redeemed, and, in the case of a Bond to be redeemed in part only, such notice shall also specify the portion of the principal amount thereof to be redeemed. Such notice shall further state that on such date there shall become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portion of the principal thereof in the case of a Bond to be redeemed in part only, together with interest accrued to such date, and that from and after such date, if the aggregate of the amounts then on deposit in the Bond Fund is sufficient to pay the Redemption Price together with interest accrued to such date, interest thereon shall cease to accrue and be payable. Such notice shall be given by the Trustee by mailing a copy of such notice, postage prepaid, by first class mail, not less than thirty
(30) days nor more than forty-five (45) days before such redemption date, to the registered owner of any Bond all or a portion of which is to be redeemed, at his last address, if any, appearing upon the registry books, but such mailing shall not be a condition precedent to such redemption and failure so to mail any such notice shall not affect the validity of any proceedings for the redemption of Bonds. Any notice mailed pursuant to this paragraph will be conclusively presumed to have been given whether or not actually received by the addressee.

If, at the time of mailing of notice of any optional redemption, the Company shall not have deposited with the Trustee moneys sufficient to redeem all the Bonds called for redemption, the redemption notice may state that it is conditional on the deposit of the redemption moneys with the Trustee not later than the redemption date, and such notice shall be of no effect unless such moneys are so deposited.

If there shall be so called for redemption less than all of a Bond, the Authority shall execute and the Trustee shall authenticate and cause to be delivered, upon the surrender of such Bond, without charge to the owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, Bonds of like series, designation, interest rates and maturities in any of the authorized denominations.

On the Business Day preceding the redemption date specified in the notice above provided for, the Company or the Authority, as the case may be, shall, and it hereby covenants that it will, deposit with the Trustee an amount of cash sufficient to effect the redemption of the Bonds specified in such notice, except that such amount may be reduced to the extent that moneys then held by the Trustee under any of the provisions of this Indenture are available for such redemption. All moneys deposited by the Authority or the Company with the Trustee or set apart by the Trustee under the provisions of this Indenture for the redemption of Bonds shall be held in trust for the account of the respective registered owners of the Bonds to be redeemed and applied in accordance with the provisions of Section 13.03 hereof.

On the redemption date designated in such notice, the principal amount of each Bond so to be redeemed, together with the accrued interest thereon to such date, and such premium, if any, as is due and payable on such Bond upon such redemption, shall become due and payable; and from and after such date (such notice having been given in accordance with the provisions of this Section 6.04 and such deposit having been made or moneys set apart as aforesaid), then, notwithstanding that any Bonds so called for redemption shall not have been surrendered, no further interest shall accrue on any such Bond (or on the portion thereof so to be redeemed). From and after such date of redemption (such notice having been given in accordance with the provisions of this Section 6.04 and such deposit having been made or moneys set apart as aforesaid), or from and after the date upon which such notice is mailed, if such notice shall state that moneys to effect such redemption have been deposited with or set apart by the Trustee, all such Bonds or such portions thereof, as the case may be, insofar as such deposit shall have been made or moneys set apart as aforesaid, shall be deemed to have been paid in full as between the Authority or the Company and the respective Bondholders and shall no longer be deemed to be Outstanding hereunder, and the Authority or the Company shall be under no further liability in respect thereof.

The Trustee agrees to provide timely notice to the Authority that some or all of the Bonds have been redeemed or paid.

SECTION 6.05. PAYMENT OF REDEMPTION PRICE. If notice of redemption has been duly mailed or duly waived by the Holders of all Bonds called for redemption and the redemption moneys have been duly deposited with the Trustee, then in either such case the Bonds called for redemption shall be payable on the redemption date at the applicable Redemption Price. Payment of the Redemption Price together with accrued interest shall be made by the Trustee, out of Revenues or other funds deposited for the purpose, to or upon the order of the Holders of the Bonds called for redemption upon surrender of such Bonds if redeemed in full.

Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued by the Trustee for such purpose shall bear a description of the issue and maturity of the Bonds being redeemed with the proceeds of such check or other transfer.

ARTICLE VII

COVENANTS OF THE AUTHORITY

SECTION 7.01. PAYMENT OF PRINCIPAL OF AND INTEREST ON BONDS. The Authority shall promptly pay or cause to be paid the principal or Redemption Price of, and the interest on, every Bond issued hereunder according to the terms thereof, but shall be required to make such payment or cause such payment to be made only out of Revenues. The Authority shall appoint one or more paying agents for such purpose, each such agent to be a national banking association, a state bank, a bank and trust company or a trust company. The Authority hereby appoints The Bank of New York as Paying Agent, which shall from time to time designate a corporate trust office of such agent as the place of payment, such appointment and designation to remain in effect until notice of change is filed with the Trustee.

SECTION 7.02. CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. The Authority shall maintain its corporate existence; shall use its best efforts to maintain and renew all its rights, powers, privileges and franchises; and shall comply with all valid and applicable laws, acts, rules, regulations, permits, orders, requirements and directions of any legislative, executive, administrative or judicial body.

SECTION 7.03. ENFORCEMENT OF AGREEMENT; NOTICE OF DEFAULT. The Authority shall give prompt written notice to the Trustee of any default known to the Authority under the Agreement or any amendment or supplement thereto.

SECTION 7.04. FURTHER ASSURANCES. Except to the extent otherwise provided in this Indenture, the Authority shall not enter into any contract or take any action by which the rights of the Trustee or the Bondholders may be impaired and shall, from time to time, execute and deliver such further instruments and take such further action as may be required to carry out the purposes of this Indenture.

SECTION 7.05. FINANCING STATEMENTS. The Authority shall cause this Indenture or a financing statement relating thereto to be filed, in such manner and at such places as may be required by law fully to protect the security of the Holders of the Bonds and the right, title and interest of the Trustee in and to the Trust Estate or any part thereof. The Company shall execute or cause to be executed, recorded and filed any and all further instruments, including continuation statements, as may be required by law for such protection of the interests of the Bondholders, and shall furnish satisfactory evidence to the Trustee of filing and refiling of such instruments and of every additional instrument which shall be necessary to preserve the lien of this Indenture upon the Trust Estate or any part thereof until the principal, redemption premium, if any, and interest on the Bonds issued hereunder shall have been paid. The Trustee shall cooperate with the Company regarding the filing of continuation statements and shall provide notice to the Company of the necessity to file, in order to preserve and protect the security of the

owners of the Bonds, within thirty (30) days of the date by which a continuation statement must be so filed for such purposes but the Trustee shall not be liable for any failure to provide such notice.

SECTION 7.06. INTENTIONALLY OMITTED

SECTION 7.07. CREATION OF LIENS. The Authority will not create or suffer to be created any lien or charge upon the Trust Estate or any part thereof, except the lien, charge and pledge created by this Indenture.

SECTION 7.08. EXCLUSION OF INTEREST ON THE BONDS FROM GROSS INCOME. The Authority agrees that it will not take any action, nor omit to make any action, which may cause the interest payable on the Tax-exempt Bonds to become includable in the gross income of the Holders thereof for federal income tax purposes.

SECTION 7.09. CONTINUING DISCLOSURE. The Company has covenanted in
Section 6.25 of the Agreement 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 hereby covenants 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 neither the Authority nor the Trustee shall incur any liability arising out of their acceptance of the form of the Continuing Disclosure Agreement.

SECTION 7.10. EVENT OF DEFAULT. Notwithstanding anything in this Indenture or in any of the other documents executed in connection with the issuance of the Bonds to the contrary, neither the Trustee nor the registered owners shall have the right to waive an Event of Default under any of the documents executed in connection with the issuance of the Bonds which arises out of a violation of a Reserved Right without the prior written consent of the Authority, which it shall give in its sole and complete discretion. Notwithstanding anything herein or in any of the documents executed in connection with the issuance of the Bonds to the contrary, nothing herein shall affect the Authority's unconditional right to specifically enforce its Reserved Rights.

SECTION 7.11. IMMUNITY OF AUTHORITY. In the exercise of the powers of the Authority and its members, officers, employees or agents under this Indenture and the Agreement, and including without limitation the application of moneys, the investment of funds, the assignment or other disposition of the Trust Estate in the event of default by the Company, neither the Authority nor

its members, officers employees or agents shall be accountable to the registered owners of the Bonds, the Trustee or the Company for any action taken or omitted by it or them in good faith and believed by it or them to be authorized or within the discretion or rights or powers conferred. The Authority and its members, officers, employees and agents shall be protected in its or their acting upon any paper or document believed by it or them to be genuine, and it and they may conclusively rely upon the advice of counsel and may (but need not) require further evidence of any fact or matter before taking any action.

SECTION 7.12. AUTHORITY AND TRUSTEE ENTITLED TO INDEMNITY. (a) Pursuant to Section 6.10 of the Agreement, the Company has agreed to indemnify the Authority, any person who "controls" the Authority 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, official, agent, attorney and employee of the Authority, the Trustee or the State (herein the "Indemnified Parties").

(b) The Company shall not be obligated to reimburse any expense or to indemnify against any loss or liability incurred by an Indemnified Party through its own gross negligence or willful misconduct.

(c) To secure the Company's indemnification payment obligation, the Indemnified Parties shall have a lien prior to the lien created by this Indenture for the benefit of the owners of the Bonds on all money or property held or collected by the Trustee other than money in the Rebate Fund and money held for the payment of the principal or redemption price of any Bonds, and interest on any Bonds previously matured or called for redemption in accordance with this Indenture, which shall be held for the benefit of the registered owners of such Bonds only. Such obligations shall survive the satisfaction and discharge of this Indenture.

(d) When an Indemnified Party incurs expenses or renders services after an Event of Default, the expenses and compensation for the services are intended to constitute expenses of administration under any applicable bankruptcy law.

SECTION 7.13. NEITHER AUTHORITY NOR TRUSTEE RESPONSIBLE FOR INSURANCE, TAXES, EXECUTION OF INDENTURE, ACTS OF THE AUTHORITY OR APPLICATION OF MONEYS APPLIED IN ACCORDANCE WITH THIS INDENTURE. (a) Neither the Authority nor the Trustee shall be under any obligation to effect or maintain insurance or to renew any policies of insurance or to inquire as to the sufficiency of any policies of insurance carried by the Company, or to report, or make or file claims or proof of loss for, any loss or damage insured against or which may occur, or to keep itself informed or advised as to the payment of any taxes or assessments, or to require any such payment to be made. Neither the Authority nor the Trustee shall have responsibility in respect of the sufficiency of the security provided by this Indenture. Neither the Authority nor the Trustee shall be under any obligation to see that any duties herein imposed upon any party other than itself, or any covenants herein

contained on the part of any party other than itself to be performed, shall be done or performed, and neither the Authority nor the Trustee shall be under any liability for failure to see that any such duties or covenants are so done or performed.

(b) Neither the Authority nor the Trustee shall be liable or responsible because of the failure of the Authority or of any of its employees or agents to make any collections or deposits or to perform any act herein required of the Authority or because of the loss of any moneys arising through the insolvency or the act or default or omission of any other depositary in which such moneys shall have been deposited under the provisions of this Indenture. Neither the Authority nor the Trustee shall be responsible for the application of any of the proceeds of the Bonds or any other moneys deposited with it and paid out, withdrawn or transferred hereunder if such application, payment, withdrawal or transfer shall be made in accordance with the provisions of this Indenture.

(c) The immunities and exemptions from liability of the Authority and the Trustee hereunder shall extend to their respective directors, members, attorneys, officers, employees and agents.

SECTION 7.14. AUTHORITY AND TRUSTEE MAY RELY ON CERTIFICATES. The Authority and the Trustee shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith and in accordance with the terms of this Indenture, upon any resolution, order, notice request, consent, waiver, certificate, statement, affidavit, requisition, bond or other paper or document which it shall in good faith believe to be genuine and to have been adopted or signed by the proper board or person or to have been prepared and furnished pursuant to any of the provisions of the Agreement or this Indenture, or upon the written opinion of any attorney, engineer, accountant or other expert believed by it to be qualified in relation to the subject matter, and neither the Authority nor the Trustee shall be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.

SECTION 7.15. FURTHER ASSURANCES. At the expense of the Company, the Authority and the Trustee will make, execute and deliver any and all such further indentures, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Holders of the Bonds of the rights and benefits provided in this Indenture.

ARTICLE VIII

DEFAULTS AND REMEDIES

SECTION 8.01. EVENTS OF DEFAULT. Each of the following shall be considered an Event of Default hereunder:

(a) payment of the principal of the Bonds and Redemption Price shall not be made when the same shall become due and payable, whether at maturity, upon redemption or otherwise; or

(b) payment of an installment of interest on any Bonds shall not be made when the same shall become due and payable; or

(c) the occurrence of an "Event of Default" under a Note or the Agreement or Mortgage, which shall continue uncured for the period of any applicable notice and cure period or has not otherwise been waived or rescinded by the Trustee, unless the Company is diligently attempting to remedy such default, in which case the Company shall be entitled to such additional time to do so as set forth in a written direction of the Authority to the Trustee, but in no event exceeding ninety (90) additional days; or

(d) the Authority shall default (other than an Event of Default listed as (a),(b) or (c) above) in the due and punctual performance of any covenant, condition, agreement or provision contained in the Bonds or in this Indenture on the part of the Authority to be performed, and such default shall continue for thirty (30) days after written notice by registered mail specifying such default and requiring the same to be remedied shall have been given to the Authority and the Company by the Trustee. The Significant Bondholders shall be provided with copies of any such notice (of events of which the Trustee is aware) within ten
(10) days.

If any of the foregoing shall occur or be continuing, the Trustee

(a) may, and upon written request of the Holders of at least fifty per cent (50%) of the aggregate principal amount of all Bonds then Outstanding shall, by written notice given to the Authority and the Company and provided that the default has not theretofore been cured, declare the principal of, and all accrued interest on, all Bonds then Outstanding to be due and payable immediately, and upon such declaration the same shall become due and payable immediately at the place of payment provided in the said notice, anything in this Indenture or in said Bonds to the contrary notwithstanding. Upon an Event of Default under Section 7.01(g) of the Agreement, the Bonds shall automatically be deemed to have been accelerated without further notice from or action taken by the Trustee.

The above provisions, however, are subject to the condition that if, after the principal of all Bonds then Outstanding shall have been so declared to be due and payable, all arrears of interest upon such Bonds, and interest on overdue installments of interest (to the extent permitted by law) at the rate

per annum borne by the Bonds and the principal and redemption premium, if any, on all Bonds then Outstanding which shall have become due and payable otherwise than by acceleration, and all other sums payable under this Indenture, except the principal of, and interest on, the Bonds which by such declaration shall have become due and payable, shall have been paid by or on behalf of the Authority, all other Events of Default hereunder shall have been cured, and the Authority also shall have performed all other things in respect of which it may have been in default under this Indenture, and shall have paid the reasonable fees and expenses of the Trustee and of the Holders of such Bonds, including reasonable attorneys' fees paid or incurred, then and in every such case, the Holders of at least fifty per cent (50%) in aggregate principal amount of the Bonds then Outstanding, by written notice to the Trustee, may rescind and annul such declaration, whereupon the Trustee shall give written notice thereof to the Authority and the Company by registered mail. Any such rescission and annulment shall be binding upon all Bondholders, but no such rescission and annulment shall extend to or affect any subsequent default or impair any right or remedy consequent thereon. Immediately upon such annulment, the Trustee shall cancel, by notice to the Company, any demand for redemption made by the Trustee pursuant to Section 8.03;

(b) may, and upon written request of the Holders of at least fifty per cent (50%) of the aggregate principal amount of all Bonds then Outstanding shall, transfer any balance remaining in the Project Fund into the Bond Fund.

SECTION 8.02. ENFORCEMENT OF AGREEMENT. The Authority agrees that the Trustee, subject to the provisions of the Agreement and this Indenture reserving the Reserved Rights to the Authority and respecting actions by the Trustee in its name or where necessary to validly assert the rights of the Bondholders, AS ASSIGNEE OF THE AUTHORITY,(but NOT in the name of the Authority) may enforce all rights of the Authority and all obligations of the Company under and pursuant to the Agreement for and on behalf of the registered owners whether or not the Authority is in default hereunder.

SECTION 8.03. JUDICIAL PROCEEDINGS BY TRUSTEE. Upon the happening and continuance of any Event of Default, then and in every such case the Trustee in its discretion may, and upon the written request of the Holders of at least fifty per centum (50%) of the aggregate principal amount of the Bonds then Outstanding and receipt of indemnity to its satisfaction shall, and upon written request of the Authority if an Event of Default occurs pursuant to Section 8.01(c) of this Indenture shall:

(a) exercise any and all rights or powers permitted to be taken or exercised by it or by the Authority under this Indenture, the Agreement, the Bonds, the Notes, and any agreements related thereto;

(b) by mandamus, or other suit, action or proceeding at law or in equity, enforce all rights of the Bondholders and require the Company to carry out any agreements with or for the benefit of the Bondholders and to perform its or their duties under the Act, the Bonds, the Notes, the Agreement and this Indenture;

(c) bring suit upon the Bonds;

(d) by action or suit in equity require the Authority to account as if it were the trustee of an express trust for the Bondholders;

(e) by action or suit in equity enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders;

(f) exercise such rights as it may have as holder of the Notes, including the right to accelerate payment of the Notes;

(g) exercise such rights as it may have as holder of the Mortgage and Assignment of Leases, including the right to seek the appointment of a receiver for the Project; or

(h) exercise, with respect to the security interest granted hereunder, all of the rights and remedies of a secured party under the State Uniform Commercial Code.

SECTION 8.04. DISCONTINUANCE OR ABANDONMENT OF PROCEEDINGS. In case any proceeding taken by the Trustee on account of any default shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the Authority, the Trustee and the Bondholders shall be restored to their former positions and rights under this Indenture, respectively, and all rights, remedies and powers of the Trustee shall continue as though no such proceeding had been taken.

SECTION 8.05. BONDHOLDERS MAY DIRECT PROCEEDINGS. The Holders of a majority in principal amount of the Bonds Outstanding hereunder shall have the right, after furnishing indemnity satisfactory to the Trustee, to direct the method and place of conducting all remedial proceedings by the Trustee hereunder, provided that such direction shall not be in conflict with any rule of law or with this Indenture or unduly prejudice the rights of minority Bondholders.

SECTION 8.06. LIMITATIONS ON ACTIONS BY BONDHOLDERS. No Bondholder shall have any right to pursue any remedy hereunder unless:

(a) the Trustee shall have been given written notice of an Event of Default;

(b) the Holders of at least fifty per cent (50%) in aggregate principal amount of all Bonds then Outstanding shall have requested the Trustee, in writing, to exercise the powers hereinabove granted or to pursue such remedy in its or their name or names;

(c) the Trustee shall have been offered indemnity satisfactory to it against costs, expenses and liabilities; and

(d) the Trustee shall have failed to comply with such request within a reasonable time.

Notwithstanding the foregoing provisions of this Section 8.06 or any other provision of this Indenture, the obligation of the Authority shall be absolute and unconditional to pay hereunder, but solely from the Revenues and other funds pledged under this Indenture, the principal or Redemption Price of, and interest on, the Bonds to the respective Holders thereof on the respective due dates thereof, and nothing herein shall affect or impair the right of action, which is absolute and unconditional, of such Holders to enforce such payment.

SECTION 8.07. TRUSTEE MAY ENFORCE RIGHTS WITHOUT POSSESSION OF BONDS. All rights under this Indenture and the Bonds may be enforced by the Trustee without the possession of any Bonds at the trial or other proceedings relative thereto, and any proceeding instituted by the Trustee shall be brought in its name for the ratable benefit of the Holders of the Bonds.

SECTION 8.08. REMEDIES NOT EXCLUSIVE. No remedy herein conferred is intended to be exclusive of any other remedy or remedies, and each remedy is in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute.

SECTION 8.09. DELAYS AND OMISSIONS NOT TO IMPAIR RIGHTS. No delays or omission in respect of exercising any right or power accruing upon any default shall impair such right or power or be a waiver of such default, and every remedy given by this Article VIII may be exercised from time to time and as often as may be deemed expedient.

SECTION 8.10. APPLICATION OF MONEYS IN EVENT OF DEFAULT. Any moneys received by the Trustee under this Article VIII shall be applied:

First: to the payment of the costs of the Trustee, including Counsel fees, any disbursements of the Trustee and its reasonable compensation; and

Second: to the payment of principal or Redemption Price (as the case may be) and interest then owing on the Bonds, and in case such moneys shall be insufficient to pay same in full, then to the payment of principal and interest ratably without preference or priority of any installment of principal or interest over any other installment of principal or interest; and

Third: to the payment of costs and expenses of the Authority, including counsel fees, incurred in connection with the Event of Default; and

Fourth: to the payment of any other amounts due under this Indenture or the Agreement.

The surplus, if any, shall be paid to the Company or the person lawfully entitled to receive the same as a court of competent jurisdiction may direct.

SECTION 8.11. TRUSTEE'S RIGHT TO RECEIVER; COMPLIANCE WITH ACT. As provided by the Act, the Trustee shall be entitled as of right to the appointment of a receiver; and the Trustee, the Bondholders and any receiver so appointed shall have such rights and powers and be subject to such limitations and restrictions as are contained in the Act.

SECTION 8.12. TRUSTEE AND BONDHOLDERS ENTITLED TO ALL REMEDIES UNDER ACT. It is the purpose of this Article to provide such remedies to the Trustee and Bondholders as may be lawfully granted under the provisions of the Act or any applicable statute or available at law or in equity; but should any remedy herein granted be held unlawful, the Trustee and the Bondholders shall nevertheless be entitled to every remedy provided by the Act. It is further intended that, insofar as lawfully possible, the provisions of this Article shall apply to and be binding upon any trustee or receiver appointed under the Act.

ARTICLE IX

THE TRUSTEE

SECTION 9.01. ACCEPTANCE OF TRUST. The Trustee accepts and agrees to execute the trusts hereby created, but only upon the additional terms set forth in this Article, to all of which the parties hereto and the Bondholders agree.

SECTION 9.02. NO RESPONSIBILITY, ETC. The recitals, statements and representations in this Indenture or in the Bonds, save only the Trustee's certificate of authentication upon the Bonds, have been made by the Authority and not by the Trustee; and the Trustee shall be under no responsibility for the correctness thereof.

SECTION 9.03. TRUSTEE MAY ACT THROUGH AGENTS; ANSWERABLE ONLY FOR WILLFUL MISCONDUCT OR NEGLIGENCE. The Trustee may exercise any powers hereunder and perform any duties required of it through attorneys, agents, officers or employees, and shall be entitled to rely upon the advice of Counsel concerning all questions hereunder. The Trustee shall not be answerable for the default or misconduct of any attorney or agent selected by it with reasonable care. Except as otherwise provided herein, the Trustee shall not be answerable for the exercise of any discretion or power under this Indenture nor for anything whatever in connection with the trust hereunder, except only its own willful misconduct or negligence.

SECTION 9.04. COMPENSATION. In the Agreement, the Company has agreed to pay the Trustee reasonable compensation for its services hereunder, and also all its reasonable expenses and disbursements, including reasonable attorneys' fees. Such obligations of the Company pursuant to Sections 7.05 and 8.04 of the Agreement are secured by a first lien security interest in the Trust Estate superior to the interests of the Holders hereunder. With regard to its compensation, however, except when an Event of Default exists hereunder, the Trustee agrees to exercise any rights pursuant to the preceding sentence only upon forty-five (45) days notice to the Company that such amounts are owed.

SECTION 9.05. NOTICE OF DEFAULT; RIGHT TO INVESTIGATE. The Trustee shall, within ten (10) days for Significant Bondholders and within ninety (90) days for all Bondholders after the occurrence thereof, give written notice by first class mail to registered Holders of Bonds of all defaults known to the Trustee, unless such defaults have been remedied (the term "defaults" for purposes of this Section and Section 9.06 being defined to include the events specified in clauses (a) through (d) of Section 8.01). The Trustee shall not be deemed to have notice of any default other than under clauses (a) and (b) of
Section 8.01, unless it has actual notice or it is notified in writing of such default by any of the Holders of the Bonds then Outstanding or by the Authority. The Trustee may, however, at any time request that the Authority provide to the Trustee full information of which the Authority has actual knowledge (without undertaking an investigation) as to the performance of any covenant hereunder; and, if information satisfactory to it is not forthcoming,

the Trustee may make or cause to be made, at the expense of the Company, an investigation into the affairs of the Company related to this Indenture.

SECTION 9.06. OBLIGATION TO ACT ON DEFAULTS. If any Event of Default shall have occurred and be continuing, the Trustee shall exercise such of the rights and remedies vested in it by this Indenture and shall use the same degree of care in their exercise as a prudent person would exercise or use in the circumstances in the conduct of his or her own affairs; provided, that if in the opinion of the Trustee such action may tend to involve expense or liability, it shall not be obligated to take such action unless it is furnished with indemnity satisfactory to it.

SECTION 9.07. RELIANCE ON REQUISITION, ETC. In addition to the provisions of Section 9.03 with respect to the Trustee's ability to rely on an opinion of counsel, the Trustee may act on any requisition, resolution, notice, telegram, request, consent, waiver, certificate, statement, affidavit, voucher, bond, or other paper or document which it in good faith believes to be genuine and to have been passed or signed by the proper persons or to have been prepared and furnished pursuant to any of the provisions of this Indenture; and the Trustee shall be under no duty to make any investigation as to any statement contained in any such instrument, but may accept the same as conclusive evidence of the accuracy of such statement.

SECTION 9.08. TRUSTEE MAY DEAL IN BONDS; OTHER FINANCIAL TRANSACTIONS. The Trustee may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Bondholders may be entitled to take with like effect as if the Trustee were not a party to this Indenture. The Trustee may also engage in or be interested in any financial or other transaction with the Authority or the Company; provided that if the Trustee determines that any such relation is in conflict with its duties under this Indenture, it shall eliminate the conflict or resign as Trustee.

SECTION 9.09. NO DUTY TO RENEW INSURANCE. The Trustee shall be under no duty to effect or to renew any insurance policy nor shall it incur any liability for the failure of the Company to effect or renew insurance or to report or file claims of loss thereunder.

SECTION 9.10. INTENTIONALLY OMITTED.

SECTION 9.11. RESIGNATION OF TRUSTEE. The Trustee may resign and be discharged of the trusts created by this Indenture by written resignation filed with the Authority (and a copy to the Company) not less than sixty (60) days before the date when it is to take effect. The Trustee shall also mail a copy of such written resignation, when filed with the Authority, to the registered owner of any Bond at his last address appearing on the registry books. Such resignation shall take effect only upon the appointment of a successor trustee and the transfer of the Collateral to such successor.

SECTION 9.12. REMOVAL OF TRUSTEE. Any Trustee hereunder may be removed at any time by an instrument appointing a successor to the Trustee so

removed, (a) executed by the Holders of a majority in principal amount of the Bonds then Outstanding and filed with the Trustee and the Authority or (b) provided no uncured Event of Default has occurred, executed by the Company and filed with the Trustee and the Authority.

SECTION 9.13. APPOINTMENT OF SUCCESSOR TRUSTEE. If the Trustee or any successor trustee resigns or is removed or dissolved, or if its property or business is taken under the control of any state or federal court or administrative body, a vacancy shall forthwith exist in the office of the Trustee, and the Authority at direction of the Company shall appoint a successor and such successor shall mail notice of such appointment to the registered owner of any Bond by first class mail at his last address appearing on the registry books. If the Authority fails to make such appointment promptly, the holders of a majority in principal amount of the Bonds then Outstanding may do so. If the holders of a majority in principal amount of Bonds fail to appoint a successor trustee within thirty (30) days, the Trustee may seek a court of competent jurisdiction to have a successor trustee appointed.

SECTION 9.14. QUALIFICATION OF SUCCESSOR. A successor trustee shall be a national banking association with trust powers, a state bank or a bank and trust company or a trust company or if there be no bank or trust company willing to accept the trust on reasonable and customary terms then such Trustee as may be appointed by a Court of competent jurisdiction, such successor trustee to have a minimum capital and surplus requirement of $50,000,000.

SECTION 9.15. INSTRUMENTS OF SUCCESSION. Any such successor trustee shall execute, acknowledge and deliver to the Authority an instrument accepting such appointment hereunder; and thereupon such successor trustee, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor in the trust hereunder, with like effect as if originally named Trustee herein. The Trustee ceasing to act hereunder shall pay over to the successor trustee all moneys held by it hereunder; and, upon request of the successor trustee, the Trustee ceasing to act and the Authority shall execute and deliver an instrument transferring to the successor trustee all the estates, properties, rights, powers and trusts hereunder of the Trustee ceasing to act.

SECTION 9.16. MERGER OF TRUSTEE. Any corporation into which any Trustee hereunder may be converted or merged or with which it or any successor to it may be consolidated or to which it may sell or transfer its assets and corporate trust business as a whole or substantially as a whole or any corporation resulting from any such conversion, sale, merger, consolidation or transfer to which any Trustee hereunder shall be a party, IPSO FACTO, shall be the successor trustee under this Indenture, and vested with all of the trusts, powers, duties, discretions, immunities, privileges and other matters as was its predecessor, without the execution or filing of any paper or any

further act on the part of the parties hereto, anything herein to the contrary notwithstanding.

ARTICLE X

EXECUTION OF INSTRUMENTS BY BONDHOLDERS
AND PROOF OF OWNERSHIP OF BONDS

SECTION 10.01. OWNERSHIP OF BONDS. Any request, direction, consent or other instrument in writing required or permitted by this Indenture to be signed or executed by Bondholders may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed by an instrument in writing. Proof of the execution of any such instrument and of the ownership of Bonds shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and any Paying Agent with regard to any action taken, suffered or omitted by any of them under such instrument if made in the following manner:

(a) The fact and date of the execution by any person of any such instrument may be proved by the certificate of any officer in any jurisdiction who, by the laws thereof, has power to take acknowledgments within such jurisdiction, to the effect that the person signing such instrument acknowledged before him the execution thereof, or by an affidavit of a witness to such execution; and

(b) The ownership of the Bonds shall be proved by the Bond Register.

Nothing contained in this Article X shall be construed as limiting the Trustee to such proof, it being intended that the Trustee may accept any other evidence of the matters in this Article X stated which to it may seem sufficient. Any request or consent of the Holder of any Bond shall bind every future Holder of the same Bond and any Bond or Bonds issued in exchange or substitution therefor or upon the registration of transfer thereof in respect of anything done by the Trustee in pursuance of such request or consent.

ARTICLE XI

AMENDMENTS AND SUPPLEMENTS

SECTION 11.01. AMENDMENTS AND SUPPLEMENTS WITHOUT BONDHOLDERS' CONSENT. This Indenture may be amended or supplemented at any time and from time to time, without the consent of the Bondholders, by a Supplemental Indenture executed by the Authority and the Trustee, for one or more of the following purposes:

(a) to add additional covenants of the Authority; and

(b) for any purpose not inconsistent with the terms of this Indenture, including, without limitation, the issuance of Additional Bonds, or to cure any ambiguity or to correct or supplement any provision contained herein or in any Supplemental Indenture which may be defective or inconsistent with any other provision contained herein or in any Supplemental Indenture, or to make such other provisions in regard to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture and which shall not adversely affect the interests of the Holders of the Bonds.

SECTION 11.02. AMENDMENTS WITH BONDHOLDERS' CONSENT. This Indenture may be amended from time to time, except with respect to (a) the principal, Redemption Price, or interest payable upon any Bonds, (b) the Interest Payment Dates, the date of maturity or the redemption provisions of any Bonds, (c) provisions relating to the aggregate principal amount of Bonds required for consent to such Supplemental Indenture, and (d) the security interest and lien granted under this Indenture, (except as provided in Section 6.16 of the Agreement and except to add additional security) by a Supplemental Indenture and approved by the Holders of at least fifty-one per centum (51%) in aggregate principal amount of the Bonds then Outstanding; provided that any dilution of the security for the Loans shall require the consent of one-hundred percent (100%) of the Holders. This Indenture may be amended from time to time in any manner by a Supplemental Indenture consented to by the Company and approved by the Holders of all the Bonds then Outstanding. It shall not be necessary for the consent of the Holders under this Section 11.02 to approve the particular form of any proposed Supplemental Indenture but it shall be sufficient if such consent shall approve the substance thereof.

SECTION 11.03. COMPANY CONSENT REQUIRED. A Supplemental Indenture shall not become effective unless the Company delivers to the Trustee its written consent to the amendment or supplement or unless the Company fails to deliver a written objection to the Trustee within fifteen (15) days after receipt by the Company of a proposed form of such amendment or supplement.

SECTION 11.04. AMENDMENT OF AGREEMENT. The Agreement may be amended or supplemented from time to time, without the consent of the Bondholders, by a supplemental Agreement executed by the Authority and the Company, for one or more of the following purposes:

(a) to add additional covenants of the Company; and

(b) for any purpose not inconsistent with the terms of the Agreement, including, without limitation, the issuance of Additional Bonds, or to cure any ambiguity or to correct or supplement any provision contained therein or in any supplemental agreement which may be defective or inconsistent with any other provision contained therein or in any supplemental agreement, or to make such other provisions in regard to matters or questions arising under the Agreement which shall not be inconsistent with the provisions of the Agreement and which shall not adversely affect the interests of the Holders of the Bonds.

If the Authority and the Company propose to amend the Agreement in such a way as would affect the interests of Bondholders and, therefore, would require the consent of the Trustee as provided in this Section 11.04, the Authority shall file with the Trustee a copy of the proposed amendment. The Trustee shall notify Bondholders of the proposed amendment and may consent thereto with the consent of at least fifty-one per centum (51%) in aggregate principal amount of the Bonds then Outstanding and each Significant Bondholder; provided, that the Trustee shall not, without the unanimous consent of the Holders of all Bonds then Outstanding, consent to any amendment which would (a) decrease the amounts payable on the Notes, (b) change the maturity date or the date of payment of any installment of interest under the Notes or change any of the payment provisions of the Notes, or (c) provisions relating to the aggregate principal amount of the Bonds required for consent to such amendment.

SECTION 11.05. TRUSTEE AUTHORIZED TO JOIN IN AMENDMENTS AND SUPPLEMENTS; RELIANCE ON COUNSEL. The Trustee is authorized to join with the Authority in the execution and delivery of any Supplemental Indenture or amendment permitted by this Article XI and in so doing shall be fully protected by an opinion of Counsel that such Supplemental Indenture or amendment is so permitted and has been duly authorized by the Authority and does not adversely affect the interests of the Holders of the Bonds and that all things necessary to make it a valid and binding agreement have been done. The Authority agrees to deliver to the Trustee, prior to the execution of a Supplemental Indenture or a supplemental Agreement, an opinion of Bond Counsel to the effect that such amendment or supplement will not have an adverse effect on the exemption of interest on the Bonds from inclusion in gross income of the Holders.

Notwithstanding anything contained herein to the contrary, there shall be no amendments or supplements to this Indenture or any Supplemental Indenture which increase the duties or responsibilities of any fiduciary under this Indenture or any Supplemental Indenture, without the express prior written consent of such fiduciary.

ARTICLE XII

DEFEASANCE

SECTION 12.01. DEFEASANCE. (a) When principal or Redemption Price (as the case may be) of, and interest on, all Bonds issued hereunder have been paid, or provision has been made for payment of the same when due in the manner described in this Section 12.01, whether at maturity or upon redemption, acceleration, or otherwise, together with all other sums payable hereunder or under the Agreement, the right, title and interest of the Trustee shall thereupon cease (except with respect to moneys or securities held by the Trustee hereunder for the payment of the principal or Redemption Price (as the case may be) of, and interest on, the Bonds and other amounts) and the Trustee, on written demand of the Authority, shall release the lien of this Indenture and shall execute documents to evidence such release as may be reasonably required by the Authority, shall surrender the Notes to the Company and shall turn over to the Company or to such person, body or authority as may be entitled to receive the same all balances then held by it hereunder.

(b) Provision for the payment of Bonds shall be deemed to have been made upon the delivery to the Trustee of (i) cash in an amount which, when added to any other moneys held by the Trustee and available for such payment, would be sufficient to make all payments specified above, or (ii) Government Obligations which are non-callable prior to the stated maturity thereof and having stated maturities arranged so that the principal of and interest becoming due and payable on such Government Obligations will, under any and all circumstances (and without further investment or reinvestment of either the principal amount thereof or the interest earned thereon), be sufficient (as confirmed by a nationally recognized firm of public accountants) to make all such payments, or
(iii) any combination of such cash and such Government Obligations the amounts of which and interest thereon, when due, are or will be, in the aggregate, sufficient to make all such payments, and in each case, the delivery to the Trustee of (a) an opinion of Bond Counsel to the effect that such defeasance is permitted under this Section 12.01 and (b) an opinion of Counsel selected by the Trustee and reasonably acceptable to the Company as to such other matters as the Trustee or the Holders of at least a majority in aggregate principal amount of the Outstanding Bonds may reasonably request. Neither the obligations nor moneys deposited with the Trustee pursuant to this Section shall be withdrawn or used for any purpose other than, and shall be segregated and held in trust for the payment of the principal of, Redemption Price and interest on said Bonds.

(c) The release of the obligations of the Authority under this Section 12.01 shall not affect the obligations of the Company to make direct payments to the Authority, the Trustee or any Holder of the Bonds pursuant to the Agreement.

ARTICLE XIII

MISCELLANEOUS

SECTION 13.01. DISSOLUTION. In the event of the dissolution of the Authority, all the covenants, stipulations, promises and agreements in this Indenture contained, by or on behalf of, or for the benefit of, the Authority, shall bind or inure to the benefit of the successors of the Authority from time to time and any officer, board, commission, agency or instrumentality to whom or to which any power or duty of the Authority shall be transferred.

SECTION 13.02. NO RIGHTS CONFERRED ON OTHERS. Except as in this Indenture otherwise specifically provided, nothing in this Indenture expressed or implied is intended or shall be construed to confer upon any person other than the Company, the Authority, the Trustee and the Holders of the Bonds issued under this Indenture, any right, remedy or claim under or by reason of this Indenture, this Indenture being intended to be for the sole and exclusive benefit of the Company, the Authority, the Trustee and the Holders of the Bonds issued under this Indenture.

SECTION 13.03. DEPOSIT OF FUNDS FOR PAYMENT OF BONDS. If the Authority deposits with the Trustee funds sufficient to pay the principal or Redemption Price of any Bonds becoming due, either at maturity or by call for redemption or otherwise, together with all interest accruing thereon to the due date, all interest on such Bonds shall cease to accrue on the due date and all liability of the Authority with respect to such Bonds shall likewise cease, except as hereinafter provided. Thereafter the Holders of such Bonds shall be restricted exclusively to the funds so deposited for any claim of whatsoever nature with respect to such Bonds, provided that such restriction shall not affect the obligations of the Company to make direct payments to the Holders of the Bonds pursuant to this Indenture or the Agreement, and the Trustee shall deposit such moneys with the Paying Agent to be held in trust for such Holders.

If any Bond or evidence of beneficial ownership of such Bond shall not be presented for payment when the principal thereof becomes due (whether at maturity, by acceleration, upon call for redemption, upon purchase or otherwise), all liability of the Authority to the registered owner thereof for the payment of such Bond, shall forthwith cease, terminate and be completely discharged if funds sufficient to pay such Bond and interest due thereon, if any, are held by the Trustee uninvested for the benefit of the registered owner thereof. Thereupon it shall be the duty of the Trustee to comply with the Uniform Unclaimed Property Act, N.J.S.A. 46:30B-1 ET SEQ. with respect to such funds. The registered owner shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Indenture or on, or with respect to, such Bond.

SECTION 13.04. SEVERABILITY OF INVALID PROVISIONS. In case any one or more of the provisions of this Indenture or of the Bonds issued under this Indenture shall, for any reason, be held to be illegal or invalid, such

illegality or invalidity shall not affect any other provisions of this Indenture or of said Bonds, and this Indenture and the Bonds shall be construed and enforced as if such illegal or invalid provisions had not been contained herein or therein.

SECTION 13.05. NO PERSONAL RECOURSE. No covenant or agreement contained in the Bonds or in this Indenture shall be deemed to be the covenant or agreement of any member, agent, or employee of the Authority in his individual capacity, and neither the members of the Authority nor any official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

SECTION 13.06. NOTICE.

(a) Any notice, demand, direction, request or other instrument authorized or required by this Indenture to be given to or filed with the persons named below shall be deemed to have been sufficiently given or filed for all purposes of this Indenture if and when sent by registered mail return receipt requested:

(i) To the Authority at 36 West State Street, P.O. Box 990, Trenton, New Jersey, 08625, Attention: Director of Program Services or at such other address as may be designated in writing by the Authority to the Trustee, copy to McManimon & Scotland, L.L.C., One Riverfront Plaza, Newark, New Jersey 07102, Attention: John V. Cavaliere, Esq.;

(ii) To the Trustee at 385 Rifle Camp Road, West Paterson, New Jersey 07424, Attn: Corporate Trust Department;

(iii) To the Company at 165 Ludlow Avenue, Northvale, New Jersey 07647, Attention: Mark Gittelman, Chief Financial Officer, 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.; and

(iv) To the Placement Agent, Ryan Beck & Co., 740 Broad Street, Shrewsbury, New Jersey 07702, copy to DeCotiis, FitzPatrick, Cole & Wisler, LLP, 500 Frank W. Burr Boulevard, Teaneck, New Jersey 08607, Attention: Isabel Miranda, Esq.

(b) Upon the written request of either the Company or the Placement Agent, the Trustee shall promptly provide a list of all Bondholders.

SECTION 13.07. EXECUTION IN SEVERAL COUNTERPARTS. This Indenture shall be simultaneously executed in several identical counterparts, and all of said counterparts executed and delivered, each as an original and complete in itself, shall constitute but one and the same instrument and any such counterpart may be introduced in evidence, proved, recorded or used for any purpose without the production of any other counterpart.

SECTION 13.08. LAWS GOVERNING INDENTURE. The effect and meaning of this Indenture and the rights of all parties hereunder shall be governed by, and construed according to, the laws of the State.

SECTION 13.09. SUCCESSORS AND ASSIGNS. All the covenants, promises and agreements in this Indenture contained by or on behalf of the Authority, or by or on behalf of the Trustee, shall bind and inure to the benefit of their respective successors and assigns, whether so expressed or not.

SECTION 13.10. HEADINGS FOR CONVENIENCE ONLY. The descriptive headings in this Indenture are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

SECTION 13.11. CREDITS ON THE NOTES. In addition to any credit, payment or satisfaction expressly provided for under the provisions of this Indenture in respect of payments due under the Notes, the Trustee shall make credits against amounts otherwise payable in respect of the applicable Note in an amount corresponding to (a) the principal amount of any Bond surrendered to the Trustee by the Company or the Authority, or purchased by the Trustee, for cancellation and (b) the amount of money held by the Trustee and available and designated for the payment of principal or Redemption Price of, or interest on, the Bonds, regardless of the source of payment to the Trustee of such moneys. The Trustee shall promptly notify the Company when such credits arise.

SECTION 13.12. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for redemption of any Bonds shall be a Saturday or Sunday or a legal holiday or a day on which banking institutions in the municipality of payment are authorized by law to close, then payment of interest or principal or Redemption Price need not be made on such date but may be made on the next succeeding business day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest on such payment shall accrue for the period after such date.

SECTION 13.13. FORM OF BONDS. The Initial Bonds to be issued under and secured by this Indenture and the Trustee's certificate of authentication are to be in substantially the form attached hereto as EXHIBIT A and EXHIBIT B with necessary and appropriate variations, omissions and insertions as permitted or required by this Indenture.

IN WITNESS WHEREOF, The Authority and the Trustee have caused their respective corporate seals to be hereunto affixed and attested and these presents to be signed by their respective officers thereunto duly authorized and this Indenture to be dated as of the day and year first above written.

{SEAL}
ATTEST                                  NEW JERSEY ECONOMIC DEVELOPMENT
                                         AUTHORITY

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

(COUNTERPART SIGNATURE PAGE TO THE INDENTURE)

THE BANK OF NEW YORK, as Trustee

By: /s/ Susan M. Pszonek
   -------------------------------
        Susan M. Pszonek
        Vice President

EXHIBIT A
(FORM OF SERIES A BOND)

THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THIS BOND. THIS BOND IS A SPECIAL, LIMITED OBLIGATION 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 THIS BOND. THIS BOND DOES NOT NOW AND SHALL NEVER CONSTITUTE A

                    MATURITY                                    DATED
NUMBER RA - 1       DATE                                DATE
                    ----                                ----
                    September 1, 2030                   August 15, 2005

CUSIP NUMBER:       ________________

REGISTERED OWNER:   CEDE & CO.

PRINCIPAL AMOUNT: THREE MILLION SIX HUNDRED SIXTY THOUSAND

AND 00/100 DOLLARS ($3,660,000.00)

INTEREST RATE: SIX AND ONE HALF PER CENT (6.50%)

THE NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the "Authority"), a

public body corporate and politic, constituting an instrumentality of the

State of New Jersey duly organized and existing under the laws of the State of New Jersey and, in particular, The New Jersey Economic Development Authority Act, constituting N.J.S.A. 34:1B.1 ET SEQ., as may be amended and supplemented (the "Act"), for value received, hereby promises to pay, but only from the funds provided therefor as hereinafter set forth, to the registered owner specified hereinabove, or registered assigns on the maturity date (specified above), unless this Bond shall be redeemed and shall have been previously called for redemption and payment of the redemption price shall have been duly made or provided for, upon surrender hereof, the principal sum specified above and to pay interest thereon (but only out of said amounts) at the interest rate per annum specified above from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or provided for or on March 1, 2006 and semiannually thereafter on March 1 and September 1 in each year (each an "Interest Payment Date") until payment of said principal sum has been made or provided for. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable and punctually paid or duly provided for, on any Interest Payment Date will, pursuant to the Indenture (as hereinafter defined) be paid to the registered owner hereof at the close of business on the regular record date for such interest, which date shall be the fifteenth (15th) day (whether such day is a business day) of the calendar month immediately preceding such Interest Payment Date (the "Regular Record Date"). Any interest on any Bond which is payable, but is not punctually paid or provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Registered Owner on the relevant Record Date by virtue of having been such owner, and such Defaulted Interest shall be paid to the Registered Owner in whose name the Bond is registered at the close of business on a special Record Date (the "Special Record Date") to be fixed by the Trustee, such Special Record Date to be not more than fifteen (15) nor less than ten (10) days prior to the date of proposed payment. The Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each registered owner, at such registered owner's address as it appears in the Bond Register (as hereinafter defined), not less than ten (10) days prior to such Special Record Date. Interest on this Bond shall be payable by check mailed to the Registered Owner hereof on the Interest Payment Date. Payments of principal, Redemption Price or interest due on this Bond may also be payable by electronic funds transfer to the Registered Owner of $1,000,000 or more; provided such Registered Owner requests such electronic funds transfer and delivers to the Trustee in writing, not later than the close of business on the applicable Record Date preceding such transfer the following information needed to make such transfer: the name of the bank to receive such transfer, wiring code of said bank, ABA number, account number of the Registered Owner and name of a contact person at the bank. The principal of and interest on this Bond shall be paid in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts.

This Bond is issued under and pursuant to the Constitution and Laws of the State of New Jersey, and under and pursuant to a resolution duly adopted by the Authority on July 12, 2005. This Bond and the Bonds of the issue of

which it forms a part are special, limited obligations of the Authority payable solely from the revenues and assets constituting the Trust Estate (as defined in the Indenture) pledged under the Indenture. THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THIS BOND. THIS BOND IS A SPECIAL, LIMITED OBLIGATION 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 THIS BOND. THIS BOND DOES NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER.

This Bond is one of the Bonds of a duly authorized issue of economic development bonds of the Authority in the aggregate principal amount of $3,660,000 and is known as "New Jersey Economic Development Authority, Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project), Series A" (the "Bonds").

The Bonds are issued for the purpose of financing a project as more fully defined in the Agreement (as hereinafter defined). Elite Pharmaceuticals, Inc. (the "Company") and the Authority have entered into a Loan Agreement dated as of August 15, 2005 (which Loan Agreement as it may from time to time be amended is hereinafter called the "Agreement") pursuant to the terms of which the Authority has agreed to issue and sell the Bonds and to lend the proceeds thereof to the Company, and in consideration thereof the Company has agreed to make payments to the Authority sufficient to pay the principal of, redemption premium (if any) and interest on the Bonds as the same become due and payable.

This Bond is issued under and pursuant to an Indenture dated as of August 15, 2005 (said Indenture together with all such supplements and amendments thereto as therein permitted, the "Indenture"), by and between the Authority and The Bank of New York, as trustee (said banking institution and any successor trustee under the Indenture, the "Trustee"). An executed counterpart of the Indenture is on file at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture for the provisions, among others, with respect to the custody and application of the proceeds of the Bonds, the collection and disposition of revenues, a description of the funds pledged to the payment of the principal of and interest on the Bonds, the nature and extent of the security, the rights, duties and obligations of the Authority and the Trustee and the rights of the holders of the Bonds, and, by the acceptance of this Bond, the holder hereof assents to all of the provisions of the Indenture.

I. REDEMPTION OF BONDS

(a) OPTIONAL REDEMPTION. The Bonds are subject to optional redemption, in whole at any time or in part on any Interest Payment Date, at the

redemption prices (expressed as a percentage of the principal amount to be redeemed) as set forth below:

                  DATE                        REDEMPTION PRICE
                  ----                        ----------------

September 1, 2015 to August 31, 2016                102%
September 1, 2016 to August 31, 2017                101%
Thereafter                                          100%

If less than all the Bonds are to be redeemed, the Bonds shall be selected by the Trustee by lot, or in such other manner as the Trustee may determine, for redemption.

(b) MANDATORY SINKING FUND REDEMPTION. The Bonds are subject to mandatory sinking fund redemption prior to maturity, at a redemption price equal to 100% of the principal amount thereof on September 1 of the years and in the amounts set forth below:

YEAR                          AMOUNT
----                          ------

2006                         $120,000
2007                          125,000
2008                          135,000
2009                          140,000
2010                          150,000
2011                          165,000
2012                          170,000
2013                          185,000
2014                          195,000
2015                          210,000
2016                          220,000
2017                           85,000
2018                           90,000
2019                           95,000
2020                          105,000
2021                          110,000
2022                          115,000
2023                          125,000
2024                          130,000
2025                          140,000
2026                          150,000
2027                          160,000
2028                          170,000
2029                          180,000
2030*                         190,000

*Final Maturity

(c) MANDATORY REDEMPTION - FUNDS REMAINING IN PROJECT FUND. The Bonds are subject to mandatory redemption in part on the earlier of (a) the third

anniversary date of the issuance of the Bonds or (b) a date not later than forty-five (45) days after the Completion Date (as defined in the Indenture), to the extent of moneys remaining in the Project Fund established under and pursuant to the Indenture as of such date, at a redemption price equal to one hundred percent (100%) of the principal amount of Bonds to be redeemed plus interest accrued thereon to the redemption date; provided, however that such redemption shall not be made if the Company obtains at its expense an opinion of bond counsel acceptable to the Trustee to the effect that the failure to make such redemption will not adversely affect the exemption of interest on the Bonds for either federal or State income tax purposes.

(d) EXTRAORDINARY MANDATORY REDEMPTION - DETERMINATION OF TAXABILITY. The Bonds are subject to mandatory redemption in whole not later than sixty (60) days after the occurrence of a Determination of Taxability (as defined in the Agreement) at a redemption price equal to one hundred and five percent (105%) of the principal amount of Bonds to be redeemed plus interest accrued thereon to such redemption date.

(e) EXTRAORDINARY MANDATORY REDEMPTION - CASUALTY AND CONDEMNATION PROCEEDS. The Bonds are subject to mandatory redemption by the Authority prior to maturity, in whole at any time, or in part on any Interest Payment Date to the extent proceeds of insurance or condemnation awards are received with respect to the Project and are not used to repair or restore the Project Facilities pursuant to the Loan Agreement at a redemption price equal to 100% of the principal amount to be redeemed, plus interest accrued thereon to the redemption date.

(f) SPECIAL MANDATORY REDEMPTION - BREACH OF CERTAIN PUBLIC PURPOSE COVENANTS. The Bonds are subject to special mandatory redemption in whole as soon as practicable but no later than the 90th day following the Authority's written notice to the Trustee and the Company that (i) the Company has ceased to operate the Project or ceased 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 (ii) any representation or warranty of the Company contained in the Agreement or in any other document furnished to the Authority in connection with the Bonds proves to have been false or misleading in any material respect when made. Upon the occurrence of any such event, the Bonds shall be redeemed by the Authority at a redemption price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date.

Notice of any redemption pursuant to the preceding paragraphs shall be given by the Trustee by first class mail postage prepaid to each registered owner of the Bonds at his address as it appears on the Bond Register (as hereinafter defined). Such notice shall be mailed not less than thirty (30) nor more than forty-five (45) days prior to the redemption date (except with respect to redemptions made pursuant to paragraphs (d) and (f), mailed within the time period specified for such redemption). Failure to mail such notice or defects therein or in the mailing thereof shall not affect the validity of the redemption. In connection with any such notice, the "CUSIP" numbers assigned

to the Bonds being called for redemption may be used but reliance may be placed only on the identification number printed hereon. In the event that less than the full principal amount hereof shall have been called for redemption, the registered owner hereof may surrender this Bond in exchange for one or more new Bonds in aggregate principal amount equal to the unredeemed portion of principal, as provided in the Indenture.

After notice of redemption shall have been given as aforesaid, then, from and after the date fixed for redemption, the Bonds so called for redemption shall cease to bear interest and such Bonds shall no longer constitute a lien on the Trust Estate and shall not be considered Outstanding under the Indenture.

II. GENERAL PROVISIONS

Pursuant to the Indenture, the Authority has, for the benefit of the holders of the Bonds, assigned to the Trustee the Authority's right, title and interest under the Agreement and the Notes, subject to the reservation of certain rights by the Authority under the Agreement to exercise remedies thereunder under certain circumstances, to receive certain fees, expenses and notices, to render consents and approvals and to receive indemnification.

The holder of this Bond shall have no right to enforce the provisions of the Indenture or the Agreement or to institute any action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture or the Agreement, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture.

In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of the Bonds may become or may be declared due and payable before the stated maturity hereof, together with the interest accrued hereon.

Modifications or alterations of the Agreement and the Indenture and any supplement or amendment thereto may be made only to the extent and in the circumstances permitted by the Indenture and may be made in certain cases without the consent of the holders of the Bonds.

This Bond is registered as to both principal and interest on the registration books of the Trustee to be kept for that purpose at the corporate trust office of the Trustee, and both principal and interest shall be payable only to the registered owner hereof. No transfer hereof shall be valid unless made at said office by the registered owner in person or by his duly authorized attorney and noted hereon. The Authority and the Trustee may treat the registered owner of this Bond as the absolute owner hereof for all purposes, and payment of or on account of either principal or interest made to such registered owner shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid and neither

the Authority nor the Trustee shall be affected by any notice to the contrary.

At the written request (in form satisfactory to the Trustee) of the registered owner, this Bond shall, except during the fifteen (15) days immediately prior to the mailing of notice of such redemption of the Bonds or after Bonds have been selected for redemption, be exchanged for an equal aggregate principal amount of Bonds in fully-registered form by the preparation and substitution of a new Bond or Bonds, signed or executed by such officers of the Authority as are then in office, of like date, maturity and interest rate, in minimum denominations of $5,000 and any $5,000 integral multiple thereof.

This Bond is not valid unless the Trustee's Certificate of Authentication endorsed hereon is duly executed.

This Bond shall be governed by and construed in accordance with the laws of the State of New Jersey.

The Act provides that no member of the Authority nor any person executing bonds for the Authority shall be liable personally on the Bonds by reason of the issuance thereof.

All acts, conditions and things required to happen, exist and be performed precedent to and in the issuance of this Bond and the execution of the Indenture have happened, exist and have been performed as so required.

{THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK}

IN WITNESS WHEREOF, the New Jersey Economic Development Authority has caused this Bond to be executed by the manual or facsimile signature of its Chief Financial Officer and its official seal or a facsimile thereof to be impressed, imprinted or reproduced hereon and attested by the manual or facsimile signature of its Assistant Secretary.

SEAL
ATTEST                                       NEW JERSEY ECONOMIC DEVELOPMENT
                                              AUTHORITY

CERTIFICATE OF AUTHENTICATION

This Bond is one the Bonds described in the within mentioned Indenture.

THE BANK OF NEW YORK,
as Trustee and as Bond Registrar

EXHIBIT B
(FORM OF SERIES B BOND)

THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THIS BOND. THIS BOND IS A SPECIAL, LIMITED OBLIGATION 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 THIS BOND. THIS BOND DOES NOT NOW AND SHALL NEVER CONSTITUTE A

                     MATURITY                                    DATED
NUMBER RB - 1        DATE                                DATE
                     ----                                ----
                     September 1, 2012                   August 15, 2005

CUSIP NUMBER:        ________________

REGISTERED OWNER:    CEDE & CO.

PRINCIPAL AMOUNT:    FOUR HUNDRED NINETY FIVE THOUSAND AND
                     00/100 DOLLARS ($495,000.00)

INTEREST RATE:       NINE PER CENT (9.00%)

THE NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the "Authority"), a

public body corporate and politic, constituting an instrumentality of the

State of New Jersey duly organized and existing under the laws of the State of New Jersey and, in particular, The New Jersey Economic Development Authority Act, constituting N.J.S.A. 34:1B.1 ET SEQ., as may be amended and supplemented (the "Act"), for value received, hereby promises to pay, but only from the funds provided therefor as hereinafter set forth, to the registered owner specified hereinabove, or registered assigns on the maturity date (specified above), unless this Bond shall be redeemed and shall have been previously called for redemption and payment of the redemption price shall have been duly made or provided for, upon surrender hereof, the principal sum specified above and to pay interest thereon (but only out of said amounts) at the interest rate per annum specified above from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or provided for or on March 1, 2006 and semiannually thereafter on March 1 and September 1 in each year (each an "Interest Payment Date") until payment of said principal sum has been made or provided for. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months. The interest so payable and punctually paid or duly provided for, on any Interest Payment Date will, pursuant to the Indenture (as hereinafter defined) be paid to the registered owner hereof at the close of business on the regular record date for such interest, which date shall be the fifteenth (15th) day (whether such day is a business day) of the calendar month immediately preceding such Interest Payment Date (the "Regular Record Date"). Any interest on any Bond which is payable, but is not punctually paid or provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Registered Owner on the relevant Record Date by virtue of having been such owner, and such Defaulted Interest shall be paid to the Registered Owner in whose name the Bond is registered at the close of business on a special Record Date (the "Special Record Date") to be fixed by the Trustee, such Special Record Date to be not more than fifteen (15) nor less than ten (10) days prior to the date of proposed payment. The Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each registered owner, at such registered owner's address as it appears in the Bond Register (as hereinafter defined), not less than ten (10) days prior to such Special Record Date. Interest on this Bond shall be payable by check mailed to the Registered Owner hereof on the Interest Payment Date. Payments of principal, Redemption Price or interest due on this Bond may also be payable by electronic funds transfer to the Registered Owner of $1,000,000 or more; provided such Registered Owner requests such electronic funds transfer and delivers to the Trustee in writing, not later than the close of business on the applicable Record Date preceding such transfer the following information needed to make such transfer: the name of the bank to receive such transfer, wiring code of said bank, ABA number, account number of the Registered Owner and name of a contact person at the bank. The principal of and interest on this Bond shall be paid in any coin or currency of the United States of America which, at the time of payment, is legal tender for the payment of public and private debts.

This Bond is issued under and pursuant to the Constitution and Laws of the State of New Jersey, and under and pursuant to a resolution duly adopted by the Authority on July 12, 2005. This Bond and the Bonds of the issue of

which it forms a part are special, limited obligations of the Authority payable solely from the revenues and assets constituting the Trust Estate (as defined in the Indenture) pledged under the Indenture. THE STATE OF NEW JERSEY IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE OF NEW JERSEY IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THIS BOND. THIS BOND IS A SPECIAL, LIMITED OBLIGATION 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 THIS BOND. THIS BOND DOES NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER.

This Bond is one of the Bonds of a duly authorized issue of economic development bonds of the Authority in the aggregate principal amount of $495,000 and is known as "New Jersey Economic Development Authority, Economic Development Bonds (Elite Pharmaceuticals, Inc. - 2005 Project), Federally Taxable Series B" (the "Bonds").

The Bonds are issued for the purpose of financing a project as more fully defined in the Agreement (as hereinafter defined). Elite Pharmaceuticals, Inc. (the "Company") and the Authority have entered into a Loan Agreement dated as of August 15, 2005 (which Loan Agreement as it may from time to time be amended is hereinafter called the "Agreement") pursuant to the terms of which the Authority has agreed to issue and sell the Bonds and to lend the proceeds thereof to the Company, and in consideration thereof the Company has agreed to make payments to the Authority sufficient to pay the principal of, redemption premium (if any) and interest on the Bonds as the same become due and payable.

This Bond is issued under and pursuant to an Indenture dated as of August 15, 2005 (said Indenture together with all such supplements and amendments thereto as therein permitted, the "Indenture"), by and between the Authority and The Bank of New York, as trustee (said banking institution and any successor trustee under the Indenture, the "Trustee"). An executed counterpart of the Indenture is on file at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture for the provisions, among others, with respect to the custody and application of the proceeds of the Bonds, the collection and disposition of revenues, a description of the funds pledged to the payment of the principal of and interest on the Bonds, the nature and extent of the security, the rights, duties and obligations of the Authority and the Trustee and the rights of the holders of the Bonds, and, by the acceptance of this Bond, the holder hereof assents to all of the provisions of the Indenture.

I. REDEMPTION OF BONDS

(a) OPTIONAL REDEMPTION. The Bonds are not subject to optional redemption.

(b) MANDATORY SINKING FUND REDEMPTION. The Bonds are subject to mandatory sinking fund redemption prior to maturity, at a redemption price equal to 100% of the principal amount thereof on September 1 of the years and in the amounts set forth below:

YEAR                         AMOUNT
----                         ------

2006                        $55,000
2007                         60,000
2008                         65,000
2009                         70,000
2010                         75,000
2011                         80,000
2012*                        90,000

*Final Maturity

(c) MANDATORY REDEMPTION - FUNDS REMAINING IN PROJECT FUND. The Bonds are subject to mandatory redemption in part on the earlier of (a) the third anniversary date of the issuance of the Bonds or (b) a date not later than forty-five (45) days after the Completion Date (as defined in the Indenture), to the extent of moneys remaining in the Project Fund established under and pursuant to the Indenture as of such date, at a redemption price equal to one hundred percent (100%) of the principal amount of Bonds to be redeemed plus interest accrued thereon to the redemption date.

(d) EXTRAORDINARY MANDATORY REDEMPTION - CASUALTY AND CONDEMNATION PROCEEDS. The Bonds are subject to mandatory redemption by the Authority prior to maturity, in whole at any time, or in part on any Interest Payment Date to the extent proceeds of insurance or condemnation awards are received with respect to the Project and are not used to repair or restore the Project Facilities pursuant to the Loan Agreement at a redemption price equal to 100% of the principal amount to be redeemed, plus interest accrued thereon to the redemption date.

(e) SPECIAL MANDATORY REDEMPTION - BREACH OF CERTAIN PUBLIC PURPOSE COVENANTS. The Bonds are subject to special mandatory redemption in whole as soon as practicable but no later than the 90th day following the Authority's written notice to the Trustee and the Company that (i) the Company has ceased to operate the Project or ceased 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 (ii) any representation or warranty of the Company contained in the Agreement or in any other document furnished to the Authority in connection with the Bonds proves to have been false or misleading in any material respect when made. Upon the occurrence of any such event, the Bonds shall be redeemed by the Authority at a redemption price equal to 100% of the principal amount thereof plus interest accrued thereon to the redemption date.

Notice of any redemption pursuant to the preceding paragraphs shall be given by the Trustee by first class mail postage prepaid to each registered owner of the Bonds at his address as it appears on the Bond Register (as hereinafter defined). Such notice shall be mailed not less than thirty (30) nor more than forty-five (45) days prior to the redemption date (except with respect to redemptions made pursuant to paragraph (e), mailed within the time period specified for such redemption). Failure to mail such notice or defects therein or in the mailing thereof shall not affect the validity of the redemption. In connection with any such notice, the "CUSIP" numbers assigned to the Bonds being called for redemption may be used but reliance may be placed only on the identification number printed hereon. In the event that less than the full principal amount hereof shall have been called for redemption, the registered owner hereof may surrender this Bond in exchange for one or more new Bonds in aggregate principal amount equal to the unredeemed portion of principal, as provided in the Indenture.

After notice of redemption shall have been given as aforesaid, then, from and after the date fixed for redemption, the Bonds so called for redemption shall cease to bear interest and such Bonds shall no longer constitute a lien on the Trust Estate and shall not be considered Outstanding under the Indenture.

II. GENERAL PROVISIONS

Pursuant to the Indenture, the Authority has, for the benefit of the holders of the Bonds, assigned to the Trustee the Authority's right, title and interest under the Agreement and the Notes, subject to the reservation of certain rights by the Authority under the Agreement to exercise remedies thereunder under certain circumstances, to receive certain fees, expenses and notices, to render consents and approvals and to receive indemnification.

The holder of this Bond shall have no right to enforce the provisions of the Indenture or the Agreement or to institute any action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture or the Agreement, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture.

In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of the Bonds may become or may be declared due and payable before the stated maturity hereof, together with the interest accrued hereon.

Modifications or alterations of the Agreement and the Indenture and any supplement or amendment thereto may be made only to the extent and in the circumstances permitted by the Indenture and may be made in certain cases without the consent of the holders of the Bonds.

This Bond is registered as to both principal and interest on the registration books of the Trustee to be kept for that purpose at the

corporate trust office of the Trustee, and both principal and interest shall be payable only to the registered owner hereof. No transfer hereof shall be valid unless made at said office by the registered owner in person or by his duly authorized attorney and noted hereon. The Authority and the Trustee may treat the registered owner of this Bond as the absolute owner hereof for all purposes, and payment of or on account of either principal or interest made to such registered owner shall be valid and effectual to satisfy and discharge the liability upon this Bond to the extent of the sum or sums so paid and neither the Authority nor the Trustee shall be affected by any notice to the contrary.

At the written request (in form satisfactory to the Trustee) of the registered owner, this Bond shall, except during the fifteen (15) days immediately prior to the mailing of notice of such redemption of the Bonds or after Bonds have been selected for redemption, be exchanged for an equal aggregate principal amount of Bonds in fully-registered form by the preparation and substitution of a new Bond or Bonds, signed or executed by such officers of the Authority as are then in office, of like date, maturity and interest rate, in minimum denominations of $5,000 and any $5,000 integral multiple thereof.

This Bond is not valid unless the Trustee's Certificate of Authentication endorsed hereon is duly executed.

This Bond shall be governed by and construed in accordance with the laws of the State of New Jersey.

The Act provides that no member of the Authority nor any person executing bonds for the Authority shall be liable personally on the Bonds by reason of the issuance thereof.

All acts, conditions and things required to happen, exist and be performed precedent to and in the issuance of this Bond and the execution of the Indenture have happened, exist and have been performed as so required.

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IN WITNESS WHEREOF, the New Jersey Economic Development Authority has caused this Bond to be executed by the manual or facsimile signature of its Chief Financial Officer and its official seal or a facsimile thereof to be impressed, imprinted or reproduced hereon and attested by the manual or facsimile signature of its Assistant Secretary.

SEAL
ATTEST                                    NEW JERSEY ECONOMIC DEVELOPMENT
                                           AUTHORITY

CERTIFICATE OF AUTHENTICATION

This Bond is one the Bonds described in the within mentioned Indenture.

THE BANK OF NEW YORK,
as Trustee and as Bond Registrar