BURLINGTON COAT FACTORY WAREHOUSE CORP, 10-K, 1995-09-29

BURLINGTON COAT FACTORY WAREHOUSE CORP
10-K, 1995-09-29
FAMILY CLOTHING STORES

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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended July 1, 1995

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from............... to ...........

Commission File No. 1-8739

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Exact Name of Registrant as specified in
its charter)

Delaware 22-1970303
- ---------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

1830 Route 130
Burlington, New Jersey 08016
------------------------ ----------
(Address of principal (Zip Code)
executive offices)

Registrant's telephone number,
including area code: (609) 387-7800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange
on which registered
----------------------------- ---------------------------
Common Stock, $1.00 par value New York Stock Exchange, Inc.
per share

Securities Registered pursuant to Section 12(g) of the Act:

Title of Class
--------------
None

Page 1 <PAGE>

Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO_____.

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

The aggregate market value of the common stock, $1.00 par
value ("Common Stock"), of the registrant held by non-affiliates of the
registrant, as determined by reference to the closing sale price of the
Common Stock on the New York Stock Exchange as of August 31, 1995,
was $188,983,332.

As of August 31, 1995, the number of shares of Common Stock,
$1.00 par value, outstanding was 40,716,554.

Documents incorporated by Part of Form 10-K into which
reference into this report document is incorporated
- -------------------------- -----------------------------

Registrant's Proxy Statement Part III
to be filed pursuant to
Regulation 14A

Page 2 <PAGE>

PART I

Item 1. Business

Burlington Coat Factory Warehouse Corporation and its
subsidiaries (the "Company" or "Burlington Coat") operates a chain
of "off-price" apparel stores which offer a broad range of moderate
to higher priced, current brand name merchandise for men, women and
children at prices substantially below traditional full retail
prices generally charged by department and specialty stores. The
sale of outerwear (coats, jackets and raincoats) accounted for
approximately 29% of the Company' s total sales during fiscal 1995.
In addition, Burlington Coat offers customers a complete line of
men's, women's and children's wear as well as a linens, bath shop
items, gifts and accessories department in 183 of its stores and a
children's furniture department in approximately 141 of its stores.
The Company's policy of buying significant quantities of merchandise
throughout the year, maintaining inventory control and using a
"no-frills" merchandising approach, allows it to offer merchandise
at prices below traditional full retail prices. The sale of
irregular or discontinued merchandise represents only a small portion
of the Company's business. Merchandise is displayed on easy access racks,
and sales assistance generally is available. Clothing alteration services
are available on a limited basis in many stores for an additional charge.

Burlington Coat's practice of purchasing outerwear early
in each fashion season and of reordering in rapid response to sales
has enabled it to maintain a large, current and varied selection of
outerwear throughout each year. Although the Company believes that
this practice helps attract customers to its stores, to the extent
the Company maintains a relatively large volume of merchandise,
particularly outerwear, the risks related to style changes, weather
and other seasonal factors, and economic conditions are necessarily
greater than if the Company maintained smaller inventories.

An important factor in Burlington Coat's operations has
been its continued ability to purchase desirable, first-quality
current brand labeled merchandise directly from manufacturers on
terms at least as favorable as those offered large retail
department and specialty stores. The Company estimates that over
900 manufacturers of apparel, including over 300 manufacturers of
outerwear, are represented at the Company's stores, and that no
manufacturer accounted for more than 5% of the Company's purchases
during the last full fiscal year. The Company does not maintain
any long-term or exclusive commitments or arrangements to purchase
from any manufacturer. No assurance can be given that the Company
will be able to continue to purchase such merchandise directly from
manufacturers or to continue its current selling price structure.
See "Competition."

Page 3<PAGE>

The Company sells its merchandise to retail customers for
cash and accepts checks and most major credit cards. The Company's
"Cohoes" division also offers its own credit card. In addition,
the Company sells on a layaway plan and offers special orders on
selected merchandise. It does not offer refunds, except on furs,
defective merchandise and certain specialty retail operations, but
will exchange or give store credit slips for merchandise returned
within a prescribed period of time.

The Company advertises primarily on television and, to a
lesser extent, in regional and local newspapers and radio. During
the past three fiscal years, advertising expenditures have averaged
approximately 2.7% of total revenues.

The Stores
- ----------

As of August 31, 1995, the Company operated 240 stores,
all but 20 of which are located in leased facilities ranging in
size (including storage space) from approximately 15,000 to
approximately 133,000 square feet, with an average area of
approximately 60,000 square feet. Selling space accounts for
over four-fifths of the total area in most stores.

All except one of the Company's stores are either free-
standing or are located in shopping malls or strip shopping
centers. The remaining store is operated from the Company's former
distribution facility in Secaucus, New Jersey. The Company
believes that its customers are attracted to its stores principally
by the availability of a large assortment of first-quality current
brand name merchandise at attractive prices.

The Company also operates stores under the names "Cohoes
Fashions," "Decelle," "Luxury Linens," "Totally 4 Kids," "Baby
Depot," and "Fit For Men." Cohoes Fashions offers merchandise in
the middle to higher price range. Decelle offers merchandise in
the moderate price range for the entire family with an emphasis on
children's and youth wear. Luxury Linens is a specialty
store for linens, bath shop items, gifts and accessories and offers
merchandise in the middle to higher range. Fit For Men offers brand
name mens clothing in special sizes. Baby Depot offers a wide
selection of baby and juvenile furniture, clothing and accesories.
Totally 4 Kids is a new moderate to upscale concept store offering
maternity wear, baby furniture, children's wear from toddlers up to
teens, children's books, toys, computer software for kids and
educational tapes in a family environment. Baby Depot is a new
concept store specializing in infant to toddler apparel, furnishings
and accessories. Fit For Men is a stand alone mens store catering
to the needs of "hard to fit" men (big, tall, husky, athletic,
portly, short and small).

Page 4<PAGE>

In the past, Burlington Coat generally has selected sites
for its stores where there are suitable existing structures which
can be refurbished, and, if necessary, enlarged, in a manner
onsistent with the Company's merchandising concepts. In some
cases, space has been substantially renovated or built to
specifications given by Burlington Coat to the lessor. Such
properties have been available to the Company on lease terms which
it believes have been favorable. See "Growth and Expansion."

The stores generally are located in close proximity to
population centers, department stores and other retail operations
and are usually established near a major highway or thoroughfare,
making them easily accessible by automobile. Since the Company's
stores are generally located outside of urban centers and the
Company believes that some of its customers drive long distances
to visit store locations, it is likely that the Company
would be adversely affected by any conditions which were to
result in thereduction of automobile use.

The Company owns substantially all the equipment used
in its stores and believes that its selling space is well utilized and
that its equipment is well maintained and suitable for its
requirements.

At August 31, 1995, a majority of the Company's stores
contained one or more departments leased by unaffiliated parties
for the sale of shoes, jewelry, and accessories. During the fiscal
year ended July 1, 1995, the Company's rental income from all of its
leased departments aggregated less than 1% of the Company's
total revenues.

Central Distribution
- --------------------

Central distribution, warehousing, ticketing and marking
services are extended to approximately fifty percent of the dollar
volume of the Company's merchandise through its office and
warehouse/distribution facility in Burlington, New Jersey. This
facility is capable of servicing the Company's present stores as
well as accommodating anticipated expansion with modifications to
its existing data processing and materials handling systems, except
for juvenile furniture inventory. The Company is leasing
approximately 85,000 square feet of warehouse space nearby to its
existing warehouse distribution center for the purpose of
warehousing and distributing its juvenile furniture inventory.

Growth and Expansion
- --------------------

Since 1972 when its first store was opened in Burlington,
New Jersey, the Company has expanded to two hundred thirteen

Page 5<PAGE>

Burlington Coat stores, five Cohoes Fashions stores, eight Decelle
stores, nine stand-alone Luxury Linens stores, three Totally 4 Kids
store, one stand alone Baby Depot store and one Fit For Men store
as of August 31, 1995.

At August 31, 1995 the Company operated stores in 41
states and is exploring expansion opportunities both within its
current market areas and in other regions. For fiscal 1996, the
Company has opened or plans to open approximately ten to thirteen
additional Burlington Coat Factory stores, one Luxury Linens store
and one Totally 4 Kids store, prior to March, 1996. There are no
planned store closings for fiscal 1996. The Company continues to
monitor store profitability and should economic factors change,
some store closings could be possible.

The Company believes that its ability to find
satisfactory locations for its stores is essential for the
continued growth of its business. The opening of stores generally
is contingent upon a number of factors, including the availability
of desirable locations with suitable structures and the negotiation
of acceptable lease terms. There can be no assurance, however,
that the Company will be able to find suitable locations for new
stores or that even if such locations are found and acceptable
lease terms are obtained, the Company will be able to open the
number of new stores presently planned.

The Company began operating its own jewelry department in
three stores on a trial basis in the fall of 1993. The jewelry
program consists of karat gold and precious and semi-precious stone
jewelry, and in some stores may include brand-name watches. Based
on the results to date, the Company expanded the program to an
additional fourteen stores during the fall of 1994. Other stores
may be added to the program during fiscal 1996.

In May of 1994, the Company opened its first "Totally
4 Kids" store in Sterling, Virginia. Two additional Totally 4 Kids
stores were opened in Tulsa, Oklahoma and Cherry Hill, New Jersey
respectively, during fiscal 1995. The store caters to the moderate
to upscale market and offers maternity wear, baby furniture,
children's wear up to teens, children's books, educational tapes,
computer software for kids, and toys in a family environment. The
Company plans to open one additional Totally 4 Kids store in fiscal
1996.

In September, 1994, the Company entered into a license
arrangement with a vendor to supply department store brand or
better fragrance and cosmetics to 127 stores on a test basis.
Based on results to date, the program has been expanded to 218
stores including, five Cohoes Fashions stores and five Decelle
stores, and the arrangement has been extended through January 31,
1998.

Page 6 <PAGE>

In addition, the Company opened one stand alone "Baby
Depot" store in August, 1994 and one "Fit for Men" store,
specializing in special size menswear in September 1994. The
Company is currently evaluating the results of these stores in
order to determine whether to open additional Baby Depots and/or
specialized menswear stores on a stand alone basis.

The Company seeks to maintain its competitive position
and improve its prospects by periodically reevaluating its methods
of operation, including its pricing and inventory policies, the
format of its stores and its ownership or leasing of stores.

Seasonality
- -----------

The Company's business is seasonal, with its highest
sales occurring in the second fiscal quarter of each year.
Historically, approximately 57% of the Company's net sales have
occurred during the period from September through January.
Weather, however, continues to be an important contributing factor
to the sale of clothing in the fall, winter and spring seasons.
Generally, the Company's sales are higher if the weather is cold
during the early fall and winter months and warm during the early
spring months. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Operations
- ----------

Each store has a manager and one or more assistant
managers, as well as department managers. The Company also employs
regional and district managers to supervise overall store operating
and merchandising policies. Major merchandising decisions are
made, overall policies are set, and accounting and general
financial functions for the Company's stores are conducted, at
corporate headquarters. In addition, the Company employs
directors of administration, store operations, loss prevention and
merchandise presentation who are in charge of those functions on a
Company-wide basis.

Merchandise purchased by the Company is either shipped
directly from manufacturers to store locations or distributed
through the Company's warehousing and distribution facility. See
"Central Distribution." A computerized merchandise information
system provides regular detailed reports of sales and inventory
levels for each store and assists the merchandise managers and
buyers in monitoring and, where necessary, adjusting inventory
levels.

At July 1, 1995, the Company had approximately 15,000
employees, including a large number of part-time and seasonal

Page 7<PAGE>

employees which varies throughout the year. Of the Company's
employees, only those employed at one of its stores and at its
warehousing facility (aggregating up to 500 persons at its peak and
approximately 300 persons at July 1, 1995) are covered by
collective bargaining agreements. The Company cannot predict
whether any future attempts to unionize its employees will be
successful. The Company believes that its relationship with its
employees has been and remains satisfactory.

Competition
- -----------

General. The retail apparel business is highly
competitive. Competitors include other individual, regional and
national "off-price" retailers offering similar merchandise at
comparable prices as well as individual and chain stores, some of
which are regional and national department and discount store
chains. At various times throughout the year department store
chains and specialty shops offer brand name merchandise at
substantial markdowns, which can result in prices approximating
those offered by the Company. Some of the Company's competitors
are considerably larger than the Company and have substantially
greater financial and other resources.

Resale Price Maintenance. Since it is the general policy
of the Company to sell at lower than the traditional full retail
price, its business may be adversely affected by manufacturers who
attempt to maintain the resale price of their merchandise by
refusing to sell, or to grant advertising allowances, to purchasers
who do not adhere to their suggested retail prices. Federal
legislation and regulations have been proposed from time to time
which, if enacted, would be helpful to manufacturers attempting
to establish minimum prices or withhold allowances. In addition,
the rules against resale price maintenance have been subject to
challenge in the courts from time to time.

The Company has, on several occasions in the past,
brought lawsuits against certain manufacturers and department store
chains and complained to the Federal Trade Commission seeking more
vigorous enforcement of existing Federal laws, as well as testified
before Congress in connection with proposed legislation concerning
the Federal antitrust laws.

Item 2. Properties
----------

The Company owns the land and building for twenty of its
stores, and is a 50% partner in a partnership which owns the
building in which one store is located. Generally, however, the
Company's policy has been to lease its stores. Store leases
generally provide for fixed monthly rental payments, plus the
payment, in most cases, of real estate taxes and other charges with

Page 8 <PAGE>

escalation clauses. In certain locations, the Company's store
leases contain formulas providing for the payment of additional
rent based on sales.

<TABLE>

The following table shows the years in which store leases
existing at August 31, 1995 expire:

Fiscal Years Number of Leases Expiring with
Ending June 30 Expiring Renewal Options
- -------------- ---------------- ---------------
<S> <C> <C>

1996-99 58 52

2000-2001 27 22

2002-2003 16 9

2004-2005 32 18

2006-2007 15 7

Thereafter 75 28
--- ---
Total 223 136
=== ===

</TABLE>

The Company owns five buildings in Burlington, New
Jersey. Of these buildings, two are used by the Company as retail
space. In addition, the Company owns approximately 97 acres of
land in the Townships of Burlington and Florence, New Jersey on
which the Company has constructed its office and warehouse/distribution
facility and leases approximately 85,000 square feet of space
nearby to the warehouse/distribution facility to store its juvenile
furniture inventory. The Company leases approximately 20,000
square feet of office space in New York City with the right of
occupancy that expires in January 2001. The Company also owns an
older warehouse/distribution facility in Secaucus, New Jersey,
portions of which it is leasing to third parties and a portion of
which it uses as a store. The Company is currently considering
selling this facility.

Item 3. Legal Proceedings
-----------------

In late September 1994, three putative class action lawsuits,
P. Gregory Buchanan v. Monroe G. Milstein, et al., No. 94-CV-4663, Jacob
Turner v. Monroe G. Milstein, et al., No. 94-CV-4737, and Ronald Abramoff v.
Monroe G. Milstein, et al., No. 94-CV-4751 (collectively, the "Class Actions"),
were filed against the Company, Monroe G. Milstein, Stephen E. Milstein and
Robert L. LaPenta, Jr. in the United States District Court for the District
of New Jersey. By Order entered November 15, 1994, the Court

Page 9 <PAGE>

consolidated the Class Actions under the caption In re Burlington
Coat Factory Securities Litigation. On January 17, 1995,
plaintiffs filed their Consolidated Amended and Supplemental Class
Action Complaint (the "Amended Complaint"), naming as defendants,
in addition to those originally named in September 1994, Andrew R.
Milstein and Mark A. Nesci. The Amended Complaint seeks
unspecified damages in connection with alleged violations of
Sections 10(b) (and Rule 10b-5 promulgated thereunder) and 20(a) of
the Securities Exchange Act of 1934, as amended. The Amended
Complaint alleges material misstatements and omissions by the
Company and certain of its officers and directors that plaintiffs
allege caused the Company's common stock to be artificially
inflated during the proposed Class Period, which is defined in
the Amended Complaint as the period from October 4, 1993 through
September 23, 1994. On March 3, 1995, the Company and the
individual defendants served a motion to dismiss plaintiffs'
Amended Complaint. That motion was fully briefed and filed with
the Court on May 17, 1995; oral argument on that motion was held
on July 20, 1995. Although the Company is unable at this time to
assess the probable outcome of the Class Actions or the materiality
of the risk of loss in connection therewith (given that the Amended
Complaint does not allege damages with any particularity), the
Company believes that the Class Actions are without merit and
intends to continue to vigorously defend them.

In the past, the Company has initiated several lawsuits
in its effort to stop what it believes to be unlawful practices on
the part of certain manufacturers and large retailers to control
the prices at which certain items of merchandise may be sold at the
Company's stores.

Item 4. Submission of Matters to a Vote
of Security Holders
-------------------------------

The Company did not submit any matter to a vote of its security
holders during the fourth quarter of fiscal 1995.

PART II

Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
-------------------------------------

The Company's Common Stock is traded on the New York
Stock Exchange, Inc. and its trading symbol is "BCF."

Page 10 <PAGE>
<TABLE>

The following table provides the high and low closing
prices on the New York Stock Exchange for each fiscal quarter
for the period from July 4, 1993 to July 1, 1995 and for the two months
ended August 31, 1995, as adjusted to give retroactive effect to
three-for-two stock split effected on September 24, 1993:

Period Low Price High Price
------ --------- ----------
<S> <C> <C>
<C>

July 4, 1993 to
October 2, 1993 13 1/8 19 3/8

October 3, 1993 to
January 1, 1994 19 24 1/2

January 2, 1994 to
April 2, 1994 18 28 1/4

April 3, 1994 to
July 2, 1994 16 3/4 27 1/2

July 3, 1994 to
October 1, 1994 12 2/3 24 3/4

October 2, 1994 to
December 31, 1994 10 1/4 14 1/8

January 1, 1995 to
April 1, 1995 8 1/2 11 7/8

April 2, 1995 to
July 1, 1995 9 7/8 11 1/4

July 2, 1995 to
August 31, 1995 10 13 3/4

</TABLE>

As of August 31, 1995 there were 639 record holders of
the Company's Common Stock. The number of record holders does not
reflect the number of beneficial owners of the Company's Common
Stock for whom shares are held by Cede & Co., certain brokerage
firms and others.

Dividend Policy
- ---------------

The Company has not paid cash dividends in the past and does not
currently plan to do so. It is the present policy of the Company's Board of
Directors to retain future earnings to finance the growth and development of
the Company's business. Any payment of cash dividends in the future will be
at the discretion of the Company's Board of Directors and will depend upon
the financial

Page 11<PAGE>

condition, capital requirements and earnings of the Company as well
as other factors which the Board of Directors may deem relevant.

Item 6. Selected Financial Data
-----------------------

<TABLE>

The following table sets forth certain selected financial data:

<CAPTION>
6/29/91 6/27/92 7/3/93 7/2/94 7/1/95
(In thousands of dollars, except per share data)

Statement of
Operations:
- --------------

Revenues $916,217 $1,013,470 $1,214,783 $1,480,676 $1,597,028

Net Income 24,742 31,368 42,903(1) 45,383 14,866

Net Income per Share .62(2) .78(2) 1.06(1)(2) 1.12 .37

Balance Sheet Data:
- -------------------

Total Assets $438,751 $491,940 $585,481 $725,439 $ 735,269

Working Capital 229,403 252,364 275,113 278,590 245,468

Long-Term Debt 96,040 94,234 91,428 91,369 83,298

Stockholder's Equity 242,071 278,712 323,111 369,857 385,019
</TABLE>

__________________
[FN]
<F1>
(1) Effective June 28, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." The Company reflected the cumulative
effect of change in accounting for income taxes by
recording a benefit of $.6 million ($.02 per share)
during fiscal 1993.

<F2>
(2) Adjusted to give retroactive effect to three-for-two stock
splits effective in July, 1992 and September, 1993.

[/FN]

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
--------------------------------------------------

The Company maintains its records on the basis of a 52-53
week fiscal year ending on the Saturday closest to June 30. Fiscal
1995 ended on July 1, 1995 and fiscal 1994 ended on July 2, 1994
and comprised 52 weeks each, whereas fiscal 1993 ended July 3, 1993
and comprised 53 weeks.

Page 12<PAGE>

Results of Operations

Fiscal Years Ended July 3, 1993,
July 2, 1994 and July 1, 1995
--------------------------------
<TABLE>

The following table sets forth certain items in the
consolidated statements of operations as a percentage of net sales
for the fiscal years ended July 3, 1993, July 2, 1994 and July 1, 1995.

<CAPTION>
Percentage of Net Sales
-----------------------

Twelve-Month Period Ended
-------------------------

7/3/93 7/2/94 7/1/95

<S> <C> <C> <C>
<C>
Net Sales 100.0% 100.0% 100.0%
------ ------ ------
Costs and expenses:

Cost of sales 65.0 65.2 66.9

Selling and administrative 28.6 28.6 29.7
expenses

Depreciation and 1.4 1.4 1.7
amortization

Interest expense 0.8 0.7 0.9
--- --- ---
95.8 95.9 99.2
---- ---- ----
Other income 1.4 0.8 0.7
--- --- ---
Income before income taxes
and cumulative effect of
change in accounting for
income taxes 5.6 4.9 1.5

Provision for income taxes 2.1 1.8 0.6
--- --- ---
Income before cumulative
effect of change in
accounting for income taxes 3.5 3.1 0.9

Cumulative effect of change
in accounting for income
taxes .1 -- --
--- --- ---

Net income 3.6% 3.1% 0.9%
==== ==== ====
</TABLE>

Page 13<PAGE>

Results of Operations

Performance in 1995 compared with 1994

Net sales increased $116.5 million (7.9%) for fiscal 1995
compared to fiscal 1994. The increase in fiscal 1995 over fiscal
1994 was due to $101.1 million in sales from new Burlington Coat
stores, $8.2 million from Luxury Linens stores, $4.1 million from
Totally 4 Kids stores and $1.7 million each from Fit For Men and
Baby Depot stores opened during the year. Cohoes Fashions stores,
Decelle stores and the Mexican operations (sometimes collectively
referred to as the "Specialty Operations") contributed additional
sales over the prior year of $14.7 million. Offsetting these sales
was a decrease in Burlington Coat comparative store sales of $75.4
million (5.4%). Sales from leased departments this year were $27.4
million compared with $18.8 milion last year. Lack of consumer
interest in apparel throughout the second half of fiscal 1995, the
highly promotional retail environment and unseasonably warm weather
in the fall and winter months were all factors affecting sales
results for fiscal 1995.

Other income in fiscal 1995 decreased $.2 million from
fiscal 1994. The primary reason for the slight decrease was a
decline in investment income. Investment income was reduced by $.9
million due to the higher inventory levels and capital expenditures
during fiscal 1995 absorbing excess investable funds. This
decrease was offset by an increase in rent income.

Cost of sales increased by $103.4 million (10.8%) from
the fiscal 1994 period to the fiscal 1995 period. The dollar in-
crease in cost of sales was attributable to the increases in unit
sales from new stores opened during the period. The decrease in
comparative stores sales volume of 5.4% in the 1995 period offset
in part the additional cost of sales from new units. Cost of sales
as a percentage of net sales increased to 66.9% in the 1995 period.
The percentage increase in 1995 over 1994 was primarily due to
additional markdowns taken as a result of the weaker apparel sales
performance during the year. To the extent apparel sales continue
to perform below planned sales, the Company will continue to take
markdowns above historical levels and will continue to experience
a decline in gross margin percentage compared with 1994 and prior
years.

Selling and administrative expenses increased by
$51.9 million (12.4%) from fiscal 1994 to fiscal 1995 primarily as
a result of increased expenses in connection with the increase in
the number of stores. As a percentage of net sales, selling and
administrative expenses were 29.7% in the 1995 period compared with
28.6% for the prior fiscal year. In fiscal 1995, the percentage
increase over 1994 was primarily due to a decrease in comparative
store sales of 5.4%.

Page 14<PAGE>

The increase in depreciation expense of $4.8 million in
the 1995 period is attributable to 29 new stores opened during the
period, remodeling and fixturing of existing stores, as well as the
acquisition of one additional store.

Interest expense increased $3.7 million (37.8%) from the
1994 period to the 1995 period. The increase in interest expense
in the fiscal 1995 period was the result of the Company's increased
usage on its lines of credit during the year as well as an increase
in the average interest rate from last year of 3.8% to the current
year's average borrowing rate of 5.7% on short-term debt.

The effective income tax rates were 37.3% and 40.4% for
the 1994 and 1995 periods, respectively. The increase in the tax
rate in fiscal 1995 is due to the elimination of the Targeted Jobs
Tax credit after December 31, 1994 and increases in state income
taxes as a percentage of pre-tax income.

Income before cumulative effect of change in accounting
for income taxes decreased $30.5 million for fiscal year ended July
1, 1995 compared with the 1994 fiscal year. Income per share
before cumulative effect of change in accounting for income taxes
decreased to $0.37 per share for fiscal 1995 from $1.12 per share
for fiscal 1994, which reflects a decline in operating income of
the Company. The fiscal 1995 performance reflects a weak U.S.
apparel environment and an unusually warm fall and winter. As a
result of the weak sales performance in a highly promotional U.S.
retail environment, higher markdowns have reduced the Company's
gross profit margin percentage in the current year. In addition,
declining comparative store sales have negatively impacted
operating expense leverage.

The Company's business is seasonal with its highest sales
occurring in the months of October, November, and December of each
year. The Company's net income generally reflects the same
seasonal pattern as its net sales. In the past, substantially all
of the Company's profits have been derived from operations during
the months of October, November and December.

Performance in 1994 compared with 1993
- --------------------------------------

Net sales increased $270.1 million (22.5%) for the fiscal
year ended July 2, 1994 over the fiscal year ended July 3, 1993.
The increase was derived from the increase in comparative store
sales of $75.4 million (6.8%), net sales of new stores opened
during the fiscal year, increases in net sales of the Cohoes
Fashions stores, and net sales from the Decelle stores and the
Mexican operations (hereafter Cohoes Fashions, Decelle and the
Mexican operation are collectively referred to as the "Specialty
Operations"). Fiscal 1994 was a 52-week fiscal year compared with

Page 15<PAGE>

a 53-week fiscal year in 1993. Net sales for the 53rd week
impacted fiscal 1993 by approximately $9.5 million compared with
fiscal 1994. The 18 Burlington Coat Factory stores opened in
fiscal 1993 contributed $61.1 million to net sales in fiscal 1993
compared with $107.5 million in fiscal 1994. The 24 Burlington
Coat Factory stores opened in fiscal 1994 contributed $147.0
million to net sales. The two Cohoes Fashions stores opened during
fiscal 1994 contributed $8.7 million to net sales and the Decelle
stores acquired during the period contributed $19.4 million to net
sales.

Other income decreased $4.2 million from the 1993 period
to the 1994 period. The decrease in other income was primarily due
to the decreases in leased department rental income, the result of
the closing of approximately 30 leased departments which the
Company has converted to Company department selling space, and to
a decrease in investment income. New store openings and existing
store capital improvement expenditures as well as planned inventory
growth throughout the Company absorbed excess investable funds
during fiscal 1994 resulting in a decrease in interest income of
$2.2 million realized during the fiscal year. In addition, the
Company lost $.3 million from the sale of investments during the
year.

Cost of sales increased by $178.5 million (22.9%) from
the 1993 period to the 1994 period. The dollar increase in cost of
sales is attributable to the increases in unit sales from new
stores opened during the period, and increases in comparative store
sales volume of 6.8% in the 1994 period. Cost of sales as a
percentage of net sales increased to 65.2% in the 1994 period from
65.0% in the 1993 period. The 0.2% increase was due primarily to
lower margins from the Specialty Operations and increases in
shrinkage and freight costs as a percentage of purchases.

Selling and administrative expenses increased by $77.2
million (22.5%) from the 1993 period to the 1994 period, primarily
as a result of increased expenses in connection with the increase
in the number of stores. As a percentage of net sales, selling and
administrative expenses were 28.6% in both the 1993 period and the
1994 period. In the 1994 fiscal period, the positive effect on
selling and administrative costs, as a percentage of sales, created
by comparative store sales growth, was partially offset by growth
in non-store payroll related expenses and costs incurred to operate
the Specialty Operations.

The increase in depreciation expense of $4.4 million in
the 1994 period is mainly attributable to the fixturing and
improvements made for the 26 new stores opened during the period.
In addition, the Company acquired the real property associated with
five stores during the 1994 fiscal year.

Page 16<PAGE>

Interest expense increased slightly from the 1993 period
due to the Company's increased use of its lines of credit during
the year.

The effective income tax rates were 36.7% and 37.3% for
the 1993 and 1994 periods, respectively. The increase in the
effective tax rate in fiscal 1994 is due primarily to an increase
in the statutory federal tax rate to 35% in fiscal 1994.

Income before cumulative effect of change in accounting
for income taxes increased $3.1 million (7.3%) to $45.4 million for
the fiscal year ended July 2, 1994 compared with the 1993 fiscal
year. Income per share before cumulative effect of change in
accounting for income taxes increased to $1.12 per share for fiscal
1994 due to comparative stores sales increases and new stores
opened during the year. Income before cumulative effect of change
in accounting for income taxes, in part, was negatively impacted in
fiscal 1994 by an increase in the losses from the Specialty
Operations from $.5 million to $3.5 million.

During the fiscal year ended July 3, 1993, the Company
recorded a cumulative effect benefit resulting from the adoption of
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (See Notes to the Consolidated Financial
Statements No. A.6) in the amount of $.6 million ($.02 per share
after giving effect to the three-for-two stock split). Net income
as a percentage of net sales was 3.6% and 3.1% for the 1993 and
1994 periods, respectively.

The results of operations for the fourth fiscal quarter
of 1994 were negatively impacted in comparison with the prior
year's fourth fiscal quarter primarily by a shift in comparable
calendar weeks and an earlier Easter selling season to the third
quarter of fiscal 1994, shifting approximately $37.0 million in net
sales and $9.6 million in pre-tax profit into the third fiscal
quarter of 1994. In addition, losses from the newly acquired
operations, start up operations and increased store opening costs
were approximately $1.6 million.

Liquidity and Capital Resources
- -------------------------------

During the year ended July 1, 1995, the Company opened
twenty-nine stores including twenty Burlington Coat Factory
Warehouse stores, one specialty men's store, "Fit For Men", five
new "Luxury Linens" stores, two "Totally 4 Kids" stores and one
"Baby Depot" store. Expenditures incurred to acquire, set up and
fixture the twenty-nine new stores opened during fiscal 1995 were
approximately $34.7 million. The Company also expended
approximately $5.5 million to purchase a building and a ground
lease for two of these stores and $5.7 million to renovate one
store located in a historic district of New York City to be opened

Page 17<PAGE>

in the first quarter of fiscal 1996. In addition, the Company
expended approximately $8.7 million for capital improvements and
refurbishing of existing stores. The Company estimates that it
will spend approximately $12 million for capital expenditures
(i.e., fixtures, equipment and leasehold improvements) in
connection with the opening of 12 new stores during fiscal 1996.

Working capital increased from $275.1 million at July 3,
1993 to $278.6 million at July 2, 1994 and decreased to $245.5
million at July 1, 1995.

Total funds provided from operations for the fiscal years
ended July 3, 1993, July 2, 1994 and July 1, 1995 were $64.7
million, $72.6 million and $45.5 million, respectively. Total
funds from operations are calculated by adding back to net income
non-cash expenditures such as depreciation and deferred taxes.

Net cash provided by operating activities of $43.0
million for the fiscal year ended July 1, 1995, increased from
$28.3 million in net cash used from operating activities for the
comparable period of fiscal 1994. This increase in net cash from
operations was due to a reduction in merchandise inventory in the
current year of $16.9 million while the prior fiscal year had a
$116.0 million inventory increase. The increase in part was offset
by a decline in operating profits for the current fiscal year.

The Company's long-term borrowings at July 1, 1995
include $80 million of long term subordinated notes issued by the
Company to institutional investors in June 1990 ("the Notes") and
an industrial development bond of $10 million issued by the New
Jersey Economic Development Authority.

The Notes mature on June 27, 2005 and bear interest at
the rate of 10.6% per annum. The Notes have an average maturity of
ten years and are subject to mandatory prepayment in installments
of $8 million each without premium on June 27 of each year
beginning in 1996. The Notes are subordinated to senior debt,
including, among others, bank debt and indebtedness for borrowed
money. The interest rate on the industrial development bond
financing was originally fixed at 9.78% over the life of these
serial and term bonds (the "Bonds"). The Company refinanced its
industrial development bonds with the New Jersey Economic
Development Authority on September 1, 1995. The original bonds
were called at 103 and refinanced with credit enhanced bonds (the
"Refunding Bonds"). The Refunding Bonds consist of serial and
term bonds having the same maturity as the original issue. The
serial bonds aggregate $3.6 million and mature in series annually
on September 1, beginning in 1996 and continuing to and including
2003. The term bonds consist of two portions, $1.4 million
maturing on September 1, 2005 and $5.0 million maturing on
September 1, 2010. The serial bonds bear interest ranging from

Page 18<PAGE>

3.75% to 5.4% per annum, and the term bonds bear interest at the
rates of 5.60% for the portion maturing on September 1, 2005 and
6.125% per annum for the portion maturing on September 1, 2010.
The average interest rate and average maturity of the Refunding
Bonds are 5.84% and 9.78 years, respectively.

The Company has in place a committed line of credit
agreement in the amount of $40.0 million and $160.0 million in
uncommitted lines of credit. The maximum borrowings outstanding
under these lines were $147.4 million and $65.0 million during
fiscal 1995 and fiscal 1994, respectively. The average borrowings
outstanding under the lines were $69.1 million and $15.7 million
during fiscal 1995 and 1994 respectively. The weighted average
interest rate on outstanding borrowings during fiscal 1995 and 1994
were 5.7% and 3.8%, respectively. Short term borrowings
outstanding at July 1, 1995 were $85.9 million compared with $65.0
million at July 2, 1994.

The increase in short term borrowings at July 1, 1995
over July 2, 1994 is the direct result of poorer sales performance
during the current fiscal year. As a result, the Company has
reduced its expansion plan to opening approximately 12 additional
stores in fiscal 1996. The Company anticipates having its lines of
credit paid off by the end of the calender year 1995.

The Company believes that its current capital
expenditures and operating requirements can be satisfied from
internally generated funds, from short term borrowings under its
revolving credit and term loan agreement as well as uncommitted
lines of credit and from its long term borrowings. The Company may
consider replacing some of its short term borrowings with long term
financing. Furthermore, to the extent that the Company decides to
purchase additional store locations, it may be necessary to finance
such acquisitions with additional long term borrowings. The
Company believes that the current operating results will not have
a material effect on its ability to obtain financing.

On or about September 23, 1994 three separate class
actions were filed against the Company. These three actions were
consolidated and an amended complaint was served on January 17,
1995. The Company filed a motion to dismiss on May 17, 1995 and a
hearing on the motion was held on July 20, 1995. (See part II -
Other Information, Item 1 Legal Proceedings.) The Company is
unable to determine the probability of any potential loss with
respect to these class action suits or the materiality thereof at
this time and accordingly has not established any reserve for this
matter. However, the Company believes the actions are without
merit and intends to vigorously defend them.

Page 19<PAGE>

Inflation
- ---------

Historically, the Company has been able to increase its
selling prices as the costs of merchandising and related operating
expenses have increased and , therefore, inflation has not had a
significant effect on operations.

Item 8. Financial Statements and Supplementary Data
-------------------------------------------

See Index to Financial Statements and following pages.

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
---------------------------------------------

Not Applicable

PART III

Item 10. Directors and Executive Officers of the
Registrant
---------------------------------------

Item 11. Executive Compensation
----------------------

Item 12. Security Ownership of Certain Beneficial
Owners and Management
----------------------------------------

Item 13. Certain Relationships and Related Transactions
----------------------------------------------

In accordance with General Instruction G(3) of the
General Instructions to Form 10-K, the information called for by
Items 10, 11, 12 and 13 is omitted from this Report and is
incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation l4A of the General
Rules and Regulations under the Securities Exchange Act of 1934,
which the Company will file not later than 120 days after July 1,
1995.

Page 20 <PAGE>

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
----------------------------------------

(a) The following documents are filed as part of this
Report.

Page No.
1. Financial Statements

Index to Consolidated Financial 30
Statements

Independent Auditors' Report 31

Consolidated Balance Sheets 32
July 2, 1994 and July 1, 1995

Consolidated Statements of Operations 33
Fiscal Years Ended July 3, 1993,
July 2, 1994 and July 1, 1995

Consolidated Statements of 34
Stockholders' Equity for the
Fiscal Years Ended July 3, 1993,
July 2, 1994 and July 1, 1995

Consolidated Statements of Cash 35
Flows for the Fiscal Years
Ended July 3, 1993,
July 2, 1994 and July 1, 1995

Notes to Consolidated Financial 37
Statements

2. Financial Statement Schedules

Schedule II - Valuation and 48
Qualifying Accounts

Schedule IX - Short-term Borrowing
is omitted because the information
required is presented in Management's
Discussion and Analysis of Financial
Condition and Results of Operations
appearing on pages 12 through 20
of this Report and the Notes to the
Consolidated Financial Statements.

Page 21<PAGE>

Page No.

All other schedules are omitted
because they are not applicable or not
required or because the required
information is included in the consol-
idated financial statements or notes
thereto.

3. Exhibits

3.1 Articles of Incorporation,
as amended 1/

3.2 By-laws 1/

*10.1 1993 Stock Incentive Plan 1/

10.2 Revolving Credit Agreement dated 2/
August 30, 1985 between the
Company and BancOhio National
Bank, as amended through Amendment
No. 3.

10.3 Amendment No. 4 to Revolving Credit 1/
Agreement between the Company and
National City Bank, Columbus
(successor to BancOhio National Bank)

10.4 Loan Agreement dated as of August 1, 54
1995 by and between New Jersey
Economic Development Authority and
Burlington Coat Factory Warehouse
of New Jersey, Inc.

10.5 Assignment of Leases dated as of 138
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity
Bank, National Association
_______________
[FN]
<F1>

(1) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended July
3, 1993, File No. 1-8739.
<F2>
(2) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended June
29, 1991, File No. 1-8739.

*Executive Compensation Plan
[/FN]
Page 22 <PAGE>

Page No.

10.6 Mortgage and Security Agreement 155
dated as of August 1, 1995
between Burlington Coat Factory
Warehouse of New Jersey, Inc. and
First Fidelity Bank, National
Association

10.7 Indenture of Trust dated as of 184
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association

10.8 Guaranty and Suretyship dated as of 288
August 1, 1995 from the Company to
First Fidelity Bank, National
Association

10.9 Letter of Credit Reimbursement 305
Agreement dated as of August 1, 1995
between Burlington Coat Factory
Warehouse of New Jersey,
Inc. and First Fidelity Bank,
National Association

10.10 Environmental Indemnity Agreement dated 359
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank,
National Association

10.11 Burlington Coat Factory Warehouse 368
Corporation Amended and Restated
Employees Profit Sharing
Plan

10.12 Note Agreement dated June 27, 1990 413

21 Subsidiaries of Registrant 479

23 Consent of Deloitte & Touche LLP, 481
independent certified public
accountants, to the use of
their report on the financial
statements of the Company for
the fiscal year ended July 1,
1995 in the Registration Statements
of the Company on Form S-8,
Registration No. 2-96332,
No. 33-21569, No. 33-51965 and
No. 33-61351

27 Financial Data Schedule 483

Page 23<PAGE>

EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
---------------------------------------------

Description Location
----------- --------
1) 1993 Stock Incentive Plan Filed as Exhibit 10.1
to the Company's Annual
Report on Form 10-K for
the year ended July 3,
1993, Pages 103-130

(b) Reports on Form 8-K

During the period ended July 1, 1995 the Company did not
file any report on Form 8-K.

Page 24 <PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)

By: /s/ Monroe G. Milstein
----------------------------
Monroe G. Milstein, President

Dated: September 28, 1995

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

Name Title Date
- ---- ----- ----
/s/ Monroe G. Milstein Chief Executive Officer September 28, 1995
Monroe G. Milstein and President (Principal
Executive Officer);
Director

/s/ Robert L. LaPenta, Jr. Controller (Principal September 28, 1995
Robert L. LaPenta, Jr. Financial and
Accounting Officer)

/s/ Henrietta Milstein Director September 28, 1995
Henrietta Milstein

_____________________ Director September __, 1995
Harvey Morgan

/s/ Andrew R. Milstein Director September 28, 1995
Andrew R. Milstein

/s/ Stephen E. Milstein Director September 28, 1995
Stephen E. Milstein

/s/ Mark A. Nesci Director September 28, 1995
Mark A. Nesci

______________________ Director September __, 1995
Irving Drillings
Page 25<PAGE>

SIGNATURES

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)

By: _____________________________
Monroe G. Milstein, President

Dated: September , 1995

Name Title Date
- ---- ----- ----
________________________ Chief Executive Officer September __, 1995
Monroe G. Milstein and President (Principal
Executive Officer);
Director

________________________ Controller (Principal September __, 1995
Robert L. LaPenta, Jr. Financial and
Accounting Officer)

________________________ Director September __, 1995
Henrietta Milstein

________________________ Director September __, 1995
Harvey Morgan

________________________ Director September __, 1995
Andrew R. Milstein

________________________ Director September __, 1995
Stephen E. Milstein

________________________ Director September __, 1995
Mark A. Nesci

/s/Irving Drillings Director September 28, 1995
Irving Drillings

Page 26
<PAGE>
SIGNATURES

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)

By: _____________________________
Monroe G. Milstein, President

Dated: September , 1995

Name Title Date

________________________ Chief Executive Officer September __, 1995
Monroe G. Milstein and President (Principal
Executive Officer);
Director

________________________ Controller (Principal September __, 1995
Robert L. LaPenta, Jr. Financial and
Accounting Officer)

________________________ Director September __, 1995
Henrietta Milstein

/s/ Harvey Morgan Director September 28, 1995
Harvey Morgan

________________________ Director September __, 1995
Andrew R. Milstein

________________________ Director September __, 1995
Stephen E. Milstein

________________________ Director September __, 1995
Mark A. Nesci

________________________ Director September __, 1995
Irving Drillings

Page 27<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

Page 28<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

Page 29<PAGE>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION

AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

Page No.

Independent auditors' report 31

Consolidated balance sheets 32
July 2, 1994 and July 1, 1995

Consolidated statements of operations for the 33
fiscal years ended July 3, 1993, July 2,
1994 and July 1, 1995

Consolidated statements of stockholders' 34
equity for the fiscal years ended July 3,
1993, July 2, 1994 and July 1, 1995

Consolidated statements of cash flows for 35
the fiscal years ended July 3, 1993, July
2, 1994 and July 1, 1995

Notes to consolidated financial statements 37

Financial Statement Schedules

- Schedule II -- Valuation and Qualifying 48
Accounts

- Schedule IX -- (Omitted since information
required appears in Management's
Discussion and Analysis of
Financial Condition and Results
of Operations appearing on pages
12 through 20 of this Report)

- Schedule X -- (Omitted since information
required is included in Note K to the
consolidated financial statements)

Page 30<PAGE>

INDEPENDENT AUDITORS' REPORT
- ----------------------------

Board of Directors and Stockholders
Burlington Coat Factory Warehouse Corporation
Burlington, New Jersey

We have audited the accompanying consolidated balance sheets of Burlington
Coat Factory Warehouse Corporation and its subsidiaries as of July 1, 1995 and
July 2, 1994, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three fiscal years in the
period ended July 1, 1995. Our audits also included the financial statement
schedule listed in the Index at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Burlington Coat Factory Warehouse
Corporation and subsidiaries at July 1, 1995 and July 2, 1994, and the results
of their operations and their cash flows for each of the three fiscal years in
the period ended July 1, 1995 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

As discussed in Note P to the consolidated financial statements, the Company
is a defendant in a consolidated class action lawsuit. The ultimate outcome
of the litigation cannot presently be determined. Accordingly, no provision
for any loss that may result upon resolution of these matters has been made in
the accompanying consolidated financial statements.

As discussed in Note A.6 to the consolidated financial statements, the Company
changed its method of accounting for income taxes effective June 28, 1992 to
conform with Statement of Financial Accounting Standards No. 109.

DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 21, 1995

Page 31<PAGE>
<TABLE>
<CAPTION>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(All amounts in thousands except share data)

July 01, July 02,
1995 1994
<S> <C> <C>
<C>
ASSETS
- ------

Current Assets:
Cash and Cash Equivalents $ 14,520 $ 21,236
Accounts Receivable Net of Allowance for Doubtful
Accounts of 1995--$3,711 and 1994--$4,995 15,326 13,915
Merchandise Inventories 452,026 468,921
Deferred Tax Asset 8,843 6,782
Prepaid and Other Current Assets 6,006 17,968
------------------
Total Current Assets 496,721 528,822

Property and Equipment Net of Accumulated
Depreciation and Amortization 224,493 184,590
Other Assets 14,055 12,027
-----------------
Total Assets $735,269 $725,439
=================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------

Current Liabilities:
Accounts Payable $101,046 133,706
Notes Payable 85,900 65,020
Income Taxes Payable 2,064 454
Other Current Liabilities 54,177 50,998
Current Maturities of Long-Term Debt 8,066 54
------------------
Total Current Liabilities 251,253 250,232

Long-Term Debt 83,298 91,369
Other Liabilities 9,728 7,151
Deferred Tax Liability 5,971 6,830

Stockholders' Equity:
Unrealized Loss-Marketable Securities (8) (20)
Foreign Currency Translation Adjustment -- 284
Preferred Stock, Par Value $1; Authorized
5,000,000 shares; none issued and outstanding -- --
Common Stock, Par Value $1; Authorized 100,000,000 shares;
41,139,012 shares issued and outstanding at July 1, 1995
41,122,459 shares issued and outstanding at July 2, 1994 41,139 41,122
Capital in Excess of Par Value 25,143 24,592
Retained Earnings 320,595 305,729

Treasury Stock at Cost; 1995 and 1994--427,387 Shares (1,850) (1,850)

Total Stockholders Equity 385,019 369,857
Total Liabilities and Stockholders' Equity $735,269 $725,439

See notes to consolidated financial statements
</TABLE>

Page 32<PAGE>
<TABLE>
<CAPTION>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands except share data)

YEAR YEAR YEAR
ENDED ENDED ENDED
July 01, July 02, July 03,
1995 1994 1993
------------------------------------
<S> <C> <C> <C>
<C>
REVENUES:

Net Sales $1,584,942 $1,468,440 $1,198,305
Other Income 12,086 12,236 16,478
------------------------------------

1,597,028 1,480,676 1,214,783
------------------------------------

COSTS AND EXPENSES:
Cost of Sales (Exclusive of
Depreciation and Amortization) 1,060,212 956,818 778,306
Selling and Administrative Expenses 471,947 420,046 342,799
Depreciation and Amortization 26,327 21,528 17,090
Interest Expense 13,602 9,873 9,774
-----------------------------------
1,572,088 1,408,265 1,147,969
-----------------------------------

Income Before Provision for
Income Taxes and Cumulative Effect
of Change in Accounting Principle 24,940 72,411 66,814

Provision for Income Taxes 10,074 27,028 24,512
-----------------------------------
Income Before Cumulative Effect
of Change in Accounting Principle 14,866 45,383 42,302

Cumulative Effect of Change in
Accounting Principle (See note 6) -- -- 601
-----------------------------------

Net Income $14,866 $ 45,383 $ 42,903
===================================

Earnings Per Share:
Income Per Share Before Cumulative
Effect of Change in Accounting
Principle $ 0.37 $ 1.12 $ 1.04

Income Per Share From Cumulative
Effect of Change in Accounting
Principle -- -- 0.02
--------------------------------------
Net Income Per Share $ 0.37 $ 1.12 $ 1.06
=======================================
Weighted Average Shares Outstanding 40,710,683 40,632,201 40,503,350
=======================================
Dividends Per Share -- -- --
=======================================

See notes to consolidated financial statements
</TABLE>
Page 33 <PAGE>

<TABLE>
<CAPTION>
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JULY 03, 1993, JULY 02, 1994 AND JULY 01, 1995

(All amounts in thousands)

Capital in Valuation
Common Excess of Retained Treasury Allowance
Stock Par Value Earnings Stock Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<C>

Balance at June 27, 1992 $27,247 $35,872 $217,443 ($1,850) $278,712
Net Income 42,903 42,903
Stock Options Exercised 101 1,406 1,507
Net Unrealized Loss on
Noncurrent Marketable
Securities ($11) (11)
Stock Split 13,680 (13,680) 0
------------------------------------------------------------
Balance at July 03, 1993 41,028 23,598 260,346 (1,850) (11) 323,111
Net Income 45,383 45,383
Stock Options Exercised 81 1,007 1,088
Net Unrealized Loss on
Noncurrent Marketable
Securities (9) (9)
Equity Adjustment for
Translation 284 284
Stock Split Adjustment 13 (13) 0
------------------------------------------------------------

Balance at July 02, 1994 41,122 24,592 305,729 (1,850) 264 369,857
Net Income 14,866 14,866
Stock Options Exercized 17 551 568
Net Unrealized Gain on
Non-Current Marketable
Securities 12 12
Equity Adjustment for
Translation (284) (284)
_____________________________________________________________
Balance at July 01, 1995 $41,139 $25,143 $320,595 ($1,850) ($8) $385,019
=============================================================

See notes to consolidated financial statements

</TABLE>

Page 34 <PAGE>
<TABLE>
<CAPTION>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands)
Year Ended
July 01, July 02, July 03,
1995 1994 1993
-------------------------------
<S> <C> <C> <C>
<C>
OPERATING ACTIVITIES

Net Income $ 14,866 $ 45,383 $42,903
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and Amortization 26,327 21,528 17,090
Provision for Losses on Accounts Receivable 5,162 4,821 3,690
Provision for Deferred Income Taxes (2,920) (826) 193
Loss on Disposition of Fixed Assets 536 203 378
Rent Expense and Other 1,521 1,527 1,041
Cumulative Effect of Change in Accounting for
Income Taxes - - (601)
Changes in Operating Assets and Liabilities:
Accounts Receivable (3,032) (8,674) (4,741)
Merchandise Inventories 16,895 (116,002) (88,780)
Prepaids and Other Current Assets 11,962 (1,327) (7,551)
Accounts Payable (32,660) 17,499 44,703
Other Current Liabilities 4,389 7,525 2,766
-------------------------------
Net Cash Provided by (Used in)
Operating Activities 43,046 (28,343) 11,091
-------------------------------
INVESTING ACTIVITIES
Acquisition of Property and Equipment (66,900) (63,686) (39,836)
Short-Term Investments-Net - 16,421 41,623
Proceeds From Sale of Fixed Assets 27 17 14
Issuance of Long-Term Notes Receivable (5,202) (3,668) (2,241)
Receipts Against Long-Term Notes Receivable 1,611 609 442
Acquisition of Investments - - (155)
Proceeds From Sale of Investments - - 113
Acquisition of Leasehold (2,652) (2,050) -
Minority Interest (66) 497 -
Other 2,031 568 43
-------------------------------
Net Cash (Used in) Provided by
Investing Activities (71,151) (51,292) 3
-------------------------------
FINANCING ACTIVITIES
Principal Payments on Long-Term Debt (59) (118) (3,069)
Issuance of Common Stock Upon Exercise of
Stock Options 568 1,088 1,507
Net Borrowings Under Line of Credit 20,880 65,020 -
------------------------------
Net Cash Provided by (Used in)
Financing Activities 21,389 65,990 (1,562)
------------------------------
(Decrease) Increase in Cash and
Cash Equivalents (6,716) (13,645) 9,532
Cash and Cash Equivalents at
Beginning of Period 21,236 34,881 25,349
------------------------------
Cash and Cash Equivalents at
End of Period $ 14,520 $ 21,236 $34,881
==============================
Interest Paid $ 13,490 $ 9,873 $13,925
==============================
Income Taxes Paid $ 10,900 $ 32,414 $21,955
==============================

See notes to consolidated financial statements

Page 35 <PAGE>
</TABLE>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Supplemental Schedule of Non-Cash Financing and Investing Activities:

The Company wrote off certain fixed assets with a book value of $.4
million, $.2 million and $.5 million for the fiscal years 1993, 1994 and
1995 respectively.

See notes to consolidated financial statements

Page 36<PAGE>

Notes to Consolidated Financial Statements
- ----------------------------------------------------------------------------
A. Summary of Significant Accounting Policies

1. Business
Burlington Coat Factory Warehouse operates 211 stores which sell off-
price apparel for men, women and children. A majority of those stores
offer a home linens department and baby room furniture department.
The Company also operates stores under the names "Cohoes Fashions"
(five stores), "Decelle" (eight stores), "Luxury Linens" (nine
stores), "Totally 4 Kids" (three stores), "Fit For Men" (one store),
and "Baby Depot" (one store). Cohoes Fashions offers merchandise in
the middle to higher price range. Decelle offers merchandise in the
moderate price range for the entire family with an emphasis on
children's and youth wear. Luxury Linens is a specialty store for
linens, bath shop item, gifts and accessories and offers merchandise
in the middle to higher range. Totally 4 Kids is a new moderate to
upscale concept store offering maternity wear, baby furniture,
children's wear from toddlers up to teens, childrens's books, toys
computer software for kids and educational tapes in a family
environment. "Fit For Men" is a stand alone mens store specializing
in special size mens wear. "Baby Depot" is a stand alone infant and
toddler store specializing in infant and toddler apparel, furnishings
and accessories.

2. Principles of consolidation
The consolidated financial statements include the accounts of
Burlington Coat Factory Warehouse Corporation and its subsidiaries
(the "Company"). All intercompany transactions and balances have been
eliminated in consolidation.

3. Inventories
Inventories are stated at the lower of the First In First Out (FIFO)
cost or market, as determined by the retail inventory method.

4. Property and equipment
Property and equipment are stated at cost and depreciation is computed
on the straight line method over the estimated useful lives of the
assets. The estimated useful lives are between 20 and 40 years for
buildings, depending upon the expected useful life of the facility,
and three to ten years for store fixtures and equipment. Leasehold
improvements are amortized over a ten year period. Repairs and
maintenance expenditures are charged to expense as incurred. Renewals
and betterments which significantly extend the useful lives of
existing property and equipment are capitalized.

5. Store opening expenses
Expenses related to new store openings are charged to operations in
the period incurred.

6. Income taxes
Effective June 28, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Deferred
income taxes have been recorded to recognize temporary differences

Page 37<PAGE>

which result from revenues and expenses being recognized in different
periods for financial reporting purposes than for income tax purposes.
The adoption of SFAS 109 created a $.6 million benefit ($.02 per
share) and was accounted for in fiscal 1993 as a cumulative change in
accounting principle.

7. Income per share
Income per share is based on the weighted average number of shares
outstanding during each period. The dilutive effect of stock options
is not material.

8. Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term, highly liquid
investments with maturities of three months or less at the time of
purchase. Cash equivalent investments amounted to $.8 million at July
1, 1995 and $.9 million at July 2, 1994.

9. Fiscal year end date
The Company's fiscal year is a 52-53 week year with its year ending on
the Saturday closest to June 30th of each year. Fiscal 1993 ended
July 3, 1993 and comprised 53 weeks, whereas fiscal 1995 and fiscal
1994 ended July 1, 1995 and July 2, 1994, respectively, and comprised
52 weeks each.

10. Other income
Other income is primarily rental income received from leased
departments and interest income.

11. Reclassifications
Certain reclassifications have been made to the prior years' financial
statements to conform to the classifications used in the current
year.

B. Stock Splits
On September 13, 1993, the Board of Directors declared a three-for-two
split of the Company's common stock effective October 4, 1993, to
stockholders of record on September 24, 1993. This stock split was
effected in the form of a 50% stock dividend by the distribution of one
additional share for every two shares of stock already issued. The par
value of the common stock remained at $1.00 per share. As a result,
$13.68 million, representing the total par value of the new shares issued,
were transferred from the capital in excess of par value account to common
stock. Common stock and paid in capital in excess of par value accounts
as of July 3, 1993 were adjusted to give effect to the stock split. All
amounts per share were adjusted to give retroactive effect to the stock
split.

Page 38
<PAGE>
C. Investments
Investments (which are incuded in Other Assets) consist of the following:
<TABLE>
<CAPTION>
__________________________________________________________________________

Fair Value
_____________________________________

July 1, July 2,
1995 1994

(in thousands)
- -----------------------------------------------------------------------------
<S>
<C>

Long-Term:
Common Stock (cost: 1995,
$34; 1994, $34) $ 16 $ 9
Preferred Stock (cost: 1995,
$69; 1994, $69) 79 74
- -----------------------------------------------------------------------------

$ 95 $ 83
_____________________________________________________________________________

</TABLE>
<TABLE>
D. Property and Equipment
Property and equipment consists of:
<S>
<C>

- -----------------------------------------------------------------------------
July 1, July 2,
1995 1994
(in thousands)
- -----------------------------------------------------------------------------
Land $ 21,181 $ 14,989
Buildings 81,191 78,626
Store Fixtures and Equipment 188,072 155,359
Leasehold Improvements 60,546 35,581
Construction in Progress --- 1,100
- -----------------------------------------------------------------------------
350,990 285,655
- -----------------------------------------------------------------------------
Less Accumulated Depreciation
and Amortization (126,497) (101,065)
- -----------------------------------------------------------------------------
$224,493 $184,590
- -----------------------------------------------------------------------------

</TABLE>

Page 39<PAGE>

E. Accounts Payable
Accounts payable consists of the following:
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------
July 1, July 2,
1995 1994

(in thousands)
- ------------------------------------------------------------------------------
<S> <C> <C>
<C>

Accounts Payable-Trade $ 76,571 $114,549
Accounts Payable-Due Banks 7,641 3,258
Other 16,834 15,899
- ------------------------------------------------------------------------------
$101,046 $133,706
- ------------------------------------------------------------------------------
</TABLE>

F. Lines of Credit
The Company had a committed line of credit of $40.0 million at July 1,
1995 and July 2, 1994. The Company also had uncommitted lines of credit
of $160.0 million and $130.0 million at July 1, 1995 and July 2, 1994,
respectively. Short-term borrowings outstanding under these committed and
uncommitted lines were $85.9 million and $65.0 at July 1, 1995 and July 2,
1994, respectively. Letters of credit outstanding against these lines
were $36.9 million and $50.4 million at July 1, 1995 and July 2, 1994,
respectively.

The maximum borrowings outstanding under these lines were $147.4 million
and $65.0 million during fiscal 1995 and fiscal 1994 respectively. The
average borrowings outstanding under these lines were $69.1 million during
fiscal 1995 and $15.7 million during fiscal 1994.

The weighted average interest rate on outstanding borrowings during fiscal
1995 was 5.7%. The weighted average interest rate on outstanding
borrowings during fiscal 1994 was 3.8%.

Short-term borrowings against these lines of credit bear interest at or
below the lending bank's prime rate. The $40 million committed line of
credit requires a commitment fee on the unused portion of 1/5 of 1
percent.

The Company's committed line of credit renews annually and is available
through 1998. The uncommitted lines of credit are cancellable at any
time.

Page 40
<PAGE>

G. Long-Term Debt:
Long-term debt consists of:
<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------
July 1, July 2,
1995 1994
(in thousands)
- -------------------------------------------------------------------------------
<S> <C> <C>
<C>

Subordinated Notes, 10.6%, due in
annual $8 million payments from
June 1996 to June 2005 $ 80,000 $ 80,000
Industrial Revenue Bonds, 9.78%,
due in semi-annual payments of
various amounts from September 1,
1996 to September 1, 2010 10,000 10,000
Urban Development Action Grant, non-
interest bearing, due April 1999 917 917
Promissory note, due at various dates
through 2000 (interest rate
imputed at 10.6%) 447 506
- -------------------------------------------------------------------------------

Subtotal 91,364 91,423

Less current portion (8,066) (54)
- -------------------------------------------------------------------------------
Long-Term Debt $ 83,298 $91,369
- -------------------------------------------------------------------------------
</TABLE>

The Industrial Revenue Bonds and Urban Development Action Grant were
issued in connection with the construction of the Company's distribution
center. The Bonds are secured by a first mortgage on the Company's
distribution center. The Urban Development Action Grant was secured by a
second mortgage on the facility.

Indebtedness totaling $10.9 million are secured by land and buildings with
a net book value of $20.2 million at July 1, 1995.

On September 1, 1995 the Company called the Industrial Revenue Bonds at
103 and simultaneously refinanced these bonds with fixed rate bonds with
an average interest rate of 5.84%. The new Industrial Revenue Bonds have
the same maturity schedule as the original bonds and are also secured by a
first mortgage on the Company's home office and distribution center.

Long-term debt maturing in each of the next five fiscal years is as
follows: 1996 - $8.1 million; 1997 - $8.4 million; 1998 - $8.4 million;
1999 - $9.4 million and 2000 - $8.5 million.

Several loan agreements of the Company contain restrictions which, among
other things, require maintenance of certain financial ratios, restrict
encumbrance of assets and creation of indebtedness, and limit the payment
of dividends. At July 1, 1995, $176.6 million of the Company's retained
earnings of $320.6 million were unrestricted and available for the payment
of dividends under the most restrictive terms of the agreements.

Page 41<PAGE>

H. Sales from Leased Departments
Retail sales from certain leased departments, included in net sales,
amounted to $27.4 million, $18.8 million, and $15.8 million in fiscal
1995, fiscal 1994 and fiscal 1993, respectively.

I. Lease Commitments
The Company leases 218 stores and office spaces under operating leases
that will expire principally during the next twenty years. The leases
typically include renewal options and escalation clauses and provide for
contingent rentals based on a percentage of gross sales.

The following is a schedule of future minimum lease payments under the
operating leases:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
(in thousands)
<S> <C>
<C>
Fiscal Year
__________________________________________________________________

1996 $ 55,831
1997 54,376
1998 52,395
1999 49,225
2000 43,511
Thereafter 324,485
- ------------------------------------------------------------------
Total minimum lease payments $ 579,823
- ------------------------------------------------------------------

</TABLE>

The above schedule of future minimum lease payments has not been reduced
by future minimum sublease rental income of $16.0 million under non-
cancelable subleases and other contingent rental agreements.

Total rental expenses under operating leases for the periods ended July 1,
1995, July 2, 1994 and July 3, 1993 were $57.1 million, $47.3 million, and
$39.3 million, respectively, including contingent rentals of $2.5 million,
$1.5 million and $1.0 million. Rent expense for the above periods has not
been reduced by sublease rental income of $6.1 million, $4.9 million and
$6.9 million which has been included in other income for the periods ended
July 1, 1995, July 2, 1994 and July 3, 1993, respectively.

The Company has irrevocable letters of credit in the amount of $14.5
million to guarantee payment and performance under certain leases and
insurance contracts.

J. Employee Retirement Benefit Plans
The Company has a noncontributory profit-sharing plan covering full-time
employees who meet age and service requirements. Under the plan, the
Company's contribution is determined annually by the Board of Directors.
Profit sharing contributions were $.9 million, $4.2 million and $3.7
million respectively, for the periods ended July 1, 1995, July 2, 1994 and
July 3, 1993.

Page 42 <PAGE>

K. Income Taxes
The provision for income taxes is summarized as follows:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
- ----------------------------------------------------------------------

Year ended 1995 1994 1993
(in thousands)
- ----------------------------------------------------------------------
Current:
Federal $10,737 $24,779 $20,795
State and Local 2,257 3,075 3,309
- ----------------------------------------------------------------------
Subtotal 12,994 27,854 24,104
Deferred (2,920) (826) 408
- ----------------------------------------------------------------------
Total $10,074 $27,028 $24,512
- ----------------------------------------------------------------------

</TABLE>

A reconciliation of the Company's effective tax rate with the statutory
federal tax rate is as follows:

<S> <C> <C> <C>
<C>
______________________________________________________________________

Year ended 1995 1994 1993
______________________________________________________________________

Tax at statutory rate 35.0% 35.0% 34.0%
State income taxes, net
of federal benefit 4.7 2.8 3.2
Job tax credit (.3) (.9) (.8)
Other charges 1.0 .4 .3
- ----------------------------------------------------------------------
Effective tax rate 40.4% 37.3% 36.7%
______________________________________________________________________

</TABLE>

As discussed in Note A.6, the Company adopted SFAS No. 109 for the fiscal
year beginning June 28, 1992, and the cumulative effect of this change is
reported in the 1993 consolidated statement of operations. Deferred
income taxes for 1995 and 1994 reflect the impact of "temporary
differences" between amounts of assets and liabilities for financial
reporting purposes and such amounts as measured by tax laws. These
temporary differences are determined in accordance with SFAS No. 109 and
are more inclusive in nature than "timing differences" as determined under
previously applicable accounting principles.

On August 10, 1993 the Omnibus Budget Reconciliation Act was enacted which
increases federal tax rates from 34% to 35%. The effect on current and
deferred taxes of this change in tax rates was not significant and was
recognized in income during fiscal 1994.

Page 43<PAGE>

Temporary differences which give rise to deferred tax assets and
liabilities at July 1, 1995 and July 2, 1994 are as follows:

- --------------------------------------------------------------------------------
Year Ended 1995 1994
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
(in thousands)
- --------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
<C>
Current:
Allowance for doubtful
accounts $1,494 $1,954
Compensated absences 657 676
Inventory costs
capitalized for tax
purposes 3,544 2,845
Insurance Reserves 4,836 2,746
Prepaid Items deductible
for tax purposes $2,117 --- $1,439
Other 429 ---
- -------------------------------------------------------------------------------
10,960 2,117 8,221 1,439
- -------------------------------------------------------------------------------
Non-Current:
Depreciation 9,706 --- 8,281
Accounting for rent
expense 1,131 --- 1,261 ---
Pre-opening cost 2,414 --- ---
Other 190 190 ---
- -------------------------------------------------------------------------------
$3,735 $9,706 $1,451 $8,281
- -------------------------------------------------------------------------------
</TABLE>

No valuation account is deemed necessary.

L. Supplementary Income Statement Information

- -------------------------------------------------------------------------------
Year ended 1995 1994 1993
(in thousands)
- -------------------------------------------------------------------------------
Advertising $42,345 $38,793 $35,384

Repairs and Maintenance $15,533 $13,330 $10,696
- -------------------------------------------------------------------------------
</TABLE>

All other required items are omitted since they are less than 1% of total
revenues.

M. Incentive Plans
In April 1983, the stockholders of the Company adopted a Stock Option and
Stock Appreciation Rights Plan (the "1983 Plan") which authorized the
granting of options for the issuance of 1,125,000 shares of common stock.
During 1988 the stockholders authorized the issuance of an additional
675,000 shares of common stock for a total of 1,800,000 shares under this
Plan. The 1983 Plan provided for the issuance of incentive stock options,
nonqualified stock options and stock appreciation rights. This plan
expired in April, 1993. In November, 1993, the stockholders of the
Company approved a stock incentive plan (the "1993 Plan"), authorizing the
granting of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance stock and other stock
based compensation. A total of 450,000 shares of common stock have been
reserved for issuance under the 1993 Plan. A summary of stock options
transactions in fiscal 1993, 1994 and 1995 is as follows (all data have
been restated to reflect the three-for-two stock split):

Page 44<PAGE>
<TABLE>
<CAPTION>

- ------------------------------------------------------------------
Number Option Price
of Shares Per Share
- ------------------------------------------------------------------
<S> <C> <C>
<C>
Options outstanding
June 27, 1992 . . . . . 541,923 $ 4.48 to $ 8.30
Options issued . . . . 9,000 $11.08
Options cancelled . . . . . (20,236) $ 4.48 to $ 8.22
Options exercised . . . . . (151,286) $ 4.75 to $ 8.22
- ------------------------------------------------------------------
Options outstanding
July 3, 1993 . . . . . 379,401 $ 4.48 to $ 8.30
Options issued . . . . . 25,100 $24.69
Options cancelled . . . . . (5,445) $ 4.74 to $ 7.37
Options exercised . . . . . (81,011) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
July 2, 1994 . . . . . 318,045 $ 4.74 to $24.69
Options issued . . . . . 38,200 $11.50
Options cancelled . . . . . (5,290) $ 4.74 to $ 7.37
Options exercised . . . . . (16,404) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
July 1, 1995 . . . . . 334,551 $ 4.74 to $24.69
Options exercisable. . . . . 296,351 $ 4.74 to $24.69
- ------------------------------------------------------------------
</TABLE>

Included in the above are options to purchase 2,250 shares of stock issued
to a member of the Board of Directors at $8.22 per share which were
exercised during the year ended July 2, 1994. To date, only stock options
have been granted under both the 1983 Plan and the 1993 Plan.

N. Interim Financial Information (Unaudited)
(All amounts in thousands except per share data.)

- --------------------------------------------------------------------------------
Income
Provision (Loss)
(Benefit) Net per
Net Gross for Income Income Share
Sales Profit Taxes (Loss) (1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<C>

1995:
First $299,242 $105,875 $(4,675) $(7,526) $(.18)
Second 656,492 218,309 26,442 43,115 1.06
Third 324,457 107,901 (5,144) (9,029) (.22)
Fourth 304,751 92,645 (6,549) (11,694) (.29)
_______________________________________________________________________________

1994:
First $241,215 $85,445 $(1,352) $(2,916) $(.07)
Second 625,420 218,924 33,914 56,082 1.38
Third 327,413 114,453 1,727 2,828 .07
Fourth 274,392 92,800 (7,261) (10,611) (.26)

</TABLE>

(1) Income per share is based on the weighted average number of shares
outstanding during each of the quarters. The sum of the four quarters may
not equal the full year computation due to rounding.

Page 45<PAGE>

On an interim basis the Company values inventory using the gross profit
method and at year-end values inventory at the lower of FIFO cost or
market as determined by the retail inventory method. The annual
adjustment for the difference between actual gross profit and interim
estimated gross profit is recorded in the fourth quarter of the fiscal
year. Results of quarterly operations are impacted by the highly seasonal
nature of the Company's business, timing of certain holiday selling
seasons and the comparability of calendar weeks within a quarter as a
result of the 52/53 week fiscal years.

O. Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, short-term investments,
accounts receivable and accounts payable approximate fair value because of
the short maturities of these items.

Interest rates that are currently available to the Company for issuance of
notes payable and long-term debt (including current maturities) with
similar terms and remaining maturities are used to estimate fair value for
debt issues. The estimated fair value of notes payable and long-term debt
(including current maturities) are as follows:

<TABLE>
<CAPTION>
_____________________________________________________________________________
July 1, July 2,
1995 1994
(in thousands)

Carrying Fair Carrying Fair
Amount Value Amount Value
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C>

Notes Payable $85,900 $85,900 $65,020 $ 65,020

Long-Term Debt
(including current maturities) $91,364 $92,930 $91,423 $102,800
- -----------------------------------------------------------------------------
</TABLE>

The fair values presented herein are based on pertinent information
available to management as of the respective year ends. Although
management is not aware of any factors that could significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and
current estimates of fair value may differ from amounts presented herein.

P. Legal Matters
In late September, 1994, the Company received summons and complaint in
three separate purported class action lawsuits. Each of the complaints
was consolidated into a single amended complaint which seeks unspecified
damages and alleges a cause of action arising under certain federal
securities laws for alleged material misstatements and omissions in public
statements by the Company and five executive officers purportedly causing
the market price of the Company's common stock to be artificially inflated
during the period October 4, 1993 through September 23, 1994, inclusive.
The Company is unable to fully assess the impact of such actions at this
time but believes they are without merit. Accordingly, no provision for

Page 46<PAGE>

any loss that may result upon resolution of these matters has been made in
the accompanying consolidated financial statements.

Dividend Policy
The Company has not paid cash dividends in the past and does not currently
plan to do so. It is the present policy of the Company's Board of
Directors to retain future earnings to finance the growth and development
of the Company's business. Any payment of cash dividends in the future
will be at the discretion of the Company's Board of Directors and will
depend upon the financial condition, capital requirements and earnings of
the Company as well as other factors which the Board of Directors may deem
relevant.

Market for the Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is traded on the New York Stock Exchange, Inc.
and its trading symbol is "BCF." The following table provides the high
and low closing prices on the New York Stock Exchange for each fiscal
quarter for the period from July 4, 1993 to July 1, 1995 and for the two
months ended August 31, 1995 (all data has been restated to reflect the
three-for-two stock split effected on September 24, 1993):

- -----------------------------------------------------------------
Period Low Price High Price
- ----------------------------------------------------------------
<S> <C> <C>
<C>

July 4, 1993 to 13 1/8 19 3/8
October 2, 1993
- -----------------------------------------------------------------
October 3, 1993 to 19 24 1/2
January 1, 1994
- -----------------------------------------------------------------
January 2, 1994 to 18 28 1/4
April 2, 1994
- -----------------------------------------------------------------
April 3, 1994 to 16 3/4 27 1/2
July 2, 1994
- -----------------------------------------------------------------
July 3, 1994 to 12 2/3 24 3/4
October 1, 1994
- -----------------------------------------------------------------
October 2, 1994 to 10 1/4 14 1/8
December 31, 1994
- -----------------------------------------------------------------
January 1, 1995 to 8 1/2 11 7/8
April 1, 1995
- -----------------------------------------------------------------
April 2, 1995 to 9 7/8 11 1/4
July 1, 1995
- -----------------------------------------------------------------
July 2, 1995 to 10 13 3/4
August 31, 1995
- -----------------------------------------------------------------

</TABLE>

As of August 31, 1995, there were 639 record holders of the Company's
Common Stock. The number of record holders does not reflect that number
of beneficial owners of the Company's Common Stock for whom shares are
held by Cede & Co., certain brokerage firms and others.

Page 47<PAGE>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
Schedule II - Valuation and Qualifying Accounts
(All amounts in thousands)

- -------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL.E
- -------------------------------------------------------------------------------
DESCRIPTION BALANCE AT CHARGED TO DEDUCTIONS- BALANCE AT
BEGINNING CHARGED TO OTHER ACCOUNTS END OF
OF PERIOD EXPENSE ACCOUNTS WRITTEN OFF PERIOD
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
<C>
Period ended 7/01/95

ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $4,995 $5,162 $0 $(6,446) $3,711
---------------------------------------------------------
Period ended 7/02/94

ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $4,237 $4,821 $0 $(4,063) $4,995
---------------------------------------------------------

Period ended 7/03/93

ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $3,723 $3,690 $0 $(3,176) $4,237
--------------------------------------------------------

</TABLE>

Page 48<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

Page 49<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

Page 50<PAGE>

File No. 1-8739
=============================================================================

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

EXHIBITS FILED WITH

FORM 10-K

FOR FISCAL YEAR ENDED

July 1, 1995

under

The Securities Exchange Act of 1934

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION

(Exact Name of Registrant as specified in its Charter)

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

Page 51<PAGE>

INDEX TO EXHIBITS

Exhibits Page No.

3.1 Articles of Incorporation, as Amended 1/

3.2 By-laws 1/

10.1 1993 Stock Incentive Plan 1/

10.2 Revolving Credit Agreement dated 2/
August 30, 1985 between the Company
and BancOhio National Bank as amended
through Amendment No. 3

10.3 Amendment No. 4 to Revolving Credit 1/
Agreement between the Company and
National City Bank, Columbus (successor
to BancOhio National Bank)

10.4 Loan Agreement dated as of 54
August 1, 1995 by and between
New Jersey Economic Development
Authority and Burlington Coat Factory
Warehouse of New Jersey, Inc.

10.5 Assignment of Leases dated as of 138
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity Bank,
National Association

10.6 Mortgage and Security Agreement dated 155
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association

[FN]
_______________

<F1>
(1) Incorporated by reference to Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended July 3, 1993, File No. 1-8739.
<F2>
(2) Incorporated by reference to Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended June 29, 1991, File No. 1-8739.

Page 52<PAGE>

Exhibits Page No.
- -------- --------

10.7 Indenture of Trust dated as of 184
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association

10.8 Guaranty and Suretyship Agreement dated 288
as of August 1, 1995 from the Company
to First Fidelity Bank, National
Association

10.9 Letter of Credit Reimbursement Agreement 305
dated as of August 1, 1995 between
Burlington Coat Factory Warehouse of
New Jersey, Inc. and First Fidelity
Bank, National Association

10.10 Environmental Indemnity Agreement dated 359
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association

10.11 Burlington Coat Factory Warehouse 368
Corporation Amended and Restated
Employees Profit Sharing Plan

10.12 Note Agreement dated June 27, 1990 413

21 Subsidiaries of Registrant 479

23 Consent of Deloitte & Touche LLP 481
independent certified public accountants,
to the use of their report on the financial
statements of the Company for the fiscal
year ended July 1 1995 in the Registration
Statements of the Company on Form S-8,
Registration No. 2-96332, No. 33-21569,
No. 33-51965 and No. 33-61351

27 Financial Data Schedule 483

Page 53<PAGE>

EXHIBIT 10.4

Page 54

<PAGE>

LOAN AGREEMENT

Between

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

and

BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.

Dated as of August 1, 1995

Page 55

<PAGE>

TABLE OF CONTENTS
PAGE

ARTICLE I
BACKGROUND, REPRESENTATIONS AND FINDINGS

Section 1.1. Background . . . . . . . . . . . . . . . . 1
Section 1.2. Definitions. . . . . . . . . . . . . . . . 3
Section 1.3. Borrower Representations . . . . . . . . . 16
Section 1.4. Authority Representations and Findings . . 27

ARTICLE II
ACQUISITION OF PROJECT FACILITIES

Section 2.1. Acquisition of Project Facilities. . . . . 30
Section 2.2. Notices and Permits. . . . . . . . . . . . 30
Section 2.3. Additions and Changes to Project Facilities30

ARTICLE III
FINANCING OF PROJECT

Section 3.1. Issuance of Bonds. . . . . . . . . . . . . 31
Section 3.2. Acquisition Fund . . . . . . . . . . . . . 31
Section 3.3. Disbursements from the Acquisition Fund. . 31
Section 3.4. Establishment of Completion Date.. . . . . 32
Section 3.5. Application of Excess Amounts in
Acquisition Fund . . . . . . . . . . . . . 33
Section 3.6. Bonds Not to Become Arbitrage Bonds. . . . 33
Section 3.7. Restriction on Use of Acquisition Fund . . 33
Section 3.8. Three-Year Expenditure Requirement . . . . 33
Section 3.9. Investment Permitted . . . . . . . . . . . 33

ARTICLE IV
THE LOAN

Section 4.1. The Loan . . . . . . . . . . . . . . . . . 35
Section 4.2. Payment of Loan; Term of Agreement . . . . 35
Section 4.3. Security; Letter of Credit . . . . . . . . 35
Section 4.4. Acceleration of Payment to Redeem Bonds. . 36
Section 4.5. No Defense or Set-Off. . . . . . . . . . . 36
Section 4.6. Assignment of Authority's Rights . . . . . 37
Section 4.7. Opinion of Counsel for Borrower. . . . . . 37
Section 4.8. Opinion of Bond Counsel. . . . . . . . . . 37
Section 4.9. Opinion of Counsel for the Trustee . . . . 38
Section 4.10. Opinion of Counsel for the Bank. . . . . . 38
Section 4.11. Opinion of Counsel for the Escrow Agent. . 38
Section 4.12. Loan and Other Documents . . . . . . . . . 38
Section 4.13. Conditions Subsequent;
Defeasance of Prior Bonds. . . . . . . . . 42

Page 56

<PAGE>

ARTICLE V
COVENANTS OF BORROWER

Section 5.1. Financial Statements . . . . . . . . . . . 44
Section 5.2. Preservation of Corporate Existence and
Qualification. . . . . . . . . . . . . . . 45
Section 5.3. Keeping of Records and Books of Account. . 45
Section 5.4. Maintenance of Properties. . . . . . . . . 45
Section 5.5. Maintenance of Licenses. . . . . . . . . . 46
Section 5.6. Further Assurances . . . . . . . . . . . . 46
Section 5.7. Maintenance of Insurance . . . . . . . . . 46
Section 5.8. Payment of Taxes, etc. . . . . . . . . . . 48
Section 5.9. Concerning the Project Facility. . . . . . 48
Section 5.10. Compliance with Code and Treasury
Regulations. . . . . . . . . . . . . . . . 48
Section 5.11. Compliance with Applicable Laws. . . . . . 51
Section 5.12. Environmental Covenant . . . . . . . . . . 51
Section 5.13. Mergers, etc.. . . . . . . . . . . . . . . 51
Section 5.14. Lease or Transfer of Project Facilities. . 53
Section 5.15. Inspection of the Project Facility . . . . 54
Section 5.16. Relocation of the Project Facilities . . . 54
Section 5.17. Annual Certificate . . . . . . . . . . . . 54
Section 5.18. Aggregate Limit. . . . . . . . . . . . . . 55
Section 5.19. Brokerage Fee. . . . . . . . . . . . . . . 55
Section 5.20. Intentionally Omitted. . . . . . . . . . . 55
Section 5.21. Payment of Compensation and Expenses
of Trustee and Placement Agent . . . . . . 55
Section 5.22. Payment of Authority's Fees and Expenses . 55
Section 5.23. Indemnity Against Claims . . . . . . . . . 56
Section 5.24. Damage to or Condemnation of
Project Facilities . . . . . . . . . . . . 57
Section 5.25. Prohibition of Liens . . . . . . . . . . . 58
Section 5.26. Financing Statements . . . . . . . . . . . 59
Section 5.27. Change in Nature of Corporate Activities . 59
Section 5.28. Notice and Certification With Respect
to Bankruptcy Proceedings. . . . . . . . . 59
Section 5.29. Rebate Covenant. . . . . . . . . . . . . . 60
Section 5.30. Continuing Disclosure. . . . . . . . . . . 60

ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Events of Default; Acceleration. . . . . . 61
Section 6.2. Remedies on Default; Suit Therefor . . . . 63
Section 6.3. No Remedy Exclusive. . . . . . . . . . . . 64
Section 6.4. Agreement to Pay Attorneys' Fees
and Expenses . . . . . . . . . . . . . . . 64
Section 6.5. No Additional Waiver Implied by One Waiver 65
Section 6.6. Other Remedies . . . . . . . . . . . . . . 65
Section 6.7. Waiver . . . . . . . . . . . . . . . . . . 65
Section 6.8. Rights of the Bank . . . . . . . . . . . . 65

Page 57

<PAGE>
ARTICLE VII
MISCELLANEOUS

Section 7.1. Limitation of Liability of Authority . . . 66
Section 7.2. Severability . . . . . . . . . . . . . . . 66
Section 7.3. Successors and Assigns . . . . . . . . . . 66
Section 7.4. Enforcement of Certain Provisions by
the Bank . . . . . . . . . . . . . . . . . 66
Section 7.5. Amendments, Etc. . . . . . . . . . . . . . 67
Section 7.6. Execution in Counterparts. . . . . . . . . 67
Section 7.7. Governing Law. . . . . . . . . . . . . . . 67
Section 7.8. No Warranty of Condition or Suitability
by Authority . . . . . . . . . . . . . . . 67
Section 7.9. Adjustments and Additional Costs . . . . . 67
Section 7.10. Reasonable Consent . . . . . . . . . . . . 68
Section 7.11. Amounts Remaining in Bond Fund or
Acquisition Fund . . . . . . . . . . . . . 68
Section 7.12. Receipt of Indenture . . . . . . . . . . . 68
Section 7.13. Headings . . . . . . . . . . . . . . . . . 68
Section 7.14. Waiver of Jury Trial . . . . . . . . . . . 68
Section 7.15. Integration; Entire Agreement. . . . . . . 69
Section 7.16. Survival of Agreements . . . . . . . . . . 69
Section 7.17. Addresses for Notices, Etc.. . . . . . . . 69

EXHIBIT A - Premises Description . . . . . . . . . . . . . . .A-1
EXHIBIT B - Description of Project Facilities. . . . . . . . .B-1
EXHIBIT C - New Jersey Economic Development Authority. . . . .C-1
EXHIBIT D - Description of Machinery and Equipment . . . . . .D-1
EXHIBIT E - Form of Completion Certificate . . . . . . . . . .E-1

Page 58

<PAGE>

ARTICLE I

BACKGROUND, REPRESENTATIONS AND FINDINGS

Section 1.1. Background. THIS LOAN AGREEMENT dated as
of the first day of August, 1995, 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 BURLINGTON COAT FACTORY WAREHOUSE OF NEW JERSEY,
INC. (the "Borrower"), a corporation organized and existing under
the laws of the State of New Jersey.

WHEREAS, the New Jersey Economic Development Authority
Act, constituting Chapter 80 of the Pamphlet Laws of 1974 of the
State of New Jersey, 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 of New Jersey (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, the Authority was created to aid in remedying
the aforesaid conditions and to implement the purposes of the Act,
and the Legislature has determined that the authority and powers
conferred upon the Authority under the Act and the expenditure of
moneys pursuant thereto constitute 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 has been so declared to be as a matter of express legislative
determination; 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

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distribution center for the Borrower's products containing about
25,000 square feet of office space, the equipping of such building
with conveyor systems, rolling racks and automated machinery and
the construction of a parking lot adjacent to such building, and
the Authority, by resolution duly adopted July 3, 1985 in
accordance with the Act, accepted the application of the Borrower
for assistance in financing the 1985 Project; and

WHEREAS, the Authority, by resolution duly adopted
September 4, 1985 in accordance with the Act, authorized the
issuance of not to exceed $10,000,000 aggregate principal amount of
its Economic Development Bonds (Burlington Coat Factory Warehouse
of New Jersey, Inc. - 1985 Project) for the purpose of making a
loan to the Borrower to finance the 1985 Project (the "Original
Loan"); and

WHEREAS, on September 20, 1985 the Authority issued
$10,000,000 of its Economic Development Bonds dated September 1,
1985 to finance the 1985 Project (the "Prior Bonds") pursuant to
the provisions of an Indenture of Trust by and between the
Authority and National Westminster Bank USA, as Trustee, dated as
of September 1, 1985 (the "Prior Indenture"); and

WHEREAS, aforesaid Prior Bonds maturing on or after
September 1, 1996 are subject to redemption prior to maturity, at
the option of the Borrower, on any interest payment date on or
after September 1, 1995; and

WHEREAS, the Borrower is desirous of redeeming
$10,000,000 aggregate principal amount of the Prior Bonds maturing
on or after September 1, 1996 (the "Refunded Bonds") on September
1, 1995; and

WHEREAS, the Borrower, by letter dated May 10, 1995, has
notified the Authority of its intent to redeem the Refunded Bonds
on September 1, 1995 and has requested the Authority's assistance
in the issuance of not to exceed $10,000,000 aggregate principal
amount of bonds to refinance the 1985 Project and to redeem the
Refunded Bonds; and

WHEREAS, on July 11, 1995, the Authority, by resolution
duly adopted (the "Resolution"), authorized the issuance of its
Economic Development Refunding Bonds (Burlington Coat Factory
Warehouse of New Jersey, Inc. - 1995 Project) (the "Refunding
Bonds" or the "Bonds") for the purpose of providing funds for the
Borrower to refinance the 1985 Project and to redeem the Refunded
Bonds (the "Project"); and

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<PAGE>

WHEREAS, the Authority has determined to issue the Bonds
concurrently herewith pursuant to the Act, the Resolution and the
Indenture (as hereinafter defined); and

WHEREAS, subject to the redemption of the Refunded Bonds,
the defeasance of the Prior Bonds and the release of all liens
created under the Prior Indenture associated therewith, the Loan
shall be secured by a first mortgage lien on the Premises (as
hereinafter defined), an Assignment of Leases on the Project
Facility (as hereinafter defined), a first priority security
interest in the Machinery and Equipment (as hereinafter defined),
a Guaranty (as hereinafter defined), and such other security
granted by the Borrower in connection with this transaction; and

WHEREAS, the Authority, contemporaneously with the
execution and delivery of this Loan Agreement, shall enter into an
Indenture of Trust dated as of August 1, 1995 (the "Indenture")
wherein the Authority has assigned certain of its rights under this
Loan Agreement to the Trustee for the benefit of the Holders from
time to time of the Bonds; and

WHEREAS, the execution and delivery of this Loan
Agreement have been duly authorized by the parties and all
conditions, acts and things necessary and required by the
Constitution or statutes of the State of New Jersey 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.

NOW, THEREFORE, for and in consideration of the premises
and of the mutual representations, covenants and agreements herein
set forth, the Authority and the Borrower, each party binding
itself and its successors and assigns, do mutually promise,
covenant and agree as follows (provided that in the performance of
the agreements of the Authority herein contained any obligation it
may incur for the payment of money shall not be a debt of the State
or any political subdivision thereof, and neither the State nor any
political subdivision thereof shall be liable on any obligation so
incurred, but any such obligation shall be payable solely out of
the revenues or other receipts, funds or moneys to be derived by
the Authority under this Loan Agreement, the Note and the Loan
Documents (as each such term is hereinafter defined):

Section 1.2. Definitions.

(a) The following terms shall have the meanings ascribed
to them in Section 1.1 hereof:

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Original Application
Prior Bonds
Prior Indenture
Refunded Bonds

(b) The following words and terms as used herein shall
have the following meanings unless the context or use indicates
another or different meaning or intent. Capitalized terms found
herein, but not defined herein shall have the same meanings given
them in the Indenture.

"Account" shall mean any account created under the
Indenture;

"Acquisition Fund" shall mean the fund so designated
which is established pursuant to Section 407 of the Indenture;

"Act" shall mean the New Jersey Economic Development
Authority Act, constituting N.J.S.A. Sec.34:1B-1 et seq., as amended,
or any successor legislation, and the regulations promulgated
thereunder;

"Act of Bankruptcy" shall mean the filing of a petition
in bankruptcy (or other commencement of a bankruptcy or similar
proceeding) by or against the Borrower, the Corporate Guarantor or
the Authority under any applicable bankruptcy, insolvency,
reorganization or similar law, now or hereafter in effect;

"Act of Bankruptcy of the Bank" shall occur when the
Bank, as issuer of the Letter of Credit, or any Letter of Credit
Issuer, becomes insolvent or fails to pay its debts generally as
such debts become due or admits in writing its inability to pay any
of its indebtedness or consents to or petitions for or applies to
any authority for the appointment of a receiver, liquidator,
trustee or similar official for itself or for all or any
substantial part of its properties or assets or any such trustee,
receiver, liquidator or similar official is otherwise appointed or
when insolvency, reorganization, arrangement or liquidation
proceedings (or similar proceedings) are instituted by or against
the Bank, or any Letter of Credit Issuer, provided that any such
proceedings brought against the Bank or any Letter of Credit
Issuer, will constitute such an Act of Bankruptcy only if not
dismissed within one hundred twenty (120) days;

"Agreement" or "Loan Agreement" shall mean this Loan
Agreement dated as of August 1, 1995 by and between the Authority
and the Borrower and any amendments hereof and supplements hereto
relating to the Project to be financed from proceeds of the Bonds;

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"Alternate Letter of Credit" shall mean any letter of
credit substituted for the Initial Letter of Credit, including any
renewals or extensions of the Initial Letter of Credit by the
Letter of Credit Issuer, pursuant to and meeting the requirements
of Section 404 of the Indenture;

"Alternate Letter of Credit Issuer" shall mean the issuer
of an Alternate Letter of Credit which meets the standards set
forth in Section 404(d) of the Indenture;

"Application" shall mean the Borrower's letter to the
Authority, dated May 10, 1995, with respect to the Project, and all
attachments, exhibits, correspondence and modifications submitted
in writing to the Authority in connection with said application;

"Article" shall mean a specified article hereof, unless
otherwise indicated;

"Assignment of Leases and Rents" shall mean the
assignment dated as of August 1, 1995, which is made a part of the
Record of Proceedings, executed by the Borrower and assigning to
the Bank the benefits of existing and future leases on the Project
Facility, as the same may be amended from time to time;

"Authority" shall mean the New Jersey Economic
Development Authority, a public body corporate and politic
constituting an instrumentality of the State of New Jersey
exercising governmental functions and any body, board, authority,
agency or political subdivision or other instrumentality of the
State which shall hereafter succeed to the powers, duties and
functions thereof;

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

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

"Bank" shall mean, with respect to the Initial Letter of
Credit, First Fidelity Bank, National Association, issuer of the
irrevocable direct pay Initial Letter of Credit, dated the Issue
Date, with its office located at 123 South Broad Street,
Philadelphia, Pennsylvania 19109 and its successors and assigns,
and with respect to an Alternate Letter of Credit, the Alternate
Letter of Credit Issuer;

"Bond" or "Bonds" or "Refunding Bond" or "Refunding

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Bonds" shall mean the Authority's not to exceed $10,000,000
aggregate principal amount of Economic Development Refunding Bonds
(Burlington Coat Factory Warehouse of New Jersey, Inc. - 1995
Project) issued to provide funds to finance the Project,
substantially in the form attached as Exhibit A to the Indenture;

"Bond Counsel" shall mean the law firm of Wilentz,
Goldman & Spitzer, P.A., 90 Woodbridge Center Drive, Woodbridge,
New Jersey or any other nationally recognized bond counsel
acceptable to the Authority, the Trustee and the Letter of Credit
Issuer;

"Bond Fund" shall mean the fund so designated which is
established and created by Section 402 of the Indenture;

"Bond Year" shall mean the one-year period commencing
September 1 and ending on the following August 31; except that the
first Bond Year shall commence on the Issue Date and end on August
31, 1996;

"Borrower" shall mean Burlington Coat Factory Warehouse
of New Jersey, Inc., a corporation organized and existing under the
laws of the State of New Jersey and its successors and assigns;

"Borrower's Completion Certificate" shall mean the
certificate described in Section 3.4 hereof, executed by the
Borrower in form and substance acceptable to the Authority, wherein
the Borrower certifies as to such matters as the Authority shall
require;

"Business Day" shall mean a day of the year, other than
a Saturday, Sunday or other day on which banks located in the
municipality in which the Principal Offices of the Trustee, the
Paying Agent, the Bond Registrar (as defined in Section 209 of the
Indenture) or the Bank are located are authorized or required by
law to close;

"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations and rules promulgated
thereunder;

"Collateral" shall mean all the real property subject to
the lien of the Mortgage and the Assignment of Leases, the
Machinery and Equipment, as well as all those assets of the

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Borrower in which the Authority or the Bank are granted a security
interest and all other real and personal property owned by the
Borrower and pledged, conveyed or in which the Authority or the
Bank are otherwise granted a lien and/or security interest in
connection with the Reimbursement Agreement (as hereinafter
defined) or any other Loan Document;

"Commitment Letter" shall mean the letter dated June 28,
1995 from the Bank to the Borrower confirming the Bank's commitment
to provide the Borrower with an irrevocable direct pay letter of
credit and executed by the Borrower on June 30, 1995;

"Completion Date" shall mean the date of completion of
the 1985 Project as stated in the Borrower's Completion Certificate
described in Section 3.4 hereof;

"Corporate Guarantor" shall mean Burlington Coat Factory
Warehouse Corporation, a corporation of the State of Delaware, the
Borrower's parent corporation;

"Cost" shall mean those items set forth in Section 3(c)
of the Act and all expenses as may be necessary or incident to
acquiring, constructing, installing or restoring the Project;

"Counsel for the Bank" shall mean the law firm of Pepper,
Hamilton & Scheetz, Philadelphia, Pennsylvania;

"Counsel for the Borrower" shall mean the general counsel
to the Borrower, Paul C. Tang, Esq.;

"Counsel for the Escrow Agent" shall mean the law firm of
Reid and Riege, P.C., Hartford, Connecticut;

"Counsel for the Placement Agent" shall mean the law firm
of Robinson, St. John & Wayne, Newark, New Jersey;

"Counsel for the Trustee" shall mean the law firm of Reid
and Riege, P.C., Hartford, Connecticut;

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

"Determination of Taxability" shall be deemed to have
occurred upon the happening of any of the following:

(i) the issuance of a published or private written
ruling of the Internal Revenue Service in which the

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Borrower or any "related person" has participated or with
respect to which the Borrower or "related person" has
been given written notice and the opportunity to
participate, to the effect that the interest payable on
the Bonds is wholly includable in the gross income for
Federal income tax purposes of one or more Ownersthereof;
or

(ii) a final, nonappealable determination by a
court of competent jurisdiction in the United States in a
proceeding with respect to which the Borrower or "related
person" has been given written notice and the opportunity
to participate and defend, to the effect that the
interest payable on the Bonds is wholly includable in the
gross income for Federal income tax purposes of one or
more Owners thereof; or

(iii) the enactment of legislation of the Congress
of the United States with the effect that interest
payable on the Bonds is, or would be, in the opinion of
Bond Counsel, includable in the gross income of the
Owners (except Owners who are "substantial users" or
"related persons" within the meaning of Section 147(a)
of the Code);

"Escrow Agent" shall mean Shawmut Bank Connecticut,
National Association, Hartford, Connecticut or its successor in
interest;

"Escrow Deposit Agreement" shall mean the Escrow Deposit
Agreement dated as of August 1, 1995 pursuant to which proceeds of
the Bonds will be deposited with the Escrow Agent, which proceeds
will be used to redeem the Refunded Bonds;

"Event of Default" shall mean any event of default as
defined in Article VI hereof;

"Financing Statements" shall mean the Uniform Commercial
Code financing statements which are made part of the Record of
Proceedings, executed by the Borrower, as Debtor;

"Funds" shall mean the Acquisition Fund and the Bond Fund
and shall not include the Rebate Fund;

"General Certificate of the Authority" shall mean the
certificate of the Authority which is made a part of the Record of
Proceedings;

"Gross Proceeds" shall have the meaning set forth in

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Section 1.148-1(b) of the Treasury Regulations, presently
including, without limitation:

(a) Sale proceeds, which are amounts actually or
constructively received on the sale (or other disposition) of the
Bonds, excluding amounts included in the issue price used to pay
accrued interest within one (1) year of the date of issuance;

(b) Investment proceeds, which are amounts actually
or constructively received from the investment of sale proceeds or
investment proceeds;

(c) Transferred proceeds, which are proceeds of a
refunded issue that are allocable to a refunding issue at the time
the refunded issue is discharged;

(d) Replacement proceeds, which are amounts
replaced by proceeds of an issue, including amounts held in a
sinking fund, pledged fund, or reserve or replacement fund for an
issue; and

(e) Amounts not otherwise taken into account which
are received as a result of investing the amounts described above;

"Guaranty" or "Guaranty Agreement" shall mean the
guaranty and suretyship agreement dated as of August 1, 1995,
executed and delivered by the Corporate Guarantor to the Bank;

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;

"Holder", "holder" or "Bondholder" shall mean any person
who shall be the registered owner of any Bond or Bonds;

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

"Indenture" shall mean the Indenture of Trust dated as of
August 1, 1995 by and between the Authority and the Trustee, as the
same may have been from time to time amended, modified or

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supplemented by Supplemental Indentures as permitted thereby;

"Initial Letter of Credit" shall mean the irrevocable
direct pay Letter of Credit dated the Issue Date, in the form of
Annex A attached to the Reimbursement Agreement (as herein
defined), issued by the Bank;

"Issue Date" shall mean August 24, 1995;

"Letter of Credit" shall mean the Initial Letter of
Credit or any Alternate Letter of Credit;

"Letter of Credit Account" shall mean the account so
designated which is established and created as a separate account
within the Bond Fund pursuant to Section 402 of the Indenture;

"Letter of Credit Issuer" shall mean the Bank as issuer
of the Initial Letter of Credit and any issuer of an Alternate
Letter of Credit;

"Letter of Credit Maturity Date" shall mean the date of
expiration of the Initial Letter of Credit which is September 15,
2000, unless extended or renewed, or if the Initial Letter of
Credit has been replaced with an Alternate Letter of Credit, then
the expiration date of the Alternate Letter of Credit;

"Loan" shall mean the issuance of an amount not to exceed
$10,000,000 by the Authority for the purposes of redeeming the
Refunded Bonds;

"Loan Documents" shall mean any or all of this Loan
Agreement, the Indenture, the Mortgage, the Financing Statements,
the Guaranty Agreement, the Placement Agreement, the Assignment of
Leases, the Reimbursement Agreement, the Letter of Credit, the
Escrow Deposit Agreement, any documents securing the Borrower's
obligations under the Loan Agreement, the Indenture and the
Reimbursement Agreement and all documents and instruments executed
in connection therewith and all amendments and modifications
thereto;

"Machinery and Equipment" shall mean the machinery and
equipment listed on Exhibit D attached hereto and incorporated by
this reference herein;

"Mortgage" shall mean the first mortgage lien on and
security interest in the Premises securing the obligations of the
Borrower to the Bank, which Mortgage is made a part of the Record
of Proceedings, executed by the Borrower, as Mortgagor, and given
to the Bank, as Mortgagee;

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"Net Proceeds" shall mean the Bond Proceeds less any
amounts placed in a reasonably required reserve or replacement fund
within the meaning of Section 150(a)(3) of the Code;

"1985 Project" shall mean the acquisition of 46.779 acres
of land in the Township of Burlington, Burlington County, New
Jersey and the construction of an approximately 500,000 square foot
building situate thereon for use as a national distribution center
for the Borrower's products containing about 25,000 square feet of
office space, the equipping of such building with conveyor systems,
rolling racks and automated machinery and the construction of a
parking area adjacent to such building, a portion of such costs
being financed with the proceeds of the Prior Bonds;

"Nonpurpose Investment" 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 Bonds and
(ii) not acquired in order to carry out the governmental purpose of
the Bonds;

"Obligations" shall mean the obligations of the Borrower
created pursuant to the Loan Documents and secured by the
Collateral;

"Original Loan" shall mean the loan from the Authority to
the Borrower in the aggregate principal amount not to exceed
$10,000,000 to pay for a portion of the Costs of the 1985 Project;

"Outstanding", when used with reference to Bonds and as
of any particular date, shall describe all Bonds theretofore and
thereupon being authenticated and delivered except (a) any Bond
canceled by the Trustee or proven to the satisfaction of the
Trustee to have been canceled by the Authority or by any other
Fiduciary, at or before said date, (b) any Bond for payment or
Redemption of which moneys 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 one or more of the Fiduciaries in trust (whether
upon or prior to maturity or the redemption date of such Bond) 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 III of the Indenture, (c) any Bond in lieu
of or in substitution for which another Bond shall have been
authenticated and delivered pursuant to Article II of the
Indenture, and (d) any Bond held by the Borrower;

"Paragraph" shall mean a specified paragraph of a
Section, unless otherwise indicated;

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"Permitted Encumbrances" shall mean, as of any particular
time: (i) liens for taxes and assessments not then delinquent or,
provided there is no risk of forfeiture or sale of any of the
Collateral, which are being contested in good faith and for which
reserves have been established by the Borrower which are
satisfactory to the Bank, all in accordance with the provisions of
Section 5.8 of the Reimbursement Agreement; (ii) liens granted
pursuant to the Reimbursement Agreement, the Indenture, the Loan
Agreement, the Mortgage, the Assignment of Leases, the Financing
Statements and the other Loan Documents; (iii) utility access and
other easements and rights of way, restrictions and exceptions that
the Title Insurance Policy insures will not interfere with or
impair the Premises or the Project Facility and previously approved
by and acceptable to the Bank; (iv) liens securing claims or
demands of mechanics and materialmen or other like liens; (v)
purchase money security interests encumbering (A) property other
than the Collateral or (B) property acquired after the date hereof
and otherwise comprising Collateral, provided, however, that the
Bank's lien shall remain in effect with respect to such Collateral
subject only to such purchase money security interest(s); (vi)
those exceptions shown on Schedule B of the Title Insurance Policy
acceptable to the Bank and the Authority; (vii) liens of or
resulting from any litigation or legal proceeding which are being
contested in good faith by appropriate actions or proceedings or
any judgment or award, the time for the appeal or petition for
rehearing of which shall not have expired, or in respect of which
the Borrower shall at any time in good faith be prosecuting an
appeal or proceeding for a review and in respect of which a stay of
execution pending such appeal or proceeding for review shall have
been secured or for which a supersedeas bond has been timely
posted; (viii) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other
restrictions as to the use of real properties which are necessary
for the conduct of the activities of the Borrower or which
customarily exist on properties of corporations engaged in similar
activities and similarly situated and which do not in the aggregate
materially impair the operation of the business of the Borrower;
and (ix) liens in favor of the City of Burlington in connection
with an Urban Development Act Grant (UDAG Grant Number
B-85-AB-34-0262), which liens are subordinate to the lien of and
Mortgage in favor of the Bank;

"Permitted Investments" shall mean those investments
described in Article VI of the Indenture;

"Person" or "Persons" shall mean any individual,
corporation, partnership, joint venture, trust, or unincorporated

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organization, or a governmental agency or any political subdivision
thereof;

"Placement Agent" shall mean First Fidelity Bank, N.A.,
in its capacity as agent in connection with the placement of the
Bonds;

"Placement Agreement" shall mean the Placement Agreement
dated as of August 1, 1995 by and among the Placement Agent, the
Bank, the Authority and the Borrower;

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

"Principal User" shall mean any principal user within the
meaning of Section 1.103-10 of the Treasury Regulations and the
proposed amendments thereto 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)(3)
of the Code;

"Project" shall mean the refinancing of the 1985 Project
and the redemption of the Refunded Bonds with the proceeds of the
Bonds;

"Project Facility" or "Project Facilities" shall mean the
land, the improvements and the building situate thereon located in
the Project Municipality acquired and constructed by the Borrower,
including any additions, substitutions or replacements which have
been constructed or acquired thereon with the proceeds of the
Refunded Bonds;

"Project Municipality" shall mean the Township of
Burlington, County of Burlington, State of New Jersey;

"Proper Charge" shall mean (i) issuance costs for the
Bonds, including, without limitation, certain attorneys' fees,
printing costs, initial trustee's fees and similar expenses; or
(ii) an expenditure for the Project incurred for the purposes of
redeeming the Refunded Bonds which were issued for the purposes of
acquiring and constructing the 1985 Project;

"Rebate Fund" shall mean the fund so designated which is
established and created pursuant to Section 413 of the Indenture;

"Record of Proceedings" shall mean the Loan Documents,

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certificates, affidavits, opinions and other documentation executed
in connection with the sale of the Bonds and the making of the
Loan;

"Reimbursement Agreement" shall mean the Letter of Credit
Reimbursement Agreement dated as of August 1, 1995, between the
Borrower and the Bank, as the same may be amended from time to time
and filed with the Trustee, under which terms the Bank agrees to
issue the Initial Letter of Credit, and any successor agreement of
the Borrower with a Letter of Credit Issuer under which terms the
Borrower and such Letter of Credit Issuer agree to issue the Letter
of Credit;

"Related Person" shall mean a related person within the
meaning of Section 144(a)(3) or Section 147(a)(2) of the Code, as
is applicable;

"Requisition Form" shall mean the form of requisition
required by Section 3.3 hereof as a condition precedent to the
disbursement of moneys from the Acquisition Fund, in the form which
shall be part of the Record of Proceedings;

"Reserved Rights" shall mean those certain rights of the
Authority under this Loan Agreement to indemnification and to
payments of certain Authority fees and expenses, indemnity
payments, its right to enforce notice and reporting requirements,
restrictions on transfer of ownership, its right to inspect and
audit the books, records and the Project Facilities, of the
Borrower, collection of attorneys' fees, its right to enforce the
Borrower's covenant to comply with applicable Federal tax law, its
rights set forth in the provisions to the granting clause in the
preamble to the Indenture (to the extent not recited herein) and
its right to receive certain notices;

"Resolution" shall mean the resolution duly adopted by
the Authority on July 11, 1995, accepting the Application, making
certain findings and determinations and authorizing the issuance
and sale of the Bonds and determining other matters in connection
with the Project, as the same may be amended or supplemented from
time to time;

"Section" shall mean a specified section hereof, unless
otherwise indicated;

"State" shall mean the State of New Jersey;

"Substantial User" shall mean a substantial user of the
Project Facility or any Related Person to a Substantial User within
the meaning of Section 147(a) of the Code;

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

"Term Sheet" shall mean the term sheet dated June 28,
1995 attached to the Commitment Letter from the Bank to the
Borrower and made a part thereof, outlining the terms and
conditions upon which the Letter of Credit is to be issued by the
Bank;

"Test Period Beneficiary" shall mean any Person who was
an owner or Principal User of any facilities being financed by any
issue of tax-exempt facility-related bonds (as defined in Section
144(a)(10)(B) of the Code) at any time during the three-year period
beginning on the later of the date such facilities were placed in
service or the date of such issue;

"Title Insurance Policy" shall mean the title insurance
policy issued pursuant to Commitment No. CO 950126 by Commonwealth
Land Title Insurance Company on the Project Facilities and made
part of the Record of Proceedings;

"Treasury Regulations" shall mean the Income Tax
Regulations promulgated by the Department of Treasury pursuant to
Sections 103 and 141-150 of the Code as the same shall be amended
or supplemented from time to time;

"Trustee" shall mean Shawmut Bank Connecticut, National
Association, a national banking association duly organized and
validly existing and authorized to accept and execute the trusts of
the character set forth in the Indenture under and by virtue of the
laws of the United States of America, with its principal corporate
trust office located in Hartford, Connecticut, or its successor and
assigns in interest of such capacities;

"Yield" shall mean the yield as calculated in the manner
set forth in Section 148 of the Code; thus, yield with respect to
an investment allocated to the Bonds is that discount rate which
produces the same present value when used in computing the present
value of all receipts received and to be received with respect to
investments and the present value of all the payments with respect
to the investments. The yield on the Bonds is that discount rate
which produces the same present value on the date hereof when used
in computing the present value of all payments of principal,
interest and charges for a "qualified guarantee" to be made with
respect to the Bonds and the present value of all of the issue
prices for the Bonds. The issue price for each maturity of the
Bonds is the initial offering price of such Bonds to the public.

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Section 1.3. Borrower Representations. The Borrower
represents and warrants that:

(a) Organization, Powers, etc. It is a corporation
duly organized, created and in good standing under the laws of the
State and in all other jurisdictions in which such qualification is
material to the conduct of its business activities, has the full
corporate power and authority to own its properties and assets and
to carry on its business as now being conducted (and as now
contemplated by the Borrower) and has the power to perform all the
undertakings of the Loan Documents, to borrow hereunder and to
execute and deliver the Loan Documents.

(b) Execution of Loan Documents. The execution,
delivery and performance by the Borrower of the Loan Documents and
other instruments required or contemplated to be delivered by the
Borrower pursuant to this Agreement:

(i) have been duly authorized by all
requisite corporate action;

(ii) do not and will not conflict with or
violate any provision of law, rule or governmental
regulation, any order, decree, writ, injunction,
determination, award or judgment of any court, arbitrator
or other agency of government;

(iii) do not and will not conflict with or
violate any provision of the certificate of incorporation
and by-laws of the Borrower; and

(iv) do not and will not conflict with any
of the terms of, or result in a breach of, or constitute
a default under, or result in the creation or imposition
of any lien or charge upon any assets of the Borrower
pursuant to, any mortgage, indenture, contract, lease,
loan or credit agreement, or other agreement or
instrument to which the Borrower is a party or by which
any of its assets are bound (excepting those liens as are
created by the Loan Documents).

(c) Title to Collateral. Except as described in
Section 3.1(c) of the Reimbursement Agreement, the Borrower has
good and marketable title to the Collateral, free and clear of any
lien or encumbrance except for the Permitted Encumbrances, if any.
Assuming consideration has been given by the Bank and subject to
the defeasance of the Refunded Bonds and the release of all liens
created under the Prior Indenture associated therewith, upon
recording in the appropriate office, the Mortgage will constitute a

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valid first mortgage lien on the Premises and an assignment of the
leases thereon and upon recording, the Financing Statements will
perfect valid first lien security interests in the Collateral,
other than the Premises.

(d) Litigation. Except as described in the
Schedule II of the Reimbursement Agreement, there is no action,
suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency or arbitrator now
pending or, to the knowledge of the Borrower, threatened against or
affecting it or any of its properties or powers which, if adversely
determined, would (i) affect the transactions contemplated hereby,
(ii) affect the validity or enforceability of the Loan Documents,
(iii) affect the ability of the Borrower to perform its obligations
under the Loan Documents, (iv) impair the value of the Collateral,
(v) materially impair the Borrower's right to carry on its business
substantially as is now being conducted, (vi) adversely affect the
validity or the enforceability of the Bonds, the Indenture, the
Loan Agreement and the Loan Documents, (vii) have a material
adverse effect on the Borrower's financial condition or (viii) in
which the relief sought is in excess of $500,000.

(e) Payment of Taxes. The Borrower has filed or
caused to be filed all Federal, State and local tax returns
(including, without limitation, information 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 made against the
Borrower or against any of its properties or assets and all other
taxes, fees or other charges imposed on it by any governmental
authority, to the extent that such taxes have become due; and no
tax liens have been filed, and to the knowledge of the Borrower and
no claims have been asserted against the Borrower or any of its
properties or assets with respect to any taxes, fees or charges by
any governmental authority.

(f) No Defaults. The Borrower is not as of the
date hereof in default or noncompliance in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any material agreement or instrument to
which it is a party or by which it is bound or with respect to any
law, statute, judgment, writ, injunction, decree, rule or
regulation of any court or governmental authority.

(g) Consents. No consent of any other person and
no consent, license, approval or authorization of, or registration,
filing or declaration with, any court or governmental authority, is
or will be necessary to the valid execution, delivery or
performance by the Borrower of any of the Loan Documents.

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(h) Important Inducement. The availability of the
financial assistance by the Authority as provided herein was an
important inducement to the Borrower to undertake the 1985 Project
and to locate the Project Facility in the State.

(i) Obligations of the Borrower. Each of the Loan
Documents have been duly executed and delivered and constitute
legal, valid and binding obligations of the Borrower enforceable
against it in accordance with their respective terms.

(j) No Untrue Statements. No representation
contained herein or in any Loan Document, and no information,
certification, instrument, agreement, exhibit, report furnished by
or on behalf of the Borrower to the Authority and the Trustee, the
Original Application, or any other document, certificate or
statement furnished to the Trustee and the Authority, by or on
behalf of the Borrower contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading or
incomplete. The Borrower specifically represents that it is not
involved in any litigation of the nature that was required to be
disclosed in the Original Application nor is it the subject of any
investigation or administrative proceeding (of the type that would
have been required to be disclosed in the Original Application)
which has not been disclosed to the Authority. Further, it is
specifically acknowledged by the Borrower that all such statements,
representations and warranties shall be deemed to have been relied
upon by the Authority as an inducement to undertake the Project and
make the Loan and by the Holders as an inducement to purchase the
Bonds and that if any such statements, representations and
warranties were false at the time they were made, the Authority or
the Holders may, in its sole discretion, consider any such
misrepresentation or breach of warranty an Event of Default as
defined in Section 6.1 hereof and exercise the remedies provided
for in this Loan Agreement.

(k) No Subsidiaries. The Borrower (x) has no
subsidiaries and no investment in any other corporation; (y) has no
investment in any partnership, limited partnership or joint
venture; and (z) is not a member or participant in any partnership,
limited partnership or joint venture.

(l) No Action. The Borrower 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 Bonds to be includable in the gross income of the recipients
thereof under the Code.

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(m) Compliance with Laws. The Borrower has
complied in all material respects with all filings, permits,
licenses and other requirements of Federal, State and local laws
necessary to prevent the Borrower from being precluded, by reason
of its failure to comply with any such requirements, from
continuing to conduct its activities as are now being conducted in
the jurisdictions in which it is now conducting activities.

(n) Acquisition/Operation of the Project Facility.
The operation of the Project Facility in the present manner and as
contemplated and described in the Original Application does not
conflict with any current zoning, water, air pollution or other
ordinances, orders, laws or regulations applicable thereto. The
Borrower caused the Project Facility to be acquired in all material
respects in accordance with all Federal, State and local laws or
ordinances (including rules and regulations) relating to zoning,
building, safety and environmental quality. The Borrower will
complete the Project pursuant to the terms of this Agreement and
the Reimbursement Agreement.

(o) Commencement of Project; Proper Charges. The
Borrower has not incurred any expense prior to July 11, 1995 for
which it shall seek reimbursement from the Acquisition Fund, other
than a Proper Charge.

(p) Outstanding Tax-Exempt Bonds. (i) Except for
the Bonds and the Refunded Bonds, which will be redeemed in their
entirety with the Net Proceeds of the Bonds, there is outstanding
no other issue of tax-exempt bonds (including industrial
development bonds) as defined in Section 150(a)(6) 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 Borrower, the Corporate Guarantor or any Principal User of the
Project Facility and which are or will be wholly or partially
located in the Project Municipality.

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

(q) 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 Facility within the meaning of
Section 1.103-8T of the Temporary Treasury Regulations at any time
during the five (5) year period immediately preceding the date

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hereof, and who will receive, directly or indirectly, Bond Proceeds
in an amount equal to five per centum (5%) or more of the face
amount of the Bonds in payment for his interest in the Project
Facility, will be a Substantial User of the Project Facility or a
Related Person at any time during the five (5) year period
beginning on the date of issuance of the Bonds.

(r) Placement in Service. The Project Facilities
were not acquired or placed in service by the Borrower (determined
in accordance with the provisions of Section 103 of the Code and
applicable Treasury Regulations thereunder) more than one (1) year
prior to the date of issuance of the Prior Bonds.

(s) Use of Proceeds. All of the proceeds of the
Bonds will be used for Proper Charges of the Project.

(t) Economic Life. The information contained in
the Tax Certificate and the Internal Revenue Service Form 8038,
setting forth the respective cost, economic life, ADR midpoint
life, if any, under Rev. Proc. 83-35, 1983-1 C.B. 745, 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 1985
Project which was financed with the proceeds of the Prior Bonds is
true, accurate and complete.

(u) Average Weighted Maturity of the Bonds. The
average weighted maturity of the Bonds will not exceed 120% of the
remaining useful lives of the assets comprising the Project
Facilities (all determined pursuant to Section 147(b) of the Code
and the rulings promulgated thereunder).

(v) Bonds Not Federally Guaranteed. (A) The
payment of principal or interest with respect to the Bonds is not
guaranteed (in whole or in part) by the United States (or any
agency or instrumentality thereof); (B) a significant portion of
the proceeds of the Bonds will not be (i) used in making loans the
payment of principal or interest with respect to which are to be
guaranteed (in whole or in part) by the United States (or any
agency or instrumentality thereof), or (ii) invested (directly or
indirectly) in Federally insured deposits or accounts as defined in
Section 149(b)(4)(B) of the Code; or (C) the payment of principal
or interest on the Bonds is not otherwise indirectly guaranteed (in
whole or in part) by the United States (or an agency or
instrumentality thereof).

The foregoing provisions of this Section shall not
apply to proceeds of the Bonds being: (x) invested for an initial

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temporary period until such proceeds are needed for the purpose for
which such issue was issued; (y) invested in obligations issued by
the United States Treasury; or (z) invested in other investments
permitted under Section 149(b)(3) of the Code.

(w) Acquisition of Land. (i) No portion of the
proceeds of the Prior Bonds was used (directly or indirectly) for
the acquisition of land (or an interest therein) to be used for
farming purposes, and (ii) less than 25% of the proceeds of the
Prior Bonds were used (directly or indirectly) for the acquisition
of land (or an interest therein) not described in clause (i).

(x) Environmental Representation. For purposes of
this subsection 1.3(u), "Applicable Environmental Law(s)" shall
mean (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"); (ii) the Resource Conservation and Recovery Act of
1976, as amended, 42 U.S.C. 6901 et seq. ("RCRA"); (iii) the New
Jersey Industrial Site Recovery Act, as amended, P.L. 1995, C. 139
("ISRA"); (iv) the New Jersey Spill Compensation and Control Act,
as amended, N.J.S.A. 58:10-23.11b et seq. ("Spill Act"); (v) the
New Jersey Underground Storage Tank Act, as amended, N.J.S.A.
58:10A-21 et seq. ("UST"); (vi) the New Jersey Solid Waste
Management Act, as amended, N.J.S.A. 13:1E-1 et seq.; (vii) the New
Jersey Toxic Catastrophe Prevention Act, as amended, N.J.S.A.
13:1K-19 et seq.; (viii) the New Jersey Water Pollution Control
Act, as amended, N.J.S.A. 58:10A-1 et seq; (ix) the Clean Air Act,
as amended, 42 U.S.C. 7401 et seq.; (x) the New Jersey Air
Pollution Control Act, as amended, N.J.S.A. 26:2C-1 et seq.; and
(xi) any and all laws, regulations, and executive orders, both
Federal, State and local, pertaining to pollution or protection of
the environment (including laws, regulations and other requirements
relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, or hazardous or toxic materials or
wastes into ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, or hazardous or toxic material or
wastes), as the same may be amended or supplemented from time to
time. Any capitalized terms mentioned in the following subsections
which are defined in any Applicable Environmental Law shall have
the meanings ascribed to such terms in said laws; provided,
however, that if any of such laws are amended so as to broaden any
term defined therein, such broader meaning shall apply subsequent
to the effective date of such amendment.

(i) To the best knowledge of the Borrower,

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after due inquiry and diligence, (a) the Borrower has obtained all
permits, licenses and other authorizations which are required with
respect to its businesses, properties and assets under all
Applicable Environmental Laws; (b) he activities, properties and
assets of the Borrower are in compliance with all terms and
conditions of the required permits, licenses and authorizations,
and are also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or
contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved
thereunder; and (c) there are no past or present events,
conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with, or prevent, continued
compliance on the part of the Borrower, or which may give rise to
any liability on the part of the Borrower, or otherwise form the
basis of any claim, action, suit, proceeding or investigation
against the Borrower, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste.

(ii) 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 Borrower,
including without limitation, the Premises or the Project Facility.

(iii) Neither the Borrower nor the Premises or
the Project Facilities are in violation of any Applicable
Environmental Law or subject to any existing, pending or threatened
investigation or inquiry by any governmental authority pertaining
to any Applicable Environmental Law, other than as disclosed in
writing to the Authority prior to the date hereof. The Borrower
shall not cause or permit the Premises or the Project Facilities to
be in violation of, or do anything which would subject the Premises
or the Project Facilities to any remedial obligations under any
Applicable Environmental Law, and shall promptly notify the
Authority and the Bank, in writing, of any existing, pending or
threatened investigation or inquiry by any governmental authority
in connection with any Applicable Environmental Law.

(iv) No friable asbestos, or any asbestos
containing substance deemed hazardous by Federal or State
regulations, has been installed in the Project Facilities other
than as disclosed in writing to the Authority prior to the date
hereof. The Borrower covenants that it will not install in the

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Project Facilities friable asbestos or any asbestos containing
substance deemed hazardous by Federal or State regulations. In the
event any such materials are found to be present at the Project
Facilities, the Borrower agrees to remove the same promptly upon
discovery at its sole cost and expense.

(v) The Borrower has taken all steps necessary
(which without limitation includes at a minimum all actions
necessary to meet the "all appropriate inquiry" standard set forth
in N.J.S.A. 58:10A-23.11g as amended by ISRA) to determine and has
determined that no Hazardous Substances or Hazardous Wastes have
been disposed of or otherwise released or discharged on or to the
Premises or the Project Facilities other than as disclosed in
writing to the Authority prior to the date hereof. The use which
the Borrower makes of the Project Facilities will not result in the
disposal or other release or discharge of any Hazardous Substance
or Hazardous Waste on or to the Premises or the Project Facilities.
During the term of this Loan Agreement, the Borrower shall take all
steps necessary to determine whether Hazardous Substances or
Hazardous Wastes have been disposed of or otherwise released or
discharged on or to the Premises or the Project Facilities and if
so will remove the same promptly upon discovery at its sole
expense.

The Borrower further represents, warrants, covenants and
agrees as follows:

(vi) None of the real property owned and/or
occupied by the Borrower and located in the State, including
without limitation the Premises and the Project Facilities, has, to
the best of the Borrower's knowledge, ever been used by previous
owners and/or operators nor will be used in the future to (i)
refine, produce, store, handle, transfer, process or transport
Hazardous Substances or Hazardous Wastes; or (ii) generate,
manufacture, refine, transport, treat, store, handle or dispose of
Hazardous Substances or Hazardous Wastes other than as disclosed in
writing to the Authority prior to the date hereof.

(vii) The Borrower has not received any
communication, written or oral, from the State Department of
Environmental Protection, the United States Environmental
Protection Agency, or any other governmental entity concerning any
intentional or unintentional action or omission on the Borrower's
part on the Premises or Project Facilities resulting in the
releasing, spilling, leaking, pumping, pouring, emitting, emptying
or dumping of Hazardous Substances or Hazardous Wastes other than
as disclosed in writing to the Authority prior to the date hereof.

(viii) None of the real property owned and/or

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occupied by the Borrower and located in the State, including
without limitation the Premises and the Project Facilities, has or
is now being used as a Major Facility, as such term is defined in
ISRA, and the Borrower shall not use any such property as a Major
Facility in the future without the prior express written consent of
the Authority and the Bank. If the Borrower ever becomes an owner
or operator of a Major Facility, then the Borrower shall furnish
the State Department of Environmental Protection with all the
information required by N.J.S.A. Sec.58:10-23.11d, and shall duly file
with the Director of the Division of Taxation in the New Jersey
Department of the Treasury a tax report or return, and shall pay
all taxes due therewith, in accordance with N.J.S.A. Sec.58:10-23.11h.

(ix) In connection with the purchase of the
Premises or any other real property located within the State
acquired by the Borrower on or after January 1, 1984, the Borrower
required that the seller of said real property, including the
Premises, comply with the applicable provisions of ISRA (or its
predecessor statute ECRA) and the seller did comply therewith.

(x) The Borrower shall not conduct or cause or
permit to be conducted on the Premises or the Project Facilities
any activity which constitutes an Industrial Establishment, as such
term is defined in ISRA, without the prior express written consent
of the Authority and the Bank. In the event that the provisions of
ISRA become applicable to the Premises or the Project Facilities
subsequent to the date hereof, the Borrower shall give prompt
written notice thereof to the Authority and the Bank and shall take
immediate requisite action to insure full compliance therewith.
The Borrower shall deliver to the Authority and the Bank copies of
all correspondence, notices, reports, and submissions that the
Borrower generates, or sends to or receives from the State
Department of Environmental Protection, in connection with such
ISRA compliance. The Borrower's obligation to comply with ISRA
shall, notwithstanding its general applicability, also specifically
apply to a sale, transfer, closure or termination of operations
associated with any foreclosure action by the Authority, the
Trustee or the Bank.

(xi) No lien has been attached to any revenue
or any personal property owned by the Borrower and located in the
State, including, without limitation, the Premises or the Project
Facilities, as a result of (i) the Administrator of the New Jersey
Spill Compensation Fund expending moneys from said fund to pay for
Damages and/or Cleanup and Removal Costs; or (ii) the Administrator
of the United States Environmental Protection Agency expending
moneys from the Hazardous Substance Superfund for Damages and/or
Response Action Costs. In the event that any such lien is or has
been filed, then the Borrower shall, within thirty (30) days from

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the date that the Borrower is given such notice of such lien (or
within such shorter period of time in the event that the State or
the United States has commenced steps to have the Premises or the
Project Facilities sold), either: (i) pay the claim and remove the
lien from the Premises or Project Facilities; or (ii) furnish (a) a
bond satisfactory to the Authority and the Bank in the amount of
the claim out of which the lien arises, (b) a cash deposit in the
amount of the claim out of which the lien arises, or (c) other
security satisfactory to the Authority and the Bank in an amount
sufficient to discharge the claim out of which the lien arises.

(xii) In the event that the Borrower shall cause
or permit to exist a releasing, spilling, leaking, pumping,
pouring, emitting, emptying or dumping of Hazardous Substances or
Hazardous Wastes, the Borrower shall promptly remove and remediate
such release, spill, leak, pumping, pouring, emission, emptying or
dumping in accordance with the provisions of any Applicable
Environmental Law.

(y) Project Municipality. The Project Facilities
are 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
Facilities is not integrated with any other facility in any
neighboring municipality operated by any Principal User of the
Project Facilities. All of the facilities financed by the Prior
Bonds are located within one state, and neither the Borrower nor
any Related Person is a user of any facility financed by the
proceeds of the Prior Bonds other than the 1985 Project.

(z) No Tenancies. No Principal User of the
Project Facilities 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 Facilities.

(aa) No Common Plan of Financing. Subsequent to
thirty-one (31) days prior to the date hereof, the Borrower or any
Related Person (or group of related persons which includes the
Borrower) has not guaranteed, 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 Bonds and ending
thirty-one (31) days thereafter, there will be no obligations
issued under Section 103 which are guaranteed by the Borrower or
any Related Person (or group of related persons which includes the
Borrower) or which are issued with the assistance or participation

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of, or by arrangement with, the Borrower or any Related Person (or
group of related persons which includes the Borrower) without the
written opinion of Bond Counsel, 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
Bonds. Other than the Borrower, the Corporate Guarantor or any
Related Person (or group of related persons including the
Borrower), no person has (i) guaranteed, arranged, participated in,
assisted with the issuance of, or paid any portion of the cost of
the issuance of the 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.

(bb) Aggregation of Issues for Single Project. The
Project Facilities do not share "substantial common facilities",
within the meaning of Section 144(a)(9) of the Code, with any other
facility financed by an outstanding tax-exempt bond.

(cc) Limitation on Expenditures; Principal User.
On the issue date of the Prior Bonds, the sum of the following did
not exceed $10,000,000:

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

(ii) the aggregate amount of all capital
expenditures paid or incurred for the three (3) year period prior
to the date of issuance of the Prior Bonds by any Person other than
the Borrower or other Principal User of the Project Facility or a
Related Person to the Borrower or other Principal User of the
Project Facility (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 Facility or any Related Person is a Principal User;

(iii) the aggregate face amount of any
outstanding issues of obligations (other than the Prior Bonds)

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exempt from taxation under Section 144(a)(4) of the Code, the
proceeds of which were used primarily with respect to facilities
(i) located within each 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
Borrower or any other Principal User of the Project Facilities or
any Related Person; and

(iv) the aggregate principal amount of the
Prior Bonds.

(dd) As of the date hereof, the Borrower and the
Corporate Guarantor, the parent of the Borrower, are the only
Principal Users of the Project.

(ee) The Borrower shall at all times do and perform
all acts and things necessary to be done and performed under the
Loan Documents in order to assure that interest paid on the Bonds
shall, for purposes of Federal income taxation, be excludable from
the gross income of the recipients thereof and exempt from
taxation, except in the event that such recipient is a Substantial
User of the Project Facility or a Related Person thereto.

Section 1.4. Authority Representations and Findings.
The Authority hereby confirms its findings and represents that:

(a) it is a public body corporate and politic
constituting an instrumentality of the State, duly organized and
existing under the laws of the State, particularly the Act. The
Authority is authorized to issue the Bonds in accordance with the
Act and to use the proceeds from the sale of the Bonds to make the
Loan to the Borrower;

(b) the Authority has complied with the provisions
of the Act and has full power and authority pursuant to the Act to
consummate all transactions contemplated by this Loan Agreement,
the Indenture, the Bonds, the Resolution, and any and all other
agreements relating thereto and to issue, sell and deliver the
Bonds as provided herein and in the Indenture;

(c) by the Resolution duly adopted by the Authority
and still in full force and effect, the Authority has duly
authorized the execution, delivery and due performance of this Loan
Agreement, the Indenture and the Bonds and the taking of any and
all actions as may be required on the date hereof on the part of
the Authority to carry out, give effect to and consummate the
transactions contemplated by this Loan Agreement and the Indenture.
All approvals of the Authority necessary in connection with the
foregoing have been received;

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(d) the Bonds have been duly authorized, executed,
issued and delivered and constitute valid and binding special and
limited obligations of the Authority, the principal of, redemption
premium, if any, and interest on which are payable solely from the
revenues and other moneys derived pursuant to this Loan Agreement
and pledged therefor by the Indenture. The Bonds shall not be in
any way a debt or liability of the State or of any political
subdivision thereof, except the Authority, and shall not create or
constitute any indebtedness, liability or obligation of the State
or of any political subdivision thereof, except the Authority,
whether legal, moral or otherwise;

(e) the execution and delivery of the Loan
Agreement and the Bonds, and compliance with the provisions hereof
and thereof, do not conflict with or constitute on the part of the
Authority a violation of the Constitution of the State or a
violation or breach of or default under its by-laws or any statute,
indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which the Authority is a party or by
which the Authority is bound or, to the knowledge of the Authority,
any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Authority or any of its
activities or properties. All consents, approvals, authorizations
and orders of governmental or regulatory authorities which are
required to be obtained by the Authority for the consummation of
the transactions contemplated hereby and thereby have been
obtained;

(f) the Authority shall apply the proceeds from the
sale of the Bonds and the revenues derived under this Loan
Agreement for the purposes specified and in the manner provided in
this Loan Agreement;

(g) to the best knowledge of the Authority, there
is no action, suit, proceeding or investigation at law or in
equity, or before or by any court, public board or body pending or
threatened against or affecting the Authority, or any basis
therefor, wherein an unfavorable decision, ruling or finding would
materially adversely affect the transactions contemplated hereby,
or which in any way would materially adversely affect the validity
of the Bonds, the Indenture, the Resolution, this Loan Agreement,
any agreement or instrument to which the Authority is a party and
which is used or contemplated for use in consummation of the
transactions contemplated hereby or the exemption from taxation as
set forth herein; and

(h) any certificate signed by an Authorized
Authority Representative and delivered to the Trustee, Bank,
Borrower, or Placement Agent shall be deemed a representation and

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warranty by the Authority to the Trustee, Bank, Borrower or
Placement Agent, as the case may be, as to the statements made
therein.

It is specifically understood and agreed that the
Authority makes no representation as to the financial position or
business condition of the Borrower and does not represent or
warrant as to any of the statements, materials (financial or
otherwise), representations or certifications furnished or to be
made and furnished by the Borrower in connection with the sale of
the Bonds, or as to the correctness, completeness or accuracy of
such statements.

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ARTICLE II

ACQUISITION OF PROJECT FACILITIES

Section 2.1. Acquisition of Project Facilities. The
Borrower used the proceeds of the Prior Bonds to finance the
Project Facilities as soon as practicable after the proceeds of the
Prior Bonds became available and that it will use its best efforts
to effectuate the redemption of the Refunded Bonds with the
proceeds of the Bonds as soon as practicable after the proceeds of
the Bonds become available.

Section 2.2. Notices and Permits. The Borrower has
given or caused to be given all notices and comply or cause
compliance with all laws, ordinances, municipal rules and
regulations and requirements of public authorities applying to or
affecting the acquisition and the conduct of the work on the
Project Facilities, and the Borrower will defend and save the
Authority, its members, officers, agents and employees, the Bank,
its officers, agents and employees, and the Trustee, its officers,
agents and employees harmless from all fines due to failure to
comply therewith. The Borrower has procured or has caused to be
procured all permits and licenses necessary for the prosecution of
the acquisition and installation of the Project Facilities.

Section 2.3. Additions and Changes to Project
Facilities. The Borrower may, at its option and at its own cost
and expense, at any time and from time to time, make such
improvements, additions, renovations and changes to the Project
Facilities as it may deem to be desirable for its uses and
purposes, provided that (i) such improvements, additions and
changes shall constitute part of the Project Facilities and be
subject to the liens and security interests created by the
Indenture and this Agreement and (ii) that the Borrower shall not
permit any alienation, removal, demolition, substitution,
improvement, alteration or deterioration of the Project Facilities
or any other act which might materially impair or reduce the
usefulness or value thereof, or the security provided under the
Indenture, without the prior written consent of the Authority and
the Bank. The Borrower shall request in writing that the Bank, in
accordance with the Reimbursement Agreement, shall execute
termination statements for any filings made to perfect the security
interests created by the Indenture and by Section 4.3 of this Loan
Agreement for any fixture or item of equipment permanently removed
from the Project Facilities by the Borrower, provided that any item
of property so removed by the Borrower shall be replaced by other
property of similar value or function.

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ARTICLE III

FINANCING OF PROJECT

Section 3.1. Issuance of Bonds. In order to finance the
Project, the Authority, upon request of the Borrower, shall issue
and sell Bonds up to the maximum aggregate principal amount not to
exceed $10,000,000. The Bonds will be issued under and secured by
the Indenture. The Borrower agrees that its interest in the
Premises and the Project Facilities and its rights hereunder are
and shall be subordinate to the rights of the Trustee under the
Indenture and the Bank under the Reimbursement Agreement, and
agrees to comply with and be bound by all of the provisions thereof
that are binding upon the Authority. The Borrower hereby agrees to
make all payments of the loan (as defined in Section 4.2 hereof)
and other amounts due hereunder to enable the Authority to make all
payments required of it under the Bonds and the Indenture. The
Bonds are special and limited obligations of the Authority, payable
from payments made under the Letter of Credit, which payments are
secured by payments made by the Borrower to the Bank pursuant to
the terms of the Reimbursement Agreement, or from other moneys
available for such purpose under the terms of the Indenture.
Neither the general credit nor the taxing power of the State or any
political subdivision thereof is pledged to the payment of the
Bonds.

Section 3.2. Acquisition Fund. The Net Proceeds of the
Bonds will be deposited with the Escrow Agent to redeem the
Refunded Bonds. Amounts received from the Borrower will be
deposited in the Acquisition Fund established under the Indenture
for payment of Costs associated with the Project upon requisition
as provided in Section 408 of the Indenture and Section 3.3 of this
Loan Agreement. The Borrower agrees that the sums requisitioned
from the Acquisition Fund will be used to pay the Costs associated
with the Project. The Borrower shall have the right to enforce
payments from the Acquisition Fund upon compliance with the
procedures set forth in this Section 3.2 and Section 3.3 herein and
Section 408 of the Indenture; provided that during the continuance
of an Event of Default as defined in the Indenture, the Acquisition
Fund shall be held for the benefit of Holders of the Bonds and the
Bank in accordance with the provisions of the Indenture and the
Loan Documents.

Section 3.3. Disbursements from the Acquisition Fund.
The Authority has, in the Indenture, irrevocably authorized and
directed the Trustee to make payments from the Acquisition Fund to
pay Costs associated with the Project as defined in the Indenture.
The Borrower may direct the Trustee to make such payments directly
to or at the direction of the Borrower without any act by the

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Authority, upon compliance by the Borrower with the requirements of
this Loan Agreement and the Indenture.

(a) The Borrower agrees as a condition precedent to
the disbursement of any portion of the Acquisition Fund to comply
with the terms of this Agreement and the Indenture and to furnish
the Trustee with a Requisition Form substantially in the form set
forth as Exhibit C annexed hereto and incorporated by this
reference herein signed by an Authorized Borrower Representative
and approved by the Bank in writing stating with respect to each
payment made: (i) the requisition number; (ii) the name and address
of the Person to whom payment is to be made by the Trustee or, if
the payment is to be made to the Borrower for a reimbursable
advance, the name and address of the Person to whom such advance
was made together with proof of payment by the Borrower; (iii) the
amount to be paid; (iv) that each obligation for which payment is
sought is a Proper Charge against the Acquisition Fund, is unpaid
or unreimbursed, and has not been the basis of any previously paid
requisition; (v) if such payment is a reimbursement to the Borrower
for costs or expenses incurred by reason of work performed or
supervised by officers or employees of the Borrower or any of its
affiliates, that the amount to be paid does not exceed the actual
cost thereof to the Borrower or any of its affiliates; (vi) that no
uncured Event of Default has occurred under this Loan Agreement or
the Indenture; and (vii) the Borrower has received no written
notice of any lien, right to lien or attachment upon, or other
claim affecting the right to receive payment of, any of the moneys
payable under such Requisition Form to any of the Persons named
therein, or if any of the foregoing has been received, it has been
released or discharged or will be released or discharged upon
payment of the Requisition Form.

Section 3.4. Establishment of Completion Date. On the
Issue Date, the Borrower shall deliver to the Authority, the Bank
and the Trustee, the Borrower's Completion Certificate, the form of
which is annexed hereto as Exhibit E and incorporated by this
reference herein, which shall evidence completion of the 1985
Project and shall be signed by an Authorized Borrower
Representative stating the date of completion of the 1985 Project
and that, as of such date: (i) the 1985 Project has been
completed; (ii) the Cost of all labor, services, materials and
supplies used in the 1985 Project have been paid; (iii) the
Machinery and Equipment necessary for the 1985 Project has been
installed to the Borrower's satisfaction; such Machinery and
Equipment so installed is suitable and sufficient for the efficient
operation of the 1985 Project for the intended purposes and all
costs and expenses incurred in the acquisition and installation of
such Machinery and Equipment have been paid; (iv) the 1985 Project
is being operated as an authorized "project" under the Act and

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substantially as proposed in the Original Application; and (v) all
permits, including a Certificate of Occupancy, necessary for the
utilization of the Premises and the Project Facilities have been
obtained and are in effect.

Section 3.5. Application of Excess Amounts in
Acquisition Fund. (a) Any amounts remaining in the Acquisition
Fund (except for amounts therein sufficient to cover costs of the
Project not then due and payable or not then paid) shall be
transferred to the Bond Fund (as that term is defined in the
Indenture) to be applied by the Trustee in the manner set forth in
Section 402 of the Indenture. The Borrower shall give the Trustee
written investment instructions with respect thereto which would
not result in such funds being invested at a Yield materially
higher than the Yield on the Bonds.

(b) If for any reason the amount in the Acquisition
Fund proves insufficient to pay all Costs of the Project, the
Borrower shall pay the remainder of such Costs.

Section 3.6. Bonds Not to Become Arbitrage Bonds. As
provided in Article VI of the Indenture, the Trustee will invest
moneys held by the Trustee as directed by the Borrower in writing.
The Borrower hereby covenants to the Authority and to the Holders
of the Bonds that, notwithstanding any other provision of this
Agreement or any other instrument, it will neither make nor
instruct the Trustee to make any investment of the Bond Proceeds
which would cause the Bonds to be arbitrage bonds under Section 148
of the Code and the Treasury Regulations promulgated thereunder,
and that it will comply with the requirements of such Section and
Treasury Regulations throughout the term of the Bonds.

Section 3.7. Restriction on Use of Acquisition Fund.
The Borrower (i) shall not use or direct the use of moneys from the
Acquisition Fund in any way, or take or omit to take any other
action, so as to cause the interest on any Bonds to become subject
to Federal income tax, and (ii) shall use all of the Net Proceeds
for Proper Charges of the Project.

Section 3.8. Three-Year Expenditure Requirement. The
Borrower covenants that, within three (3) years of the date of
original delivery and payment for the Prior Bonds, the Borrower
completed the Project Facilities and caused all of the proceeds of
the Prior Bonds to be expended for Costs of the Project Facilities.

Section 3.9. Investment Permitted. Any moneys in the
Bond Fund (as defined in the Indenture) and Acquisition Fund shall
be invested or reinvested by the Trustee upon the written request

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and direction of the Borrower in the manner provided in the Indenture.

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ARTICLE IV

THE LOAN

Section 4.1. The Loan. The Authority agrees, upon the
terms and subject to the conditions hereinafter set forth, to enter
into this Loan Agreement with the Borrower for the purpose of
undertaking the Project.

Section 4.2. Payment of Loan; Term of Agreement. (a)
The loan to be repaid by the Borrower will be an amount equal to
the principal of, redemption premium (if any) and interest on, the
Bonds (the "Loan"). The Loan shall be repayable by the Borrower in
installments which, as to amounts and due dates, correspond to the
payments of the principal or applicable redemption price of, and
interest on, the Bonds. Such installments of Loan payments shall
be made in immediately available funds and shall be reduced to the
extent that other moneys are available for such purpose in funds
available for payment by the Trustee and a credit in respect
thereof has been granted pursuant to the terms hereof or the terms
of the Indenture. Notwithstanding the preceding paragraph or any
other provision of this Loan Agreement, so long as the Letter of
Credit is in effect, all payments of principal and interest on the
Bonds shall be paid from draws by the Trustee on the Letter of
Credit in accordance with the terms of the Indenture. The
outstanding balance of the Loan shall be reduced by the amount of
any such principal payments made by the Trustee through a draw on
the Letter of Credit. The Borrower shall reimburse the Bank for
moneys drawn on the Letter of Credit in accordance with the terms
of the Reimbursement Agreement.

(b) The Loan Agreement and the respective obligations of
the parties hereto shall remain in full force and effect from the
date of execution and delivery of the Loan Agreement until (i) the
date on which the principal or redemption price of and all interest
on the Bonds and any other expenses of the Authority with respect
to the Bonds shall have been fully paid or provision for the
payment thereof shall have been made pursuant to the Indenture,
(ii) the Borrower shall have fully performed and satisfied all
other covenants, agreements and obligations under the Loan
Agreement and the Reimbursement Agreement and (iii) the Indenture
shall have been released and discharged pursuant to the Indenture,
at which time the Authority shall cancel and release the Loan
Agreement.

Section 4.3. Security; Letter of Credit. Concurrently
with the issuance by the Authority of the Bonds, (a) the Borrower
shall cause the Letter of Credit to be delivered to the Trustee as
security for and as the principal source of payment of the Bonds.

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The Borrower may also from time to time cause the delivery of an
Alternate Letter of Credit in replacement therefor, to the extent
permitted by the terms of the Indenture. So long as any Letter of
Credit is held by the Trustee, all payments of principal and
interest on the Bonds shall be funded from draws on the Letter of
Credit in accordance with Section 404 of the Indenture. The
Borrower shall pay the redemption premium due, if any, required by
an optional redemption in accordance with Section 304(c) of the
Indenture. Credits in the amounts of such draws applied to
payments of principal of or interest on the Bonds will be granted
in respect of installments of the Loan otherwise due under Section
4.2 and 4.4 hereof, to the extent the Bank is reimbursed by or on
behalf of the Borrower for such draws. The Borrower hereby grants
to the Authority a security interest in any moneys, funds or
securities held hereunder or under the Indenture. This Loan
Agreement shall constitute a security agreement for the purposes of
the Uniform Commercial Code ("UCC") as in effect in New Jersey.

Section 4.4. Acceleration of Payment to Redeem Bonds.
As permitted by the Indenture and the Reimbursement Agreement,
whenever the Bonds are subject to optional redemption pursuant to
the Indenture, the Authority will, but only upon request of the
Borrower, direct the Trustee in writing to call the same for
Redemption as provided in the Indenture. Whenever the Bonds are
subject to mandatory redemption pursuant to the Indenture, the
Borrower will cooperate with the Authority and the Trustee in
effecting such Redemption. In the event of any mandatory or
optional redemption of the Bonds, the Borrower will pay or cause to
be paid on or before the date of Redemption an amount equal to the
applicable redemption price as a prepayment of that portion of the
Loan corresponding to the Bonds to be redeemed, together with
applicable redemption premium (if any) and interest accrued to the
date of redemption or will reimburse the Bank for any drawings
under the Letter of Credit for such purposes (exclusive of the
redemption premium) in accordance with the Reimbursement Agreement.

Section 4.5. No Defense or Set-Off. The obligations of
the Borrower to make or cause to be made payments of the Loan shall
be absolute and unconditional without defense or set-off by the
Authority under this Agreement or under any other agreement between
the Borrower and the Authority or for any other reason, including
without limitation, failure of the Trustee to present a draft for a
draw on the Letter of Credit or failure of the Bank to make the
required payment pursuant to the terms of the Letter of Credit,
failure to redeem the Refunded Bonds, any acts or circumstances
that may constitute failure of consideration, destruction of or
damage to the Premises or the Project Facilities, commercial
frustration of purpose, or failure of the Authority to perform and
observe any agreement, whether express or implied, or any duty,

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liability or obligation arising out of or connected with this
Agreement, it being the intention of the parties that the payments
required of the Borrower hereunder will be paid in full when due
without any delay or diminution whatsoever. Repayments of the Loan
and additional sums required to be paid by or on behalf of the
Borrower hereunder shall be received by the Authority or the
Trustee as net sums and the Borrower agrees to pay or cause to be
paid all charges against or which might diminish such net sums.

Section 4.6. Assignment of Authority's Rights. As
security for the payment of the Bonds the Authority will assign to
the Trustee all the Authority's rights under this Agreement (except
the rights of the Authority to receive payments under Sections 5.22
and 5.23 hereof and other Reserved Rights under the Indenture).
The Authority retains the right, jointly and severally with the
Trustee and/or the Bank, to specifically enforce the provisions
contained in the Loan Documents. The Borrower consents to such
assignment and agrees to make or cause to be made payments of the
Loan under Section 4.2 hereof directly to the Bank and Section 4.4
hereof directly to the Trustee without defense or set-off by reason
of any dispute between the Borrower and the Trustee or the Bank.

Section 4.7. Opinion of Counsel for Borrower. On the
Issue Date, the Authority, the Trustee, the Bank and the Placement
Agent shall have received the opinion of Counsel for the Borrower
addressed to them and satisfactory in form and substance to Bond
Counsel, Counsel for the Trustee, Counsel for the Bank and Counsel
for the Placement Agent to the effect that, inter alia: (i) the
Loan Documents have been duly executed and delivered by the
Borrower and the Corporate Guarantor, as applicable, and constitute
the valid and binding obligations of the Borrower and the Corporate
Guarantor, as applicable, enforceable in accordance with their
respective terms, except to the extent that the enforceability of
such documents may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally,
and (ii) all of the Bond Proceeds will be used for Proper Charges;
and containing any other provisions deemed necessary and proper and
otherwise in form and substance satisfactory to the Bank and its
ounsel.

Section 4.8. Opinion of Bond Counsel. On the Issue
Date, the Authority, the Bank, the Placement Agent and the Trustee
shall have received the opinion of Bond Counsel to the effect that,
inter alia :

(a) interest income on the Bonds is not includable
in gross income under the Code except for those tax consequence set
forth therein;

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(b) interest income on the Bonds is not includable
as gross income under the New Jersey Gross Income Tax Act (P.L.
1976, Chapter 47);

(c) 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; and

(d) the Bonds have been duly authorized and issued
under the provisions of the Indenture, the Resolution and the Act.

Section 4.9. Opinion of Counsel for the Trustee. On the
Issue Date, the Authority, the Bank and the Placement Agent shall
have received an opinion of Counsel for the Trustee, addressed to
them and satisfactory in form and substance to Bond Counsel stating
that the Trustee is lawfully empowered, authorized and duly
qualified to serve as Trustee and to perform the provisions of and
to accept the trusts contemplated by the Indenture, and the Trustee
has duly authorized the acceptance of the trusts contemplated by
the Indenture.

Section 4.10. Opinion of Counsel for the Bank. On the
Issue Date, the Authority, the Trustee and the Placement Agent
shall have received an opinion of Counsel for the Bank, addressed
to them and satisfactory in form and substance to Bond Counsel,
Counsel for the Trustee and Counsel for the Placement Agent stating
that the Letter of Credit has been duly authorized and delivered
and constitutes a valid and binding obligation of the Bank.

Section 4.11. Opinion of Counsel for the Escrow Agent.
On the Issue Date, the Authority, the Trustee, the Bank and the
Placement Agent shall have received an opinion of counsel for the
Escrow Agent, addressed to them and satisfactory in form and
substance to Bond Counsel and Counsels for the Trustee and
Placement Agent stating that the Escrow Agent is lawfully
empowered, authorized and duly qualified to serve as Escrow Agent
and to perform the provisions of and to accept the trusts
contemplated by the escrow deposit agreement, and the Escrow Agent
has duly authorized the acceptance of the trusts contemplated by
the escrow deposit agreement.

Section 4.12. Loan and Other Documents. On the Issue
Date, the Authority, the Bank and the Trustee shall have also
received:

(a) the Loan Documents duly executed by the
respective parties thereto;

(b) the Letter of Credit and Reimbursement

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Agreement providing for the terms of repayment of all draws under
the Letter of Credit duly executed by the Borrower;

(c) a certificate in form and substance
satisfactory to the Authority and the Bank, to the effect that the
Project Facilities are not within a special flood hazard area, as
described in the Flood Disaster Protection Act of 1973 and the
National Flood Insurance Act of 1968, or a certification from the
Project Municipality to that effect. Should the Project Facilities
be located in a special flood hazard area as designated by the
Secretary of Housing and Urban Development, the Borrower shall
furnish the Bank with a flood insurance policy in the lesser of (i)
the amount of the Letter of Credit or (ii) the maximum amount
obtainable under the National Flood Insurance Act, naming the
Authority and the Bank as insureds, together with a receipted bill
for the premium. Thereafter, the Borrower shall furnish the Bank
with a renewal flood insurance policy on the anniversary date of
such policy;

(d) secretary's certificates of the Borrower and
Corporate Guarantor, to which are attached certified true copies of
(w) the articles of incorporation of the Borrower and Corporate
Guarantor and all amendments thereto, certified by the Secretary of
State of the state of their incorporation, (x) the By-Laws of the
Borrower and Corporate Guarantor and all amendments thereto, (y)
appropriate resolutions and shareholder consents of the Borrower
and Corporate Guarantor authorizing the transactions contemplated
by this Loan Agreement and (z) incumbency certificates as to
officers, and any amendments thereto;

(e) a good standing certificate issued by the
appropriate official of the state in which the Borrower and
Corporate Guarantor are incorporated, which identifies all the
dates on which the Borrower's and Corporate Guarantor's articles of
incorporation and amendments thereto were filed; and a good
standing certificate issued by the appropriate official of those
states in which the Borrower and Corporate Guarantor are qualified
as foreign corporations, and in which such qualification is
material to the conduct of their respective businesses;

(f) evidence that the security interest to be
granted to the Bank in the personal property of the Borrower
constitutes a first-priority lien and security interest, including,
without limitation, any appropriate State and county UCC searches,
judgment searches and tax liens searches against the Borrower and
Corporate Guarantor;

(g) evidence that all applicable consents,
licenses, permits and approvals for the use and occupancy of the

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Premises and Project Facilities have been obtained from all
governmental agencies or public utility companies having
jurisdiction with respect thereto including, to the extent
applicable, but not limited to: all environmental approvals
(including, without limitation, written evidence of the State
Department of Environmental Protection certifying as to the proper
authorized closure and/or removal of underground storage tanks);
approvals for sewer, water, gas, electric and other utilities; a
final certificate of occupancy; all zoning, site plan and/or
subdivision approvals. All of such approvals and permits shall be
legally valid and shall remain in full force and effect throughout
the term of the Letter of Credit. In the event that any of such
approvals is invalidated, rescinded or suspended by any
governmental agencies or court of competent jurisdiction, the Bank
shall not be obligated to issue the Letter of Credit;

(h) if the Premises were acquired by the Borrower
on or after January 1, 1984, evidence from the Borrower or
Corporate Guarantor as to compliance with or non-applicability of
the Environmental Cleanup Responsibility Act (now known as the
Industrial Site Recovery Act) including an Affidavit of Borrower or
Corporate Guarantor to the State Department of Environmental
Protection supporting such nonapplicability letter;

(i) all fees required to be paid to the Bank and
the Trustee under any of the Loan Documents;

(j) the fees and disbursements of Counsel for the
Bank;

(k) the title insurance binder (the "Binder")
committing to insure the Mortgage in an amount up to the amount of
the Letter of Credit, excepting all the Permitted Encumbrances, if
any, issued by a company licensed by the State, in form, substance
and amounts satisfactory to the Bank, naming the Authority, the
Trustee and the Bank, as additional insureds, together with proof
of full payment of all fees and premiums for said Binder. Within
thirty (30) days after the Issue Date, the Borrower shall furnish
the Trustee and the Bank or cause the Trustee and the Bank to be
furnished with a Title Insurance Policy insuring the aforesaid
first lien interest referenced in (l) below;

(l) ALTA (as hereinafter defined) Standard title
policy on the form currently in use in the State at the time of the
issuance of the Letter of Credit in the amount of the Letter of
Credit, reinsuring with direct access agreements and/or co-insured
in amounts and with title insurance companies reasonably acceptable
to the Bank, insuring that the Mortgage is a valid first lien
mortgage on the Premises, subject only to those exceptions, whether

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of record or otherwise that have been previously approved by the
Bank;

(m) a current boundary and location survey of the
Premises acceptable to the Bank, its counsel and the title insurer,
prepared by a licensed New Jersey surveyor acceptable to the Bank,
its counsel and the title insurer, which survey shall be prepared
in accordance with the requirements set forth by the Bank and shall
be certified to the Bank and the title insurer;

(n) a Guaranty Agreement from the Corporate
Guarantor providing for the unconditional irrevocable guaranty of
the obligations of the Borrower under the Loan Documents, which
Guaranty Agreement shall contain substantially the same financial
and other covenants as exist in the revolving credit agreement
between the Borrower and National City Bank as presently in effect,
which covenants may be modified from time to time with the prior
written consent of the Bank in accordance with the terms of the
Reimbursement Agreement;

(o) subject to the defeasance of the Prior Bonds
and the release of all liens created under the Prior Indenture
associated therewith, a mortgage and security agreement
constituting a valid first lien on the Premises including, but not
limited to all real estate fixtures located and attached to the
Premises, as security for the obligations of the Borrower under the
Letter of Credit;

(p) subject to the defeasance of the Prior Bonds
and the release of all liens created under the Prior Indenture
associated therewith, a security interest creating a valid first
priority interest on the Machinery and Equipment;

(q) Financing Statements as may be deemed
reasonably necessary by the Bank or its counsel so as to perfect a
valid first priority lien in favor of the Bank with regard to all
personalty, furniture, furnishings, fixtures, building materials
and equipment owned by the Borrower now or hereinafter located at
or affixed to the Premises and the Machinery and Equipment;

(r) an Assignment of Leases providing for the
assignment by the Borrower to the Bank of all its right, title and
interest in and to any leases, tenancy agreements or any other
rental arrangements with respect to the Premises or Project
Facilities;

(s) true copies of insurance policies and
certificates of insurance in form and substance acceptable to the
Trustee and the Bank evidencing the insurance coverage on the

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Premises and Project Facilities as required by the Loan Agreement
and Reimbursement Agreement and appropriate liability coverage and
hazard insurance on land improvements, buildings and the Machinery
and Equipment naming the Trustee and the Bank, as applicable, loss
payees, mortgagee, and an additional insured together with proof of
payment of the first year's premiums;

(t) a Hazardous Substances Certificate and
Indemnity Agreement pursuant to which the Borrower and the
Corporate Guarantor agree to indemnify the Bank for any and all
environmental liability which the Bank may incur by virtue of
issuing the Letter of Credit;

(u) a written certification of an architect or
engineer selected by the Bank stating that the Project Facilities
located at the Premises (i) are structurally sound, (ii) show no
signs of structural distress, and (iii) have a remaining life span
for current or proposed usage well in excess of the term of the
Letter of Credit. All deficiencies which said architect or
engineer may deem to be material shall be corrected by the
Borrower, at its own cost and expense, prior to closing to the
satisfaction of the Bank and said architect/engineer. The cost of
such inspection report shall be borne by the Borrower;

(v) a capital expenditures certificate, in form and
substance satisfactory to Bond Counsel, setting forth the amounts
of all expenditures described in Section 1.3(z). One such
certificate shall be delivered for the Borrower and each Principal
User;

(w) the Tax Certificate, in form and substance
satisfactory to Bond Counsel;

(x) a Secondary Market Disclosure Certificate
evidencing the Borrower's and the Corporate Guarantor's
certification to comply with the provisions of Rule 15c2-12(b)(5)
of the Securities and Exchange Commission as long as this Loan
Agreement is in effect and the Bonds remain Outstanding; and

(y) and any and all other documents which may be
reasonably required by the Authority and the Bank or as set forth
in Section 4.1 of the Reimbursement Agreement.

Section 4.13. Conditions Subsequent; Defeasance of Prior
Bonds. Upon the redemption of the Refunded Bonds, the defeasance
of the Prior Bonds and the release and discharge of all liens under
the Prior Indenture associated therewith pursuant to and in
accordance with the provisions of Section 9.1 of the Prior
Indenture, the Borrower shall provide written documentation of the

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cancellation, discharge and release of all liens and security
interests granted to the Authority and the Prior Trustee and
securing the Prior Bonds and the proper recordation of the
documents pursuant to which such liens have been satisfied and
released. The Borrower, the Prior Trustee and the Authority shall
execute and deliver to the Bank copies of such instruments as shall
be required to evidence the discharge and satisfaction of such
liens and security interests.

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<PAGE>
ARTICLE V

COVENANTS OF BORROWER

The Borrower covenants and agrees, so long as this
Agreement shall remain in effect, as follows:

Section 5.1. Financial Statements.

(a) Annual Report: as soon as available and in any
event within 105 days after the end of each fiscal year, the
Borrower will submit or cause to be submitted annual audited
consolidated financial statements for the Corporate Guarantor and
its consolidated subsidiaries (including the Borrower) to the
Trustee during the term of this Agreement and to the Bank during
the term of the Letter of Credit including therein the balance
sheet of the Corporate Guarantor and its consolidated subsidiaries
as of the end of such fiscal year and the statements of operations
of the Corporate Guarantor and its consolidated subsidiaries for
such fiscal year, setting forth in comparative form the
corresponding figures for the preceding fiscal year, prepared in
accordance with GAAP consistently applied, all in reasonable detail
and in each case duly certified by independent certified public
accountants of recognized standing acceptable to the Bank, and
bythe chief financial or chief accounting officer of the Corporate
Guarantor, together with a certificate of said accounting firm
stating that, in the statements of the Corporate Guarantor and its
consolidated subsidiaries (including the Borrower) for such fiscal
year, it did not discover that an Event of Default (or an event
which, with notice or the lapse of time or both, would constitute
an Event of Default) had occurred at any time during such fiscal
year, or, if an Event of Default (or such other event) did occur,
the nature thereof; and (iii) a certificate of the chief financial
or chief accounting officer of the Borrower and Corporate Guarantor
stating that such officer does not have any knowledge that an Event
of Default (or an event which, with notice or the lapse of time or
both, would constitute an Event of Default) exists, a statement of
the nature thereof and the actions which the Borrower and Corporate
Guarantor propose to take with respect thereto.

(b) Quarterly Report: as soon as available and in
any event within sixty (60) days after the end of each of the first
three (3) quarters of each fiscal year of the Corporate Guarantor
and its consolidated subsidiaries (including the Borrower), the
Borrower shall submit or cause to be submitted by the Corporate
Guarantor, during the term of the Letter of Credit, management
prepared consolidated financial statements, including a balance
sheet, income statement and cash flow statement prepared in
accordance with GAAP, in form and substance satisfactory to the

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Bank for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, to the Trustee during
the term of this Agreement and to the Bank during the term of the
Letter of Credit.

(c) The Borrower shall submit or cause to be
submitted by the Corporate Guarantor to the Bank within 105 days
after the end of the Fiscal Year annual management letters of the
Borrower or Corporate Guarantor from the independent certified
public accountants of the Corporate Guarantor.

(d) At the times referred to above, the Borrower
shall submit or cause to be submitted by the Corporate Guarantor to
the Trustee and the Bank "no default" certificates showing the
calculations evidencing compliance with the financial covenants
contained in the Reimbursement Agreement and executed by an
Authorized Borrower Representative showing that the Borrower and
Corporate Guarantor are in compliance with all covenants and
agreements in this Loan Agreement.

(e) SEC Reports. Promptly after sending or filing,
the Borrower shall submit or cause to be submitted by the Corporate
Guarantor, copies of all proxy statements, financial statements and
other notices and reports to the Trustee and the Bank when the
Corporate Guarantor sends to its shareholders as well as copies of
all regular, annual, periodic and special reports and all
Registration Statements filed with the Securities and Exchange
Commission or similar government authority or with any national
security exchange succeeding to the functions of the Securities and
Exchange Commission (other than those on Form S-8), including,
without limitation, Forms 10Q and 10K.

Section 5.2. Preservation of Corporate Existence and
Qualification. The Borrower shall preserve and maintain its
corporate existence, rights, franchises and privileges in its
jurisdiction of incorporation, qualify and remain qualified as a
foreign corporation in each jurisdiction in which such
qualification is material to the conduct of its business in view of
its activities and operations and the ownership or lease of its
properties, and comply with all provisions of its Certificate of
Incorporation and By-Laws.

Section 5.3. Keeping of Records and Books of Account.
The Borrower shall keep adequate records and books of account
reflecting all of its financial transactions regarding the Project
Facilities.

Section 5.4. Maintenance of Properties. The Borrower
shall maintain and preserve all of its properties, necessary or

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useful in the proper conduct of its activities, in good working
order and condition, ordinary wear and tear excepted and from time
to time will make or will cause to be made, all needed and proper
repairs, renewals, replacements, betterments and improvements
thereto.

Section 5.5. Maintenance of Licenses. The Borrower
shall maintain and keep in effect licensing, know-how and similar
agreements necessary in the proper conduct of its activities.

Section 5.6. Further Assurances. The Borrower shall
do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered all such further instruments, acts,
deeds, and assurances as may be reasonably requested by the Bank
and the Authority for the purpose of carrying out the provisions
and intent of the Reimbursement Agreement, this Loan Agreement and
any of the Loan Documents.

Section 5.7. Maintenance of Insurance.

(a) The Borrower agrees to insure the Project
Facility and Collateral or cause such to be insured with insurance
companies licensed to do business in the State, in such amounts as
indicated herein or in such amounts, manner and against such loss,
damage and liability (including liability to third parties), as is
customary with companies in the same or similar business and
located in the same or similar areas, and to pay the premiums
thereon. The form and amount of each insurance policy issued
pursuant to this Section 5.7 shall be satisfactory to the Authority
and the Bank.

(b) Each insurance policy issued pursuant to this
Section 5.7 shall name the Borrower, the Trustee and the Bank as
insureds, as applicable, as their interests may appear.

(i) mortgage title insurance in an amount
not less than the stated amount of the Letter of
Credit insuring that title to the Premises is
marketable and insurable at regular rates, with no
exceptions other than those approved by the Bank and
Counsel for the Bank and that the Mortgage is a
valid first mortgage lien. Such policy shall be
issued by a title insurance company acceptable to
the Bank and in a form approved by the American Land
Title Association ("ALTA"), subject to the approval
of the Bank and shall include affirmative coverage

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against all future liens which might take priority
over the Mortgage; and

(ii) fire, hazard and "All-Risk"
insurance, including extended coverage for flood and
earthquake, together with vandalism, malicious
mischief and Replacement Cost endorsements
(non-reporting form), covering the Project
Facilities which shall be in an amount not less than
100% of the agreed upon fully insurable replacement
value of the Project Facilities on a completed value
basis by an insurer satisfactory to the Bank, so
written and endorsed as to make losses, if any,
payable to the Bank as Mortgagee and/or Lender/Loss
Payee, as applicable; and

(iii) flood insurance, as described in
Section 4.11(c), if the Project Facility is located
in an area designated by the United States
Department of Housing and Urban Development as being
subject to a special flood hazard in the maximum
amount of flood insurance available through the
Federal Flood Insurance Program for the improvements
located on the Premises, naming the Bank as the
mortgagee and/or Lender/Loss Payee; and

(iv) comprehensive general public
liability insurance, including XCU coverage, Broad
Form Endorsement, protective liability coverage on
operations of independent contractors engaged in
construction, blanket contractual liability
insurance, completed operations and products
liability coverage against any and all liability of
the Borrower or claims of liability of the Borrower
arising out of, occasioned by or resulting from any
bodily injury, death, personal injury and property
damage liability with limits of liability in minimum
amounts of $1,000,000 per person per occurrence,
$3,000,000 aggregate per occurrence and $1,000,000
aggregate property damage; and

(v) Excess/Umbrella Liability Insurance
on a "follow form" basis with a minimum limit of
liability of $10,000,000 for the Premises.

(d) The insurance policies or endorsements shall
cover the entire Project Facilities and shall provide that the
coverage will not be reduced, canceled or not renewed without
thirty (30) days prior written notice to the Bank. The Borrower

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shall provide the Authority and the Bank with certificates from the
insurers at closing, and evidence of renewal or replacement of
policies required to be maintained by this Section shall be
provided to the Bank and the Trustee on behalf of the Authority at
least ten (10) days prior to the expiration of any such policy.
The Borrower may furnish, instead of original or duplicate
policies, certificates of blanket coverage provided the Project
Facilities are identified and specifically allocated amounts are
shown.

Section 5.8. Payment of Taxes, etc. The Borrower will
promptly pay and discharge or cause to be promptly paid and
discharged all taxes, assessments 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 Borrower with diligence and
continuity by appropriate proceedings for which the Borrower has
maintained adequate reserves satisfactory to the Bank.

Section 5.9. Concerning the Project Facility. The
Borrower shall operate or cause the Project Facility 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
Loan Agreement. The Project Facility is of a character included
within the definition of "project" in the Act, and its estimated
cost was $20,000,000. The Borrower operates the Project Facility
substantially in the form represented in the Original Application
and will neither (a) materially alter the operation of the Project
Facility without the prior written consent of the Authority and the
Bank, nor (b) cause a change in the use of the Project Facility
such that the Bonds would cease to be qualified small issue bonds
(within the meaning of Section 144(a) of the Code).

Section 5.10. Compliance with Code and Treasury
Regulations. (a) The Borrower shall at all times do and perform
all acts and things necessary or desirable in order to assure that
interest paid on the Bonds shall, for the purposes of Federal
income taxation, be excludable from the gross income of the
recipients thereof and exempt from such taxation, except in the
event that such recipient is a Substantial User or Related Person
to a Substantial User.

For purposes of this Section, any and all actions of any
Principal User of the Project Facilities or any Related Person to
any such Principal User shall be deemed to be actions of the
Borrower. In addition, any and all actions to be undertaken by the
Borrower or by any other Person as to which the Authority must,

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pursuant to the terms hereof, consent or approve in advance, shall
be deemed to be the actions of the Borrower or such other Person
(and not the actions of the Authority).

(b) The Borrower shall not permit at any time or
times any of the Gross Proceeds to be used, directly or indirectly,
to acquire any Investment Property (within the meaning of Section
148(b)(2) of the Code) the acquisition of which would cause the
Bonds to be "arbitrage bonds" for the purposes of Section 148 of
the Code. The Borrower shall utilize the Bond Proceeds so as to
satisfy the reasonable expectations of the Borrower set forth in
the Tax Certificate delivered as part of the Record of Proceedings.
The Borrower further agrees to comply with the provisions of 603(d)
of the Indenture.

(c) The Borrower shall use the Bond Proceeds for
the Project in the manner and as specifically set forth in the Tax
Certificate furnished to Bond Counsel and the Authority. The
Borrower shall not expend the Bond Proceeds on assets other than
those listed in the Tax Certificate without the express written
consent of Bond Counsel.

(d) In the event the Borrower does not spend the
Gross Proceeds of the Bonds or any other Gross Proceeds within the
six (6) month period after the date of issuance, the Borrower shall
direct the Trustee in writing to rebate to the United States on
behalf of the Authority (i) the excess of (A) the aggregate amount
earned on all Non-Purpose Investments in which Gross Proceeds are
invested (other than (i) investments attributable to an excess
described herein and (ii) the amount earned on a bona fide Debt
Service fund and amounts earned on such amounts, if allocated to
the bona fide Debt Service fund in each Bond Year, but only if the
gross earnings on such fund for such Bond Year are less than
$100,000), over (B) the amount which would have been earned if all
Non-Purpose Obligations (valued at fair market value at the time
the investment becomes a Non-Purpose Investment) had been invested
at a Yield equal to the Yield on the Bonds, plus (ii) any income
attributable to the excess described in clause (i) above. Each
year, on the anniversary date of the issuance of the Bonds, the
Borrower shall determine the amount of the rebate due to the United
States on behalf of the Authority and shall promptly pay such
amount to the Trustee for deposit in the Rebate Fund.

For each investment of Gross Proceeds in a Non-Purpose
Investment, the Borrower shall direct the Trustee to record the
following information which shall be provided by the Borrower to
the Trustee: purchase date, purchase price, fair market value,
face amount, stated interest rate, any accrued interest due on its
purchase date, frequency of interest payments, disposition date,

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disposition price, any accrued interest due on the disposition date
and Yield to maturity as calculated by the Borrower. The Yield to
Maturity for an Investment presently means that discount rate,
based on a compounding frequency the same as the Bonds' (or such
other compounding permitted by the Code), which when used to
determine the present value, on the purchase date of such
investment or the date on which the investment becomes a
Non-Purpose Investment, whichever is later, of all payments of
principal and interest on such investment gives an amount equal to
the fair market value of such investment including accrued interest
due on such date. Any moneys held by the Trustee in its capacity
as Trustee (other than moneys held in the Letter of Credit Account
of the Bond Fund) shall be invested and reinvested by the Trustee
solely as directed in writing by the Borrower in accordance with
the provisions of the Indenture. The Trustee may make any and all
such investments through its own investment department. In making
investments, the Trustee shall rely upon written direction of
Borrower and is hereby relieved of any and all liability with
respect to making, redeeming and selling such investments in
accordance with the directions of the Borrower.

The rebate shall be paid in installments which shall be
made at least once every five (5) years from the date of issuance
of the Bonds. The first such installment shall be due to the
United States on behalf of the Authority not later than sixty (60)
days after the end of the fifth (5th) year following the date of
issuance of the Bonds and shall be in an amount which ensures that
at least ninety percent (90%) of the amount described above with
respect to the Bonds is paid. Each subsequent payment shall be
made not later than five (5) years after the date the preceding
payment was due. Within sixty (60) days after the retirement of
the Bonds, the Borrower shall direct the Trustee in writing to pay
to the United States on behalf of the Authority one hundred percent
(100%) of the aggregate amount due with respect to the Bonds not
theretofore paid.

At the (i) maturity of the Bonds, (ii) if the Bonds are
redeemed prior to maturity, the date on which the Bonds are
redeemed, (iii) each year, on the anniversary date of the issuance
of the Bonds, and (iv) any other date that may be required by the
Code (the "Computation Date"), the Borrower shall determine the
amount of the rebate payable to the United States on behalf of the
Authority and shall promptly deliver written notice of such amount
and the detailed basis of calculation therefor to the Authority and
the Trustee. On each Computation Date, if such amount of rebate
payable exceeds the amount then on deposit in the Rebate Fund such
amount of rebate payable shall be transferred by the Trustee at the
written direction of the Borrower from the Bond Fund to the Rebate
Fund until such amount is paid as a rebate to the United States.

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If there is not a sufficient amount in the Bond Fund for such
transfer, the Borrower shall promptly pay to the Trustee, from
other sources, the amount necessary to make up such deficiency.
Any determination of the rebate amounts or transfers required by
this Section 5.10 shall be the sole responsibility of the Borrower
and the Trustee shall be entitled to rely upon any such
determination.

Except as may be permitted pursuant to Section 148(c) of
the Code (relating to certain temporary periods for investment), at
no time during the term of the Bonds shall the amount invested by
the Borrower in Non-Purpose Obligations with a Yield higher than
the Yield on the Bonds exceed 150% of the Debt Service on the Bonds
for the Bond Year. The aggregate amount invested in Non-Purpose
Obligations shall be promptly and appropriately reduced as the
outstanding principal of the Bonds is reduced.

Section 5.11. Compliance with Applicable Laws. The
Borrower shall operate and maintain the Project Facilities in
accordance 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 ERISA, the
Americans with Disabilities Act and Applicable Environmental Laws,
workers' compensation, sanitary, safety, non-discrimination and
zoning laws, ordinances, rules and regulations as shall be binding
upon the Borrower and which might adversely affect its activities
or financial condition.

Section 5.12. Environmental Covenant. The Borrower
shall not permit any action to occur which would be in direct
violation of any and all applicable Federal, State, county and
municipal laws, ordinances, rules and regulations now in force or
hereinafter enacted, including Applicable Environmental Laws, the
regulations of the Authority and the regulations of the Department
of Environmental Protection.

The Borrower shall give immediate written notice, in the
manner provided in Section 7.17 hereof, to the Authority, the Bank,
and the Trustee of any inquiry, notices of investigation or any
similar communication from the Department of Environmental
Protection and the United States Department of Environmental
Protection regarding violation of any Applicable Environmental
Laws.

Section 5.13. Mergers, etc. (a) The Borrower will not
merge into or consolidate with or into, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person without the prior

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express written consent of the Authority and the Bank and in
accordance with the following:

(b) If at any time during the period the Bonds are
outstanding, the Borrower, any Principal User of the Project
Facility or any Related Person thereto proposes (i) to merge or
consolidate with any person, firm or corporation owning or
occupying facilities located wholly or partly within the Project
Municipality, or (ii) to gain control of any such person, firm or
corporation, or (iii) to acquire a greater than fifty percent (50%)
ownership interest of any such person, firm or corporation (whether
by ownership of stock or otherwise), or (iv) to assume or guarantee
liabilities incurred in connection with any facility located wholly
or partly within the Project Municipality owned or occupied by any
such person, firm or corporation, or (v) to enter into any exchange
of property for stock or stock for property pursuant to a plan of
reorganization with any such person, firm or corporation, or (vi)
to enter into any transaction with any such person, firm or
corporation the result of which shall be to cause such person, firm
or corporation to become a Principal User of the Project Facility
or a Related Person to the Borrower or any such Principal User, the
Borrower shall, prior to the taking of any of the foregoing
proposed actions, deliver to the Authority and the Bank, and upon
request thereof, any Holder of any Bond an opinion of nationally
recognized bond counsel to the effect that the proposed action will
not violate the provisions of Sections 5.13 and 5.18 hereof nor in
any way cause the interest on the Bonds to become includable in the
gross income of the Holders of the Bonds for Federal income tax
purposes except in the event such holder is a Substantial User or a
Related Person thereto; and provided further that, (vii) the
Borrower causes the proposed surviving, resulting or transferee
company to furnish the Authority with a Change of Ownership
Information Form; (viii) 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 Borrower
immediately preceding the merger, consolidation or transfer; (ix)
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; (x) the surviving, resulting or transferee
company assumes in writing the obligations of the Borrower under
this Agreement and the Reimbursement Agreement; and (xi) after the
merger, consolidation or transfer, the Project Facility shall be
operated as an authorized project under the Act. [Notwithstanding
anything else to the contrary herein, the Borrower shall still be
required to obtain the written consent of the Bank prior to the
effectiveness of any transaction enumerated herein and the

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satisfaction by the Borrower of the conditions set forth above
shall in no way be deemed to constitute the consent of the Bank.]

(c) The Borrower shall, during the period
commencing on the Issue Date of the Bonds and continuing for three
(3) years thereafter, maintain or cause to be maintained separate
books and records with respect to the Project Facilities and any
and all other facilities located wholly or partly within the
Project Facility Municipality of which the Borrower, any Principal
User of the Project Facilities or any Related Person thereto is a
Principal User, which books and records shall be sufficient to
indicate the nature of any and all capital expenditures with
respect to the Project Facilities and such other facilities.

(d) The Borrower shall cause any Principal User of
the Project Facilities and any Related Person thereto to comply
with all of the provisions of this Section as to its own operations
or space at the Project site or in the Project Municipality.

(e) The Authority has elected that the provisions
of Section 144(a)(4) of the Code shall be applicable with respect
to the Bonds. In order to effectuate and to continue such election
in full force and effect so long as the Bonds shall remain
outstanding, the Borrower agrees to take such actions as may from
time to time be required by applicable law or regulation in
connection therewith.

Section 5.14. Lease or Transfer of Project Facilities.
The Borrower shall not lease, sublease, sell or otherwise dispose
of any possessory interest in whole or part of the Project
Facilities without the prior express written consent of the
Authority and the Bank. In the event that the Borrower leases or
subleases the Project Facilities or any portion thereof, the
Borrower and the proposed lessee shall submit to the Authority and
the Bank an application for project occupants in the form currently
in use by the Authority and a copy of the lease. Leasing,
subleasing or an assignment of leases that would affect the
excludability of interest paid on the Bonds from Federal gross
income taxation under the Code or that would impair the ability of
the Borrower to operate or cause the Project Facilities to be
operated as an authorized project under the Act, shall not be
permitted. The Authority may review the proposed lease and
application to determine if it tends to further the public purposes
for which the Authority was created, and if the Authority
determines that the lease would not promote these purposes, it may
disapprove the proposed lease.

In making the determination described above, the
Authority may consider, among other criteria, (i) if the proposed

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occupancy complies with the conditions specified in the Act for the
Authority's assistance to "projects" as defined in the Act; (ii) if
the proposed occupancy is consistent with the provisions respecting
tax-exempt qualified small issue bond financings set forth in
Section 144 of the Code; and (iii) if the proposed lease will
result in the loss of employment for a substantial number of New
Jersey workers by reason of relocating the business of the lessee
from one part of the State to another or for any other reason.

If the Authority fails to deliver notice of either
approval or disapproval of a proposed lease within twenty (20) days
from the day the Authority receives a proposed lease, including all
of the information identified above and such other information as
the Authority may reasonably require, the proposed lease shall be
deemed to be approved by the Authority; provided further that the
Borrower shall still be required to obtain the affirmative consent
of the Bank. The Borrower shall promptly send a copy of each
executed lease to the Authority and the Bank.

Section 5.15. Inspection of the Project Facility. The
Borrower agrees that the Authority and the Bank, and their duly
authorized agents or representatives shall have the right, at all
reasonable times and upon prior reasonable notice, to enter upon
and to examine and inspect the Project Facility. The Authority,
the Trustee and the Bank, and their respective officers and agents
shall also be permitted, at all reasonable times and upon prior
notice, to examine the books and records of the Borrower with
respect to the Project Facility, to discuss its affairs, finances
and accounts with any of its officers or directors and to make
copies or abstracts thereof.

Section 5.16. Relocation of the Project Facilities. The
Borrower covenants and agrees that during the term of this Loan
Agreement it will not relocate the Project Facility or a
substantial number of its employees to another location either
within or without the State without first obtaining the prior
express written consent of the Authority and the Bank.

Section 5.17. Annual Certificate. On each anniversary
date of the Loan, the Borrower shall furnish to the Authority, the
Bank, and the Trustee the following:

(a) A certificate indicating whether or not the
Borrower 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 the passage of time, or both, under
any of the Loan Documents.

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(b) A written description of the present use of the
Project Facilities, including a report from every entity that
leases or occupies space at the Project Facilities and the number
of persons employed by the lessee, as applicable, and a description
of any anticipated material change in the use of the Project
Facilities or in the number of employees employed at the Project
Facilities.

(c) The Borrower shall also furnish to the
Authority upon request, which request shall not be made more
frequently than once a year, an employment report on a form to be
supplied by the Authority.

Section 5.18. Aggregate Limit. The Borrower shall not
allow the aggregate face amount of any outstanding issue or issues
of tax-exempt facility-related bonds within the meaning of Section
144(a)(10)(B) of the Code (including the face amount of the Bonds)
allocable to any Test-Period Beneficiary (not including as
outstanding any issue which is to be redeemed from the Net Proceeds
of any such issue) to exceed $40,000,000.

Section 5.19. Brokerage Fee. The Authority and the
Bank shall not be liable to the Borrower for any brokerage fee,
finders fee, or loan servicing fee and the Borrower shall hold the
Authority harmless from any such fees or claims.

Section 5.20. Intentionally Omitted.

Section 5.21. Payment of Compensation and Expenses of
Trustee and Placement Agent. Except to the extent payment is
otherwise provided from the Acquisition Fund, the Borrower will pay
the Trustee's (and any other paying agent's or authenticating
agent's) reasonable compensation and expenses under the Indenture,
including, but not limited to, reasonable attorneys' fees and all
costs of redeeming Bonds thereunder. The Borrower will also pay
the reasonable compensation of the Placement Agent for the
performance of its duties and services under the Placement
Agreement.

Section 5.22. Payment of Authority's Fees and Expenses.
Except to the extent payment is provided from the Acquisition Fund,
the Borrower will pay the Authority's standard administration fee
and all reasonable expenses (other than day-to-day operating
expenses of the Authority), including legal fees, incurred by the
Authority in connection with the issuance of the Bonds and the
performance by the Authority of its functions and duties under this
Agreement and the Indenture. The Authority's standard
administration fees in respect of this Agreement is $25,000 payable
upon the execution and delivery of this Agreement.

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Section 5.23. Indemnity Against Claims. In the exercise
of the powers of the Authority, the Bank, or the Trustee hereunder,
including (without limiting the foregoing) the application of
moneys, the investment of funds and disposition of the Project
Facilities upon the occurrence of an Event of Default, neither the
Authority, the Bank, the Trustee nor their members, directors,
officers, employees or agents shall be accountable to the Borrower
for any action taken or omitted by any of them in good faith and
with the belief that it is authorized or within the discretion or
rights or powers conferred hereunder or under the Indenture. The
Authority, the Bank, the Trustee and their members, directors,
officers, employees and agents shall be protected in acting upon
any paper or document believed to be genuine, and any of them 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. No recourse shall be had by the Borrower for any claims
based hereon or on the Indenture against any member, director,
officer, employee or agent of the Authority, the Bank, or the
Trustee alleging personal liability on the part of such person
unless such claims are based upon the bad faith, fraud, deceit,
gross negligence or willful misconduct of such person. As such,
the Borrower shall indemnify and hold harmless the Authority, any
person who "controls" the Authority within the meaning of Section
15 of the Securities Act of 1933, as amended, the Bank, the Trustee
and each member, director, officer, employee, attorney and agent of
the Authority, the Bank or the Trustee (collectively the
"Indemnified Parties") against any and all claims, losses, damages
or liabilities, joint and several, to which the Indemnified Parties
become subject, insofar as such losses, claims, damages or
liabilities (including all costs, expenses and reasonable counsel
fees incurred in investigating or defending such claim) (or actions
in respect thereof) suffered by any of the Indemnified Parties
caused by, relating to, arising directly or indirectly out of,
resulting from or in any way connected to the Project Facility or
the Project or are based upon any other act or omission in
connection with (a) the condition, use, possession, conduct,
management, planning, design, acquisition, construction,
installation, financing or sale of the Project Facility or any part
thereof; or (b) any untrue statement of a material fact contained
in information submitted or to be submitted to the Indemnified
Parties by the Borrower 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 to
the Indemnified Parties not misleading or incomplete unless the
losses, damages or liabilities arise from the gross negligence or
willful misconduct of the person to be indemnified. In the event
any claim is made or action brought against an Indemnified Party,
except for claims or actions brought which arise from the gross
negligence or willful misconduct of any such person, the

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Indemnified Party may direct the Borrower to assume the defense of
the claim and any action brought thereon and pay all reasonable
expenses (including attorneys' fees) incurred therein; or such
Indemnified Party may assume the defense of any such claim or
action, the reasonable cost (including attorneys' fees) of which
shall be paid by the Borrower upon written request of the
Indemnified Party to the Borrower, provided, that if the Authority,
the Bank or the Trustee assumes such defense, no settlement of any
such claim or action shall be made without the consent of the
Borrower, which consent shall not be unreasonably withheld. The
Borrower may engage its own counsel to participate in the defense
of any such action. The defense of any such claim shall include
the taking of all actions necessary or appropriate thereto. The
Borrower shall not be liable for any settlement of any such action
effected without Borrower's consent, but if settled with the
consent of the Borrower, or if there is a final judgment for the
claimant on any such action, the Borrower agrees to indemnify and
hold harmless the Indemnified Parties from and against any loss or
liability by reason of such settlement or judgment.

The indemnification provisions of this Section 5.23 shall
survive the termination of this Loan Agreement and the other Loan
Documents.

Section 5.24. Damage to or Condemnation of Project
Facilities. In the event of damage, destruction or condemnation of
part or all of the Project Facilities, the Borrower shall notify
the Trustee and the Bank not later than five (5) days after the
occurrence of such event (the "Initial Notice") and the following
provisions shall apply:

(a) In the event of any partial damage, destruction
or condemnation of the Project Facilities in an amount aggregating
less than $5,000,000, the Borrower shall apply the proceeds from
any payment or award related thereto to reconstruct, repair or
restore the Project Facility to a substantially equivalent
condition or value existing immediately prior to such event or to a
condition of at least an equivalent value in accordance with the
provisions of Section 407 of the Indenture.

(b) In the event the Borrower shall not or shall
fail to commence to repair, replace or reconstruct the Project
Facility within sixty (60) days after the Initial Notice to the
Trustee and the Bank when such proceeds aggregate less than
$5,000,000 or in the event such proceeds exceed in the aggregate
$5,000,000, the Bank shall have the option to (i) apply such
proceeds to the costs of repair, reconstruction and restoration of
the Project Facilities to a substantially equivalent condition or
value existing immediately prior to such event or to a condition of

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at least an equivalent value, in which case such funds shall be
deposited with the Trustee in the Acquisition Fund in accordance
with Section 407 of the Indenture; or (ii) use such proceeds to
reduce any outstanding principal balance of unreimbursed draws
under the Letter of Credit and remit the balance to the Borrower;
or (iii) retain such proceeds (up to the amount of the Borrower's
obligations to the Bank under the Letter of Credit and the
documents executed in connection therewith) as cash collateral for
the Borrower's obligations under the Letter of Credit; or (iv)
redeem Bonds from moneys from the Letter of Credit pursuant to
Section 301(b) of the Indenture and apply the amount of such net
proceeds of any insurance, casualty or condemnation award to
reimburse the Bank for any draw on the Letter of Credit, but only
to the extent of any such proceeds. The Bank shall notify the
Trustee and the Borrower in writing of its election within seventy
(70) days after the Initial Notice from the Borrower of such event.

(c) Funds disbursed to pay the cost of repair,
reconstruction and restoration of the Project Facilities shall be
paid in accordance with the Bank's standard construction loan
disbursement conditions and requirements and as set forth in the
Reimbursement Agreement and in accordance with Section 3.3 hereof
and Section 408 of the Indenture.

(d) the Borrower shall cooperate and consult with
the Bank in all matters pertaining to the settlement or
adjudication of any insurance claims and all claims and demands for
damages on account of any taking or condemnation of the Project
Facility or pertaining to the settlement, compromising or
arbitration of any claim on account of any damage or destruction of
the Project Facility. In no event shall the Borrower voluntarily
settle, or consent to the settlement of, any insurance claim equal
to or greater than $2,500,000 with relation to the Project Facility
or any proceedings arising out of any condemnation of the Project
Facility without the prior written consent of the Bank, which
consent shall not be unreasonably withheld.

(e) Damage to, destruction of or condemnation of
all or a portion of the Project Facilities shall not terminate the
Agreement, or cause any abatement of or reduction in the payments
to be made by the Borrower or otherwise affect the respective
obligations of the Authority or the Borrower, except as set forth
in this Loan Agreement.

Section 5.25. Prohibition of Liens. The Borrower shall
not create, or suffer to be created by any other person any lien or
charge upon the Acquisition Fund or the Project Facilities or any
part thereof or upon the rents, contributions, charges, receipts or
revenues therefrom, without the consent of the Authority and the

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Bank, provided that nothing in this Agreement shall limit the right
of the Borrower to enforce payments from the Acquisition Fund
pursuant to Section 408 of the Indenture. The Borrower further
agrees to pay or cause to be discharged or make adequate provision
to satisfy and discharge, within thirty (30) days after the same
shall become due, any such lien or charge and also all lawful
claims or demands for labor, materials, supplies or other charges
which, if unpaid, might be or become a lien upon the Acquisition
Fund, the Project Facilities or any part thereof or the revenues or
income therefrom. Nothing in this Section shall require the
Borrower to pay or cause to be discharged or make provision for any
such lien or charge so long as the validity thereof shall be
diligently contested in good faith and by appropriate proceedings
so long as the Acquisition Fund, the Project Facilities or any part
thereof are not subject to loss or forfeiture. The Authority shall
cooperate with the Borrower in any such contest and shall cooperate
with the Borrower with respect to obtaining any necessary releases
of liens or other encumbrances on the Project Facilities.

Section 5.26. Financing Statements. The Borrower shall,
at the Borrower's own expense, cause financing statements under the
New Jersey Uniform Commercial Code to be filed in the places
required by law in order to perfect the security interests created
or contemplated by Section 4.3 hereof naming the Bank as secured
party. From time to time, as reasonably requested by the Holder of
any Bond, but not more often than once each year, the Borrower
shall furnish to the Trustee an opinion of counsel setting forth
what actions, if any, should be taken by the Borrower to preserve
such security interest and/or the Trustee to preserve the right,
title and interest of the Trustee in and to the trust estate
created under the Indenture. The Borrower shall execute and file
or cause to be executed and filed all further instruments as shall
be required by law to preserve such security interest, and shall
furnish satisfactory evidence to the Trustee and the Bank of the
filing and refiling of such instruments.

Section 5.27. Change in Nature of Corporate Activities.
The Borrower shall not make any material change in the nature of
its corporate activities; provided that this covenant shall not
prevent the Borrower from engaging in additional corporate
activities not otherwise prohibited by this Agreement, the Code or
the Act.

Section 5.28. Notice and Certification With Respect to
Bankruptcy Proceedings. The Borrower shall promptly notify the
Trustee and the Bank in writing of the occurrence of any of the
following events and shall keep the Trustee and the Bank informed
of the status of any petition in bankruptcy filed (or bankruptcy or
similar proceeding otherwise commenced) against the Borrower: (i)

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application by the Borrower for or consent by the Borrower to the
appointment of a receiver, trustee, liquidator or custodian or the
like of itself or of its property, or (ii) is not generally paying
its debts as they become due, or (iii) general assignment by the
Borrower for the benefit of creditors, or (iv) adjudication of the
Borrower as a bankrupt or insolvent, or (v) commencement by the
Borrower of a voluntary case under the United States Bankruptcy
Code or filing by the Borrower of a voluntary petition or answer
seeking reorganization of the Borrower, an arrangement with
creditors of the Borrower or an order for relief or seeking to take
advantage of any insolvency law or filing by the Borrower of an
answer admitting the material allegations of an insolvency
proceeding, or action by the Borrower for the purpose of effecting
any of the foregoing, (vi) if without the application, approval or
consent of the Borrower, a proceeding shall be instituted in any
court of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking in respect of the Borrower an order for relief or an
adjudication in bankruptcy, reorganization, dissolution, winding
up, liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver,
liquidator or custodian or the like of the Borrower or of all or
any substantial part of its assets, or other relief in respect
thereof under any bankruptcy or insolvency law.

Except where expressly provided to the contrary, all
covenants in this Article shall be given independent effect so that
if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or default if such
action is taken or condition exists.

Section 5.29. Rebate Covenant. The Borrower shall
calculate or cause to be calculated the rebate requirement and
shall pay to the Trustee at such times as required under the Code
an amount equal to the rebate requirement for deposit by the
Trustee into the Rebate Fund. To the extent the amounts on deposit
in the Rebate Fund as of any date of computation are not sufficient
to meet the rebate requirement, the Borrower shall immediately pay
the amounts necessary to the Trustee for deposit in the Rebate Fund
in accordance with the provisions of Section 413 of the Indenture.

Section 5.30. Continuing Disclosure. The Borrower shall
provide or cause to be provided by the Corporate Guarantor all of
the information described in Section 515 of the Indenture relating
to compliance with the provisions of Rule 15c2-12(b)(5) of the
Securities and Exchange Commission.

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ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Events of Default; Acceleration. Each of
the following events is hereby defined as, and is declared to be
and to constitute, an "Event of Default" hereunder:

(a) Failure by the Borrower to make or cause to be made
any payment required to be made under Section 4.2 or 4.4 on or
before the date the same is due; or

(b) Failure or refusal by the Borrower to observe or
comply with any of its other covenants hereunder and such failure
or refusal shall continue for a period of ninety (90) days after
written notice thereof has been given to the Borrower and the
Letter of Credit Issuer by the Authority or the Trustee; provided
that (i) if such failure is of such nature that it can be corrected
but not within ninety (90) days, it will not be an Event of Default
so long as prompt corrective action is instituted and is diligently
pursued and the Letter of Credit Issuer consents to such extension
or is not required to consent thereto pursuant to the Reimbursement
Agreement, which consent may not be unreasonably withheld, and (ii)
if such failure results in the interest on the Bonds becoming
subject to Federal income taxation and the Bonds are redeemed as a
result thereof in accordance with their terms, such failure shall
not constitute an Event of Default, and provided further, however,
that failure of the Borrower to comply with the covenant contained
in Section 5.31 hereof shall not constitute an Event of Default; or

(c) The Borrower shall (i) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or the
like of itself or of its property, or (ii) admit in writing its
inability to pay its debts generally as they become due, or (iii)
make a general assignment for the benefit of creditors, or (iv) be
adjudicated a bankrupt or insolvent, or (v) commence a voluntary
case under the United States Bankruptcy Code, or file a voluntary
petition or answer seeking reorganization, an arrangement with
creditors or an order for relief, or seeking to take advantage of
any insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization, or insolvency proceeding, or action shall be taken
by it for the purpose of effecting any of the foregoing, or (vi) if
without the application, approval or consent of the Borrower, a
proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the
Borrower an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition

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or arrangement with creditors, a readjustment of debts, the
appointment of a trustee, receiver, liquidator or custodian or the
like of the Borrower or of all or any substantial part of its
assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being
contested by the Borrower in good faith, the same shall (A) result
in the entry of an order for relief or any such adjudication or
appointment or (B) remain unvacated, undismissed, undischarged,
unstayed or unbonded for a period of ninety (90) days; or

(d) For any reason the Bonds are declared due and
payable by acceleration in accordance with Section 902 of the
Indenture; or

(e) If the Trustee receives written notice from the
Letter of Credit Issuer that an Event of Default as defined in the
Reimbursement Agreement has occurred and is continuing and
directing the Trustee to accelerate the Bonds; or

(f) If the Trustee receives written notice from the
Letter of Credit Issuer following a drawing under the Letter of
Credit for interest on Bonds which remain Outstanding after the
application of the proceeds of such drawing, that the Letter of
Credit will not be reinstated with respect to such interest; or

(g) The transfer of title to or possession of the
Project Facilities or any part thereof (in one or more
transactions) for any reason without prior express written consent
of the Authority and the Bank as provided in Section 5.14 hereof;
or

(h) The voluntary close of business or voluntary
cessation of operations of the Borrower at the Project Facilities
for a continuous period in excess of one-hundred twenty (120) days;
or

(i) Any material misrepresentation or warranty by or on
behalf of the Borrower contained in this Agreement or in any
report, certificate, financial instrument or other instrument
furnished in connection with the Loan Agreement shall prove to be
false or misleading;

then and in each and every such case the Trustee, upon receipt of
written notice or actual knowledge, as the case may be, by notice
in writing to the Borrower, may, in accordance with the Indenture,
with the consent of the Letter of Credit Issuer, so long as the
Letter of Credit is still in effect and the Letter of Credit Issuer
has not defaulted in its obligations thereunder, if such Event of
Default has not been cured and shall, at the direction of the

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Letter of Credit Issuer so long as the Letter of Credit is in
effect and the Letter of Credit Issuer has not defaulted in its
obligations thereunder, declare all sums which the Borrower is
obligated to pay under this Loan Agreement to be due and payable
immediately, and upon any such declaration the same shall become
and shall be immediately due and payable, anything in this Loan
Agreement contained to the contrary notwithstanding. In case the
Trustee shall have proceeded to enforce any right under this Loan
Agreement and such proceedings 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 Borrower, the
Authority and the Trustee shall be restored respectively to their
several positions and rights hereunder, and all rights, remedies
and powers of the Borrower, the Authority and its assignee or the
Trustee shall continue as though no proceeding had been taken.

Section 6.2. Remedies on Default; Suit Therefor.

(a) The Borrower covenants that, in case it shall fail
to pay or cause to be paid any sum payable by or on behalf of the
Borrower under Section 4.2 or 4.4 as and when the same shall become
due and payable, whether at maturity or by acceleration or
otherwise, or in the event the Authority or the Letter of Credit
Issuer declares an Event of Default then, upon demand of the
Trustee, the Borrower will pay to the Trustee the whole amount of
the Loan that then shall have become due and payable under such
Sections; and, in addition thereto, such further amount as shall be
sufficient to cover the reasonable costs and expenses of
collection, including a reasonable compensation to the Trustee, its
agents and counsel, and any reasonable expenses or liability
incurred by the Authority or the Trustee or the Letter of Credit
Issuer. In case Borrower shall fail forthwith to pay such amounts
upon such demand, the Trustee shall be entitled and empowered, as
more particularly set forth in the Indenture, to institute any
actions or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Borrower and collect in the
manner provided by law out of the property of the Borrower the
moneys adjudged or decreed to be payable.

(b) 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 benefit of
the creditors or the property of the Borrower, the Trustee shall be
entitled and empowered as more particularly set forth in the
Indenture, by intervention in such proceedings or otherwise, to

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file and prove a claim or claims for the whole amount of the Loan,
including interest owing and unpaid in respect thereof, and, in
case of any judicial proceedings, to file such proofs of claim and
other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee allowed in such 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. Any
receiver, assignee or trustee in bankruptcy or reorganization is
hereby authorized to make such payments to the Authority or the
Trustee, and to pay to the Authority or the Trustee any amount due
it for reasonable compensation and expenses, including counsel fees
incurred by it up to the date of such distribution.

(c) In addition to the above remedies, if the Borrower
commits a breach, or threatens to commit a breach of this
Agreement, 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 irreparable injury to the Authority
and that money damages will not provide an adequate remedy
therefor.

Section 6.3. No Remedy Exclusive. No remedy herein
conferred or reserved to the Authority or the Trustee 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 occurring upon any default
shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right or power may be exercised from
time to time and as often as may be deemed expedient. In order to
entitle the Authority or the Trustee to exercise any remedy
reserved to either of them in this Article, it shall not be
necessary to give notice, other than such notice as may be required
in this Article.

Section 6.4. Agreement to Pay Attorneys' Fees and
Expenses. In the event the Borrower should default under any of
the provisions of this Loan Agreement and either the Authority, the
Trustee or the Bank shall require and employ attorneys or incur
other expenses for the collection of payments due or to become due
or for the enforcement or performance or observance of any
obligation or agreement on the part of the Borrower herein

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contained, the Borrower agrees that it will on demand therefor pay
to the Authority, the Trustee or the Bank the reasonable fees of
such attorneys and such other expenses so incurred by the
Authority, the Trustee or the Bank whether or not suit be brought.

Section 6.5. No Additional Waiver Implied by One Waiver.
In the event any agreement contained in this Loan Agreement should
be breached by any party and thereafter waived by any other party,
such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.

Section 6.6. Other Remedies. Whenever all sums which
the Borrower is obligated to pay under this Agreement shall have
been declared to be immediately due and payable, the Trustee, as
assignee of the Authority, shall be entitled to any one or more of
the remedies as set forth in Article IX of the Indenture and any
such power may be exercised from time to time as often may be
deemed expedient.

Section 6.7. Waiver. The Borrower expressly waives any
right of redemption on or after the date of foreclosure with
respect to the Project Facilities that it may otherwise have under
the laws of the State. The Borrower hereby waives and relinquishes
the benefits of any present or future law exempting the Project
Facilities from attachment, levy or sale on execution, or any part
of the proceeds arising from the sale thereof, and all benefits of
stay of execution or other process.

Section 6.8. Rights of the Bank. So long as (a) the
Letter of Credit is in full force and effect and there is no
default thereunder and (b) the Bank has not improperly refused or
failed to honor a payment request under the Letter of Credit, the
Bank shall have the sole right and power to take, make, give or
withhold any consent to any amendment, substitution or release of
any of the Mortgage, the Assignment of Leases or the property
subject to the lien or interests created therein and (except for
the right of the Authority to declare an Event of Default and to
exercise its other remedies hereunder) to exercise all rights and
remedies provided for herein, in the Indenture, or in the other
Loan Documents with respect to the Collateral.

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ARTICLE VII

MISCELLANEOUS

Section 7.1. Limitation of Liability of Authority. In
the event of any default by the Authority hereunder, the liability
of the Authority to the Borrower shall be enforceable only out of
its interest in the Project Facilities and under this Agreement and
there shall be no other recourse for damages by the Borrower
against the Authority, its officers, members, agents and employees,
or any of the property now or hereafter owned by it or them.

Section 7.2. Severability. If any provision hereof is
found by a court of competent jurisdiction to be prohibited or
unenforceable, it shall be ineffective only to the extent of such
prohibition or unenforceability, and such prohibition or
unenforceability shall not invalidate the balance of such provision
to the extent it is not prohibited or unenforceable, nor invalidate
the other provisions hereof, all of which shall be liberally
construed in order to effect the provisions of this Agreement.

Section 7.3. Successors and Assigns.

(a) The provisions of the Loan Documents shall be
binding upon and inure to the benefit of the parties thereto and
their respective successors and permitted assigns, except that the
Borrower or Corporate Guarantor may not assign the Commitment and
the other Loan Documents or any of its obligations, liabilities,
rights or benefits thereunder without the prior written consent of
the Bank, which the Bank may withhold in its absolute discretion.

(b) Without limiting any other rights of the Bank
under applicable law, the Bank may at any time grant to one or more
banks or other institutions or entities participating interests in
the credit facility made or to be made to the Borrower under the
Loan Document.

Subject to the foregoing, this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns, and the terms "Authority",
"Borrower" and "Trustee" shall, where the context requires, include
the respective successors and assigns of such persons. No
assignment pursuant to this Section shall release the Borrower from
its obligations under this Agreement.

Section 7.4. Enforcement of Certain Provisions by the
Bank. The Bank is hereby explicitly recognized as a third party
beneficiary of this Agreement.

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<PAGE>

Section 7.5. Amendments, Etc. No amendment,
modification, termination or waiver of any provision of the Loan
Documents, and no consent to any departure therefrom by the
Borrower or the Corporate Guarantor or any other party thereto,
shall in any event be effective unless the same shall be in writing
and signed by the Bank and the Trustee, as assignee of the
Authority, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given; however, the financial covenants contained in the
Reimbursement Agreement and the Guaranty Agreement may be amended
with the prior written consent of the Bank and the consent of the
Authority, the Trustee and the Bondholders thereto shall not be
required. No notice to or demand on the Borrower or the Corporate
Guarantor in any case shall entitle the Borrower or the Corporate
Guarantor to any other or further notice or demand in similar or
other circumstances.

Section 7.6. Execution in Counterparts. This Loan
Agreement and the other Loan Documents may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original and
all of which (taken together) shall constitute one and the same
agreement.

Section 7.7. Governing Law. This Loan Agreement and the
other Loan Documents shall be governed by, and construed in
accordance with, the internal laws of the State (without giving
effect to principles of conflicts of law), except to the extent
that the perfection and enforcement of any lien are required to be
governed by the law of the State in which the property subject to
such lien is located.

Section 7.8. No Warranty of Condition or Suitability by
Authority. The Authority makes no warranty, either express or
implied, as to the condition of the Project Facilities or any part
thereof or that they will be suitable for the Borrower's purposes
or needs. The Borrower acknowledges and agrees that the Authority
is not a dealer in property of such kind, and that the Authority
has not made, and does not hereby make, any representation or
warranty or covenant with respect to the merchantability, fitness
for a particular purpose, condition or suitability of the Project
Facilities in any respect or in connection with or for the purposes
and uses of the Borrower or its tenants.

Section 7.9. Adjustments and Additional Costs. The
Borrower agrees to pay all charges and costs which are required and
whenever required in connection with the Authority's acquisition of
the Project Facilities and in connection with the conveyance of the
Project Facilities from the Authority to the Borrower.

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<PAGE>

Section 7.10. Reasonable Consent. Any and all consents
required to be given, pursuant to this Loan Agreement or any of the
Loan Documents, by the Authority, the Bank, or the Trustee shall be
based on a reasonable standard other than when the Trustee is
acting upon the direction of any of the parties pursuant to any of
the Loan Documents, except that any consent to any sale, transfer,
other lien or encumbrance on the Collateral shall be in the sole
discretion of the Bank.

Section 7.11. Amounts Remaining in Bond Fund or
Acquisition Fund. It is agreed by the parties hereto that any
amounts remaining in the Bond Fund or Acquisition Fund, after
payment in full of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the
Indenture) and of the fees, charges and expenses of the Trustee and
the Authority in accordance with the Indenture, shall upon release
of the Indenture pursuant to Section 1101 thereof, be paid first by
the Trustee to the Bank to the extent of any unreimbursed drawings
under the Letter of Credit, or any other obligations owing by the
Borrower to the Bank under the Reimbursement Agreement and any
remaining moneys shall belong to and be paid to the Borrower by the
Trustee as overpayment of the Loan.

Section 7.12. Receipt of Indenture. The Borrower hereby
acknowledges that it has received an executed copy of the Indenture
and is familiar with its provisions, and agrees that it will take
all such actions as are required or contemplated of it under the
Indenture to preserve and protect the rights of the Trustee and of
the Bondholders thereunder and that it will not take any action
which would cause a default thereunder. Any redemption of Bonds
prior to maturity shall be effected as provided in the Indenture.
The Borrower agrees to comply with the provisions of Section 702 of
the Indenture.

Section 7.13. Headings. The captions or headings in
this Agreement are for convenience of reference only and shall not
control or affect the meaning or construction of any provision
hereof.

Section 7.14. Waiver of Jury Trial. The Borrower hereby
waives any and all rights that it may now or hereafter have under
the laws of the United States of America or any state, to a trial
by jury of any and all issues arising either directly or indirectly
in any action or proceeding between the Authority, the Trustee or
the Bank or their successors and assigns, out of or in any way
connected with the Loan and the other Loan Documents. It is
intended that said waiver shall apply to any and all defenses,
rights, and/or counterclaims in any action or proceeding.

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<PAGE>

Section 7.15. Integration; Entire Agreement. This Loan
Agreement and the other Loan Documents and other instruments and
documents to be delivered hereunder and thereunder, are intended by
the parties hereto and thereto to be an integrated contract, which
together contain the entire understandings of the parties with
respect to the subject matter contained herein. This Loan
Agreement and the other Loan Documents supersede all prior
agreements and understandings between the parties with respect to
such subject matter, whether written or oral.

Section 7.16. Survival of Agreements. All agreements,
covenants, representations and warranties made herein shall survive
the delivery of the Letter of Credit.

Section 7.17. Addresses for Notices, Etc.. All notices
requests, demands, directions and other communications provided for
hereunder or under any other Loan Document shall be sufficient if
made in writing and delivered personally (including by Federal
Express or other recognized courier), if mailed by certified mail,
return receipt requested, or if telecopied, to the applicable party
at the addresses indicated below:

If to the Authority:

New Jersey Economic Development Authority
Capital Place One
CN 990
200 South Warren Street
Trenton, New Jersey 08625
Attention: Executive Director
Telecopier Number: (609) 633-7751

If to the Borrower:

Burlington Coat Factory Warehouse
of New Jersey, Inc.
1830 Route 130
Burlington, New Jersey 08016
Attention: Chief Accounting Officer
(telecopies sent to (609) 387-7071)

- with duplicate copies to-

Paul C. Tang, Esq., general counsel,
at the above address and telecopier number

and

Burlington Coat Factory Warehouse Corporation

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<PAGE>

1830 Route 130
Burlington, New Jersey 08016
Attention: President
(telecopies sent to (609) 387-9011)

If to the Bank:

First Fidelity Bank, N.A.
123 South Broad Street - PMB006
Philadelphia, Pennsylvania 19109
Attention: Stephen H. Clark, Vice President
Telecopier Number: (215) 985-8793

or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party complying as
to delivery with the terms of the Loan Documents. All notices,
requests, demands, directions and other communications shall (if
delivered personally) be effective when delivered or (if mailed)
three (3) days after having been deposited in the mail, addressed
as aforesaid.

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<PAGE>

IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Agreement to be executed and
delivered as of the date first written above.

[SEAL] NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
ATTEST:

By:___________________
FRANK T. MANCINI, JR., CAREN S. FRANZINI,
Assistant Secretary Executive Director

ATTEST: BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.

By:___________________
ROBERT L. LAPENTA, JR., MARK A. NESCI,
Assistant Secretary Vice President

Page 129
<PAGE>

EXHIBIT A

Premises Description

ALL THAT CERTAIN tract or parcel of land and premises
situate, lying and being in the Township of Burlington, County of
Burlington and State of New Jersey, bounded and described as
follows:

COMMENCING at a monument in the Southeasterly right-of-
way line of U.S. State Highway Route 130 (103 feet wide), said
monument being on the Municipal boundary line between the Township
of Florence and the Township of Burlington in the County of
Burlington, State of New Jersey and corner to Block 160.01, Lot
1.01 in the Township of Florence and running;

(1) along said Municipal boundary line (being the same
as the line of said Lot 1.01), South 05 degrees 56 minutes 01
seconds East, 1,722.05 feet to a monument on said Municipal
boundary line and common corner to Block 160.01, Lots 1.01 and 5.01
in the Township of Florence and Block 147, Lot 6 in the Township of
Burlington; thence

(2) along said Lot 6, Block 147, South 88 degrees 56
minutes 58 seconds West, 259.53 feet to a monument corner to same;
thence

(3) still along said Lot 6, South 87 degrees 42 minutes
19 seconds West, 1,203.81 feet to a monument in the line of Block
147, Lot 12, Township of Burlington; thence

(4) along said Lot 12, North 02 degrees 26 minutes 36
seconds East, 1,339.17 feet to a monument corner to said Lot 12 in
the Southeasterly right-of-way line of U.S. State Highway Route
130; thence

(5) along said Southeasterly right-of-way line, North 70
degrees 46 minutes 50 seconds East, 1,299.66 feet to the point and
place of beginning.

CONTAINING within said bounds 47.348 acres.

BEING shown and designated as Lot 7, Block 147, Plate 30
on the current Tax Map of the Township of Burlington.

BEING the same land and premises which became vested in
Burlington Coat Factory Warehouse of New Jersey, Inc., a New Jersey
Corporation by the following:

A-1
Page 130

EXHIBIT A (continued)

Premises Description

(a) As to part by Deed from Blue Grass Lawn Farms, a
Partnership by John J. Gunn and Doris S. Gunn, his wife, sole
partners, dated December 31, 1985, recorded January 2, 1986 in Deed
Book 3122 page 159.

(b) As to part by Deed from James C. Workman and Dorothy
H. Workman, his wife, dated December 30, 1985, recorded January 2,
1986 in Deed Book 3122 page 164.

ALSO BEING the same land and premises which became vested
in Burlington Coat Factory Warehouse of New Jersey, Inc., a New
Jersey Corporation by Deed from Burlington Coat Factory Warehouse
of New Jersey, Inc., a New Jersey Corporation, dated December 31,
1985, recorded January 2, 1986 in Deed Book 3122 at page 168, and
corrected by a Deed of Correction dated February 13, 1987, recorded
June 12, 1987 in Deed Book 3421 at page 181.

A-2

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<PAGE>

EXHIBIT B

Description of Project Facilities

The 46.779 acres of land and an approximately 450,000
square foot building situate thereon located at 1830 Route 130,
Township of Burlington, County of Burlington, New Jersey which
houses the national distribution center for Borrower's products,
including the administrative functions of Borrower and the
equipment in such building consisting of conveyor systems, rolling
racks and automated machinery and a parking area adjacent to such
facility.

B-1

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<PAGE>

Requisition Ref. No. _____

EXHIBIT C

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
(BURLINGTON COAT FACTORY WAREHOUSE OF
NEW JERSEY, INC. - 1995 PROJECT)

REQUISITION REF. NO. _______

I, the undersigned _________________ [insert title] of
Burlington Coat Factory Warehouse of New Jersey, Inc. (the
"Borrower"), DO HEREBY CERTIFY that I am an Authorized Borrower
Representative duly designated by the Borrower to execute and
deliver this certificate on behalf of the Borrower. I DO HEREBY
FURTHER CERTIFY pursuant to and in accordance with the terms of a
Loan Agreement between the New Jersey Economic Development
Authority (the "Authority") and the Borrower, dated as of
___________, 1995 (the "Loan Agreement") as follows:

1. This requisition is Requisition No. _______.

2. The name and address of the person, firm or
corporation to whom payment is due is:

____________________________
____________________________
____________________________

[If such payment is to be made to the Borrower for a
reimbursable advance, insert the name and address of the person,
firm or corporation to whom such advance was made together with
proof of payment by the Borrower.]

3. The amount to be paid to such person, firm or
corporation named in paragraph (2) above is $______________.

4. Each obligation, item of cost or expense mentioned
herein has been properly incurred, is a Proper Charge against the
Acquisition Fund, is unpaid or unreimbursed, and has not been the
basis of any previously paid requisition.

C-1

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<PAGE>

Requisition Ref. No. _________

5. If such payment is a reimbursement to the Borrower
for costs or expenses incurred by reason of work performed or
supervised by officers or employees of the Borrower or any of its
affiliates, such amount mentioned herein to be paid does not exceed
the actual cost thereof to the Borrower or any of its affiliates.

6. No uncured Event of Default has occurred under the
Loan Agreement or the Indenture.

7. The Borrower has received no written notice of any
lien, right to lien or attachment upon, or other claim affecting
the right to receive payment of, any of the moneys payable under
this Requisition to any of the persons, firms or corporations named
herein, or if any of the foregoing has been received, it has been
released or discharged or will be released or discharged upon
payment of this Requisition.

Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Loan
Agreement.

DATED: BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.

__________________________________
AUTHORIZED BORROWER REPRESENTATIVE
Name:
Title:

The undersigned, on behalf of First Fidelity Bank,
National Association hereby approves the above Requisition.

DATED: FIRST FIDELITY BANK, NATIONAL
ASSOCIATION

_________________________________
AUTHORIZED BANK REPRESENTATIVE
Name:
Title:

C-2

Page 134

EXHIBIT D

Description of Machinery and Equipment

Belt Roller System, including:

Store Dump
Cross Dock
Flatwear Processing
Hanging Opening
Empty Tote System
Store Jump
Flatwear Processing
Shipping System
Trash Conveyors
Sorter Platform
Case Sealer
Automatic Sealer
Recirculation Loop

Rail System including:

Monorail PS-1
Monorail PS-2
Monorail PS-4
Monorail PS-5
Monorail PS-6
Monorail PS-7
Free Rail System
Mezanine Structure

CSC 2000 Tilt Tray Flat Sorter:

6 induction stations for merchandisers
1 auto induction for carton packing
324 Store Parking Chutes

HLS 6000 - 105 Hanging Garment Sorter:

1 Semi automatic induction for merchandiser
254 Store parking locations

D-1

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<PAGE>

EXHIBIT E

FORM OF COMPLETION CERTIFICATE

New Jersey Economic Development Authority
Capital Place One
Trenton, New Jersey 08625

Pursuant to Section 3.4 of the Loan Agreement by and
between the Authority and the Borrower dated as of August 1, 1995
(the "Loan Agreement"), the undersigned, an Authorized Borrower
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 1985 Project was completed as of June __,
1988;

(ii) as of such date referenced in (i) above, the
Cost of all labor, services, materials and
supplies used in the 1985 Project have been
paid;

(iii) all machinery and equipment necessary for the
1985 Project has been installed to the
Borrower's satisfaction; such machinery and
equipment so installed is suitable and
sufficient for the efficient operation of the
1985 Project for the intended purposes and all
costs and expenses, if any, incurred in the
acquisition and installation of such machinery
and equipment have been paid;

(iv) the 1985 Project is being operated as an
authorized "project" under the Act and
substantially as proposed in the Original
Application of the Borrower; and

(v) all permits, including a Certificate of
Occupancy, necessary for the utilization of the
1985 Project have been obtained and are in
effect.

E-1

Page 136

BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.

By:______________________________
Authorized Borrower
Representative

Dated: August 24, 1995

E-2

Page 137
<PAGE>

EXHIBIT 10.5

Page 138
<PAGE>

ASSIGNMENT OF LEASES AND RENTS

DATE: As of August 1, 1995

ASSIGNEE: FIRST FIDELITY BANK, NATIONAL ASSOCIATION
123 South Broad Street, PMB 006
Philadelphia, Pennsylvania 19109
Attention: Stephen H. Clark, Vice President
Telecopier No.: (215) 985-8793

ASSIGNOR: BURLINGTON COAT FACTORY WAREHOUSE OF NEW JERSEY, INC.

Type of Entity: Corporation
State of Organization: New Jersey
Mailing Address: 1830 Route 130, Burlington, NJ 08046
Telecopier No.: (609) 387-9011

MORTGAGED Street Address: 1830 Route 130
PREMISES: Township of: Burlington
County of: Burlington
State of: New Jersey

WHEREAS, the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
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 of New Jersey
(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, the New Jersey Economic Development Authority
(the "Authority"), a public body corporate and politic constituting an
instrumentality of the State of New Jersey was created to aid in remedying
the aforesaid conditions and to implement the purposes of the Act, and the
Legislature has determined that the authority and powers conferred upon the
Authority under the Act and the expenditure of moneys pursuant thereto
constitute 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 has been so declared to be as a
matter of express legislative determination; 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

Page 139
<PAGE>

WHEREAS, Mortgagor (also referred to herein as the "Company")
submitted an application (the "Original Application") to the Authority for
financial assistance in the principal amount of $10,000,000 for financing a
portion of the costs of a project (the "1985 Project") consisting of the
acquisition of 46.779 acres of land in the Township of Burlington,
Burlington County, New Jersey, the construction of an approximately 500,000
square foot building situate thereon for use as a national distribution center
for the Company's products (which building currently contains 75,000 square feet
of office space), the equipping of such building with conveyor systems, rolling
racks and automated machinery and the construction of a parking lot adjacent to
such building, and the Authority, by resolution duly adopted July 3, 1985 in
accordance with the Act, accepted the application of the Company for
assistance in financing the 1985 Project; and

WHEREAS, the Authority, by resolution duly adopted September 4, 1985
in accordance with the Act, authorized the issuance of not to exceed $10,000,000
aggregate principal amount of its Economic Development Bonds (Burlington Coat
Factory Warehouse of New Jersey, Inc. - 1985 Project) for the purpose of making
a loan to the Company to finance the 1985 Project (the "Original Loan"); and

WHEREAS, on September 20, 1985 the Authority issued $10,000,000 of its
Economic Development Bonds dated September 1, 1985 to finance the 1985 Project
(the "Prior Bonds"); and

WHEREAS, those Prior Bonds maturing on or after September 1, 1996 are
subject to redemption prior to maturity, at the option of the Company, on any
interest payment date on or after September 1, 1995; and

WHEREAS, the Company desires to redeem $10,000,000 aggregate principal
amount of the Prior Bonds maturing on or after September 1, 1996 (the "Refunded
Bonds") on September 1, 1995; and

WHEREAS, the Company, by letter dated May 10, 1995, notified the
Authority of its intent to redeem the Refunded Bonds on September 1, 1995 and
has requested the Authority's assistance in the issuance of not to exceed
$10,000,000 aggregate principal amount of bonds to refinance the 1985 Project
and to redeem the Refunded Bonds; and

WHEREAS, on July 11, 1995, the Authority, by resolution duly adopted
(the "Resolution"), authorized the issuance of its Economic Development
Refunding Bonds (Burlington Coat Factory Warehouse of New Jersey, Inc. - 1995
Project) (the "Refunding Bonds" or the "Bonds") for the purpose of providing
funds for the Company to refinance the 1985 Project and to redeem the Refunded
Bonds (the "Project"); and

WHEREAS, the Authority has determined to issue the Bonds concurrently
herewith pursuant to the Act, the Resolution and the Indenture (as hereinafter
defined); and

WHEREAS, the Loan shall be secured by a first mortgage lien (subject
only to the defeasance of the Prior Bonds and the release of all liens created
under the Prior Indenture (as herein defined)) on the Premises (as hereinafter
defined), an Assignment of Leases on the Project Facility (as hereinafter
defined), a first priority security interest in the Machinery and

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Equipment (as hereinafter defined), a Guaranty (as hereinafter defined), and
such othersecurity granted by the Company in connection with this transaction;
and

WHEREAS, the Authority, contemporaneously with the execution and
delivery of this Agreement, shall enter into a Loan Agreement with the Company,
and an Indenture of Trust dated as of August 1, 1995 (the "Indenture") wherein
the Authority has assigned certain of its rights under the Loan Agreement to the
Trustee for the benefit of the Holders from time to time of the Bonds; and

WHEREAS, to facilitate the issuance and sale of the Bonds and to
enhance the marketability of the Bonds, the Company has requested the Bank to
issue an irrevocable direct pay letter of credit substantially in the form of
Annex A attached hereto (the "Letter of Credit"), in an amount up to an
aggregate amount of $10,357,293.00 (as reduced and reinstated from time to time
in accordance with the provisions of the Reimbursement Agreement (defined
herein), the Letter of Credit and the other Loan Documents), of which (a)
the sum of $10,000,000 shall be available to pay the principal amount of the
Bonds either at maturity (whether at the stated maturity date or by
acceleration) or upon redemption thereof, and (b) the remainder shall be
available to pay up to 210 days' interest on the outstanding Bonds computed at
the rate of six and one hundred twenty-five thousandths percent (6.125%) per
annum accrued on the outstanding Bonds, as such interest becomes due; and

WHEREAS, the Company's obligations to the Bank under the Letter of
Credit are evidenced by a Letter of Credit and Reimbursement Agreement dated as
of even date herewith and entered into by and between the Company and the Bank
(the "Reimbursement Agreement"); and

WHEREAS, as a condition, among others, to its issuance of the Letter
of Credit, the Bank has required that the Company enter into this Mortgage and
Security Agreement; and

WHEREAS, all capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed thereto in the Reimbursement
Agreement;

1. GRANT OF ASSIGNMENT.

To induce Assignee to enter into the transaction described in the
foregoing recitals, and to secure the observance, payment and performance of the
Liabilities (as defined below), Assignor hereby conveys, transfers and assigns
to Assignee, all of the right, title and interest of Assignor now existing or
hereafter arising in and to:

1.1. All leases, subleases, tenancies, licenses, occupancy
agreements or agreements to lease all or any portion of the Mortgaged Premises
identified above and more particularly described on Schedule "A" attached hereto
(the "Mortgaged Premises"), including without limitation, the leases listed on
Schedule "B" attached hereto, together with

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any extensions, renewals, amendments, modifications or replacements thereof, and
any options, rights of first refusal or guarantees of any tenant's obligations
under any lease now or hereafter in effect (individually, a "Lease" and
collectively, the "Leases");

1.2. All rents, income, receipts, revenues, reserves, issues and
profits and similar payments of any kind payable under any Lease or otherwise
arising from the Mortgaged Premises, including, without limitation, minimum
rents, additional rents, percentage rents, parking, maintenance and deficiency
rents (together with the items described in Sections 1.3., 1.4. and 1.5. below,
the "Rents");

1.3. All awards and payments of any kind derived from or
relating to any Lease including, without limitation: (i) claims for the
recovery of damages to the Mortgaged Premises, or for the abatement of any
nuisance existing thereon; (ii) claims for damages resulting from acts of
insolvency or bankruptcy or otherwise; (iii) lump sum payments for the
cancellation or termination of any Lease, the waiver of any term thereof, or
the exercise of any right of first refusal or option to purchase; and (iv) the
return of any insurance premiums or ad valorem tax payments made in advance and
subsequently refunded;

1.4. The proceeds of any rental insurance carried by Assignor on
the Mortgaged Premises; and

1.5. All security deposits and escrow accounts made by any
tenant or subtenant under any Lease.

2. LOAN DOCUMENTS; INCORPORATION BY REFERENCE.

This Assignment is the Assignment of Leases referred to in the
Reimbursement Agreement. As additional security for the payment and performance
to Assignee of the Liabilities, Assignor has executed and delivered to Assignee
a Mortgage and Security Agreement (the "Mortgage") constituting a first priority
lien and security interest in the Mortgaged Premises (subject only to the
defeasance of the Prior Bonds and the release of all liens created under the
Prior Indenture) and other collateral documents described in or accompanying
the Reimbursement Agreement or Mortgage. This Assignment of Leases, the
Reimbursement Agreement, the Letter of Credit, the Indenture, the Loan
Agreement, the Guaranty, the Financing Statements, the Mortgage, the Placement
Agreement, the Escrow Deposit Agreement, and all other guarantees, documents,
certificates and instruments executed in connection therewith are sometimes
hereinafter referred to collectively as the "Loan Documents" or individually as
a "Loan Document". The terms of the Loan Documents are hereby made a part of
this Assignment to the same extent and with the same effect as if fully set
forth herein.

3. LIABILITIES.

This Assignment secures: (i) the repayment of all sums due under
the Reimbursement Agreement and the other Loan Documents (and all extensions,
renewals, replacements, substitutions, amendments and modifications thereof);
(ii) the performance of all terms, conditions and covenants set forth in the
Loan Documents; and (iii) all obligations and indebtedness of every kind and
description of Assignor to Assignee arising under the Loan

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Documents, whether primary or secondary, absolute or contingent, direct or
indirect, sole, joint or several, secured or unsecured, due or to become due,
contractual or tortious, arising by operation of law or otherwise, or now or
hereafter existing (including without limitation, principal, interest, fees,
late charges and expenses, including attorneys' fees). All of the foregoing
shall collectively be defined as the "Liabilities".

4. REPRESENTATIONS AND WARRANTIES.

Assignor represents and warrants to Assignee as follows: (i)
Assignor has title to and full right to assign the Leases and the Rents
thereunder; (ii) no other assignment of any interest in any of the Leases or
Rents has been made; (iii) there are no leases or agreements to lease all or any
portion of the Mortgaged Premises now in effect except the Leases, true and
complete copies of which have been furnished to Assignee, and no written or
oral modifications have been made thereto; (iv) there is no existing default by
Assignor or by any tenant under any of the Leases, nor has any event occurred
which due to the passage of time, the giving or failure to give notice, or both,
would constitute a default under any of the Leases and, to the best of
Assignor's knowledge, no tenant has any defenses, set-offs or counterclaims
against Assignor; (v) the Leases are in full force and effect; (vi) Assignor
has not done anything which might prevent Assignee from or limit Assignee in
operating under this Assignment; (vii) Assignor has not accepted Rent under any
Lease more than one (1) month in advance of its accrual, and payment thereof has
not otherwise been forgiven, discounted or compromised; and (viii) Assignor has
not received any funds or deposits from any tenant except as expressly provided
for in a Lease.

5. COVENANTS.

5.1. Assignor covenants and agrees that Assignor will perform
all of its obligations, as landlord, under the Leases and will enforce the
performance by tenants of all of their respective obligations under the Leases,
and will not do or permit to be done anything to impair the security thereof.
Assignor covenants and agrees that Assignor will not, without the prior
written consent of Assignee in each instance: (i) accept or collect the Rent
under any Lease more than one (1) month in advance of the due date thereof; (ii)
anticipate, discount, compromise, forgive, encumber or assign the Rents or any
part thereof or any Lease or any interest therein; (iii) modify, amend or
otherwise change the terms of any Lease; (iv) subordinate any Lease to any
mortgage or other encumbrance; (v) consent to any assignment of or subletting
under any Lease; (vi) cancel or terminate any Lease or accept a surrender
thereof; (vii) release any guarantor or surety of any tenant's obligations under
any of the Leases; or (viii) enter into any Lease subsequent to the date hereof.
Any of the foregoing acts, if done without the prior written consent of
Assignee, shall be null and void.

5.2. Assignor covenants and agrees to furnish to Assignee, on
request: (i) a complete list, as of the date of such request, of all existing
Leases and the Rents payable thereunder, and providing such further detail as
Assignee may request; (ii) executed or certified copies of all existing Leases
and any modifications or amendments thereto; and (iii) specific, separate
assignments of any future Leases duly executed and acknowledged by Assignee.

5.3. Assignor hereby indemnifies and agrees to protect,
defend and hold harmless Assignee, any entity which "controls"
Assignee within the meaning of Section 15 of

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the Securities Act of 1933, as amended, or is under common control with
Assignee, and any member, officer, director, official, agent, employee or
attorney of Assignee, and their respective heirs, administrators, executors,
successors and assigns (collectively, the "Indemnified Parties"), from and
against any and all losses, damages, expenses or liabilities
of any kind or nature and from any suits, claims or demands,
including reasonable attorneys' fees incurred in investigating or defending
such claim, suffered by any of them and caused by, relating to, arising out
of or resulting from any claim by any tenant or any other party arising under or
in connection with any of the Leases or this Assignment (unless, as to any
Indemnified Party, such claim, as determined by a final judgment of a court of
competent jurisdiction, has been caused solely by the gross negligence or
willful misconduct of such Indemnified Party). In case any action shall be
brought against Assignee or any other Indemnified Party in respect to which
indemnity may be sought against Assignor, Assignee or such other Indemnified
Party shall promptly notify Assignor and Assignor shall assume the
defense thereof, including the employment of counsel selected by Assignor
and satisfactory to Assignee, the payment of all costs and expenses, and the
right to negotiate and consent to settlement. The failure of Assignee to so
notify Assignor shall not relieve Assignor of any liability it may have under
the foregoing indemnification provisions or from any liability which
it may otherwise have to Assignee or any of the other Indemnified Parties.
Assignee shall have the right, at its sole option, to employ separate counsel in
any such action and to participate in the defense thereof, all at Assignor's
sole cost and expense. Assignor shall not be liable for any settlement of any
such action effected without its consent, but if settled with Assignor's
consent, or if there be a final judgment for the claimant in any such action,
Assignor agrees to indemnify and save harmless Assignee from and against any
loss or liability by reason of such settlement or judgment.

5.4. Assignee may elect, at its sole option, and without
releasing Assignor from any obligation hereunder or under the Leases, to
discharge any obligation under any Lease which Assignor fails to discharge,
including without limitation, defending, at its own cost and expense, any action
brought against Assignor, Assignee or any other Indemnified Party with respect
thereto, and all sums expended by Assignee in connection therewith, including
costs, expenses and reasonable attorneys' fees, shall be included in the
Liabilities secured by this Assignment and the other Loan Documents, and shall
be due and payable on demand, together with interest thereon at three percent
(3%) per annum above the rate of interest then in effect under the
Reimbursement Agreement, such interest to be calculated from the date of such
advance to the date of repayment thereof. Section 5.3. and
this Section 5.4. shall survive the repayment of the Liabilities and the
release or satisfaction of this Assignment.

6. RIGHTS AND OBLIGATIONS OF Assignor.

6.1. Notwithstanding any legal presumption to the contrary,
Assignee shall not be obligated by reason of its acceptance of this Assignment
to perform any obligation of Assignor under any of the Leases, and Assignee
shall not, prior to entry upon and taking possession of the Mortgaged Premises,
be deemed a mortgagee in possession.

6.2. This Assignment shall not operate to place responsibility
upon Assignee for: (i) the control, care, operation, management or repair of
the Mortgaged Premises; (ii) the performance of any of the terms or conditions
of the Leases; (iii) any waste committed on, or any dangerous or defective
condition at the Mortgaged Premises; or (iv) any

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negligence in the control, care, operation, management or repair of the
Mortgaged Premises, resulting in loss or injury or death to any tenant,
licensee, employee or other person or loss of or damage to the property of
any of the foregoing. Assignee assumes no liability for any security
deposited with Assignor by any tenant unless and until such deposits
are assigned and delivered to Assignee.

6.3. This Assignment is intended to be and shall constitute an
unconditional, absolute and present assignment from Assignor to Assignee and not
an assignment for additional security only. Notwithstanding that this
Assignment is effective immediately, Assignor shall have the right under a
revocable license granted hereby to collect as they become due, but not prior to
accrual, all Rents from the Mortgaged Premises and to retain, use and enjoy
the same; provided, however, that Assignee shall have the right, without
notice to or further demand on Assignor, (i) to revoke such license at any time,
and from time to time, whether before or after an Event of Default (as
hereinafter defined) has occurred hereunder, (ii) to direct all tenants under
the Leases to pay all Rents directly to Assignee, (iii) to collect and
receive all Rents as they become due and payable and apply such Rents to the
payment of the LC Indebtedness and any other sums due and payable under any
of the Loan Documents, and (iv) to disburse the remainder of the Rents to
Assignor to pay the operating expenses of the Mortgaged Premises.

6.4. So long as Assignee has not revoked the license granted
hereby, Assignor shall receive and hold such Rents, as well as the right and
license to receive such Rents, as a trust fund to be applied, and Assignor
hereby covenants and agrees that such Rents shall be so applied, first to the
payment of real estate taxes and other lienable assessments, then to the cost
of insurance, maintenance and repairs, then to the satisfaction of Assignor's
obligations under the Leases, and then to the payment of interest and principal
and other sums becoming due under the Liabilities, before using any part of the
Rents for any other purpose. Should all or any portion of such Rents be
utilized other than as herein provided, Assignor, and all those who
participate in such action, shall, immediately from and after the revocation
of the license granted hereby without further notice or demand or
acceleration of the Liabilities, be liable to Assignee for conversion.

7. EVENTS OF DEFAULT.

Each of the following shall constitute a default (each, an "Event
of Default") hereunder:

7.1. Any representation or warranty made by Assignor in this
Assignment shall prove to be false, incorrect or misleading in any material
respect as of the date when made;

7.2. A breach by Assignor of any term, covenant, condition,
obligation or agreement under this Assignment;

7.3. A default by Assignor under any of the Leases; or

7.4. An Event of Default under any of the other Loan Documents.

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8. REMEDIES UPON AN EVENT OF DEFAULT.

Upon or at any time after the occurrence of an Event of Default,
Assignee may exercise any one or more of the following rights and remedies:

8.1. Without regard to the adequacy of any security, and with or
without appointment of a receiver, and irrespective of Assignor's possession,
Assignee may then or thereafter enter upon and take possession of the Mortgaged
Premises; have, hold, manage, lease and operate the same; revoke the license
granted to Assignor to collect the Rents without notice to or further demand
on Assignor (unless Assignee has previously revoked the license granted
hereunder and such revocation is still in effect), and collect, in its
own name or in the name of Assignor, and receive all Rents accrued but unpaid
and in arrears as of the date of such Event of Default, as well as the Rents
which thereafter become due and payable; and have full power to make from time
to time all alterations, renovations, repairs or replacements to the Mortgaged
Premises as Assignee may deem proper. Upon the revocation of the license
granted to Assignor (and irrespective of whether such revocation occurs before
or after an Event of Default), Assignee may notify the tenants under the Leases
to pay all Rents directly to Assignee. Any Rents collected by Assignor after
the revocation of such license shall be deemed the property of Assignee and
shall be paid to Assignee on demand. Such Rents shall be deposited in the Cash
Collateral Account and applied in accordance with the Reimbursement Agreement
and the Indenture. Assignor hereby irrevocably authorizes and directs the
tenants under the Leases, upon receipt of written notice from Assignee, to pay
all Rents due under the Leases to Assignee without the necessity of any inquiry
to Assignor and without any liability respecting the determination of the
actual existence of any Event of Default claimed by Assignee or any claim by
Assignor to the contrary. Assignor further agrees that it shall facilitate in
all reasonable ways Assignee's collection of the Rents and will, upon Assignee's
request, execute and deliver a written notice to each tenant under the Leases
directing such tenants to pay the Rents to Assignee. Assignor shall have no
right or claim against any parties to any Lease who make payment to Assignee
after receipt of written notice from Assignee requesting same.

8.2. Assignee may apply such Rents to the payment of: (i) the
cost of all alterations, repairs, replacements and expenses incident to taking
and retaining possession of the Mortgaged Premises and the management and
operation thereof; (ii) all taxes, charges, claims, assessments, water rents,
sewer rents and any other liens which may be prior in lien or payment to the
Liabilities, and premiums for insurance, with interest on all such items; and
(iii) the Liabilities, together with all costs and attorneys' fees; all in
accordance with the provisions of the Reimbursement Agreement and the Indenture.

8.3. Assignee may: (i) endorse as Assignor's attorney-in-fact
the name of Assignor or any subsequent owner of the Mortgaged Premises on any
checks, drafts or other instruments received in payment of the Rents, and
deposit the same in bank accounts, which power of attorney, being for security,
is coupled with an interest and shall be irrevocable; (ii) give proper
receipts, releases and acquittances in relation thereto in the name of Assignor;
(iii) institute, prosecute, settle or compromise any summary or legal
proceedings in the name of Assignor for the recovery of the Rents, or for damage
to the Mortgaged Premises, or for the abatement of any nuisance thereon; and
(iv) defend any legal proceedings brought against Assignor arising out of
the operation of the Mortgaged Premises. Any charges, expenses or

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fees, including reasonable attorneys' fees and costs, incurred by Assignee in
connection with any of the foregoing shall be included in the Liabilities
secured by this Assignment and the other Loan Documents, and shall be due and
payable on demand, together with interest at three percent (3%) per annum above
the rate of interest then in effect under the Reimbursement Agreement, such
interest to be calculated from the date of such advance to the date of repayment
thereof.

8.4. Assignee may, at its election, but shall not be obligated
to: (i) perform any of Assignor's obligations under the Leases (provided,
however, that Assignor shall remain liable for such obligations notwithstanding
such election by Assignee); (ii) exercise any of Assignor's rights, powers or
privileges under the Leases; (iii) modify, cancel or renew existing Leases or
make concessions to the tenants thereto; and (iv) execute new Leases for all
or any portion of the Mortgaged Premises.

9. ESTOPPEL CERTIFICATES.

Assignor shall, from time to time, without charge and within ten
(10) days after requested by Assignee, execute, acknowledge and deliver, and
cause each tenant under the Leases to execute, acknowledge and deliver to
Assignee a written statement, in form and substance satisfactory to Assignee,
certifying to certain matters relating to the Leases, including without
limitation: (i) the commencement and expiration dates of the Leases and the
dates when any rents, charges and other sums commenced to be payable thereunder;
(ii) that the Leases are unmodified and in full force and effect (or, if
modified, stating the nature of such modifications and that the Leases as so
modified are in full force and effect); (iii) the amount of Rents (including
a breakdown thereof) payable under the Leases and the dates to which the Rents
and other charges under the Leases have been paid in advance; and (iv)
whether there are any uncured defaults by Assignor or Assignee or any setoffs or
defenses against enforcement of any terms or conditions under any Lease.

10. ASSIGNEE AS CREDITOR OF TENANTS.

Notwithstanding the license granted by Assignee in Section 6.3.
hereof, Assignee, and not Assignor, shall be deemed to be the creditor of each
tenant in respect of any assignment for the benefit of creditors, bankruptcy,
reorganization, insolvency, dissolution or receivership proceedings affecting
such tenant. Assignee shall have the option to have any money received by
Assignee as such creditor applied to reduce the Liabilities or paid over to
Assignor. Assignee shall have the right to file claims in any such proceedings
and to otherwise pursue creditors' rights therein.

11. TERM.

Upon repayment in full of the Liabilities and the satisfaction or
discharge of the Mortgage, this Assignment shall automatically terminate and
become null and void. Prior to such termination, the affidavit or certificate
of any representative or attorney of Assignee stating that any of the
Liabilities remain unpaid shall be conclusive evidence of the validity,

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effectiveness and continuing force of this Assignment, and any person is
hereby authorized to rely thereon.

12. OTHER RIGHTS OF ASSIGNEE.

Assignee may, without prejudice to any of its rights under this
Assignment, take or release other security, release any party primarily or
secondarily liable for any of the Liabilities, and grant extensions, renewals,
modifications or indulgences with respect to any Loan Document to which it is a
party or of which it is a beneficiary.

13. NO WAIVER.

13.1. The collection of Rents under the Leases, the taking of
possession of the Mortgaged Premises, or any other remedial action taken by
Assignee shall not waive any Event of Default or waive, modify or affect any
notice of default under the Loan Documents, or invalidate any act done pursuant
to such notice, and the enforcement of any such right or remedy by Assignee,
once exercised, shall continue for so long as Assignee shall elect,
notwithstanding that the collection and application of such Rents may have cured
the original Event of Default. If Assignee thereafter elects to discontinue the
exercise of any such right or remedy, that or any other right or remedy under
this Assignment may be reasserted at any time and from time to time following
any subsequent Event of Default.

13.2. Assignee shall not be deemed to have modified or waived
any of its rights or remedies hereunder unless such modification or waiver is in
writing and signed by Assignee, and then only to the extent specifically set
forth therein. A waiver in one event shall not be construed as continuing or as
a waiver of or bar to such right or remedy on a subsequent event. In the event
any agreement contained in this Assignment should be breached by Assignor and
thereafter waived by Assignee, such waiver shall be limited to the actual
breach so waived and shall not be deemed to waive any other breach hereunder.

14. CONTINUING ENFORCEMENT OF ASSIGNMENT.

If, after receipt of any payment of all or any part of the
Liabilities, Assignee is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Assignment and the other Loan Documents shall continue
in full force and effect or be reinstated, as the case may be, and Assignor
shall be liable for, and shall indemnify, defend and hold harmless Assignee with
respect to the full amount so surrendered. The provisions of this Section 14
shall survive the termination of this Assignment and the other Loan Documents
and shall remain effective notwithstanding the payment of the Liabilities,
the defeasance of the Bonds, the release of any security interest, lien or
encumbrance securing the Liabilities or any other action which Assignee may have
taken in reliance upon its receipt of such payment. Any cancellation, release
or other such action by Assignee shall be deemed to have been conditioned upon
any payment of the Liabilities having become final and irrevocable.

15. MISCELLANEOUS.

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15.1. Remedies Cumulative. The rights and remedies of Assignee
as provided in this Assignment or in any other Loan Document shall be cumulative
and concurrent, may be pursued separately, successively or together, may be
exercised as often as occasion therefor shall arise, and shall be in addition to
any other rights or remedies conferred upon Assignee at law or in equity. The
failure, at any one or more times, of Assignee to assert the right to declare
the Liabilities due, grant any extension of time for payment of the Liabilities,
take other or additional security for the payment thereof, release any security,
change any of the terms of the Loan Documents, or waive or fail to exercise
any right or remedy under any Loan Document shall not in any way affect this
Assignment or the rights of Assignee.

15.2. Integration. This Assignment and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.

15.3. Attorneys' Fees and Expenses. If Assignee retains the
services of counsel by reason of a claim of a default or an Event of Default
hereunder or under any of the other Loan Documents, or on account of any matter
involving the assignment intended to be granted hereby, or for examination of
matters subject to Assignee's approval under the Loan Documents, all costs of
suit and all reasonable attorneys' fees (and/or allocated fees of Assignee's
in-house legal counsel) and such other reasonable expenses so incurred by
Assignee shall forthwith become due and payable, on demand, and shall be secured
hereby.

15.4. Partial Invalidity. The invalidity or unenforceability of
any one or more provisions of this Assignment shall not render any other
provision invalid or unenforceable. In lieu of any invalid or unenforceable
provision, there shall be added automatically a valid and enforceable provision
as similar in terms to such invalid or unenforceable provision as may be
possible.

15.5. Binding Effect. The covenants, conditions, waivers,
releases and agreements contained in this Assignment shall bind, and the
benefits thereof shall inure to, the parties hereto and their respective heirs,
executors, administrators, successors and assigns and are intended and shall be
held to be real covenants running with the land; provided, however, that this
Assignment cannot be assigned by Assignor without the prior written consent
of Assignee, and any such assignment or attempted assignment by Assignor
shall be void and of no effect with respect to Assignee.

15.6. Modifications. This Assignment may not be supplemented,
extended, modified or terminated except by an agreement in writing and signed by
Assignor and Assignee.

15.7. Affiliate. As used herein, "Affiliate" shall mean First
Fidelity Bancorporation and any of its direct and indirect affiliates and
subsidiaries.

15.8. Jurisdiction. Assignor irrevocably appoints each and
every owner, partner and/or officer of Assignor as its attorneys upon whom may
be served, by regular or certified mail at the address set forth above, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Assignment or any of the other Loan Documents; and
Assignor hereby consents that any action or proceeding against it be

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commenced and maintained in any court within the State of New Jersey or in the
United States District Court for any District of New Jersey by service of
process on any such owner, partner and/or officer; and Assignor agrees that the
courts of the State of New Jersey and the United States District Court for any
District of New Jersey shall have jurisdiction with respect to the subject
matter hereof and the person of Assignor and all collateral securing the
obligations of Assignor. Assignor agrees not to assert any defense to any
action or proceeding initiated by Assignee based upon improper venue or
inconvenient forum. Assignor agrees that any action brought by Assignor shall
be commenced and maintained only in a court in the federal judicial district or
county in which Assignee has its principal place of business in New Jersey.

15.9. Notices. All notices and communications under this
Assignment shall be in writing and shall be given by either (a) hand delivery,
(b) first class mail (postage prepaid) to the addresses listed in this
Assignment, (c) reliable overnight commercial courier (charges prepaid) or
(d) telecopied to the addresses or phone numbers listed in this Assignment.
Notice shall be deemed to have been given and received: (i) if by hand
delivery, upon delivery; (ii) if by mail, three (3) calendar days after the date
first deposited in the United States mail; (iii) if by overnight courier, on the
date scheduled for delivery; and (iv) if by telecopier, upon receipt of
evidence of the successful transmission thereof. A party may change its
address by giving written notice to the other party as specified herein.

15.10. Governing Law. This Assignment shall be governed by and
construed in accordance with the substantive laws of the State of New Jersey
without reference to conflict of laws principles.

15.11. Waiver of Jury Trial. ASSIGNOR AND ASSIGNEE AGREE
THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM,
BROUGHT BY ASSIGNEE OR ASSIGNOR, ON OR WITH RESPECT TO THIS ASSIGNMENT
OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A
JURY. ASSIGNEE AND ASSIGNOR EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, ASSIGNOR WAIVES ANY RIGHT IT MAY HAVE TO CLAIM
OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. ASSIGNOR ACKNOWLEDGES AND AGREES THAT
THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS ASSIGNMENT AND
THAT ASSIGNEE WOULD NOT EXTEND CREDIT TO ASSIGNOR OR

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ASSIGNOR (AS APPLICABLE) IF THE WAIVERS SET FORTH IN THIS SECTION WERE
NOT A PART OF THIS ASSIGNMENT.

IN WITNESS WHEREOF, Assignor, intending to be legally bound, has duly
executed and delivered this Assignment of Leases and Rents as of the day and
year first above written.

ATTEST: BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.

____________________________ By:________________________________
Name: Robert L. LaPenta, Jr. Name: Mark A. Nesci
Title: Assistant Secretary Title: Vice President

[SEAL]

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SCHEDULE "A"

DESCRIPTION OF MORTGAGED PREMISES

Street Address: 1830 Route 130, Burlington, NJ 08016

Parcel Number: Lots 7, 6.01 and a small part of Lot 6 (as indicated by the
broken line on the tax map of Burlington Township annexed hereto
as Annex A-1) of Block 147 on the tax map of Burlington Township

Legal Description: See Annex A-2.

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SCHEDULE "B"

LIST OF LEASES

All Leases between Assignor, as landlord, and any other person or
entity, as tenant, now existing or hereafter entered into including, without
limitation, the Leases listed below. The omission of any or all presently
existing Leases from this Schedule B shall not be deemed an omission of such
Leases from the effect of this Assignment, it being the intent of the parties
that all such Leases now existing or hereafter entered into shall be subject to
this Assignment, whether or not specifically enumerated below.

As of August 24, 1995, there are no leases.

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ACKNOWLEDGMENT

STATE OF NEW JERSEY :
: SS.:
COUNTY OF BURLINGTON :

On this, the ___ day of August, 1995 before me, the undersigned
officer, personally appeared Mark A. Nesci, who acknowledged himself to be a
Vice President of Burlington Coat Factory Warehouse of New Jersey, Inc., a New
Jersey corporation, and that he, as such officer being authorized to do so,
executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself as such officer,
and desired that the same might be recorded as such.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

_____________________________________
Notary Public
My Commission Expires:

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EXHIBIT 10.6

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MORTGAGE AND SECURITY AGREEMENT

BURLINGTON COAT FACTORY WAREHOUSE OF NEW JERSEY, INC., as Mortgagor

in favor of

FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Mortgagee

Dated as of August 1, 1995

Record and Return to: Lisa R. Jacobs
Pepper, Hamilton & Scheetz
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103-2799

Prepared by: ___________________________
Lisa R. Jacobs, Esq.

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MORTGAGE AND SECURITY AGREEMENT

DATE: As of August 1, 1995

MORTGAGEE: FIRST FIDELITY BANK, NATIONAL ASSOCIATION
123 S. Broad Street, PMB 006
Philadelphia, PA 19109
Attention: Stephen H. Clark, Vice President
Telecopier No.: (215) 985-8793

MORTGAGOR: BURLINGTON COAT FACTORY WAREHOUSE OF
NEW JERSEY, INC.

Type of Entity: Corporation
State of Organization: New Jersey
Mailing Address: 1830 Route 130, Burlington, NJ 08016
Telecopier No.: (609) 387-9011

MORTGAGED Street Address: 1830 Route 130
PREMISES: Township of: Burlington
County of: Burlington
State of: New Jersey

WHEREAS, the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
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 of New Jersey
(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, the New Jersey Economic Development Authority (the
"Authority"), a public body corporate and politic constituting an
instrumentality of the State of New Jersey was created to aid in remedying the
aforesaid conditions and to implement the purposes of the Act, and the
Legislature has determined that the authority and powers conferred upon the
Authority under the Act and the expenditure of moneys pursuant thereto
constitute 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 has been so declared to be as a matter of express
legislative determination; 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

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WHEREAS, Mortgagor (also referred to herein as the "Company")
submitted an application (the "Original Application") to the Authority for
financial assistance in the principal amount of $10,000,000 for financing a
portion of the costs of a project (the "1985 Project") consisting of the
acquisition of 46.779 acres of land in the Township of Burlington, Burlington
County, New Jersey, the construction of an approximately 500,000 square foot
building situate thereon for use as a national distribution center for the
Company's products (which building currently contains 75,000 square feet of
office space), the equipping of such building with conveyor systems, rolling
racks and automated machinery and the construction of a parking lot adjacent
to such building, and the Authority, by resolution duly adopted July 3, 1985
in accordance with the Act, accepted the application of the Company for
assistance in financing the 1985 Project; and

WHEREAS, the Authority, by resolution duly adopted September 4, 1985
in accordance with the Act, authorized the issuance of not to exceed $10,000,000
aggregate principal amount of its Economic Development Bonds (Burlington Coat
Factory Warehouse of New Jersey, Inc. - 1985 Project) for the purpose of making
a loan to the Company to finance the 1985 Project (the "Original Loan"); and

WHEREAS, on September 20, 1985 the Authority issued $10,000,000 of its
Economic Development Bonds dated September 1, 1985 to finance the 1985 Project
(the "Prior Bonds"); and

WHEREAS, the Company desires to redeem $10,000,000 aggregate principal
amount of the Prior Bonds maturing on or after September 1, 1996 (the "Refunded
Bonds") on September 1, 1995; and

WHEREAS, on July 11, 1995, the Authority, by resolution duly adopted
(the "Resolution"), authorized the issuance of its Economic Development
Refunding Bonds (Burlington Coat Factory Warehouse of New Jersey, Inc. - 1995
Project) (the "Refunding Bonds" or the "Bonds") for the purpose of providing
funds for the Company to refinance the 1985 Project and to redeem the Refunded
Bonds (the "Project"); and

WHEREAS, the Authority has determined to issue the Bonds concurrently
herewith pursuant to the Act, the Resolution and the Indenture (as hereinafter
defined); and

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the Project Facility (as hereinafter defined), a first priority security
interest in the Machinery and Equipment (as hereinafter defined), a Guaranty
(as hereinafter defined), and such other security granted by the Company in
connection with this transaction; and

WHEREAS, to facilitate the issuance and sale of the Bonds and to
enhance the marketability of the Bonds, the Company has requested the Bank to
issue an irrevocable direct pay letter of credit substantially in the form of
Annex A attached hereto (the "Letter of Credit"), in an amount up to an
aggregate amount of $10,357,293.00 (as reduced and reinstated from time to time
in accordance with the provisions of the Reimbursement Agreement (defined
herein), the Letter of Credit and the other Loan Documents), of which (a)
the sum of $10,000,000 shall be available to pay the principal amount of the
Bonds either at maturity (whether at the stated maturity date or by
acceleration) or upon redemption thereof, and (b) the remainder shall be
available to pay up to 210 days' interest on the outstanding Bonds computed
at the rate of six and one hundred twenty-five thousandths percent (6.125%)
per annum accrued on the outstanding Bonds, as such interest becomes due;

WHEREAS, as a condition, among others, to its issuance of the Letter
of Credit, the Bank has required that the Company enter into this Mortgage and
Security Agreement;

1. DEBT; LOAN DOCUMENTS. Mortgagor is indebted to Mortgagee in the
principal sum not to exceed Ten Million Three Hundred Fifty Seven Thousand Two
Hundred Ninety Three Dollars ($10,357,293.00), together with interest thereon,
as evidenced by Reimbursement Agreement.

This Mortgage is the Mortgage referred to in the Reimbursement
Agreement. The indebtedness and obligations evidenced by the Reimbursement
Agreement arise in connection with the Letter of Credit. As additional security
for the payment and performance to Mortgagee of the Liabilities (as defined
below), Mortgagor has executed and delivered to Mortgagee an Assignment of
Leases and Rents assigning all of Mortgagor's rights as lessor under all
leases affecting the Mortgaged Premises now or hereafter in effect (the
"Assignment of Leases"), and other collateral documents described in or
accompanying the Loan Agreement. This Mortgage, the Reimbursement
Agreement, the Letter of Credit, the Indenture,

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the Loan Agreement, the Guaranty, Financing Statements, the Assignment of
Leases, the Placement Agreement, the Escrow Deposit Agreement, and all other
guarantees, documents, certificates and instruments executed in connection
therewith are sometimes hereinafter referred to collectively as the "Loan
Documents" or individually as a "Loan Document". The terms and conditions of
the Loan Documents are hereby made a part of this Mortgage to the same extent
and with the same effect as if fully set forth herein. All capitalized terms
used but not otherwise defined herein shall have the respective meanings
ascribed to them in the Reimbursement Agreement.

2. LIABILITIES; GRANT OF MORTGAGE.

To secure to Mortgagee (i) the repayment of all sums due under the
Reimbursement Agreement and this Mortgage (and all extensions, renewals,
replacements, substitutions, amendments and modifications thereof) and the
other Loan Documents; (ii) the performance of all terms, conditions and
covenants set forth in the Loan Documents; and (iii) all obligations and
indebtedness of every kind and description of Mortgagor to Mortgagee arising
under the Loan Documents, whether primary or secondary, absolute or contingent,
direct or indirect, sole, joint or several, secured or unsecured, due or to
become due, contractual or tortious, arising by operation of law or otherwise,
or now or hereafter existing (including without limitation, principal, interest,
fees, late charges and expenses) (clauses (i), (ii) and (iii) hereof
collectively, the "Liabilities"), Mortgagor has granted, bargained, sold,
released and conveyed and by these presents does grant, bargain, sell, release
and convey unto Mortgagee, its successors and assigns, all of Mortgagor's right,
title and interest now owned or hereafter acquired in and to each of the
following (collectively, the "Mortgaged Premises"):

2.1. All those certain tracts of land set forth above as the Mortgaged
Premises and more particularly described in Schedule "A" attached hereto and
made a part hereof (the "Real Estate");

2.2. Any and all buildings and improvements now or hereafter erected
on, under or over the Real Estate;

2.3. Any and all fixtures, machinery, equipment and other articles of
real, personal or mixed property, belonging to Mortgagor, at any time now or
hereafter installed in, attached to or situated in or upon the Real Estate, or
the buildings and improvements now or hereafter erected thereon, and used or
intended to be used in connection with the operations and maintenance of a
certain national distribution center existing or to be erected on the Real
Estate, or in the operation of the buildings and improvements, plant, business
or dwelling situate thereon, whether or not such real, personal or mixed
property is or shall be affixed thereto, and all replacements, substitutions and
proceeds of the foregoing, including without limitation: all boilers, furnaces,
motors, appliances, transformers, generators, heaters, ranges, mantels,
sprinkling and other fire prevention or extinguishing equipment, gas and
electric fixtures, heating and plumbing, lighting, ventilating, refrigerating,
incinerating, security, communications, irrigating, cleaning, cooking and air
conditioning equipment, waste disposal equipment, elevators, escalators, cranes,
hoists and platforms, screens, storms sash, screen doors, awnings, blinds,
shades, gas and oil tanks, wall cabinets, together with all accessories,
substitutions, fittings, additions, replacements, parts and accessions to any
of the foregoing, any other building materials, building machinery
and building equipment delivered to the Real

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Estate during the course of, or in connection with any construction, repair or
renovation on or of the Real Estate or the improvements thereon, and all files,
books, ledgers, reports and records relating to any of the foregoing; excluding,
however, trade fixtures such as material handling equipment, office furniture
and fixtures, and all other items not related to the operation and maintenance
of the building and land, unless the Bank has paid for or reimbursed the
Borrower for the cost of acquiring the same, and all inventory of the Company.

2.4. Any and all leases, subleases, tenancies, licenses, occupancy
agreements or agreements to lease all or any portion of the Mortgaged Premises
and all extensions, renewals, amendments, modifications and replacements
thereof, and any options, rights of first refusal or guarantees relating thereto
(collectively, the "Leases"); all rents, income, receipts, revenues, security
deposits, escrow accounts, reserves, issues, profits, awards and payments of
any kind payable under the Leases or otherwise arising from the Mortgaged
Premises including, without limitation, minimum rents, additional rents,
percentage rents, parking, maintenance and deficiency rents (collectively, the
"Rents"); all accounts, general intangibles and contract rights (including any
right to payment thereunder, whether or not earned by performance) of any nature
relating to the Mortgaged Premises or the use, occupancy, maintenance,
construction, repair or operation thereof; all management agreements, franchise
agreements, utility agreements and deposits, building service contracts,
maintenance contracts, construction contracts and architect's agreements; all
maps, plans, surveys and specifications; all warranties and guaranties; all
permits, licenses and approvals; and all insurance policies, books of account
and other documents, of whatever kind or character, relating to the use,
construction upon, occupancy, leasing, sale or operation of the Mortgaged
Premises;

2.5. Any and all estates, rights, tenements, hereditaments,
privileges, easements, reversions, remainders and appurtenances of any kind
benefitting the Mortgaged Premises; all means of access to and from the
Mortgaged Premises, whether public or private; all streets, alleys, passages,
ways, water courses, water and mineral rights; all rights of Mortgagor as
declarant or unit owner under any declaration of condominium or association
applicable to the Mortgaged Premises; and all other claims or demands of
Mortgagor, either at law or in equity, in possession or expectancy of, in, or to
the Mortgaged Premises; and

2.6. Any and all "proceeds" of any of the above-described Mortgaged
Premises, which term shall have the meaning given to it in the Uniform
Commercial Code as in effect in New Jersey (the "Code") and shall additionally
include whatever is received upon the use, lease, sale, exchange, transfer,
collection or other utilization or any disposition or conversion of any of the
Mortgaged Premises, voluntary or involuntary, whether cash or non-cash,
including proceeds of insurance and condemnation awards, rental or lease
payments, accounts, chattel paper, instruments, documents, contract rights,
general intangibles, equipment and inventory.

TO HAVE AND TO HOLD the above granted and conveyed Mortgaged
Premises, or mentioned and intended so to be, with the appurtenances, unto
Mortgagee, its successors and assigns, forever.

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3. ADVANCES.

This Mortgage shall secure any and all present or future advances and
readvances under the Reimbursement Agreement and the other Loan Documents made
by Mortgagee to or for the benefit of Mortgagor or the Mortgaged Premises,
including, without limitation: (i) principal, interest, late charges, fees and
other amounts due under each of the other Loan Documents or this Mortgage; (ii)
all advances by Mortgagee to Mortgagor or any other person to pay costs of
erection, construction, alteration, repair, restoration, maintenance and
completion of any improvements on the Mortgaged Premises; (iii) all
advances made or costs incurred by Mortgagee for the payment of real estate
taxes, assessments or other governmental charges, maintenance charges, insurance
premiums, appraisal charges, environmental inspection, audit, testing or
compliance costs, and costs incurred by Mortgagee for the enforcement and
protection of the Mortgaged Premises or the lien of this Mortgage; and (iv) all
legal fees, costs and other expenses incurred by Mortgagee by reason of any
default or otherwise in connection with the Liabilities. Mortgagor agrees
that if, at any time during the term of this Mortgage or following a foreclosure
hereof, Mortgagor fails to perform or observe any covenant or obligation under
this Mortgage including, without limitation, payment of any of the foregoing,
Mortgagee may (but shall not be obligated to) take such steps as are reasonably
necessary to remedy any such nonperformance or nonobservance and provide payment
thereof. All amounts advanced by Mortgagee shall be added to the amount secured
by this Mortgage and the other LoanDocuments evidencing collateral security,
and shall be due and payable on demand, together with interest at three percent
(3%) per annum above the rate of interest then in effect under the Reimbursement
Agreement, such interest to be calculated from the date of such advance
to the date of repayment thereof. Mortgagor's obligations hereunder shall be
continuing and shall survive notwithstanding a foreclosure of this Mortgage.

4. ASSIGNMENT OF LEASES.

4.1. Mortgagor hereby assigns to Mortgagee, as further security for
the payment of the Liabilities, all Leases and Rents. Mortgagor shall, upon
demand, deliver to Mortgagee an executed copy of each Lease which, as of the
date hereof, has been evidenced by a writing. The parties hereto acknowledge
and agree that any Lease with respect to any portion of the Mortgaged Premises
effective after the date hereof shall be in writing and shall be subject to the
terms of Section 4.3 hereof. This assignment shall continue in effect until the
Liabilities are paid in full and this Mortgage is satisfied or discharged of
record; however, so long as no Event of Default (as defined below) exists,
Mortgagor shall have a license to collect, and may retain, use and enjoy the
Rents as they become due, but not prior to accrual, subject to the terms and
conditions set forth in the Assignment of Leases. Such license granted to
Mortgagor shall be immediately revoked without further notice or demand upon the
occurrence of an Event of Default.

4.2. Mortgagor shall timely perform all of its obligations under the
Leases. Mortgagor represents and warrants that: (i) there are no leases or
agreements to lease all or any part of the Real Estate now in effect, except
those specifically set forth in, and assigned to Mortgagee by, the Assignment of
Leases; and (ii) there is no assignment or pledge of any rents, issues or
profits of or from the Mortgaged Premises now in effect, except pursuant to the

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Assignment of Leases, and Mortgagor shall not make any assignment or pledge
thereof to anyone other than Mortgagee until the satisfaction in full of the
Liabilities.

4.3. Mortgagor shall not, without the prior written consent of
Mortgagee: (i) enter into any lease of all or any portion of the Mortgaged
Premises except in accordance with Section 5.13 of the Reimbursement Agreement;
(ii) amend, modify, terminate or accept a surrender of any Lease; or (iii)
collect or accept rent from any tenant of the Mortgaged Premises for a period of
more than one month in advance.

5. SECURITY AGREEMENT.

This Mortgage constitutes a security agreement under the Code and
shall be deemed to constitute a fixture financing statement. Mortgagor hereby
grants to Mortgagee a security interest in the personal and other property
included in the Mortgaged Premises (excluding inventory), and all replacements
of, substitutions for, and additions to, such property, and the proceeds
thereof. Mortgagor shall, at Mortgagor's own expense, execute, deliver, file
and refile any financing or continuation statements or other security agreements
Mortgagee may require from time to time to perfect, confirm and maintain the
lien of this Mortgage with respect to such property. Without limiting the
foregoing, Mortgagor hereby irrevocably appoints Mortgagee attorney-in-fact for
Mortgagor to execute, deliver and file such instruments for or on behalf of
Mortgagor at Mortgagor's expense, which appointment, being for security, is
coupled with an interest and shall be irrevocable.

6. REPRESENTATIONS, WARRANTIES AND COVENANTS.

6.1. Payment and Performance. Mortgagor shall (i) pay to Mortgagee
all sums required to be paid by Mortgagor under the Loan Documents, in
accordance with their stated terms and conditions; (ii) perform and comply with
all terms, conditions and covenants set forth in each of the Loan Documents by
which Mortgagor is bound; and (iii) perform and comply with all of Mortgagor's
obligations and duties as landlord under any Leases.

6.2. Seisin and Warranty. Mortgagor is seized of an indefeasible
estate in fee simple in, and warrants (with bargain and sale covenants) the
title to, the Mortgaged Premises; has good and valid title to all rents, issues
and profits therefrom, and has the right, full power and lawful authority to
grant, convey and assign the same to Mortgagee in the manner and form set forth
herein; and this Mortgage is a valid and enforceable first lien on the Mortgaged
Premises, subject only to that certain lien and security interest granted to the
trustee for the Prior Bonds pursuant to that certain indenture of trust dated as
of September 1, 1985 (the "Prior Indenture") and the documents, agreements and
instrument executed and delivered therewith, which liens and security interests
will be released in accordance with the provisions of Section 4.4 of the
Reimbursement Agreement. Mortgagor hereby covenants that Mortgagor shall (i)
preserve such title and the validity and priority of the lien of this Mortgage
and shall forever warrant and defend the same to Mortgagee against all lawful
claims whatsoever; and (ii) execute, acknowledge and deliver all such further
documents or assurances, and cause to be done all such further acts as may at
any time hereafter be required by Mortgagee to protect fully the lien of this
Mortgage.

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6.3. Insurance.

(a) Mortgagor shall obtain and maintain at all times throughout
the term of this Mortgage insurance of the types, in such amounts and otherwise
as required pursuant to Section 5.7 of the Reimbursement Agreement.

(b) Mortgagor shall not take out any separate or additional
insurance with respect to the Mortgaged Premises which is contributing in the
event of loss unless approved by Mortgagee and in conformity with the
requirements of this Section 6.3.

(c) Notwithstanding the foregoing, in the event that Mortgagor
fails to maintain insurance in accordance with this Section 6.3., and Mortgagee
elects to obtain insurance to protect its interests hereunder, Mortgagee may
obtain insurance in any amount and of any type Mortgagee deems appropriate to
protect Mortgagee's interest only and Mortgagee shall have no duty or obligation
to Mortgagor to maintain insurance in any greater amount or of any other type
for the benefit of Mortgagor. All insurance premiums incurred or paid by
Mortgagee shall be at Mortgagor's sole cost and expense in accordance with
Section 3 hereof. Mortgagee's election to obtain insurance shall not be deemed
to waive any Event of Default (as hereinafter defined) hereunder.

6.4. Taxes and Other Charges. Mortgagor shall prepare and timely file
all federal, state and local tax returns required to be filed by Mortgagor and
promptly pay and discharge all taxes, assessments, water and sewer rents, and
other governmental charges imposed upon Mortgagor, the Mortgaged Premises or on
any of Mortgagor's other property when due, but in no event after interest or
penalties commence to accrue thereon or become a lien upon such property, except
for those taxes, assessments, water and sewer rents, or other governmental
charges then being contested in good faith by Mortgagor by appropriate
proceedings and for which Mortgagor has established for the payment thereof
adequate reserves in accordance with GAAP, and so long as such contest: (i)
operates to prevent collection, stay any proceedings which may be instituted to
enforce payment of such item, and prevent a sale of the Mortgaged Premises to
pay such item; (ii) is maintained and prosecuted with due diligence; and (iii)
shall not have been terminated or discontinued adversely to Mortgagor.
Mortgagor shall submit to Mortgagee, upon request, an affidavit signed by
Mortgagor certifying that all federal, state and local tax returns have been
filed to date and all taxes, assessments, water and sewer rents, and other
governmental charges with respect to Mortgagor's properties have been paid to
date.

6.5. Escrows. If required by Mortgagee, following and during the
continuance of an Event of Default, Mortgagor shall pay to Mortgagee at the time
of payment of each installment of principal and interest due under the
Reimbursement Agreement, and commencing with the first payment due after the
date of such request, a sum equal to (a) the amount of the next installment of
taxes, water and sewer rents and assessments levied or assessed against the
Mortgaged Premises, and/or (b) the premiums which will next become due on the
insurance policies required by this Mortgage, all in amounts as estimated by
Mortgagee, less all sums already paid therefor or deposited with Mortgagee for
the payment thereof, divided by the number of payments to become due before
one (1) month prior to the date when such taxes and assessments and/or
premiums, as applicable, will become due,

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such sums to be held by Mortgagee to pay the same when due. If such escrow
funds are not sufficient to pay such taxes and assessments and/or insurance
premiums, as applicable, as the same become due, Mortgagor shall pay to
Mortgagee, upon request, such additional amounts as Mortgagee shall estimate to
be sufficient to make up any deficiency. No amount paid to Mortgagee hereunder
shall be deemed to be trust funds but may be commingled with general funds of
Mortgagee and no interest shall be payable thereon. Upon the occurrence of
an Event of Default, Mortgagee shall have the right, at its sole discretion, to
apply any amounts so held against the Liabilities. If Mortgagor is not required
to pay tax escrows pursuant to this Section 6.5., Mortgagor shall promptly
provide to Mortgagee copies of receipted tax bills, canceled checks or other
evidence satisfactory to Mortgagee evidencing that such taxes and assessments
have been timely paid.

6.6. Transfer of Title. Without the prior written consent of
Mortgagee in each instance, Mortgagor shall not cause or permit any transfer of
the Mortgaged Premises or any part thereof, whether voluntarily, involuntarily
or by operation of law, nor shall Mortgagor enter into any agreement or
transaction to transfer, or accomplish in form or substance a transfer, of the
Mortgaged Premises. A "transfer" of the Mortgaged Premises includes:
(i) the direct or indirect sale, transfer or conveyance of the Mortgaged
Premises or any portion thereof or interest therein; (ii) the execution of an
installment sale contract or similar instrument affecting all or any portion of
the Mortgaged Premises; and (iii) if Mortgagor is a partnership or corporation,
the transfer (whether in one transaction or a series of transactions) of stock,
partnership or other ownership interests in Mortgagor.

6.7. No Encumbrances.

(a) Except as permitted in accordance with the terms of Section
5.22 of the Reimbursement Agreement, Mortgagor shall not create or permit to
exist any mortgage, pledge, lien, security interest (including, without
limitation, a purchase money security interest), encumbrance, attachment, levy,
distraint or other judicial process on or against the Mortgaged Premises or any
part thereof (including, without limitation, fixtures and other personalty),
whether superior or inferior to the lien of this Mortgage, without the prior
written consent of Mortgagee. If any non-consensual lien or encumbrance which
is not permitted under the terms of Section 5.22 of the Reimbursement Agreement
is filed or entered without Mortgagor's consent, Mortgagor shall have it removed
of record within ten (10) days after it is filed or entered.

(b) By placing or accepting a mortgage, lien or encumbrance of
any type, whether voluntary or involuntary, against the Mortgaged Premises, the
holder thereof shall be deemed to have agreed, without any further act or
documentation being required, that its mortgage, lien or encumbrance shall be
subordinate in lien priority to this Mortgage and to any future amendments,
consolidations or extensions hereof (including, without limitation, amendments
which increase the interest rate on the Reimbursement Agreement, extend the
term of the Liabilities, provide for future advances secured by this Mortgage,
or provide for the release of portions of the Mortgaged Premises with or without
consideration).

(c) Mortgagor agrees that it will cause the holder of any
subordinate mortgage or other lien, whether or not consented to by Mortgagee, to
expressly agree by acceptance of such subordinate mortgage or other lien that it
waives and relinquishes any

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rights it may have, whether under a legal theory of marshalling of assets or any
other theory at law or in equity, to restrain Mortgagee from, or recover
damages from Mortgagee as a result of, Mortgagee exercising its various remedies
hereunder or under any other documents evidencing or securing the Liabilities,
in such order and with such timing as Mortgagee deems appropriate in its sole
discretion.

(d) Mortgagee may, at any time or from time to time, renew,
extend or increase the amount of this Mortgage, alter or modify the terms hereof
or of the Reimbursement Agreement in any way, waive any of the terms, covenants
or conditions hereof or of the Reimbursement Agreement in whole or in part,
release any portion of the Mortgaged Premises or any other security, and grant
such extensions and indulgences in relation to the Liabilities as Mortgagee may
determine, without the consent of any junior lienor or encumbrancer or any
obligation to give notice of any kind thereto, and without in any manner
affecting the priority or the lien hereof on all or any part of the Mortgaged
Premises.

6.8. Removal of Fixtures. Mortgagor shall not remove or permit to be
removed from the Mortgaged Premises any fixtures presently or in the future
owned by Mortgagor as the term "fixtures" is defined by the law in New Jersey
(except as otherwise permitted pursuant to Section 5.13 of the Reimbursement
Agreement).

6.9. Maintenance and Repair; Alterations.

(a) Mortgagor shall (i) abstain from and not permit the
commission of waste in or about the Mortgaged Premises; (ii) keep the Mortgaged
Premises, at Mortgagor's own cost and expense, in good and substantial repair,
working order and condition; (iii) make or cause to be made, as and when
necessary, all repairs and replacements, whether or not insurance proceeds are
available therefor; and (iv) not remove, demolish, materially alter,
discontinue the use of, permit to become vacant or deserted, or otherwise
dispose of all or any part of the Mortgaged Premises. All alterations,
replacements, renewals or additions made pursuant to this Section 6.9. shall
automatically become a part of the Mortgaged Premises and shall be covered by
the lien of this Mortgage.

(b) Mortgagee, and any persons authorized by Mortgagee, shall
have the right, but not the obligation, to enter upon the Mortgaged Premises at
any reasonable time to inspect and photograph its condition and state of repair.
In the event any such inspection reveals, in the sole discretion of Mortgagee,
the necessity for any repair, alteration, replacement, clean-up or maintenance,
Mortgagor shall, at the discretion of Mortgagee, either: (i) cause such work to
be effected immediately; or (ii) promptly establish an interest bearing reserve
fund with Mortgagee in an amount determined by Mortgagee for the purpose of
effecting such work.

6.10. Compliance with Applicable Laws. Mortgagor agrees to
observe, conform and comply, and to cause its tenants to observe, conform and
comply with all federal, state, county, municipal and other governmental or
quasi-governmental laws, rules, regulations, ordinances, codes, requirements,
covenants, conditions, orders, licenses, permits, approvals and restrictions,
including without limitation, the Americans with Disabilities Act of 1990
(collectively, "Legal Requirements"), now or hereafter affecting all or any part
of the Mortgaged Premises, its occupancy or the business or operations now or
hereafter conducted

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thereon and the personalty contained therein, within such time as required by
such Legal Requirements. Mortgagor has caused the Mortgaged Premises to be
designed, and the Mortgaged Premises currently is, in compliance with all
Legal Requirements applicable to the Mortgaged Premises.

6.11. Damage, Destruction and Condemnation.

(a) If all or any part of the Mortgaged Premises is partially or
totally damaged or destroyed, Mortgagor shall give prompt notice thereof to
Mortgagee, and Mortgagee may make proof of loss if not made promptly by
Mortgagor. Mortgagor hereby authorizes and directs any affected insurance
company to make payment under such insurance, including return of unearned
premiums, to Mortgagee instead of to Mortgagor and Mortgagee jointly, and
Mortgagor appoints Mortgagee as Mortgagor's attorney-in-fact to endorse any
draft thereof, which appointment, being for security, is coupled with an
interest and irrevocable. Subject to the provision of subsection (d) hereof,
Mortgagee is hereby authorized and empowered by Mortgagor to settle, adjust or
compromise, in consultation with Mortgagor, any claims for loss, damage or
destruction to the Mortgaged Premises. Mortgagor shall pay all costs of
collection of insurance proceeds payable on account of such damage or
destruction. All rights to the insurance proceeds are hereby assigned to
Mortgagee as additional security for payment of the Liabilities.

(b) Immediately upon obtaining knowledge of the institution of
any proceeding for the condemnation of all or any part of the Mortgaged
Premises, Mortgagor shall give notice to Mortgagee. Mortgagor shall, at its
sole cost and expense, diligently prosecute any such proceeding and shall
consult with Mortgagee and shall cooperate with it in the defense of any such
proceeding. Mortgagee may participate in any such proceeding and Mortgagor
shall from time to time deliver to Mortgagee all instruments requested by it to
permit such participation. Mortgagor shall not, without Mortgagee's prior
written consent which will not be unreasonably withheld or delayed, enter into
any agreement for the taking or conveyance in lieu thereof of all or any part of
the Mortgaged Premises. All awards and proceeds of condemnation are hereby
assigned to Mortgagee, and Mortgagor, upon request by Mortgagee, agrees to
make, execute and deliver any additional assignments or documents necessary from
time to time to enable Mortgagee to collect the same. Such awards and proceeds
shall be paid or applied by Mortgagee, subject to the provision of subsection
(d) hereof, to: (i) reduction of the Liabilities; (ii) restoration, replacement
or repair of the Mortgaged Premises in accordance with Mortgagee's standard
construction loan disbursement conditions and requirements; or (iii) Mortgagor.

(c) Nothing in this Section 6.11 shall relieve Mortgagor of its
duty to repair, restore, rebuild or replace the Mortgaged Premises following
damage or destruction or partial condemnation if no or inadequate insurance
proceeds or condemnation awards are available to defray the cost of repair,
restoration, rebuilding or replacement so long as Mortgagee makes the proceeds
of the insurance required hereunder, which are paid to Mortgagee, available for
such purpose. Notwithstanding the foregoing, if Mortgagee elects not to make
the aforesaid insurance proceeds available hereunder in accordance with the
terms of this Article 9, Mortgagor's sole responsibility under this subsection
(c) shall be to demolish the damaged or destroyed portion of the Mortgaged
Premises or adequately secure the Mortgaged Premises from additional damage or
deterioration, all to the reasonable satisfaction of

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Mortgagee; and provided that no Default or Event of Default under any of the
Loan Documents has occurred, Mortgagee shall release insurance proceeds to the
extent required for, and for the limited purpose of, such demolition or securing
of the Mortgaged Premises.

(d) Notwithstanding the provisions of subparagraphs (a) and (b)
above, in the event that all or any part of the Mortgaged Premises is damaged by
fire or other casualty, in an amount aggregating less than $5,000,000 the
Mortgagor shall use said funds for restoration, repair or replacement of the
Mortgaged Premises. Such funds shall be paid in accordance with the Mortgagee's
standard construction loan disbursement conditions as set forth on Schedule III
to the Reimbursement Agreement and in accordance with Section 3.3 of the Loan
Agreement and Section 408 of the Indenture.

(i) In the event (x) the Mortgagor fails, or fails to
commence, to repair, replace or reconstruct the damaged, destroyed or condemned
Mortgaged Premises within sixty (60) days after the Initial Notice when such
proceeds aggregate less than $5,000,000, or (y) such proceeds exceed $5,000,000,
the Mortgagee shall have the option to (A) apply such funds to the costs of
repair, reconstruction and restoration of the Mortgaged Premises to a
substantially equivalent condition or value existing immediately prior to such
event or to a condition of at least an equivalent value, in which case such
funds shall be deposited with the Trustee in the Acquisition Fund in accordance
with Section 407 of the Indenture; or (B) use such proceeds to reduce any
outstanding principal balance of unreimbursed draws under the Letter of Credit
or other outstanding LC Indebtedness and remit the balance to the Mortgagor; or
(C) retain such proceeds (up to the amount of the Mortgagor's obligations to
the Mortgagee under the Letter of Credit and the documents executed in
connection therewith) as cash collateral for the Mortgagor's obligations under
the Letter of Credit; or (D) redeem Bonds from moneys from the Letter of Credit
pursuant to Section 301(b) of the Indenture and apply the amount of such net
proceeds of any insurance, casualty or condemnation award to reimburse the
Mortgagee for any draw on the Letter of Credit, but only to the extent of any
such proceeds. The Mortgagee shall notify the Trustee and the Mortgagor in
writing of its election within seventy (70) days after the Initial Notice.

(ii) The Mortgagor shall cooperate and consult with
Mortgagee in all matters pertaining to the settlement or adjudication of any
insurance claims and all claims and demands for damages on account of any taking
or condemnation of the Mortgaged Premises or pertaining to the settlement,
compromising or arbitration of any claim on account of any damage or destruction
of the Mortgaged Premises. In no event shall the Mortgagor voluntarily settle,
or consent to the settlement of, any insurance claim equal to or greater than
$2,500,000 with relation to the Mortgaged Premises or any proceedings arising
out of any condemnation of the Mortgaged Premises without the prior written
consent of the Mortgagee, which consent will not be unreasonably withheld.

(iii) Damage to, destruction of or condemnation of all
or a portion of the Mortgaged Premises, shall not terminate the Reimbursement
Agreement, or cause any abatement of or reduction in the payments to be made by
the Mortgagor or otherwise affect the respective obligations of the Authority or
the Mortgagor, except as set forth in the Reimbursement Agreement.

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6.12. Required Notices. In addition to the other notices required
pursuant to the terms of this Mortgage, Mortgagor shall notify Mortgagee within
three (3) days of: (i) receipt of any notice from any governmental or
quasi-governmental authority relating to the structure, use or occupancy of the
Mortgaged Premises or alleging a violation of any Legal Requirements; (ii) a
substantial change in the occupancy or use of all or any part of the Mortgaged
Premises; (iii) receipt of any notice from the holder of any lien or security
interest in all or any part of the Mortgaged Premises; (iv) commencement of any
litigation affecting or potentially affecting the financial ability of Mortgagor
or the value of the Mortgaged Premises; (v) a pending or threatened condemnation
of all or any part of the Mortgaged Premises; (vi) receipt of any notice with
regard to any Release of Hazardous Substances (as such terms are defined in
Section 9.2. hereof) or any other environmental matter affecting the Mortgaged
Premises or Mortgagor's interest therein; (vii) receipt of any request for
information, demand letter or notification of potential liability from any
entity relating to potential responsibility for investigation or clean-up of
Hazardous Substances on the Mortgaged Premises or at any other site owned or
operated by Mortgagor; (viii) receipt of any notice from any tenant of all
or any part of the Mortgaged Premises alleging a default, failure to perform or
any right to terminate its lease or to set-off rents; or (ix) receipt of any
notice of the imposition of, or of threatened or actual execution on, any lien
on or security interest in all or any part of the Mortgaged Premises.

6.13. No Credits on Account of the Liabilities. Mortgagor shall
not claim or demand or be entitled to any credit on account of the Liabilities
for any part of the taxes paid with respect to the Mortgaged Premises or any
part thereof and no deduction shall otherwise be made or claimed from the
taxable value of the Mortgaged Premises, or any part thereof, by reason of
this Mortgage.

6.14. Books and Records. Mortgagor shall keep and maintain
complete and accurate books and records in accordance with generally accepted
accounting principles, or the requirements of the Internal Revenue Code, as
applicable, consistently applied, reflecting all of the financial affairs of
Mortgagor and all items of income and expense in connection with the operation
of the Mortgaged Premises.

6.15. Right to Reappraise. Mortgagee shall have the right to
conduct or have conducted by an independent appraiser acceptable to Mortgagee
appraisals of the Mortgaged Premises in form and substance satisfactory to
Mortgagee at the sole cost and expense of Mortgagor; provided, however, that
except as specifically required by the Reimbursement Agreement, Mortgagor shall
not be obligated to bear the expense of such appraisals so long as (i) no
Event of Default exists, and (ii) such appraisals are not required by
applicable law, rule or regulation or the interpretation or administration
thereof by any governmental authority or comparable agency charged with the
interpretation or administration thereof. The cost of such appraisals, if
chargeable to Mortgagor as aforesaid, shall be added to the Liabilities and
shall be secured by this Mortgage in accordance with the provisions of Section
3 hereof.

7. DECLARATION OF NO OFFSET.

Mortgagor represents to Mortgagee that Mortgagor has no knowledge of
any offsets, counterclaims or defenses to the Liabilities either at law or in
equity. Mortgagor shall, within three (3) days upon request in person or within
seven (7) days upon request by mail, furnish to Mortgagee or Mortgagee's
designee a written statement in form satisfactory to

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Mortgagee stating the amount due under the Liabilities and whether there are
offsets or defenses against the same, and if so, the nature and extent thereof.

8. CHANGE IN LAWS.

In the event of the passage, after the date of this Mortgage, of any
law 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 Mortgagee or
impose upon Mortgagee the obligation to pay the whole or any part of any
taxes, assessments, charges or liens ("Charges") herein required to be paid
by Mortgagor, then Mortgagor shall pay the full amount of the Charges.

9. ENVIRONMENTAL MATTERS.

9.1. Definitions. For purposes of this Section 9, "Applicable
Environmental Laws" shall mean any and all existing or future federal, state and
local statutes, ordinances, regulations, rules, executive orders, standards and
requirements, including the requirements imposed by common law, concerning or
relating to industrial hygiene and the protection of health and the environment
including, without limitation: (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq.;
(ii) the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C.
6901, et seq.; (iii) the Clean Air Act, as amended, 42 U.S.C. 7901, et seq.;
(iv) the Clean Water Act, as amended, 33 U.S.C. 1251, et seq.; (v) the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. 1801, et seq.; (vi) the New
Jersey Industrial Site Recovery Act, formerly known as the Environmental Cleanup
Responsibility Act, as amended, N.J.S.A. 13:1K-6, et seq. ("ISRA"); (viii) the
New Jersey Spill Compensation and Control Act, as amended,
N.J.S.A. 58:10-23 11b, et seq. ("Spill Act"); (ix) the New Jersey Underground
Storage of Hazardous Substances Act, as amended, N.J.S.A. 58:10A-21, et seq.;
and (x) the New Jersey Water Pollution Control Act, as amended,
N.J.S.A. 58:10A-1, et seq.; provided, however, that Applicable Environmental
Laws enacted after the date hereof shall be included within the representations
included in this Section 9 only after the respective effective dates of such
Applicable Environmental Laws, but such Applicable Environmental Laws shall
be subject to any "grandfathering" provisions applicable thereto. Any terms
mentioned in this Section 9 which are defined in any Applicable Environmental
Law shall have the meanings ascribed to such terms in said laws; provided,
however, that if any of such laws are amended so as to broaden any term defined
therein, such broader meaning shall apply subsequent to the effective date of
such amendment.

9.2. Representations, Warranties and Covenants. Mortgagor represents,
warrants, covenants and agrees as follows:

(a) To Mortgagor's knowledge, neither Mortgagor nor the
Mortgaged Premises or any occupant thereof 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. 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 Mortgagee in writing
of any existing, pending or threatened investigation or inquiry by any
governmental

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authority in connection with any Applicable Environmental Law. In addition,
Mortgagor shall provide Mortgagee with copies of any and all material written
communications with any governmental authority in connection with any Applicable
Environmental Law, concurrently with Mortgagor's giving or receiving of same.

(b) To Mortgagor's knowledge there are no underground storage
tanks, radon, asbestos materials, polychlorinated biphenyls or urea formaldehyde
insulation present at or installed in the Mortgaged Premises. Mortgagor has not
caused any of the aforementioned materials to be placed or installed on the
Mortgaged Premises during its period of ownership. Mortgagor covenants and
agrees that if any such materials are found to be present at the Mortgaged
Premises, Mortgagor shall remove or remediate the same promptly upon discovery
at its sole cost and expense.

(c) Mortgagor has taken all steps recommended by Mortgagor's
engineers as stated in the environmental report and soil report delivered to
Mortgagee prior to the date hereof as necessary to determine and has determined
that there has been no release, spill, discharge, leak, disposal or emission
(individually a "Release" and collectively, "Releases") of any Hazardous
Material, Hazardous Substance or Hazardous Waste, including gasoline, petroleum
products, explosives, toxic substances, solid wastes and radioactive materials
(collectively, "Hazardous Substances") at, upon, under or within the Mortgaged
Premises. The use which Mortgagor or any other occupant of the Mortgaged
Premises makes or intends to make of the Mortgaged Premises will not result in a
Release of any Hazardous Substances on or to the Mortgaged Premises. During the
term of this Mortgage, Mortgagor shall take all steps necessary to determine
whether there has been a Release of any Hazardous Substances on or to the
Mortgaged Premises and if Mortgagor finds a Release has occurred, Mortgagor
shall remove or remediate the same promptly upon discovery at its sole cost
and expense.

(d) To Mortgagor's knowledge, none of the real property owned
and/or occupied by Mortgagor and located in the State of New Jersey, including
without limitation, the Mortgaged Premises, has ever been used by the present or
previous owners and/or operators or will be used during Mortgagor's ownership in
the future to refine, produce, store, handle, transfer, process, transport,
generate, manufacture, heat, treat, recycle or dispose of Hazardous Substances.

(e) Mortgagor has not received any notice of violation, request
for information, summons, citation, directive or other communication, written or
oral, from the New Jersey Department of Environmental Protection and Energy or
the United States Environmental Protection Agency concerning any intentional or
unintentional act or omission on Mortgagor's or any occupant's part resulting in
the Release of Hazardous Substances into the waters or onto the lands within the
jurisdiction 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,
held in trust or otherwise controlled by or within the jurisdiction of the State
of New Jersey.

(f) None of the real property owned and/or occupied by Mortgagor
and located in the State of New Jersey, including without limitation, the
Mortgaged Premises has been or is now being used as a Major Facility, and
Mortgagor shall not use any such

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property as a Major Facility in the future without the prior written consent of
Mortgagee. If Mortgagor ever becomes an owner or operator of a Major Facility,
then Mortgagor shall furnish the New Jersey Department of Environmental
Protection and Energy with all the information required by N.J.S.A.
58:10-23.11d, and shall duly file with the Director of the Division of Taxation
in the New Jersey Department of Treasury a tax report or return, and
shall pay all taxes due therewith, in accordance with N.J.S.A. 58:10-23.11h.

(g) The Mortgaged Premises are not located within a "freshwater
wetlands" or a "transition area", each as defined by N.J.S.A. 13:9B-3, and are
not subject to the terms of the New Jersey Freshwater Wetlands Protection Act,
as amended, N.J.S.A. 13:9B-1, et seq., or the rules and regulations promulgated
thereunder.

(h) Mortgagor shall not conduct or knowingly cause or permit to
be conducted on the Mortgaged Premises any activity which constitutes an
Industrial Establishment, as such term is defined in ISRA, without the prior
written consent of Mortgagee. In the event that the provisions of ISRA become
applicable to the Mortgaged Premises subsequent to the date hereof, Mortgagor
shall give prompt written notice thereof to Mortgagor and shall take immediate
requisite action to insure full compliance therewith. Mortgagor shall deliver to
Mortgagee copies of all correspondence, notices and submissions that it sends
to or receives from the New Jersey Department of Environmental Protection and
Energy in connection with such ISRA compliance. Mortgagor's obligation to
comply with ISRA shall, notwithstanding its general applicability, also
specifically apply to a sale, transfer, closure or termination of operations
associated with any foreclosure action, including, without limitation, a
foreclosure action brought with respect to this Mortgage.

(i) The real property owned and/or occupied by Mortgagor and
located in the State of New Jersey, including without limitation, the Mortgaged
Premises: (i) are being and have been during the period of Mortgagor's
ownership operated in compliance with all Applicable Environmental Laws, and all
permits required thereunder have been obtained and complied with in all
respects; and (ii) do not have any Hazardous Substances present excepting
such quantities of petroleum and chemical products, in proper storage
containers, as are necessary for the construction or operation of the commercial
business of Mortgagor and its tenants, and the usual waste products therefrom
("Permitted Substances"), all in accordance with Applicable Environmental Laws.

(j) Mortgagor will and will cause its tenants to operate the
Mortgaged Premises in compliance with all Applicable Environmental Laws and,
other than Permitted Substances, will not place or permit to be placed any
Hazardous Substances on the Mortgaged Premises.

(k) No lien has been attached to or threatened to be imposed
upon any revenue or any real or personal property owned by Mortgagor, including
without limitation, the Mortgaged Premises, and there is no basis for the
imposition of any such lien based on any governmental action under Applicable
Environmental Laws. Neither Mortgagor nor any other party has been, is or will
be involved in operations at the Mortgaged Premises which could lead to the
imposition of environmental liability on Mortgagor, or on any subsequent or
former owner

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of the Mortgaged Premises, or the creation of an environmental lien on the
Mortgaged Premises. In the event that any such lien is filed, Mortgagor shall,
within thirty (30) days from the date that Mortgagor is given notice of such
lien (or within such shorter period of time as is appropriate in the event
that the State of New Jersey or the United States has commenced steps to have
the Mortgaged Premises sold), either: (i) pay the claim and remove the lien
from the Mortgaged Premises; or (ii) furnish a cash deposit, bond or other
security satisfactory in form and substance to Mortgagee in an amount
sufficient to discharge the claim out of which the lien arises.

(l) In the event that Mortgagor shall cause or permit to exist a
Release of Hazardous Substances into the waters or onto the lands within the
jurisdiction 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,
held in trust or otherwise controlled by or within the jurisdiction of the State
of New Jersey, without having obtained a permit issued by the appropriate
governmental authorities, Mortgagor shall promptly clean up such Release in
accordance with the provisions of all Applicable Environmental Laws.

9.3. Right to Inspect and Cure. Mortgagee shall have the right to
conduct or have conducted by its agents or contractors such environmental
inspections, audits and tests as Mortgagee shall deem necessary or advisable
from time to time at the sole cost and expense of Mortgagor; provided,
however, that Mortgagor shall not be obligated to bear the expense of such
environmental inspections, audits and tests so long as (i) no Event of
Default exists, and (ii) Mortgagee has no cause to believe in its sole
reasonable judgment that there has been a Release or threatened Release of
Hazardous Substances at the Mortgaged Premises or that Mortgagor or the
Mortgaged Premises is in violation of any Applicable Environmental Law. The
cost of such inspections, audits and tests, if chargeable to Mortgagor as
aforesaid, shall be added to the Liabilities and shall be secured by this
Mortgage. Mortgagor shall, and shall cause each tenant of the Mortgaged
Premises to, cooperate with such inspection efforts; such cooperation shall
include, without limitation, supplying all information requested concerning
the operations conducted and Hazardous Substances located at the Mortgaged
Premises. In the event that Mortgagor fails to comply with any Applicable
Environmental Law, Mortgagee may, in addition to any of its other remedies
under this Mortgage, cause the Mortgaged Premises to be in compliance with such
laws and the cost of such compliance shall be added to the sums secured by this
Mortgage in accordance with the provisions of Section 3 hereof.

10. INDEMNIFICATION.

10.1. Mortgagor hereby indemnifies and agrees to protect, defend
and hold harmless Mortgagee, any entity which "controls" Mortgagee within the
meaning of Section 15 of the Securities Act of 1933, as amended, or is under
common control with Mortgagee, and any member, officer, director, official,
agent, employee or attorney of Mortgagee, and their respective heirs,
administrators, executors, successors and assigns (collectively, the
"Indemnified Parties"), from and against any and all losses, damages, expenses
or liabilities of any kind or nature and from any suits, claims or demands,
including reasonable attorneys'

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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 Loan Documents or the transactions contemplated therein
(unless determined by a final judgment of a court of competent jurisdiction to
have been caused by the gross negligence or willful misconduct of the
Indemnified Parties) including, without limitation: (i) disputes with any
architect, general contractor, subcontractor, materialman or supplier, or on
account of any act or omission to act by Mortgagee in connection with the
Mortgaged Premises; (ii) losses, damages (including consequential damages),
expenses or liabilities sustained by Mortgagee in connection with any
environmental inspection, monitoring, sampling or cleanup of the
Mortgaged Premises required or mandated by any Applicable Environmental Law;
(iii) the failure of Mortgagor to perform any obligations herein required to
be performed by Mortgagor; and (iv) the ownership, construction, occupancy,
operation, use or maintenance of the Mortgaged Premises.

10.2. In case any action shall be brought against Mortgagee or any
other Indemnified Party in respect to which indemnity may be sought against
Mortgagor, Mortgagee or such other Indemnified Party shall promptly notify
Mortgagor and Mortgagor shall assume the defense thereof, including the
employment of counsel selected by Mortgagor and satisfactory to Mortgagee,
the payment of all costs and expenses, and the right to negotiate and consent
to settlement. The failure of Mortgagee to so notify Mortgagor shall not
relieve Mortgagor of any liability it may have under the foregoing
indemnification provisions or from any liability which it may otherwise have
to Mortgagee or any of the other Indemnified Parties. Mortgagee shall have
the right, in its reasonable discretion, to employ separate counsel in any
such action and to participate in the defense thereof, all at Mortgagor's sole
cost and expense. Mortgagor shall not be liable for any settlement of any such
action effected without its consent, but if settled with Mortgagor's consent, or
if there be a final judgment for the claimant in any such action, Mortgagor
agrees to indemnify and save harmless Mortgagee from and against any loss or
liability by reason of such settlement or judgment.

10.3. The provisions of this Section 10 shall survive the
repayment or discharge of the Liabilities and the release or satisfaction of
this Mortgage.

11. EVENTS OF DEFAULT.

Each of the following shall constitute a default (each, an "Event of
Default") hereunder:

11.1. Non-payment when due including any grace period granted in
connection therewith (if applicable) of any sum required to be paid to Mortgagee
under any of the Loan Documents, including without limitation, principal and
interest;

11.2. A breach of any covenant contained in Sections 6.3, 6.4, 6.6
or 6.7 hereof;

11.3. A failure by Mortgagor to give notice as and when due
pursuant to Section 6.11 or 6.12 hereof;

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11.4. Any representation or warranty made by Mortgagor in this
Mortgage or in any other Loan Document or to induce Mortgagee to enter into the
transactions contemplated hereunder shall prove to be false, incorrect or
misleading in any material respect as of the date when made;

11.5. A breach by Mortgagor of any other term, covenant,
condition, obligation or agreement under this Mortgage, and the continuance of
such breach for a period of thirty (30) days after written notice thereof shall
have been given to Mortgagor; provided, however, that with respect to defaults
other than those referenced in 11.1, 11.2, 11.3 or 11.4 hereof, in the event
any such default cannot be cured within such thirty (30) day period, the
applicable cure period may be extended by an additional thirty (30) days, and,
thereafter for consecutive additional thirty (30) day periods, so long as
Mortgagor is diligently pursuing such cure;

11.6. An Event of Default under any of the other Loan Documents
(without duplication of applicable cure period, if any);

11.7. The (a) filing by Mortgagor of a petition seeking relief
under the Federal Bankruptcy Code or any similar federal or state statute, or
(b) the granting of any such relief, or (c) filing of such a petition against
such Mortgagor, which petition is not dismissed within sixty (60) days of the
filing thereof; any assignment for the benefit of creditors made by Mortgagor;
the appointment of a custodian, receiver, liquidator or trustee for Mortgagor or
for any of the property of Mortgagor, or the taking of any action by Mortgagor
to effect any of the foregoing; or if Mortgagor becomes insolvent (however
defined) or is not paying its debts generally as they become due;

11.8. Except as otherwise permitted in Section 6.6, the death,
dissolution, liquidation, merger, consolidation or reorganization of Mortgagor,
or the institution of any proceeding to effect any of the foregoing;

11.9. The filing, entry or issuance after the date hereof of any
judgment, execution, garnishment, attachment, distraint or lien, not covered by
effective insurance, against Mortgagor or its property in excess (either singly
or in the aggregate during the term of this Mortgage) of $100,000, subject to
the provisions of Section 6.7(a) hereof, if applicable; or

11.10. A default under any other obligation secured by the
Mortgaged Premises or any part thereof.

12. REMEDIES.

If an Event of Default shall have occurred, Mortgagee may take any of
the following actions (without the obligation to marshall):

12.1. Acceleration. Mortgagee may declare the entire amount of
the Liabilities immediately due and payable, without presentment, demand, notice
of any kind, protest or

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<PAGE>

notice of protest, all of which are expressly waived, notwithstanding anything
to the contrary contained in any of the Loan Documents and Mortgagee may
exercise any and all other remedies as set forth in Section 7.2 of the
Reimbursement Agreement. Mortgagee may collect interest from the date of
default on the unpaid balance of the Liabilities, at the rate of interest then
in effect under the Reimbursement Agreement plus three percent (3%) per annum.

12.2. [Intentionally Omitted].

12.3. Foreclosure. Mortgagee may institute any one or more
actions of mortgage foreclosure against all or any part of the Mortgaged
Premises, or take such other action at law or in equity for the enforcement of
this Mortgage and realization on the security herein or elsewhere provided for,
as the law may allow, and may proceed therein to final judgment and execution
for the entire unpaid balance of the Liabilities, together with all future
advances and any other sums due by Mortgagor in accordance with the provisions
of this Mortgage, together with interest from the date of default at the rate
then in effect under the Reimbursement Agreement plus three percent (3%) per
annum, all costs of suit and attorneys' fees. In case of any sale of the
Mortgaged Premises by judicial proceedings, the Mortgaged Premises may be sold
in one parcel or in such parcels, manner or order as Mortgagee in its sole
discretion may elect. Mortgagor, for itself and anyone claiming by, through
or under it, hereby agrees that Mortgagee shall in no manner, in law or in
equity, be limited, except as herein provided, in the exercise of its rights in
the Mortgaged Premises or in any other security hereunder or otherwise
appertaining to the Liabilities or any other obligation secured by this
Mortgage, whether by any statute, rule or precedent which may otherwise
require said security to be marshalled in any manner and Mortgagor, for itself
and others as aforesaid, hereby expressly waives and releases any right to or
benefit thereof. The failure to make any tenant a defendant to a foreclosure
proceeding shall not be asserted by Mortgagor as a defense in any proceeding
instituted by Mortgagee to collect the Liabilities or any deficiency remaining
unpaid after the foreclosure sale of the Mortgaged Premises.

12.4. Appointment of Receiver. Upon or at any time after
Mortgagee has the right to file an action to foreclose this Mortgage, Mortgagee
may petition the court in which such action is or might be filed to appoint a
receiver of the Mortgaged Premises. Such appointment may be made either before
or after sale, without notice, without regard to the solvency or insolvency of
Mortgagor at the time of application for such receiver, without regard to the
then value of the Mortgaged Premises or whether the Mortgaged Premises shall
be then occupied as a homestead or not, and without regard to whether Mortgagor
has committed waste or allowed deterioration of the Mortgaged Premises, and
Mortgagee or any agent of Mortgagee may be appointed as such receiver.
Mortgagor hereby agrees that Mortgagee has a special interest in the Mortgaged
Premises and absent the appointment of such receiver the Mortgaged Premises
shall suffer waste and deterioration and Mortgagor further agrees that it shall
not contest the appointment of a receiver and hereby so stipulates to such
appointment pursuant to this paragraph. Such receiver shall have the power to
perform all of the acts permitted Mortgagee pursuant to Section 12.2. above and
such other powers which may be necessary or customary in such cases for the
protection, possession, control, management and operation of the Mortgaged
Premises during such period.

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12.5. Rights as a Secured Party. Mortgagee shall have, in
addition to other rights and remedies available at law or in equity, the rights
and remedies of a secured party under the Code. Mortgagee may elect to
foreclose such of the Mortgaged Premises as then comprise fixtures pursuant
either to the law applicable to foreclosure of an interest in real estate or to
that applicable to personal property under the Code. To the extent permitted by
law, Mortgagor waives the right to any stay of execution and the benefit of all
exemption laws now or hereafter in effect.

12.6. Excess Monies. Mortgagee may apply on account of the
Liabilities any unexpended monies still retained by Mortgagee that were paid
by Mortgagor to Mortgagee: (i) for the payment of, or as security for the
payment of taxes, assessments or other governmental charges, insurance premiums,
or any other charges; or (ii) to secure the performance of some act by
Mortgagor.

12.7. Other Remedies. Mortgagee shall have the right, from time
to time, to bring an appropriate action to recover any sums required to be paid
by Mortgagor under the terms of this Mortgage, as they become due, without
regard to whether or not any other Liabilities shall be due, and without
prejudice to the right of Mortgagee thereafter to bring an action of mortgage
foreclosure, or any other action, for any default by Mortgagor existing at
the time the earlier action was commenced. In addition, Mortgagee shall have
the right to set-off all or any part of any amount due by Mortgagor to Mortgagee
under any of the Liabilities, against any indebtedness, liabilities or
obligations owing by Mortgagee or any Affiliate in any capacity to Mortgagor,
including any obligation to disburse to Mortgagor any funds or other property on
deposit with or otherwise in the possession, control or custody of Mortgagee.

13. ENFORCEMENT OF MORTGAGE.

If, after receipt of any payment of all or any part of the
Liabilities, Mortgagee is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion
of trust funds), then this Mortgage and the other Loan Documents shall continue
in full force and effect, and Mortgagor shall be liable for, and shall
indemnify, defend and hold harmless Mortgagee with respect to the full amount
so surrendered. The provisions of this Section shall survive the satisfaction
or release of this Mortgage and shall remain effective notwithstanding the
payment of the Liabilities, the cancellation of the Reimbursement Agreement,
the release of any security interest, lien or encumbrance securing the
Liabilities or any other action which Mortgagee may have taken in reliance upon
its receipt of such payment. Any cancellation, release or other such action by
Mortgagee shall be deemed to have been conditioned upon any payment of the
Liabilities having become final and irrevocable.

14. MISCELLANEOUS.

14.1. Remedies Cumulative. The rights and remedies of Mortgagee
as provided in this Mortgage or in any other Loan Document shall be cumulative
and concurrent, may be pursued separately, successively or together, may be
exercised as often as occasion

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<PAGE>

therefor shall arise, and shall be in addition to any other rights or remedies
conferred upon Mortgagee at law or in equity. The failure, at any one or
more times, of Mortgagee to assert the right to declare the Liabilities due,
grant any extension of time for payment of the Liabilities, take other or
additional security for the payment thereof, release any security, change any of
the terms of the Loan Documents, or waive or fail to exercise any right or
remedy under any Loan Document shall not in any way affect this Mortgage or the
rights of Mortgagee.

14.2. Integration. This Mortgage and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings
with respect thereto.

14.3. Attorneys' Fees and Expenses. If Mortgagee retains the
services of counsel by reason of a claim of a default or an Event of Default
hereunder or under any of the other Loan Documents, or on account of any matter
involving Mortgagor's title to the Mortgaged Premises or the security interest
intended to be granted hereby, or for examination of matters subject to
Mortgagee's approval under the Loan Documents, all costs of suit and all
reasonable attorneys' fees and such other reasonable expenses so incurred by
Mortgagee shall forthwith become due and payable, on demand, and shall be
secured hereby.

14.4. No Implied Waiver. Mortgagee shall not be deemed to have
modified or waived any of its rights or remedies hereunder unless such
modification or waiver is in writing and signed by Mortgagee, and then only
to the extent specifically set forth therein. A waiver in one event shall not
be construed as continuing or as a waiver of or bar to such right or remedy
on a subsequent event.

14.5. Severability. The illegality or unenforceability of any
provision of this Mortgage or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Mortgage or any instrument or agreement required
hereunder.

14.6. Binding Effect. The covenants, conditions, waivers,
releases and agreements contained in this Mortgage shall bind, and the benefits
thereof shall inure to, the parties hereto and their respective heirs,
executors, administrators, successors and permitted assigns and are intended
and shall be held to be real covenants running with the land.

14.7. Modifications. This Mortgage may not be supplemented,
extended, modified or terminated except by an agreement in writing and signed by
Mortgagor and Mortgagee.

14.8. Affiliate. As used herein, "Affiliate" shall mean First
Fidelity Bancorporation and any of its direct and indirect affiliates and
subsidiaries.

14.9. Commercial Loan. Mortgagor represents and warrants that the
loans or other financial accommodations included as Liabilities secured by this
Mortgage were obtained solely for the purpose of carrying on or acquiring a
business or commercial investment and not for residential, consumer or
household purposes.

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<PAGE>

14.10. Modification of Mortgage. This Mortgage is subject to
"modification" as such term is defined in P.L. 1985 c.353 (N.J.S.A. 46:9-8.1, et
seq.) and shall be subject to the priority provisions thereof.

14.11. No Joint Venture. Nothing herein nor the acts of the
parties hereto shall be construed to create a partnership or joint venture
between Mortgagor and Mortgagee. Nothing in this Mortgage shall be construed to
make Mortgagee liable to anyone or goods delivered or services performed by
Mortgagee upon the Mortgaged Premises or for debts or claims accruing to
Mortgagee against Mortgagor.

14.12. Captions. The captions contained herein are not a part of
this Mortgage. They are only for the convenience of the parties and do not in
any way modify, amplify, or give full notice of any of the terms, covenants or
conditions of this Mortgage.

14.13. Time is of the Essence. Whether or not elsewhere herein
expressly stated, all dates and times for performance herein set forth shall be
of the essence of this Mortgage.

14.14. Sole Discretion of Mortgagor. It is understood and agreed
that the Mortgagee shall have, with respect to all matters herein which must be
approved by or be acceptable or satisfactory to Mortgagee or which may be
determined by or consented to by Mortgagee, including, but not limited to, any
conditions, provisions, agreements, contracts, documents, surveys, reports,
legal opinions, and title requirements, the sole discretion to determine the
acceptability thereof to Mortgagee, but such sole discretion shall not be
interpreted by Mortgagee as justifying arbitrary rejection but will connote a
reasonable application of judgment, taking into consideration institutional
lending practices and commercial custom in major commercial real estate
transactions.

14.15. Counterparts. This Mortgage may be executed in any number
of counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.

14.16. Jurisdiction. Mortgagor irrevocably appoints each and every
owner, partner and/or officer of Mortgagor as its attorneys upon whom may be
served, by regular or certified mail at the address set forth in this Mortgage,
any notice, process or pleading in any action or proceeding against it arising
out of or in connection with this Mortgage or any of the other Loan Documents;
and Mortgagor hereby consents that any action or proceeding against it be
commenced and maintained in any court within the State of New Jersey or in
the United States District Court for any District of New Jersey by service of
process on any such owner, partner and/or officer; and Mortgagor agrees that the
courts of the State of New Jersey and the United States District Court for any
District of New Jersey shall have jurisdiction with respect to the subject
matter hereof and the person of Mortgagor and all collateral securing the
obligations of Mortgagor. Mortgagor agrees not to assert any defense to any
action or proceeding initiated by Mortgagee based upon improper venue or
inconvenient forum. Mortgagor agrees that any action brought by Mortgagor shall
be commenced and maintained only in a court in the federal judicial district or
county in which Mortgagee has a place of business in New Jersey.

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<PAGE>

14.17. Notices. All notices and communications under this Mortgag
e shall be in writing and shall be given by either (a) hand delivery, (b) first
class mail (postage prepaid), (c) telecopier to the number listed in this
Mortgage, or (d) reliable overnight commercial courier (charges prepaid) to
the addresses listed in this Mortgage. Notice shall be deemed to have been
given and received: (i) if by hand delivery, upon delivery; (ii) if by mail,
three (3) calendar days after the date first deposited in the United States
mail; (iii) if by telecopier, when transmitted, with confirmation of receipt
obtained by the sender; or (iv) if by overnight courier, on the date
scheduled for delivery. A party may change its address by giving written
notice to the other party as specified herein.

14.18. Governing Law. This Mortgage shall be governed by and
construed in accordance with the substantive laws of the State of New Jersey
without reference to conflict of laws principles.

14.19. Waiver of Jury Trial. MORTGAGOR AND MORTGAGEE AGREE
THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM,
BROUGHT BY MORTGAGEE OR MORTGAGOR, ON OR WITH RESPECT TO THIS
MORTGAGE OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES
WITH RESPECT HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT
BY A JURY. MORTGAGEE AND MORTGAGOR EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
SUCH SUIT, ACTION OR PROCEEDING. MORTGAGOR ACKNOWLEDGES AND AGREES
THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS MORTGAGE AND
THAT MORTGAGEE WOULD NOT EXTEND CREDIT TO MORTGAGOR IF THE WAIVERS
SET FORTH IN THIS SECTION WERE NOT A PART OF THIS MORTGAGE.

15. DEFEASANCE.

If Mortgagor indefeasibly pays to Mortgagee the full amount of the
Liabilities, including all interest accrued thereon and all fees and costs
incurred in connection therewith, and, until such time as such payment has
become indefeasible, keeps all the other covenants and agreements contained
herein and in the Reimbursement Agreement and the other Loan Documents, and
if Mortgagor shall also pay all satisfaction costs and the cost of recording a
discharge and, if appropriate, a power-of-attorney to satisfy this Mortgage,
then and from thenceforth this Mortgage and the estate hereby created, granted,
transferred and assigned shall cease and become void.

IN WITNESS WHEREOF, Mortgagor, intending to be legally bound, has duly
executed and delivered this Mortgage and Security Agreement as of the day and
year first above written.

ATTEST: BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.

By:____________________________ By:________________________________

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<PAGE>

Name: Robert L. LaPenta, Jr. Name: Mark A. Nesci
Title: Assistant Secretary Title: Vice President

[SEAL]

Page 181

<PAGE>

SCHEDULE "A"

DESCRIPTION OF MORTGAGED PREMISES

Street Address: 1830 Route 130, Burlington, NJ 08016

Parcel Number:

Legal Description: See Exhibit A-1

Page 182
<PAGE>

CORPORATE ACKNOWLEDGMENT

STATE OF NEW JERSEY :
: SS.:
COUNTY OF BURLINGTON :

On this, the ___ day of August, 1995 before me, the undersigned
officer, personally appeared _________________________ who acknowledged
himself/herself to be a _________________________ of Burlington Coat Factory
Warehouse of New Jersey, Inc.,
a New Jersey corporation, and that he/she, as such officer, being authorized to
do so, executed the foregoing instrument on behalf of the corporation for the
purposes therein contained by signing the name of the corporation by
himself/herself as such officer.

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

___________________________________
Notary Public

[Notarial Seal]

My Commission Expires:

Page 183

EXHIBIT 10.7

PAGE 184<PAGE>

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

and

SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION
as Trustee

(Burlington Coat Factory Warehouse
of New Jersey, Inc. - 1995 Project)

INDENTURE OF TRUST

Dated as of August 1, 1995

PAGE 185<PAGE>

INDENTURE OF TRUST

TABLE OF CONTENTS
PAGE

ARTICLE I
DEFINITIONS

Section 101. Definitions . . . . . . . . . . . . . . . . .7
Section 102. Rules of Construction . . . . . . . . . . . 19

ARTICLE II
THE BONDS

Section 201. Authorized Amount of Bonds. . . . . . . . . 21
Section 202. Purposes for Issuance of Bonds. . . . . . . 21
Section 203. Manner of Payment of Bonds. . . . . . . . . 21
Section 204. Maturities, Interest Rates, and Certain
Other Provisions. . . . . . . . . . . . . . 21
Section 205. Execution . . . . . . . . . . . . . . . . . 24
Section 206. Authentication. . . . . . . . . . . . . . . 24
Section 207. Limited Obligations . . . . . . . . . . . . 24
Section 208. Mutilated, Lost, Stolen or Destroyed
Bonds . . . . . . . . . . . . . . . . . . . 25
Section 209. Bond Register; Registration and
Transferability of Bonds. . . . . . . . . . 26
Section 210. Cancellation and Destruction of
Surrendered Bonds . . . . . . . . . . . . . 27
Section 211. Form of Bonds . . . . . . . . . . . . . . . 27
Section 212. Delivery of Bonds . . . . . . . . . . . . . 27
Section 213. Temporary Bonds . . . . . . . . . . . . . . 29
Section 214. Payments Due on Saturdays, Sundays and
Holidays. . . . . . . . . . . . . . . . . . 30
Section 215. Notice of Determination of Taxability . . . 30

ARTICLE III
REDEMPTION OF BONDS

Section 301. Redemption. . . . . . . . . . . . . . . . . 31
Section 302. Selection of Bonds to be Redeemed . . . . . 33
Section 303. Notice of Redemption; Rights of Holders . . 34
Section 304. Payment of Redeemed Bonds . . . . . . . . . 35

ARTICLE IV
REVENUES; FUNDS; LETTER OF CREDIT

Section 401. Source of Payment of Bonds. . . . . . . . . 37
Section 402. Creation of Bond Fund . . . . . . . . . . . 37
Section 403. Use of Moneys in Bond Fund. . . . . . . . . 40
Section 404. The Letter of Credit. . . . . . . . . . . . 40
Section 405. Satisfaction of Obligations . . . . . . . . 43
Section 406. No Interest of Authority or Borrower. . . . 43
Section 407. Creation of Acquisition Fund. . . . . . . . 43
Section 408. Payments from Acquisition Fund. . . . . . . 43

PAGE 186<PAGE>

Section 409. [Intentionally Omitted] . . . . . . . . . . 44
Section 410. NonPresentment of Bonds . . . . . . . . . . 44
Section 411. Moneys To Be Held in Trust. . . . . . . . . 44
Section 412. Repayment to the Bank from Bond Fund. . . . 45
Section 413. Rebate Fund . . . . . . . . . . . . . . . . 45

ARTICLE V
GENERAL REPRESENTATIONS AND COVENANTS

Section 501. Payment of Principal, Premium and
Interest. . . . . . . . . . . . . . . . . . 46
Section 502. Performance of Covenants. . . . . . . . . . 46
Section 503. Authorization . . . . . . . . . . . . . . . 46
Section 504. Creation of Liens; Indebtedness . . . . . . 47
Section 505. Inspection of Project Books . . . . . . . . 47
Section 506. Rights under Loan Agreement . . . . . . . . 47
Section 507. Enforcement of Duties and Obligations of
the Borrower. . . . . . . . . . . . . . . . 47
Section 508. Recordation and Filing of Documents . . . . 48
Section 509. Instruments of Further Assurance. . . . . . 48
Section 510. Transfer of Letter of Credit. . . . . . . . 48
Section 511. Furnishing Documents to the Authority . . . 48
Section 512. No Litigation . . . . . . . . . . . . . . . 48
Section 513. No Other Encumbrances . . . . . . . . . . . 49
Section 514. No Personal Liability . . . . . . . . . . . 49
Section 515. Compliance with Rule 15c2-12. . . . . . . . 49

ARTICLE VI
INVESTMENTS

Section 601. Investment of Bond Fund and Acquisition
Fund. . . . . . . . . . . . . . . . . . . . 53
Section 602. Investment of Letter of Credit Account. . . 54
Section 603. General Provisions of Investments . . . . . 54

ARTICLE VII
THE TRUSTEE, PAYING AGENTS

Section 701. Appointment of Trustee; Acceptance of the
Trusts. . . . . . . . . . . . . . . . . . . 56
Section 702. Fees, Charges and Expenses of Trustees
and Paying Agents . . . . . . . . . . . . . 59
Section 703. [Intentionally Omitted] . . . . . . . . . . 60
Section 704. Intervention by Trustee . . . . . . . . . . 60
Section 705. Successor Trustee . . . . . . . . . . . . . 60
Section 706. Resignation by the Trustee. . . . . . . . . 61
Section 707. Removal of the Trustee. . . . . . . . . . . 61
Section 708. Appointment of Successor Trustee by the
Borrower or Bondholders . . . . . . . . . . 61
Section 709. Concerning any Successor Trustee. . . . . . 62
Section 710. Trustee Protected in Relying upon
Resolutions, etc. . . . . . . . . . . . . . 62
Section 711. Successor Trustee as Trustee of the
Funds, Bond Registrar and Paying Agent. . . 63
Section 712. Trustee and Authority Required to Accept
PAGE 187<PAGE>

Directions and Actions of Borrower. . . . . 63
Section 713. Paying Agent or Agents. . . . . . . . . . . 63
Section 714. Maintenance of Records. . . . . . . . . . . 64
Section 715. Consent of Borrower and Letter of Credit
Issuer. . . . . . . . . . . . . . . . . . . 64

ARTICLE VIII
SUPPLEMENTAL INDENTURES

Section 801. Supplemental Indentures Not Requiring
Consent of Bondholders. . . . . . . . . . . 65
Section 802. Supplemental Indentures Requiring Consent
of Bondholders. . . . . . . . . . . . . . . 66
Section 803. Consent of Borrower and Bank. . . . . . . . 67
Section 804. Bond Counsel Opinion. . . . . . . . . . . . 67

ARTICLE IX
DEFAULT PROVISIONS AND REMEDIES OF
TRUSTEE AND BONDHOLDERS

Section 901. Events of Default . . . . . . . . . . . . . 69
Section 902. Acceleration. . . . . . . . . . . . . . . . 69
Section 903. Preservation of Security. . . . . . . . . . 71
Section 904. Other Remedies. . . . . . . . . . . . . . . 71
Section 905. Right of Letter of Credit Issuer or
Bondholders to Direct Proceedings . . . . . 72
Section 906. Appointment of Receiver . . . . . . . . . . 73
Section 907. Application of Moneys . . . . . . . . . . . 73
Section 908. Remedies Vested in Trustee. . . . . . . . . 75
Section 909. Rights and Remedies of Bondholders. . . . . 75
Section 910. Termination of Proceedings. . . . . . . . . 76
Section 911. Waivers and Non-Waiver of Events of
Default . . . . . . . . . . . . . . . . . . 76
Section 912. Notice of Defaults. . . . . . . . . . . . . 77
Section 913. Waiver of Redemption Rights . . . . . . . . 78
Section 914. Rights of Bank Regarding Collateral . . . . 78

ARTICLE X
AMENDMENT OF LOAN AGREEMENT

Section 1001. Amendments to Loan Agreement Not
Requiring Consent of Bondholders . . . . . 79
Section 1002. Amendments to Loan Agreement Requiring
Consent of Bondholders . . . . . . . . . . 79

ARTICLE XI
DISCHARGE OF LIEN

Section 1101. Defeasance of Bonds. . . . . . . . . . . . 80

ARTICLE XII
MISCELLANEOUS

Section 1201. Consent of Bondholders . . . . . . . . . . 83
Section 1202. Limitation of Rights . . . . . . . . . . . 84
PAGE 188<PAGE>

Section 1203. Limitation on Liability of Members of
Authority. . . . . . . . . . . . . . . . . 84
Section 1204. Severability . . . . . . . . . . . . . . . 84
Section 1205. Notices. . . . . . . . . . . . . . . . . . 84
Section 1206. Notice to Moody's. . . . . . . . . . . . . 86
Section 1207. Counterparts . . . . . . . . . . . . . . . 86
Section 1208. Table of Contents and Section Headings
Not Controlling. . . . . . . . . . . . . . 86
Section 1209. Governing Law. . . . . . . . . . . . . . . 86
Section 1210. Third Party Beneficiary. . . . . . . . . . 86

PAGE 189<PAGE>

INDENTURE OF TRUST

THIS INDENTURE OF TRUST, dated as of the first day of
August, 1995 (the "Indenture"), 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 Shawmut Bank Connecticut, National
Association, a national banking association duly organized and
validly existing and authorized to accept and execute the trusts
of the character hereinafter set forth under and by virtue of the
laws of the United States of America, with its principal
corporate trust office located at Hartford, Connecticut, as
Trustee (the "Trustee").

W I T N E S S E T H:

WHEREAS, the New Jersey Economic Development Authority
Act, constituting N.J.S.A. 34:1B-1 et seq., as amended (the
"Act"), declares that the legislature has determined that
Department of Labor and Industry statistics of recent years
indicate a continuing decline in manufacturing employment within
the State of New Jersey (the "State") which is a contributing
factor to the unemployment existing within the State, which
exceeds the national average, thus adversely affecting the
economy of the State and the prosperity, safety, health and
general welfare of its inhabitants and their standard of living;
and that the availability of financial assistance and suitable
facilities are important inducements to new and varied employment
promoting enterprises to locate in the State, and to existing
enterprises to remain and expand in 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 or make loans to any
person for the planning, designing, acquiring, constructing,
reconstructing, improving, equipping and furnishing of a project,
for which credits or loans may be secured by loan agreements,
security agreements, mortgages, leases, contracts and any other
instruments, upon such terms and conditions as the Authority
shall deem reasonable, and to require the inclusion in any loan
PAGE 190<PAGE>
agreement, security agreement, mortgage, lease, contract, and any
other instrument, such provisions for the construction, use,
operation and maintenance and financing of a project as the
Authority may deem necessary or desirable and to enter into
contracts with respect to the improvement, equipping, furnishing,
operation and maintenance of a project, for such consideration
and upon such terms and conditions as the Authority may determine
to be reasonable; and

WHEREAS, the Borrower submitted an application (the
"Original Application") to the Authority for financial assistance
in the principal amount of $10,000,000 for financing a portion of
the costs of a project (the "1985 Project") consisting of the
acquisition of 46.779 acres of land in the Township of
Burlington, Burlington County, New Jersey, the construction of an
approximately 500,000 square foot building situate thereon for
use as a national distribution center for the Borrower's products
containing about 25,000 square feet of office space, the
equipping of such building with conveyor systems, rolling racks
and automated machinery and the construction of a parking lot
adjacent to such building, and the Authority, by resolution duly
adopted July 3, 1985 in accordance with the Act, accepted the
application of the Borrower for assistance in financing the 1985
Project; and

WHEREAS, the Authority, by resolution duly adopted
September 4, 1985 in accordance with the Act, authorized the
issuance of not to exceed $10,000,000 aggregate principal amount
of its Economic Development Bonds (Burlington Coat Factory
Warehouse of New Jersey, Inc. - 1985 Project) for the purpose of
making a loan to the Borrower to finance the 1985 Project (the
"Original Loan"); and

WHEREAS, on September 20, 1985 the Authority issued
$10,000,000 of its Economic Development Bonds dated September 1,
1985 to finance the 1985 Project (the "Prior Bonds") pursuant to
the provisions of an Indenture of Trust by and between the
Authority and National Westminster Bank, USA, as Trustee, dated
as of September 1, 1985 (the "Prior Indenture"); and

WHEREAS, the Borrower is desirous of redeeming the
Prior Bonds dated September 1, 1985 maturing on or after
September 1, 1996 (the "Refunded Bonds") on September 1, 1995;
and

WHEREAS, the Borrower, by letter dated May 10, 1995,
has notified the Authority of its intent to redeem the Refunded
Bonds on September 1, 1995 and has requested the Authority's
PAGE 191<PAGE>
assistance in the issuance of not to exceed $10,000,000 aggregate
principal amount of bonds to refinance the 1985 Project and to
redeem the Refunded Bonds; and

WHEREAS, on July 11, 1995, the Authority by resolution
duly adopted (the "Resolution"), authorized the issuance of its
Economic Development Refunding Bonds (Burlington Coat Factory
Warehouse of New Jersey, Inc. - 1995 Project) (the "Refunding
Bonds" or the "Bonds") for the purpose of providing funds for the
Borrower to refinance the 1985 Project and redeem the Refunded
Bonds (the "Project"); and

WHEREAS, the Authority has determined that the
issuance, sale and delivery of said Bonds, as hereinafter
provided, is needed to finance the cost of the Project, including
necessary expenses incidental thereto and concurrently herewith,
the Authority and the Borrower have entered into a Loan
Agreement, dated as of August 1, 1995, providing for the
financing of the Project (the "Loan Agreement" or "Agreement");
and

WHEREAS, the Borrower has caused to be delivered to the
Trustee an Irrevocable Direct Pay Letter of Credit No. 40017969
(the "Initial Letter of Credit") issued by First Fidelity Bank,
National Association (the "Bank") providing for the payment of
principal and up to 210 days interest on the Bonds calculated at
the rate of six and one hundred twenty-five thousandths percentum
(6.125%) per annum accrued on the Bonds; and

WHEREAS, the Bank will be entitled to reimbursement by
the Borrower for all amounts drawn under the Initial Letter of
Credit (as hereinafter defined) pursuant to the terms of a Letter
of Credit Reimbursement Agreement (the "Reimbursement
Agreement"), dated as of the date hereof, between the Borrower
and the Bank, a copy of which has been delivered to the Trustee;
and

WHEREAS, the obligation of the Borrower to reimburse
the Bank for payments made under the Initial Letter of Credit and
the Reimbursement Agreement shall be additionally secured by a
mortgage from the Borrower to the Bank on the real property and
improvements thereon more specifically described in Exhibit A
thereto (the "Mortgage"), a guaranty of payment by the Corporate
Guarantor (as hereinafter defined), an Assignment of Leases and
by filed Financing Statements creating a security interest in
Machinery and Equipment; and

WHEREAS, the execution and delivery of this Indenture
have been duly authorized by the Authority, and all conditions,
acts and things necessary and required by the Constitution or
statutes of the State of New Jersey or otherwise, to exist, to
have happened, or to have been performed precedent to and in the
PAGE 192<PAGE>
execution and delivery of this Indenture and in the issuance of
the Bonds herein authorized, do exist, have happened and have
been performed in regular form, time and manner; and

WHEREAS, the said Trustee has power to enter into this
Indenture and to execute the trusts hereby created and has
accepted the trusts so created and in evidence thereof has joined
in the execution hereof.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

That the Authority, in consideration of the premises,
of the acceptance by the Trustee of the trusts hereby created, of
the mutual covenants herein contained, of the purchase and
acceptance of the Bonds by the Holders thereof, of the issuance
of the Letter of Credit by the Bank, and of the sum of One
Dollar, in lawful money of the United States of America to it
duly paid by the Trustee at or before the execution and delivery
of these presents, and for other good and valuable consideration
the receipt whereof is hereby acknowledged, and in order to
secure (A) the payment of the principal of, redemption premium,
if any, and interest on the Bonds according to their terms, (B)
the obligations of the Borrower under the Loan Agreement, (C) all
of the obligations of the Borrower under the Reimbursement
Agreement to reimburse the Letter of Credit Issuer for all draws
under the Letter of Credit, to perform its covenants contained
therein and to repay all amounts owing thereunder, whether for
fees, expenses, reimbursements of drawings under the Letter of
Credit or otherwise, and (D) the performance and observance by
the Authority of all the covenants expressed or implied herein
and in the Bonds, does by these presents (i) sell, grant,
bargain, assign, transfer, convey, pledge and set over to the
Trustee, and (ii) grant to the Trustee for the benefit of the
owners of the Bonds a security interest in:

(A) All of the Authority's right, title to and
interest in, to and under the Loan Agreement (but none
of its obligations thereunder), including, but not
limited to, all payments due and to become due
thereunder (except for payments to or for the benefit
of the Authority under Sections 4.4, 5.22 and 5.23 of
the Loan Agreement, and reserving its right to sue in
its own name and for its own benefit to recover damages
for breach by the Borrower of, or to seek specific
performance of the Borrower's obligations as set forth
in the Loan Agreement and including other Reserved
Rights), and all moneys, securities, Funds and Accounts
(including investments, if any) held and to be held by
the Trustee pursuant to this Indenture; and

(B) the Revenues; and
PAGE 193<PAGE>
(C) all substitutions and replacements for any of
the foregoing and all proceeds of any of the foregoing;
the same to be held in trust and applied by the Trustee
as provided herein;

PROVIDED, HOWEVER, that the Authority, in order to
accomplish the purposes and objectives of the New Jersey Economic
Development Authority Act (P.L. 1974, c. 80), as amended and
supplemented, retains the right, jointly and severally with the
Trustee, upon the happening of an Event of Default, to enforce
the provisions contained in the Loan Agreement, whether or not
the Trustee or the Holders shall have exercised any rights or
remedies under this Indenture or the Loan Agreement, to the
extent reasonably necessary to enforce the public purposes
thereof. In addition, the Authority shall have the right and
remedy, without posting bond or other security, to have
provisions of the Loan Agreement specifically enforced by any
court having equity jurisdiction, it being acknowledged and
agreed that any breach or threatened breach of a provision of the
Loan Agreement will cause irreparable injury to the Authority and
that money damages will not provide an adequate remedy therefor;

PROVIDED THAT 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 OF, IF ANY, OR INTEREST ON THE BONDS. THE BONDS
ARE SPECIAL, LIMITED OBLIGATIONS OF THE NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY (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; AND PROVIDED FURTHER THAT THE OBLIGATION TO REIMBURSE THE
LETTER OF CREDIT ISSUER FOR DRAWS UNDER THE LETTER OF CREDIT AND
THE OTHER OBLIGATIONS UNDER THE REIMBURSEMENT AGREEMENT (AS
HEREIN DEFINED) ARE SOLELY OBLIGATIONS OF THE BORROWER AND ARE
NOT IN ANY MANNER OBLIGATIONS OF THE AUTHORITY, THE STATE OF NEW
JERSEY OR ANY POLITICAL SUBDIVISION THEREOF;

TO HAVE AND TO HOLD the same unto the Trustee and its
successors in trust forever;

IN TRUST NEVERTHELESS, upon the terms and trusts herein
set forth, for the equal and proportionate benefit, security and
protection of all Holders of the Bonds issued under and secured
by this Indenture without preference, priority or distinction as
to lien or otherwise of any Bonds over any other Bonds, and for
the security of the Bank, except that moneys available to the
Trustee under the Letter of Credit shall be available solely for
the payment of the principal of and interest on the Bonds.

IT IS HEREBY COVENANTED, declared and agreed by and
PAGE 194<PAGE>
between the parties hereto that all Bonds issued and secured
hereunder are to be issued, authenticated and delivered and all
said property hereby sold, granted, bargained, assigned,
transferred, conveyed, pledged and set-over is to be dealt with
and disposed of under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes as
hereinafter expressed, and the Authority does hereby agree and
covenant with the Trustee, with the respective Holders from time
to time of the Bonds and with the Bank as follows:

PAGE 195<PAGE>
ARTICLE I

DEFINITIONS

Section 101. Definitions. The following words and
terms as used herein shall have the following meanings unless the
context or use indicates another or different meaning or intent.
Capitalized terms found herein, but not defined herein shall have
the same meanings as defined in the Loan Agreement.

"Account" shall mean any account created under this
Indenture;

"Acquisition Fund" shall mean the fund so designated
which is established pursuant to Section 407 hereof;

"Act" shall mean the New Jersey Economic Development
Authority Act, constituting N.J.S.A. 34:1B-1 et seq., as amended,
or any successor legislation, and the regulations promulgated
thereunder;

"Act of Bankruptcy" shall mean the filing of a petition
in bankruptcy (or other commencement of a bankruptcy or similar
proceeding) by or against the Borrower, the Corporate Guarantor
or the Authority under any applicable bankruptcy, insolvency,
reorganization or similar law, now or hereafter in effect;

"Act of Bankruptcy of the Bank" shall occur when the
Bank, as issuer of the Letter of Credit, or any Letter of Credit
Issuer, becomes insolvent or fails to pay its debts generally as
such debts become due or admits in writing its inability to pay
any of its indebtedness or consents to or petitions for or
applies to any authority for the appointment of a receiver,
liquidator, trustee or similar official for itself or for all or
any substantial part of its properties or assets or any such
trustee, receiver, liquidator or similar official is otherwise
appointed or when insolvency, reorganization, arrangement or
liquidation proceedings (or similar proceedings) are instituted
by or against the Bank, or any Letter of Credit Issuer, provided
that any such proceedings brought against the Bank or any Letter
of Credit Issuer, will constitute such an Act of Bankruptcy only
if not dismissed within one hundred twenty (120) days;

"Agreement" or "Loan Agreement" shall mean the Loan
Agreement dated as of August 1, 1995 by and between the Authority
and the Borrower and any amendments thereof and supplements
thereto relating to the Project to be financed from proceeds of
the Bonds;

"Alternate Letter of Credit" shall mean any letter of
credit substituted for the Initial Letter of Credit, including
any renewals or extensions of the Initial Letter of Credit by the
Letter of Credit Issuer, pursuant to and meeting the requirements
PAGE 196<PAGE>
of Section 404 hereof;

"Alternate Letter of Credit Issuer" shall mean the
issuer of an Alternate Letter of Credit which meets the standards
set forth in Section 404(d) hereof;

"Application" shall mean the Borrower's letter to the
Authority, dated May 10, 1995, with respect to the Project, and
all attachments, exhibits, correspondence and modifications
submitted in writing to the Authority in connection with said
application;

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

"Assignment of Leases and Rents" shall mean the
assignment dated as of August 1, 1995, which is made a part of
the Record of Proceedings, executed by the Borrower and assigning
to the Bank the benefits of existing and future leases on the
Project Facility, as the same may be amended from time to time;

"Authority's Fee" shall mean the fee in the amount of
$25,000, payable to the Authority for its services in connection
with the issuance of the Bonds;

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

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

"Authorized Denominations" shall mean minimum denomina-
tions of $25,000 and integral multiples of $5,000 thereafter;

"Authorized Trustee Representative" shall mean such
person or persons designated by the Trustee to act on its behalf;

"Available Moneys" shall mean, with respect to the
payment of principal of, redemption premium, if any and interest
on the Bonds (i) moneys which are paid to the Trustee by the
Letter of Credit Issuer pursuant to a draw on the Letter of
Credit, (ii) moneys which have been deposited in the Bond Fund,
(other than moneys drawn under the Letter of Credit and deposited
PAGE 197<PAGE>
in the Letter of Credit Account within the Bond Fund pursuant to
Section 402 hereof), which moneys have remained on deposit in the
Bond Fund for at least 123 days during and prior to which there
has been no Act of Bankruptcy, (iii) moneys which have been
deposited directly by the Borrower with the Trustee in the Bond
Fund and which have remained on deposit therein for at least 123
days during and prior to which there has been no Act of
Bankruptcy, (iv) the proceeds of the sale of refunding
obligations, if, in the opinion, acceptable to Moody's, of
nationally recognized counsel experienced in bankruptcy matters,
the application of such moneys will not constitute a voidable
preference in the event of the occurrence of an Act of
Bankruptcy, or (v) the proceeds from investment of moneys
qualifying as Available Moneys under clauses (ii) or (iii) of
this definition, if, in the opinion, acceptable to Moody's, of
nationally recognized counsel experienced in bankruptcy matters,
the application of such moneys will not constitute a voidable
preference in the event of an Act of Bankruptcy;

"Bank" shall mean, with respect to the Initial Letter
of Credit, First Fidelity Bank, National Association, issuer of
the irrevocable direct pay Initial Letter of Credit, dated the
Issue Date, with its office located at 123 South Broad Street,
Philadelphia, Pennsylvania 19109 and its successors and assigns,
and with respect to an Alternate Letter of Credit, the Alternate
Letter of Credit Issuer;

"Bond" or "Bonds" or "Refunding Bond" or "Refunding
Bonds" shall mean the Authority's not to exceed $10,000,000
aggregate principal amount of Economic Development Refunding
Bonds (Burlington Coat Factory Warehouse of New Jersey, Inc. -
1995 Project) issued to provide funds to finance the Project,
substantially in the form attached as Exhibit A to the Indenture;

"Bondholder" or "Holder" or "Owner" shall mean any
person who shall be the registered owner of any Bond or Bonds as
shown on the registration books maintained on behalf of the
Authority by the Bond Registrar;

"Bond Fund" shall mean the Fund so designated which is
established and created by Section 402 hereof;

"Bond Proceeds" shall mean the amount, including any
accrued interest, paid to the Authority by the Placement Agent
pursuant to the Placement Agreement as the purchase price of the
Bonds, and any interest income earned thereon;
PAGE 198<PAGE>
"Bond Year" shall mean the one-year period commencing
September 1 and ending on the following August 31; except that
the first Bond Year shall commence on the Issue Date and end on
August 31, 1996;

"Borrower" shall mean Burlington Coat Factory Warehouse
of New Jersey, Inc., a corporation organized and existing under
the laws of the State of New Jersey and its successors and
assigns;

"Business Day" shall mean a day of the year, other than
a Saturday, Sunday or other day, on which banks located in the
municipality in which the Principal Offices of the Trustee, the
Paying Agent, the Bond Registrar (as defined in Section 209
hereof) or the Bank are located are authorized or required by law
to close;

"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations and rules promulgated
thereunder;

"Collateral" shall mean all the real property subject
to the lien of the Mortgage and the Assignment of Leases, the
Machinery and Equipment, as well as all those assets of the
Borrower in which the Authority or the Bank are granted a
security interest and all other real and personal property owned
by the Borrower and pledged, conveyed or in which the Authority
or the Bank are otherwise granted a lien and/or security interest
in connection with the Reimbursement Agreement (as hereinafter
defined) or any other Loan Document;

"Corporate Guarantor" shall mean Burlington Coat
Factory Warehouse Corporation, a corporation of the State of
Delaware, the Borrower's parent corporation;

"Cost" shall mean those items set forth in Section 3(c)
of the Act and all expenses as may be necessary or incident to
acquiring, constructing, installing or restoring the Project;

"Debt Service Payment" shall mean, with respect to any
Interest Payment Date, (i) the interest payable on such Interest
Payment Date on all Bonds then Outstanding, plus (ii) the
principal, if any, payable on such Interest Payment Date on all
such Bonds, plus (iii) the redemption premium, if any, payable on
such Interest Payment Date on all such Bonds;

"Determination of Taxability" shall be deemed to have
occurred upon the happening of any of the following:

(i) the issuance of a published or private written
ruling of the Internal Revenue Service in which the Borrower
or any "related person" has participated or with respect to
which the Borrower or "related person" has been given
PAGE 199<PAGE>
written notice and the opportunity to participate, to the
effect that the interest payable on the Bonds is wholly
includable in the gross income for Federal income tax
purposes of one or more Owners thereof; or

(ii) a final, nonappealable determination by a court of
competent jurisdiction in the United States in a proceeding
with respect to which the Borrower or "related person" has
been given written notice and the opportunity to participate
and defend, to the effect that the interest payable on the
Bonds is wholly includable in the gross income for Federal
income tax purposes of one or more Owners thereof; or

(iii) the enactment of legislation of the Congress of
the United States with the effect that interest payable on
the Bonds is, or would be, in the opinion of Bond Counsel,
includable in the gross income of the Owners (except Owners
who are "substantial users" or "related persons" within the
meaning of Section 147(a) of the Code);

"Escrow Agent" shall mean Shawmut Bank Connecticut,
National Association, Hartford, Connecticut or its successor in
interest;

"Escrow Deposit Agreement" shall mean the Escrow
Deposit Agreement dated as of August 1, 1995 pursuant to which
proceeds of the Bonds will be deposited with the Escrow Agent
which will be used to redeem the Refunded Bonds;

"Event of Default" shall have the meaning given to such
term in Section 901 hereof;

"Excess Investment Earnings" are determinable as of the
end of each Bond Year on the basis of the period from the date of
original delivery and payment for the Bonds through the last day
of the most recently completed Bond Year, and are the excess of:

(a) the aggregate amount earned on investments held
under this Indenture (including unrealized gains and losses
upon the retirement of the last Bond, but excluding (i)
investments in evidences of indebtedness described in
Section 103(a)(1) of the Code and (ii) investments of
amounts held in the Rebate Fund) over

(b) the amount that would have been earned on such
investments if they had a Yield equal to the Yield of the
Bonds (determined on a present value basis from the date of
original delivery and payment for the Bonds, without
adjustment for costs of issuance);

"Fiduciary" shall mean the Trustee or Paying Agent;

PAGE 200<PAGE>

"Funds" shall mean the Acquisition Fund and the Bond
Fund and shall not include the Rebate Fund;

"Gross Proceeds" shall have the meaning set forth in
Section 1.148-1(b) of the Treasury Regulations, presently
including, without limitation:

(a) Sale proceeds, which are amounts actually or
constructively received on the sale (or other disposition)
of the Bonds, excluding amounts included in the issue price
used to pay accrued interest within one (1) year of the date
of issuance;

(b) Investment proceeds, which are amounts actually or
constructively received from the investment of sale proceeds
or investment proceeds;

(c) Transferred proceeds, which are proceeds of a
refunded issue that are allocable to a refunding issue at
the time the refunded issue is discharged;

(d) Replacement proceeds, which are amounts replaced
by proceeds of an issue, including amounts held in a sinking
fund, pledged fund, or reserve or replacement fund for an
issue; and

(e) Amounts not otherwise taken into account which are
received as a result of investing the amounts described
above;

"Guaranty" or "Guaranty Agreement" shall mean the
guaranty and suretyship agreement dated as of August 1, 1995,
executed and delivered by the Corporate Guarantor to the Bank;

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

The term "Holder" shall have the meaning ascribed to
"Bondholder" in this Section;

"Indenture" shall mean this Indenture of Trust, as the
same may have been from time to time amended, modified or
supplemented by Supplemental Indentures as permitted hereby;

PAGE 201<PAGE>

"Interest Payment Date" shall mean March 1, 1996 and
each September 1 and March 1 thereafter;

"Issue Date" shall mean August 24, 1995;

"Letter of Credit" shall mean the Initial Letter of
Credit or any Alternate Letter of Credit;

"Letter of Credit Account" shall mean the account so
designated which is established and created as a separate account
within the Bond Fund pursuant to Section 402 hereof;

"Letter of Credit Issuer" shall mean the Bank as issuer
of the Initial Letter of Credit and any issuer of an Alternate
Letter of Credit;

"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), or preference, priority or other
security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the
Uniform Commercial Code (other than any such financing statement
filed for information purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing);

"Loan" shall mean the issuance of an amount not to
exceed $10,000,000 by the Authority for the purposes of redeeming
the Refunded Bonds;

"Loan Documents" shall mean any or all of this
Indenture, the Loan Agreement, the Mortgage, the Financing
Statements, the Guaranty Agreement, the Placement Agreement, the
Assignment of Leases, the Reimbursement Agreement, the Letter of
Credit, the Escrow Deposit Agreement, any documents securing the
Borrower's obligations under the Loan Agreement, the Indenture
and the Reimbursement Agreement, and all documents and
instruments executed in connection therewith and all amendments
and modifications thereto;

"Moody's" shall mean Moody's Investors Service, a
corporation organized and existing under the laws of the State of
Delaware, its successors and assigns, and, if such corporation
shall be dissolved or liquidated or shall no longer perform the

PAGE 202<PAGE>

functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized securities
rating agency designated by the Authority, with the approval of
the Borrower, by notice to the Trustee and the Borrower;

"Net Proceeds" shall mean the Bond Proceeds less any
amounts placed in a reasonably required reserve or replacement
fund within the meaning of Section 150(a)(3) of the Code;

"1985 Project" shall mean the acquisition of 46.779
acres of land in the Township of Burlington, Burlington County,
New Jersey and the construction of an approximately 500,000
square foot building situate thereon for use as a national
distribution center for the Borrower's products containing about
25,000 square feet of office space, the equipping of such
building with conveyor systems, rolling racks and automated
machinery and the construction of a parking area adjacent to such
building, a portion of such costs being financed with the
proceeds of the Prior Bonds;

"Outstanding", when used with reference to Bonds and as
of any particular date, shall describe all Bonds theretofore and
thereupon being authenticated and delivered except (a) any Bond
canceled by the Trustee or proven to the satisfaction of the
Trustee to have been canceled by the Authority or by any other
Fiduciary, at or before said date, (b) any Bond for payment or
Redemption of which moneys 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 one or more of the Fiduciaries in trust
(whether upon or prior to maturity or the redemption date of such
Bond) 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 III hereof, (c) any Bond in lieu
of or in substitution for which another Bond shall have been
authenticated and delivered pursuant to Article II hereof, and
(d) any Bond held by the Borrower;

"Paragraph" shall mean a specified paragraph of a
Section, unless otherwise indicated;

PAGE 203<PAGE>

"Paying Agent" shall mean any paying agent for Bonds
appointed by or pursuant to Section 713 hereof, and its successor
or successors and any other corporation or association which may
at any time be substituted pursuant to this Indenture;

"Permitted Encumbrances" shall mean, as of any
paricular time: (i) liens for taxes and assessments not then
delinquent or, provided there is no risk of forfeiture or sale of
any of the Collateral, which are being contested in good faith
and for which reserves have been established by the Borrower
which are satisfactory to the Bank, all in accordance with the
provisions of Section 5.8 of the Reimbursement Agreement; (ii)
liens granted pursuant to the Reimbursement Agreement, the
Indenture, the Loan Agreement, the Mortgage, the Assignment of
Leases, the Financing Statements and the other Loan Documents;
(iii) liens securing claims or demands of mechanics and
materialmen or other liens similar in nature; (iv) utility access
and other easements and rights of way, restrictions and
exceptions that the Title Insurance Policy insures will not
interfere with or impair the Premises or the Project Facility and
previously approved by and acceptable to the Bank; (v) purchase
money security interests encumbering (A) property other than the
Collateral or (B) property acquired after
the date hereof and otherwise comprising Collateral, provided,
however, that the Bank's lien shall remain in effect with respect
to such Collateral subject only to such purchase money security
interest(s); (vi) those exceptions shown on Schedule B of the
Title Insurance Policy acceptable to the Bank and the Authority;
(vii) liens of or resulting from any litigation or legal
proceeding which are being contested in good faith by appropriate
actions or proceedings or any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired,
or in respect of which the Borrower shall at any time in good
faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured and for which a
supersedeas bond has been timely posted; (viii) minor survey
exceptions or minor encumbrances, easements or reservations, or
rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real
properties which are necessary to the conduct of the activities
of the Borrower or which customarily exist on properties of
corporations engaged in similar activities and similarly situated
and which do not in the aggregate materially impair the operation
of the business of the Borrower; and (ix) liens in favor of the
City of Burlington in connection with an Urban Development Act
Grant (UDAG Grant Number B-85-AB-34-0262), which liens are
subordinate to the lien of and Mortgage in favor of the Bank;

"Permitted Investments" shall mean those investments
described in Article VI hereof;

"Person" or "Persons" shall mean any individual,

PAGE 204<PAGE>
corporation, partnership, joint venture, trust, or unincorporated
organization, or a governmental agency or any political
subdivision thereof;

"Placement Agent" shall mean First Fidelity Bank, N.A.,
in its capacity as agent in connection with the placement of the
Bonds;

"Placement Agreement" shall mean the Placement
Agreement dated as of August 1, 1995 by and among the Placement
Agent, the Bank, the Authority and the Borrower;

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

"Principal Office" shall mean (i) in the case of the
Trustee, the principal corporate trust office of the Trustee
located at Hartford, Connecticut, or which at any particular time
its corporate trust business shall be administered; (ii) in the
case of the Bank, its office at which documents for drawing on
the Letter of Credit are to be presented; (iii) in the case of
the Placement Agent, the office thereof designated in writing to
the Trustee, the Bank and the Borrower and (iv) in the case of
any care of their attorney Stacy John Haigney, other Person, the
office thereof designated in writing to the Trustee and the Bank;

"Project" shall mean the refinancing of the 1985
Project and the redemption of the Refunded Bonds with the
proceeds of the Bonds;

"Project Facility" or "Project Facilities" shall mean
the land, the improvements and the building situate thereon
located in the Project Municipality acquired and constructed by
the Borrower, including any additions, substitutions or
replacements which have been constructed or acquired thereon with
the proceeds of the Refunded Bonds;

"Project Municipality" shall mean the Township of
Burlington, County of Burlington, State of New Jersey;

"Rebate Fund" shall mean the fund so designated which
is.established and created by Section 413 hereof;

"Record Date" shall mean the fifteenth day of the
calendar month immediately preceding each Interest Payment Date

PAGE 205<PAGE>
(whether or not a Business Day);

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

"Redemption" shall mean payment of the principal of any
Bond prior to its stated maturity date;

"Redemption Price", when used with respect to a Bond or
portion thereof, shall mean the principal amount of such Bond or
Bonds or portion thereof plus the applicable redemption premium,
if.any, payable upon Redemption thereof in the manner
contemplated in.accordance with its terms pursuant to this
Indenture;

"Reimbursement Agreement" shall mean the Letter of
Credit.Reimbursement Agreement dated as of August 1, 1995 between
the.Borrower and the Bank, as the same may be amended from time
to time.and filed with the Trustee, under which terms the Bank
agrees to.issue the Initial Letter of Credit, and any successor
agreement of.the Borrower with a Letter of Credit Issuer under
which terms the.Borrower and such Letter of Credit Issuer agree
to issue a Letter.of Credit;

"Reserved Rights" shall mean those certain rights of
the.Authority under the Loan Agreement to indemnification and to
payments of certain Authority fees and expenses, indemnity
payments, its right to enforce notice and reporting requirements,
restrictions on transfer of ownership, its right to inspect and
audit the books, records and the Project Facilities, of the
Borrower, collection of attorneys' fees, its right to enforce the
Borrower's covenant to comply with applicable Federal tax law,
its.rights set forth in the provisions to the granting clause in
the.preamble hereto (to the extent not recited herein) and its
right to.receive certain notices;

"Revenues" shall mean (i) all amounts payable by the
Borrower under the Loan Agreement and assigned to the Trustee
hereunder, (ii) any proceeds of Bonds originally deposited with
the Trustee for the payment of interest accrued on the Bonds or
otherwise paid to the Trustee by or on behalf of the Borrower or
the Authority for deposit in the Bond Fund or moneys remaining in
the Acquisition Fund established in connection with the issuance
of the Bonds following the payment of all Costs associated with

PAGE 206<PAGE>
the Project, (iii) investment income with respect to any moneys
held by the Trustee, except investment income with respect to
moneys held in the Rebate Fund, (iv) proceeds held in the Bond
Fund of any bonds which may be issued by the Authority to provide
for the payment of the Bonds in the manner set forth in Article
XI hereof and the proceeds of investments of such proceeds, (v)
any moneys paid to the Trustee under the Letter of Credit, and
(vi) any insurance proceeds, sale proceeds or moneys paid to the
Trustee by the Bank in respect of the Project Facilities,
including any moneys received upon taking possession of or
foreclosure on the Project Facilities;

"Section" shall mean a specified section hereof, unless
otherwise indicated;

"Special Record Date" shall mean any date as may be
fixed for the payment of defaulted interest in accordance with
Section 204 hereof;

"Standard & Poor's" shall mean Standard & Poor's
Corporation, a corporation organized and existing under the laws
of the State of New York, its successors and assigns, and, if
such corporation shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency,
"Standard & Poor's" shall be deemed to refer to any other
nationally recognized securities rating agency designated by the
Authority, with the approval of the Borrower, by notice to the
Trustee and the Borrower;

"State" shall mean the State of New Jersey;

"Supplemental Indenture" shall mean any indenture,
amending, modifying or supplementing this Indenture made, signed
and becoming effective in accordance with the terms of Article
VIII;

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

"Trust Estate" shall mean all property which may from
time to time be subject to the lien of this Indenture;

PAGE 207<PAGE>
laws of the United States of America, with its principal
corporate trust office located in Hartford, Connecticut, or its
successor and assigns in interest of such capacities;

"Yield" shall mean the yield as calculated in the
manner set forth in Section 148 of the Code; thus, yield with
respect to an investment allocated to the Bonds is that discount
rate which produces the same present value when used in computing
the present value of all receipts received and to be received
with respect to investments and the present value of all the
payments with respect to the investments. The yield on the Bonds
is that discount rate which produces the same present value on
the date hereof when used in computing the present value of all
payments of principal, interest and charges for a "qualified
guarantee" to be made with respect to the Bonds and the present
value of all of the issue prices for the Bonds. The issue price
for each maturity of the Bonds is the initial offering price of
such Bonds to the public.

Section 102. Rules of Construction. Unless the
context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of the
Indenture:

(i) Words importing the
singular number shall include the plural number and
vice versa.

(ii) Words importing the
Redemption or calling for Redemption of Bonds shall not
be deemed to refer to or connote the payment of Bonds
at their stated maturity or upon the acceleration of
the principal thereof by the Trustee pursuant to
Section 902 hereof.

(iii) All references herein to
particular articles or sections are references to
articles or sections of this Indenture unless otherwise
noted.

(iv) The captions and headings
herein are solely for convenience of reference and
shall not constitute a part of this Indenture nor shall
they affect its meaning, construction or effect.

(v) All references to "hereof"
and "hereto" and words of like import shall refer to
this Indenture.

(vi) References to any time of
the day in this Indenture shall refer to Eastern
standard time or Eastern daylight saving time, as in
effect in the City of New York, New York on such day.

PAGE 208<PAGE>
(vii) Defined terms used in this
Indenture which are defined in the Loan Agreement and
not in this Indenture shall have the meaning set forth
in the Loan Agreement.

PAGE 209<PAGE>

ARTICLE II

THE BONDS

Section 201. Authorized Amount of Bonds. No Bonds may
be issued under the provisions of this Indenture except in
accordance with this Article. There is hereby created for
issuance under this Indenture a series of Bonds designated the
"Economic Development Refunding Bonds, (Burlington Coat Factory
Warehouse of New Jersey, Inc. - 1995 Project)" in the aggregate
principal amount not to exceed $10,000,000. No additional Bonds
are authorized pursuant to the terms of this Indenture.

Section 202. Purposes for Issuance of Bonds. The
Authority has authorized Bonds to be issued for the purpose of
financing the Cost of the Project, including necessary expenses
incidental thereto and to the issuance of the Bonds, as
applicable.

Section 203. Manner of Payment of Bonds. Principal or
Redemption Price of the Bonds together with accrued interest, if
any, up to and including the redemption date, maturity date or a
date of acceleration of the Bonds, shall be payable from the
sources specified in Section 401 hereof and in the order
specified in Section 402 hereof to the Holders of such Bonds upon
presentation and surrender of such Bonds as they respectively
become due at the Principal Office of the Trustee, as Paying
Agent for the Bonds. Interest on the Bonds which will be due on
an Interest Payment Date shall be paid by check or bank draft
drawn upon the Bond Fund by the Trustee and mailed to the Holders
of such Bonds as of the close of business on the Record Date next
preceding the Interest Payment Date at the registered addresses
of such Holders as they shall appear as of the close of business
on such Record Date on the registration books maintained pursuant
to Section 209 hereof. Payment as aforesaid shall be made in
such coin or currency of the United States of America as, at the
respective times of payment, shall be legal tender for the
payment of public and private debts. Any Holder of at least one
million dollars ($1,000,000) of Bonds may request interest
payments by wire transfer to an account designated by such
Holder.

Section 204. Maturities, Interest Rates, and Certain
Other Provisions. The Bonds shall be dated August 1, 1995, shall
bear interest from such date, calculated on a 360 day year basis
consisting of twelve (12) thirty (30) day months, at the rates
set forth below payable on the first day of each March and
September, commencing March 1, 1996, until maturity or
Redemption, and shall mature on the dates set forth below:

PAGE 210<PAGE>

SERIAL BONDS

Maturity Interest
(September 1) Amount Rate
1996 $320,000 3.75%
1997 350,000 4.15
1998 385,000 4.45
1999 420,000 4.75
2000 460,000 4.90
2001 505,000 5.05
2002 555,000 5.20
2003 605,000 5.40

TERM BONDS

Maturity
(September 1) Amount Interest Rate
2005 $1,400,000 5.600%
2010 $5,000,000 6.125%

The Bonds maturing on September 1, 2005 and September
1, 2010, respectively, shall be redeemed from sinking fund
payments commencing September 1, 2004 and September 1, 2006,
respectively, and each September 1 as follows:

Term Bonds Due September 1, 2005

Year Sinking Fund Installment

2004 $665,000
2005* 735,000

Term Bonds Due September 1, 2010

Year Sinking Fund Installment
2006 $ 810,000
2007 895,000
2008 990,000
2009 1,095,000
2010 1,210,000

Each such payment on the Bonds shall be payable as set
forth in this Section 204 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 the payment of public and private debts.

All Bonds shall be issued in minimum denominations of
$25,000 and thereafter in any integral multiple of $5,000. The
Bonds shall be numbered consecutively from EDRB-1 upward. The
Bonds may contain or have words as are (a) not inconsistent with
the provisions of this Indenture or the Resolution, (b) not
prejudicial to the Bondholders, and (c) authorized by a

PAGE 211<PAGE>
supplemental resolution adopted by the Authority and a
Supplemental Indenture prior to the authentication and delivery
thereof. The Bond text may be amended to reflect the security of
the Bonds by any Alternate Letter of Credit without further
action by the Authority upon the effective date of such Alternate
Letter of Credit. Each Bond issued subsequent to the initial
Bonds shall be dated the Issue Date.

The Bonds shall be subject to Redemption to the extent,
in the order, at the times, on the terms, at such Redemption
Price and subject to all other terms, conditions and provisions
in conformity with Article III hereof.

Interest on the Bonds shall be payable from the
Interest Payment Date next preceding the date of authentication
thereof to which interest has been paid or duly provided for,
unless the date of authentication thereof is an Interest Payment
Date to which interest has been paid or duly provided for, in
which case from the date of authentication thereof, or unless no
interest has been paid or duly provided for on the Bonds, in
which case from August 1, 1995, until payment of the principal
thereof has been made or duly provided for. Notwithstanding the
foregoing, if the date of authentication of any Bond is after any
date which is a Record Date next preceding any Interest Payment
Date and before such Interest Payment Date, such Bond shall bear
interest from such Interest Payment Date; provided, however, that
if the Authority shall default in the payment of interest due on
such Interest Payment Date, then such Bond shall bear interest
from the next preceding Interest Payment Date to which interest
has been paid or duly provided for, or, if no interest has been
paid or duly provided for on the Bonds, from August 1, 1995. In
the event of any such default, such defaulted interest shall be
payable to the Person in whose name such Bond is registered at
the close of business on a record date for the payment of such
defaulted interest (the "Special Record Date") established by
notice mailed by or on behalf of the Authority to the registered
Holders of Bonds not less than fifteen (15) days preceding such
Special Record Date. Such notice shall be mailed to the Person
in whose name each Bond is registered at the close of business on
the fifth (5th) day preceding the date of mailing. Payments of
interest on the Bonds shall be payable from the Bond Fund to the
Bondholders by check or bank draft mailed to the respective
addresses of the Bondholders as they appear on the registration
books of the Trustee on the Record Date. Any Holder of at least
one million dollars ($1,000,000) of Bonds may request such
interest payments by wire transfer to an account designated by
such Holder. All payments of principal of the Bonds shall be
payable at the Principal Office of the Trustee or at such
other place as the Trustee and the Holder of a Bond may agree,
upon surrender of the Bond for cancellation thereof.
PAGE 212<PAGE>

Section 205. Execution. The Bonds shall be executed
on behalf of the Authority by manual or facsimile signature of
the Chairman, Vice Chairman, Executive Director or Deputy
Director of Investment Banking of the Authority and shall have
impressed thereon the corporate seal of the Authority or shall
have reproduced thereon a facsimile thereof. Such facsimile
signatures on the Bonds shall have the same force and effect as
if the Chairman, Vice Chairman, Executive Director or Deputy
Director of Investment Banking of the Authority had manually
signed each Bond. In case any officer of the Authority the
facsimile of whose signature shall appear on the Bonds shall
cease to be such officer before the delivery of such Bonds, such
facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such officer had remained in office
until delivery; and any Bond may be signed on behalf of the
Authority, manually or in facsimile, by the person who, on the
date of execution of such Bond, shall be the proper officer of
the Authority, although on the date of execution of this
Indenture such person was not such officer.

Section 206. Authentication. The Trustee is hereby
appointed as an authenticating agent for the Bonds. No Bond
shall be valid for any purpose hereunder until it shall have
endorsed thereon a certificate of authentication substantially in
the form attached to the form of Bond, duly executed and dated by
the Trustee and such authentication shall be conclusive evidence
that such Bond has been authenticated and delivered under the
Indenture and that the Holder thereof is entitled to the benefits
of the trust hereby created. The certificate of authentication
on any Bond shall be deemed to have been executed by the Trustee
if signed by an authorized signatory of the Trustee, as the case
may be, but it shall not be necessary that the same person sign
the certificate of authentication on all of the Bonds issued
hereunder.

Section 207. Limited Obligations. (a) The Bonds,
together with interest thereon, shall be special, limited
obligations of the Authority payable solely from the Revenues and
other moneys, securities, funds and accounts (including
investments, if any) held and to be held by the Trustee pursuant
to this Indenture and shall be a valid claim of the respective
Holders thereof against such Revenues and such other moneys,
securities, funds and accounts; and there shall be no other
recourse against the Authority or any other property now or
hereafter owned by it.
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 OF,
IF ANY, OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED
OBLIGATIONS OF THE NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (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

PAGE 213<PAGE>
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.

(b) No Holder of any Bond has the right to compel
any exercise of taxing power of the Authority to pay such Bond or
the interest or redemption premium, if any, thereon. No recourse
shall be had for the payment of principal of or interest or
redemption premium, if any, on the Bonds or for any claim based
thereon or upon any indenture against any past, present or future
official, officer or employee of the Authority or any successor
corporation, as such, either directly or through the Authority,
or any successor corporation under any rule of law or equity,
statute or constitution, or by the enforcement of any assessment
or penalty or otherwise; and all such liability of any such
official, officer or employee, as such, is hereby expressly
waived and released as a condition of and in consideration for
the execution of this Indenture and the issuance of the Bonds.

Section 208. Mutilated, Lost, Stolen or Destroyed
Bonds. (a) In the event any Bond is mutilated, lost, stolen or
destroyed, the Authority may execute, upon request of the
registered Owner thereof and, upon its written request, the
Trustee shall authenticate, a duplicate Bond of like series,
date, maturity and denomination as that mutilated, lost, stolen
or destroyed Bond; provided that, in the case of any mutilated
Bond, such mutilated Bond shall first be surrendered to the
Authority, which Bond shall be canceled by the Trustee, and in
the case of any lost, stolen or destroyed Bond, there shall be
first furnished to the Authority and the Trustee evidence of such
loss, theft or destruction satisfactory to the Authority and the
Trustee together with indemnity satisfactory to them, and as may
be required by applicable law; provided further that, with
respect to any such Bond which shall have matured, the Trustee
may pay the same without surrender thereof if there shall have
been furnished to the Authority, the Trustee and the Borrower
indemnity satisfactory to them and as may be required under
applicable law. The Authority and the Trustee may charge the
Holder of such Bond with their reasonable fees and expenses
relating to the replacement of any Bond pursuant to this Section.

(b) Every Bond issued pursuant to the provisions
of this Section 208 shall constitute an additional contractual
obligation of the Authority (whether or not the lost, stolen or
destroyed Bond shall be found at any time to be enforceable) and
shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Bonds duly issued under
this Indenture.

(c) All Bonds shall be held and owned upon the
express condition that the provisions of this Section 208 are
exclusive, with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Bonds, and shall preclude

PAGE 214<PAGE>
all other rights or remedies, notwithstanding any law or statute
existing or hereinafter enacted to the contrary.

Section 209. Bond Register; Registration and
Transferability of Bonds. (a) All Bonds shall be issued in
fully registered form. The Bonds shall be registered upon
original issuance and upon subsequent registrations of transfer
or exchange as provided in this Indenture. While any of the
Bonds issued hereunder is Outstanding, there shall be maintained
and kept at the Principal Office of the Trustee books for the
registration of the Bonds (herein sometimes referred to as the
"Bond Register"). The Trustee is hereby appointed bond registrar
(the "Bond Registrar") for the Authority for the purpose of
registering and making transfers on such Bond Register. All
Bonds shall be registered as to principal and interest. By
executing this Indenture the Trustee accepts the duties and
obligations of Bond Registrar for the Authority.

(b) Bonds shall be transferable only on the Bond
Register upon surrender thereof at the Principal Office of the
Trustee by the registered Owner thereof in person or by his
attorney duly authorized in writing, together with a written
instrument of transfer executed by the registered Owner thereof
or by his duly appointed attorney and satisfactory to the
Trustee. Upon such surrender, the Authority shall execute and
the Trustee shall authenticate and deliver in the name of the
transferee or transferees, one or more new fully registered Bonds
of the same series in Authorized Denominations in the aggregate
principal amount which the registered Owner is entitled to
receive. At the option of the Holder, Bonds may be exchanged for
other Bonds of the same series in any other Authorized
Denomination of a like aggregate principal amount upon surrender
of the Bonds to be exchanged at any such office. All Bonds
presented for registration of transfer or for exchange,
Redemption or payment (if so required by the Authority, the Bond
Registrar or the Trustee), shall be accompanied by a written
instrument or instruments of transfer or authorization for
exchange, in form satisfactory to the Bond Registrar. No service
charge shall be made for any exchange or registration of transfer
of Bonds, but the Trustee may require payment of its expenses and
a sum sufficient to cover all taxes or other governmental charges
that may be imposed in relation thereto. New Bonds delivered
upon any registration of transfer or exchange shall be valid
obligations of the Authority, evidencing the same debt as the
Bonds surrendered, shall be secured by this Indenture and shall
be entitled to all of the security and benefits hereof to the
same extent as the Bonds surrendered.

(c) A Person in whose name a Bond shall be
registered shall for all purposes of this Indenture, be deemed
the absolute Owner and, so long as the same shall be registered,

PAGE 215<PAGE>
payments of or on account of the principal, redemption premium,
if any, and interest with respect to such Bond shall be made only
to the registered Owner or his legal representative. All such
payments so made to any such registered Owner or upon his order
shall be valid and effectual to satisfy and discharge the
liability of the Authority upon such Bond to the extent of the
sum or sums so paid. The Authority and the Trustee shall not be
affected by any notice to the contrary.

(d) The Trustee shall not register, register the
transfer of, or exchange Bonds for the period from the Record
Date preceding an Interest Payment Date to the related Interest
Payment Date, nor shall the Trustee register the transfer of or
exchange any Bond during the period fifteen (15) days next
preceding the giving of a notice of redemption.

Section 210. Cancellation and Destruction of
Surrendered Bonds. All Bonds which have been purchased by or on
behalf of the Authority and all Bonds surrendered for payment,
Redemption, registration of transfer or exchange and Bonds
surrendered to the Trustee by the Authority or by the Borrower
for cancellation shall be canceled and destroyed by the Trustee.
The Trustee shall deliver to the Authority and to the Borrower
certificates of destruction in respect of all Bonds so destroyed.

Section 211. Form of Bonds. The Bonds issued under
this Indenture may have printed thereon such legend or legends as
may be required to comply with any law, rule or regulation or to
conform to general usage or as may, consistent herewith, be
determined to be advisable by the Authority and the Trustee. All
Bonds shall be substantially in the form of Exhibit A attached
hereto with such appropriate variations, omissions and insertions
as are permitted or required by this Indenture.

Section 212. Delivery of Bonds. (a) Upon the
execution and delivery of this Indenture, the Authority shall
execute and deliver the Bonds to the Trustee and the Trustee,
upon written order of the Authority, shall authenticate the Bonds
and deliver them to the Placement Agent in accordance with the
provisions of this Section 212.

(b) Prior to or simultaneously with the delivery
by the Trustee of any of the Bonds there shall be filed with the
Trustee the following:

(i) Original executed counterparts of the Loan
Agreement, this Indenture, the Escrow Deposit
Agreement, the Reimbursement Agreement, the originally
executed Initial Letter of Credit and the other
originally executed Loan Documents.

(ii) A copy, duly certified by the Secretary or
Assistant Secretary of the Borrower, of the resolution

PAGE 216<PAGE>
or resolutions adopted by the Borrower authorizing the
execution and delivery of the Loan Agreement, the
Escrow Deposit Agreement, the Reimbursement Agreement,
and the Loan Documents.

(iii) A copy, duly certified by the Executive
Director, Secretary or Assistant Secretary of the
Authority, of the resolution or resolutions adopted by
the Authority authorizing the execution and delivery of
the Loan Agreement, the Escrow Deposit Agreement, the
Placement Agreement and this Indenture and the
issuance, execution and delivery of the Bonds.

(iv) An opinion of counsel for the Borrower and
Corporate Guarantor stating in the opinion of such
counsel that the Loan Agreement, the Reimbursement
Agreement and the Loan Documents have each been duly
authorized by and lawfully executed and delivered on
behalf of the Borrower and Corporate Guarantor, as
applicable, are in full force and effect and are valid,
binding and enforceable against the Borrower and
Corporate Guarantor in accordance with the respective
terms thereof, except to the extent certain bankruptcy
laws and equitable principles may affect
enforceability.

(v) An opinion of Bond Counsel for the
Authority stating in the opinion of such counsel that
the Loan Agreement, the Escrow Deposit Agreement and
this Indenture have each been duly authorized by and
lawfully executed and delivered on behalf of the
Authority, are in full force and effect and are valid,
binding and enforceable against the Authority in
accordance with the respective terms thereof, except to
the extent certain bankruptcy laws and equitable
principles may affect enforceability.

(vi) An original executed counterpart of a
certificate with respect to the compliance with Federal
arbitrage requirements from the Authority given in part
in reliance on a certificate from the Borrower along
with an original executed counterpart of the Borrower's
certificate.

(vii) An opinion of Bond Counsel for the
Authority stating in the opinion of such Bond Counsel
that: (a) the Authority is duly authorized and
entitled to issue the Bonds and, upon the execution,
authentication and delivery thereof, the Bonds will be
duly and validly issued and will constitute valid and
binding special obligations of the Authority; and (b)
interest income on the Bonds is exempt from inclusion
as gross income under the Code subject to certain

PAGE 217<PAGE>
limitations, more fully set forth therein; and (c)
interest income is not includable as gross income under
the New Jersey Gross Income Tax Act (P.L. 1976, Chapter
47).

(viii) An opinion of counsel for the Bank stating
in the opinion of such counsel addressed to the
Authority, the Borrower and the Trustee that: the
Letter of Credit has been duly authorized by and
lawfully executed and delivered on behalf of the Bank,
is in full force and effect and is valid and
enforceable against the Bank in accordance with its
terms, except (i) as may be limited by (a) bankruptcy,
insolvency, liquidation, reorganization, moratorium or
other similar laws relating to or limiting creditors'
rights generally as such laws would apply in the event
of the bankruptcy, insolvency, liquidation,
reorganization, moratorium or other similar occurrence
with respect to or affecting the Bank, (b) the powers
of Federal Regulatory bodies to appoint the Federal
Deposit Insurance Corporation as receiver to take
possession of the Bank's assets and to pay creditors of
the Bank and (c) general principles of equity, and (ii)
no opinion is expressed as to (a) the ability of a
court of appropriate jurisdiction to enjoin the ability
of the Bank to honor a draft or demand for payment
under the Letter of Credit in the event of a
presentation of documents that are forged or fraudulent
or there is fraud in the transaction or (b) the
availability of equitable remedies to persons seeking
to enforce the Letter of Credit.

(ix) An opinion of Bond Counsel for the
Authority addressed to the Authority and the Trustee to
the effect that payments on the Bonds from Available
Moneys will not constitute preferential payments
pursuant to the provisions of the Federal Bankruptcy
Code in a bankruptcy proceeding by or against the
Authority, the Borrower, the Corporate Guarantor or the
Bank.

(x) An authorization to the Trustee, signed by
an Authorized Authority Representative, to authenticate
and deliver the Bonds to the Placement Agent therein
identified.

and (xi) An executed copy of the Placement
Agreement.

Section 213. Temporary Bonds. (a) Pending
preparation of definitive Bonds, there may be executed, and, upon
written request of the Authority, the Trustee shall authenticate
and deliver to the Authority, in lieu of definitive Bonds and

PAGE 218<PAGE>
subject to the same limitations, conditions and requirements as
to date, temporary printed, engraved, lithographed or typewritten
Bonds, in the form of fully registered Bonds in Authorized
Denominations as the Authority by resolution may provide and with
such appropriate omissions, insertions and variations as may be
required.

(b) If temporary Bonds shall be issued, the
Authority shall cause definitive Bonds to be prepared and to be
executed and delivered to the Trustee, and the Trustee shall,
upon written request of the Authority and upon presentation to it
at its Principal Office of any temporary Bond, cancel the same
and authenticate and deliver in exchange therefor at the
Principal Office of the Trustee, without charge to the Holder
thereof, a definitive Bond or Bonds of an equal aggregate
principal amount, of the same maturity and bearing interest at
the same rate as the temporary Bond surrendered. Until so
exchanged, the temporary Bonds shall in all respects be entitled
to the same benefit and security of this Indenture as the
definitive Bonds to be issued and authenticated hereunder.

Section 214. Payments Due on Saturdays, Sundays and
Holidays. Except as otherwise provided in this Indenture, in any
case where the date of maturity of interest or principal of Bonds
or the date fixed for Redemption of Bonds shall not be a Business
Day, then payment of interest on or principal or Redemption Price
of such Bonds 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 shall accrue for the period after
such date.

Section 215. Notice of Determination of Taxability.
If the Trustee is notified in writing by the Internal Revenue
Service or any Bondholder of the occurrence of a Determination of
Taxability, the Trustee shall give written notice thereof to the
Authority, the Letter of Credit Issuer and the Borrower. The
Trustee shall then give written notice of any Determination of
Taxability of which it receives written notice, to the Holders by
registered or certified first class mail promptly following the
receipt of such notice. Such notice shall state that the Bonds
are subject to Redemption pursuant to Section 301(a) hereof and
shall state the matters set forth in Section 303 hereof.

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ARTICLE III

REDEMPTION OF BONDS

Section 301. Redemption. The Bonds are subject to
Redemption prior to maturity as provided in the form of the Bonds
and as follows, subject to the notice requirements set forth in
Section 303 hereof:

(a) Special Mandatory Redemption. The Bonds are
subject to special mandatory redemption in whole as soon as
practicable but not later than the 90th day following (i) the
Trustee's receipt of written notice of the occurrence of a
Determination of Taxability or (ii) the Authority's written
notice to the Trustee, the Letter of Credit Issuer and the
Borrower that (A) the Borrower has ceased to operate the Project
Facility or ceased to cause the Project Facility 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 of the representations and
warranties of the Borrower contained in the Loan Agreement have
proven to have been false or misleading in any material respect
when made. In such event, the Bonds shall be redeemed by the
Authority at a Redemption Price equal to 100% of the principal
amount thereof plus accrued interest up to and including the
redemption date.

(b) Mandatory Redemption. The Bonds are subject to
mandatory redemption, as a whole or in part, in minimum
denominations of $25,000 and in integral multiples of $5,000
thereafter, on any Interest Payment Date, at a Redemption Price
equal to 100% of the principal amount thereof, together with
interest accrued up to such redemption date in the case of
damage, destruction or condemnation of the Project, in an amount
equal to the net proceeds of any insurance, casualty or
condemnation award received by the Bank and at the option of the
Bank pursuant to Section 5.24 of the Loan Agreement and Section
304(d) hereof.

PAGE 220<PAGE>
another bank to the Trustee that an Alternate Letter of Credit
will be issued prior to the Letter of Credit Maturity Date, which
Alternate Letter of Credit shall have an expiration date of
September 15 of any subsequent year, and (ii) (A) an Alternate
Letter of Credit meeting the requirements set forth in Section
404(d)(i) hereof and which shall be presented to the Trustee
sixty (60) days prior to the Letter of Credit Maturity Date and
(B) the documents required to be delivered in Section 404(d)(ii)
hereof sixty (60) days prior to the Letter of Credit Maturity
Date.

(d) Mandatory Redemption Due to Act of Bankruptcy of
Bank. The Bonds are subject to mandatory redemption, as a whole,
at a Redemption Price equal to 100% of the principal amount of
the Outstanding Bonds together with interest accrued thereon to
the redemption date which is at least forty-five (45) days, but
not more than seventy (70) days, after the date on which an Act
of Bankruptcy of the Bank occurs, unless within thirty (30) days
after the occurrence of an Act of Bankruptcy of the Bank, the
Borrower has provided the Trustee with (i) an Alternate Letter of
Credit, which Alternate Letter of Credit shall have an expiration
date of September 15, of any subsequent year and (ii) the
opinions and written notice set forth in Section 404 hereof.

(e) Optional Redemption. Subject to the provisions
of Section 304(c) hereof regarding the payment of the redemption
premium, if any, by the Borrower, the Bonds maturing on or after
September 1, 2006 are subject to optional redemption by the
Authority, at the direction of the Borrower, in whole at any
time, or in part on any Interest Payment Date, in minimum
denominations of $25,000 and in integral multiples of $5,000
thereafter if in part, on or after September 1, 2005, at the
Redemption Prices (expressed as percentages of the principal
amount) for the Redemption Periods set forth below, plus unpaid
interest, if any, accrued up to the redemption date:

Redemption Periods Redemption
(Dates Inclusive) Prices

September 1, 2005 to August 31, 2006 102.00%
September 1, 2006 to August 31, 2007 101.00%
September 1, 2007 and thereafter 100.00%

(f) Sinking Fund Redemption. The Bonds maturing
September 1, 2005 and September 1, 2010, respectively, shall be
subject to Redemption commencing September 1, 2004 and September
1, 2006, respectively, and on each September 1 thereafter, as
applicable, at a Redemption Price equal to 100% of the principal
amount thereof being redeemed plus accrued interest up to the
redemption date. The Trustee shall cause to be redeemed such
Bonds in the aggregate principal amounts of the following Sinking
Fund Installments on September 1 of each of the following years:

PAGE 221<PAGE>
Term Bonds Due September 1, 2005

Year Sinking Fund Installment
2004 $665,000
2005 735,000

Term Bonds Due September 1, 2010

Year Sinking Fund Installment
2006 $ 810,000
2007 895,000
2008 990,000
2009 1,095,000
2010* 1,210,000

On or before the thirtieth (30th) day next preceding a
Sinking Fund Installment due date, the Trustee shall select for
Redemption on such date the principal amount of Bonds, in an
amount not exceeding that necessary to complete the retirement of
such Sinking Fund Installment, as of such Sinking Fund
Installment due date. Accrued interest on such Bonds so redeemed
shall be paid from the Bond Fund, and all expenses in connection
with such Redemption shall be paid by the Borrower. All Bonds
redeemed under the provisions of this Section shall be redeemed
in the manner provided in Section 302 hereof. The principal
amount of Bonds to be redeemed in the years 2004 through 2010
shall be reduced by the amount of such Bonds that the Trustee has
previously redeemed pursuant to Section 301(b) or (e) hereof.

Section 302. Selection of Bonds to be Redeemed. (a) A
Redemption of Bonds shall be a Redemption of the whole or any
part of the Bonds from any funds available for that purpose in
accordance with the provisions of this Indenture. If less than
all the Bonds shall be called for Redemption under any provision
of this Indenture permitting such partial redemption, the
particular Bonds (or Authorized Denominations thereof), to be
redeemed shall be selected by the Trustee by lot, using such
method as the Trustee in its sole discretion may deem proper, in
the principal amount designated in writing to the Trustee by the
Borrower or otherwise as required by this Indenture. The Trustee
and the Letter of Credit Issuer, as applicable, shall be notified
in writing by the (i) Authority in the case of a Redemption
pursuant to Section 301(a) hereof, (ii) by the Borrower in the
case of a Redemption pursuant to Section 301(e) hereof and (iii)
by the Letter of Credit Issuer in the case of a Redemption
pursuant to Sections 301(b), 301(c) and 301(d) hereof, not less
than sixty (60) days prior to the redemption date of a Redemption
pursuant to Section 301(a), (b), (c) and (e) hereof and in the
case of a Redemption pursuant to Section 301(d) hereof, not more
than ten (10) days following an Act of Bankruptcy of the Bank.

PAGE 222<PAGE>
(b) Except as otherwise provided herein, any
Bonds selected for Redemption which are deemed to be paid in
accordance with the Indenture will bear interest up to, but not
including, the date fixed for Redemption.

Section 303. Notice of Redemption; Rights of Holders.
(a) When Bonds are to be redeemed pursuant to Section 301
hereof, the Trustee shall give notice of such redemption to the
Holders in the name of the Authority, stating: (i) the Bonds to
be redeemed; (ii) the redemption date; (iii) that such Bonds will
be redeemed at the Principal Office of the Trustee; (iv) that on
such redemption date there shall become due and payable upon each
Bond to be redeemed the Redemption Price thereof together with
unpaid interest accrued prior to the redemption date; (v) the
CUSIP numbers assigned to the Bonds to be redeemed; (vi) the
serial numbers and maturities of Bonds selected for Redemption,
except that where all the Bonds are to be redeemed, the serial
numbers and maturities need not be specified; (vii) the interest
rates and maturity dates of the Bonds to be redeemed; (viii) the
date of mailing notice to Bondholders; and (ix) the record date
for the Redemption (which shall be forty-five (45) days prior to
the redemption date).

(b) Such redemption notice shall further state
that on such date there shall become due and payable upon each
Bond or portion thereof being 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. In case any Bond
is to be redeemed in part only, the notice of redemption which
relates to such Bond shall state the portion of the principal
thereof to be redeemed and that on or after the redemption date,
upon surrender of such Bond, a new Bond or Bonds of the same
maturity and in principal amount equal to the unredeemed portion
of such Bond shall be issued. The notice of redemption shall
state that Redemption is subject to receipt by the Trustee of
Available Moneys from the Letter of Credit or, as applicable and
limited by the provisions of this Indenture, other Available
Moneys sufficient to pay the Redemption Price of the Bonds to be
redeemed on or before the redemption date.

(c) The Trustee shall mail the notice required by
subsection (a) above, postage prepaid by first class mail, not
less than thirty (30) days, nor more than sixty 60) days, prior
to the applicable date to the Holders of any Bonds to be redeemed
at the addresses thereof appearing on the Bond Register kept for
such purpose. Failure to duly give such notice by mail, or any
defect therein, shall not affect the validity of any proceeding
for the Redemption of the Bonds.

PAGE 223<PAGE>

Section 304. Payment of Redeemed Bonds. (a) After
notice shall have been given in the manner provided in Section
303 hereof, Bonds or portions thereof called for Redemption shall
become due and payable on the redemption date so designated.
Upon presentation and surrender of such Bonds at the Principal
Office of the Trustee, such Bonds shall be paid at a price equal
to the Redemption Price plus unpaid interest, if any, accrued up
to and including the redemption date. If there shall be called
for Redemption less than all of a fully registered Bond, the
Authority shall, upon the surrender of such fully registered Bond
and without charge to the Owner thereof, (i) pay the Redemption
Price of the Authorized Denominations called for Redemption and
(ii) execute and cause the Trustee to authenticate and deliver
for the unredeemed balance of the principal amount of such Bond
so surrendered, Bonds of like series, maturity and interest rate
in any Authorized Denominations.

(b) If on any redemption date Available Moneys
from the Letter of Credit or, as applicable and limited by the
terms of this Indenture and in the case of the payment of
redemption premium by the Borrower in the event of an optional
redemption pursuant to Section 301(e) hereof, other Available
Moneys for the Redemption of all Bonds or portions thereof to be
redeemed, together with interest thereon to such redemption date,
shall be held by the Trustee so as to be available therefor on
such date, the Bonds or portions thereof so called for Redemption
shall cease to bear interest and such Bonds or portions thereof
shall no longer be Outstanding hereunder or be secured by or be
entitled to the benefits of this Indenture. If such Letter of
Credit moneys or, as applicable, other Available Moneys shall not
be so available on such date, such Bonds or portions thereof
shall continue to bear interest until paid at the same rate as
they would have borne had they not been called for Redemption and
shall continue to be secured by and be entitled to the benefits
of this Indenture.

(c) In the event a redemption premium is due from
the Borrower pursuant to an optional redemption in accordance
with Section 301(e) hereof, the following shall apply: the
amount of the redemption premium paid by the Borrower to the
Trustee shall be deposited by the Trustee into the Ineligible
Moneys Account in immediately available funds at least one
hundred twenty-three (123) days prior to the date on which notice
of such optional redemption is to be sent by the Borrower to the
Trustee pursuant to Section 302(a) hereof, or the amount of the
redemption premium paid by the Borrower to the Trustee shall be
deposited in the Eligible Moneys Account prior to the date fixed
for Redemption, if such moneys are delivered with an opinion,
acceptable to Moody's or the then current rating agency on the
Bonds, of a nationally recognized counsel experienced in
bankruptcy matters, stating that the application of such moneys
will not constitute a voidable preference in the event of the
occurrence of an Act of Bankruptcy. If no Act of Bankruptcy has

PAGE 224<PAGE>
occurred prior to the date fixed for Redemption and such moneys
become Available Moneys then such Available Moneys shall be
transferred by the Trustee to the Eligible Moneys Account and
shall be utilized to pay the redemption premium on the Bonds to
effect an optional redemption pursuant to Section 301(e) hereof.
If an Act of Bankruptcy has occurred prior to the date fixed for
such Redemption, or sufficient Available Moneys are not held by
the Trustee to pay the redemption premium on the Bonds, the
notice of redemption shall be deemed rescinded and the Trustee
shall be directed in writing by the Borrower or the Authority to
mail a notice of rescission to the Holders of the Bonds. If such
notice of redemption is rescinded, the moneys deposited by the
Borrower with the Trustee for payment of the redemption premium
which are Available Moneys shall be transferred into the Eligible
Moneys Account and shall be applied by the Trustee in accordance
with the provisions of Section 404(a) hereof to reimburse the
Letter of Credit Issuer for any drawing on the Letter of Credit
up to the amount of any such drawing. From the date of the
deposit of the redemption premium by the Borrower with the
Trustee, the Borrower shall have no control whatsoever over such
funds and the Trustee shall invest such funds in Permitted
Investments (as defined under Article VI hereof) to mature prior
to the date set for Redemption.

(d) In the event the Letter of Credit Issuer
provides the Trustee with written notice to effect a mandatory
redemption of the Bonds pursuant to Section 301(b) hereof, the
Trustee shall call for Redemption the amount of Bonds which (i)
does not exceed the amount of net proceeds received by the Bank
for any insurance, casualty or condemnation award and (ii) is in
Authorized Denominations and the Trustee shall present a draft to
the Letter of Credit Issuer for a draw under the Letter of Credit
in an amount which does not exceed the requirements of (i) and
(ii) herein.

(e) The Trustee shall promptly notify the
Authority in writing of the Redemption of all Outstanding Bonds,
whether at maturity or otherwise.

PAGE 225<PAGE>

ARTICLE IV

REVENUES; FUNDS; LETTER OF CREDIT

Section 401. Source of Payment of Bonds. (a) The
Bonds issued hereunder and all payments required by the Authority
hereunder are limited obligations payable solely from the
Revenues and moneys, securities, Funds and Accounts (including
investments, if any) held and to be held by the Trustee pursuant
to the Indenture, as authorized by the Act and provided herein.

The foregoing are collectively the "Security" and are
hereby pledged to the Trustee, for the benefit of the Bondholders
for the payment of the principal of, redemption premium, if any,
and interest on, the Bonds in accordance with the terms and
provisions of this Indenture, and for the benefit of the Bank for
the payment of all amounts owing to it under the Letter of Credit
and the Reimbursement Agreement. This pledge shall be valid and
binding from and after the date of execution of this Indenture,
and the security hereby pledged shall immediately be subject to
the lien of such pledge without any physical delivery thereof or
further act, and the lien of such pledge shall be valid and
binding as against all parties having claims of any kind in tort,
contract or otherwise against the Authority, irrespective of
whether such parties have notice thereof.

(b) The payments under the Loan Agreement are to
be remitted directly to the Trustee for the account of the
Authority and deposited, as herein provided, in the Bond Fund.
The Loan Agreement provides that the payments to be made shall be
sufficient in amount to ensure the prompt payment of the
principal of, redemption premium, if any, and interest on the
Bonds and the entire amount of said payments are pledged to the
payment of the principal of, redemption premium, if any, and
interest on the Bonds. The Loan Agreement further provides for a
credit for such payments to the extent that such payments have
been derived from drawings under the Letter of Credit.

Section 402. Creation of Bond Fund. (a) There is
hereby created and established a trust fund for the benefit of
the Holders of the Bonds to be held by the Trustee and designated
the "Bond Fund", which shall be used to pay the principal of,
redemption premium, if any, and interest on the Bonds. There are
hereby established with the Trustee three (3) separate and
segregated accounts to be evidenced by journal entry, to be
designated "Eligible Moneys Account", "Ineligible Moneys Account"
and "Letter of Credit Account", which collectively comprise the
Bond Fund.

(b) There shall be deposited into the accounts of
the Bond Fund from time to time the following:

PAGE 226<PAGE>
(i) into the Ineligible Moneys Account,
(1) all payments of principal, redemption premium, if
any, or interest under the Loan Agreement and (2) all
other moneys received by the Trustee under and pursuant
to the provisions of this Indenture (except moneys
described in Section 402(b)(ii) and Section 402(b)(iii)
hereof) or of the Loan Agreement; provided that, in
each case (but subject to Section 413 hereof and the
last paragraph of Section 402(c)(iii) hereof), after
such moneys shall become Available Moneys, such moneys
shall be transferred first to the Rebate Fund in the
amount required by and pursuant to Section 413 hereof
and the remainder to the Eligible Moneys Account; and
provided, further, that any moneys deposited by the
Borrower into the Ineligible Moneys Account to pay a
redemption premium on the Bonds pursuant to Section
304(c) hereof which shall thereafter become Available
Moneys shall be transferred by the Trustee directly
into the Eligible Moneys Account and shall be used
solely for the purposes of Section 304(c) hereof; and

(ii) into the Letter of Credit Account, all
moneys drawn by the Trustee under the Letter of Credit
to pay principal of the Bonds and interest accrued on
the Bonds; and

(iii) into the Eligible Moneys Account, all
moneys held in the Ineligible Moneys Account which
shall become Available Moneys and are not applied as
provided in Section 413 hereof and accrued interest on
the Bonds from August 1, 1995 to the Issue Date.

(c) Moneys in the Bond Fund shall be used solely
for the payment of the principal plus any interest accrued on the
Bonds, whether on a date of maturity, Redemption or acceleration
or on any Interest Payment Date (excepting moneys deposited by
the Borrower to effectuate an optional redemption pursuant to
Section 304(c) hereof, and except as provided in this Section
402(c) and in Section 413 hereof with respect to the Rebate Fund)
from the following source or sources but only in the following
order of priority:

(i) Available Moneys from the Letter of
Credit held in the Letter of Credit Account; provided
that in no event shall moneys held in the Letter of
Credit Account be used to pay any amount that may be
due on Bonds held by or for the account of the
Borrower, the redemption premium, if any, or fees or
expenses of the Trustee or the Paying Agent; and

(ii) Available Moneys held in the Eligible
Moneys Account; and

PAGE 227<PAGE>
(iii) Moneys held in the Ineligible Moneys
Account; provided that no moneys held in the Ineligible
Moneys Account shall be used to make any payments of
principal, redemption premium, if any, or interest on
the Bonds unless there are no further draws available
to be made on the Letter of Credit.

Moneys deposited into the Ineligible Moneys
Account (excepting those moneys deposited by the
Borrower to pay a redemption premium pursuant to
Section 304(c) hereof) which shall become Available
Moneys shall be transferred to the Rebate Fund at the
times and in the amounts required by Section 413
hereof, prior to the transfer of such moneys to the
Eligible Moneys Account.

(d) Except as set forth in subparagraph (e)
herein, to pay principal and/or interest on the Bonds on the date
any such payment becomes due, whether at maturity or on an
Interest Payment Date or as a result of Redemption pursuant to
Sections 301(a), 301(b), 301(c), 301(d), 301(e) and 301(f) hereof
or as a result of acceleration of the Bonds pursuant to Section
902 hereof, the Trustee, to make timely payment thereof, shall
present a draft for a draw upon the Letter of Credit in an amount
equal to the principal of and/or interest on the Bonds which then
shall be due and payable on such date, in accordance with the
provisions of the Letter of Credit and in accordance with Section
404 hereof and such amounts shall be deposited in the Letter of
Credit Account.

(e) Notwithstanding the provisions of
subparagraph (d) above, the following provisions shall govern the
payment of principal of and interest on the Bonds to effect a
Redemption pursuant to Section 301(b) hereof:

1. In the event of damage, destruction or
condemnation of part or all of the Project Facilities, the
Borrower shall notify the Trustee and the Bank not later than
five (5) days after the occurrence of such event (the "Initial
Notice") and the following provisions shall apply:

(i) In the event of any partial damage,
destruction or condemnation of the Project Facilities in an
amount aggregating less than $5,000,000, the Borrower shall apply
the proceeds of any claim or award related thereto to
reconstruct, repair or restore the Project Facilities to a
substantially equivalent condition or value existing immediately
prior to such event or to a condition of at least an equivalent
value, in accordance with the provisions of Section 407 hereof.
In the event the Borrower shall not or shall fail to commence to
repair, reconstruct or restore the Project Facilities within
sixty (60) days after the Initial Notice to the Trustee and the
Bank or in the event such proceeds exceed in the aggregate

PAGE 228<PAGE>
$5,000,000, the Bank shall notify the Trustee in writing, within
seventy (70) days after the Borrower's Initial Notice to the Bank
and the Trustee, of the Bank's election to (A) apply such funds
to the Cost of repair, reconstruction and restoration of the
Project, in which case such funds shall be deposited with the
Trustee in the Acquisition Fund in accordance with Section 407
hereof and paid in accordance with Section 408(b) hereof, or (B)
redeem Bonds to effect a mandatory redemption pursuant to Section
301(b) hereof, in which case the Trustee shall effect such
mandatory redemption of Bonds by making a draw under the Letter
of Credit pursuant to Section 301(b) hereof, which Redemption
shall be in an amount equal to the net proceeds received by the
Bank and in Authorized Denominations pursuant to Section 304(d)
hereof and the Bank shall utilize the net proceeds of any
casualty, insurance or condemnation award to reimburse itself for
a draw under the Letter of Credit for such Redemption, but only
to the extent of the amount of net proceeds received by the Bank
for any such casualty, insurance or condemnation award, or (C)
such funds can be used by the Bank to reduce any outstanding
balance of unreimbursed draws under the Letter of Credit and
remit the balance to the Borrower, or (D) the Bank can retain
such proceeds (up to the amount of the Borrower's obligations to
the Bank under the Letter of Credit) as cash collateral for the
Borrower's obligations thereunder. Notwithstanding the above, the
Trustee shall continue to present drafts to the Bank for a draw
under the Letter of Credit for the payment of principal and
interest on the Bonds when due and payable whether at maturity or
as a result of other redemption or acceleration of the Bonds.

(f) 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 deposited in the Bond
Fund all sums received by it derived from the Loan Agreement, but
not including sums received by it in respect of its
administrative costs, taxes and indemnification.

(g) The Trustee shall maintain such other records
of accounts based on written certifications received from the
Borrower and the Bank, as applicable, so that the Trustee may at
all times have written records of the source and date of deposit
of the funds in each such account. Funds in a particular
subaccount shall not be in any way commingled with funds in any
other trust account maintained by the Trustee.

Section 403. Use of Moneys in Bond Fund. Except as
provided in Sections 413 and 905 hereof, moneys in the Bond Fund
shall be used solely for the payment of principal of, redemption
premium, if any, and interest on, the Bonds in the manner set
forth in Section 402 hereof.

Section 404. The Letter of Credit. (a) If, pursuant
to Section 402(d), the Trustee must draw upon the Letter of
Credit, the Trustee shall present a draft for a draw under the
PAGE 229<PAGE>
Letter of Credit in accordance with the terms thereof no later
than 10:00 a.m., local prevailing time, no later than one (1)
Business Day prior to the day on which the principal of and/or
interest on any Outstanding Bond is due and payable in the amount
necessary to make payments of the principal of, whether at
maturity or upon acceleration or Redemption or otherwise, and/or
interest on the Bonds required to be made from the Bond Fund.
The amount of money drawn under the Letter of Credit on each such
date shall equal the amount of the principal and/or interest on
all Outstanding Bonds which is then due and payable. Amounts on
deposit in the Eligible Moneys Account (excepting any amount paid
by the Borrower pursuant to Section 304(c) hereof to effectuate
an optional redemption pursuant to Section 301(e) hereof) upon
any such drawing of the Letter of Credit, shall be applied by the
Trustee to reimburse the Letter of Credit Issuer up to the amount
of such drawing.

(b) Subject to the provisions set forth in
subparagraph (c) below, the Trustee shall not enter into any
amendment or modification of the Letter of Credit without notice
and the written approval or consent of all Bondholders and
Moody's. If at any time the Authority or the Borrower shall
request in writing the consent of the Bondholders to any such
proposed amendment or modification, the Trustee shall cause
notice of such proposed amendment, change or modification to be
provided to the Holders in the name of the Authority. Such
notice shall briefly set forth the nature of such proposed
amendment, change or modification and shall state that copies of
the instrument embodying the same are on file at the Principal
Office of the Trustee for inspection by all Bondholders.

(c) Notwithstanding the provisions of subparagraph (b)
hereinabove, the Trustee, within ten (10) Business Days following
a payment of principal on the Bonds, shall execute and deliver to
the Bank a certificate, in the form of Annex C attached to the
Letter of Credit, the effect of which shall be to permanently
reduce, as applicable, (i) the Principal Component of the Letter
of Credit (as defined in the Letter of Credit) to reflect the
aggregate principal amount of Bonds Outstanding and (ii) the
Interest Component of the Letter of Credit (as defined in the
Letter of Credit) to reflect the amount of interest allocable to
the reduced Principal Component (the "Certificate for the
Permanent Reduction of the Stated Amount"). The execution and
delivery of the Certificate for the Permanent Reduction of the
Stated Amount shall not constitute an amendment or modification
of the Letter of Credit requiring the consent of Bondholders.

(d) The Borrower may provide an Alternate Letter of
Credit subject to the conditions set forth below. An Alternate
Letter of Credit must be presented to the Trustee on or before
the sixty (60) days immediately preceding the Letter of Credit
Maturity Date.
PAGE 230<PAGE>
(i) Any Alternate Letter of Credit must be issued
by a banking institution which, at the time it issues an
Alternate Letter of Credit, has a credit rating established by
Moody's or the then current rating agency which is not less than
the credit rating of the Letter of Credit Issuer which is being
replaced by such banking institution in effect at the time of
such substitution from Moody's or the then current rating agency
and which credit rating will not result in a withdrawal or
reduction of the rating on the Bonds by Moody's or the then
current rating agency.

(ii) The Trustee shall only accept delivery of an
Alternate Letter of Credit upon prior receipt of (A) an opinion
of Bond Counsel stating that the delivery of such Alternate
Letter of Credit to the Trustee is authorized under the Loan
Agreement and complies with the terms of the Loan Agreement and
this Indenture, (B) an opinion of Bond Counsel stating that the
delivery of such Alternate Letter of Credit will not result in a
Determination of Taxability, (C) an opinion of Bond Counsel that
such Alternate Letter of Credit shall otherwise contain the same
material terms, including without limitation, the same Letter of
Credit Maturity Date as the Letter of Credit or the Alternate
Letter of Credit being replaced or a later Letter of Credit
Maturity Date or the final maturity date of the Bonds, (D) the
legal opinion, dated on the delivery date of the Alternate Letter
of Credit, of counsel to the issuer thereof, addressed to the
Trustee and the Borrower, opining that (i) the issuer has the
authority to issue the Alternate Letter of Credit; (ii) the
Alternate Letter of Credit has been duly authorized, executed and
delivered; (iii) payments of the principal of, redemption
premium, if any, and interest on the Bonds will not constitute
voidable preferences under the Federal Bankruptcy Code in the
event of an Act of Bankruptcy of the Borrower or the Authority
(except that the opinion referred to herein may be given by
either Bond Counsel or Counsel to the Bank); and (iv) the
Alternate Letter of Credit is a legal, valid and binding
obligation of the issuer, enforceable against the issuer in
accordance with its terms, and (E) a certificate of the issuer
thereof dated the date of issuance of the Alternate Letter of
Credit, signed by an authorized officer of the issuer to the
effect that (i) the issuer is duly organized and validly
existing, in good standing; (ii) the Alternate Letter of Credit
has been duly authorized, executed and delivered; and (iii) the
performance by the issuer of the Alternate Letter of Credit is
within the corporate power of the issuer, requires no consents,
approvals or filings, other than in the ordinary course of the
issuer's business with any governmental or regulatory agencies
and (F) written confirmation of the credit rating of the
Alternate Letter of Credit Issuer established by Moody's or the
then current rating agency and that such rating will not result
in a withdrawal or reduction of the rating of the Bonds. Upon
receipt of the foregoing, the Trustee shall accept such Alternate
Letter of Credit and promptly surrender the previously held
PAGE 231<PAGE>
Letter of Credit to the issuer thereof, in accordance with the
terms thereof, for cancellation.

Section 405. Satisfaction of Obligations. Any
obligations of the Authority under this Indenture and the Bonds
or of the Borrower under the Loan Agreement which are satisfied
by moneys drawn by the Trustee under the Letter of Credit shall
be deemed satisfied for all purposes, except any obligation to
reimburse the Bank for any draws on such Letter of Credit.

Section 406. No Interest of Authority or Borrower.
Neither the Authority nor the Borrower shall have any control
over the use of, or any right to withdraw any moneys from, the
Bond Fund. Neither the Authority nor the Borrower shall have any
right, title or interest in the Rebate Fund, except as otherwise
provided in Section 413 hereof.

Section 407. Creation of Acquisition Fund. There is
hereby created and established a trust fund in the name of the
Authority but for the account of the Borrower to be held by the
Trustee and designated the "Acquisition Fund" for the payment of
the Costs of the Project. The Acquisition Fund shall consist of
any other amounts the Authority, the Bank, or the Borrower, upon
written direction from the Bank, may deposit or cause to be
deposited therein including any moneys from the damage,
destruction or condemnation of the Project as set forth in
Section 5.24 of the Loan Agreement. The amounts in the
Acquisition Fund, until applied as hereinafter provided in
Section 408 hereof, shall be held for the Security of all Bonds
Outstanding hereunder. The Trustee shall maintain a record of
the income on investments and interest earned on deposit of
amounts held in the Acquisition Fund and on proceeds of Bonds in
respect of accrued or capitalized interest held by the Trustee as
Revenues. Subject to the provisions of Section 413 hereof, such
income or interest may be expended at any time or from time to
time to pay Costs of the Project in the same manner as the moneys
deposited in the Acquisition Fund are expended.

Section 408. Payments from Acquisition Fund. (a) The
Trustee is authorized to pay from the Acquisition Fund in
connection with the issuance of the Bonds, in the amounts set
forth in a requisition signed by an Authorized Borrower
Representative, and approved in writing by the Bank, any or all
costs of issuance of the Bonds, including but not limited to the
Authority fee, Trustee fees, Letter of Credit issuance fees,
placement fees, legal fees and expenses and printing costs, upon
receipt of a requisition executed by an Authorized Borrower
Representative in accordance with Article III of the Loan
Agreement (and approved in writing by the Bank) within ten (10)
days of receipt of same.

(b) In the event the Borrower shall or the Bank elects
PAGE 232<PAGE>
to repair the Project Facility pursuant to Section 5.24 of the
Loan Agreement and Section 5.21 of the Reimbursement Agreement
and net proceeds from any insurance, casualty or condemnation
award are deposited in the Acquisition Fund pursuant to the
provisions of Section 402(e) hereof, the Trustee shall make
payments from the Acquisition Fund upon proper requisition
therefor by the Borrower pursuant to Section 3.3 of the Loan
Agreement (and approved inwriting by the Bank) to restore,
renovate or reconstruct the Project Facility.

(c) In the event there are moneys remaining in the
Acquisition Fund not applied to pay the Costs of the Project or
retained by the Trustee for Costs of the Project not yet due or
payable or, if due and payable, not yet paid, then upon the
delivery of the certificate of an Authorized Borrower
Representative reflecting such amounts to be retained therein,
such moneys shall be transferred to the Bond Fund and applied
pursuant to the terms of Section 402 hereof.

Except during the continuance of an Event of Default
hereunder, the Trustee shall continue to make payments from the
Acquisition Fund upon proper requisition therefor.

Section 409. [Intentionally Omitted]

Section 410. Non-Presentment of Bonds. In the event
any Bond shall not be presented for payment when the principal
thereof becomes due, either at maturity or at the date fixed for
Redemption thereof or otherwise, if Available Moneys in the Bond
Fund sufficient to pay the principal of, redemption premium, if
any, and interest on such Bond shall be available to the Trustee
for the benefit of the Holder or Holders thereof, all liability
of the Authority to the Holder thereof for the payment of such
Bond, or portion thereof, as the case may be, shall forthwith
cease, determine and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such fund or funds
uninvested and without liability to the Holder of such Bond for
interest thereon, for the benefit of the Holder of such Bond, who
shall thereafter be restricted exclusively to such fund or funds,
for any claim of whatever nature on his part on, or with respect
to, said Bond, or portion thereof. Any such funds held by the
Trustee remaining unclaimed by such Holder or former Holder for
two (2) years after such principal, or premium, if any, has
become due and payable and made available to the Trustee and,
upon written instructions of the Borrower, shall be paid to the
Borrower and such Holder or former Holder shall thereafter be
entitled to look only to the Borrower for payment thereof, and
the Authority and the Trustee shall have no further
responsibility or liability with respect to such funds.

Section 411. Moneys To Be Held in Trust. All moneys
required to be deposited with or paid to the Trustee for account
of the Bond Fund or the Acquisition Fund under any provision of
PAGE 233<PAGE>
this Indenture shall be held by the Trustee in its trust
department in trust for the purposes specified herein; provided,
however, that any moneys which have been deposited with, paid to
or received by the Trustee (i) for the Redemption of a portion of
the Bonds, notice of the redemption of which has been given, or
(ii) for the payment of Bonds or interest thereon due and payable
otherwise than upon acceleration by declaration, shall be held in
trust for and subject to a Lien in favor of only the Holders of
such Bonds so called for Redemption or so due and payable.

Section 412. Repayment to the Bank from Bond Fund.
Any amounts remaining in the Bond Fund after payment in full of
principal of, redemption premium, if any, and interest on all the
Bonds (or after provision for the payment thereof has been made
in accordance with Article XI hereof), and payment of the fees,
charges and expenses including legal fees of the Trustee and the
Paying Agent and all other amounts required to be paid hereunder,
shall be paid to the Bank to the extent it remains unreimbursed
for payments made under the Letter of Credit or any other amounts
due and owing to the Bank under the Reimbursement Agreement and
then to the Borrower pursuant to Section 907(c) hereof.

Section 413. 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
Borrower shall comply with the provisions of Section 5.29 of the
Loan Agreement and instruct the Trustee in writing to transfer
from the Ineligible Moneys Account of 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 Excess Investment Earnings as of the end
of such Bond Year; provided that no such transfers or deposits
shall be necessary if the proceeds of the Bonds are fully
expended within six (6) months of the date of issue. Withdrawals
from the Rebate Fund may be made on account of negative arbitrage
in other Funds, but not on account of negative arbitrage in the
Rebate Fund. 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
Borrower, provided that the Trustee shall so pay over to the
United States: (1) not less frequently than sixty (60) days
following each fifth anniversary of the original issuance of the
Bonds, an amount equal to ninety percent (90%) of the net
aggregate amount transferred or deposited to or earned in the
Rebate Fund during such period (and not theretofore paid to the
United States or withdrawn on account of negative arbitrage in
other Funds) and (2) not later than sixty (60) days after the
Redemption, payment at maturity or other retirement of the last
Bond, 100% of all moneys remaining in the Rebate Fund.
PAGE 234<PAGE>
ARTICLE V

GENERAL REPRESENTATIONS AND COVENANTS

Section 501. Payment of Principal, Premium and
Interest. The Authority hereby covenants that it will promptly
pay or cause to be paid the principal of, redemption premium, if
any, and interest on every Bond issued under this Indenture at
the place, on the dates and in the manner provided herein and in
the Bonds appertaining hereto according to the true intent and
meaning hereof. The principal of, redemption premium, if any,
and interest on the Bonds are payable solely from the Revenues
and moneys, securities, Funds and Accounts (including
investments, if any) held and to be held by the Trustee pursuant
to this Indenture and moneys available to the Trustee under the
Letter of Credit. Such Revenues and moneys, securities, funds
and accounts (other than moneys available to the Trustee under
the Letter of Credit) have been specifically pledged to the
payment of the Bonds in the manner and to the extent herein
specified.

Section 502. Performance of Covenants. (a) The
Authority by executing this Indenture covenants that it will
promptly and faithfully observe and perform at all times any and
all covenants, undertakings, stipulations and provisions to be
observed or performed on its part contained (i) in this
Indenture, (ii) in any and every Bond executed, authenticated and
delivered hereunder, (iii) in the Loan Agreement and (iv) in all
proceedings of the Authority pertaining thereto.

(b) The Authority agrees that the Trustee in its
name or in the name of the Authority may enforce against the
Borrower or any Person any rights of the Authority under or
arising from the Bonds or the Loan Agreement whether or not the
Authority is in default hereunder or under the Loan Agreement,
but the Trustee shall not be deemed to have hereby assumed the
obligations of the Authority under the Loan Agreement, but rather
shall have no obligations under the Loan Agreement except as
specifically provided herein. The Authority shall fully
cooperate with the Trustee in the enforcement by the Trustee of
any such rights. At the request of the Authority, the Trustee,
upon receiving indemnity satisfactory to it (including indemnity
for its fees, costs and expenses, including the fees and expenses
of its attorneys and paralegals), shall in its name commence
legal action or take such other actions as the Authority shall
reasonably request to enforce the rights of the Authority or the
Trustee under or arising from the Bonds or the Loan Agreement.

Section 503. Authorization. The Authority hereby
represents, warrants and covenants that it is duly authorized
under the Constitution and laws of the State, including
particularly and without limitation the Act, to issue the Bonds
authorized hereby and to assign and pledge the Revenues and the
PAGE 235<PAGE>
moneys, securities, funds and accounts (including investments, if
any) held and to be held by the Trustee pursuant to this
Indenture, and to assign its rights and interests with respect to
the Loan Agreement in the manner and to the extent herein
specified; that all actions on its part relating to the issuance
of the Bonds have been duly taken, as provided herein, and that
the Bonds in the hands of the Holders thereof are and will be
valid and enforceable obligations of the Authority, subject to
the limitations set forth herein.

Section 504. Creation of Liens; Indebtedness. The
Authority hereby covenants that it shall not create or suffer to
be created or to exist any Lien or charge upon the Revenues or
upon the moneys, securities, funds or Accounts (including
investments, if any) held and to be held by the Trustee pursuant
to this Indenture, except as provided in this Indenture. The
Authority shall not incur any indebtedness, or issue any
evidences of indebtedness, secured by a pledge of the Revenues or
the moneys, securities, funds and Accounts (including
investments, if any) held and to be held by the Trustee pursuant
to this Indenture, other than the Bonds.

Section 505. Inspection of Project Books. The
Authority hereby covenants and agrees that all books and
documents in its possession relating to the Project or the
Project Facilities and the Revenues shall at all times be open to
inspection by such accountants or other agencies as the Trustee
may from time to time designate.

Section 506. Rights under Loan Agreement. The Loan
Agreement sets forth the covenants and obligations of the
Authority and the Borrower, including provisions that subsequent
to the issuance of the Bonds and prior to their payment in full,
or provision for payment thereof in accordance with the
provisions hereof, the Loan Agreement may not be amended or
terminated (other than as provided herein or therein) without the
prior written consent of the Trustee and the Bank, and reference
is hereby made to the same for a detailed statement of said
covenants and obligations of the Borrower thereunder.

Section 507. Enforcement of Duties and Obligations of
the Borrower. The Authority hereby covenants that it shall
require the Borrower fully to perform all duties and acts and
fully to comply with the covenants of the Borrower required by
the Loan Agreement in the manner and at the times provided in the
Loan Agreement. The Authority agrees that the Trustee in its own
name may enforce all rights of the Authority and all obligations
of the Borrower under and pursuant to the Loan Agreement for and
on behalf of the Bondholders and the Bank, whether or not an
Event of Default exists hereunder; provided that the Trustee
shall not be deemed to assume the Authority's obligations under
the Loan Agreement and shall have no obligations under the Loan
Agreement except as expressly provided herein. Subject to the
PAGE 236<PAGE>
limitation of liability herein set forth, the Authority hereby
agrees to cooperate fully with the Trustee in any proceedings, or
to join in any proceedings, necessary to enforce the rights of
the Authority and all obligations of the Borrower under and
pursuant to the Loan Agreement if the Trustee shall so request.

Section 508. Recordation and Filing of Documents. The
Authority hereby covenants that it will cause this Indenture, the
Loan Agreement (or a memorandum thereof) and all supplements
hereto and thereto, together with all other security instruments
and financing statements, to be recorded and filed, as the case
may be, in such manner and in such places as may be required by
law in order to perfect the Lien of, and the security interests
created by, this Indenture.

Section 509. Instruments of Further Assurance. The
Authority covenants that it will do, execute, acknowledge and
deliver or cause to be done, executed, acknowledged and
delivered, such further acts, instruments and transfers as the
Trustee may reasonably require for the better assuring, pledging,
assigning and confirming unto the Trustee of all the Revenues and
moneys, securities, funds and accounts (including investments, if
any) held and to be held by the Trustee pursuant to the
Indenture, pledged as contemplated herein to the payment of the
principal of, redemption premium, if any, and interest on the
Bonds and to the reimbursement of the Bank for draws on the
Letter of Credit.

Section 510. Transfer of Letter of Credit. The
Trustee shall not sell, assign or transfer the Letter of Credit,
except to a successor trustee under this Indenture, in accordance
with the provisions of the Letter of Credit.

Section 511. Furnishing Documents to the Authority.
The Trustee agrees that it shall hold all documents, affidavits,
certificates and opinions delivered to the Trustee pursuant to
Section 3.3 of the Loan Agreement for a period of at least two
(2) years after the defeasance of the Bonds and the release of
all liens created under this Indenture. The Authority shall have
the right to inspect such documents, affidavits, certificates and
opinions at the principal corporate trust office of the Trustee
at reasonable times and upon reasonable notice. The Trustee
shall provide copies of such documents, affidavits, certificates
and opinions to the Authority at its request.

Section 512. No Litigation. The Authority represents
and warrants that (a) no litigation or administrative action of
any nature has been served upon it and is now pending restraining
or enjoining the issuance or delivery of the Bonds or the
execution and delivery of this Indenture or the Agreement or in
any manner questioning the proceedings or authority under which
the same have been had, or affecting the validity of the same;
(b) no contest is pending as to its existence or authority or
PAGE 237<PAGE>
that of its present member or officers; (c) no authority or
proceeding for the issuance of the Bonds or for the payment or
Security thereof has been repealed, revoked or rescinded; (d) no
petition seeking to initiate any resolution or other measure
affecting the same or the proceedings therefor has been filed;
and (e) to the best of the knowledge of the officers of the
Authority, none of the foregoing actions are threatened.

Section 513. No Other Encumbrances. The Authority
covenants that except as otherwise provided herein and in the
Agreement, it will not sell, convey, mortgage, encumber or
otherwise dispose of any portion of the Security.

Section 514. No Personal Liability. No member,
officer, director, agent, employee or attorney of the Authority,
or any other future, past or present members, officers,
directors, agents or attorneys of the Authority, including any
Person executing this Indenture or the Bonds, shall be liable
personally on the Bonds or for any reason relating to the
issuance of the Bonds.

Section 515. Compliance with Rule 15c2-12. 1. The
Authority shall cause the Borrower (the Borrower, the Corporate
Guarantor and any entity that may become obligated directly or
indirectly to pay the principal of and interest on the Bonds in
the future, shall be the "Obligated Person" herein) to provide,
and the Borrower shall, in accordance with the provisions of Rule
15c2-12 (the "Rule"), promulgated by the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, provide, and cause the Corporate Guarantor to
provide to each nationally recognized municipal securities
information repository ("NRMSIR"), in each case as designated by
the Commission in accordance with the Rule, the following annual
financial information and operating data commencing with the
fiscal year ended December 31, 1996:

(a) annual financial statements and annual reports,
prepared in accordance with generally accepted
accounting principles and certified by independent
public accountants, and

(b) material financial information and operational
data.

The Obligated Person reserves the right to modify from
time to time the specific types of information provided
or the format of the presentation of such information,
to the extent necessary or appropriate in the judgment
of the Obligated Person; provided that, the Obligated
Personagrees that any such modification will be done in
a manner consistent with the Rule.
PAGE 238<PAGE>
(c) Such annual information and operating
datadescribed above is to be provided on or before
one hundred and twenty (120) days after the end of
each fiscal year ending on the preceding July 1
and will be made available, in addition to the
NRMSIR's, to the Trustee and to each holder of the
Bonds who makes a request for such information.

2. The Obligated Person agrees to provide or cause to
be provided, in a timely manner, to (i) each NRMSIR or to the
Municipal Securities Rulemaking Board ("MSRB"), notice of the
occurrence of any of the following events with respect to the
Bonds, if such event is material:

(a) principal and interest payment delinquencies;

(b) non-payment related defaults;

(d) unscheduled draws on the Letter of Credit
reflecting financial difficulties;

(e) substitution of the Letter of Credit Issuer or its
failure to perform;

(f) adverse tax opinions or events affecting the tax-
exempt status of the Bonds;

(g) modifications to rights of the Holders of the
Bonds;

(h) notices of optional or mandatory redemptions of
the Bonds given pursuant to the provisions of
Article III hereof;

(i) defeasances;

(j) release, substitution, or sale of property
securing repayment of the Bonds; and

(k) rating changes.

The Obligated Person may from time to time choose to
provide notice of the occurrence of certain other events, in
addition to those listed above, if such other event is material
with respect to the Bonds, but the Obligated Person does not
undertake to commit to provide any such notice of the occurrence
of any material event except those events listed above.

3. The Obligated Person agrees to provide or cause to
be provided, in a timely manner, to each NRMSIR, notice of a
PAGE 239<PAGE>
failure by the Obligated Person to provide the annual financial
information with respect to the Obligated Person described above
on or prior to the date set forth above; to the extent that the
Obligated Person is aware of a failure by any other 'obligated
person' with respect to the Bonds to provide annual financial
information with respect to that 'obligated person' pursuant to a
separate undertaking by that 'obligated person', the Obligated
Person also will provide notice of such failure by such
'obligated person'.

4. The Obligated Person reserves the right to
terminate its obligation to provide annual financial information
and notices of material events, as set forth above, if and when
the Obligated Person no longer remains an 'obligated person' with
respect to the Bonds within the meaning of the Rule; the
Obligated Person will provide notice of such termination to the
NRMSIR's, the MSRB and the Trustee.

5. The Obligated Person agrees that its undertaking
pursuant to the Rule set forth in this section is intended to be
for the benefit of the Holders of the Bonds and shall be
enforceable by the Trustee on behalf of such holders or by any
Holder; (or by any beneficial holder in the event the Bonds are
registered in the name of Cede & Co. on behalf of The Depository
Trust Company); provided that, such right to enforce the
provisions of this undertaking shall be limited to a right to
obtain specific enforcement of the Obligated Person's obligations
hereunder and any failure by the Obligated Person to comply with
the provisions of this undertaking shall not be an event of
default with respect to the Bonds under the Indenture.

6. Notwithstanding the provisions of Article IX
hereof, the provisions in the previous paragraphs shall not be
amended, except under the following conditions:

(a) The amendment may only be made in connection
with a change in circumstances that arises
from a change in legal requirements, change
in law, or change in the identity, nature, or
status of the Obligated Person, or type
ofbusiness conducted;

(b) This section of the Indenture, as amended,
would have complied with the requirements at
the time of the primary offering, after
taking into account any amendments or
interpretationsof the rule, as well as any
change incircumstances; and

(c) The amendment does not materially impair the
interests of holders, as determined either by
parties unaffiliated with the Authority or
Obligated Person (such as the Trustee or Bond
PAGE 240
Counsel), or by approving vote of Holders
pursuant to the terms of the Indenture at the
time of the amendment.

PAGE 241<PAGE>

ARTICLE VI

INVESTMENTS

Section 601. Investment of Bond Fund and Acquisition
Fund. (a) So long as no Event of Default has occurred and is
continuing, moneys held as part of the Acquisition Fund and of
the Bond Fund (other than moneys held in the Letter of Credit
Account) shall be invested or reinvested by the Trustee, in
accordance with written directions, or oral directions confirmed
in writing, of the Authorized Borrower Representative in any of
the following obligations or securities (collectively "Permitted
Investments"):

(i) direct obligations of the United States
of America for which its full faith and credit
ispledged;

(ii) obligations issued by any
instrumentality or agency of the United States of
America, whether now existing or hereafter organized,
and the payment of the principal, premium, if any, and
interest on which is fully and unconditionally
guaranteed as a full faith and credit obligation by the
United States of America;

(iii) obligations issued or guaranteed by
any State of the United States or the District of
Columbia which are rated at least "Aa" by Moody's or an
equivalent rating of the then current rating agency of
the Bonds;

(iv) interest-bearing deposits in any bank
or trust company (which may include the Trustee) or any
other bank or trust company which has a combined
capital surplus and undivided profits of at least
$50,000,000, which bank or trust company having an
investment grade rating by Moody's or an equivalent
rating of the then current rating agency of the Bonds;

(v) prime commercial paper with one of the
two (2) highest ratings by Moody's or an equivalent
rating of the then current rating agency of the Bonds;
and

(vi) deposits in a common trust fund holding
short-term government obligations established pursuant
to law as a legal depository of public moneys, any such
common trust fund having a "Aaa" rating by Moody's or
the highest long term rating of the then current rating
agency of the Bonds.

(b) The Trustee, in purchasing securities of the
PAGE 242<PAGE>
type described in clauses (i) and (ii) of subsection (a) above:
(i) may make any such purchase subject to agreement with the
seller for repurchase by the seller at a later date, and in such
connection may accept the seller's agreement for the payment of
interest in lieu of the right to receive the interest payable by
the issuer of the security purchased, provided that title to the
security so purchased by the Trustee shall vest in the Trustee,
that the Trustee shall have a perfected security interest in such
security, and that the current market value of such security (or
of cash or additional securities of the type described in said
clauses pledged with the Trustee as collateral for the purpose)
is at all times at least equal to the total amount thereafter to
become payable by the seller under said agreement, or (ii) may
purchase shares of a fund whose sole assets are of a type
described in clauses (i), (ii) and (iii) of subsection (a) above
and such repurchase agreements thereof.

(c) If any Event of Default has occurred and is
continuing hereunder, the Trustee may make such investments in
Permitted Investments (as described in Section 601(a)(i) hereof)
as permitted under applicable laws as it deems advisable;
provided that in no event shall it invest in securities issued by
or obligations of, or guaranteed by, the Authority, the Borrower
or any affiliate or agent of either of the foregoing.

Section 602. Investment of Letter of Credit Account.
Moneys held in the Letter of Credit Account shall remain
uninvested.

Section 603. General Provisions of Investments. (a)
Any permissible investments of money in the Bond Fund or
Acquisition Fund shall be held by or under the control of the
Trustee and shall be deemed at all times as part of the fund or
account from which the investment was made and the interest
accruing on any such investment and any profit realized from such
investment shall be credited to such fund or account and any loss
resulting from such investment shall be charged to such fund or
account.

(b) The Trustee shall sell and reduce to cash a
sufficient portion of investments held for the account of the
Eligible Moneys Account in the Bond Fund whenever the cash
balance of Available Moneys in the Eligible Moneys Account is
insufficient to make a payment required to be made therefrom or
when such cash balance therein is insufficient to meet any
Redemption of said Bonds that may be required under the
provisions hereof or of the Loan Agreement. The Trustee shall
sell and reduce to cash a sufficient portion of investments held
for the account of the Acquisition Fund whenever the cash balance
in the Acquisition Fund is insufficient to make a payment in
respect of a certificate of requisition when presented.

(c) Notwithstanding the foregoing, the Borrower
PAGE 243<PAGE>
shall not direct the Trustee to invest the proceeds of the Bonds
or payments due under the Loan Agreement, or any other funds
which may be deemed to be proceeds of the Bonds pursuant to
Section 103 or 148 of the Code and the applicable Regulations
thereunder, in such a way as to cause the Bonds to be treated as
"arbitrage bonds" within the meaning of Section 103 or 148 of the
Code and such Treasury Regulations issued thereunder, as
applicable to the Bonds. In accordance with the foregoing,
unless the Trustee shall have been furnished with an approving
opinion of Bond Counsel, the Borrower shall not direct the
Trustee to invest moneys in the Acquisition Fund or the Bond Fund
except as provided in the Authority's Tax Certificate dated the
Issue Date.

(d) The Trustee, except for its willful
misconduct or gross negligence, shall have no liability to any
Person for any breach by the Borrower of provisions of the
foregoing paragraph as long as the Trustee invests or reinvests,
pursuant to directions of the Authorized Borrower Representative
properly given in accordance with Section 601, the Bond Fund and
Acquisition Fund moneys in Permitted Investments pursuant to
Section 601 hereof. The Trustee may refuse to invest in
obligations directed by the Authorized Borrower Representative
which violate the provisions of Sections 601(a) and 603(c)
hereof, but the Trustee shall be under no obligation to verify
any such direction received by it in accordance with the terms of
this Indenture.

PAGE 244<PAGE>

ARTICLE VII

THE TRUSTEE, PAYING AGENTS

Section 701. Appointment of Trustee; Acceptance of the
Trusts. (a) Shawmut Bank Connecticut, National Association,
Hartford, Connecticut, is hereby appointed as Trustee. The
Trustee hereby accepts the trusts imposed upon it by this
Indenture, and agrees to perform said trusts, but only upon and
subject to the following express terms and conditions:

(i) The Trustee may execute any of the
trusts or powers hereof and perform any of its duties
by or through attorneys or agents (provided that
neither the Authority, the Borrower or any affiliate or
agent of any of the foregoing shall act as an agent of
the Trustee) and shall not be answerable for any
misconduct or negligence on the part of any attorney or
agent appointed hereunder and shall be entitled to
advice of counsel concerning all matters of the trusts
hereof and the duties hereunder and may in all cases
pay such reasonable compensation to all such attorneys
and agents as may reasonably be employed in connection
with the trusts hereof. The Trustee may act upon the
opinion or advice of any attorney (who may be the
attorney or attorneys for the Authority or the
Borrower) approved by the Trustee in the exercise of
its reasonable judgment. The Trustee shall not be
responsible for any loss or damage resulting from any
action or nonaction in good faith in reliance upon such
opinion or advice.

(ii) The Trustee shall not be responsible
for any recital herein or in the Bonds (except in
respect of the Certificate of Authentication of the
Trustee endorsed on the Bonds) or for insuring the
Project Facilities, or collecting any insurance moneys,
or for the validity of execution by the Authority of
this Indenture or of any supplements hereto or any
instruments of further assurance, or for the
sufficiency of the security for the Bonds issued
hereunder or intended to be secured hereby, or for the
value or title of the Project Facilities or otherwise
as to the maintenance of the security hereof, or,
except as provided in Article VI hereof, for the
eligibility of any security as an investment of trust
funds held by it.

(iii) The Trustee shall not be accountable
for the use of any Bonds authenticated or delivered
hereunder after such Bonds shall have been delivered in
accordance with the instructions of the Authority or
the Borrower, as the case may be. The Trustee may
PAGE 245<PAGE>
become the Owner of Bonds secured hereby with the same
rights which it would have if not Trustee.

(iv) The Trustee shall be protected in
acting in good faith upon any notice, request,
investment instruction, consent, certificate, order,
affidavit, letter, telegram or other paper or document
believed to be genuine and correct and to have been
signed or sent by the proper Person or Persons. Any
action taken by the Trustee pursuant to this Indenture
upon the request or authority or consent of any Person
who at the time of making such request or giving such
authority or consent is the Owner of any Bond, shall be
conclusive and binding upon all future Owners of the
same Bond and upon Bonds issued in exchange therefor
or in place thereof.

(v) As to the existence or nonexistence of
any fact or as to the sufficiency or validity of any
instrument, paper or proceeding, the Trustee shall be
entitled, in the absence of bad faith on its part, to
rely upon a certificate of the Authority signed by
(a) the Executive Director or Deputy Director of the
Authority or an Authorized Authority Representative, or
(b) any other duly authorized Person (such authority to
be conclusively evidenced by an appropriate resolution of
the Authority), or any certificate signed by an
Authorized Borrower Representative, as sufficient
evidence of the facts therein contained, and prior to the
occurrence of an Event of Default of which the Trustee
has been notified in writing or deemed notified as
provided in Section 901 hereof, shall also be at liberty
to accept a similar certificate to the effect that any
particular dealing, transaction or action is necessary or
expedient, but may at its discretion secure such further
evidence deemed necessary or advisable, but shall in no
case be bound to secure the same. The Trustee may accept
a certificate of the Secretary of the Authority under its
seal to the effect that a resolution in the form therein
set forth has been adopted by the Authority as conclusive
evidence that such resolution has been duly adopted, and
is in full force and effect.

(vi) The permissive right of the Trustee to
take any actions or to refrain from taking any actions
enumerated in this Indenture shall not be construed as a
duty. The Trustee shall not be answerable for other than
its gross negligence, willful misconduct, or willful
default in connection with the acceptance or
administration of the trusts hereunder. The Trustee
shall act on behalf of the Authority hereunder only
insofar as its duties are expressly set forth and shall
not have implied duties. The Trustee shall not
PAGE 246<PAGE>
a duty to inquire into or pass upon the validity,
effectiveness, genuineness or value of the Mortgage, the
Loan Agreement or the other Loan Documents and shall
assume that the same are valid, effective and genuine and
what they purport to be. The Trustee may consult with
legal counsel selected by it and shall be entitled to
rely upon the opinion of such counsel in taking or
omitting to take any action. 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
Borrower as though it were not the Trustee.

(vii) The Trustee shall not be personally
liable for any debts contracted or for damages to Persons
or to personal property injured or damaged, or for
salaries or non-fulfillment of contracts during any
period.

(viii) Subject to the provisions of the Loan
Agreement, the Trustee and its duly authorized agents,
attorneys, experts, engineers, accountants and
representatives shall have the right at any and all
reasonable times, fully to inspect the Project
Facilities, including all books, papers and records of
the Authority pertaining to the Project Facilities and
the Bonds, and to take such memoranda from and in regard
thereto as may be desired.

(ix) The Trustee shall not be required to
give any bond or surety in respect of the execution of
the said trusts and powers or otherwise in respect to the
premises.

(x) Notwithstanding anything contained
elsewhere in this Indenture, the Trustee shall have the
right, but shall not be required, to demand, in respect
of the authentication of any Bonds, the withdrawal of any
cash, the release of any property, or any action
whatsoever within the purview of this Indenture, any
showings, certificates, opinions, appraisals or other
information, or corporate actions or evidence thereof, in
addition to that by the terms hereof required as a
condition of such action by the Trustee, deemed desirable
for the purpose of establishing the right of the
Authority to the authentication of any Bonds, the
withdrawal of any cash, or the taking of any other action
by the Trustee.

(xi) Before taking any action under the
Indenture the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all
PAGE 247<PAGE>
expenses to which it may be put and to protect it against
all liability, except liability which is adjudicated to
have resulted from gross negligence, willful misconduct
or willful default by reason of any action so taken;
provided that the Trustee may not require such an
indemnity bond to be furnished when the Trustee is
presenting a draft for a draw or drawing upon the Letter
of Credit, paying the principal and accrued interest due
on the Bonds when due at maturity or upon Redemption or
acceleration of the Bonds in accordance with this
Indenture; provided, further, however, that while the
Trustee may not require indemnification prior to the
specific acts of presenting a draft under the Letter of
Credit or paying the principal of and interest accrued on
the Bonds when due whether at maturity, Redemption,
acceleration or otherwise as set forth herein, the
Trustee shall continue to be entitled to such
indemnification as otherwise provided herein.

(xii) All moneys received by the Trustee or
any Paying Agent shall, until used or applied or invested
as herein provided, be held in trust in the manner and
for the purposes for which they were received.

(xiii) The Trustee shall have no obligation
with respect to any Financial Statements forwarded to the
Trustee by the Borrower pursuant to Article V of the Loan
Agreement other than the obligation to make such
Financial Statements available for review by any Holder
of any Bond upon receipt of a written request to do so
from any such Holder.

(b) In the case of and during the continuance of an
Event of Default or upon the occurrence of an Event of Default as
to which the Trustee has received a notice as provided herein, the
Trustee shall exercise the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their
exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.

Section 702. Fees, Charges and Expenses of Trustees and
Paying Agents. The Trustee and Paying Agent shall be entitled to
payment or reimbursement for reasonable fees for services rendered
hereunder and all reasonable expenses (including advances, counsel
fees and other expenses reasonably and necessarily made or incurred
by the Trustee and Paying Agent in connection with such services).
The Trustee and Paying Agent shall be entitled to be indemnified
for, and be held harmless against, any loss, liability or expense,
incurred without gross negligence, willful misconduct or bad faith
on the part of the Trustee and Paying Agent, arising out of or in
connection with the acceptance or administration of the trusts
hereunder, including the costs and expenses of defending itself
against any claim or liability in the premises. The indemnity set
PAGE 248<PAGE>
forth in the Loan Agreement at Section 5.23 is hereby incorporated
by reference as if set forth herein in its entirety. All fees,
charges and other compensation to which the Trustee and Paying
Agent may be entitled under the provisions of this Indenture are
required to be paid by the Borrower under the terms of the Loan
Agreement and, accordingly, except for moneys that the Authority
may derive from the foregoing, neither the Authority nor the Bank
shall be liable to indemnify the Trustee and Paying Agent for fees,
charges and other compensation to which the Trustee and Paying
Agent may be entitled, and by acceptance of the trusts hereunder
the Trustee and Paying Agent shall be deemed to have agreed to the
foregoing. The Trustee is hereby granted a lien to be perfected by
possession on all moneys held by it hereunder (other than moneys
held by it in the Letter of Credit Account and Rebate Fund) for the
payment of the foregoing; provided, however, that while the Trustee
may not require indemnification prior to the specific acts of
presenting a draft under the Letter of Credit or paying the
principal of and interest accrued on the Bonds when due whether at
maturity, Redemption, acceleration or otherwise as set forth
herein, the Trustee shall continue to be entitled to such
indemnification as otherwise provided herein.

Section 703. [Intentionally Omitted]

Section 704. Intervention by Trustee. In any judicial
proceeding to which the Authority is a party and which in the
opinion of the Trustee and its counsel has a substantial bearing on
the interests of Holders of the Bonds, the Trustee may, and if
requested in writing by the Holders of at least twenty-five percent
(25%) of the aggregate principal amount of Bonds then Outstanding
shall, intervene on behalf of Bondholders.

Section 705. Successor Trustee. Any corporation or
association into which the Trustee may be converted or merged, or
with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially
as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which
it is a party, provided such corporation or association is a trust
company or national or state bank within or outside the State
having trust powers, in good standing, having reported capital
surplus and undivided profits of not less than $50 million ipso
facto and having a Moody's rating of at least Baa3 or P3 or be
otherwise acceptable to Moody's or the then current rating agency
of the Bonds, shall be and become successor Trustee hereunder and
vested with all the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without
the execution or filing of any instrument or any further act, deed
or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.

Section 706. Resignation by the Trustee. The Trustee
and any successor Trustee may at any time resign by giving not less
PAGE 249<PAGE>
than thirty (30) days' written notice to the Authority, the Letter
of Credit Issuer and the Borrower and by first class mail to each
registered Owner of Bonds then Outstanding as shown on the records
of the Trustee. Such resignation shall take effect only upon the
appointment of a successor Trustee by the Bondholders or the
Borrower. Such notice to the Authority, the Letter of Credit
Issuer and the Borrower may be served personally or sent by
registered mail or telegram. In case at any time the Trustee shall
resign and no appointment of a successor Trustee shall be made
prior to the date specified in the notice of resignation as the
date when such resignation shall take effect, the resigning Trustee
may forthwith apply to a court of competent jurisdiction for the
appointment of a successor Trustee. The Trustee shall be
compensated for all costs of seeking and appointing a successor
should the Bondholders and Authority fail to so appoint a successor
Trustee within the thirty (30) day time period to do so.

Section 707. Removal of the Trustee. (a) The Trustee
may be removed at any time, by an instrument or concurrent
instruments in writing delivered to the Trustee, the Authority and
the Borrower by the Letter of Credit Issuer, which after the
occurrence of an Event of Default or an Event of Default by the
Letter of Credit Issuer of its obligations under the Letter of
Credit must be signed by the Owners of fifty-one percent (51%) in
aggregate principal amount of Bonds then Outstanding.

(b) The Trustee may also be removed at any time for
any breach of trust or for acting or proceeding in violation of, or
for failing to act or proceed in accordance with, any provisions of
this Indenture, by any court of competent jurisdiction upon the
application by the Authority, the Letter of Credit Issuer, the
Borrower or the Owners of fifty-one percent (51%) in aggregate
principal amount of the Bonds then Outstanding.

Section 708. Appointment of Successor Trustee by the
Borrower or Bondholders. (a) In case the Trustee hereunder shall
resign, or be removed, or be dissolved, or shall be in the course
of dissolution or liquidation, or otherwise become incapable of
acting hereunder as fiduciary for Holders of the Bonds, or in case
it shall be taken under the control of any public officer or
officers, or of a receiver appointed by a court, upon the request
of the Borrower or the Owners of fifty-one percent (51%) in
aggregate principal amount of Bonds Outstanding, the Authority by
an instrument executed and signed by the Executive Director, Deputy
Director or any other Authorized Authority Representative of the
Authority and attested by the Secretary or Assistant Secretary of
the Authority under its seal shall forthwith appoint a Trustee to
fill such vacancy. Such appointment shall become final upon the
written acceptance of such trusts by the successor Trustee so
appointed as provided in Section 709 hereof.

(b) Every such Trustee appointed pursuant to the
provisions of this Section shall be a national banking association
PAGE 250<PAGE>
or a domestic bank or trust company within or outside the State
having trust powers, in good standing and having a reported capital
surplus and undivided profits of not less than $50 million ipso
facto and having a Moody's rating of at least Baa3 or P3 or be a
banking institution otherwise acceptable to Moody's or the then
current rating agency of the Bonds.

Section 709. Concerning any Successor Trustee. (a)
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to its predecessor Trustee and to the
Authority and the Borrower an instrument in writing accepting such
appointment hereunder as fiduciary for Holders of the Bonds.
Thereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its
predecessors.

(b) Every predecessor Trustee shall, on the written
request of the Authority, or of the successor Trustee, execute and
deliver an instrument transferring to such successor Trustee all
the estates, properties, rights, powers and trusts, duties and
obligations of such predecessor hereunder. Every predecessor
Trustee shall deliver all securities and moneys held by it as
Trustee hereunder to its successor for direct deposit in the
appropriate successor trust accounts. Should any instrument in
writing from the Authority be required by a successor Trustee for
more fully and certainly vesting in such successor the estates,
properties, rights, powers, trusts, duties and obligations hereby
vested or intended to be vested in the predecessor Trustee, any and
all such instruments in writing shall, on request, be executed,
acknowledged and delivered by the Authority. Every predecessor
Trustee shall transfer the Letter of Credit and all required
documents to effectively transfer such Letter of Credit to its
successor Trustee in accordance with the provisions of the Letter
of Credit.

(c) The resignation of any Trustee and the
instrument or instruments removing any Trustee and appointing a
successor hereunder, or the instrument evidencing the transfer of
the Trust Estate shall be filed and/or recorded by the successor
Trustee in each filing or recording office where this Indenture (or
a memorandum thereof) shall have been filed and/or recorded.

(d) The Borrower shall give prompt written notice
to the Letter of Credit Issuer as to the appointment of any
successor Trustee hereunder.

Section 710. Trustee Protected in Relying upon
Resolutions, etc. The resolutions, opinions, certificates and
other instruments provided for in this Indenture may be accepted by
the Trustee as conclusive evidence of the facts and conclusions
stated therein and shall be full warrant, protection and authority
to the Trustee for the withdrawal of cash hereunder and the taking
PAGE 251<PAGE>
of or omitting to take any other action under this Indenture.

Section 711. Successor Trustee as Trustee of the Funds,
Bond Registrar and Paying Agent. Any Trustee which has resigned or
been removed shall cease to be Trustee of the Funds, Bond Registrar
and Paying Agent for principal and interest of the Bonds, and the
successor Trustee shall become such Trustee, Bond Registrar and
Paying Agent. Every predecessor Trustee shall deliver to its
successor Trustee all books of account, the registration books, the
list of Bondholders and all other records, documents and
instruments relating to its duties as such custodian and Bond
Registrar.

Section 712. Trustee and Authority Required to Accept
Directions and Actions of Borrower. (a) Whenever, after a
reasonable request by the Borrower, the Authority shall fail,
refuse or neglect to give any direction to the Trustee or to
require the Trustee to take any other action which the Authority is
required to have the Trustee take pursuant to the provisions of the
Loan Agreement or this Indenture, the Borrower instead of the
Authority may give any such direction to the Trustee or require the
Trustee to take any such action. Upon receipt by the Trustee of a
written notice from the Borrower stating that the Borrower has made
reasonable request of the Authority, and that the Authority has
failed, refused or neglected to give any direction to the Trustee
or to require the Trustee to take any such action, the Trustee is
hereby irrevocably empowered and directed, subject to other
provisions of this Indenture, to accept such direction from the
Borrower as sufficient for all purposes of this Indenture. The
Borrower shall have the direct right to cause the Trustee to comply
with any of the Trustee's obligations under this Indenture to the
same extent that the Authority is empowered so to do.

(b) Certain actions or failures to act by the
Authority under this Indenture may create or result in an Event of
Default under this Indenture and the Authority hereby agrees that
the Borrower may, to the extent permitted by law, perform any and
all acts or take such action as may be necessary for and on behalf
of the Authority to prevent or correct said Event of Default and
the Trustee shall take or accept such performance by the Borrower
as performance by the Authority in such event.

Section 713. Paying Agent or Agents. (a) The Trustee is
hereby designated, and by executing this Indenture agrees to act,
as Paying Agent for and with respect to the Bonds.

(b) The Authority from time to time may appoint one
or more additional Paying Agents and, in the event of the
resignation or removal of any Paying Agent, a successor Paying
Agent, pursuant to the provisions hereof. Each Paying Agent
appointed shall be a national banking association or a domestic
bank or trust company within or outside the State, having trust
powers, in good standing, having a reported capital surplus and
PAGE 252<PAGE>
undivided profits aggregating at least $50 million ipso facto and
having a Moody's rating of Baa3 or P3 or be a banking institution
otherwise acceptable to Moody's or the then current rating agency
of the Bonds and willing and able to accept the office on
reasonable and customary terms and authorized by law to perform all
the duties imposed on it by this Indenture. Each Paying Agent
shall accept in writing its appointment as a fiduciary for Holders
of the Bonds and shall hold in one or more separate trust accounts,
maintained by it in its own name, all moneys transferred to it for
the payment of principal, redemption premium, if any, and interest
on the Bonds.

(c) Any Paying Agent may at any time resign and be
discharged of the duties and obligations created by the Indenture
by giving at least thirty (30) days' written notice to the
Authority and the Trustee. Any Paying Agent may be removed at any
time by an instrument filed with such Paying Agent and the Trustee
and signed by the Authority. In the event of the resignation or
removal of any Paying Agent, such Paying Agent shall pay over,
assign and deliver any moneys held by it as Paying Agent to its
successor, or if there be no successor, to the Trustee.

(d) Any Paying Agent shall be entitled to payment
of reimbursement for fee charges and expenses as provided in
Section 702 hereof.

Section 714. Maintenance of Records. The Trustee hereby
agrees to hold all documents, affidavits, certificates and opinions
delivered to it pursuant to Section 3.3 of the Loan Agreement for
a period of at least two (2) years after the defeasance of the
Bonds and the release of all liens created under the Indenture
associated therewith. The Authority shall have the right to
inspect such documents, affidavits, certificates and opinions at
the principal corporate trust office of the Trustee at reasonable
times and upon reasonable notice. The Trustee shall be obligated
to provide copies of such documents, affidavits, certificates and
opinions to the Authority at its request.

Section 715. Consent of Borrower and Letter of Credit
Issuer. Whenever in this Article VII an appointment of a successor
fiduciary is to be made, such appointment (other than an
appointment by a court of competent jurisdiction pursuant to
Section 706 hereof) shall be made only with the prior written
consent of the Borrower and Letter of Credit Issuer, provided that
if either party is in default of its obligations under the Loan
Agreement, the Reimbursement Agreement or the Letter of Credit,
such defaulting party's consent shall not be required to effectuate
such appointment.

PAGE 253<PAGE>
ARTICLE VIII

SUPPLEMENTAL INDENTURES

Section 801. Supplemental Indentures Not Requiring
Consent of Bondholders. (a) The Authority and the Trustee may
without the consent of, or notice to, any of the Bondholders, enter
into an indenture or indentures supplemental hereto as shall not be
inconsistent with the terms and provisions hereof for any one or
more of the following purposes:

(i) To cure any ambiguity or formal defect
or omission in the Indenture;

(ii) To grant to or confer upon the Trustee,
with its consent, for the benefit of the Bondholders any
additional rights, remedies, powers or authority that may
lawfully be granted to or conferred upon the Bondholders
or the Trustee;

(iii) To grant or pledge to the Trustee for
the benefit of Bondholders any additional security;

(iv) To modify, amend or supplement the
Indenture or any indenture supplemental thereto in such
manner as to permit the qualification thereof under the
Trust Indenture Act of 1939 or any similar Federal
statute then in effect or to permit the qualification of
the Bonds for sale under the securities laws of any of
the States of the United States, and, if they so
determine, to add to the Indenture or any indenture
supplemental thereto such other terms, conditions and
provisions as may be permitted by the Trust Indenture Act
of 1939 or similar Federal statute;

(v) To add to the covenants and agreements
of the Authority in this Indenture, other covenants and
agreements to be observed by the Authority;

(vi) To obtain a rating on the Bonds from
Moody's or Standard & Poor's, or any similar credit
agency;

(vii) To provide for book-entry only bonds;

(viii) To make any other change which, in the
judgment of the Trustee acting in reliance upon an
opinion of independent counsel, is not to the prejudice
of the Trustee or the Holders of the Bonds.

(b) The Trustee may rely upon an opinion of
independent counsel as conclusive evidence that any such
Supplemental Indenture complies with the foregoing conditions and
PAGE 254<PAGE>
provisions.

Section 802. Supplemental Indentures Requiring Consent
of Bondholders. (a) Exclusive of Supplemental Indentures covered
by Section 801 hereof and subject to the terms and provisions
contained in this Section 802, the Holders of not less than 66 2/3%
aggregate principal amount of the Bonds then Outstanding shall have
the right, from time to time, to consent to and approve the
execution by the Authority and the Trustee of such other indenture
or indentures supplemental hereto as shall be deemed necessary and
desirable by the Authority for the purpose of modifying, altering,
amending, adding to or rescinding, in any particular, any of the
terms or provisions contained herein or in any supplemental
indenture; provided that nothing contained in this Section shall
permit, or be construed as permitting without the consent of all
the Holders of Bonds Outstanding:

(i) an extension of the maturity of the
principal of or the interest on any Bond issued
hereunder; or

(ii) a reduction in the principal amount of
any Bond or the rate of interest thereon or a change in
the method of calculation of the rate of interest
thereon; or

(iii) a privilege, preference or priority of
any Bond or Bonds over any other Bond or Bonds (except
with respect to the Letter of Credit or similar credit
instrument issued with respect to the Bonds); or

(iv) a reduction in the aggregate principal
amount of the Bonds required for consent to such
supplemental indenture; or

(v) the creation of a lien upon the Trust
Estate ranking prior to or on a parity with the lien
created by this Indenture.

(b) If at any time the Authority shall request the
Trustee to enter into a Supplemental Indenture for any of the
purposes of this Section 802, the Trustee shall, upon being
satisfactorily indemnified with respect to expenses and unless such
notice is waived by 100% of the Bondholders, cause notice of the
proposed execution of such Supplemental Indenture to be mailed, by
first class mail, to all registered Owners of Bonds then
Outstanding at their addresses as they appear on the registration
books kept by the Trustee. Such notice shall briefly set forth the
nature of the proposed Supplemental Indenture and shall state that
copies thereof are on file at the Principal Office of the Trustee
for inspection by all Bondholders.

(c) If, within such period after the mailing of the
PAGE 255<PAGE>
notice required by Section 802(b) as the Authority shall prescribe
with the approval of the Trustee, the Authority shall deliver to
the Trustee an instrument or instruments executed by the Holders of
not less than 66 2/3% in aggregate principal amount of the Bonds
then Outstanding, referring to the proposed Supplemental Indenture
as described in such notice and consenting to and approving the
execution thereof, the Trustee shall execute such Supplemental
Indenture.

(d) If, within sixty (60) days or such longer
period as shall be prescribed by the Authority following the
mailing of such notice, the Holders of not less than 66 2/3% in
aggregate principal amount of the Bonds Outstanding at the time of
the adoption of any such Supplemental Indenture shall have
consented to and approved the adoption thereof as herein provided,
no Holder of any Bond shall have any right to object to any of the
terms and provisions contained therein, or the operation thereof,
or in any manner to question the propriety of the adoption thereof,
or to enjoin or restrain the Trustee or the Authority from taking
any action pursuant to the provisions thereof. Upon the adoption
of any such Supplemental Indenture as in this Section 802 permitted
and provided, this Indenture shall be and be deemed to be modified
and amended in accordance therewith.

(e) The Trustee may rely upon an opinion of
independent counsel as conclusive evidence that (i) any
Supplemental Indenture entered into by the Authority and the
Trustee and (ii) the evidence of requisite Bondholder consent
thereto comply with the provisions of this Section 802.

Section 803. Consent of Borrower and Bank. (a)
Anything herein to the contrary notwithstanding, no Supplemental
Indenture under this Article VIII shall become effective unless and
until the Borrower shall have consented to the adoption of such
Supplemental Indenture. The Borrower shall be deemed to have
consented to the adoption of any such Supplemental Indenture if the
Authority does not receive a letter of protest or objection thereto
signed by or on behalf of the Borrower on or before 3:30 p.m., on
the 30th day after the mailing of a notice and a copy of the
proposed Supplemental Indenture to the Borrower.

(b) Anything herein to the contrary notwithstand-
ing, no Supplemental Indenture as described in Sections 801 and 802
hereof shall be entered into without the prior written consent of
the Letter of Credit Issuer so long as any Bonds are Outstanding.

Section 804. Bond Counsel Opinion. As a precondition to
the execution and delivery of any Supplemental Indenture hereunder
there shall be delivered to the Authority, the Trustee, the
Borrower and the Letter of Credit Issuer an opinion of Bond Counsel
stating that such Supplemental Indenture is authorized or permitted
by this Indenture and the Act, complies with their respective
terms, will be valid and binding upon the Authority in accordance
PAGE 256<PAGE>
with its terms and will not adversely affect exclusion from gross
income of interest on the Bonds for Federal income tax purposes.

PAGE 257<PAGE>
ARTICLE IX

DEFAULT PROVISIONS AND REMEDIES OF
TRUSTEE AND BONDHOLDERS

Section 901. Events of Default. Each of the following
events is hereby defined as and shall constitute an "Event of
Default" under this Indenture:

(a) if payment of any installment of interest on
any Bond is not made when it becomes due and payable;

(b) if payment of any portion of the principal or
Redemption Price on any Bond is not made when it becomes due and
payable whether at stated Redemption, by call for Redemption other
than an optional redemption pursuant to Sections 301(e), 304(b) and
304(c) hereof, acceleration or otherwise;

(c) receipt by the Trustee from the Letter of
Credit Issuer of (i) a written declaration from the Letter of
Credit Issuer of the occurrence of an "Event of Default" under the
Reimbursement Agreement or (ii) notice that the Letter of Credit
Issuer has elected not to reinstate an "A Drawing" under the Letter
of Credit in accordance with the terms of the Letter of Credit,
together with a written direction from the Letter of Credit Issuer
to declare an Event of Default hereunder and under the Loan
Agreement and to accelerate the Bonds;

(d) if the Letter of Credit Issuer shall wrongfully
refuse to honor the Letter of Credit; and

(e) receipt by the Trustee of written notice from
the Authority of the occurrence of an Event of Default under the
Loan Agreement (but only with the consent of the Letter of Credit
Issuer as long as the Letter of Credit is in full force and effect
and the Letter of Credit Issuer is not in default in its obliga-
tions under the Letter of Credit), other than an Event of Default
under Subsection 901(a) or (b) above.

Section 902. Acceleration. (a) (i) Upon any Event of
Default under Section 901 hereof (except an Event of Default under
Section 901(c) which shall be treated as set forth in 902(a)(ii)
below), while the Letter of Credit is not in effect or while the
Letter of Credit Issuer is then in default of its obligations
thereunder, upon the written request of the Holders of not less
than fifty-one percent (51%) in aggregate principal amount of Bonds
then Outstanding or (ii) upon the occurrence of any Event of
Default under Section 901(c), the Trustee shall, by notice in
writing delivered to the Authority, the Borrower and the Letter of
Credit Issuer, declare the principal of all Bonds then Outstanding
and the interest accrued on such Bonds to the date of the
declaration of acceleration to be due and payable, whereupon such
principal and interest shall become and be immediately due and
PAGE 258<PAGE>
payable and declare that interest shall cease to accrue on the date
of the declaration of acceleration.

(b) Upon the occurrence and during the continuance
of any Event of Default under Section 901 hereof, while the Letter
of Credit is in effect and the Letter of Credit Issuer is not in
default of its obligations thereunder, the Trustee shall, but only
if so directed by the Letter of Credit Issuer, without any notice
to the Authority and the Borrower, declare the principal of all
Bonds then Outstanding and the interest accrued on the Bonds to the
date of the declaration of acceleration immediately due and
payable, and such principal and interest shall thereupon become and
be immediately due and payable and declare that interest shall
cease to accrue on the date of the declaration of acceleration.

(c) If all of the Bonds Outstanding shall become so
immediately due and payable pursuant to Sections 902(a) or 902(b)
hereof, the Trustee shall, as soon as practicable, declare by
written notice to the Borrower all unpaid installments payable by
the Borrower under Section 4.2 of the Loan Agreement to be
immediately due and payable. Upon any acceleration of the Bonds,
the Trustee shall immediately draw under the Letter of Credit in
accordance with Section 404 hereof and make payment to the
Bondholders of principal of all Bonds then Outstanding and interest
accrued on such Bonds to the date of declaration of acceleration.

(d) Upon receipt by the Trustee of payment of the
full amount drawn on the Letter of Credit and provided sufficient
moneys are available in the Bond Fund to pay sums due on the Bonds,
the Letter of Credit Issuer shall be subrogated to the right, title
and interest of the Trustee and Bondholders in and to the Trust
Estate and any other security held by the Trustee for payment of
the Bonds and the Trustee shall be required to execute such
documents as the Bank may reasonably request to evidence such
subrogation.

(e) If, after the principal of the Bonds has been
so declared to be due and payable (other than by reason of or in
connection with an Event of Default under Section 901(c) unless and
until the Letter of Credit Issuer shall have withdrawn in writing
its notice specified in such Section and has given written notice
of reinstatement of the Letter of Credit in full):

(i) the Authority pays or causes to be paid
all arrears of interest and interest on overdue
installments of interest (if lawful) at the rate or rates
per annum borne by the Bonds and the principal and
premium, if any, on all the Bonds then Outstanding which
shall have become due and payable otherwise than by
acceleration;

(ii) the Authority pays or causes to be paid
all other sums payable under this Indenture, except the
PAGE 259<PAGE>
principal of and interest on the Bonds which by such
declaration shall have become due and payable, upon the
Bonds;

(iii) the Authority also performs all other
things in respect to which it may have been in default
hereunder and pays the reasonable charges of the Trustee,
the Bondholders and any trustee appointed under law,
including the Trustee's reasonable attorneys' fees; and

(iv) no Event of Default under this Indenture
or the Agreement is then continuing;

then, in every such case, the Trustee shall annul such declaration
and its consequences (but if the Letter of Credit has been drawn on
in connection with such acceleration, only if the Trustee has
received written notice from the Letter of Credit Issuer that the
Letter of Credit has been fully reinstated), and such annulment
shall be binding upon all Holders of Bonds issued hereunder. No
such annulment shall extend to or affect any subsequent Event of
Default or impair any right or remedy consequent thereon. The
Trustee shall forward a copy of any such annulment notice pursuant
to this paragraph to the Authority, the Borrower, the Paying Agent
and the Letter of Credit Issuer.

Section 903. Preservation of Security. Subject to the
provisions of Sections 905, 912 and 914 hereof, upon the occurrence
and during the continuance of any Event of Default, the Trustee
may, and upon the written request of the Holders of not less than
fifty-one percent (51%) in aggregate principal amount of the Bonds
then Outstanding, and provided the Trustee is furnished with
security and indemnity satisfactory to it, shall institute and
maintain such suits and proceedings as it may be advised by counsel
shall be necessary or expedient to prevent any impairment of the
Security under this Indenture by any acts which may be unlawful or
in violation of this Indenture and such suits and proceedings as
the Trustee may be advised shall be necessary or expedient to
preserve or protect its interests and the interests of the
Bondholders and the Letter of Credit Issuer.

Section 904. Other Remedies. (a) Subject to Sections
905 and 914 hereof, upon the occurrence and during the continuance
of any Event of Default the Trustee may, as an alternative, proceed
to pursue any available remedy to enforce the payment of the
principal of, redemption premium, if any, and interest on the Bonds
then Outstanding, including, without limitation, an action or writ
of mandamus.

(b) Subject to Sections 905 and 914 hereof, upon
the occurrence and during the continuance of any Event of Default,
then and in every case the Trustee may proceed, and upon the
written request of the Holders of not less than fifty-one percent
(51%) in aggregate principal amount of the Bonds then Outstanding
PAGE 260<PAGE>
shall proceed, to protect and enforce its rights, the rights of the
Bondholders under the Act and under the Indenture and the rights of
the Letter of Credit Issuer forthwith by such suits, actions or
special proceedings in equity or at law, or by proceedings in the
office of any board or officer having jurisdiction (provided the
Trustee is furnished with security and indemnity satisfactory to
it), whether for the specific performance of any covenant or
agreement contained in this Indenture or the Agreement or in aid of
the execution of any power granted herein or in the Agreement, or
in the Act or for the enforcement of any legal or equitable right
or remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce such rights or to perform any
of its duties under this Indenture.

(c) If an Event of Default shall have occurred and
be continuing, and if requested to do so by the Holders of not less
than fifty-one percent (51%) in aggregate principal amount of the
Bonds then Outstanding or the Letter of Credit Issuer, as
applicable, pursuant to Section 905 and indemnified as provided in
Section 903 hereof, the Trustee shall be obligated to exercise such
one or more of the rights and powers conferred by this Section and
by Sections 903 and 906 hereof as the Trustee, being advised by
counsel, shall deem most expedient and in the interest of the
Bondholders.

(d) No remedy by the terms of this Indenture
conferred upon or reserved to the Trustee (or to the Bondholders)
is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to any
other remedy given to the Trustee, the Letter of Credit Issuer or
to the Bondholders hereunder or now or hereafter existing by law.

(e) No waiver of any Event of Default hereunder,
whether by the Trustee, the Letter of Credit Issuer or by the
Bondholders, shall extend to or shall affect any subsequent Event
of Default or shall impair any rights or remedies consequent
thereon.

Under no circumstances shall the Trustee be required to
resort to any other remedy prior to drawing under the Letter of
Credit.

Section 905. Right of Letter of Credit Issuer or
Bondholders to Direct Proceedings. Anything in this Indenture to
the contrary notwithstanding, following an acceleration of the
payment of the Bonds as provided in Section 902 hereof, the Letter
of Credit Issuer (so long as the Letter of Credit is in effect and
not wrongfully dishonored) or, upon the termination of the Letter
of Credit or a default by the Letter of Credit Issuer thereunder,
the Holders of at least fifty-one percent (51%) in aggregate
principal amount of Bonds then Outstanding shall have the right, at
any time, by an instrument or instruments in writing executed and
delivered to the Trustee, to direct the method and place of
PAGE 261<PAGE>
conducting all proceedings to be taken in connection with the
enforcement of the terms and conditions of this Indenture or for
the appointment of a receiver or any other proceedings hereunder;
provided that such direction shall not be otherwise than in
accordance with the provisions of law or of this Indenture; and
further provided that the Trustee shall be indemnified to its
satisfaction pursuant to Section 903 hereof; provided, further,
however, that while the Trustee may not require indemnification
prior to the specific acts of presenting a draft under the Letter
of Credit or paying the principal of and interest accrued on the
Bonds when due whether at maturity, Redemption, acceleration or
otherwise as set forth herein, the Trustee shall continue to be
entitled to such indemnification as otherwise provided herein.

Section 906. Appointment of Receiver. Upon the
occurrence and during the continuance of an Event of Default, and
upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee, the Letter of
Credit Issuer and/or of the Bondholders, the Trustee shall be
entitled, as a matter of right, to the appointment of a receiver or
receivers of the Trust Estate and the payments derived from the
Agreement, together with such other powers as the court making such
appointments shall confer.

Section 907. Application of Moneys. (a) All moneys
received by the Trustee pursuant to any right given or action taken
under the provisions of this Article IX (except moneys derived from
a draw under the Letter of Credit) shall be applied first to the
payment of the reasonable costs and expenses of the proceedings,
including reasonable attorneys' fees, resulting in the collection
of such moneys and of the expenses, liabilities and advances
incurred or made by the Trustee hereunder, including reasonable
attorneys' fees, except as a result of its gross negligence,
willful misconduct or bad faith. The balance of such moneys, after
providing for the foregoing, shall be deposited by the Trustee in
the Eligible Moneys Account in the Bond Fund and all moneys in the
Bond Fund shall be applied as follows:

(i) Unless the principal of all the Bonds shall
have become or shall have been declared due and payable,
all such moneys shall be applied:

First -- To the payment to the Holders of the
Bonds entitled thereto of all installments of
interest then due on the Bonds, in order of
maturity of the installments of such interest and,
if the amount available shall not be sufficient to
pay in full any particular installment, then to the
amounts due on such installment, to the Holders
entitled thereto, ratably, without any
discrimination or preference;

Second -- To the payment to the Holders of the
PAGE 262<PAGE>
Bonds entitled thereto of the unpaid principal or
Redemption Price of any of the Bonds which shall
have become due (other than Bonds called for
Redemption for the payment of which moneys are held
pursuant to the provisions of this Indenture), in
order of their due dates, and to the payment of
interest on such Bonds from the respective dates
upon which they became due. If the amount
available shall not be sufficient to pay in full
Bonds due on any particular date, together with
such interest, then to the payment ratably,
according to the amount of principal and redemption
premium, if any, due on such date, to the Persons
entitled thereto without any discrimination or
preference; and

Third -- To the payment of the principal or
Redemption Price of and interest on the Bonds as
the same become due and payable.

(ii) If the principal of all Bonds shall have become
due or shall have been declared due and payable, all such
moneys applied to the payment of the principal of,
redemption premium, if any, and interest then due and
unpaid on the Bonds, without preference or priority of
principal over interest or of interest over principal, or
of any installment of interest over any other installment
of interest, or of any Bond over any other Bond, ratably,
according to the amounts due respectively for principal,
redemption premium, if any, and interest, to the Holders
of Bonds entitled thereto without any discrimination or
preference.

(iii) If the principal of all the Bonds shall have
been declared due and payable, and if such declaration
shall thereafter have been rescinded and annulled under
the provisions of this Article IX then, subject to the
provisions of paragraph (ii) of this Section 907(a) in
the event that the principal of all the Bonds shall later
become due or be declared due and payable, the moneys
shall be applied in accordance with the provisions of
paragraph (i) of this Section 907(a).

(b) Whenever moneys are to be applied pursuant to
the provisions of this Section 907, such moneys shall be applied at
such times, and from time to time, as the Trustee shall determine,
having due regard for the amount of such moneys available for
application and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee
shall apply such funds, it shall fix the date (which shall be an
Interest Payment Date unless another date shall be deemed more
suitable) upon which such application is to be made and upon such
date interest on the amounts of principal to be paid on such dates
PAGE 263<PAGE>
shall cease to accrue, except if the Bonds were immediately due and
payable by acceleration then the interest on such principal amounts
to be paid shall have ceased to accrue on the date of the
declaration of acceleration and the date fixed for payment shall be
as near as possible to the date of the declaration of acceleration.
The Trustee shall give such notice as it may deem appropriate of
the deposit with it of any such moneys and of the fixing of any
such date, and shall not be required to make payment to the Holder
of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement or for cancellation if fully paid.

(c) Whenever all Bonds and interest thereon have
been paid under the provisions of this Section 907 and all expenses
and charges of the Trustee have been paid, any balance remaining in
the Bond Fund and Letter of Credit Account shall be paid, first to
the Letter of Credit Issuer as provided in Section 412 hereof and
then to the Borrower.

Section 908. Remedies Vested in Trustee. All rights of
action (including the right to file proof of claims) under the
Indenture or under any of the Bonds may be enforced by the Trustee
without the possession of any of the Bonds or the production
thereof in any trial or other proceedings relating thereto and any
such suit or proceedings instituted by the Trustee shall be brought
in its name as Trustee without the necessity of joining as
plaintiffs or defendants any Holders of the Bonds. Subject to the
provisions of Section 907 hereof, any recovery of judgment shall be
for the equal and ratable benefit of the Holders of the Outstanding
Bonds in respect of which such proceedings shall be brought.

Section 909. Rights and Remedies of Bondholders. (a)
No Holder of any Bond shall have any right to institute any suit,
action or proceeding for the enforcement of any covenant or
provision of the Indenture or for the appointment of a receiver or
any other remedy hereunder, unless:

(i) an event of default has occurred of which the
Trustee has been notified or is deemed to have notice as
provided in this Article IX;

(ii) such event of default shall have become an
Event of Default;

(iii) the Holders of at least fifty-one percent (51%)
in aggregate principal amount of Bonds then Outstanding
shall have made written request to the Trustee, shall
have offered reasonable opportunity either to proceed to
exercise the powers hereinbefore granted or to institute
such action, suit or proceeding in the Trustee's name and
shall have offered to the Trustee indemnity satisfactory
to the Trustee, as provided in Section 903 hereof; and

(iv) the Trustee shall thereafter have failed or
PAGE 264<PAGE>
refused to exercise the powers hereinbefore granted, or
to institute such action, suit or proceeding in its own
name.

Such notification, request and offer of indemnity are hereby
declared in every case at the option of the Trustee to be
conditions precedent to the execution of the powers and trusts of
this Indenture, and to any action or cause of action for the
enforcement of this Indenture, or for the appointment of a receiver
or for any other remedy hereunder, it being understood and intended
that no one or more Holders of the Bonds shall have any right in
any manner whatsoever to enforce any right hereunder except in the
manner herein provided, and that all proceedings shall be
instituted, had and maintained in the manner herein provided and
for the equal and ratable benefit of the Holders of all Bonds then
Outstanding. The provisions of this Section 909 shall no longer be
of any effect after all of the right, title and interest of the
Bondholders under this Indenture shall have been subrogated to the
Letter of Credit Issuer, pursuant to Section 902(d) hereof.

(b) Nothing contained in the Indenture shall affect
or impair any right of enforcement conferred on any Bondholder by
law, including the Act, or the right of any Bondholder to enforce
the payment of the principal of, redemption premium, if any, and
interest on any Bond at and after the maturity thereof, or the
obligation of the Authority to pay the principal of, redemption
premium, if any, and interest on each of the Bonds issued hereunder
to the respective Holders thereof at the time, place, from the
source and in the manner as provided herein and in the Bonds.

Section 910. Termination of Proceedings. In case the
Trustee shall have proceeded to enforce any right hereunder by the
appointment of a receiver or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason, or shall have
been determined adversely, then and in every such case the
Authority, the Letter of Credit Issuer and the Trustee shall be
restored to their former positions and rights hereunder and all
rights, remedies and powers of the Trustee shall continue as if no
such proceedings had been taken.

Section 911. Waivers and Non-Waiver of Events of
Default. Subject to the provisions of Section 914 hereof, (a) to
the extent not precluded by the Act, the Trustee may in its
discretion waive any Event of Default hereunder (other than an
Event of Default under Section 901(c)) and its consequences and
rescind any declaration of acceleration of maturity of principal,
and shall waive any Event of Default hereunder and its consequences
upon the written request of the Holders of not less than fifty-one
percent (51%) in aggregate principal amount of all the Bonds then
Outstanding; provided that an Event of Default under Section 901(c)
hereof may only be waived if the Letter of Credit Issuer withdraws
in writing its notice specified in Section 901(c); provided,
further that an Event of Default under Section 901(c) hereof may
PAGE 265<PAGE>
only be waived if the Trustee has received written notice from the
Letter of Credit Issuer that the Letter of Credit has been fully
reinstated; provided, further that there shall not be waived any
Event of Default unless prior to such waiver or rescission, all
arrears of interest and payment of principal when due, as the case
may be, together with interest (to the extent permitted by law) on
overdue principal and interest, at the applicable rate of interest
borne by the Bonds, and all expenses of the Trustee in connection
with such Event of Default shall have been paid or provided for.
In case of any such waiver or rescission, or in case any proceeding
taken by the Trustee on account of any such Event of Default shall
have been discontinued or abandoned or determined adversely, then
and in every such case the Authority, the Trustee, the Bondholders
and the Letter of Credit Issuer shall be restored to their former
positions and rights hereunder respectively. No such waiver or
rescission shall extend to any subsequent or other Event of
Default, or impair any right consequent thereon.

(b) No delay or omission of the Trustee or of any
Holder of the Bonds to exercise any right or power accruing upon
any Event of Default shall impair any such right or power or shall
be construed to be a waiver of any such Event of Default or an
acquiescence therein. Every power and remedy given by this Article
IX to the Trustee, the Letter of Credit Issuer and the Holders of
the Bonds, respectively, may be exercised from time to time and as
often as may be deemed expedient.

(c) The Trustee may waive any Event of Default,
other than an Event of Default under Section 901(c) hereof, which
in its opinion shall have been remedied before the entry of final
judgment or decree in any suit, action or proceeding instituted by
it under the provisions of this Indenture or the Agreement, or
before the completion of the enforcement of any other remedy under
this Indenture or the Agreement.

Section 912. Notice of Defaults. (a) Within ninety
(90) days after (i) the receipt of notice of an Event of Default as
provided in Section 901 hereof or (ii) the occurrence of an Event
of Default under 901(a) or (b), the Trustee shall, unless such
Event of Default shall have theretofore been cured, give written
notice thereof by certified or registered first class mail to each
Owner of Bonds then Outstanding, provided that, except in the case
of a default in the payment of the principal or Redemption Price of
or interest on any of the Bonds, the Trustee may withhold such
notice if, in its sole judgment, it determines that the withholding
of such notice is in the best interests of the Bondholders.

(b) The Trustee shall, as soon as practicable,
notify the Authority, the Letter of Credit Issuer and the Borrower
of any Event of Default known to the Trustee.

Section 913. Waiver of Redemption Rights. Upon the
occurrence and continuance of an Event of Default, to the extent
PAGE 266<PAGE>
that such rights may then lawfully be waived, neither the
Authority, nor anyone claiming through or under it, shall set up,
claim, or seek to take advantage of any appraisement, valuation,
stay, extension or Redemption laws now or hereafter in force, in
order to prevent or hinder the enforcement of this Indenture or a
foreclosure under this Indenture. The Authority, for itself and
all who may claim through or under it, hereby waives, on or after
the date of foreclosure, to the extent that it lawfully may do so,
the benefit of all such laws and all rights of appraisement and
Redemption to which it may be entitled under the laws of the State
of New Jersey.

Section 914. Rights of Bank Regarding Collateral. So
long as the Letter of Credit is in effect and the Letter of Credit
Issuer is making all required payments with respect to the Bonds in
accordance with the terms of the Letter of Credit, the right of the
Trustee hereunder to grant consents, grant waivers, direct
proceedings, pursue remedies and otherwise exercise any rights
under this Indenture with respect to the Collateral shall be
exercised by the Letter of Credit Issuer acting alone and the
Trustee will execute any documents and take or refrain from taking
all actions which the Trustee is required or entitled to execute or
take or refrain from taking hereunder in accordance with the
written request and instructions of the Letter of Credit Issuer
provided that the Letter of Credit Issuer shall pay or agree to pay
(subject to the Letter of Credit Issuer's right to reimbursement
under the Reimbursement Agreement) any and all costs and expenses
incurred or to be incurred in connection therewith.

PAGE 267<PAGE>
ARTICLE X

AMENDMENT OF LOAN AGREEMENT

Section 1001. Amendments to Loan Agreement Not Requiring
Consent of Bondholders. Except for the amendments as provided in
Section 1002 hereof, the Authority and the Trustee may, with the
consent of the Letter of Credit Issuer but without the consent of
or notice to the Bondholders, consent to any amendment of the Loan
Agreement including those which may be required (i) by the
provisions of the Loan Agreement or the Indenture, (ii) for the
purpose of curing any ambiguity or formal defect or omission, (iii)
to grant or pledge to the Trustee for the benefit of the
Bondholders any additional security, or (iv) in connection with any
other change therein which, in the judgment of the Trustee acting
in reliance upon an opinion of independent counsel, does not
materially and adversely affect the rights of the Holders of the
Bonds. Nothing in this Section contained shall permit, or be
construed as permitting, any reduction in the payments required to
be paid under the Loan Agreement without the consent of all Holders
of the Outstanding Bonds and the Letter of Credit Issuer.

Section 1002. Amendments to Loan Agreement Requiring
Consent of Bondholders. Any reduction in the payments required to
be paid under the Loan Agreement shall not be permitted without the
publication of notice and the consent of all Holders of the
Outstanding Bonds and the Letter of Credit Issuer. Such consent
shall be given and procured as provided in Section 802 hereof.

PAGE 268<PAGE>
ARTICLE XI

DISCHARGE OF LIEN

Section 1101. Defeasance of Bonds. (a) If the
Authority shall pay or cause to be paid to all the Holders of any
Outstanding Bonds the principal of, redemption premium, if any, and
interest to become due thereon at the times and in the manner
stipulated therein and herein with Available Moneys, and if the
Authority shall keep, perform and observe all and singular the
covenants and promises in the Bonds so paid and in this Indenture
expressed as to be kept, performed and observed by it or on its
part, then such Bonds shall cease to be subject to the Lien of this
Indenture and the rights hereby granted shall cease, determine and
be void, whereupon the Trustee shall cancel and discharge this
Indenture; provided that the Trustee's obligation to pay to the
Holders of the Outstanding Bonds the principal of, redemption
premium, if any, and interest to become due thereon shall survive
the cancellation and discharge of this Indenture; and provided
further that in the event there has been a drawing under the Letter
of Credit for which the Letter of Credit Issuer has not been fully
reimbursed pursuant to the Reimbursement Agreement or any other
obligations are then due and owing to the Letter of Credit Issuer
under the Reimbursement Agreement, and upon written instructions
from the Letter of Credit Issuer, the Trustee shall assign and turn
over to the Letter of Credit Issuer, as subrogee or otherwise, all
of the Trustee's right, title and interest under this Indenture,
all balances held hereunder not required for the payment of the
Bonds and such other sums and the Trustee's right, title and
interest in, to and under the Loan Agreement. In such event the
Trustee shall execute and deliver to the Authority such instruments
in writing as shall be requisite to cancel the Lien hereof and
shall assign and deliver to the Authority any property at the time
subject to the Indenture which may then be in its possession,
except amounts required to be paid to the Borrower under Section
413 hereof, which shall be assigned and delivered to the Borrower,
and except cash or securities held by the Trustee for the payment
of the principal of, redemption premium, if any, and interest on
the Bonds. The Authority and the Borrower shall have no right to
draw under the Letter of Credit for the payment of Bonds pursuant
to this Section 1101.

(b) Any Bond shall be deemed to be paid within the
meaning of this Article and for all purposes of this Indenture when
(i) payment of the principal of and redemption premium, if any, on
such Bond, plus interest thereon to the due date thereof (whether
such due date is by reason of maturity or upon redemption as
provided herein) shall have been made or caused to be made in
accordance with the terms thereof with Available Moneys, or shall
have been made or caused to be made by irrevocably depositing in
the Eligible Moneys Account of the Bond Fund other moneys of the
Borrower, in the form of cash and/or obligations described in
Section 601(a)(i) hereof of the United States of America, maturing
PAGE 269<PAGE>
as to principal and interest in such amounts and at such times as
will ensure the availability of sufficient moneys to make such
payment, and (ii) all necessary and proper fees, compensation and
expenses, including legal fees of the Trustee, the Registrar, and
the Paying Agent pertaining to the Bonds with respect to which such
deposit is made shall have been paid or the payment thereof
provided for to the satisfaction of the Trustee. At such times as
a Bond shall be deemed to be paid hereunder, as aforesaid, such
Bond shall no longer be secured by or subject to the lien of this
Indenture, except for the purposes of any such payment from cash or
such moneys or obligations described in Section 601(a)(i) hereof of
the United States of America and shall be canceled pursuant to
Section 210 hereof.

(c) Notwithstanding the foregoing subparagraph (b)
hereinabove, no deposit thereunder shall be deemed a payment of the
Bonds unless and until (i) proper notice of Redemption shall have
been given in accordance with Article III of this Indenture or, in
the event that the Bonds are not by their terms subject to
Redemption within the next succeeding sixty (60) days, until the
Borrower shall have given the Trustee, on behalf of the Authority,
irrevocable instructions to notify the Owners of the Bonds, in
accordance with Article III of this Indenture, that the deposit
required by Section 1101(b) hereof has been made and that said
Bonds are deemed to have been paid in accordance with the
provisions hereof and stating the maturity or redemption date upon
which the moneys are to be available for the payment of the
principal of and the applicable redemption premium, if any, on said
Bonds plus interest thereon to the due date thereof or the maturity
date of such Bonds; (ii) a certificate from a nationally recognized
accounting firm, acceptable to Moody's, verifying that the
Available Moneys (but not including investment earnings thereon)
deposited with the Trustee shall have been sufficient to pay when
due the principal of, redemption premium, if any and interest
accrued on such Outstanding Bonds to the date fixed for redemption;
(iii) legal opinion of Bond Counsel to the effect that the Bonds
have been paid in accordance with the terms of this Indenture (such
opinion being given in reliance on the verification report
identified in (ii) above); and (iv) an opinion, acceptable to
Moody's, of nationally recognized counsel experienced in bankruptcy
matters stating the application of such Available Moneys or other
moneys of the Borrower will not constitute a voidable preference in
the event of an occurrence of an Act of Bankruptcy.

(d) The payment of principal of, redemption
premium, if any, and interest due thereon shall be made at the
Principal Office of the Trustee upon surrender of the Bonds for
cancellation.

(e) The Trustee shall provide written notice to the
Authority upon the maturity or defeasance of all of the Bonds
Outstanding.
PAGE 270<PAGE>
ARTICLE XII

MISCELLANEOUS

Section 1201. Consent of Bondholders. (a) Any consent,
request, direction, approval, objection or other instrument
required by this Indenture to be signed and executed by the
Bondholders may be in any number of writings of similar tenor and
may be signed or executed by such Bondholders in person or by
agents appointed in writing and may, but shall not be required to,
be obtained at a meeting of Bondholders called in such manner as
the Trustee shall specify. Proof of the execution of any such
consent, request, direction, approval, objection or other
instrument or of the writing appointing any such agent and of the
ownership of Bonds, if made in the following manner, shall be
sufficient for any of the purposes of this Indenture, and may be
conclusively relied on by the Trustee with regard to any action
taken thereunder:

(i) The fact and date of the execution by any
Person of any such writing may be proved by the
certificate of any officer in any jurisdiction who by law
has power to take acknowledgments within such
jurisdiction that the Person signing such writing
acknowledged before him the execution thereof, or by an
affidavit of any witness to such execution. The
authority of the Person or Persons executing any such
instrument on behalf of a corporate Bondholder may be
established without further proof if such instrument is
signed by a Person purporting to be the president or a
vice-president of such corporation with a corporate seal
affixed and attested by a Person purporting to be its
secretary or an assistant secretary.

(ii) The ownership of Bonds and the amount,
number and other identification, and the date of holding
shall be determined by reference to the books of
registration maintained by the Trustee as Bond Registrar.

(b) For all purposes of the Indenture and of the
proceedings for the enforcement hereof, such Person shall be deemed
to continue to be the Holder of such Bond.

(c) Any request, consent or vote of the Owner of
any Bond shall bind all future Owners of such Bond with respect to
anything done or suffered to be done or omitted to be done by the
Authority or the Trustee in accordance therewith, unless and until
such request, consent or vote is revoked by the filing with the
Trustee of a writing, signed and executed by the Owner of the Bond,
in form and substance and within such time as shall be satisfactory
to the Trustee. The Trustee shall be entitled to rely on such
request, consent or vote until such time, if any, until the same
shall have been revoked.
PAGE 271<PAGE>
Section 1202. Limitation of Rights. With the exception
of rights herein expressly conferred, nothing expressed or
mentioned in or to be implied from this Indenture or the Bonds is
intended or shall be construed to give to any Person, other than
the Authority, the Trustee, the Borrower, the Holders of the Bonds,
and the Letter of Credit Issuer any legal or equitable right,
remedy or claim under or in respect to this Indenture, or any
covenants, conditions and provisions herein contained. The
Indenture and all of the covenants, conditions and provisions
thereof are intended to be and are for the sole and exclusive
benefit of such Persons.

Section 1203. Limitation on Liability of Members of
Authority. No covenant, condition or agreement contained herein
shall be deemed to be a covenant, agreement or obligation of a
present or future member of the Authority or any officer, employee
or agent of the Authority in his or her individual capacity, and
neither the Authority nor any officer thereof 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. No member, officer, employee or agent of the Authority
shall incur any personal liability with respect to any other action
taken by him or her pursuant to this Indenture or the Act, provided
such member, officer, employee or agent acts in good faith.

Section 1204. Severability. (a) If any of the
provisions of this Indenture shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any
particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases, because it conflicts with any other
provision or provisions hereof or any constitution or statute or
rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or
of rendering any other provision or provisions therein contained
invalid, inoperative or unenforceable to any extent whatever.

(b) The invalidity of any one or more phrases,
sentences, clauses or Sections in this Indenture shall not affect
the remaining portions hereof.

Section 1205. Notices. All notices, certificates,
requests, complaints, demands or other communications hereunder
shall be in writing unless otherwise specified herein and shall be
deemed sufficiently given when sent by telegram, telex or
registered mail, postage prepaid, return receipt requested, or
first class mail unless registered or certified mail is specified
herein addressed as follows:

(a) If to the Authority:

New Jersey Economic Development Authority
200 South Warren Street
PAGE 272<PAGE>
Capital Place One
Trenton, New Jersey 08625
Attention: Executive Director

with a copy to:

Wilentz, Goldman & Spitzer, P.A.
90 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: Anthony J. Pannella, Jr., Esq./
Cheryl J. Oberdorf, Esq.

(b) If to the Trustee:

Shawmut Bank Connecticut, National Association
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust
Administration

Burlington Coat Factory Warehouse
of New Jersey, Inc.
1830 Route 130
Burlington, New Jersey 08016
Attention: Chief Accounting Officer

with a copy of such notice to:

Paul C. Tang, Esq., general counsel, at the above
address

(d) If to the Letter of Credit Issuer:

First Fidelity Bank, National Association,
New Jersey
123 South Broad Street
Philadelphia, Pennsylvania 19109
Attention: Stephen Clark, V.P.

with a copy to:

Pepper, Hamilton & Scheetz
3000 Two Logan Square
18th and Arch Streets
Philadelphia, Pennsylvania 19103

The Authority and the Trustee may by notice given hereunder to the
other, the Borrower and the Letter of Credit Issuer designate any
further or different addresses to which subsequent notices,
certificates, requests, complaints, demands or other communications
PAGE 273<PAGE>
hereunder shall be sent. All notices required to be sent by the
Trustee, the Authority, the Borrower, the Bondholders or the
Placement Agent shall also be sent to the Letter of Credit Issuer,
provided failure to so notify the Letter of Credit Issuer shall not
negate the effect of such notice.

Section 1206. Notice to Moody's. As long as the Bonds
are rated by Moody's, the Trustee shall provide prior written
notice in the manner provided in Section 1205 hereof to Moody's
upon the occurrence of (i) the execution of any amendment,
modification or supplement to the Loan Agreement pursuant to
Article X hereof; (ii) the execution of a Supplemental Indenture
pursuant to Article VIII of the Indenture; (iii) any expiration,
termination, revocation or extension of the Letter of Credit; (iv)
any change in a Trustee or Paying Agent; (v) any material
amendments, supplements or modification of the provisions of the
Letter of Credit; and (vi) when all Bonds have been paid or deemed
to have been paid pursuant to the terms of this Indenture.

Section 1207. Counterparts. This Indenture may be
executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.

Section 1208. Table of Contents and Section Headings Not
Controlling. The table of contents and the headings of the several
sections of this Indenture have been prepared for convenience of
reference only and shall not control, affect the meaning of, or be
taken as an interpretation of any provision of this Indenture.

Section 1209. Governing Law. This Indenture and each
Bond shall be deemed to be a contract made under the laws of the
State of New Jersey and for all purposes shall be construed in
accordance with the laws of said State of New Jersey.

Section 1210. Third Party Beneficiary. So long as the
Initial Letter of Credit Issuer honors its obligations under the
Letter of Credit, the parties hereto acknowledge that the Initial
Letter of Credit Issuer is a third party beneficiary hereunder.

PAGE 274<PAGE>

IN WITNESS WHEREOF, the NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY has caused this Indenture to be executed by one of its
officers thereunto duly authorized, its corporate seal to be
hereunto affixed, and the same to be attested by one of its
officers duly authorized, and Shawmut Bank Connecticut, National
Association has caused this Indenture to be executed by one of its
officers thereunto duly authorized, and its corporate seal to be
hereunto affixed, all as of the day and year first above written.

ATTEST: NEW JERSEY ECONOMIC
DEVELOPMENT AUTHORITY
[SEAL]

By:
FRANK T. MANCINI, JR. CAREN S. FRANZINI
Assistant Secretary Executive Director

SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION
as Trustee

By:___________________________
SUSAN C. MERKER
Assistant Vice President

PAGE 275<PAGE>

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
ECONOMIC DEVELOPMENT REFUNDING BONDS
(BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC. - 1995 Project)

No. EDRB-_

MATURITY DATE: DATED DATE: August 1, 1995

AUTHENTICATION DATE:

CUSIP:

INTEREST RATE:

REGISTERED OWNER:

PRINCIPAL SUM: ___________________ Dollars ($ )

THE NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the
"Authority"), a body politic and corporate and a public
instrumentality of the State of New Jersey (the "State") and duly
existing under the Constitution and laws of the State, including
the New Jersey Economic Development Authority Act (the "Act"), for
value received hereby promises to pay, (but solely from the sources
described in this Bond), to the REGISTERED OWNER identified above,
or registered assigns, the PRINCIPAL SUM, on the MATURITY DATE or
on the date fixed for Redemption, as the case may be, together with
INTEREST on the PRINCIPAL SUM from the DATED DATE, until the
Authority's obligations with respect to the payments of such
PRINCIPAL SUM shall be discharged, at the INTEREST RATE per annum
stated above semiannually on the first days of March and September,
commencing March 1, 1996.

This Bond (as hereinafter defined) shall be payable as
to principal or Redemption Price when due, upon presentation and
surrender thereof, at the principal corporate trust office of
Shawmut Bank Connecticut, National Association, Hartford,
Connecticut, as Trustee, Bond Registrar and Paying Agent (the
"Trustee"), or at the duly designated office of any duly appointed
alternate or successor thereto. The interest on this Bond will be
payable by check or bank draft and will be mailed to the Person in
whose name each Bond is registered which appears on the
registration books of the Authority held by the Trustee as
determined as of the close of business on the fifteenth day
(whether or not a Business Day) of February and August (the "Record
Date"). Upon request, any Holder of at least one million dollars
($1,000,000) of Bonds shall be entitled to receive interest
payments from the Trustee by wire transfer. Payment of the
principal or Redemption Price of and interest on this Bond shall be
PAGE 276<PAGE>
made 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.

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 OF, IF
ANY, OR INTEREST ON THE BONDS. THE BONDS ARE SPECIAL, LIMITED
OBLIGATIONS OF THE NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (THE
"AUTHORITY"), PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS,
FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE INDENTURE (AS
HEREAFTER DEFINED) 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.

No recourse shall be had for the payment of the principal
or Redemption Price of or interest on this Bond or for any claim
based hereon or on the Indenture, against any member, officer or
employee, past, present or future of the Authority or of any
successor body, as such, either directly or through the Authority
or any successor body, under any constitutional provision, statute,
rule of law, or by the enforcement of any assessment thereof by any
legal or equitable proceedings or otherwise.

Reference is made to the further provisions of this Bond
set forth on the reverse side of this Bond; such provisions shall
for all purposes have the same effect as if set forth at this
place.

It is hereby certified and recited that all acts, things
and conditions required by the Constitution or statutes of the
State or the Indenture to exist, to have happened or to have been
performed precedent to or in the issuance of this Bond exist, have
happened and have been performed in due time, form and manner as
required by law and that said issue of Bonds, together with all
other indebtedness of the Authority, is within every debt and other
limit prescribed by said Constitution or statutes.

This Bond shall not be entitled to any right or benefit
under the Indenture, or be valid or become obligatory for any
purpose, until this Bond shall have been authenticated by the
execution by the Trustee, or its successor as Trustee, or an
authenticating agent thereof, of the certificate of authentication
inscribed hereon.

IN WITNESS WHEREOF, THE NEW JERSEY ECONOMIC DE
AUTHORITY has caused this Bond to be executed in its name by the
manual or printed facsimile signature of its Executive Director and
attested by the printed facsimile signature of its Assistant
Secretary, and the facsimile of its corporate seal to be impressed
or imprinted hereon.
PAGE 277<PAGE>

CERTIFICATE OF AUTHENTICATION

This Bond is one of the issue of
Economic Development Refunding Bonds
described and delivered pursuant
to the within mentioned
Indenture.

SHAWMUT BANK CONNECTICUT, NEW JERSEY ECONOMIC
NATIONAL ASSOCIATION, DEVELOPMENT AUTHORITY
as Trustee

By:_____________________ By:_________________________
Authorized Signatory Name: Caren S. Franzini
Title: Executive Director

Attest:

By:_________________________
Name: Frank T. Mancini, Jr.
Title: Assistant Secretary

[SEAL]

PAGE 278<PAGE>
[REVERSE OF BOND]

1. Indenture; Loan Agreement. This Bond is one of an
authorized issue of bonds (the "Bonds"), limited in aggregate
principal amount to $10,000,000. The Bonds are issued under and
governed by the Indenture of Trust dated as of August 1, 1995 (the
"Indenture") between the Authority and Shawmut Bank Connecticut,
National Association, Hartford, Connecticut, as Trustee and
pursuant to a resolution of the Authority duly adopted July 11,
1995. THE TERMS AND PROVISIONS OF THE BONDS INCLUDE THOSE IN THE
INDENTURE. BONDHOLDERS ARE REFERRED TO THE INDENTURE FOR A
STATEMENT OF THOSE TERMS AND PROVISIONS. ANY CAPITALIZED TERMS
USED HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE SAME MEANINGS
ASCRIBED TO SUCH TERMS IN THE INDENTURE.

The Bonds are issued pursuant to and in full compliance
with the Act which authorizes the execution and delivery of the
Loan Agreement (as hereinafter defined) and the Indenture.

The Bonds are being issued for the purpose of providing
funds to refund, on a current basis, $10,000,000 aggregate
principal amount Economic Development Bonds (Burlington Coat
Factory Warehouse of New Jersey, Inc. - 1985 Project) of the New
Jersey Economic Development Authority dated as of September 1, 1985
(the "Prior Bonds"), maturing on or after September 1, 1996 (the
"Refunded Bonds") on September 1, 1995 (the "Project"), the
proceeds of which Prior Bonds were used to finance a portion of a
project which consisted of the acquisition of land and the
construction of a building thereon to house the national
distribution center of the Borrower, including the equipping of
such building with rolling racks, conveyor systems and automated
machinery, all located in the Township of Burlington, Burlington
County, New Jersey (the "1985 Project"), and further providing,
among other things, for the execution and delivery of the Indenture
and the payment of necessary costs incidental thereto. To provide
for the payment of the Bonds, the Authority and the Borrower have
entered into a Loan Agreement dated as of the date of the Indenture
(the "Loan Agreement"), under which the Borrower is obligated to
pay, among other payments, all amounts coming due on the Bonds. The
Authority has assigned all its rights except for certain Reserved
Rights to such payments under the Loan Agreement to the Trustee as
security for the Bonds.

Executed counterparts of the Indenture, the Loan
Agreement, the Reimbursement Agreement (as hereinafter defined),
the Letter of Credit (as hereinafter defined) and all documents and
instruments executed in connection therewith, are on file at the
principal corporate trust office of the Trustee.

2. Source of Payments. The Bonds are special limited
obligations of the Authority and, as provided in the Indenture, the
Authority shall be obligated to pay the principal of, redemption
PAGE 279<PAGE>
premium, if any, and interest on the Bonds solely from payments to
be made by the Borrower under the Loan Agreement and from the
Letter of Credit as described below (but only so long as the Letter
of Credit is in effect) and from any other Revenues and moneys,
securities, Funds and Accounts (including investments, if any)
pledged to or held by the Trustee under the Indenture for such
purpose, and there shall be no other recourse against the Authority
or any other property now or hereafter owned by it. Except as
otherwise provided in the Indenture, this Bond is entitled to the
benefits of the Indenture equally and ratably both as to principal
or Redemption Price of and interest under the Indenture to which
reference is made for a description of the rights of the Holders of
the Bonds, the rights and obligations of the Authority, and the
rights, duties and obligations of the Trustee. No additional bonds
may be issued under the Indenture. The Holder of this Bond shall
have no right to enforce the provisions of the Indenture, the Loan
Agreement or the Letter of Credit or the rights and remedies
thereunder, except as provided in the Indenture.

3. Security. The Borrower has caused an Irrevocable,
Direct-Pay Letter of Credit (the "Initial Letter of Credit") to be
issued by First Fidelity Bank, National Association (as issuer of
the Initial Letter of Credit the "Letter of Credit Issuer") to be
delivered to the Trustee (the Initial Letter of Credit or any
replacement or alternate Letter of Credit, the "Alternate Letter of
Credit", collectively the "Letter of Credit"). The Initial Letter
of Credit entitles the Trustee to draw an amount equal to the
principal amount of the Outstanding Bonds to pay the principal of
the Bonds when due at maturity or upon redemption or acceleration
as described herein and in the Indenture, plus an amount equal to
210 days' interest accrued on the Outstanding Bonds (computed at a
maximum rate of 6.125%). Unless extended, the Initial Letter of
Credit expires September 15, 2000 or on the earlier occurrence of
events specified therein. Subject to the provisions of the
Indenture, the Borrower may cause an Alternate Letter of Credit to
be substituted for the Letter of Credit then in effect, having
terms substantially similar to the Initial Letter of Credit with
the exception of the expiration date thereof. Unless the Initial
Letter of Credit or an Alternate Letter of Credit substituted
therefor is extended or replaced in accordance with the terms of
the Indenture, this Bond will become subject to mandatory
redemption as described below. The Initial Letter of Credit is
being issued pursuant to a Letter of Credit Reimbursement Agreement
dated August 1, 1995 (the "Reimbursement Agreement") between the
Borrower and the Letter of Credit Issuer, under which the Borrower
is obligated, among other things, to reimburse the Letter of Credit
Issuer for any draws under the Initial Letter of Credit.

4. Redemption. The Bonds are subject to Redemption
prior to maturity as provided herein and in the Indenture.

(a) Special Mandatory Redemption. The Bonds are subject
to special mandatory redemption in whole as soon as practicable but
Page 280
not later than the 90th day following (i) the Trustee's receipt of
written notice of the occurrence of a Determination of Taxability
or (ii) written notification by the Authority to the Trustee, the
Letter of Credit Issuer and the Borrower that (a) the Borrower has
ceased to operate the Project Facility or ceased to cause the
Project Facility 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 of the
representations and warranties of the Borrower contained in the
Loan Agreement have proven to have been false or misleading in any
material respect when made. In such event, the Bonds shall be
redeemed by the Authority at a Redemption Price equal to 100% of
the principal amount thereof plus accrued interest up to and
including the redemption date.

(b) Mandatory Redemption. The Bonds are subject to
mandatory redemption, as a whole or in part, in minimum
denominations of $25,000 and in integral multiples of $5,000
thereafter, on any Interest Payment Date, at a Redemption Price
equal to 100% of the principal amount thereof, together with
interest accrued up to such redemption date in the case of damage,
destruction or condemnation of the Project in an amount equal to
the net proceeds of any insurance, casualty or condemnation award
received by the Bank and at the option of the Bank pursuant to
Section 5.24 of the Loan Agreement.

(c) Extraordinary Mandatory Redemption. The Bonds are
subject to extraordinary mandatory redemption by the Authority, in
whole, on the Interest Payment Date immediately preceding the
termination of the Initial Letter of Credit on September 15, 2000
(the "Letter of Credit Maturity Date") or the Interest Payment Date
immediately preceding the Letter of Credit Maturity Date of an
Alternate Letter of Credit, at a Redemption Price equal to 100% of
the principal amount thereof, in the event the Borrower does not
provide the Trustee, at least sixty (60) days prior to the Letter
of Credit Maturity Date, with (i) written notice from the Letter of
Credit Issuer to the Trustee that the Letter of Credit will be
renewed by the Letter of Credit Issuer upon the Letter of Credit
Maturity Date, which Letter of Credit shall have an expiration date
of September 15 of any subsequent year or written notice from
another bank to the Trustee that an Alternate Letter of Credit will
be issued on or prior to the Letter of Credit Maturity Date, which
Alternate Letter of Credit shall have an expiration date of
September 15 of any subsequent year, and (ii) (A) an Alternate
Letter of Credit meeting the requirements of Section 404(d)(i) of
the Indenture which shall be presented to the Trustee at least
sixty (60) days prior to the Letter of Credit Maturity Date and (B)
the documents required to be delivered in Section 404(d)(ii) of the
Indenture sixty (60) days prior to the Letter of Credit Maturity
Date.

(d) Mandatory Redemption Due to Act of Bankruptcy of
Bank. The Bonds are subject to mandatory redemption, as a whole,
Page 281

at a Redemption Price equal to 100% of the principal amount of the
Outstanding Bonds together with interest accrued thereon to the
redemption date which is at least forty-five (45) days, but not
more than seventy (70) days, after the date on which an Act of
Bankruptcy of the Bank occurs, unless within thirty (30) days after
the occurrence of an Act of Bankruptcy of the Bank, the Borrower
has provided the Trustee with (i) an Alternate Letter of Credit,
which Alternate Letter of Credit shall have an expiration date of
September 15, of any subsequent year and (ii) the opinions and
written notice set forth in Section 404 of the Indenture.

(e) Optional Redemption. Subject to the payment of the
redemption premium by the Borrower pursuant to Section 304 of the
Indenture, the Bonds maturing on or after September 1, 2006 are
subject to optional redemption by the Authority, at the direction
of the Borrower, in whole at any time or in part on any Interest
Payment Date, in minimum amounts of $25,000 and in integral
multiples of $5,000 thereafter, on or after September 1, 2005, at
the Redemption Prices (expressed as percentages of the principal
amount) for the Redemption Periods set forth below, plus unpaid
interest, if any, accrued up to the redemption date:

Redemption Periods Redemption
(Dates Inclusive) Prices

September 1, 2005 to August 31, 2006 102.00%
September 1, 2006 to August 31, 2007 101.00%
September 1, 2007 and thereafter 100.00%

(f) Sinking Fund Redemption. The Bonds maturing on
September 1, 2005 and September 1, 2010, respectively, shall be
subject to redemption commencing September 1, 2004 and September 1,
2006, respectively, and on each September 1 thereafter, at a
Redemption Price equal to 100% of the principal amount thereof
being redeemed plus accrued interest up to the redemption date.
The Trustee shall cause to be redeemed such Bonds in the aggregate
principal amounts of the following Sinking Fund Installments on
September 1 of each of the following years: Page 282<PAGE>

TERM BONDS DUE SEPTEMBER 1, 2005

Year Sinking Fund Installment

2004 $665,000
2005* 735,000

TERM BONDS DUE SEPTEMBER 1, 2010

Year Sinking Fund Installment
2006 $ 810,000
2007 895,000
2008 990,000
2009 1,095,000
2010 1,210,000

Accrued interest on such Bonds so redeemed shall be paid
from the Bond Fund, and all expenses in connection with such
Redemption shall be paid by the Borrower. All Bonds redeemed under
the Indenture shall be redeemed in the manner provided in the
Indenture. The principal amount of Bonds to be redeemed in the
years 2004 through 2010 shall be reduced by the amount of such
Bonds that the Trustee has previously redeemed pursuant to Section
301(b) (special mandatory redemption) or 301(e) (optional
redemption) of the Indenture.

5. Selection of Bonds to be Redeemed. (a) A
Redemption of Bonds shall be a Redemption of the whole or any part
of the Bonds from any funds available for that purpose in
accordance with the provisions of the Indenture. If less than all
of the Bonds shall be called for Redemption under any provision of
the Indenture permitting such partial redemption, the particular
Bonds (or Authorized Denominations thereof), to be redeemed shall
be selected by the Trustee by lot, using such method as the Trustee
in its sole discretion may deem proper, in the principal amount
designated in writing to the Trustee by the Borrower or otherwise
as required by the Indenture. The Trustee shall be notified in
writing pursuant to the Indenture not less than sixty (60) days
prior to the date fixed for Redemption, but in the case of a
Mandatory Redemption due to an Act of Bankruptcy of the Bank, not
more than ten (10) days following the occurrence thereof.

(b) Except as otherwise provided in the Indenture,
any Bonds selected for Redemption which are deemed to be paid in
accordance with the Indenture will bear interest up to, but not
including, the date fixed for redemption.

6. Notice of Redemption; Rights of Holders.

When Bonds are to be redeemed, the Trustee shall give
Page 283
notice of such Redemption to the Holders in the name of the
Authority, stating, among other things: (i) the Bonds to be
redeemed; (ii) the redemption date; (iii) that such Bonds will be
redeemed at the Principal Office of the Trustee; (iv) that on such
redemption date there shall become due and payable upon each Bond
to be redeemed the Redemption Price thereof together with unpaid
interest accrued prior to the redemption date; (v) the CUSIP
numbers assigned to the Bonds to be redeemed; (vi) the serial
numbers and maturities of Bonds selected for Redemption, (except
that where all of the Bonds are to be redeemed the serial numbers
and maturities need not be specified); (vii) the interest rates and
maturity dates of the Bonds to be redeemed; (viii) the date of
mailing the notice of redemption; (ix) the record date for the
Redemption (which shall be forty-five (45) days prior to the
redemption date); and (x) that on the redemption date interest
thereon shall cease to accrue. The notice of redemption shall
state that Redemption is subject to receipt by the Trustee of
Available Moneys sufficient to pay the Redemption Price of the
Bonds to be redeemed on or before the redemption date.

The Trustee shall mail the required notice, postage
prepaid by first class mail, not less than thirty (30) days, nor
more than sixty (60) days, prior to the applicable date to the
Holders of any Bonds to be redeemed at the addresses thereof
appearing on the Bond Register kept for such purpose. Failure to
duly give such notice by mail, or any defect therein, shall not
affect the validity of any proceeding for the Redemption of the
Bonds.

Pursuant to Section 304(b) of the Indenture, if on any
redemption date Available Moneys for the Redemption of all Bonds or
portions thereof to be redeemed, together with interest thereon to
such redemption date, shall be held by the Trustee so as to be
available therefor on such date, the Bonds or portions thereof so
called for Redemption shall cease to bear interest and such Bonds
or portions thereof shall no longer be Outstanding under the
Indenture or be secured by or be entitled to the benefits of the
Indenture. If such Available Moneys shall not be so available on
such date, such Bonds or portions thereof shall continue to bear
interest until paid at the same rate as they would have borne had
they not been called for Redemption and shall continue to be
secured by and be entitled to the benefits of the Indenture.

7. Denominations; Transfer; Exchange. The Bonds are
in registered form without coupons in minimum principal
denominations of $25,000 and in integral multiples of $5,000
thereafter.

8. Transferability of Bonds. This Bond is
transferable only on the Bond Register upon surrender thereof at
the Principal Office of the Trustee by the registered Owner thereof
or by his attorney duly authorized in writing together with a
written instrument of transfer satisfactory to the Trustee. Upon
Page 284
such surrender, the Authority shall execute and the Trustee shall
authenticate and deliver in the name of the transferee or
transferees, one or more new fully registered Bonds of the same
series in Authorized Denominations in the aggregate principal
amount which the registered Owner is entitled to receive. At the
option of the Holder, Bonds may be exchanged for other Bonds of the
like aggregate principal amount upon surrender of the Bonds to be
exchanged at any such office. All Bonds presented for registration
of transfer or for exchange, Redemption or payment (if so required
by the Authority, the Bond Registrar or the Trustee), shall be
accompanied by a written instrument or instruments of transfer or
authorization for exchange, in form satisfactory to the Bond
Registrar. No service charge shall be made for any exchange or
registration of transfer of Bonds, but the Trustee may require
payment of its expenses and a sum sufficient to cover all taxes or
other governmental charges that may be imposed in relation thereto.
New Bonds delivered upon any registration of transfer or exchange
shall be valid obligations of the Authority, evidencing the same
debt as the Bonds surrendered, shall be secured by the Indenture
and shall be entitled to all of the security and benefits thereof
to the same extent as the Bonds surrendered.

A Person in whose name a Bond shall be registered
shall for all purposes of the Indenture, be deemed the absolute
Owner thereof and, so long as the same shall be registered,
payments of or on account of the principal, redemption premium, if
any, and interest with respect to such Bond shall be made only to
the registered Owner or his legal representative. All such
payments so made to any such registered Owner or upon his order
shall be valid and effectual to satisfy and discharge the liability
of the Authority upon such Bond to the extent of the sum or sums so
paid. The Authority and the Trustee shall not be affected by any
notice to the contrary.

The Authority and the Trustee shall not register,
register the transfer of, or exchange Bonds for the period from the
Record Date preceding an Interest Payment Date to the related
Interest Payment Date, nor shall the Trustee register the transfer
of or exchange any Bond during the period fifteen (15) days before
the giving of a notice of redemption.

9. Defaults and Remedies. The Indenture provides
that the occurrence of certain events constitute Events of Default.
If an Event of Default occurs and is continuing, the Trustee may,
and shall, upon the written direction of the Letter of Credit
Issuer, declare the principal of all the Bonds Outstanding and the
interest accrued on such Bonds then to be due and payable
immediately in the manner and with the effects and subject to the
conditions set forth in the Indenture. An Event of Default and its
consequences may be waived as provided in the Indenture.
Bondholders may not enforce the Indenture or the Bonds except as
provided in the Indenture. Under certain circumstances, the
Trustee may refuse to enforce the Indenture or the Bonds unless it
Page 285
receives indemnity from the Holders satisfactory to it. Subject to
certain limitations, Holders of fifty-one percent (51%) in
aggregate principal amount of the Bonds then Outstanding may direct
the Trustee in its exercise of any trust or power.

Page 286<PAGE>

{Form of Abbreviations }

The following customary abbreviations, when used in the
inscription of the face of the within Bond, shall be construed as
though they were written out in full according to applicable laws
and regulations.

TEN COM = as tenants in common
TEN ENT = as tenants by the entireties
JT TEN = as joint tenants with right of survivorship
and not as tenants in common

Uniform Gifts to Minors Act -_______, Custodian _________________
(Cust) (Minor)
under Uniform Gift to Minors Act
_________________________
(State)
Additional Abbreviations may also be used though not in the above
list.
{ Form of Assignment }

COMPLETE AND SIGN THIS FORM FOR ORDINARY
ASSIGNMENT AND REGISTRATION OF TRANSFER

FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto

(Insert Name/Address and Taxpayer Identification No. of Assignee)
the within Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints ________________________, as attorney to
transfer said Bond on the Bond Register with full power of
substitution and revocation in the premises.

Assignor's Signature:
Dated: _______________________________________________
Signature Guaranteed: _________________________________

NOTE: Signature(s) must be guaranteed by a member firm of the New
York Stock Exchange or a commercial bank or trust company.

NOTICE: The signature to this Assignment must correspond with the
name of the registered Owner as it appears upon the face of the
within Bond in every particular, without alteration or enlargement
or any change whatever.

Page 287<PAGE>

EXHIBIT 10.8

PAGE 288<PAGE>

GUARANTY AND SURETYSHIP AGREEMENT

This GUARANTY AND SURETYSHIP AGREEMENT is made as of the 1st day
of August, 1995, by BURLINGTON COAT FACTORY WAREHOUSE CORPORATION, a
Delaware corporation (the "Guarantor") in favor of FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, a national banking association (the "Bank").

WHEREAS, the New Jersey Economic Development Authority Act,
constituting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
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 of New
Jersey (the "State") to foster and promote the economy of the State, increase
opportunities for gainful employment and improve living assist in the economic
development or redevelopment of political subdivisions State, and otherwise
contribute to the prosperity, health and general welfare its inhabitants by
inducing manufacturing, industrial, commercial, recreation and other
employment promoting enterprises to locate, remain or expand within the State
by making available financial assistance; and

WHEREAS, the New Jersey Economic Development Authority (the
"Authority"), a public body corporate and politic constituting an
instrumentality of the State of New Jersey was created to aid in remedying
the aforesaid conditions and to implement the purposes of the Act, and the
Legislature has determined that the authority and powers conferred upon the
Authority under the Act and the expenditure of moneys pursuant thereto
constitute 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 has been so declared to be as a matter of express
legislative determination; 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, Burlington Coat Factory Warehouse of New Jersey, Inc. (the
"Company"), a wholly owned subsidiary of the Guarantor, submitted an
application (the "Original Application") to the Authority for financial
assistance in the principal amount of $10,000,000 for financing a portion of
the costs of a project (the "1985 Project") consisting of the acquisition of
46.779 acres of land in the Township of Burlington, Burlington County, New
Jersey, the construction of an approximately 500,000 square foot building
situate thereon for use as a national distribution center for the Company's
products (which building currently contains 75,000 square feet of office
space), the equipping of such building with conveyor systems, rolling racks
and automated machinery and the construction of a parking adjacent to such
building, and the Authority, by resolution duly adopted July 3, 1985 in
accordance with the Act, accepted the application of the Company for
assistance in financing the 1985 Project; and

WHEREAS, the Authority, by resolution duly adopted September 4,
1985 in accordance with the Act, authorized the issuance of not to exceed
$10,000,000 aggregate principal amount of its Economic Development Bonds
PAGE 289<PAGE>
(Burlington Coat Factory Warehouse of New Jersey, Inc. - 1985 Project) for
the purpose of making a loan to the Company to finance the 1985 Project
(the "Original Loan"); and

WHEREAS, on September 20, 1985 the Authority issued $10,000,000 of
its Economic Development Bonds dated September 1, 1985 to finance the 1985
Project (the "Prior Bonds"); and

WHEREAS, those Prior Bonds maturing on or after September 1, 1996
are subject to redemption prior to maturity, at the option of the Company, on
any interest payment date on or after September 1, 1995; and

WHEREAS, the Company desires to redeem $10,000,000 aggregate
principal amount of the Prior Bonds maturing on or after September 1, 1996
(the "Refunded Bonds") on September 1, 1995; and

WHEREAS, on July 11, 1995, the Authority, by resolution duly
adopted (the "Resolution"), authorized the issuance of its Economic
Development Refunding Bonds (Burlington Coat Factory Warehouse of New Jersey,
Inc. - 1995 Project) (the "Refunding Bonds" or the "Bonds") for the purpose
of providing funds for the Company to refinance the 1985 Project and to
redeem the Refunded Bonds (the "Project"); and

WHEREAS, the Authority has determined to issue the Bonds concurrently
herewith pursuant to the Act, the Resolution and the Indenture (as
hereinafter defined); and

WHEREAS, the Authority, contemporaneously with the execution and
delivery of this Agreement, has entered into a Loan Agreement with the
Company, and an Indenture of Trust dated as of August 1, 1995 (the
"Indenture") wherein the Authority has assigned certain of its rights under
the Loan Agreement to the Trustee for the benefit of the Holders from time
to time of the Bonds; and

WHEREAS, to facilitate the issuance and sale of the Bonds and to
enhance the marketability of the Bonds, the Company has requested the Bank to
issue an irrevocable direct pay letter of credit substantially in the form of
Annex A attached hereto, in an amount up to an aggregate amount of
$10,357,293.00 (as reduced and reinstated from time to time in accordance with
the provisions hereof and of the Letter of Credit), of $10,000,000 shall be
available to pay the principal amount of the Bonds either (whether at the
stated maturity date or by acceleration) or upon redemption the remainder
shall be available to pay up to 210 days' interest on the on the Outstanding
Bonds computed at the rate of six and one hundred twenty-five thousandths
percent (6.125%) per annum accrued on the outstanding Bonds, as such
interest becomes due; and
-2- 290<PAGE>
WHEREAS, as a condition, among others, to its issuance of the
Letter of Credit, the Bank has required that (a) the Company and the Bank
enter into a certain Letter of Credit Reimbursement Agreement dated of even
date herewith (as amended from time to time, the "Reimbursement Agreement")
and (b) the Guarantor execute and deliver to the Bank this Guaranty;

NOW, THEREFORE, for and in consideration of the premises and of the
mutual representations, covenants and agreements herein set forth (each of
which is incorporated herein by reference), intending to be legally bound
hereby, and in order to induce the Bank to issue the Letter of Credit, and to
secure the observance, payment and performance of the Liabilities (as defined
below), and with full knowledge that Bank would not make the said loans,
extensions of credit or financial accommodations without this Guaranty
and Suretyship Agreement (together with any amendments or modifications
hereto in effect from time to time, the "Guaranty"), which shall be construed
as an agreement of suretyship, the Guarantor hereby unconditionally agrees
as follows:

Section 1. LIABILITIES GUARANTEED.

Guarantor hereby guarantees and becomes surety to Bank for the full,
prompt and unconditional payment of the Liabilities (as defined below), when
and as the same shall become due, whether at the stated maturity date, by
acceleration or otherwise, and the full, prompt and unconditional performance
of each and every term and condition of every transaction to be kept and
performed by the Company under the Reimbursement Agreement and the other Loan
Documents (as defined below). This Guaranty is a primary obligation of
Guarantor and shall be a continuing Guaranty. Bank may require Guarantor to
pay and perform its liabilities and obligations under this Guaranty and may
proceed immediately against Guarantor without being required to bring any
proceeding or take any action against the Company, any collateral, security
for the Company's obligations under the Reimbursement Agreement and the other
Loan Documents, any other guarantor or any otherperson, entity or property
prior thereto, the liability of Guarantor hereunder being joint and several,
and independent of and separate from the liability of the Company,
guarantor or person and the availability of such collateral.

Section 2. DEFINITIONS.

2.1. "Affiliate" means First Fidelity Bancorporation and any
of its direct and indirect affiliates and subsidiaries.

2.2. "Liabilities" means, collectively: (i) the repayment of
all sums due under the Reimbursement Agreement (as the same may be amended
from time to time) and the other Loan Documents; (ii) the performance of all
terms, conditions and covenants set forth in the Reimbursement Agreement and
the other Loan Documents; and (iii) all obligations and indebtedness of every
kind and description of the Company to Bank or to any Affiliate, whether
primary or secondary, absolute or contingent, direct or indirect, sole, joint,
several, secured or unsecured, due or to become due, contractual or tortious,
arising by operation of law or otherwise, or now or hereafter existing, and
whether incurred by the Company as principal, surety, endorser, guarantor,
accommodation party or otherwise, including without

-3- 291<PAGE>
limitation, principal, interest, fees, late charges and expenses, including
attorney's fees and/or allocated fees of Bank's in-house legal counsel.

2.3. "Loan Documents" means, collectively, the Reimbursement
Agreement, that certain Mortgage and Security Agreement of even date herewith
from the Company to Bank (the "Mortgage"), that certain Assignment of Leases
and Rents of even date herewith from the Company to Bank (the "Assignment of
Leases"), UCC-1 financing statements, this Guaranty and any other guaranty,
document, certificate or instrument executed by the Company, Guarantor or any
other obligated party in connection with the Letter of Credit and the Bonds,
together with all amendments, modifications, renewals or extensions thereof.
The Loan Documents are hereby made a part of this Guaranty to the same extent
and with the same effect as if fully set forth herein.

2.4. Capitalized terms not otherwise defined herein shall have
the same meanings as are given to such terms in the Reimbursement Agreement
and the other Loan Documents.

Section 3. REPRESENTATIONS AND WARRANTIES.

Guarantor represents and warrants as of the date hereof and, unless
otherwise indicated, at all times hereafter until the Liabilities are fully
paid and performed, as follows:

3.1. Organization, Powers. Guarantor: (i) is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and is authorized to do business in each other jurisdiction
wherein its ownership of property or conduct of business legally requires
such authorization and in which such qualification is material to the conduct
of its business; (ii) has the power and authority to own its properties
and assets and to carry on its business as now being conducted and as now
contemplated; and (iii) has the power and authority to execute, deliver and
perform all of its obligations under this Guaranty and any other Loan
Document to which it is a party.

3.2. Execution of Guaranty. This Guaranty and all other Loan
Documents to which Guarantor is a party have been duly executed and delivered by
Guarantor. Execution, delivery and performance of this Guaranty and each
other Loan Document to which Guarantor is a party will not: (i) violate any
of its organizational documents, provision of law, order of any court, agency
or other instrumentality of government, or any provision of any indenture,
agreement or other instrument to which it is a party (including without
limitation the Loan Documents) or by which it or any of its properties is
bound; (ii) result in the creation or imposition of any lien, charge or
encumbrance of any nature, other than the liens created by the Loan
Documents; and (iii) require any authorization, consent, approval, license,
exemption of, or filing or registration with, any court or governmental
authority.

3.3. Obligations of Guarantor. This Guaranty and each other
Loan Document to which Guarantor is a party are the legal, valid and binding
obligations of Guarantor, enforceable against it in accordance with their
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws or equitable principles relating to or affecting
the enforcement of creditors' rights generally. The loans or credit
accommodations made by Bank to the Company and the assumption by Guarantor
of its obligations hereunder

-4- 292<PAGE>
and under any other Loan Document to which Guarantor is a party will result
in material benefits to Guarantor. This Guaranty was entered into by
Guarantor for commercial purposes.

3.4. Litigation; Compliance with Laws. Except as set forth on
Schedule A attached hereto, there is no action, suit or proceeding at law or
in equity or by or before any governmental authority, agency or other
instrumentality now pending or, to the knowledge of Guarantor, threatened
against or affecting Guarantor or any of its properties or rights which, if
adversely determined, would materially impair or affect: collateral securing
the Liabilities; (ii) Guarantor's right to carry on its now conducted (and as
now contemplated); (iii) its financial condition; or (iv) its capacity to
consummate and perform its obligations under this Guaranty or any other Loan
Document to which Guarantor is a party. Guarantor is in compliance in all
material respects with all laws, ordinances, rules, regulations and
requirements which affect Guarantor, its assets or the operation of its
business, and is not in violation of or in default with respect to any order,
writ, injunction, decree or demand of any court or governmental authority.

3.5. Payment of Taxes. Guarantor 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 or assessments
have become due, except such that are contested in good faith by Guarantor by
appropriate proceedings and for which adequate reserves have been
established. Guarantor is not aware of any material unasserted claims for
prior taxes against it for which adequate reserves have not been established.

3.6. No Defaults. Guarantor is not (a) in default in the
performance, observance or fulfillment of any of the obligations, covenants
or conditions contained herein or (b) in default in any material respect in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement or to which it is
a party or by which it or any of its properties is bound.

3.7. Financial Statements. All financial statements delivered by
Guarantor to Bank are true, correct and complete in all material respects,
fairly represent Guarantor's financial condition as of the date hereof and
thereof, and no information has been omitted which would make the information
previously furnished misleading or incorrect in any material respect.

3.8. No Material Adverse Change. As of the date hereof, there
has been no material adverse change in the financial condition, operations,
affairs, prospects or business of Guarantor from the date of the most recent
financial statements provided by Guarantor to Bank.

3.9. No Untrue Statements. No Loan Document or other document,
certificate or statement furnished to Bank by or on behalf of Guarantor
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein
not misleading. It is specifically understood by Guarantor that all such
statements, representations and warranties shall be deemed to have been relied
upon by Bank as an inducement to make the Loan to the Company.

-5- 293<PAGE>
3.10. Title to Property. Guarantor has good and
marketable title to all of its properties and assets listed in the most
recent financial statements delivered to Bankon or prior to the date hereof,
except as otherwise expressly described in said financial statements, and
except those properties and assets disposed of since the date of said
financial statements.

Section 4. NO LIMITATION OF LIABILITY.

4.1. Without incurring responsibility to Guarantor, without
impairing or releasing the obligations of Guarantor to Bank, and without
reducing the amount due under the terms of this Guaranty (except to the
extent of amounts actually paid to and legally retained by Bank), Bank may at
any time and from time to time, without the consent of notice to Guarantor,
upon any terms or conditions, and in whole or in part:

4.1.1. Change the manner, place or terms of payment of
(including, without limitation, the interest rate and monthly payment amount),
and/or change or extend the time for payment of, or renew or modify, any of
the Liabilities, any security therefor, or any of the Loan Documents
evidencing same, and the Guaranty herein made shall apply to the Liabilities
and the Loan Documents as so changed, extended, renewed or modified;

4.1.2. Sell, exchange, release, surrender, realize
upon or otherwise deal with in any manner and in any order, any property at
any time pledged, mortgaged or in which a security interest is given to
secure, or however securing, the Liabilities;

4.1.3. Exercise or refrain from exercising any rights
against the Company or others (including Guarantor) or against any security
for the Liabilities or otherwise act or refrain from acting;

4.1.4. Settle or compromise any Liabilities, whether in a
proceeding or not, and whether voluntarily or involuntarily, dispose of any
security therefor (with or without consideration) or settle or compromise any
liability incurred directly or indirectly in respect thereof or hereof, and
subordinate the payment of all or any part thereof to the payment of any
Liabilities, whether or not due, to creditors of the Company other than
Bank and Guarantor;

4.1.5. Apply any sums it receives, by whomever paid or
however realized, to any of the Liabilities;

4.1.6. Add, release, settle, modify or discharge the
obligation of any maker, endorser, guarantor, surety, obligor or any other
party who is in any way obligated for any of the Liabilities;

4.1.7. Accept any additional security for the
Liabilities; and/or

4.1.8. Take any other action which might constitute a
defense available to, or a discharge of, the Company or any other obligated
party (including Guarantor) in respect of the Liabilities.

-6- 294<PAGE>
4.2. The invalidity, irregularity or unenforceability of all
or any part of the Liabilities or any Loan Document, or the impairment or
loss of any security therefor, whether caused by any action or inaction of
Bank or any Affiliate, or otherwise, shall not affect, impair or be a defense
to Guarantor's obligations under this Guaranty.

Section 5. WAIVERS AND SUBORDINATION.

5.1. Subordination of Subrogation. Guarantor irrevocably
subordinates to the full and indefeasible payment of all of the Liabilities,
any present or future claim, right or remedy to which Guarantor is now or may
hereafter become entitled which arises on account of this Guaranty and/or
from the performance by Guarantor of its obligations hereunder to be
subrogated to Bank's rights against the Company or any other obligated party
and/or any present or future claim, remedy or right to seek contribution
reimbursement, indemnification, exoneration, payment or the like, or
participation in any claim, right or remedy of Bank against the Company or
any security which Bank now has or hereafter acquires, whether or not such
claim, right or remedy arises under contract, in equity, by statute, under
common law or otherwise. If, notwithstanding such subordination, any funds or
property shall be paid or transferred to Guarantor on account of such
subrogation, contribution, reimbursement, exoneration or indemnification at
any time when all of the Liabilities have not been paid in full, Guarantor
shall hold such funds or property in trust for Bank and shall segregate such
funds from other funds of Guarantor and shall forthwith pay over to Bank such
funds and/or property to be applied by Bank to the Liabilities, whether
matured or unmatured, in accordance with the terms of the Reimbursement
Agreement and the Loan Documents.

5.2. Waiver of Remedies. To the extent permitted by law,
Guarantor waives the right of inquisition on any real estate levied on,
voluntarily condemns the same, authorizes the prothonotary or clerk to enter
upon the writ of execution this voluntary condemnation and agrees that such
real estate may be sold on a writ of execution; and also waives any relief
from any appraisement, stay or exemption law of any state now in force or
hereafter enacted. In addition, Guarantor waives the right to marshalling of
the Company's assets and any other protection granted by law to guarantors,
now or hereafter in effect with respect to any action or proceeding brought
by Bank against it. The parties hereto acknowledge and agree, however, that
notwithstanding the waivers set forth in this Section 5.2, in the event the
Guarantor provides to the Bank cash collateral in the amounts and
otherwise as required pursuant to Section 7.2(c) of the Reimbursement
Agreement, the Bank agrees to refrain from exercising any such rights against
the Guarantor's non-cash collateral.

5.3. Waiver of Defenses. Guarantor irrevocably waives all
claims of waiver, release, surrender, alteration or compromise and all
defenses, set-offs,counterclaims, recoupments, reductions, limitations or
impairments other than (a) payment in full of the Liabilities, and (b) such
defenses as are assertable by the Company and not otherwise specifically
waived pursuant to any other provision of this Guaranty.

5.4. Waiver of Notice. Guarantor waives notice of acceptance
of this Guaranty and notice of the Liabilities and waives notice of default,
non-payment, partial payment, presentment, demand, protest, notice of protest
or dishonor, and all other notices to which Guarantor might otherwise be
entitled or which might be required by law to be given by Bank.

-7- 295<PAGE>
Section 6. COVENANTS.

6.1. Merger, Restructure. Guarantor shall not merge into,
consolidate with or into, or sell, assign, lease or otherwise dispose of
(whether in one transaction or a series of transactions) all or substantially
all of its assets (now owned or hereafter acquired) to any person or entity,
without the prior written consent of Bank.

6.2. Maintenance of Business. Guarantor shall: (i) continue to
remain in and operate substantially the same type of business presently engaged
in by it; (ii) not suspend transaction of its usual business; (iii) conduct
its business in an orderly, efficient and customary manner; (iv) comply with
all laws, ordinances, rules, regulations and requirements and shall maintain
its business, properties and assets necessary to conduct business in
compliance with all applicable governmental laws, ordinances, approvals, rules,
regulations and requirements, including without limitation, zoning, sanitary,
pollution, building, environmental and safety laws and ordinances, and the
rules and regulations promulgated thereunder; and (v) not remove, demolish,
materially alter, discontinue the use of, sell, transfer, assign, hypothecate,
pledge or otherwise dispose of any part of its properties or assets necessary
for the continuance of its business, as presently conducted and as presently
contemplated, other than (1) in the normal course of its business and (2) in
connection with additional financing in relation to real property (other than
the Mortgaged Premises, as defined in the Mortgage) from time to time owned
by the Guarantors; provided, however, that the foregoing limitations shall
not prohibit the Guarantor from engaging in additional activities related to
its present corporate activities. To the extent that Guarantor controls the
Company, Guarantor will not take or cause to be taken any inaction which
will violate or cause a default or Event of Default under any of the Documents.

6.3. Books and Records. Guarantor shall keep and maintain
complete and accurate books and records in accordance with generally accepted
accounting principles consistently applied, reflecting all of the financial
affairs of Guarantor. Guarantor shall permit representatives of Bank to
examine and audit Guarantor's (and its parent's and its subsidiaries') books
and records, to inspect Guarantor's facilities and properties, and to
discuss Guarantor's financial condition and the contents of Guarantor's
financial statements with Guarantor's accountants.

6.4. Financial Statements; Compliance Certificate.

6.4.1. Guarantor shall furnish to Bank the following
financial information, in each instance prepared in accordance with generally
accepted accounting principles consistently applied:

(a) Annual Report: as soon as available and in any
event within 105 days after the end of each fiscal year, an annual audited
consolidated financial statement for the Guarantor and its Consolidated
Subsidiaries (including the Company) to the Trustee and to the Bank during
the term of the Letter of Credit [including therein the balance sheet of the
Guarantor and its Consolidated Subsidiaries as of the end of such fiscal year
and the statements of operations of the Guarantor and Subsidiaries for such
fiscal year, setting forth in comparative form the corresponding figures for
the preceding fiscal year,]

-8- 296<PAGE>
prepared in accordance with GAAP consistentlly applied, all in reasonable
detail and in each case duly certified by independent certified public
accountants of recognized standing acceptable to the Bank, and by the chief
financial or chief accounting officer of the Guarantor, together with a
certificate of said accounting firm stating that, in the statements of the
Guarantor and its consolidated subsidiaries (including the Company) for
such fiscal year, it did not discover that an Event of Default (or an event
which, with notice of the lapse of time or both, would constitute an Event of
Default) had occurred at any time during such fiscal year, or, if an Event of
Default (or such other event) did occur, the nature thereof.

(b) Quarterly Report: as soon as available and in
any event within sixty (60) days after the end of each of the first three (3)
quarters of each fiscal year of the Guarantor and its consolidated
subsidiaries (including the Company), during the term of the Letter of Credit,
management prepared consolidated financial statements, including a balance
sheet, income statement and cash flow statement prepared in accordance with
GAAP, in form and substance satisfactory to the Bank for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, to the Trustee and to the Bank during the term of the Letter of
Credit.

(c) Management Letters: the Guarantor will submit
annual management letters, if any, for the Guarantor, from the independent
certified public accountants for the Guarantor.

(d) SEC Reports. Promptly after sending or filing,
copies of all proxy statements, financial statements and other notices and
reports to the Trustee and the Bank when the Guarantor sends to its
shareholders as well as copies of all regular, annual, periodic and special
reports and all Registration Statements filed with the Securities and Exchange
Commission or similar government authority or with any security exchange
succeeding to the functions of the Securities and Exchange Commission
(other than those on Form S-8), including, without limitation, Forms 10Q and
10K.

6.4.2. Guarantor shall furnish to Bank, with each set
of financial statements described in Section 6.4.1(a)-(c) above, a compliance
certificate signed by Guarantor's chief financial or chief accounting officer
(a) certifying that: (i) all representations and warranties of Guarantor set
forth in this Guaranty or any other Loan Document remain true and correct;
(ii) none of the covenants of Guarantor contained in this or any other
Loan Document has been breached; and (iii) to its knowledge, no event occurred
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default under this Guaranty or any other Loan
Document. In addition, Guarantor shall promptly notify Bank of the occurrence
of any default, Event of Default, adverse litigation or material adverse
change in its financial condition; and (b) showing the calculations and
financial covenants set forth in Section 6.8 hereof.

6.5. Taxes and Other Charges. Guarantor shall prepare and timely
file all federal, state and local tax returns required to be filed by Guarantor
and promptly pay and discharge all taxes, assessments, water and sewer rents,
and other governmental charges imposed upon Guarantor or on any of Guarantor's
property when due, but in no event after interest or penalties commence to
accrue thereon or become a lien upon such property, except for those taxes,
assessments, water and sewer rents, and other governmental charges then

-9- 297
being contested in good faith by Guarantor by appropriate proceedings and for
which Guarantor established on its books, a reserve for the payment thereof
in accordance with GAAP, and so long as such contest: (i) operates to prevent
collection, stay any proceedings which may be instituted to enforce payment
of such item, and prevent a sale of Guarantor's property to pay such item;
(ii) is maintained and prosecuted with due diligence; and (iii) shall not have
been terminated or discontinued adversely to Guarantor. Guarantor shall submit
to Bank, upon request, an affidavit signed by Guarantor certifying that all
federal, state and local income tax returns have been filed to date and all
real property taxes, assessments and other governmental charges with respect to
Guarantor's properties have been paid to date.

6.6. Security Interest in Property of Guarantor. Guarantor
hereby grants to Bank a lien upon and continuing security interest in all
property of Guarantor, now or hereafter in the possession of Bank or any
Affiliate in any capacity whatsoever, including, without limitation, any
balance or share of any deposit, trust or agency account (whether general or
special, time or demand, matured or unmatured, fixed or unliquidated), and all
property and assets of Guarantor now or hereafter subject to a security
agreement, pledge, mortgage, assignment or other document or agreement granting
any Affiliate a security interest therein or lien or encumbrance thereon
("Guarantor's Property"), as security for the performance of this Guaranty and
the payment of the Liabilities, which security interest shall be enforceable
and subject to all the provisions of this Guaranty, as if Guarantor's Property
were specifically pledged hereunder, and the proceeds of Guarantor's Property
may be applied to payment of the Liabilities at any time following the
occurrence of a default or Event of Default under the Reimbursement Agreement,
this Guaranty or any other Loan Document.

6.7. Indemnification.

6.7.1. Guarantor hereby indemnifies and agrees to
protect, defend and hold harmless Bank, any entity which "controls" Bank within
the meaning of Section 15 of the Securities Act of 1933, as amended, or is
under common control with Bank, and any member, officer, director, official,
agent, employee or attorney of Bank, and their respective heirs,
administrators, executors, successors and assigns (collectively, the
"Indemnified Parties"), from and against any and all losses, damages,
expenses or liabilities of any kind or nature and from any suits, claims or
demands, including reasonable attorneys' 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 Loan
Documents or the transactions contemplated therein (unless determined by a
final judgment of a court of competent jurisdiction to have been caused
solely by the gross negligence or willful misconduct of the Indemnified
Parties) including, without limitation: (i) disputes with any architect,
general contractor, subcontractor, materialman or supplier, or on account of
any act or omission to act by Bank in connection with the Mortgaged Premises;
losses, damages (including consequential damages), expenses or liabilities
sustained by Bank in connection with any environmental inspection, monitoring,
sampling or cleanup of the Mortgaged Premises required or mandated by any
applicable environmental law; (iii) any untrue statement of a material fact
contained in information submitted to Bank by Guarantor or the omission of any
material fact necessary to be stated therein in order to make such
statement not misleading or incomplete; (iv) the failure of Guarantor
to perform any obligations herein required to be performed by

-10- 298<PAGE>
Guarantor; and (v) the ownership, construction, occupancy, operation, use or
maintenance of the Mortgaged Premises.

6.7.2. In case any action shall be brought against
Bank or any other Indemnified Party in respect to which indemnity may be sought
against Guarantor, Bank or such other Indemnified Party shall promptly notify
Guarantor and Guarantor shall assume the defense thereof, including the
employment of counsel selected by Guarantor and satisfactory to Bank, the
payment of all costs and expenses and the right to negotiate and consent to
settlement. The failure of Bank to so notify Guarantor shall of any liability
which it may have under the foregoing indemnification provisions or from any
liability which it may otherwise have to Bank or any of the other Indemnified
Parties. Bank shall have the right, at its sole option, to employ separate
counsel in any such action and to participate in the defense thereof, all at
Guarantor's sole cost and expense. Guarantor shall not be liable for any
settlement of any such action effected without its consent, but if settled
with Guarantor's consent, or if there be a final judgment for the claimant in
any such action, Guarantor agrees to indemnify and save harmless Bank from
and against any loss or liability by reason of such settlement or judgment.

6.7.3. The provisions of this Section 6.7. shall
survive the repayment or other satisfaction of the Liabilities.

6.8. Financial Covenants. Guarantor shall comply with the
financial covenants, if any, hereinafter provided.

6.8.1. Current Assets and Liabilities. The Guarantor
and its Consolidated Subsidiaries will maintain Current Assets in an amount
which is not less than one hundred twenty percent (120%) of Current Liabilities.

6.8.2. Tangible Net Worth. The Guarantor and its
Consolidated Subsidiaries' Consolidated Tangible Net Worth as at the end of
any of its fiscal years during the term of this Agreement shall be equal to
not less than (a) One Hundred Forty Million Dollars ($140,000,000) plus (b) Six
Million Dollars ($6,000,000) multiplied by the number of full fiscal years
which have elapsed since the end of the 1994 fiscal year. If the Guarantor
changes its fiscal year, the minimum Tangible Net Worth as at the end of the
new fiscal year end shall be equal to the minimum Tangible Net Worth which
would have been required had the fiscal year end not been changed, plus Six
Million Dollars ($6,000,000) multiplied by a fraction the numerator of which is
the number of months between the previous fiscal year end and the new fiscal
year end and the denominator of which is twelve (12).

6.8.3. Total Indebtedness. The Guarantor and its
Consolidated Subsidiaries will not permit total indebtedness of the Guarantor
and its Consolidated Subsidiaries in the aggregate to exceed one hundred eighty
percent (180%) of such Consolidated group's Tangible Net Worth.

6.8.4. Long-Term Liabilities. The Guarantor and its
Consolidated Subsidiaries will not permit Long-Term Liabilities to exceed sixty
percent (60%) of the Capitalization.

-11- 299<PAGE>
6.8.5. Indebtedness for Borrowed Money. Neither the
Guarantor nor the Company will borrow any funds except pursuant to the
following types of borrowings: (a) borrowings to finance the acquisition of
real or personal property (including capital leases) secured by a security
interest encumbering such personal property, provided that the amount of any
such encumbrance does not exceed the greater of the purchase price or fair
market value of such property, (b) borrowings from Bank hereunder, and (c)
the indebtedness described on Schedule B attached hereto. The foregoing
exceptions, in the aggregate, are subject, however, to the provisions of
Sections 6.8.2 and 6.8.3 hereof. Nothing herein contained shall be deemed in
any way to limit the right and ability of the Guarantor and the Company to post
letters of credit or to incur trade indebtedness in the ordinary course of
their respective businesses, to the extent such activities are otherwise
permitted under this Agreement.

Section 7. EVENTS OF DEFAULT.

Each of the following shall constitute a default (each, an
"Event of Default") hereunder:

7.1. Non-payment when due of any sum required to be paid to Bank
by the Company or the Guarantor under any of the Loan Documents;

7.2. A breach of any covenant contained in Section 6.8 hereof;

7.3. A breach by Guarantor of any other term, covenant,
condition, obligation or agreement under this Guaranty, and the continuance
of such breach for a period of thirty (30) days after written notice thereof
shall have been given to Guarantor;

7.4. Any representation or warranty made by Guarantor in this
Guaranty shall prove to be false, incorrect or misleading in any material
respect as of the date when made; or

7.5. An Event of Default under any of the other Loan Documents.

Section 8. REMEDIES.

Upon an Event of Default, all liabilities of Guarantor hereunder
shall become immediately due and payable without demand or notice and, in
addition to any other remedies provided by law, Bank may:

8.1. Enforce the obligations of Guarantor under this Guaranty.

8.2. To the extent permitted by law, and regardless of the
adequacy of any collateral or other means of obtaining repayment of the
Liabilities, Bank shall have the right immediately and without notice or
other act, and is specifically authorized hereby, to setoff against any of
the Liabilities any sum owed by Bank or any Affiliate in any capacity to
Guarantor whether due or not, or any of Guarantor's Property, even if
effecting such setoff results in a loss or reduction of interest to Guarantor
or the imposition of a penalty applicable to the early withdrawal of time
deposits. If such setoff creates an overdraft in any account held by

-12- 300
Bank or any Affiliate, Bank may charge Guarantor an administrative fee in an
amount established from time to time by Bank. Bank shall be deemed to have
exercised such right of setoff and to have made a charge against Guarantor's
Property immediately upon the occurrence of the Event of Default, even though
the actual book entries may be made at some time subsequent.

8.3. Perform any covenant or agreement of Guarantor in default
hereunder (but without obligation to do so) and in that regard pay such money
as may be required or as Bank may reasonably deem expedient. Any costs,
expenses or fees, including reasonable attorneys' fees and costs, incurred by
Bank in connection with the foregoing shall be included in the Liabilities
guaranteed hereby and secured by the other Loan Documents, and shall be due
and payable on demand, together with interest at three percent (3%) per
annum above the rate of interest then in effect under the Reimbursement
Agreement, such interest to be calculated from the date of such advance to the
date of repayment thereof. Any such action by Bank shall not be deemed to be a
waiver or release of Guarantor hereunder and shall be without prejudice to
any other right or remedy of Bank.

8.4. From time to time and without advertisement or demand upon
or notice to the Company or Guarantor of right of redemption, to sell, re-sell,
assign, transfer and deliver all or part of Guarantor's Property, at any
brokers' board or exchange or at public or private sale, for cash or on credit
or for future delivery, and in connection therewith may grant options and may
impose reasonable conditions such as requiring any purchaser of any
security so held to represent that such security is purchased for investment
purposes only. Upon each such sale, Bank may purchase all or any part of
Guarantor's Property being sold, free from and discharged of all trusts,
claims, rights of redemption and equities of Guarantor. In case of each such
sale, or of any proceeding to collect any of the Liabilities, Guarantor
shall pay all costs and expenses of every kind for collection, sale or
delivery, including reasonable attorneys' fees, and after deducting such costs
and expenses from the proceeds of sale or collection, Bank may apply any
residue to the Liabilities and Guarantor shall continue to be liable for any
deficiency, with interest.

Section 9. CONTINUING ENFORCEMENT OF GUARANTY

9.1. If, after receipt of any payment of all or any part of the
Liabilities, Bank is compelled or agrees, for settlement purposes, to
surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as
a preference or fraudulent conveyance, an impermissible setoff, or a
diversion of trust funds), then this Guaranty and the other Loan Documents
shall continue in full force and effect or be reinstated, as the case may be,
and Guarantor shall be liable for, and shall indemnify, defend and hold
harmless Bank with respect to the full amount so surrendered. The provisions
of this Section shall survive the termination of this Guaranty and the other
Loan Documents and shall remain effective notwithstanding the payment of the
Liabilities, the termination of the Reimbursement Agreement, the cancellation
of the Letter of Credit, this Guaranty or any other Loan Document, the release
of any security interest, lien or encumbrance securing the Liabilities or any
other action which Bank may have taken in reliance upon its receipt of such
payment. Any cancellation, release or other such action shall be deemed to
have been conditioned upon any payment of the Liabilities become final and
irrevocable.

-13- 301<PAGE>
9.2. Settlement of any claim by Bank against the Company,
whether in any proceeding or not, and whether voluntary or involuntary, shall
not reduce the amount due under the terms of this Guaranty except to the
extent of the amount actually paid by the Company or any other obligated
party and legally retained by Bank in connection with the settlement.

Section 10. MISCELLANEOUS.

10.1. Disclosure of Financial Information. Bank is hereby
authorized to disclose any financial or other information about Guarantor to
any regulatory body or agency having jurisdiction over Bank or to any present,
future or prospective participant or successor in interest in any loan or other
financial accommodation made by Bank to the Company or Guarantor. The
information provided may include, without limitation, amounts, terms,
balances, payment history, return item history and any financial or other
information about Guarantor. Guarantor agrees to indemnify, defend, release
Bank, and hold Bank harmless, at Guarantor's cost and expense, from and against
any and all lawsuits, claims, actions, proceedings or suits against Bank or
against Guarantor and Bank, arising out of or relating to Bank's reporting or
disclosure of such information. Such indemnity shall survive the repayment
or other satisfaction of the Liabilities.

10.2. Remedies Cumulative. The rights and remedies of
Bank, as provided herein and in any other Loan Document, and all warrants of
attorney contained herein and therein, shall be cumulative and concurrent,
may be pursued separately, successively or together, may be exercised as
often as occasion therefor shall arise, and shall be in addition to any other
rights or remedies conferred upon Bank at law or in equity. The failure, at
any one or more times, of Bank to exercise any such right or remedy shall in no
no event be construed as a waiver or release thereof. Bank shall have the
right to take any action it deems appropriate without the necessity of
resorting to any collateral securing this Guaranty.

10.3. Integration. This Guaranty and the other Loan Documents
constitute the sole agreement of the parties with respect to the transaction
contemplated hereby and supersede all oral negotiations and prior writings with
respect thereto.

10.4. Attorney's Fees and Expenses. If Bank retains the
services of counsel by reason of a claim of a default or an Event of Default
hereunder or under any of the other Loan Documents, or on account of any matter
involving this Guaranty, or for examination of matters subject to Bank's
approval under the Loan Documents, all costs of suit and all reasonable
attorneys' fees (and/or allocated fees of Bank's in-house legal counsel) and
such other reasonable expenses so incurred by Bank shall demand, become due
and payable and shall be secured hereby.

10.5. No Implied Waiver. Bank shall not be deemed to have
modified or waived any of its rights or remedies hereunder unless such
modification or waiver is in writing and signed by Bank, and then only to the
extent specifically set forth therein. A waiver in one event shall not be
construed as continuing or as a waiver of or bar to such right or remedy on a
subsequent event.

-14- 302<PAGE>
10.6. No Third Party Beneficiary. Guarantor and Bank do not
intend the benefits of this Guaranty to inure to any third party and
notwithstanding any term, condition or provision hereof or of any other Loan
Document to the contrary, no third party (including the Company) shall have any
status, right or entitlement under this Guaranty.

10.7. Partial Invalidity. The invalidity or
unenforceability of any one or more provisions of this Guaranty shall not
render any other provision invalid or unenforceable. In lieu of any invalid
or unenforceable provision, there shall be added automatically a valid and
enforceable provision as similar in terms to such invalid or unenforceable
provision as may be possible.

10.8. Binding Effect. The covenants, conditions, waivers,
releases and agreements contained in this Guaranty shall bind, and the benefits
thereof shall inure to, the parties hereto and their respective heirs,
executors, administrators, successors and assigns; provided, however, that this
Guaranty cannot be assigned by Guarantor without the prior written consent of
Bank, and any such assignment or attempted assignment by Guarantor shall be
void and of no effect with respect to Bank.

10.9. Modifications. This Guaranty may not be supplemented,
extended, modified or terminated except by an agreement in writing and signed
by Guarantor and Bank.

10.10. Sales or Participations. Bank may from time to time
sell or assign, in whole or in part, or grant participations in the Letter of
Credit or the Reimbursement Agreement, and/or the obligations evidenced
thereby. The holder of any such sale, assignment or participation, if the
applicable agreement between Bank and such holder so provides, shall be:
(a) entitled to all of the rights, obligations and benefits of Bank
and (b) deemed to hold and may exercise the rights of setoff or banker's lien
with respect to any and all obligations of such holder to Guarantor, in each
case as fully as though Guarantor were directly indebted to such holder. Bank
may in its discretion give notice to Guarantor of such sale, assignment or
participation; however, the failure to give such notice shall not affect any
of Bank's or such holder's rights hereunder.

10.11. Jurisdiction. Guarantor irrevocably appoints each and
every owner, partner and/or officer of Guarantor as its attorneys upon whom
may be served, by regular or certified mail at the address set forth below, any
notice, process or pleading in any action or proceeding against it arising out
of or in connection with this Guaranty or any other Loan Document; and
Guarantor hereby consents that any action or proceeding against it be
commenced and maintained in any court within the State of New Jersey or in the
United States District Court for any District of New Jersey by service of
process on any such owner, partner and/or officer; and Guarantor agrees that the
courts of the State of New Jersey and the United States District Court for any
District of New Jersey shall have jurisdiction with respect to the subject
matter hereof and the person of Guarantor and all collateral securing the
obligations of Guarantor. Guarantor agrees not to assert proceeding initiated
by Bank based upon improper venue or inconvenient forum. Guarantor agrees
that any action brought by Guarantor shall be commenced and maintained only in
a court in the federal judicial district or county in which Bank has its
principal place of business in New Jersey.

-15- 303
10.12. Notices. All notices and communications under this
Guaranty shall be in writing and shall be given by either (a) hand delivery,
(b) first class mail (postage prepaid), or (c) reliable overnight commercial
courier (charges prepaid) to the addresses listed in this Guaranty. Notice
shall be deemed to have been given and received: (i) if by hand delivery,
upon delivery; (ii) if by mail, three (3) calendar days after the date first
deposited in the United States mail; and (iii) if by overnight courier, on
the date scheduled for delivery. A party may change its address by giving
written notice to the other party as specified herein.

10.13. Governing Law. This Guaranty shall be governed by and
construed in accordance with the substantive laws of the State of New Jersey
without reference to conflict of laws principles.

10.14. Joint and Several Liability. If Guarantor consists of
more than one person or entity, the word "Guarantor" shall mean each of them
and their liability shall be joint and several.

10.15. Waiver of Jury Trial. GUARANTOR AND BANK AGREE THAT
ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM,
BROUGHT BY BANK OR GUARANTOR, ON OR WITH RESPECT TO THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT
HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY.
BANK AND GUARANTOR EACH HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, GUARANTOR WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL,
EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. GUARANTOR ACKNOWLEDGES AND AGREES
THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS GUARANTY AND
THAT BANK WOULD NOT EXTEND CREDIT TO THE COMPANY IF THE WAIVERS SET
FORTH IN THIS SECTION WERE NOT A PART OF THIS GUARANTY.

IN WITNESS WHEREOF, Guarantor, intending to be legally bound, has duly
executed and delivered this Guaranty and Suretyship Agreement as of the day
and year first above written.

ATTEST: BURLINGTON COAT FACTORY WAREHOUSE
CORPORATION

By:______________________________ By:_____________________________________
Name: Robert L. LaPenta, Jr. Name: Mark A. Nesci
Title: Assistant Secretary Title: Vice President

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EXHIBIT 10.9

Page 305<PAGE>
___________________________________________________________________________
___________________________________________________________________________

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

by and between

FIRST FIDELITY BANK, NATIONAL ASSOCIATION

and

BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.

Relating to: Economic Development Refunding Bonds
(Burlington Coat Factory Warehouse of New Jersey, Inc. - 1995 Project)

Dated as of August 1, 1995

___________________________________________________________________________
___________________________________________________________________________

Page 306<PAGE>

TABLE OF CONTENTS

Page

ARTICLE 1 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 3

Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2. Rules of Construction. . . . . . . . . . . . . . . . 15

ARTICLE 2 - THE LETTER OF CREDIT . . . . . . . . . . . . . . . . . . . . 15

Section 2.1. Agreement of the Bank to Issue the Letter of Credit.. 15
Section 2.2. Term of Letter of Credit. . . . . . . . . . . . . . . 15
(a) Original Term; Extension . . . . . . . . . . . . . . 15
(b) Company's Right to Terminate.. . . . . . . . . . . . 16
Section 2.3. Draws and Other Fees and Expenses Under the Letter of
Credit. . . . . . . . . . . . . . . . . . . . . . . 16
(a) Payments. . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Applications of Certain Funds.. . . . . . . . . . . . . 18
(c) Default Rate. . . . . . . . . . . . . . . . . . . . . . 18
Section 2.4. Security for Obligations. . . . . . . . . . . . . . . 18
Section 2.5. Place of Payment; Computation of Interest.. . . . . . 18
Section 2.6. Evidence of Debt. . . . . . . . . . . . . . . . . . . 18
Section 2.7. Permitted Drawings. . . . . . . . . . . . . . . . . . 18
(a) Generally.. . . . . . . . . . . . . . . . . . . . . . . 18
(b) Acceleration of Payment to Redeem Bonds.. . . . . . . . 18

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 19

Section 3.1. Company Representations.. . . . . . . . . . . . . . . 19
Section 3.2. Representations and Warranties as to the
Acquisition of Project Facilities. .. . . . . . . . 24
(a) Acquisition of Project Facilities.. . . .. . . . . . . 24
(b) Notices and Permits.. . .. . . . . . . . . . . . . . . 25
(c) Additions and Changes to Project Facilities.. . .. . . 25

ARTICLE 4 - CONDITIONS TO ISSUANCE OF THE LETTER OF CREDIT . . . . . . . 25

Section 4.1. Loan Documents. . . . . . . . . . . . . . . . . . . . 25
Section 4.2. Payment of Fees.. . . . . . . . . . . . . . . . . . . 28
Section 4.3. Opinions of Counsel. . . . . . . . . . . . . . . . . 28
(a) Opinion of Counsel for Company. . . . . . . . . . . . 28
(b) Opinion of Bond Counsel.. . . . . . . . . . . . . . . 28
(c) Opinion of Counsel for the Trustee. . . . . . . . . . 28
(d) Opinion of Counsel for the Bank.. . . . . . . . . . . 29
(e) Opinion of Counsel for the Escrow Agent.. . . . . . . 29
Section 4.4. Conditions Subsequent; Defeasance of Prior Bonds. . . 29

Page 307<PAGE>

Page

ARTICLE 5 - COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . . 29

Section 5.1. Financial Statements. . . . . . . . . . . . . . . . . 29
Section 5.2. Preservation of Corporate Existence and Qualification 30
Section 5.3. Keeping of Records and Books of Account . . . . . . . 31
Section 5.4. Maintenance of Properties . . . . . . . . . . . . . . 31
Section 5.5. Maintenance of Licenses . . . . . . . . . . . . . . . 31
Section 5.6. Further Assurances. . . . . . . . . . . . . . . . . . 31
Section 5.7. Maintenance of Insurance. . . . . . . . . . . . . . . 31
Section 5.8. Payment of Taxes, Etc.. . . . . . . . . . . . . . . . 32
Section 5.9. Concerning the Project Facility . . . . . . . . . . . 32
Section 5.10. Compliance with Applicable Laws. . . . . . . . . . . 33
Section 5.11. Environmental Covenant . . . . . . . . . . . . . . . 33
Section 5.12. Mergers, Etc . . . . . . . . . . . . . . . . . . . . 33
Section 5.13. Lease or Transfer of Project Facilities. . . . . . . 33
Section 5.14. Inspection of the Project Facility . . . . . . . . . 34
Section 5.15. Relocation of the Project Facilities . . . . . . . . 34
Section 5.16. Annual Certificate . . . . . . . . . . . . . . . . . 34
Section 5.17. Payment of Compensation and Expenses of Trustee and
Placement Agent . . . . . . . . . . . . . . . . . 35
Section 5.18. Payment of Authority's Fees and Expenses . . . . . . 35
Section 5.19. Indemnity Against Claims . . . . . . . . . . . . . . 35
Section 5.20. Costs and Expenses; Indemnity. . . . . . . . . . . . 36
Section 5.21. Damage to or Condemnation of Project Facilities. . . 37
Section 5.22. Prohibition of Liens . . . . . . . . . . . . . . . . 38
Section 5.23. Financing Statements . . . . . . . . . . . . . . . . 38
Section 5.24. Change in Nature of Corporate Activities . . . . . . 38
Section 5.25. Notice and Certification With Respect to Bankruptcy
Proceedings. . . . . . . . . . . . . . . . . . . . 38
Section 5.26. Rebate Covenant. . . . . . . . . . . . . . . . . . . 39
Section 5.27. Continuing Disclosure. . . . . . . . . . . . . . . . 39

ARTICLE 6 - FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . 39

Section 6.1. Current Assets and Liabilities. . . . . . . . . . . . 39
Section 6.2. Tangible Net Worth. . . . . . . . . . . . . . . . . . 39
Section 6.3. Total Indebtedness. . . . . . . . . . . . . . . . . . 40
Section 6.4. Long-Term Liabilities . . . . . . . . . . . . . . . . 40
Section 6.5. Indebtedness for Borrowed Money.. . . . . . . . . . . 40

ARTICLE 7 - EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . 40

Section 7.1. Events of Default: Acceleration . . . . . . . . . . . 40
Section 7.2. Remedies. . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.3. No Remedy Exclusive . . . . . . . . . . . . . . . . . 43

Page 308<PAGE>

Page

Section 7.4. Agreement to Pay Attorneys Fees and Expenses. . . . . 44
Section 7.5. No Additional Waiver Implied by One Waiver. . . . . . 44
Section 7.6. Waiver. . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.7. Additional Rights of the Bank . . . . . . . . . . . . 44

ARTICLE 8 - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 45

Section 8.1. Severability. . . . . . . . . . . . . . . . . . . . . 45
Section 8.2. Successors and Assigns. . . . . . . . . . . . . . . . 45
Section 8.3. Amendments, Etc . . . . . . . . . . . . . . . . . . . 45
Section 8.4. Execution in Counterparts . . . . . . . . . . . . . . 45
Section 8.5. Governing Law . . . . . . . . . . . . . . . . . . . . 45
Section 8.6. Adjustments and Additional Costs. . . . . . . . . . . 46
Section 8.7. Reasonable Consent. . . . . . . . . . . . . . . . . . 46
Section 8.8. Amounts Remaining in Bond Fund or Acquisition Fund. . 46
Section 8.9. Receipt of Indenture. . . . . . . . . . . . . . . . . 46
Section 8.10. Headings . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.11. Waiver of Jury Trial . . . . . . . . . . . . . . . . 46
Section 8.12. Integration: Entire Agreement . . . . . . . . . . . 46
Section 8.13. Survival of Agreements . . . . . . . . . . . . . . . 47
Section 8.14. Addresses for Notices, Etc.. . . . . . . . . . . . . 47

List of Schedules and Exhibits

Annex A: Form of Letter of Credit
Annex B: Property Description
Schedule I: Subordinated Debt
Schedule II: Disclosure Pursuant to Representations and Warranties
Schedule III: Construction Loan Disbursement Conditions

Page 309
<PAGE>
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as
of the first day of August, 1995, is by and between FIRST FIDELITY BANK,
NATIONAL ASSOCIATION (the "Bank"), a national banking association, and
BURLINGTON COAT FACTORY WAREHOUSE OF NEW JERSEY, INC. (the "Company"), a cor-
poration organized and existing under the laws of the State of New Jersey.

WHEREAS, the New Jersey Economic Development Authority Act, consti-
tuting Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey,
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 of New
Jersey (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, the New Jersey Economic Development Authority (the
"Authority"), a public body corporate and politic constituting an instru-
mentality of the State of New Jersey was created to aid in remedying the afore-
said conditions and to implement the purposes of the Act, and the Legislature
has determined that the authority and powers conferred upon the Authority
under the Act and the expenditure of moneys pursuant thereto constitute 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 has been so declared to be as a matter of express legislative
determination; 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, the Company submitted an application (the "Original
Application") to the Authority for financial assistance in the principal amount
of $10,000,000 for financing a portion of the costs of a project (the "1985
Project") consisting of the acquisition of 46.779 acres of land in the
Township of Burlington, Burlington County, New Jersey, the construction of an
approximately 500,000 square foot building situate thereon for use as a national
distribution center for the Company's products (which building currently
contains 75,000 square feet of office space), the equipping of such building
with conveyor systems, rolling racks and automated machinery and the
construction of a parking lot adjacent to such building, and the Authority,
by resolution duly adopted July 3, 1985 in accordance with the Act, accepted
the application of the Company for assistance in financing the 1985 Project;
and

Page 310<PAGE>

New Jersey, Inc. - 1985 Project) for the purpose of making a loan to the Company
to finance the 1985 Project (the "Original Loan"); and

WHEREAS, on September 20, 1985 the Authority issued $10,000,000 of its
Economic Development Bonds dated September 1, 1985 to finance the 1985 Project
(the "Prior Bonds"); and

WHEREAS, the Company desires to redeem $10,000,000 aggregate principal
amount of the Prior Bonds maturing on or after September 1, 1996 (the "Refunded
Bonds") on September 1, 1995; and

WHEREAS, on July 11, 1995, the Authority, by resolution duly adopted
(the "Resolution"), authorized the issuance of its Economic Development
Refunding Bonds (Burlington Coat Factory Warehouse of New Jersey, Inc. -
1995 Project) (the "Refunding Bonds" or the "Bonds") for the purpose of
providing funds for the Company to refinance the 1985 Project and to redeem
the Refunded Bonds (the "Project"); and

WHEREAS, the Authority has determined to issue the Bonds concurrently
herewith pursuant to the Act, the Resolution and the Indenture (as hereinafter
defined); and

WHEREAS, the Loan shall be secured by a first mortgage lien (subject
only to the defeasance of the Prior Bonds and the release of all liens created
under the Prior Indenture (as defined herein)) on the Premises (as hereinafter
defined), an Assignment of Leases on the Project Facility (as hereinafter
defined), a first priority security interest in the Machinery and Equipment
(as hereinafter defined), a Guaranty (as hereinafter defined), and such other
security granted by the Company in connection with this transaction; and

Page 311<PAGE>

(whether at the stated maturity date or by acceleration) or upon redemption
thereof, and (b) the remainder shall be available to pay up to 210 days'
interest on the outstanding Bonds computed at the rate of six and one hundred
twenty-five thousandths percent (6.125%) per annum accrued on the outstanding
Bonds, as such interest becomes due;

WHEREAS, as a condition, among others, to its issuance of the Letter
of Credit, the Bank has required that the Company enter into this Letter of
Credit Reimbursement Agreement;

ARTICLE 1

DEFINITIONS

Section 1.1. Definitions. The following words and terms as used herein
shall have the following meanings unless the context or use indicates another or
different meaning or intent.

(a) "Account" shall mean any account created under the Indenture;

(b) "Acquisition Fund" shall mean the fund so designated which is
established pursuant to Section 407 of the Indenture;

(c) "Act" shall mean the New Jersey Economic Development Authority
Act, constituting N.J.S.A. sec. 34:1B-1, et seq., as amended, or any successor
legislation, and the regulations promulgated thereunder;

(d) "Act of Bankruptcy" shall mean the filing of a petition in bank-
ruptcy (or other commencement of a bankruptcy or similar proceeding) by or
against the Company, the Corporate Guarantor or the Authority under any
applicable bankruptcy, insolvency, reorganization or similar law, now or
hereafter in effect;

(e) "Act of Bankruptcy of the Bank" shall occur when the Bank, as
issuer of the Letter of Credit, or any Letter of Credit Issuer, becomes
insolvent or fails to pay its debts generally as such debts become due or admits
in writing its inability to pay any of its indebtedness or consents to or
petitions for or applies to any authority for the appointment of a receiver,
liquidator, trustee or similar official for itself or for all or any substan-
tial part of its properties or assets or any such trustee, receiver, liquida-
tor or similar official is otherwise appointed or when insolvency,
reorganization, arrangement or liquidation proceedings (or similar proceedings)
are instituted by or against the Bank, or any Letter of Credit Issuer, provided
that any such proceedings brought against the Bank or any Letter of Credit
Issuer, will constitute such an Act of Bankruptcy only if not dismissed within
one hundred twenty (120) days;

Page 312

(f) "Agreement" or "Reimbursement Agreement" shall mean this Letter
of Credit Reimbursement Agreement dated as of August 1, 1995 between the Company
and the Bank, as the same may be amended from time to time and filed with the
Trustee, under which terms the Bank agrees to issue the Letter of Credit, and
any successor agreement of the Company with a Letter of Credit Issuer under
which terms the Company and such Letter of Credit Issuer agree to issue the
Letter of Credit;

(g) "Alternate Letter of Credit" shall mean any letter of credit
substituted for the Letter of Credit, including any renewals or extensions of
the Letter of Credit by the Letter of Credit Issuer, pursuant to and meeting
the requirements of Section 404 of the Indenture;

(h) "Alternate Letter of Credit Issuer" shall mean the issuer of an
Alternate Letter of Credit which meets the standards set forth in Section 404(d)
of the Indenture;

(i) "Applicable Environmental Laws" shall mean (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. 9601, et seq. ("CERCLA"); (ii) the Resource Conservation and Recovery Act
of 1976, as amended, 42 U.S.C. 6901, et seq. ("RCRA"); (iii) the New Jersey
Industrial Site Recovery Act, as amended, P.L. 1995, C. 139 ("ISRA"); (iv) the
New Jersey Spill Compensation and Control Act, as amended, N.J.S.A.
58:10-23.11b, et seq. ("Spill Act"); (v) the New Jersey Underground Storage
Tank Act, as amended, N.J.S.A. 58:10A-21, et seq. ("UST"); (vi) the New Jersey
Solid Waste Management Act, as amended, N.J.S.A. 13:1E-1, et seq.; (vii) the
New Jersey Toxic Catastrophe Prevention Act, as amended, N.J.S.A. 13:1K-19,
et seq.; (viii) the New Jersey Water Pollution Control Act, as amended, N.J.S.A.
58:10A-1, et seq.; (ix) the Clean Air Act, as amended, 42 U.S.C. 7401, et seq.;
(x) the New Jersey Air Pollution Control Act, as amended, N.J.S.A. 26:2C-1,
et seq.; and (xi) any and all laws, regulations, and executive orders, both
Federal, State and local, pertaining to pollution or protection of the
environment (including laws, regulations and other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, or hazardous or toxic material or wastes),
as the same may be amended or supplemented from time to time. Any capitalized
terms which are defined in any Applicable Environmental Law shall have the
meanings ascribed to such terms in said laws; provided, however, that if any of
such laws are amended so as to broaden any term defined therein, such broader
meaning shall apply subsequent to the effective date of such amendment.

(j) "Application" shall mean the Company's letter to the Authority,
dated May 10, 1995, with respect to the Project, and all attachments, exhibits,
correspondence and modifications submitted in writing to the Authority in
connection with said application;

(k) "Article" shall mean a specified article hereof, unless otherwise
indicated;

(l) "Assignment of Leases" shall mean the assignment, which is made a
part of the Record of Proceedings, dated as of August 1, 1995, executed by the
Company and assigning to the Bank all of the Company's right, title and
interest in and to, and, the

Page 313<PAGE>

benefits of all existing and future leases on the Project Facility, as the same
may be amended from time to time;

(m) "Authority" shall mean the New Jersey Economic Development
Authority, a public body corporate and politic constituting an instrumentality
of the State of New Jersey exercising governmental functions and any body,
board, authority, agency or political subdivision or other instrumentality of
the State which shall hereafter succeed to the powers, duties and functions
thereof;

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

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

(p) "Bank" shall mean First Fidelity Bank, National Association,
issuer of the irrevocable direct pay Letter of Credit dated the Issue Date, and
its successors and assigns.

(q) "Base Rate" shall mean the rate of interest established by the
Bank from time to time as its reference rate in making loans but which does not
reflect the rate of interest charged to any particular class of borrower. The
Base Rate is not tied to any external or index rate of interest. Any rate of
interest as tied to the Base Rate shall automatically and immediately change as
of the date of change in the Base Rate without any notice to the Company.

(r) "Bond" or "Bonds" or "Refunding Bond" or "Refunding Bonds" shall
mean the Economic Development Refunding Bonds (Burlington Coat Factory Warehouse
of New Jersey, Inc. - 1995 Project) in the aggregate principal amount not to
exceed $10,000,000 issued by the Authority to provide funds to finance the
Project, in the form attached to the General Certificate of the Authority and
made a part of the Record of Proceedings;

(s) "Bond Counsel" shall mean the law firm of Wilentz, Goldman &
Spitzer, P.A., 90 Woodbridge Center Drive, Woodbridge, New Jersey or any other
nationally recognized bond counsel acceptable to the Authority, the Trustee and
the Bank;

(t) "Bond Fund" shall mean the fund so designated which is
established and created by Section 402 of the Indenture;

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

(v) "Bond Year" shall mean the one-year period commencing August 1
and ending on the following July 31; except that the first Bond Year shall
commence on the Issue Date and end on July 31, 1996;

Page 314

(w) "Business Day" shall mean a day of the year, other than (i) a
Saturday or Sunday, or (ii) any other day on which commercial banking
institutions located in the municipality in which the Principal Offices of
the Trustee, the Paying Agent, the Bond Registrar (as defined in Section 209
of the Indenture) or the Bank is located are authorized or required by law to be
closed;

(x) "Capitalization" shall mean the amount equal to Net Worth plus
Long-Term Liabilities;

(y) "Cash Collateral Account" shall mean that certain deposit account
established and maintained by the Company at the Bank as a separate account from
the Letter of Credit Account, the proceeds of which shall be used in accordance
with Section 7.2 hereof;

(z) "Code" shall mean the Internal Revenue Code of 1986, as amended
and the Treasury Regulations and rules promulgated thereunder;

(aa) "Collateral" shall mean all the real property subject to the lien
of the Mortgage and the Assignment of Leases, the Machinery and Equipment, as
well as all those assets of the Company in which the Authority and the Bank are
granted a security interest and all other real and personal property owned by
the Company and pledged, conveyed or in which the Authority or the Bank are
otherwise granted a lien and/or security interest in connection with this
Agreement or any other Loan Document;

(bb) "Commitment Letter" shall mean the letter dated June 28, 1995
from the Bank to the Company confirming the Bank's commitment to provide the
Company with an irrevocable direct pay letter of credit and executed by the
Company on June 30, 1995;

(cc) "Company" shall mean Burlington Coat Factory Warehouse of New
Jersey, Inc., a corporation organized and existing under the laws of the State
of New Jersey and its successors and assigns;

(dd) "Consolidated" shall mean the consolidation of the accounts of
the Corporate Guarantor and its subsidiaries in accordance with generally
accepted accounting principles, including principles of consolidation, applied
in a manner consistent with the application of such principles in the prepa-
ration of the audited financial statements mentioned in Section 5.1 hereof;

(ee) "Corporate Guarantor" shall mean the Burlington Coat Factory
Warehouse Corporation, a corporation of the State of Delaware, the Company's
parent corporation;

(ff) "Cost" shall mean those items set forth in Section 3(c) of the
Act and all expenses as may be necessary or incident to acquiring, constructing,
installing or restoring the Project;

(gg) "Counsel for the Bank" shall mean the law firm of Pepper,
Hamilton & Scheetz, Philadelphia, Pennsylvania;

Page 315

(hh) "Counsel for the Company" shall mean the general counsel to the
Company, Paul C. Tang, Esquire;

(ii) "Counsel for the Escrow Agent" shall mean the law firm of Reid &
Riege, P.C., Hartford, Connecticut;

(jj) "Counsel for the Placement Agent" shall mean the law firm of
Robinson, St. John & Wayne, Newark, New Jersey;

(kk) "Counsel for the Trustee" shall mean the law firm of Reid &
Riege, P.C., Hartford, Connecticut;

(ll) "Current Assets" shall mean all assets of the Company on a
Consolidated basis that, in accordance with generally accepted accounting
principles consistently applied, would be classified as current assets of the
Company on a Consolidated basis;

(mm) "Current Liabilities" shall mean all liabilities of the Company
on a Consolidated basis that, in accordance with generally accepted
accounting principles consistently applied, would be classified as current
liabilities of the Company on a Consolidated basis. If the Company has
committed letters of credit in amounts in excess of Forty Million Dollars
($40,000,000), the amount of such letters of credit in excess of Forty Million
Dollars ($40,000,000) shall be included as "Current Liabilities," but only to
the extent of the first Forty Million Dollars ($40,000,000) of such excess;

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

(oo) "Determination of Taxability" shall be deemed to have occurred
upon the happening of any of the following:

(i) the issuance of a published or private written ruling of the
Internal Revenue Service in which the Company or any "related person" has
participated or with respect to which the Company or "related person" has been
given written notice and the opportunity to participate and defend, to the
effect that the interest payable on the Bonds is wholly includable in the
gross income for Federal income tax purposes of one or more Owners thereof; or

(ii) a final, nonappealable determination by a court of competent
jurisdiction in the United States in a proceeding with respect to which the
Company or "related person" has been given written notice and the opportunity to
participate and defend, to the effect that the interest payable on the Bonds is
wholly includable in the gross income for Federal income tax purposes of one or
more Owners thereof; or

(iii) the enactment of legislation of the Congress of the
United States with the effect that interest payable on the Bonds is, or would
be, in the opinion of Bond

Page 316<PAGE>

Counsel, includable in the gross income of the Owners (except Owners who are
"substantial users" or "related persons" within the meaning of Section 147(a) of
the Code);

(pp) "Escrow Agent" shall mean Shawmut Bank Connecticut, National
Association, or its successor in interest, as applicable;

(qq) "Escrow Deposit Agreement" shall mean the Escrow Deposit
Agreement dated as of August 1, 1995 pursuant to which proceeds of the Bonds
will be deposited with the Escrow Agent which will be used to redeem the
Refunded Bonds;

(rr) "Event of Default" shall mean any of the events, conditions, acts
or omissions defined as an event of default in Article 7 hereof;

(ss) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, together with the rules and regulations promulgated
thereunder or pursuant thereto as from time to time in effect;

(tt) "Financing Statements" shall mean the Uniform Commercial Code
financing statements executed by the Company, as 'Debtor', in favor of the Bank,
as 'Secured Party', delivered pursuant to Section 4.1(d) hereof;

(uu) "Funds" shall mean the Acquisition Fund and the Bond Fund and
shall not include the Rebate Fund;

(vv) "GAAP" shall mean generally accepted accounting principles,
consistently applied;

(ww) "General Certificate of the Authority" shall mean the certificate
of the Authority which is made a part of the Record of Proceedings;

(xx) "Gross Proceeds" shall have the meaning set forth in Section
1.148-1(b) of the Treasury Regulations, presently including, without limitation:

(i) Sale proceeds, which are amounts actually or constructively
received on the sale (or other disposition) of the Bonds, excluding amounts
included in the issue price used to pay accrued interest within one (1) year of
the date of issuance;

(ii) Investment proceeds, which are amounts actually or
constructively received from the investment of sale proceeds or investment
proceeds;

(iii) Transferred proceeds, which are proceeds of a refunded
issue that are allocable to a refunding issue at the time the refunded issue is
discharged;

(iv) Replacement proceeds, which are amounts replaced by
proceeds of an issue, including amounts held in a sinking fund, pledged fund, or
reserve or replacement fund for an issue; and

Page 317<PAGE>

(v) Amounts not otherwise taken into account which are received
as a result of investing the amounts described above;

(yy) "Guaranty" or "Guaranty Agreement" shall mean the guaranty and
suretyship agreement dated as of August 1, 1995 executed and delivered by the
Corporate Guarantor to the Bank;

(zz) "Hazardous Substance(s)" shall mean pollutants, contaminants, or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, or hazardous or toxic material or wastes);

(aaa) "Holder", "holder" or "Bondholder" shall mean any person who
shall be the registered owner of any Bond or Bonds;

(bbb) "Indemnified Parties" shall mean the State, the Authority,
the Bank, the Placement Agent, the Holders, the Trustee, any person who
"controls" the State, the Authority, the Bank, the Placement Agent, the Holders
or the Trustee within the meaning of ection 15 of the Securities Act of 1933, as
amended, and any member, officer, official, employee or attorney of the
Authority, the State, the Trustee, the Bank, the Placement Agent or the Holders;

(ccc) "Indenture" shall mean the Indenture of Trust dated as of
August 1, 1995, by and between the Authority and the Trustee, as the same may
have been from time to time amended, modified or supplemented by Supplemental
Indentures as permitted thereby;

(ddd) "Issue Date" shall mean August 24, 1995, being the date on
which the Bank issues the Letter of Credit;

(eee) "LC Indebtedness" means the liability of the Company to pay
to the Bank (a) the sums due to the Bank pursuant to Article 2 hereof, together
with the contingent liability of the Company with respect to reimbursement of
draws on the Letter of Credit, and any and all other advances made pursuant to
this Agreement and all other payment obligations of the Company hereunder,
(b) all liabilities and obligations of the Company to the Bank under the other
Loan Documents, and (c) any and all reasonable expenses and out-of-pocket
costs incurred by the Bank in connection with the enforcement of this
Agreement or any other Loan Document or the protection of the Bank's rights
hereunder or thereunder;

(fff) "Letter of Credit" shall mean the irrevocable direct pay
Letter of Credit dated the Issue Date, in the form of Annex A attached hereto
issued by the Bank;

(ggg) "Letter of Credit Account" shall mean the account so
designated which is established and created as a separate account within the
Bond Fund pursuant to Section 402 of the Indenture;

Page 318<PAGE>

(hhh) "Letter of Credit Issuer" shall mean the Bank as issuer of
the Letter of Credit and any issuer of an Alternate Letter of Credit;

(iii) "Letter of Credit Maturity Date" shall mean the date of
expiration of the Letter of Credit which is September 15, 2000, unless extended
or renewed, as provided in Section 2.2 hereof, in which case the term "Letter of
Credit Maturity Date" shall mean such extended date;

(jjj) "Loan" shall mean the loan from the Authority to the
Company, in the aggregate principal amount not to exceed $10,000,000, being an
amount equal to the principal of (including redemption premium and interest
on) the Bonds;

(kkk) "Loan Agreement" shall mean the Loan Agreement dated as of
August 1, 1995 by and between the Authority and the Company and any amendments
thereof and supplements thereto relating to the Project to be financed from
proceeds of the Bonds;

(lll) "Loan Documents" shall mean any or all of this Reimbursement
Agreement, the Letter of Credit, the Loan Agreement, the Indenture, the
Mortgage, the Financing Statements, the Placement Agreement, the Assignment of
Leases, the Escrow Deposit Agreement, the documents securing the Company's
obligations under this Agreement, the Loan Agreement and Indenture, and all
documents and instruments executed in connection therewith and all amendments
and modifications thereto;

(mmm) "Long-Term Liabilities" shall mean the liabilities of the
Company on a Consolidated basis other than Current Liabilities and deferred
taxes;

(nnn) "Maximum Stated Amount" shall mean the amount of
$10,357,293.00, as reduced and reinstated from time to time in accordance with
the provisions hereof and of the Letter of Credit;

(ooo) "Mortgage" shall mean the first mortgage lien on and
security interest in the Premises securing the obligations of the Company to the
Bank, which Mortgage is made a part of the Record of Proceedings, executed by
the Company, as Mortgagor, and given to the Bank, as Mortgagee;

(ppp) "Net Proceeds" shall mean the Bond Proceeds less any amounts
placed in a reasonably required reserve or replacement fund within the meaning
of Section 150(a)(3) of the Code;

(qqq) "Net Working Capital" shall mean the amount by which Current
Assets exceed Current Liabilities;

(rrr) "Net Worth" shall mean the amount by which the Consolidated
assets of the Company exceed its Total Indebtedness;

(sss) "1985 Project" shall mean the acquisition of 46.779 acres of
land in the Township of Burlington, Burlington County, New Jersey and the
construction of an

Page 319<PAGE>

approximately 500,000 square foot building situate thereon for use as a
national distribution center for the Company's products (which building
currently contains 75,000 square feet of office space) the equipping of such
building with conveyor systems, rolling racks and automated machinery and
the construction of a parking area adjacent to such building, a portion of
such costs being financed with the proceeds of the Refunded Bonds;

(ttt) "Obligations" shall mean the obligations of the Company
created pursuant to this Agreement and the other Loan Documents and secured by
the Collateral;

(uuu) "Original Application" shall have the meaning set forth in
the recital paragraphs hereof;

(vvv) "Original Loan" shall mean the loan from the Authority to
the Company in the aggregate principal amount not to exceed $10,000,000 to pay
for a portion of the Costs of the 1985 Project;

(www) "Outstanding", when used with reference to Bonds and as of
any particular date, shall describe all Bonds theretofore and thereupon being
authenticated and delivered except (a) any Bond canceled by the Trustee or
proven to the satisfaction of the Trustee to have been canceled by the Authority
or by any other Fiduciary, at or before said date, (b) any Bond for payment
or Redemption of which moneys 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 one or more of
the Fiduciaries in trust (whether upon or prior to maturity or the redemption
date of such Bond) 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 the Indenture, (c) any Bond in lieu of or in substitution for
which another Bond shall have been authenticated and delivered pursuant to
the Indenture, and (d) any Bond held by the Company;

(xxx) "Paragraph" shall mean a specified paragraph of a Section,
unless otherwise indicated;

(yyy) "Payment Date" shall mean each March 1 and September 1 of
each year during the term of this Agreement, commencing with March 1, 1996;

(zzz) "Permitted Encumbrances" shall mean, as of any particular
time: (i) liens for taxes and assessments not then delinquent or, provided there
is no risk of forfeiture or sale of any of the Collateral, which are being
contested in good faith and for which reserves have been established by the
Company which are satisfactory to the Bank, all in accordance with the
provisions of Section 5.8 hereof; (ii) liens granted pursuant to this
Agreement, the Indenture, the Loan Agreement, the Mortgage, the Assignment of
Leases, the Financing Statements and the other Loan Documents; (iii) utility
access and other easements and rights of way, restrictions and exceptions that
the Title Insurance Policy insures will not interfere with or impair the
Project Facility and previously approved by and acceptable to the Bank;
(iv) liens securing claims of mechanics and materialman or other like liens; (v)
purchase money security interests encumbering (A) property other than the
Collateral or (B) property acquired after the date hereof and otherwise
comprising Collateral, provided, however, that the Bank's lien shall remain
in effect with respect to such Collateral subject

Page 320<PAGE>

only to such purchase money security interest(s); (vi) those exceptions shown on
Schedule B of the Title Insurance Policy acceptable to the Bank and the
Authority; (vii) liens of or resulting from any litigation or legal proceeding
which are being contested in good faith by appropriate actions or proceedings or
any judgment or award, the time for the appeal or petition for rehearing of
which shall not have expired, or in respect of which the Company shall at any
time in good faith be prosecuting an appeal or proceeding for a review and in
respect of which a stay of execution pending such appeal or proceeding for
review shall have been secured or for which a supersedeas bond has been timely
posted; (viii) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other
similar purposes, or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the activities of the
Company or which customarily exist on properties of corporations engaged in
similar activities and similarly situated and which do not in the aggregate
materially impair the operation of the business of the Company; and (ix) liens
in favor of the City of Burlington in connection with an Urban Development
Act Grant (UDAG Grant Number B-85-AB-34-0262), which liens are subordinate
to the lien of and mortgage in favor of the Bank.

(aaaa) "Permitted Investments" shall mean those investments
described in Article VI of the Indenture;

(bbbb) "Person" or "Persons" shall mean any individual, corpora-
tion, partnership, joint venture, trust, or unincorporated organization, or a
governmental agency or any political subdivision thereof;

(cccc) "Placement Agent" shall mean First Fidelity Bank, National
Association, in its capacity as agent in connection with the placement of the
Bonds;

(dddd) "Placement Agreement" shall mean the Placement Agreement
dated as of August 1, 1995 by and among the Placement Agent, the Bank, the
Authority and the Company;

(eeee) "Premises" shall mean the premises and all improvements
thereon located in the Project Municipality, all as described in Annex B to this
Agreement and the Mortgage;

(ffff) "Principal User" shall mean any principal user within the
meaning of Section 1.103-10 of the Treasury Regulations and the proposed amend-
ments thereto 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)(3) of the Code;

(gggg) "Prior Bonds" shall have the meaning set forth in the
recital paragraphs hereof;

(hhhh) "Prior Indenture" shall mean the Indenture of Trust dated as
of September 1, 1985, by and between the Authority and the Trustee governing
the Prior Bonds;

Page 321<PAGE>

(iiii) "Project" shall mean the refinancing of the 1985 Project and
the redemption of the Refunded Bonds with the proceeds of the Bonds;

(jjjj) "Project Facility" or "Project Facilities" shall mean the
land, the improvements and the building situate thereon located in the Project
Municipality acquired and constructed by the Company, including any additions,
substitutions or replacements which have been constructed or acquired thereon
with the proceeds of the Refunded Bonds;

(kkkk) "Project Municipality" shall mean the Township of
Burlington, County of Burlington, State of New Jersey;

(llll) "Proper Charge" shall mean (i) issuance costs for the Bonds,
including, without limitation, certain attorneys' fees, printing costs, initial
trustee's fees and similar expenses; or (ii) an expenditure for the Project
incurred for the purposes of redeeming the Refunded Bonds which were issued
for the purposes of acquiring and constructing the 1985 Project;

(mmmm) "Rating Agency" shall mean Moody's Investor Service;

(nnnn) "Rebate Fund" shall mean the fund so designated which is
established and created pursuant to Section 413 of the Indenture;

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

(pppp) "Refunded Bonds" shall have the meaning set forth in the
recital paragraphs hereof;

(qqqq) "Related Person" shall mean a related person within the
meaning of Section 144(a)(3) or Section 147(a)(2) of the Code, as is applicable;

(rrrr) "Resolution" shall mean the resolution duly adopted by the
Authority on July 11, 1995, accepting the Application, making certain findings
and determinations and authorizing the issuance and sale of the Bonds and
determining other matters in connection with the Project, as the same may be
amended or supplemented from time to time;

(ssss) "Section" shall mean a specified section hereof, unless
otherwise indicated;

(tttt) "Securities Act" shall mean the Federal Securities Act of
1933, as amended from time to time, together with the rules and regulations
promulgated thereunder or pursuant thereto, as from time to time in effect;

(uuuu) "State" shall mean the State of New Jersey;

(vvvv) "Subordinated Debt" shall mean any indebtedness now existing
or hereafter arising (a true and correct list of which, as of the date hereof,
is set forth on

Page 322<PAGE>

Schedule I attached hereto) so long as the documents evidencing such indebt-
edness provide that (i) the rights of the holders of such indebtedness are
expressly subordinate to the rights of the Bank, (ii) the holders of such
indebtedness will not collect any moneys in excess of the scheduled
amortization payments on such indebtedness without the written consent of the
Bank, including, but not limited to, proceeds from the sale of any of the
Collateral, except as provided herein, (iii) the holders of such indebtedness
shall not challenge, contest or attempt to defeat the priority of the liens
created by the Mortgage and other Loan Documents securing the payment of
amounts owing under this Agreement, the Loan Agreement, the Indenture, and
the Bonds, in any dissolution, liquidation, bankruptcy, insolvency, receivership
or other similar proceedings for the Company whether voluntary or involuntary,
(iv) the holders of such indebtedness shall provide notice to the Bank of a
payment default thereunder and such holder's intention to accelerate such
indebtedness at least ten (10) days prior to the date of such acceleration,
(v) the holders of such indebtedness shall provide notice to the Bank of
nonpayment defaults and of such holder(s)' intention to accelerate such
indebtedness at the same time such holder gives notice to the Company thereof,
and (vi) the Bank shall be deemed a third party beneficiary of such provisions;

(wwww) "Subsidiary" means, as to any Person, any corporation of
which more than fifty percent (50%) of the outstanding capital stock having (in
the absence of contingencies) ordinary voting power to elect directors (or
Persons performing similar functions) of such corporation is, at the time of
determination, owned by such Person directly, or indirectly through one or
more intermediaries;

(xxxx) "Substantial User" shall mean a substantial user of the
Project Facility or any Related Person to a Substantial User within the
meaning of Section 147(a) of the Code;

(yyyy) "Tangible Net Worth" shall mean the amount by which the
Consolidated tangible assets of the Company exceed its Total Indebtedness;

(zzzz) "Tax Certificate" shall mean the 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;

(aaaaa) "Title Insurance Policy" shall mean the title insurance
policy issued pursuant to Commitment No. CO 95-0126 by Commonwealth Land Title
Insurance Company on the Project Facilities and made part of the Record of
Proceedings;

(bbbbb) "Treasury Regulations" shall mean the Income Tax Regulations
promulgated by the Department of Treasury pursuant to Sections 103 and 141-150
of the Code as the same shall be amended or supplemented from time to time;

(ccccc) "Trustee" shall mean Shawmut Bank Connecticut, National
Association, a national banking association duly organized and validly existing
and authorized to accept and execute the trusts of the character set forth in
the Indenture under and by virtue of the laws of the United States of America,
with its principal corporate trust office located in Hartford, Connecticut, in
its capacity as Trustee, Registrar and Paying Agent, and its successors and
assigns in such capacities;

Page 323<PAGE>

(ddddd) "UCC" shall mean the Uniform Commercial Code as now or
hereafter in effect under the laws of the State of New Jersey or any other
jurisdiction which controls the perfection of a security interest in favor of
the Bank in any of the Collateral;

(eeeee) "Yield" shall mean the yield as calculated in the manner set
forth in Section 148 of the Code; thus, yield with respect to an investment
allocated to the Bonds is that discount rate which produces the same present
value when used in computing the present value of all receipts received and to
be received with respect to investments and the present value of all the
payments with respect to the investments. The yield on the Bonds is that
discount rate which produces the same present value on the date hereof when used
in computing the present value of all payments of principal, interest and
charges for a "qualified guarantee" to be made with respect to the Bonds and the
present value of all of the issue prices for the Bonds. The issue price for
each maturity of the Bonds is the initial offering price of such Bonds to the
public.

Section 1.2. Rules of Construction.

(a) Any capitalized term used herein which is not defined herein but
is defined in the Indenture shall herein have the respective meaning given to it
in the Indenture;

(b) Terms used herein which are not otherwise defined herein (or in
the Indenture) but which are defined in or used in Article 9 of the UCC, shall
herein have the respective meanings given to them in such Article 9;

(c) All accounting terms used herein without definition shall be
interpreted in accordance with GAAP, and except as otherwise expressly provided
herein all computations herein required shall be made in accordance with GAAP,
and all principles and practices applied to financial data submitted pursuant to
this Agreement shall be applied in manner consistent with the application of
such principles and practices in the preparation of the audited financial
statements mentioned in Section 5.1 hereof;

(d) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
paragraph, clause and similar references are to this Agreement unless other-
wise specified; the term "heretofore" means before the date of execution of
this Agreement; and the term "hereafter" means after the date of execution of
this Agreement; and

(e) Wherever required by the context of this Agreement, the singular
shall include the plural, and vice versa, unless otherwise specified; and each
use of or reference to this masculine, feminine or neuter gender shall include
any or all of such genders, as appropriate.

Page 324<PAGE>

ARTICLE 2

THE LETTER OF CREDIT

Section 2.1. Agreement of the Bank to Issue the Letter of Credit. Subject
to the terms and conditions of this Agreement, the Bank agrees to issue the
Letter of Credit in favor of the Trustee on the Issue Date in the stated
amount of Ten Million Three Hundred Fifty-Seven Thousand Two Hundred Ninety-
Three Dollars ($10,357,293.00).

Section 2.2. Term of Letter of Credit.

(a) Original Term; Extension. The Letter of Credit shall, subject to
earlier termination in accordance with the terms of the Letter of Credit, expire
on September 15, 2000 (the "Letter of Credit Maturity Date"); provided, that the
expiry date of the Letter of Credit may be extended at the request of the
Company, by written notice to the Bank not less than 210 days prior to the
Letter of Credit Maturity Date, and at the Bank's sole discretion and on
terms or conditions acceptable to the Bank, for a term not to exceed an
additional five (5) years. The Bank shall give prior written notice to the
Company, the Trustee and the Rating Agency of any such renewal. If the Bank
elects not to renew the Letter of Credit, the Bank shall notify the Company, the
Trustee and the Rating Agency, in writing not less than 150 days prior to the
then applicable Letter of Credit Maturity Date that it will not renew the
term of the Letter of Credit.

(b) Company's Right to Terminate. The Company may terminate the
Letter of Credit at any time prior to the Letter of Credit Maturity Date,
without premium or penalty, provided that: (i) the Company provides the Bank
with written notice not less than ten (10) Business Days prior to the effect-
ive date of such termination; (ii) the Letter of Credit Beneficiary has
consented to such termination and provides to the Bank (A) the original Letter
of Credit, and (B) written authorization evidencing its consent and release of
its interest in the Letter of Credit, all in accordance with the terms and con-
ditions of the Indenture; and (iii) all obligations and all amounts due and
payable to the Bank under the Reimbursement Agreement or any other Loan
Document have been fully satisfied or paid, as applicable, prior to the
effective date of such termination.

Section 2.3. Draws and Other Fees and Expenses Under the Letter of Credit.

(a) Payments. The Company hereby agrees to pay to the Bank:

(i) Drawings. Five (5) Business Days prior to each Payment
Date, commencing initially on the Payment Date of March 1, 1996, an amount
necessary to pay the amount to be drawn under the Letter of Credit on the
immediately succeeding date of any drawing for each of the payments described in
Section 2.7 hereof;

(ii) Drawing Fee. On each date that any amount is drawn under
the Letter of Credit pursuant to any drawing referred to in clause (i) herein
above, a drawing fee in the amount of $100 per each draw;

Page 325<PAGE>

(iii) Transfer Fee. Upon each transfer of the Letter of Credit
in accordance with its terms a sum equal to $1,500;

(iv) Customary Charges. On demand, any and all reasonable
charges the Bank may make in connection with drawings under the Letter of Credit
and any and all reasonable expenses which the Bank incurs relative to the Lette
of Credit;

(v) Enforcement Expenses. On demand, any and all expenses
incurred by the Bank in enforcing any rights under this Agreement and the other
Loan Documents;

(vi) Interest. On demand, interest on any and all amounts drawn
on the Letter of Credit and not reimbursed to the Bank through the amounts
deposited pursuant to clause (i) of this paragraph or otherwise, from the date
of drawing of such amounts under the Letter of Credit until payment in full by
or on behalf of the Company at a fluctuating rate of interest per annum equal to
three percent (3.0%) plus the Base Rate announced by the Bank from time to
time. All interest calculations shall be based upon a year of 360 days
consisting of twelve (12) thirty (30) day months;

(vii) Commission. An annual non-refundable fee with respect
to the Letter of Credit, computed for the period from and including the Issue
Date to and including the last day a drawing is available under the Letter of
Credit (the "Termination Date"), at a rate of three quarters of one percent
(.75%) per annum on the amount from time to time available to be drawn under
the Letter of Credit, payable annually, on each anniversary date of the Issue
Date, with the first such payment (reduced by the $25,000 previously paid by the
Company) due on the Issue Date;

(viii) Payments in Respect of Increased Costs. If any
adoption of or if any change in any law, regulation, policy, or guideline or in
the interpretation or application of any of the foregoing by any court,
administrative or governmental authority charged with the interpretation and/or
administration thereof shall either (i) impose, modify or make applicable any
reserve, special deposit, capital or capital equivalency or ratio, assessment,
insurance premium, or similar requirement in connection with the Letter of
Credit, or documents, advances, or refinancing in connection therewith or (ii)
impose on the Bank (or, if applicable, any of its affiliates or correspondents)
any other condition regarding the Letter of Credit, and the result of any event
referred to in clause (i) or (ii) above shall be to increase the Bank's (or,
if applicable, such affiliate's or correspondent's) costs of issuing, maintain-
ing, renewing or extending the Letter of Credit then, upon demand by the Bank,
the Company shall immediately pay to the Bank, from time to time as the Bank
shall specify, additional amounts (calculated on the basis of such Company's pro
rata share of the aggregate amount of obligations to the Bank of the Company and
all similarly situated customers of the Bank), which shall be sufficient to
compensate for such increased cost; provided, however that (x) Company shall
not be responsible for penalties or fines payable by Bank for Bank's failure to
comply with such laws, rules, policies or guidelines following the Bank's charge
to the Company for the same in accordance with this paragraph, and (y) such
increased costs charged to Company shall not exceed the actual increase in costs
to, or loss in profit of, the Bank related to the transactions contemplated by
this Agreement Letter. The obligation of the Company set forth in the
foregoing sentence shall apply to and include each such increased cost
incurred by the Bank as a result of any event mentioned in clause (i) or (ii)

Page 326<PAGE>

above for the period through and including the Termination Date. A certificate
setting forth in reasonable detail (including detailed calculations of) such
increased cost incurred by the Bank as a result of any event mentioned in clause
(i) or (ii) above, submitted by the Bank to the Company, shall be conclusive,
absent manifest error, as to the amount thereof; and

(ix) Cash Collateral Payments. Upon the occurrence of an Event
of Default as specified in Section 7.2(b) hereof, an amount equal to the then
Maximum Stated Amount of the Letter of Credit, such amount (together with all
interest earned thereon and all investments and proceeds of investments
thereof) to be held by the Bank as cash collateral in the Cash Collateral
Account to secure reimbursement to the Bank of the LC Indebtedness, including
without limitation, all amounts paid by the Bank pursuant to draws under the
Letter of Credit and payment of all other obligations of the Company to the Bank
hereunder and under the other Loan Documents.

(b) Applications of Certain Funds. The Company hereby authorizes the
Bank to apply (i) the amounts set forth in clause (i) of paragraph (a) above to
reimburse the Bank for any such drawings honored by the Bank and made by the
Trustee on the Letter of Credit and further acknowledges that the Company is
paying said amounts set forth in clause (i) of paragraph (a) above to the Bank
for the purpose of reimbursing the Bank for drawings honored on the Letter of
Credit; and (ii) any and all amounts in the Cash Collateral Account on account
of any LC Indebtedness of the Company or the Guarantor due and owing to the
Bank;

(c) Default Rate. Any amount not paid when due or demanded, as the
case may be under this Section 2.3 shall bear interest from the date such
payment is due or demanded, as applicable at a per annum rate equal to three
percent (3.0%) above the Base Rate.

Section 2.4. Security for Obligations. As security for the payment of the
LC Indebtedness and the other obligations of the Company to the Bank under this
Agreement and the other Loan Documents, the Company will (a) grant to the Bank
(i) the Mortgage on the Premises, and (ii) the Assignment of Leases, and (b)
cause the Corporate Guarantor to provide to the Bank the Guaranty.

Section 2.5. Place of Payment; Computation of Interest. All payments by
or on behalf of the Company to the Bank hereunder shall be made on the date such
payment becomes due or, if demand must be made by the Bank in accordance with
Section 2.3 hereof, upon demand, in lawful currency of the United States and in
immediately available funds at the Bank's office at 123 South Broad Street,
Philadelphia, Pennsylvania 19109 or at such other place as may be designated by
the Bank by written notice to the Company. Any payment due or demanded on a
day which is not a Business Day (as defined in the Letter of Credit) shall be
paid on the next succeeding Business Day.

Section 2.6. Evidence of Debt. The Bank shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Company resulting from each drawing under the Letter of Credit, the amounts of
principal and interest payable and paid from time to time hereunder or other
reimbursable costs and expenses hereunder.

Page 327<PAGE>

Section 2.7. Permitted Drawings.

(a) Generally. So long as the Letter of Credit is in effect, all
payments of principal and interest on the Bonds shall be paid from draws by the
Trustee on the Letter of Credit in accordance with the terms of the Indenture.
The outstanding balance of the Loan shall be reduced by the amount of any such
payments made by the Trustee through a draw on the Letter of Credit. The
Company shall reimburse the Bank for moneys drawn on the Letter of Credit in
accordance with the terms of Section 2.3 hereof.

(b) Acceleration of Payment to Redeem Bonds. As permitted by the
Indenture and the Reimbursement Agreement, whenever the Bonds are subject to
optional redemption pursuant to the Indenture, the Authority will, but only upon
request of the Company, direct the Trustee in writing to call the same for
Redemption as provided in the Indenture. Whenever the Bonds are subject to
mandatory redemption pursuant to the Indenture, the Company will cooperate
with the Authority and the Trustee in effecting such Redemption. In the event
of any mandatory or optional redemption of the Bonds, the Company will pay or
cause to be paid on or before the date of Redemption an amount equal to the
applicable redemption price (including the redemption premium (if any) and
interest accrued to the date of redemption) as a prepayment of that portion of
the Loan corresponding to the Bonds to be redeemed, or will reimburse the Bank
for any drawings under the Letter of Credit for such purposes (exclusive of the
redemption premium) in accordance with this Agreement.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

Section 3.1. Company Representations. The Company represents and warrants
to the Bank that:

(a) Organization, Powers, Etc. It is a corporation duly organized,
created and in good standing under the laws of the State and all other
jurisdictions in which the conduct of its activities or the ownership or lease
of its properties or assets requires such qualification, and in which such
qualification is material to the conduct of its business, has the full
corporate power and 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 and authority to perform all the undertakings of this Agreement
and the other Loan Documents, to borrow hereunder and to execute and deliver
this Agreement and the other Loan Documents.

(b) Execution of Loan Documents. The execution, delivery and
performance by the Company of this Agreement and the other Loan Documents and
other instruments required or contemplated to be delivered by the Company
pursuant to this Agreement:

(i) have been duly authorized by all requisite corporate action;

Page 328<PAGE>

(ii) do not and will not conflict with or violate any provision
of law, rule or governmental regulation, any order, decree, writ, injunction,
determination, award or judgment of any court, arbitrator or other agency of
government;

(iii) do not and will not conflict with or violate any
provision of the certificate of incorporation and by-laws of the Company; and

(iv) do not and will not conflict with any of the terms of, or
result in a breach of, or constitute a default under, or result in the creation
or imposition of any lien or charge upon any assets of the Company pursuant to,
any mortgage, indenture, contract, lease, loan or credit agreement, or other
agreement or instrument to which the Company is a party or by which any of its
assets are bound (excepting those liens as are created by the Loan Documents).

(c) Title to Collateral. Except as described in on Schedule II
hereto, the Company has good and marketable title to the Collateral, free and
clear of any lien or encumbrance except for the Permitted Encumbrances, if any.
Assuming adequate consideration therefor has been given by the Bank, upon
recording in the appropriate office, the Mortgage (subject to the defeasance of
the liens created by the Indenture governing the Prior Bonds) will constitute a
valid first mortgage lien on the Premises and an assignment of the leases
thereon and upon recording, the Financing Statements will perfect valid first
lien security interests in the Collateral, other than the Premises.

(d) Litigation. Except as described in Schedule II hereto, there is
no action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency or arbitrator now pending or, to
the knowledge of the Company, threatened against or affecting it or any of its
properties or powers which, if adversely determined, would (i) 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) impair the value of the Collateral,
(v) materially impair the Company's right to carry on its business substantially
as is now being conducted, (vi) adversely affect the validity or the
enforceability of the Bonds, the Indenture, this Agreement, the Loan Agreement
and the Loan Documents, (vii) have a material adverse effect on the Company's
financial condition or (viii) in which the relief sought is in excess of
$500,000.

(e) Payment of Taxes. The Company has filed or caused to be filed
all Federal, State and local tax returns (including, without limitation,
information 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 made against the
Company or against any of its properties or assets and all other taxes, fees or
other charges imposed on it by any governmental authority, to the extent that
such taxes have become due; and no tax liens have been filed, and to the
knowledge of the Company, no claims have been asserted against the Company or
any of its properties or assets, with respect to any taxes, fees or charges by
any governmental authority.

(f) No Defaults. The Company is not as of the date hereof in default
or noncompliance in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any material agreement or
instrument to which it is a

Page 329<PAGE>

party (including without limitation, the Indenture and the other Loan Documents)
or by which it is bound or with respect to any law, statute, judgment, writ,
injunction, decree, rule or regulation of any court or governmental authority.

(g) Consents. No consent of any other person and no consent,
license, approval or authorization of, or registration, filing or declaration
with, any court or governmental authority, is or will be necessary to the valid
execution, delivery or performance by the Company of any of the Loan Documents.

(h) Important Inducement. The availability of the financial
assistance by the Authority as provided herein was an important inducement to
the Company to undertake the 1985 Project and to locate the Project Facility in
the State.

(i) Obligations of the Company. Each of the Loan Documents have been
duly executed and delivered and constitute legal, valid and binding obligations
of the Company enforceable against it in accordance with their respective terms.

(j) No Untrue Statements. No representation contained herein or in
any Loan Document, and no information, certification, instrument, agreement,
exhibit, report furnished by or on behalf of the Company to the Authority and
the Trustee, the Application, or any other document, certificate or statement
furnished to the Trustee and the Authority, by or on behalf of the Company
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein and therein not
misleading or incomplete. The Company specifically represents that it is not
involved in any litigation required to be disclosed in the Original Application
nor is it the subject of any investigation or administrative proceeding except
as disclosed in the Application or on Schedule II hereto. Further, it is
specifically acknowledged by the Company that all such statements, represen-
tations and warranties shall be deemed to have been relied upon by the
Authority as an inducement to undertake the Project and make the Loan and by the
Holders as an inducement to purchase the Bonds and that if any such statements,
representations and warranties were false at the time they were made, the
Authority or the Holders may, in its sole discretion, consider any such
misrepresentation or breach of warranty an Event of Default as defined in
Section 7.1 hereof and exercise the remedies provided for in this Agreement.

(k) No Subsidiaries. The Company (i) has no subsidiaries and no
investment in any other corporation; (ii) has no investment in any partnership,
limited partnership or joint venture; and (iii) is not a member or participant
in any partnership, limited partnership or joint venture.

(l) 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 Bonds to be includable in the
gross income of the recipients thereof under the Code.

(m) Compliance with Laws. The Company has complied in all material
respects with all filings, permits, licenses and other requirements of Federal,
State and local laws necessary to prevent the Company from being precluded,
by reason of its failure to

Page 330<PAGE>

comply with any such requirement, from continuing to conduct its activities as
now conducted in the jurisdictions in which it is now conducting activities.

(n) Acquisition/Operation of the Project Facility. The operation of
the Project Facility in the manner presently contemplated and as described in
the Original Application 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 Facility to be acquired in accordance, in all
material respects, 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 the
terms of this Agreement in all material respects.

(o) Environmental Representations.

(i) The Company has obtained all permits, licenses and other
authorizations which are required with respect to its businesses, properties and
assets under all Applicable Environmental Laws. The activities, properties and
assets of the Company are in compliance with all terms and conditions of the
required permits, licenses and authorizations, and are also in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in those laws
or contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder. There are no
past or present events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with, or prevent, continued
compliance on the part of the Company, or which may give rise to any liability
on the part of the Company, or otherwise form the basis of any claim, action,
suit, proceeding or investigation against the Company, based on or related
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment, of any Hazardous Substance;

(ii) There have been no claims, litigation, administrative
proceedings, whether actual or threatened, or judgments or orders, relating to
any Hazardous Substances or other forms of pollution relating in any way to any
property or activities of the Company, including without limitation, the
Premises or the Project Facility;

(iii) Neither the Company nor the Premises or the Project
Facilities are in violation of any Applicable Environmental Law or subject to
any existing, pending or threatened investigation or inquiry by any governmental
authority pertaining to any Applicable Environmental Law, other than as
disclosed in writing to the Bank and the Authority prior to the date hereof.
The Company shall not cause or permit the Premises or the Project Facilities to
be in violation of, or do anything which would subject the Premises or the
Project Facilities to any remedial obligations under any Applicable
Environmental Law, and shall promptly notify the Authority and the Bank, in
writing, of any existing, pending or threatened investigation or inquiry by any
governmental authority in connection with any Applicable Environmental Law;

(iv) No friable asbestos, or any asbestos containing substance
deemed hazardous by Federal or State regulations, has been installed in the
Project

Page 331<PAGE>

Facilities other than as disclosed in writing to the Authority prior to the date
hereof. The Company covenants that it will not install in the Project
Facilities friable asbestos or any asbestos containing substance deemed
hazardous by Federal or State regulations. In the event any such materials
are found to be present at the Project Facilities, the Company agrees to
remove the same promptly upon discovery at its sole cost and expense; and

(v) The Company has taken all steps necessary (which without
limitation includes at a minimum all actions necessary to meet the "all appro-
priate inquiry" standard set forth in N.J.S.A. 58:10A-23.11g as amended by ISRA)
to determine and has determined that no Hazardous Substances have been disposed
of or otherwise released or discharged on or to the Premises or the Project
Facilities other than as disclosed in writing to the Authority prior to the date
hereof. The use which the Company makes of the Project Facilities will not
result in the disposal or other release or discharge of any Hazardous
Substance on or to the Premises or the Project Facilities. During the term of
this Agreement, the Company shall take all steps necessary to determine whether
Hazardous Substances have been disposed of or otherwise released or discharged
on or to the Premises or the Project Facilities and if so will remove the same
promptly upon discovery at its sole expense;

The Company further represents, warrants, covenants and agrees as
follows:

(vi) None of the real property owned and/or occupied by the
Company and located in the State, including without limitation the Premises and
the Project Facilities, has, to the best of the Company's knowledge, ever been
used by previous owners and/or operators nor will be used in the future to (i)
refine, produce, store, handle, transfer, process or transport Hazardous
Substances; or (ii) generate, manufacture, refine, transport, treat, store,
handle or dispose of Hazardous Substances other than as disclosed in writing to
the Authority prior to the date hereof;

(vii) The Company has not received any communication, written
or oral, from the State Department of Environmental Protection, the United
States Environmental Protection Agency, or any other governmental entity
concerning any intentional or unintentional action or omission on the Company's
part on the Premises or Project Facilities resulting in the releasing,
spilling, leaking, pumping, pouring, emitting, emptying or dumping of
Hazardous Substances other than as disclosed in writing to the Authority prior
to the date hereof;

(viii) None of the real property owned and/or occupied by
the Company and located in the State, including without limitation the Premises
and the Project Facilities, has or is now being used as a Major Facility, as
such term is defined in ISRA, and the Company shall not use any such property as
a Major Facility in the future without the prior express written consent of the
Authority and the Bank. If the Company ever becomes an owner or operator of a
Major Facility, then the Company shall furnish the State Department of
Environmental Protection with all the information required by N.J.S.A.
Sec. 58:10-23 11d, and shall duly file with the Director of the Division of
Taxation in the New Jersey Department of the Treasury a tax report or return,
and shall pay all taxes due therewith, in accordance with N.J.S.A.
Sec. 58:10-23.11h;

Page 332<PAGE>

(ix) The Company shall not conduct or cause or permit to be
conducted on the Premises or the Project Facilities any activity which
constitutes an Industrial Establishment, as such term is defined in ISRA,
without the prior express written consent of the Authority and the Bank. In
the event that the provisions of ISRA become applicable to the Premises or
the Project Facilities subsequent to the date hereof, the Company shall give
prompt written notice thereof to the Authority and the Bank and shall take
immediate requisite action to insure full compliance therewith. The Company
shall deliver to the Authority and the Bank copies of all correspondence,
notices, reports, and submissions that the Company generates, or sends to or
receives from the State Department of Environmental Protection, in connection
with such ISRA compliance. The Company's obligation to comply with ISRA shall,
notwithstanding its general applicability, also specifically apply to a sale,
transfer, closure or termination of operations associated with any foreclosure
action by the Authority, the Trustee or the Bank;

(x) No lien has been attached to any revenue or any personal
property owned by the Company and located in the State, including, without
limitation, the Premises or the Project Facilities, as a result of (i) the
Administrator of the New Jersey Spill Compensation Fund expending moneys from
said fund to pay for Damages and/or Cleanup and Removal Costs; or (ii) the
Administrator of the United States Environmental Protection Agency expending
moneys from the Hazardous Substance Superfund for Damages and/or Response
Action Costs. In the event that any such lien is or has been filed, then the
Company shall, within thirty (30) days from the date that the Company is given
such notice of such lien (or within such shorter period of time in the event
that the State or the United States has commenced steps to have the Premises or
the Project Facilities sold), either: (i) pay the claim and remove the lien from
the Premises or Project Facilities; or (ii) furnish (a) a bond satisfactory to
the Authority and the Bank in the amount of the claim out of which the lien
arises, (b) a cash deposit in the amount of the claim out of which the lien
arises, or (c) other security satisfactory to the Authority and the Bank in an
amount sufficient to discharge the claim out of which the lien arises; and

(xi) In the event that the Company shall cause or permit to exist
a releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping
of Hazardous Substances or Hazardous Wastes, the Company shall promptly remove
and remediate such release, spill, leak, pumping, pouring, emission, emptying or
dumping in accordance with the provisions of any Applicable Environmental Law.

(p) Project Municipality. The Project Facilities are 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 Facilities is not integrated with any other facility in
any neighboring municipality operated by any Principal User of the Project
Facilities. All of the facilities financed by the Refunded 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 Refunded Bonds other than the 1985
Project.

(q) No Tenancies. No Principal User of the Project Facilities 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 Facilities.

Page 333<PAGE>

(r) Preservation of Tax Exemption. The Company shall at all times do
and perform all acts and things necessary to be done and performed under the
Loan Documents in order to assure that interest paid on the Bonds shall, for
purposes of Federal income taxation, be excludable from the gross income of the
recipients thereof and exempt from taxation, except in the event that such
recipient is a Substantial User of the Project Facility or a Related Person
thereto.

Section 3.2. Representations and Warranties as to the Acquisition of
Project Facilities.

(a) Acquisition of Project Facilities. The Company agrees that it
used the Prior Bonds to finance the Project Facilities as soon as practicable
after the proceeds of the Prior Bonds became available and that it will use its
best efforts to effectuate the redemption of the Refunded Bonds with the
proceeds of the Bonds as soon as practicable after the proceeds of the Bonds
become available.

(b) Notices and Permits. The Company has given or caused to be given
all notices and comply or cause compliance with all laws, ordinances, municipal
rules and regulations and requirements of public authorities applying to or
affecting the acquisition and the conduct of the work on the Project Facilities,
and the Company will defend and save the Authority, its members, officers,
agents and employees, the Bank, its officers, agents and employees, and the
Trustee, its officers, agents and employees harmless from all fines due
to failure to comply therewith. The Company has procured or has caused to be
procured all permits and licenses necessary for the prosecution of the
acquisition and installation of the Project Facilities.

(c) Additions and Changes to Project Facilities. The Company may, at
its option and at its own cost and expense, at any time and from time to time,
make such improvements, additions, renovations and changes to the Project
Facilities as it may deem to be desirable for its uses and purposes, provided
that (i) such improvements, additions and changes shall constitute part of
the Project Facilities and be subject to the liens and security interests
created by this Agreement and the Indenture, and (ii) that the Company shall not
permit any alienation, removal, demolition, substitution, improvement,
alteration or deterioration of the Project Facilities or any other act which
might materially impair or reduce the usefulness or value thereof, or the
security provided under the Indenture, without the prior written consent of the
Authority and the Bank. The Company shall request in writing that the Bank,
shall execute termination statements for any filings made to perfect the
security interests created pursuant to this Agreement, the Loan Agreement, and
the Indenture for any fixture or item of equipment permanently removed from the
Project Facilities by the Company, provided that any item of property so removed
by the Company shall be replaced by other property of similar value or function.

Page 334<PAGE>

ARTICLE 4

CONDITIONS TO ISSUANCE OF THE LETTER OF CREDIT

Section 4.1. Loan Documents. On or before the Issue Date, the Bank shall
have received the following, each in form and substance satisfactory to the
Bank:

(a) this Letter of Credit and Reimbursement Agreement providing for
the terms of repayment of all draws under the Letter of Credit duly executed by
the Company;

(b) the Mortgage constituting a valid first lien (subject only to the
defeasance of the Prior Bonds and the release of lien securing the Prior
Indenture) on the Premises including, without limitation, all real estate
fixtures located and attached to the Premises, as security for the obligations
of the Company under the Letter of Credit;

(c) an Assignment of Leases providing for the assignment by the
Company to the Bank of all its right, title and interest in and to any leases,
tenancy agreements or any other rental arrangements with respect to the Premises
or Project Facilities;

(d) Financing Statements as may be deemed reasonably necessary by the
Bank or its counsel so as to perfect a valid first priority lien in favor of the
Bank with regard to all personalty, furniture, furnishings, fixtures, building
materials and equipment owned by the Company now or hereinafter located at or
affixed to the Premises and the Machinery and Equipment;

(e) a Guaranty Agreement from the Corporate Guarantor providing for
the unconditional irrevocable guaranty of the obligations of the Company under
the Loan Documents;

(f) secretary's certificates of the Company and Corporate Guarantor,
to which are attached certified true copies of (i) the articles of incorporation
of the Company and Corporate Guarantor and all amendments thereto, certified by
the Secretary of State of the state of their incorporation, (ii) the By-Laws of
the Company and Corporate Guarantor and all amendments thereto, (iii)
appropriate resolutions and shareholder consents of the Company and
Corporate Guarantor authorizing the transactions contemplated by this Agreement,
and (iv) incumbency certificates as to officers, and any amendments thereto;

(g) a good standing certificate issued by the appropriate official of
the state in which each of the Company and Corporate Guarantor is incorporated,
which identifies all the dates on which the Company's and Corporate Guarantor's
articles of incorporation and amendments thereto were filed; and a good standing
certificate issued by the appropriate official of the states in which the
Company and Corporate Guarantor are qualified as a foreign corporation, as
applicable;

(h) a certificate in form and substance satisfactory to the Authority
and the Bank, to the effect that the Project Facilities are not within a special
flood hazard area, as

Page 335<PAGE>

described in the Flood Disaster Protection Act of 1973 and the National Flood
Insurance Act of 1968, or a certification from the Project Municipality to that
effect. Should the Project Facilities be located in a special flood hazard area
as designated by the Secretary of Housing and Urban Development, the Company
shall furnish the Bank with a flood insurance policy in the lesser of (i) the
amount of the Letter of Credit or (ii) the maximum amount obtainable under
the National Flood Insurance Act, naming the Authority and the Bank as insureds,
together with a receipted bill for the premium. Thereafter, the Company shall
furnish the Bank with a renewal flood insurance policy on the anniversary date
of such policy;

(i) true and correct copies of certificates, in form and substance
acceptable to the Authority and the Bank, evidencing the insurances on the
Premises and Project Facilities required to be maintained pursuant to this
Agreement and the Loan Agreement, and naming the Bank as lender/loss payee,
mortgagee, and an additional insured;

(j) evidence that the security interest to be granted to the Bank in
the personal property of the Company constitutes a first-priority lien and
security interest (subject only to the defeasance of the Prior Bonds and the
release of all liens created under the Prior Indenture), including, without
limitation, any appropriate State and county UCC searches, judgment searches and
tax liens searches against the Company and Corporate Guarantor;

(k) evidence that all applicable consents, licenses, permits and
approvals for the use and occupancy of the Premises and Project Facilities have
been obtained from all governmental agencies or public utility companies having
jurisdiction with respect thereto including, to the extent applicable, but not
limited to: all environmental approvals (including, without limitation, written
evidence of the State Department of Environmental Protection certifying as to
the proper authorized closure and/or removal of underground storage tanks);
approvals for sewer, water, gas, electric and other utilities; a final
certificate of occupancy; all zoning, site plan and/or subdivision approvals.
All of such approvals and permits shall be legally valid and shall remain in
full force and effect throughout the term of the Letter of Credit. In the
event that any of such approvals is invalidated, rescinded or suspended by any
governmental agencies or court of competent jurisdiction, the Bank shall not be
obligated to issue the Letter of Credit;

(l) a current boundary and location survey of the Premises acceptable
to the Bank, its counsel and the title insurer, prepared by a licensed New
Jersey surveyor acceptable to the Bank, its counsel and the title insurer, which
survey shall be prepared in accordance with the requirements set forth by the
Bank and shall be certified to the Bank and the title insurer;

(m) a completed and certified Environmental Questionnaire;

(n) an ALTA (as hereinafter defined) Standard title policy on the
form currently in use in the State at the time of the issuance of the Letter of
Credit in the amount of the Letter of Credit, reinsuring with direct access
agreements and/or co-insured in amounts and with title insurance companies
reasonably acceptable to the Bank, insuring that the Mortgage is a valid
first lien mortgage on the Premises, subject only to those exceptions,
whether of record or otherwise that have been previously approved by the Bank;

Page 336<PAGE>

(o) an environmental indemnity agreement pursuant to which the
Company and the Corporate Guarantor agree to indemnify the Bank for any and all
environmental liability which the Bank may incur by virtue of issuing the Letter
of Credit;

(p) a written certification of an architect or engineer selected by
the Bank stating that the Project Facilities located at the Premises (i) are
structurally sound, (ii) show no signs of structural distress, and (iii) have a
remaining life span for current or proposed usage well in excess of the term of
the Letter of Credit. All deficiencies which said architect or engineer may
deem to be material shall be corrected by the Company, at its expense, prior to
closing to the satisfaction of the Bank and said architect/engineer. The cost
of such inspection report shall be borne by the Company;

(q) the Tax Certificate, in form and substance satisfactory to Bond
Counsel;
(r) a Continuing Disclosure certification evidencing the Company's
and the Corporate Guarantor's intent to comply with the provisions of Rule
15c2-12 of the Securities and Exchange Commission as long as this Agreement is
in effect and the Bonds remain Outstanding;

(s) any and all other documents reasonably required by the Authority
and the Bank.

Section 4.2. Payment of Fees. On the Issue Date, the following shall have
been duly paid:

(a) all fees required to be paid to the Bank and the Trustee under
any of the Loan Documents; and

(b) the fees and disbursements of Counsel for the Bank as agreed in
Section 5.20 hereof.

Section 4.3. Opinions of Counsel.

(a) Opinion of Counsel for Company. On the Issue Date, the
Authority, the Trustee, the Bank and the Placement Agent shall have received the
opinion of Counsel for the Company addressed to them and satisfactory in form
and substance to Bond Counsel, Counsel for the Trustee, Counsel for the Bank and
Counsel for the Placement Agent to the effect that, inter alia: (i) the Loan
Documents have been duly executed and delivered by the Company and the
Corporate Guarantor, as applicable, and constitute the valid and binding
obligations of the Company and the Corporate Guarantor, as applicable,
enforceable in accordance with their respective terms, except to the extent that
the enforceability of such documents may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and (ii) all
of the Bond Proceeds will be used for Proper Charges; and containing any other
provisions deemed necessary and proper by, and otherwise in form and substance
satisfactory to, the Bank and its counsel;

Page 337<PAGE>

(b) Opinion of Bond Counsel. On the Issue Date, the Authority, the
Bank, the Placement Agent and the Trustee shall have received the opinion of
Bond Counsel to the effect that, inter alia:

(i) interest income on the Bonds is not includable in gross
income under the Code except for those tax consequences set forth therein;

(ii) interest income on the Bonds is not includable as gross
income under the New Jersey Gross Income Tax Act (P.L. 1976, Chapter 47);

(iii) 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; and

(iv) the Bonds have been duly authorized and issued under the
provisions of the Indenture, the Resolution and the Act;

(c) Opinion of Counsel for the Trustee. On the Issue Date, the
Authority, the Bank and the Placement Agent shall have received an opinion of
Counsel for the Trustee, addressed to them and satisfactory in form and
substance to Bond Counsel (and the Company shall have received a reliance letter
with respect thereto) stating that the Trustee is lawfully empowered, authorized
and duly qualified to serve as Trustee and to perform the provisions of and to
accept the trusts contemplated by the Indenture, and the Trustee has duly
authorized the acceptance of the trusts contemplated by the Indenture;

(d) Opinion of Counsel for the Bank. On the Issue Date, the
Authority, the Trustee and the Placement Agent shall have received an opinion of
Counsel for the Bank, addressed to them and satisfactory in form and substance
to Bond Counsel, Counsel for the Trustee and Counsel for the Placement Agent
(and the Company shall have received a reliance letter with respect thereto)
stating that the Letter of Credit has been duly authorized and delivered and
constitutes a valid and binding obligation of the Bank; and

(e) Opinion of Counsel for the Escrow Agent. On the Issue Date, the
Authority, the Trustee, the Bank and the Placement Agent shall have received an
opinion of counsel for the Escrow Agent, addressed to them and satisfactory in
form and substance to Bond Counsel and Counsels for the Trustee and Placement
Agent (and the Company shall have received a reliance letter with respect
thereto) stating that the Escrow Agent is lawfully empowered, authorized and
duly qualified to serve as Escrow Agent and to perform the provisions of and to
accept the trusts contemplated by the escrow deposit agreement, and the Escrow
Agent has duly authorized the acceptance of the trusts contemplated by the
escrow deposit agreement.

Section 4.4. Conditions Subsequent; Defeasance of Prior Bonds. Upon the
defeasance of the Prior Bonds and the release of the lien of the Prior Indenture
following the full payment of the Prior Bonds and the Original Loan and pursuant
to and in accordance with Article IX of such Prior Indenture, the Company shall
provide to the Bank evidence of the cancellation and discharge of the liens
and security interests granted to the Trustee to secure the Prior Bonds and the
proper recording of the documents pursuant to which such liens

Page 338<PAGE>

have been satisfied or released. The Company shall, and shall cause the
Authority and Trustee to, execute and deliver to the Bank copies of all such
instruments as may be appropriate to evidence such discharge and satisfaction of
such liens and security interests.

ARTICLE 5

COVENANTS OF THE COMPANY

The Company covenants and agrees, so long as this Agreement shall
remain in effect as follows:

Section 5.1. Financial Statements.

(a) Annual Report: as soon as available and in any event within 105
days after the end of each fiscal year, the Company will submit annual audited
consolidated financial statements for the Corporate Guarantor and its
consolidated subsidiaries (including the Company) to the Trustee and to the
Bank during the term of the Letter of Credit including therein the balance
sheet of the Corporate Guarantor and its Consolidated Subsidiaries as of
the end of such fiscal year and the statements of operations of the Corporate
Guarantor and its Consolidated Subsidiaries for such fiscal year, setting forth
in comparative form the corresponding figures for the preceding fiscal year,
prepared in accordance with GAAP consistently applied, all in reasonable detail
and in each case duly certified by independent certified public accountants
of recognized standing acceptable to the Bank, and by the chief financial or
chief accounting officer of the Corporate Guarantor, together with a certificate
of said accounting firm stating that, in the statements of the Corporate
Guarantor and its consolidated subsidiaries (including the Company) for such
fiscal year, it did not discover that an Event of Default (or an event which,
with notice or the lapse of time or both, would constitute an Event of Default)
had occurred at any time during such fiscal year, or, if an Event of Default
(or such other event) did occur, the nature thereof; and (iii) a certificate of
the chief financial or chief accounting officer of the Company and Corporate
Guarantor stating that such officer does not have any knowledge that an Event of
Default (or an event which, with notice or the lapse of time or both, would
constitute an Event of Default) exists, a statement of the nature thereof and
the actions which the Company and Corporate Guarantor propose to take with
respect thereto.

(b) Quarterly Report: as soon as available and in any event within
sixty (60) days after the end of each of the first three (3) quarters of each
fiscal year of the Corporate Guarantor and its consolidated subsidiaries
(including the Company), during the term of the Letter of Credit, management
prepared consolidated financial statements, including a balance sheet, income
statement and cash flow statement prepared in accordance with GAAP, in form and
substance satisfactory to the Bank for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, to the Trustee and
to the Bank during the term of the Letter of Credit.

Page 339<PAGE>

(c) Company will submit annual management letters, if any, for the
Company or Corporate Guarantor, from the independent certified public
accountants for the Corporate Guarantor.

(d) Compliance Certificate. At times referred to above, "no default"
certificates showing the calculations of the financial covenants set forth in
Article 6 hereof, and signed by an Authorized Company Representative showing
that the Company and Corporate Guarantor are in compliance with all covenants
and agreements in this Agreement.

(e) SEC Reports. Promptly after sending or filing, copies of all
proxy statements, financial statements and other notices and reports to the
Trustee and the Bank when the Company or the Corporate Guarantor sends to its
shareholders as well as copies of all regular, annual, periodic and special
reports and all Registration Statements filed with the Securities and Exchange
Commission or similar government authority or with any national security
exchange succeeding to the functions of the Securities and Exchange Commission
(other than those on Form S-8), including, without limitation, Forms 10Q and
10K.

Section 5.2. Preservation of Corporate Existence and Qualification. The
Company shall preserve and maintain its corporate existence, rights, franchises
and privileges in its jurisdiction of incorporation, qualify and remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is material to its business, activities and operations and the
ownership or lease of its properties, and comply with all provisions of its
Certificate of Incorporation and By-Laws.

Section 5.3. Keeping of Records and Books of Account. The Company shall
keep adequate records and books of account reflecting all of its financial
transactions regarding the Project Facilities.

Section 5.4. Maintenance of Properties. The Company shall maintain and
preserve all of its properties, necessary or useful in the proper conduct of its
activities, in good working order and condition, ordinary wear and tear excepted
and from time to time will make or will cause to be made, all needed and proper
repairs, renewals, replacements, betterments and improvements thereto.

Section 5.5. Maintenance of Licenses. The Company shall maintain and keep
in effect licensing, know-how and similar agreements necessary in the proper
conduct of its activities.

Section 5.6. Further Assurances. The Company shall do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further instruments, acts, deeds, and assurances as may be
reasonably requested by the Bank and the Authority for the purpose of
carrying out the provisions and intent of this Agreement, the Loan Agreement
and any of the Loan Documents.

Section 5.7. Maintenance of Insurance.

(a) The Company agrees to insure the Project Facility and Collateral
or cause such to be insured with insurance companies licensed to do business in
the State, in

Page 340<PAGE>

such amounts as indicated herein or in such amounts, manner and against such
loss, damage and liability (including liability to third parties), as is
customary with companies in the same or similar business and located in the
same or similar areas, and to pay the premiums thereon. The form and amount
of each insurance policy issued pursuant to this Section 5.7 shall be
satisfactory to the Authority and the Bank.

(b) Each insurance policy issued pursuant to this Section 5.7 shall
name the Company and the Bank as insureds, as their interests may appear.

(i) mortgage title insurance in an amount not less than the
stated amount of the Letter of Credit insuring that title to the Premises is
marketable and insurable at regular rates, with no exceptions other than those
approved by the Bank and Counsel for the Bank and that the Mortgage is a valid
first mortgage lien. Such policy shall be issued by a title insurance
company acceptable to the Bank and in a form approved by the American Land Title
Association ("ALTA"), subject to the approval of the Bank and shall include
affirmative coverage against all future liens which might take- priority over
the Mortgage; and

(ii) fire, hazard and "All-Risk" insurance, including extended
coverage for flood and earthquake, together with vandalism, malicious mischief
and Replacement Cost endorsements (non- reporting form), covering the Project
Facilities which shall be in an amount not less than 100% of the agreed upon
fully insurable replacement value of the Project Facilities on a completed
value basis by an insurer satisfactory to the Bank, so written and endorsed as
to make losses, if any, payable to the Bank and the Trustee, as Mortgagee and/or
Lender/Loss Payee, as their interests may appear; and

(iii) flood insurance, as described in Section 4.1(h), if the
Project Facility is located in an area designated by the United States
Department of Housing and Urban Development as being subject to a special
flood hazard in the maximum amount of flood insurance available through the
Federal Flood Insurance Program for the improvements located on the Premises,
naming the Bank and the Trustee, as the Mortgagee and/or Lender/Loss Payee,
as their interests may appear; and

(iv) comprehensive general public liability insurance, including
XCU coverage, Broad Form Endorsement, protective liability coverage on
operations of independent contractors engaged in construction, blanket
contractual liability insurance, completed operations and products liability
coverage against any and all liability of the Company or claims of liability
of the Company arising out of, occasioned by or resulting from any bodily
injury, death, personal injury and property damage liability with limits of
liability in minimum amounts of $1,000,000 per person per occurrence, $3,000,000
aggregate per occurrence and $1,000,000 aggregate property damage; and

(v) Excess/Umbrella Liability Insurance on a "follow form" basis
with a minimum limit of liability of $10,000,000 for the Premises.

(d) The insurance policies or endorsements shall cover the entire
Project Facilities and shall provide that the coverage will not be reduced,
canceled or not renewed

Page 341<PAGE>

without thirty (30) days prior written notice to the Bank. The Company shall
provide the Authority and the Bank with certificates from the insurers at
closing, and evidence of renewal or replacement of policies required to be
maintained by this Section shall be provided to the Bank and the Trustee on
behalf of the Authority at least ten (10) days prior to the expiration of any
such policy. The Company may furnish, instead of original or duplicate policies,
certificates of blanket coverage provided the Project Facilities are identified
and specifically allocated amounts are shown.

Section 5.8. Payment of Taxes, Etc. The Company will promptly pay and
discharge or cause to be promptly paid and discharged all taxes, assessments 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 with diligence and continuity and by appropriate
proceedings for which the Company has maintained adequate reserves satisfactory
to the Bank.

Section 5.9. Concerning the Project Facility. The Company shall operate
or cause the Project Facility 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 Facility is of a character included
within the definition of "project" in the Act, and its estimated cost was
$20,000,000. The Company operates the Project Facility substantially in the
form represented in the Original Application and will neither (a) materially
alter the operation of the Project Facility without the prior written consent of
the Authority and the Bank, nor (b) cause a change in the use of the Project
Facility such that the Bonds would cease to be qualified small issue bonds
(within the meaning of Section 144(a) of the Code).

Section 5.10. Compliance with Applicable Laws. The Company shall operate
and maintain the Project Facilities in accordance 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 ERISA, the
Americans with Disabilities Act and Applicable Environmental Laws, workers'
compensation, sanitary, safety, non-discrimination and Zoning laws, ordinances,
rules and regulations as shall be binding upon the Company and which might
adversely affect its activities or credit.

Section 5.11. Environmental Covenant. The Company shall not permit any
action to occur which would be in direct violation of any and all applicable
Federal, State, county and municipal laws, ordinances, rules and regulations now
in force or hereinafter enacted, including Applicable Environmental Laws, the
regulations of the Authority and the regulations of the Department of
Environmental Protection.

The Company shall give immediate written notice, in the manner
provided in Section 8.14 hereof, to the Bank, the Authority, and the Trustee of
any inquiry, notices of investigation or any similar communication from the
Department of Environmental Protection and the United States Department of
Environmental Protection regarding violation of any Applicable Environmental
Laws.

Section 5.12. Mergers, Etc.

Page 342<PAGE>

(a) The Company will not merge into or consolidate with or into, or
sell, assign, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person without the prior express written
consent of the Authority and the Bank as set forth below.

(b) The Company shall, during the period commencing on the Issue Date
of the Bonds and continuing for three (3) years thereafter, maintain or cause to
be maintained separate books and records with respect to the Project Facilities
and any and all other facilities located wholly or partly within the Project
Facility Municipality of which the Company, any Principal User of the Project
Facilities or any Related Person thereto is a Principal User, which books and
records shall be sufficient to indicate the nature of any and all capital
expenditures with respect to the Project Facilities and such other facilities.

Section 5.13. Lease or Transfer of Project Facilities. Except as set forth
in the Original Application, the Company shall not lease, sublease, sell or
otherwise dispose of any possessory interest in whole or part of the Project
Facilities without the prior express written consent of the Authority and the
Bank. In the event that the Company leases or subleases the Project Facilities
or any portion thereof, the Company and the proposed lessee shall submit to
the Authority and the Bank an application for project occupants in the form
currently in use by the Authority and a copy of the lease. The Authority may
review the proposed lease and application to determine if it tends to further
the public purposes for which the Authority was created, and if the Authority
determines that the lease would not promote these purposes, it may disapprove
the proposed lease.

In making the determination described above, the Authority may
consider, among other criteria, (i) if the proposed occupancy complies with the
conditions specified in the Act for the Authority's assistance to "projects" as
defined in the Act; (ii) if the proposed occupancy is consistent with the
provisions respecting tax-exempt qualified small issue bond financings set
forth in Section 144 of the Code; and (iii) if the proposed lease will result in
the loss of employment for a substantial number of New Jersey workers by reason
of relocating the business of the lessee from one part of the State to another
or for any other reason.

If the Authority fails to deliver notice of either approval or
disapproval of a proposed lease within twenty (20) days from the day the
Authority receives a proposed lease, including all of the information
identified above and such other information as the Authority may reasonably
require, the proposed lease shall be deemed to be approved by the Authority;
provided further that the Company shall still be required to obtain the
affirmative consent of the Bank. The Company shall promptly send a copy of each
executed lease to the Authority and the Bank.

Section 5.14. Inspection of the Project Facility. The Company agrees that
the Authority and the Bank, and their duly authorized agents or representatives
shall have the right, at all reasonable times and upon prior reasonable notice,
to enter upon and to examine and inspect the Project Facility. The Authority,
the Trustee and the Bank, and their respective officers and agents shall also be
permitted, at all reasonable times and upon prior notice, to examine the
books and records of the Company with respect to the Project Facility,

Page 343<PAGE>

to discuss its affairs, finances and accounts with any of its officers or
directors and to make copies or abstracts thereof.

Section 5.15. Relocation of the Project Facilities. The Company covenants
and agrees that during the term of this Agreement it will not relocate the
Project Facility or a substantial number of its employees to another location
either within or without the State without first obtaIning the prior express
written consent of the Authority and the Bank.

Section 5.16. Annual Certificate. On each anniversary date of the Loan,
the Company shall furnish to the Bank, the Authority and the Trustee the
following:

(a) A certificate 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 the passage of
time, or both, under any of the Loan Documents.

(b) A written description of the present use of the Project
Facilities, including a report from every entity that leases or occupies space
at the Project Facilities and the number of persons employed by the lessee, as
applicable, and a description of any anticipated material change in the use of
the Project Facilities or in the number of employees employed at the Project
Facilities.

(c) The Company shall also furnish to the Authority upon request,
which request shall not be made more frequently than once a year, an employment
report on a form to be supplied by the Authority.

Section 5.17. Payment of Compensation and Expenses of Trustee and
Placement Agent. Except to the extent payment is otherwise provided from the
Acquisition Fund, the Company will pay the Trustee's (and any other paying
agent's or authenticating agent's) compensation and expenses under the
Indenture, including, but not limited to, reasonable attorneys' fees and all
costs of redeeming Bonds thereunder. The Company will also pay the reasonable
compensation of the Placement Agent for the performance of its duties and
services under the Placement Agreement.

Section 5.18. Payment of Authority's Fees and Expenses. Except to the
extent payment is provided from the Acquisition Fund, the Company will pay the
Authority's standard administration fee and all reasonable expenses (other than
day-to-day Operating expenses of the Authority), including legal and accounting
fees, incurred by the Authority in connection with the issuance of the Bonds
and the performance by the Authority of its functions and duties under this
Agreement and the Indenture. The Authority's standard administration fees
in respect of this Agreement is $25,000 payable upon the execution and delivery
of this Agreement.

Section 5.19. Indemnity Against Claims. In the exercise of the powers of
the Bank, hereunder, including without limitation the application of moneys, the
investment of funds and disposition of the Project Facilities upon the
occurrence of an Event of Default, neither the Bank nor its directors, officers,
shareholders, employees or agents shall be accountable to the Company for any
action taken or omitted by any of them in good faith and with the belief

Page 344<PAGE>

that it is authorized or within the discretion or rights or powers conferred
hereunder or under the Indenture. The Bank and its directors, officers,
shareholders, employees and agents shall be protected in acting upon any paper
or document believed to be genuine, and any of them 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. No recourse shall be had by
the Company for any claims based hereon or on the Indenture against any member,
director, officer, employee or agent of the Bank alleging personal liability on
the part of such person unless such claims are based upon the gross negligence
or willful misconduct of such person. As such, the Company shall indemnify and
hold harmless the Bank, and each director, officer, shareholder, employee,
attorney and agent of the Bank (collectively the "Indemnified Parties") against
any and all claims, losses, damages or liabilities, joint and several, to which
the Indemnified Parties become subject, insofar as such losses, claims,
damages or liabilities (including all costs, expenses and reasonable counsel
fees incurred in investigating or defending such claim) (or actions in respect
thereof) suffered by any of the Indemnified Parties caused by, relating to,
arising directly or indirectly out of, resulting from or in any way connected to
the Project Facility or the Project or are based upon any other act or omission
in connection with (a) the condition, use, possession, conduct, management,
planning, design, acquisition, construction, installation, financing or sale
of the Project Facility or any part thereof; or (b) any untrue statement of a
material fact contained in information submitted or to be submitted to the
Indemnified Parties 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 to the Indemnified Parties not misleading or
incomplete unless the losses, damages or liabilities arise from the gross
negligence or willful misconduct of the person to be indemnified. In the event
any claim is made or action brought against an Indemnified Party, except for
claims or actions brought which arise from the gross negligence or willful
misconduct of any such person, the Indemnified Party may direct the Company
to assume the defense of the claim and any action brought thereon and pay all
reasonable expenses (including attorneys' fees) incurred therein; or such
Indemnified Party may assume the defense of any such claim or action, the
reasonable cost (including attorneys' fees) of which shall be paid by the
Company upon written request of the Indemnified Party to the Company, provided,
that if the Bank assumes such defense, no settlement of any such claim or action
shall be made without the consent of the Company, which consent shall not be
unreasonably withheld. The Company may engage its own counsel to participate in
the defense of any such action. The defense of any such claim shall include the
taking of all actions necessary or appropriate thereto. 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.

The indemnification provisions of this Section 5.19 shall survive the
termination of this Agreement and the other Loan Documents.

Section 5.20. Costs and Expenses; Indemnity.

(a) The Company agrees to pay on demand all reasonable costs and
expenses of the Bank in connection with the preparation, execution, delivery,
administration, modification and enforcement of the Commitment Letter and any
and all of the other Loan

Page 345<PAGE>

Documents (including, without limitation, the fees and disbursements of Counsel
for the Bank); provided, however, that the Company shall not be responsible to
pay more than $18,000 in attorneys' fees (on aggregate basis for counsel for the
Bank and counsel for the Placement Agent) plus out-of-pocket and reasonable
disbursements in connection with the preparation of the Loan Documents to be
executed and delivered in connection with the issuance of the Bonds.

(b) the Company agrees to indemnify, save, and hold harmless the Bank
and its directors, officers, agents and employees (collectively the
"indemnitees") from and against:

(i) any and all claims, demands, actions, or causes of action
that are asserted against any indemnitee by any person arising, directly or
indirectly, from or as a result of any of the transactions contemplated by
the Term Sheet or the Loan Documents; and

(ii) any and all liabilities, losses, costs or expenses
(including attorneys' fees) that any indemnitee suffers or incurs as a result of
the assertion of any claim, demand, action, or cause of action specified in the
immediately preceding subparagraph (i).

The covenants and agreements of this Section 5.20 shall be unconditional,
whether or not the Letter of Credit closing occurs as a result of the Company's
failure to perform all of its obligations under the Loan Documents and shall
survive the repayment of the obligations, the termination of this Agreement
and other Loan Documents and the cancellation of the Letter of Credit.

Section 5.21. Damage to or Condemnation of Project Facilities. In the
event of damage, destruction or condemnation of part or all of the Project
Facilities, the Company shall notify the Trustee and the Bank not later than
five (5) days after the occurrence of such event (the "Initial Notice").

(a) In the event of any partial damage, destruction or condemnation
of the Project Facilities in an amount aggregating less than $5,000,000 the
Company shall use said funds for restoration, repair or replacement of the
Project Facility. Such funds shall be paid in accordance with the Bank's
standard construction loan disbursement conditions as set forth on Schedule
III hereto and in accordance with Section 5.24 of the Loan Agreement and
Section 408 of the Indenture.

(b) In the event (i) the Company fails, or fails to commence, to
repair, replace or reconstruct the damaged, destroyed or condemned Project
Facilities within sixty (60) days after the Initial Notice when such proceeds
aggregate less than $5,000,000, or (ii) such proceeds exceed $5,000,000, the
Bank shall have the option to (A) apply such funds to the costs of repair,
reconstruction and restoration of the Project Facilities to a substantially
equivalent condition or value existing immediately prior to such event or to a
condition of at least an equivalent value, in which case such funds shall be
deposited with the Trustee in the Acquisition Fund in accordance with Section
407 of the Indenture; or (B) use such proceeds to reduce any outstanding
principal balance of unreimbursed draws under the Letter of Credit or other
outstanding LC Indebtedness and remit the balance to the Company; or (C) retain

Page 346<PAGE>

such proceeds (up to the amount of the Company's obligations to the Bank under
the Letter of Credit and the documents executed in connection therewith) as cash
collateral for the Company's obligations under the Letter of Credit; or (D)
redeem Bonds from moneys from the Letter of Credit pursuant to Section 301(b) of
the Indenture and apply the amount of such net proceeds of any insurance,
casualty or condemnation award to reimburse the Bank for any draw on the
Letter of Credit, but only to the extent of any such proceeds. The Bank shall
notify the Trustee and the Company in writing of its election within seventy
(70) days after the Initial Notice.

(c) The Company shall cooperate and consult with the Bank in all
matters pertaining to the settlement or adjudication of any insurance claims and
all claims and demands for damages on account of any taking or condemnation of
the Project Facility or pertaining to the settlement, compromising or
arbitration of any claim on account of any damage or destruction of the Project
Facility. In no event shall the Company voluntarily settle, or consent to the
settlement of, any insurance claim equal to or greater than $2,500,000 with
relation to the Project Facility or any proceedings arising out of any
condemnation of the Project Facility without the prior written consent of the
Bank, which consent will not be unreasonably withheld.

(d) Damage to, destruction of or condemnation of all or a portion of
the Project Facilities shall not terminate the Agreement, or cause any abatement
of or reduction in the payments to be made by the Company or otherwise affect
the respective obligations of the Authority or the Company, except as set forth
in this Agreement.

Section 5.22. Prohibition of Liens. The Company shall not create, or
suffer to be created by any other person any lien or charge upon the Acquisition
Fund or the Project Facilities (other than Permitted Encumbrances) or any part
thereof or upon the rents, contributions, charges, receipts or revenues
therefrom, without the consent of the Authority and the Bank, provided that
nothing in this Agreement shall limit the right of the Company to enforce
payments from the Acquisition Fund pursuant to Section 408 of the Indenture.
The Company further agrees to pay or cause to be discharged or make adequate
provision to satisfy and discharge, within thirty (30) days after the same shall
become due, any such lien or charge and also all lawful claims or demands for
labor, materials, supplies or other charges which, if unpaid, might be or become
a lien upon the Acquisition Fund, the Project Facilities or any part thereof or
the revenues or income therefrom. Nothing in this Section shall require the
Company to pay or cause to be discharged or make provision for any such
lien or charge so long as the validity thereof shall be diligently contested in
good faith and by appropriate proceedings so long as the Acquisition Fund, the
Project Facilities or any part thereof are not subject to loss or forfeiture.
The Authority shall cooperate with the Company in any such contest and shall
cooperate with the Company with respect to obtaining any necessary releases
of liens or other encumbrances on the Project Facilities.

Section 5.23. Financing Statements. The Company shall, at the Company's
own expense, cause financing statements under the New Jersey Uniform Commercial
Code to be filed in the places required by law in order to perfect the security
interests created or contemplated by Section 2.4 hereof naming the Bank as
secured party. From time to time, as reasonably requested by the Holder of any
Bond, but not more often than once each year, the Company shall furnish to the
Trustee an opinion of counsel setting forth what actions, if

Page 347<PAGE>

any, should be taken by the Company to preserve such security interest and/or
the Trustee to preserve the right, title and interest of the Trustee in and to
the trust estate created under the Indenture. The Company shall execute and
file or cause to be executed and filed all further instruments as shall be
required by law to preserve such security interest, and shall furnish
satisfactory evidence to the Authority and the Bank of the filing and refiling
of such instruments.

Section 5.24. Change in Nature of Corporate Activities. The Company shall
not make any material change in the nature of its corporate activities; provided
that the foregoing shall not prohibit the Company from engaging in additional
activities related to its present corporate activities and not otherwise
prohibited under the Code or the Act.

Section 5.25. Notice and Certification With Respect to Bankruptcy
Proceedings. The Company shall promptly notify the Trustee and the Bank in
writing of the occurrence of any of the following events and shall keep the
Trustee and the Bank informed of the status of any petition in bankruptcy filed
(or bankruptcy or similar proceeding otherwise commenced) against the Company:
(i) application by the Company for or consent by the Company to the appointment
of a receiver, trustee, liquidator or custodian or the like of itself or of its
property, or (ii) is not generally paying its debts as they become due, or (iii)
general assignment by the Company for the benefit of creditors, or (iv)
adjudication of the Company as a bankrupt or insolvent, or (v) commencement
by the Company of a voluntary case under the United States Bankruptcy Code or
filing by the Company of a voluntary petition or answer seeking
reorganization of the Company, an arrangement with creditors of the Company or
an order for relief or seeking to take advantage of any insolvency law or filing
by the Company of an answer admitting the material allegations of an insolvency
proceeding, or action by the Company for the purpose of effecting any of the
foregoing, (vi) if without the application, approval or consent of the Company,
a proceeding shall be instituted in any court of competent jurisdiction, under
any law relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking in respect of the Company an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation, a composition
or arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or of
all or any substantial part of its assets, or other relief in respect thereof
under any bankruptcy or insolvency law.

Except where expressly provided to the contrary, all covenants in this
Article shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitations of, another
covenant shall not avoid the occurrence of an Event of Default or default if
such action is taken or condition exists.

Section 5.26. Rebate Covenant. The Company shall calculate or cause to be
calculated the rebate requirement and shall pay to the Trustee at such times as
required under the Code an amount equal to the rebate requirement for deposit by
the Trustee into the Rebate Fund. To the extent the amounts on deposit in the
Rebate Fund as of any date of computation are not sufficient to meet the rebate
requirement, the Company shall immediately pay the amounts necessary to the
Trustee for deposit in the Rebate Fund in accordance with the provisions of
Section 413 of the Indenture.

Page 348<PAGE>

Section 5.27. Continuing Disclosure. The Company shall provide or cause
to be provided by the Corporate Guarantor (a) on a timely basis, all of the
information described in Section 515 of the Indenture relating to compliance
with Rule 15c2-12 of the Exchange Act, and (b) on or prior to the effective
date of any such transaction, notification of the purchase or sale, by or for
the account of the Company, of any of the Bonds, together with a detailed
description of such transaction.

ARTICLE 6

FINANCIAL COVENANTS

Section 6.1. Current Assets and Liabilities. The Corporate Guarantor and
its Consolidated Subsidiaries will maintain Current Assets in an amount which is
not less than one hundred twenty percent (120%) of Current Liabilities.

Section 6.2. Tangible Net Worth. The Corporate Guarantor and its
Consolidated Subsidiaries' Consolidated Tangible Net Worth as at the end of any
of its fiscal years during the term of this Agreement shall be equal to not less
than (a) One Hundred Forty Million dollars ($140,000,000) plus (b) Six Million
Dollars ($6,000,000) multiplied by the number of full fiscal years which have
elapsed since the end of the 1994 fiscal year. If the Company changes its
fiscal year, the minimum Tangible Net Worth as at the end of the new fiscal year
end shall be equal to the minimum Tangible Net Worth which would have been
required had the fiscal year end not been changed, plus Six Million Dollars
($6,000,000) multiplied by a fraction the numerator of which is the number of
months between the previous fiscal year end and the new fiscal year end and the
denominator of which is twelve (12).

Section 6.3. Total Indebtedness. The Corporate Guarantor and its
Consolidated Subsidiaries will not permit the total indebtedness of the
Corporate Guarantor and its Consolidated Subsidiaries to exceed one hundred
eighty percent (180%) of such Consolidated group's Tangible Net Worth.

Section 6.4. Long-Term Liabilities. The Corporate Guarantor and its
Consolidated Subsidiaries will not permit Long-Term Liabilities to exceed sixty
percent (60%) of the Capitalization.

Section 6.5. Indebtedness for Borrowed Money. The Company will not borrow
any funds except pursuant to the following types of borrowings: (a) borrowings
to finance the acquisition of personal property (including capital leases)
secured by a security interest encumbering such personal property, provided that
the amount of any such encumbrance does not exceed the greater of the purchase
price or fair market value of such property and (b) borrowings from Bank
hereunder. The foregoing exceptions, in the aggregate, are subject, however,
to the provisions of Sections 6.2 and 6.3 hereof. Nothing herein contained
shall be deemed in any way to limit the right and ability of the Company to post
letters of credit or to incur trade indebtedness in the ordinary course of their
respective businesses, to the extent such activities are otherwise permitted
under this Agreement.

Page 349<PAGE>

ARTICLE 7

EVENTS OF DEFAULT AND REMEDIES

Section 7.1. Events of Default: Acceleration. Each of the following
events is hereby defined as, and is declared to be and to constitute, an "Event
of Default" hereunder:

(a) Failure by the Company to make or cause to be made any payment
required to be made under Section 2.3 on or before the date the same is due; or

(b) Any material misrepresentation or warranty by or on behalf of the
Company contained in this Agreement or in any report, certificate, financial
instrument or other instrument furnished in connection with this Agreement or
any other Loan Document shall prove to be false or misleading;

(c) Failure of the Company to observe, perform or comply with any of
the covenants or conditions contained in Article 6 hereof;

(d) Failure or refusal by the Company to observe, perform or comply
with any of its other covenants hereunder or under any of the other Loan
Documents and such failure or refusal shall continue for a period of thirty
(30) days after the earlier of (i) the date on which the Company first becomes
aware of such failure or (ii) the date on which the Bank has provided written
notice thereof to the Company; provided that (A) if such failure is of
such nature that it can be corrected but not within thirty (30) days, it will
not be an Event of Default so long as prompt corrective action is instituted and
is diligently pursued by the Company and the Bank consents to such extension or
is not required to consent thereto pursuant to the Agreement, which consent may
not be unreasonably withheld, and (B) if such failure results in the interest on
the Bonds becoming subject to Federal income taxation and the Bonds are redeemed
as a result thereof in accordance with their terms, such failure shall not
constitute an Event of Default, and provided further, however, that failure of
the Company to comply with the covenant contained in Section 5.27(a) hereof
shall not constitute an Event of Default; or

(e) The Company shall fail to pay in full when due (i) any amount
owing by the Company with respect to the Bonds (including payments due under any
indenture, loan agreements, lease agreements or similar agreements), or (ii) the
principal of, premium (if any) on or interest on any other Indebtedness of the
Company in a principal amount exceeding $100,000, as and when the same shall
become due (unless such amount owing is being contested in good faith by the
Company with diligence and continuity and by appropriate proceedings for
which the Company has maintained adequate reserves in accordance with GAAP),
or the occurrence of any default under any mortgage, agreement or
other instrument under or pursuant to which the Bonds or such Indebtedness is
incurred, secured, or issued, and continuance of which default beyond the period
of grace, if any, allowed with respect thereto; or

(f) The entry or filing of any judgment, writ or warrant of
attachment or of any similar process in an amount in excess of $500,000 against
the Company or against its
Page 350<PAGE>

property and failure of the Company to vacate, pay, bond, stay or contest in
good faith such judgment, writ, warrant of attachment or other process for a
period of thirty (30) days, unless the Company delivers the Bank evidence,
satisfactory to the Bank, that such amount is fully covered by third-party
insurance; or

(g) The Company shall (i) apply for or consent to the appointment of
a receiver, trustee, liquidator or custodian or the like of itself or of its
property, or (ii) admit in writing its inability to pay its debts generally as
they become due, or (iii) make a general assignment for the benefit of
creditors, or (iv) be adjudicated a bankrupt or insolvent, or (v) commence a
voluntary case under the United States Bankruptcy Code, or file a voluntary
petition or answer seeking reorganization, an arrangement with creditors or an
order for relief, or seeking to take advantage of any insolvency law or file an
answer admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization, or insolvency proceeding, or action shall be taken
by it for the purpose of effecting any of the foregoing, or (vi) if without the
application, approval or consent of the Company, a proceeding shall be
instituted in any court of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking in respect
of the Company an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Company or of
all or any substantial part of its assets, or other like relief in respect
thereof under any bankruptcy or insolvency law, and, if such proceeding is
being contested by the Company in good faith, the same shall (A) result in
the entry of an order for relief or any such adjudication or appointment or (B)
remain unvacated, undismissed, undischarged, unstayed or unbonded for a
period of sixty (60) days; or

(h) For any reason the Bonds are declared due and payable by
acceleration in accordance with Section 902 of the Indenture; or

(i) This Agreement, or any of the other Loan Documents ceases to be
valid and binding on the Company or is deemed null and void or the validity or
enforceability thereof is contested by the Company or the Corporate Guarantor or
the Company denies that it has further liability under this Agreement or any of
the other Loan Documents, or the Guarantor denies that it has further liability
under the Guaranty;

(j) The transfer of title to or possession of the Project Facilities
or any part thereof (in one or more transactions) for any reason without prior
express written consent of the Authority and the Bank as provided in Section
5.13 hereof; or

(k) The voluntary close of business or voluntary cessation of
operations of the Company at the Project Facilities for a continuous period in
excess of one-hundred twenty (120) days; or

Section 7.2. Remedies.

(a) Upon the occurrence of any Event of Default (other than one
referred to in clause (f) or (g) of Section 7.1, with respect to which the
remedies provided in clause (i) of this Section 7.2(a) shall automatically and
immediately be applicable, without notice or

Page 351<PAGE>

demand of any kind), the Bank (i) may, by mailing of notice to the Company
declare an amount equal to the maximum amount which may at any time be drawn
under the Letter of Credit whether or not the Trustee shall have presented, or
shall be entitled at such time to present, the drafts, certificates or other
documents required to draw on the Letter of Credit) together with the other
obligations of the Company hereunder or under the other Loan Documents to be
forthwith due and payable, and the same shall thereupon become due and payable
without demand, presentment, protest or further notice of any kind, all of which
are hereby expressly waived, (ii) subject to the terms of the Letter of Credit,
may refuse to reinstate (A) the Maximum Stated Amount and any interest portion
of the Letter of Credit with respect to any draft representing interest
following the payment by the Bank of the amount set forth in such draft, and/or
(B) the Maximum Stated Amount, the interest portion and the principal portion of
the Letter of Credit with respect to any draft representing payment of
principal following the payment by the Bank of an amount set forth in such
draft, and (iii) may pursue any other rights or remedies it may have at law or
in equity or pursuant hereto or to any of the other Loan Documents.

(b) In addition to the remedies provided in Section 7.2(a) hereof,
upon the occurrence of any Event of Default under Section 7.1(a), (f) or (g)
hereof, or upon the Bank's declaring the obligations of the Company hereunder to
be due and payable, the Bank shall have the right to foreclose on the Mortgage,
and collect and sell or otherwise liquidate any Collateral and (A) apply the
proceeds thereof to payment of the LC Indebtedness outstanding or (B) deposit
such proceeds in the Cash Collateral Account, to be applied in accordance
with Section 7.2(c) hereof.

(c) So long as the Letter of Credit shall remain outstanding, any
amounts due and payable as described in the previous subparagraphs (a) and (b),
when received by the Bank, shall (in such manner and order as the Bank shall
determine in its sole discretion): (i) to the extent of the Maximum Stated
Amount (and any reinstatements thereof which the Bank is obligated to make, if
any), be deposited in the Cash Collateral Account and held by the Bank as cash
collateral for the obligation of the Company to reimburse the Bank for the
amounts of any draws under the Letter of Credit; and/or (ii) be applied to
payment of any or all of the LC Indebtedness or the Company's obligations under
any one or more of the other Loan Documents. Upon any draw under the Letter of
Credit, the Bank shall have the unconditional right to debit any and all
accounts of the Company at the Bank, including the Cash Collateral Account to
reimburse the Bank for the amount of such draw. The Company shall have the
right to direct the investment in Permitted Investments of any funds in such
accounts, and the Bank shall not have any duty or liability with respect to
such investments (including, without limitation, any liability for any loss due
to change in value or for any penalty, charge or loss upon liquidation thereof
prior to maturity in accordance with the immediately succeeding sentence) except
to make the investments directed by the Company, and to hold, receive the
proceeds of, liquidate as necessary, and apply such investments and the
proceeds thereof in accordance with this Section 7.2(c). In the event that any
of the funds held in the Cash Collateral Account are invested in an investment
that requires payment or deduction of a prepayment, breakage or similar penalty
or charge upon liquidation prior to maturity (including without limitation a
certificate of deposit), the Company shall have a further obligation under this
Agreement to reimburse or pay to the Bank, upon demand, the full amount of
each such penalty, charge, loss of investment earnings, or loss of funds
attributable to any action by the Bank in so liquidating any such investment
in order to

Page 352<PAGE>

apply the proceeds of the Cash Collateral Account in accordance with this
paragraph, and such obligation until paid in full shall be added to and become a
part of the LC Indebtedness of the Company, shall bear interest as provided in
Section 2.3(c) hereof, and shall be secured by the Collateral granted pursuant
to the terms of this Agreement and the other Loan Documents. In the event the
Letter of Credit is canceled or expires or in the event at any time of any
permanent reduction of the Maximum Stated Amount (i.e., a reduction not subject
to any possible subsequent reinstatement pursuant to the terms of the Letter of
Credit, except voluntarily by the Bank at its sole option) at any time, the Bank
shall apply the amounts then in the Cash Collateral Account (to the extent that
funds are available therein, including, as and to the extent necessary, the
liquidation of any investments held in the Cash Collateral Account subject to
the provisions of this paragraph), by, first, setting aside in the Cash
Collateral Account (to the extent so available) an amount of funds and
investments (excluding any accrued or expected interest or earnings thereon to
the extent not actually received by the Bank) equal to the Maximum Stated Amount
immediately after such cancellation, expiration or permanent reduction, second,
applying any remaining amounts (if any) to the payment of the outstanding LC
Indebtedness, and third, after payment in full of all such obligations to the
Bank, paying any remaining amounts (if any) to the Company.

(d) Upon the occurrence or existence of any Event of Default, the
Bank shall be entitled to notify the Trustee and the Paying Agent thereof and
demand the acceleration of the maturity of the Bonds pursuant to Section 6.2 of
the Loan Agreement and Section 902(c) of the Indenture and request the Paying
Agent to draw under the Letter of Credit.

Section 7.3. No Remedy Exclusive. No remedy herein conferred or reserved
to the Bank 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 Agreement and the other Loan
Document or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power occurring upon any default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle the Bank to exercise any
remedy reserved to it in this Article, it shall not be necessary to give notice
to any party, other than such notice as may be required in this Article 7. The
rights and remedies of the Bank specified herein are for the sole and exclusive
benefit, use and protection of the Bank and the Bank is entitled, but shall have
no duty or obligation to the Company, the Corporate Guarantor, the Authority,
the Trustee, the Bondholders, or any other Person, (a) to exercise or refrain
from exercising any right or remedy reserved to the Bank hereunder or under any
other Loan Document, or (b) to cause the Trustee, the Authority or any other
Person to exercise or refrain from exercising any right or remedy available
to it under any of the Loan Documents to which it is a party.

Section 7.4. Agreement to Pay Attorneys Fees and Expenses. In the event
the Company shall default under any of the provisions of this Agreement and the
Bank shall require and employ attorneys or incur other expenses for the
collection of payments due or to become due or for the enforcement or
performance or observance of any obligation or agreement on the part of the
Company herein contained, the Company agrees that it will on demand therefor
pay to the Bank the reasonable fees of such attorneys and such other expenses so
incurred by the Bank whether or not suit be brought.

Page 353<PAGE>

Section 7.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Agreement should be breached by any party and
thereafter waived by any other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.

Section 7.6. Waiver. The Company expressly waives any right of redemption
it might otherwise have with respect to the Project Facilities under the laws of
the State, to the extent such right may be exercised on or after the date of any
foreclosure sale. The Company hereby waives and relinquishes the benefits of
any present or future law exempting the Project Facilities from attachment, levy
or sale on execution, or any part of the proceeds arising from the sale thereof,
and all benefits of stay of execution or other process.

Section 7.7. Additional Rights of the Bank. So long as the Letter of
Credit is in full force and effect, the Bank shall have the sole right and power
to take, make, give or withhold any consent to any amendment, substitution or
release of any of the Mortgage, the Assignment of Leases or the property subject
to the lien or interests created therein and (except for the right of the
Authority to declare an event of default and to exercise its other remedies
thereunder) to exercise all rights and remedies provided for herein, in the
Indenture, or in the other Loan Documents with respect to the Collateral.

ARTICLE 8

MISCELLANEOUS

Section 8.1. Severability. If any provision hereof is found by a court of
competent jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or unenforceability, and
such prohibition or unenforceability shall not invalidate the balance of
such provision to the extent it is not prohibited or unenforceable, nor
invalidate the other provisions hereof, all of which shall be liberally
construed in order to effect the provisions of this Agreement.

Section 8.2. Successors and Assigns.

(a) The provisions of the Loan Documents shall be binding upon and
inure to the benefit of the parties thereto and their respective successors and
permitted assigns, except that the Company or Corporate Guarantor may not assign
the Letter of Credit, or their respective rights and obligations under this
Agreement and the other Loan Documents or any of its obligations, liabilities,
rights or benefits thereunder without the prior written consent of the Bank,
which the Bank may withhold in its absolute discretion.

(b) Without limiting any other rights of the Bank under applicable
law, the Bank may at any time grant to one or more banks or other institutions
or entities participating interests in the Letter of Credit made or to be
made to the Company under this Agreement.

Subject to the foregoing, this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns, and the

Page 354<PAGE>

terms "Authority", "Company" and "Trustee" shall, where the context requires,
include the respective successors and assigns of such persons. No assignment
pursuant to this Section shall release the Company from its obligations under
this Agreement.

Section 8.3. Amendments, Etc. No amendment, modification, termination or
waiver of any provision of this Agreement or the other Loan Documents to which
the Bank is a party or beneficiary, and no consent to any departure there from
by the Company or the Corporate Guarantor or any other party thereto, shall in
any event be effective unless the same shall be in writing and signed by the
Bank (and such other parties as each such document shall specify) and then
such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on the Company
or the Corporate Guarantor in any case shall entitle the Company or the
Corporate Guarantor to any other or further notice or demand in similar or other
circumstances.

Section 8.4. Execution in Counterparts. This Agreement and the other Loan
Documents may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an original
and all of which (taken together) shall constitute one and the same agreement.

Section 8.5. Governing Law. This Agreement and the other Loan Documents
shall be governed by, and construed in accordance with, the internal laws of the
State (without giving effect to principles of conflicts of law), except to the
extent that the perfection and enforcement of any lien are required to be
governed by the law of the State in which the property subject to such lien
is located.

Section 8.6. Adjustments and Additional Costs. In addition to any and all
other expenses, costs and obligations of the Company set forth herein, the
Company agrees to pay all charges and costs which are required and whenever
required in connection with the Authority's acquisition of the Project
Facilities and in connection with the conveyance of the Project Facilities
from the Authority to the Company.

Section 8.7. Reasonable Consent. Any and all consents required to be
given, pursuant to this Agreement or any of the Loan Documents, by the
Authority, the Bank, or the Trustee shall be based on a reasonable standard
other than when the Trustee is acting upon the direction of any of the
parties pursuant to any of the Loan Documents, except that any consent to any
sale, transfer, other lien or encumbrance on the Collateral shall be in the sole
discretion of the Bank.

Section 8.8. Amounts Remaining in Bond Fund or Acquisition Fund. It is
agreed by the parties hereto that any amounts remaining in the Bond Fund or
Acquisition Fund, after payment in full of the Bonds (or provision for payment
thereof having been made in accordance with the provisions of the Indenture) and
of the fees, charges and expenses of the Trustee and the Authority in accordance
with the Indenture, shall upon release of the Indenture pursuant to Section 1101
thereof, be paid first by the Trustee to the Bank to the extent of any
unreimbursed drawing under the Letter of Credit, or any other obligations owing
by the Company to the Bank under this Agreement and any remaining moneys
shall belong to and be paid to the Company by the Trustee as overpayment of the
Loan.

Page 355<PAGE>

Section 8.9. Receipt of Indenture. The Company hereby acknowledges that
it has received an executed copy of the Indenture and is familiar with its
provisions, and agrees that it will take all such actions as are required or
contemplated of it under the Indenture to preserve and protect the rights of the
Trustee and of the Bondholders thereunder and that it will not take any action
which would cause a default thereunder. Any redemption of Bonds prior to
maturity shall be effected as provided in the Indenture. The Company agrees to
comply with the provisions of Section 702 of the Indenture.

Section 8.10. Headings. The captions or headings in this Agreement are
for convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof.

Section 8.11. Waiver of Jury Trial. The Company hereby waives any and all
rights that it may now or hereafter have under the laws of the United States of
America or any state, to a trial by jury of any and all issues arising either
directly or indirectly in any action or proceeding between the Authority, the
Trustee or the Bank or their successors and assigns, out of or in any way
connected with the Letter of Credit, this Agreement and the other Loan
Documents. It is intended that said waiver shall apply to any and all defenses,
rights, and/or counterclaims in any action or proceeding.

Section 8.12. Integration: Entire Agreement. This Agreement and the
other Loan Documents and other instruments and documents to be delivered
hereunder and thereunder, are intended by the parties hereto and thereto to be,
an integrated contract, which together contain the entire understandings of
the parties with respect to the subject matter contained herein. This Agreement
and the other Loan Documents supersede all prior agreements and understandings
between the parties with respect to such subject matter, whether written or
oral.

Section 8.13. Survival of Agreements. All agreements, covenants,
representations and warranties made herein shall survive the delivery of the
Letter of Credit and this Agreement and the respective obligations of the
parties hereto shall remain in full force and effect from the date of execution
and delivery of this Agreement until (i) the date on which the
principal or redemption price of and all interest on the Bonds and any other
expenses of the Authority with respect to the Bonds shall have been fully paid
or provision for the payment thereof shall have been made pursuant to the
Indenture, (ii) the Company shall have fully performed and satisfied all
other covenants, agreements and obligations under this Agreement, the Loan
Agreement and (iii) the Indenture shall have been released and discharged
pursuant to the Indenture.

Section 8.14. Addresses for Notices, Etc. All notices requests, demands,
directions and other communications provided for hereunder or under any other
Loan Document shall be sufficient if made in writing and delivered personally
(including by Federal Express or other recognized courier), if mailed by
certified mail, return receipt requested, or if telecopied,
to the applicable party at the addresses indicated below:

If to the Authority:

Page 356<PAGE>

New Jersey Economic Development Authority
Capital Place One
CN 990
200 South Warren Street
Trenton, New Jersey 08625
Attention: Executive Director
Telecopier Number: (609) 633-7751

If to the Company:

Burlington Coat Factory Warehouse
of New Jersey, Inc.
1830 Route 130
Burlington, New Jersey 08016
Attention: Chief Accounting Officer
Telecopier Number: (609) 387-9011

- with a duplicate copy to -

Burlington Coat Factory Warehouse Corporation
1830 Route 130
Burlington, New Jersey 08016
Attention: Paul C. Tang, Esquire
Telecopier Number: (609) 387-7071

If to the Bank:

First Fidelity Bank, National Association
123 South Broad Street - PMB 006
Philadelphia, Pennsylvania 19109
Attention: Stephen H. Clark, Vice President
Telecopier: (215) 985-8793

If to the Trustee:

Shawmut Bank Connecticut, N.A.
777 Main Street, MSN 238
Hartford, CT 06115
Attention: Corporate Trust Administration
Telecopier: ________________

or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of the Loan Documents. All notices, requests, demands, directions and other
communications shall (if delivered<PAGE>
personally) be effective when delivered or
(if mailed) three (3) days after having been

Page 357<PAGE>

deposited in the mail, addressed as aforesaid.

IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed and delivered as of the date first
written above.

ATTEST: BURLINGTON COAT FACTORY
WAREHOUSE OF NEW JERSEY, INC.

______________________________ By:________________________________
___________________, Secretary Name: Mark A. Nesci
Title: Vice President

FIRST FIDELITY BANK, NATIONAL
ASSOCIATION

By:________________________________
Name: Stephen H. Clark
Title: Vice President

Page 358<PAGE>

EXHIBIT 10.10

Page 359
<PAGE>

HAZARDOUS SUBSTANCES CERTIFICATE AND INDEMNITY AGREEMENT

THIS HAZARDOUS SUBSTANCES CERTIFICATE AND INDEMNITY
AGREEMENT dated as of August 1, 1995, is made by and between Burlington Coat
Factory Warehouse of New Jersey, Inc., a New Jersey corporation with an office
located at 1830 Route 130, Burlington, New Jersey, 08016 (referred to as the
"Company," and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national banking
association with an address at 123 S. Broad Street, Philadelphia, PA 19109
(referred to as the "Bank").

DEFINITIONS. The following words shall have the following meaning
when used in this Agreement. All references to dollar amounts shall mean
amounts in lawful money of the United States of America.

Agreement. The word "Agreement" means this Hazardous Substances
Certificate and Indemnity Agreement, as this Hazardous Substances Certificate
and Indemnity Agreement may be modified from time to time, together with all
exhibits and schedules attached to this Hazardous Substances Certificate and
Indemnity Agreement.

Bank. The word "Bank" means First Fidelity Bank, National
Association, its successors and assigns.

Company. The word "Company" means Burlington Coat Factory
Warehouse of New Jersey, Inc., a New Jersey corporation, its successors and
assigns.

Environmental Laws. The words "Environmental Laws" mean (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. 9601, et seq. ("CERCLA"); (ii) the Resource Conservation and
Recovery Act of 1976, as amended, 42 U.S.C. 6901, et seq. ("RCRA"); (iii) the
New Jersey Industrial Site Recovery Act, as amended, P.L. 1995, C. 139
("ISRA"); (iv) the New Jersey Spill Compensation and Control Act, as amended,
N.J.S.A. 58:10-23.11b, et seq. ("Spill Act"); (v) the New Jersey Underground
Storage Tank Act, as amended, N.J.S.A. 58:10A-21, et seq. ("UST"); (vi) the
New Jersey Solid Waste Management Act, as amended, N.J.S.A. 13:1E-1, et seq.;
(vii) the New Jersey Toxic Catastrophe Prevention Act, as amended, N.J.S.A.
13:1K-19, et seq.; (viii) the New Jersey Water Pollution Control Act, as
amended, N.J.S.A. 58:10A-1, et seq.; (ix) the Clean Air Act, as amended,
42 U.S.C. 7401, et seq.; (x) the New Jersey Air Pollution Control Act, as
amended, N.J.S.A. 26:2C-1, et seq.; and (xi) any and all laws, regulations,
and executive orders, both Federal, State and local, pertaining to pollution or
protection of the environment (including laws, regulations and other
requirements relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, or hazardous or toxic
material or wastes), as the same may be amended or supplemented from time to
time. Any capitalized terms which are defined in any Applicable Environmental
Law shall have the meanings ascribed to such terms in said laws; provided,
however, that if any of such laws are amended so as to broaden any term defined
therein, such broader meaning shall apply subsequent to the effective date of
such amendment.

Page 360
<PAGE>

Hazardous Substance. The words "Hazardous Substance" are used
in their very broadest sense and refer to materials that, because of their
quantity, concentration or physical chemical or infectious characteristics, may
cause or pose a present or potential hazard to human health or the
environment when improperly used, treated, stored, disposed of, generated,
manufactured, transported or otherwise handled. "Hazardous Substances"
include without limitation any and all hazardous or toxic substances, materials
or waste as defined by or listed under the Environmental Laws. "Hazardous
Substances" also include without limitation petroleum and petroleum
by-products or any fraction thereof and asbestos.

LC Indebtedness. The words "LC Indebtedness" mean the liability
of the Company to pay to the Bank (a) the sums due to the Bank pursuant to
Article 2 of that certain Letter of Credit and Reimbursement Agreement dated
as of August 1, 1995, by and between the Company and the Bank (the
"Reimbursement Agreement"), together with the contingent liability of the
Company with respect to reimbursement of draws on the Letter of Credit, and
any and all other advances made pursuant to this Agreement and all other
payment obligations of the Company hereunder, (b) all liabilities and
obligations of the Company to the Bank under the other Loan Documents (as
defined in the Reimbursement Agreement), and (c) any and all reasonable
expenses and out-of-pocket costs incurred by the Bank in connection with the
enforcement of this Agreement or any other Loan Document or the protection of
the Bank's rights hereunder or thereunder;

Occupant. The word "Occupant" means individually and
collectively all persons or entities occupying or utilizing the Real Property,
whether as owner, tenant, operator or other occupant.

Real Property. The word "Real Property" means the Real Property,
and all improvements thereon located on Lots 7, 6.01 and a small part of Lots 6
of Block 147 in the tax map of Burlington, Township, County of Burlington, State
of New Jersey, as more particularly described on Schedule "A" attached hereto.

REPRESENTATIONS. The following representations based are made to the
Bank, subject to disclosures made pursuant to that certain Environmental
Questionnaire delivered to and accepted by the Bank in writing:

Use of Real Property. After due inquiry and investigation, the
Company has no knowledge, or reason to believe, that there has been any use,
generation, manufacture, storage, treatment, refinement, transportation,
disposal, release, or threatened release of any Hazardous Substance by any
person on, under, or about the Real Property.

Hazardous Substances. After due inquiry and investigation, the
Company has no knowledge, or reason to believe, that the Real Property, whenever
and whether owned by previous Occupants, has ever contained asbestos, PCB or
other Hazardous Substances, whether used in construction or stored on the Real
Property.

No Notices. The Company has received no summons, citation,
directive, letter or other communication, written or oral, from any agency or
department of

Page 361
<PAGE>

any county or state or the United States Government concerning any intentional
or unintentional action or omission on, under, or about the Real Property which
has resulted in the releasing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping of Hazardous Substances into any waters or onto any lands or
where damage may have resulted to the lands, waters, fish, shellfish, wildlife,
biota, air or other natural resources.

AFFIRMATIVE COVENANTS. Subject to disclosures made and accepted by
the Bank in writing, the Company hereby covenants with the Bank as follows:

Use of Real Property. The Company will not use and does not
intend to use the Real Property to generate, manufacture, refine, transport,
treat, store, handle or dispose of any Hazardous Substances in violation of
applicable Environmental Laws other than de minimis, lawful use in connection
with construction activities.

Compliance with Environmental Laws. The Company shall cause
the Real Property and the operations conducted thereon to comply with all
Environmental Laws and orders of any governmental authorities having
jurisdiction under any Environmental Laws and shall obtain, keep in effect
and comply with all governmental permits and authorization required by
Environmental Laws with respect to such Real Property or operations. The
Company shall furnish the Bank with copies of all such permits and
authorizations and any amendments or renewals thereof and shall notify the Bank
of any expiration or revocation of such permits or authorizations.

Preventive, Investigatory and Remedial Action. The Company shall
exercise extreme care in handling Hazardous Substances if the Company uses or
encounters any. The Company, at the Company's expense, shall undertake any and
all preventive, investigatory or remedial action (including emergency response,
removal, containment and other remedial action) (a) required by any
applicable Environmental Laws or orders by any governmental authority having
jurisdiction under Environmental Laws, or (b) necessary to prevent or
minimize property damage (including damage to Occupant's own property),
personal injury or damage to the environment, or the threat of any such damage
or injury, by releases of or exposure to Hazardous Substances in connection with
the Real Property or operations of any Occupant on the Real Property. In the
event the Company fails to perform any of the Company's obligations under this
section of the Agreement, the Bank may (but shall not be required to), after
written notice to the Company and a reasonable opportunity to cure such
performance, perform such obligations at the Company's expense. All such costs
and expenses incurred by the Bank under this section and otherwise under this
Agreement shall be reimbursed by the Company to the Bank upon demand with
interest at the default rate set forth in the Reimbursement Agreement, or in the
absence of a default rate, at the interest rate set forth therein. The Bank
and the Company intend that the Bank shall have full recourse to the Company
for any sum at any time due to the Bank under this Agreement. In performing
any such obligations of the Company, the Bank shall at all times be deemed to
be the agent of the Company and shall not by reason of such performance be
deemed to be assuming any responsibility of the Company under any Environmental
Law or to any third party. The Company hereby irrevocably appoints the Bank as
the Company's attorney-in-fact with full power to perform such of the Company's
obligations under this section of the Agreement as the Bank deems necessary and
appropriate.

Page 362
<PAGE>

Notices. The Company shall immediately notify the Bank upon
becoming aware of any of the following:

(a) Any spill, release or disposal of a Hazardous Substance on
any of the Real Property, all in connection with any of its operations if such
spill, release or disposal must be reported to any governmental authority under
applicable Environmental Laws.

(b) Any contamination or imminent threat of contaminations, of
the Real Property by Hazardous Substances, or any violation of Environmental
Laws in connection with the Real Property or the operations conducted on the
Real Property.

(c) Any order, notice of violation, fine or penalty or other
similar action by any governmental authority relating to Hazardous Substances or
Environmental Laws and the Real Property or the operations conducted on the Real
Property.

(d) Any judicial or administrative investigation or proceeding
relating to Hazardous Substances or Environmental Laws and to the Real Property
or the operations conducted on the Real Property.

(e) Any matters relating to Hazardous Substances or
Environmental Laws that would give a reasonably prudent the Bank cause to be
concerned that the value of the Bank's security interest in the Real Property
may be reduced or threatened or that may impair, or threaten to impair, the
Company's ability to perform any of its obligations under this Agreement when
such performance is due.

Access to Records. The Company shall deliver to the Bank, at the
Bank's request, copies of any and all documents in the Company's possession or
to which it has access relating to Hazardous Substances or Environmental Laws
and the Real Property and the operations conducted on the Real Property,
including without limitation results of laboratory analysis, site assessments or
studies, environmental audit reports and other consultants' studies and reports.

Inspections. The Bank reserves the right to inspect and
investigate the Real Property and operations thereon at any time and from time
to time, and the Company shall cooperate fully with the Bank in such inspection
and investigations. If the Bank at any time has reason to believe that the
Company or any Occupants of the Real Property are not complying with all
applicable Environmental Laws or with the requirement of this Agreement or
that a material spill, release or disposal of Hazardous Substances has occurred
on or under the Real Property, the Bank may require the Company to furnish the
Bank at the Company's expense an environmental audit or a site assessment with
respect to the matters of concern to the Bank. Such audit or assessment shall
be performed by a qualified consultant approved by the Bank. Any inspections or
tests made by the Bank shall be for the Bank's purposes only and shall not be
construed to create any responsibility or liability on the part of the Bank to
the Company or to any other person.

COMPANY'S WAIVER AND INDEMNIFICATION. The Company hereby indemnifies
and holds harmless the Bank and the Bank's officers, directors, employees and

Page 363
<PAGE>

agents, and the Bank's successors and assigns and their officers, directors,
employees and agents against any and all claims, demands, losses, liabilities,
costs and expenses (including without limitation attorneys' fees at trial and on
any appeal or petition for review) incurred by such person (a) arising out of or
relating to any investigatory or remedial action involving the Real Property,
the operations conducted on the Real Property or any other operations of the
Company or any Occupant and required by Environmental Laws or by orders of any
governmental authority having jurisdiction under any Environmental Laws, or (b)
on account of injury to any person whatsoever or damage to any property arising
out of, in connection with, or in any way relating to (i) the breach of any
covenant contained in this Agreement, (ii) the violation of any Environmental
Laws, (iii) the use, treatment, storage, generation, manufacture, transport,
release, spill, disposal or other handling of Hazardous Substances on the
Real Property, (iv) the contamination of any of the Real Property by Hazardous
Substances by any means whatsoever (including without limitation any presently
existing contamination of the Real Property) or (v) any costs incurred by the
Bank pursuant to this Agreement. In addition to this indemnity, the Company
hereby releases and waives all present and future claims against the Bank for
indemnity or contribution in the event the Company becomes liable for cleanup or
other costs under any Environmental Laws, other than claims arising as a direct
result of acts of the Bank or its authorized agents and representatives
following the Bank's taking possession of the Real Property.

PAYMENT: FULL RECOURSE TO THE COMPANY. The Bank and the
Company intend that the Bank shall have full recourse to the Company for the
Company's obligations hereunder as they become due to the Bank under this
Agreement. Such liabilities, losses, claims, damages and expenses shall be
reimbursable to the Bank as the Bank's obligations to make payments with respect
thereto are incurred, and the Company shall pay such liabilities, losses,
damages and expenses to the Bank as so incurred, without any requirement to wait
for the ultimate outcome of any litigation, claim or proceeding, within
thirty (30) days after written notice from the Bank. The Bank's notice shall
contain a brief itemization of the amounts incurred to the date of such notice.
In addition to any remedy available for failure to pay periodically such
amounts, such amounts shall thereafter bear interest at the default rate set
forth in the Reimbursement Agreement, or in the absence of a default rate, at
the interest rate set forth in the Reimbursement Agreement.

SURVIVAL. The covenants contained in this Agreement shall survive (a)
the repayment of the LC Indebtedness, (b) any foreclosure, whether judicial or
nonjudicial, of the Real Property, and (c) any delivery of a deed in lieu of
foreclosure to the Bank or any successor of the Bank. The covenants contained
in this Agreement shall be for the benefit of the Bank and any successor to the
Bank, as holder of any security interest in the Real Property or the
indebtedness secured thereby, or as owner of the Real Property following
foreclosure or the delivery of a deed in lieu of foreclosure.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
a part of this Agreement.

Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey, and to the
extent applicable, with the federal laws of the United States Government.

Page 364

Attorneys' Fees; Expenses. The Company agrees to pay upon
demand all of the Bank's reasonable costs and expenses, including attorneys'
fees and the Bank's legal expenses, incurred in connection with the enforcement
of this Agreement. The Bank may pay someone else to help enforce this Agreement
and the Company shall pay the osts and expenses of such enforcement. Costs and
expenses include the Bank's reasonable attorneys' fees and legal expenses
whether or not there is a lawsuit, including attorneys' fees and legal expenses
for bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment
collection services. the Company also shall pay all court costs and such
additional fees as may be directed by the court.

Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances.

Waivers and Consents. The Bank shall not be deemed to have
waived any rights under this Agreement unless such waiver is in writing and
signed by the Bank. No delay or omission on the part of the Bank in exercising
any right shall operate as a waiver of such right or any other right. A waiver
by any party of a provision of this Agreement shall not constitute a waiver of
or prejudice the party's right otherwise to demand strict compliance with that
provision or any other provision. No prior waiver by the Bank, nor any course
of dealing between Bank and the Company, shall constitute a waiver of any of the
Bank's rights or any of the Company's obligations as to any future transactions.
Whenever consent by the Bank is required in this Agreement, the granting of such
consent by the Bank in any instance shall not constitute continuing consent to
subsequent instances where such consent is required. The Company hereby
waives notice of acceptance of this Agreement by the Bank.

EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES HAVING READ
ALL OF THE PROVISIONS OF THIS AGREEMENT, AND EACH AGREES TO ITS TERMS.
NO FORMAL ACCEPTANCE BY THE BANK IS NECESSARY TO MAKE THIS
AGREEMENT EFFECTIVE.

Page 365
<PAGE>
IN WITNESS WHEREOF, the Company has caused its duly authorized
representatives to affix their hands and seals and its corporate seal as of
this first day of August, 1995.

BURLINGTON COAT FACTORY WAREHOUSE
OF NEW JERSEY, INC.

ATTEST:

_________________________ By:______________________________________
Robert L. LaPenta, Jr. Name: Mark A. Nesci
Assistant Secretary Title: Vice President

Acknowledged and Agreed as of
the first day of August, 1995

FIRST FIDELITY BANK, NATIONAL ASSOCIATION

By:_______________________________________
Name:
Title:

Page 366
<PAGE>

"SCHEDULE A"

Page 367
<PAGE>

EXHIBIT 10.11

Page 369<PAGE>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION

EMPLOYEES' PROFIT SHARING PLAN

As Amended and Restated Effective July 3, 1994
[incorporating amendments effective September 1, 1995]

Page 369<PAGE>

TABLE OF CONTENTS

Page

Definitions . . . . . . . . . . . . . . . . 1

ARTICLE I Participation. . . . . . . . . . . . . . . 5

ARTICLE II Participant Deferral Contributions. . . . . 6

ARTICLE III Employer Matching Contributions. . . . . . 9

ARTICLE IV Profit Sharing Contributions. . . . . . . 13

ARTICLE V Rollover Contributions; Direct Transfers. .13

ARTICLE VI Contribution Limitations. . . . . . . . . .16

ARTICLE VII Investment of Funds. . . . . . . . . . . . 18

ARTICLE VIII Vesting of Interest. . . . . . . . . . . . 20

ARTICLE IX Payments From Accounts. . . . . . . . . . .23

ARTICLE X Loans. . . . . . . . . . . . . . . . . . . 28

ARTICLE XI Administration. . . . . . . . . . . . . . 30

ARTICLE XII Trustee. . . . . . . . . . . . . . . . . 31

ARTICLE XIII Termination and Amendment. . . . . . . . 32

ARTICLE XIV Miscellaneous . . . . . . . . . . . . . . 33

ARTICLE XV Top Heavy Provisions. . . . . . . . . . . 33

APPENDIX A

APPENDIX B

Page 370<PAGE>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
EMPLOYEES' PROFIT SHARING PLAN

This Plan was originally established by the Board of

Directors of Burlington Coat Factory Warehouse Corporation,

effective November 1, 1983, for the exclusive benefit of eligible

employees of the Company and their beneficiaries. Effective July

3, 1994, the Plan has been amended and restated in order to comply

with the provisions of the Tax Reform Act of 1986 as well as

certain other subsequent legislative changes. Effective September

1, 1995, the Plan has been further amended to provide additional

retirement security for Company employees through a deferred

savings and investment program. The Plan, as so amended, is

designed as a profit sharing plan which incorporates a cash or

deferred arrangement under section 401(k) of the Internal Revenue

Code of 1986, as amended, and Plan provisions shall be interpreted

accordingly.

Definitions:
- ------------

The following words and phrases shall have the meanings

provided below, except as otherwise required by the context. As

used in the Plan, the masculine pronoun shall be deemed to include

the feminine, and the singular number, the plural, unless a

different meaning is clearly indicated by the context.

"Accounts" means the Profit Sharing Account, Company
Account, Deferral Account, Rollover Account, Transfer Account
and Prior Plan Account, as applicable, maintained for a
Participant.

"Affiliate" means the Company and any corporation which
is a member of a controlled group of corporations (as defined
in Code section 414(b)) which includes the Company, or any
trade or business (whether or not incorporated) which is under

Page 371<PAGE>

common control (within the meaning of Code section 414(c))
with the Company.

"Board of Directors" means the Board of Directors of the
Company.

"Break in Service" means a Plan Year during which a
Participant fails to complete at least five hundred and one
(501) Hours of Service. For purposes of determining whether
a Break in Service has occurred, a Participant who is absent
from employment because of a Leave of Absence, pregnancy, the
birth of the Participant's child, the placement of a child
with the Participant for adoption, or the need to care for
such child during the period immediately following such birth
or placement shall be given credit for each Hour of Service
which otherwise would normally have been credited to such
Participant but for such absence. If the Committee is unable
to determine the number of such hours, eight Hours of Service
shall be credited per day of absence. No more than 501 Hours
of Service shall be credited to a Participant under this
paragraph because of such Leave of Absence, pregnancy or
placement. Hours of Service shall not be credited to a
Participant under this paragraph unless such Participant
furnishes to the Committee such timely information as the
Committee may require to establish that the absence from
employment is for reasons described above and to establish the
number of days for which there was such an absence. Hours of
Service credited under this paragraph shall be credited only
for the Plan Year in which the absence begins, if the
Participant would be prevented from incurring a Break in
Service in such Plan Year solely because the period of absence
is treated as Hours of Service or, in any other case, in the
immediately following Plan Year.

"Code" means the Internal Revenue Code of 1986, as may
be amended from time to time and the regulations promulgated
thereunder.

"Company" means Burlington Coat Factory Warehouse Corpo-
ration, or any successor entity.

"Committee" means the committee appointed by the Board
of Directors pursuant to Section 11.1.

"Company Account" means the separate account maintained
for each Participant to which Employer matching contributions
and related earnings are credited under ARTICLE III.

"Compensation" means the total annual wages and salary
(not in excess of $150,000, as may be adjusted by the
Secretary of the Treasury from time to time) of an Employee
from the Employer, but excluding other contributions to this
Plan or contributions to other employee benefit plans of the

Page 372<PAGE>

Employer. In determining the Compensation of an Employee for
purposes of the immediately preceding sentence, the rules of
Code section 414(q)(6) shall apply, except that in applying
such rules, the term "family" shall include only the spouse of
the Employee and lineal descendants of the Employee who have
not attained age 19 before the close of the year. The dollar
limitation, as adjusted, will be allocated among the members
of the family unit in proportion to each member's
Compensation.

"Deferral Account" means the separate account maintained
for each Participant to which a Participant's deferral
contributions and related earnings are credited under ARTICLE
II.

"Effective Date" means July 3, 1994, the effective date
of this amendment and restatement of the Plan.

"Eligible Employee" means each Employee who meets the
eligibility requirements for Plan participation under Article
I. Notwithstanding the foregoing, for purposes of Sections
2.4 and 2.5, an Eligible Employee includes an Employee whose
eligibility to make contributions to the Plan has been
suspended because of a hardship withdrawal pursuant to Section
9.9.

"Employee" means an individual in the regular employment
of the Employer, but excluding an independent contractor, a
non-resident alien, and an employee covered by a collective
bargaining unit whose retirement benefits were the subject of
good faith bargaining between the Employer and the Employee's
representative representing such unit unless agreed upon
between such representative and Employer.

"Employer" means the Company or a Participating
Affiliate.

"Highly Compensated Employee" means an individual
described in Code section 414(q).

"Hour of Service" means each hour for which an Employee
either is directly or indirectly paid, or entitled to payment
by the Employer or an Affiliate. The number of Hours of
Service, and the period to which such hours shall be credited,
will be determined in accordance with Department of Labor
regulations Section 25.200b-2. An hour for which an Employee
is paid at an overtime or premium rate shall be included only
as a single hour. An Employee with respect to whom the
Employer or an Affiliate does not maintain records reflecting
the number of hours for which he is paid shall be credited
with 45 Hours of Service for each week or part thereof he is
paid or entitled to be paid by the Employer or an Affiliate.

Page 373<PAGE>

"Investment Funds" means each of the Investment Funds
provided for in Section 7.2 and set forth in Appendix A.

"Key Employee" means an individual described in Code
section 416(i)(1).

"Leave of Absence" means a period of absence from
employment because (i) an Employer grants an Employee a leave
of absence for a specified period of time (not to exceed two
years) and such leaves are granted on a nondiscriminatory
basis; (ii) an Employee is on active military duty but not
only to the extent his employment rights are protected by the
Military Selective Service Act or the Uniformed Services
Employment and Reemployment Rights Act of 1994; or (iii) the
Employee is temporarily laid off by an Employer.

"Participant" means an Eligible Employee participating
in the Plan in accordance with ARTICLE I.

"Participating Affiliate" means an Affiliate to which the
Board of Directors has extended the Plan and which adopts the
Plan as a participating employer by action of its board of
directors or other governing body.

"Plan" means the Burlington Coat Factory Warehouse
Corporation Employees' Profit Sharing Plan, as set forth
herein (including any Appendices hereto) and as may be amended
from time to time.

"Plan Year" means the 12 month period beginning on the
first day of the Company's fiscal year and ending on that
Saturday of the following calendar year which falls closest to
June 30.

"Prior Plan" means the Burlington Coat Factory Warehouse
Corporation Employees Profit Sharing Plan, as in effect prior
to the Effective Date.

"Prior Plan Account" means the separate account for a
Participant in which the Participant's account under the Prior
Plan and related earnings are credited.

"Profit Sharing Account" means the separate account for
a Participant in which the Participant's profit sharing
contributions and related earnings are credited under ARTICLE
IV.

"Retirement" means the later of (i) a Participant's
termination of employment with the Employer on or after age 65
or (ii) the fifth anniversary of the date on which he
commenced participation in the Plan.

Page 374<PAGE>

"Rollover Account" means the separate account maintained
for a Participant to which the Participant's rollover
contributions and related earnings are credited under Section
5.1.

"Stock" means the Company's common stock, par value $1.00
per share.

"Transfer Account" means the separate account maintained
for a Participant to which amounts transferred on behalf of a
Participant and related earnings are credited under Section
5.2.

"Trust Agreement" means the agreement between the Trustee
and the Company pursuant to which the Trust Fund is
established and maintained, as provided in ARTICLE XII.

"Trustee" means the trustee under the Trust Agreement.

"Trust Fund" means the trust under the Plan established
pursuant to the Trust Agreement, as provided for in ARTICLE
XII.

"Valuation Date" means the last business day of each Plan
Year, and such other date as may be determined by the
Committee in its sole discretion.

"Year of Service" means a Plan Year during which a
Participant completes at least 1,000 Hours of Service;
provided, that for purposes of determining an Employee's
eligibility to participate in the Plan, pursuant to ARTICLE I,
a Year of Service shall mean any twelve (12) consecutive month
period, beginning on or after the Employee's date of
employment with an Employer, during which he completes at
least 1,000 Hours of Service; and further provided, that an
Employee who is credited with at least 1,000 Hours of Service
in both his first 12 consecutive months of employment and the
Plan Year which begins during such 12 month period shall be
credited with two Years of Service at the end of such Plan
Year.

Page 375<PAGE>

ARTICLE I

PARTICIPATION

1.1 Participation in the Plan shall be offered only to

Eligible Employees of the Employer. Once an Employee has become an

Eligible Employee, he will continue to be an Eligible Employee

until he ceases to be an Employee.

1.2 Each Employee on the Effective Date who was a participant

in the Prior Plan shall become a Participant in the profit sharing

feature of the Plan, as described in ARTICLE IV, as of the

Effective Date. Each other Employee shall be become an Eligible

Employee following the attainment of age 21 and the completion of

one Year of Service.

1.3 At the time an Employee becomes an Eligible Employee, he

will be provided with a written application for participation in

the salary deferral feature of the Plan and an explanation of the

Plan. Each Eligible Employee shall become a Participant with

respect to the salary deferral feature of the Plan as soon as

administratively feasible following the date on which his

application is received by the Committee.

1.4 A Participant who (a) ceases to be an Employee or (b)

enters the military service of the United States, shall be an

inactive Participant. Any interest of such inactive Participant in

the Investment Funds shall be allowed to remain, subject to ARTICLE

IX.

Page 376<PAGE>
ARTICLE II

PARTICIPANT DEFERRAL CONTRIBUTIONS

2.1 Subject to Sections 2.4 and 2.5 and ARTICLE VI, a

Participant may elect to defer prospectively by payroll deduction

from 1% to 15% of his Compensation, in whole percentages.

2.2 A Participant may change or suspend his deferral per-

centage as of the first payroll date of any future month subsequent

to his becoming a Participant by timely delivering the appropriate

form to the Committee.

2.3 The Employer shall contribute to the Plan, on behalf of

each Participant who elects pursuant to Section 2.1 to defer a

percentage of his Compensation, an amount in cash equal to the

amount deferred by the Participant. All such contributions,

together with any related earnings, shall be credited to the

Participant's Deferral Account.

2.4 (a) If the actual deferral percentage (as defined in

paragraph (c) below) of Compensation for Participants who are

Highly Compensated Employees is more than the amount permitted

under the deferral limitations set forth in paragraph (b) below,

there shall be a reduction in the portion of the contributions

credited to the Deferral Accounts of those Participants who are

Highly Compensated Employees and who elected to defer the highest

percentage of Compensation such that the deferral limitations are

satisfied. The Employer shall distribute to such Participants any

excess deferral contributions, and any related earnings, no later

than 2 1/2 months following the Plan Year in which such excess

Page 377<PAGE>

deferral contributions are made. In addition, if the Employer

believes that contributions would be in excess of the deferral

limitations set forth in paragraph (b) below, the Employer may in

its sole discretion suspend, in whole or part, deferral

contributions to the Plan made on behalf of Participants who are

Highly Compensated Employees. In such case the amounts which would

ordinarily be deferred in a payroll period shall be paid directly

to such Participants.

(b) The actual deferral percentage for any Plan Year of

all Eligible Employees who are Highly Compensated Employees shall

not exceed, alternatively: (A) 125% of the actual deferral

percentage for all Eligible Employees who are not Highly

Compensated Employees; or (B) 200% of the actual deferral

percentage for Eligible Employees who are not Highly Compensated

Employees; provided that, solely for purposes of clause (B) above,

the actual deferral percentage for all Eligible Employees who are

Highly Compensated Employees does not exceed the actual deferral

percentage for all Eligible Employees who are not Highly

Compensated Employees by more than 2%, or such other amount that

the Secretary of the Treasury shall prescribe.

deferral percentage for a specified group of Eligible Employees for

a Plan Year shall be the average of the ratios, calculated

separately for each Eligible Employee in such group, of (i) the

amount of contributions to the Deferral Account and Company Account

(to the extent taken into account for purposes of the actual

deferral percentage test) made on behalf of each Eligible Employee

Page 378<PAGE>

for such Plan Year to (ii) the Eligible Employee's Compensation for

such Plan Year. However, for purposes of determining the actual

deferral percentage for a Plan Year of an Employee who is a 5%

owner of the Company or who is one of the ten most highly-paid

Highly Compensated Employees, the deferral contributions (and

Employer matching contributions, if treated as deferral

contributions for purposes of the actual deferral percentage test)

and Compensation of such Highly Compensated Employee shall include

the deferral contributions (and Employer matching contributions, if

treated as deferral contributions for purposes of the actual

deferral percentage test) and Compensation for the Plan Year of

"family members" (as defined in Code section 414(q)(6)). "Family

members," with respect to such Highly Compensated Employees, shall

be disregarded as separate employees in determining the actual

deferral percentage both for Eligible Employees who are not Highly

Compensated Employees and for Eligible Employees who are Highly

Compensated Employees. In addition, for purposes of determining

the actual deferral percentage test, deferral contributions and

Employer matching contributions must be made before the last day of

the 12-month period immediately following the Plan Year to which

contributions relate.

(d) If a reduction in the amount of deferral

contributions on behalf of a Participant is required because of the

application of paragraph (a) above, the reduction shall be treated

as taxable earnings to the Participant for the pay period in which

the reduction occurs, and the Employer shall withhold any taxes

required by law on such taxable earnings.

Page 379<PAGE>

(e) If a distribution of excess deferral contributions

(and related earnings) is required because of the application of

paragraph (a) above, the Employer shall withhold any taxes required

by law on such distribution.

2.5 Notwithstanding anything contained herein to the

contrary, the maximum amount of contributions credited to the

Deferral Account on behalf of a Participant in any calendar year

may not exceed $9,240 (as may be adjusted by the Secretary of the

Treasury to reflect increases in the cost of living), and any such

contributions made to the Deferral Account in excess of such amount

(as adjusted), plus any related earnings on such excess amount,

shall be distributed to the Participant no later than April 15

following the close of the calendar year in which such excess

contributions are made.

ARTICLE III

EMPLOYER MATCHING CONTRIBUTIONS

3.1 Subject to the provisions of Sections 3.2 and 3.3 and

ARTICLE VI, the Employer shall contribute in cash to the Plan each

month an amount equal to 100% of a Participant's deferral

contributions (but not in excess of $250 for any Participant) made

pursuant to Section 2.1 on behalf of each Participant; provided

however, that the Company may, in its discretion, contribute Stock,

valued at its fair market value, in lieu of cash for all or any

part of its contribution under this Section 3.1. Employer matching

contributions shall be credited to a Participant's Company Account.

Page 380<PAGE>

3.2 (a) If the contribution percentage (as defined in

paragraph (c) below) of Compensation for Participants who are

Highly Compensated Employees is more than the amount permitted

under the special limitations set forth in paragraph (b) below,

there shall be a reduction in the Employer matching contributions

credited to the Company Accounts of those Participants who are

Highly Compensated Employees so that such special limitations are

satisfied. Any excess Employer matching contributions made to the

Trust Fund (plus any related earnings) shall be distributed to such

Participants before the end of the Plan Year following the Plan

Year in which such excess Employer matching contributions are made.

In addition, if the Employer or the Committee determines that

Employer matching contributions would be in excess of the special

limitations set forth in paragraph (b) below, the Employer may, in

its sole discretion, suspend, in whole or in part, deferral

contributions to the Plan made on behalf of Participants who are

Highly Compensated Employees and, therefore, related Employer

matching contributions with respect to such Participants (in which

case the deferral contributions that would ordinarily be

contributed to the Trust Fund on such Participants' behalf in a

payroll period shall be paid directly to such Participants).

(b) The contribution percentage for any Plan Year of all

Eligible Employees who are Highly Compensated Employees shall not

exceed, alternatively: (A) 125% of the contribution percentage for

all Eligible Employees who are not Highly Compensated Employees, or

(B) 200% of the contribution percentage for Eligible Employees who

are not Highly Compensated Employees; provided that, solely for

Page 381<PAGE>
purposes of clause (B) above, the contribution percentage for

Eligible Employees who are Highly Compensated Employees does not

exceed the contribution percentage for Eligible Employees who are

not Highly Compensated Employees by more than 2%, or such other

amount that the Secretary of the Treasury shall prescribe.

percentage for a specified group of Eligible Employees for a Plan

Year shall be the average of the ratios, calculated separately for

each Eligible Employee in such group, of (i) the amount of Employer

matching contributions made on behalf of each Eligible Employee for

such Plan Year (to the extent not taken into account for purposes

of the actual deferral percentage test) to (ii) the Eligible

Employee's Compensation for such Plan Year. However, for purposes

of determining the contribution percentage for a Plan Year of a 5%

owner of the Company or one of the ten most highly-paid Highly

Compensated Employees, the Employer matching contributions (to the

extent not taken into account for purposes of the actual deferral

percentage test) of such Highly Compensated Employee shall include

the Employer matching contributions (to the extent not taken into

account for purposes of the actual deferral percentage test) and

Compensation for the Plan Year of "family members" (as defined in

Code section 414(q)(6)). "Family members," with respect to such

Highly Compensated Employees, shall be disregarded as separate

employees in determining the average contribution percentage both

for Eligible Employees who are not Highly Compensated Employees and

for Eligible Employees who are Highly Compensated Employees. In

addition, for purposes of determining the contribution percentage

Page 382<PAGE>

test, Employer matching contributions will be considered made for

a Plan Year if made before the last day of the 12-month period

immediately following the Plan Year to which contributions relate.

(d) If a distribution of excess Employer matching

contributions (and related earnings) is required because of the

application of (a) above, the Employer shall withhold any taxes

required by law on such distribution.

(e) In the event an active Participant is required to

reduce his deferral contributions to the Plan as a result of the

application of the provisions of Section 2.4(a), the Employer

matching contribution under Section 3.1(a) made on behalf of the

Participant for the remainder of the Plan Year shall be applied to

the reduced amount of deferral contributions.

3.3 If both the actual deferral percentage and the average

contribution percentage of Highly Compensated Employees exceeds

1.25 multiplied by the actual deferral percentage and contribution

percentage of the non-Highly Compensated Employees, multiple use

will occur. In the event of multiple use, if one or more Highly

Compensated Employees participate in a plan(s) subject to both the

actual deferral percentage and contribution percentage tests and

the sum of the two percentages of those Highly Compensated

Employees subject to either or both tests exceeds the "aggregate

limit," then the average contribution percentage of those Highly

Compensated Employees who also participate in a salary deferral

arrangement will be reduced (beginning with the Highly Compensated

Employee whose contribution percentage is the highest) so that the

limit is not exceeded. For the purposes of this Section,

Page 383<PAGE>

"aggregate limit" shall mean the sum of (i) 125% of the greater of

the actual deferral percentage or the average contribution

percentage for non-Highly Compensated Employees for the Plan Year

and (ii) the lesser of 200% of, or two percentage points plus, the

smaller of such actual deferral percentage or average contribution

percentage.

ARTICLE IV

PROFIT SHARING CONTRIBUTIONS

4.1 Subject to Article VI, the Company shall contribute to

the Plan for each Plan Year such amount in cash as shall be

authorized by the Board of Directors in its sole discretion.

4.2 The amount contributed for any Plan Year shall be

allocated proportionately among the Profit Sharing Accounts of

Eligible Employees. The Profit Sharing Account of each Eligible

Employee shall be credited with a proportionate amount of such

contribution equal to the proportion that his Compensation for such

Plan Year bears to the total Compensation of all Eligible Employees

for such Plan Year.

ARTICLE V

ROLLOVER CONTRIBUTIONS; DIRECT TRANSFERS

5.1 Subject to the provisions of the Plan and to rules of

uniform application to be promulgated by the Committee, an Eligible

Employee, or Employee who is not yet an Eligible Employee, may make

a contribution to the Plan in cash which qualifies as a "rollover

amount", "rollover contribution," or "eligible rollover

Page 384<PAGE>
distribution" under Code section 403(a)(4), 408(d)(3) or

402(f)(2)(A), respectively. An Employee who wishes to make such a

contribution shall timely file with the Committee a written notice

requesting approval for such contribution, affirming that his

contribution qualifies as a rollover amount, rollover contribution

or eligible rollover distribution. Investment of such

contribution, as between or among the Investment Funds, as

applicable, shall be as directed by the Employee in accordance with

the provisions of Sections 7.3 and 7.4. In addition to the written

notice required under this Section 5.1, the Committee may require

such further documentation from the Employee, or the applicable

trustee, plan sponsor, custodian or other appropriate person, as

evidence of the contribution being qualified as a rollover amount,

rollover contribution or eligible rollover distribution, and until

such written notice and documentary evidence satisfactory to the

Committee have been so provided, the Committee shall not approve

such contribution to the Plan. The Committee shall be fully

protected in relying on such written and documentary evidence

presented by or on behalf of the Employee. Contributions made by

the Employee pursuant to this Section 5.1 shall be credited to the

Employee's Rollover Account.

5.2 Subject to the provisions of the Plan and to rules of

uniform application to be promulgated by the Committee, and in

addition to deferral contributions or rollover contributions to the

Plan in accordance with ARTICLE II and Section 5.1, an Eligible

Employee, or Employee who has not yet become an Eligible Employee,

may have transferred directly to the Plan on his behalf his accrued

Page 385<PAGE>
benefit in another retirement plan qualified under Code section

401(a) (provided such plan is not described in Code section

401(a)(11)(B)). An Employee who wishes to have such an amount

transferred shall timely file with the Committee a written notice

requesting approval for such transfer, affirming that the transfer

is from a tax-qualified plan. Such transfer shall be effected

directly from the transferor plan without distribution to the

Employee, as soon as practicable after receipt of such notice and

approval by the Committee. Investment of such transferred amount,

as between or among the Investment Funds, as applicable, shall be

as directed by the Employee in accordance with the provisions of

Sections 7.3 and 7.4. In addition to the written notice required

under this Section 5.2, the Committee may require such further

documentation from the Employee, or the applicable trustee, plan

sponsor, custodian or other appropriate person, as evidence of the

transfer being from a plan qualified under Code section 401(a), and

until such written notice and documentary evidence satisfactory to

the Committee have been so provided, the Committee shall not

approve such transfer to the Plan. The Committee shall be fully

protected in relying on such written and documentary evidence

presented by or on behalf of the Employee. Transfers made by the

Employee pursuant to this Section 5.2 shall be credited to the

Employee's Transfer Account.

Page 386<PAGE>

5.3 Upon the occurrence of an event of distribution as

described in Article IX, and notwithstanding any other provisions

of the Plan to the contrary that would otherwise limit a

distributee's election under this Section, a distributee may elect,

at the time and in the manner prescribed by the Company, to have

any portion of an eligible rollover distribution paid directly to

an eligible retirement plan specified by the distributee in a

direct rollover. For purposes of this Section 5.3, the following

definitions apply:

"Eligible rollover distribution" is any
distribution of all or any portion of the
balance to the credit of the distributee,
except that an eligible rollover distribution
does not include: any distribution that is one
of a series of substantially equal periodic
payments (not less frequently than annually)
made for the life (or life expectancy) of the
distributee or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated beneficiary, or for
a specified period of ten years or more; any
distribution to the extent such distribution
is required under Code section 401(a)(9); and
the portion of any distribution that is not
includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer
securities).

"Eligible retirement plan" is an individual
retirement account described in Code section
408(a), an individual retirement annuity
described in Code section 408(b), an annuity
plan described in Code section 403(a), or a
qualified trust described in Code section
401(a), that accepts the distributee's
eligible rollover distribution. However, in
the case of an eligible rollover distribution
to the surviving spouse, an eligible
retirement plan is an individual retirement
account or individual retirement annuity.

"Distributee" includes an Employee or former
Employee. In addition, the Employee's or

Page 387<PAGE>

former Employee's surviving spouse and the
Employee's or former Employee's spouse or
former spouse who is the alternate payee under
a qualified domestic relations order, as
defined in Code section 414(p), are
distributees with regard to the interest of
the spouse or former spouse.

"Direct rollover" is a payment by the Plan to
the eligible retirement plan specified by the
distributee.

ARTICLE VI

CONTRIBUTION LIMITATIONS

6.1 (a) Any provision of the Plan to the contrary

notwithstanding, no Employer contributions or other annual

additions to a Participant's Accounts will be made in any Plan Year

in excess of the lesser of $30,000 (as adjusted from time to time

by the Secretary of the Treasury) or 25% of the Participant's

"compensation" (within the meaning of Code section 415(c)(3)).

(b) Any provision of the Plan to the contrary

notwithstanding, in the case of a Participant who is a participant

in a defined benefit plan of the Company, his maximum annual

additions shall not exceed the amount which will result in a

defined contribution plan fraction which when added to the defined

benefit plan fraction of such Participant will exceed 1.0 for any

Plan Year.

defined benefit plans of the Company and any Affiliates (as

determined in accordance with Code section 415(h)), and all defined

contribution plans of the Company and any Affiliates (as determined

in accordance with Code section 415(h)), including the Plan, shall

Page 388<PAGE>

be combined or aggregated and the maximum benefit or annual

additions limitation shall be determined on the basis of a

Participant's annual additions and benefits under all such plans.

(d) For purposes of this Section 6.1, (i) a defined

contribution plan means a plan which provides for an individual

account for each participant and for benefits based solely upon the

amount contributed to the participant's account, and any income,

expenses, gains and losses, and any forfeitures of accounts of

other participants which may be allocated to such participant's ac-

counts except to the extent provided in (ii) below; (ii) a defined

benefit plan means any plan which is not a defined contribution

plan; however, in the case of a defined benefit plan which provides

a benefit derived from employer contributions which is based partly

on the balance of the separate account of a participant, such plan

shall be treated as a defined contribution plan to the extent bene-

fits are based on the separate account of a participant and as a

defined benefit plan with respect to the remaining portion of the

benefits under the plan; (iii) the defined benefit plan fraction

for a participant shall be a fraction the numerator of which is the

lesser of (a) the product of 1.25 multiplied by the dollar

limitation in effect for the plan, or (b) the product of 1.4

multiplied by an amount equal to 100% of the Participant's average

compensation for his high three years projected annual benefit

under the plan, if such plan provided the maximum benefit allowed

by law; (iv) the defined contribution plan fraction for a

Participant shall be a fraction the numerator of which is the sum

of the annual additions to the Participant's accounts under a

Page 389<PAGE>

defined contribution plan of the Company and Affiliates (as

determined in accordance with Code section 415(h)) and the

denominator of which is the sum of the lesser of the following

amounts for such Plan Year and for each prior Plan Year: (a) the

product of 1.25 multiplied by the dollar limitation in effect for

such Plan Year, or (b) the product of 1.4 multiplied by the 25% of

Participant's compensation (within the meaning of Code section

415(c)(3)); and (v) annual addition has the meaning set forth in

Code section 415(c)(2).

ARTICLE VII

INVESTMENT OF FUNDS

7.1 The Employer on a monthly basis, or more frequently, will

pay over to the Trustee, or its agent, contributions made to the

Plan to be held in trust and invested as provided herein and in the

Trust Agreement.

7.2 The Trust Fund will be divided into those Investment

Funds set forth in Appendix A.

7.3 (a) Subject to Section 7.3(b), each Participant's Profit

Sharing Account, Company Account, Deferral Account, Rollover

Account and Transfer Account, as applicable, will be invested in

one or more of the Investment Funds. Each Participant will desig-

nate the proportion (expressed as a percentage in multiples of 10%)

of his Accounts to be invested in each Investment Fund. Such

designation, once made, may be changed as of any future month. The

Participant may also transfer the amount equivalent to his

interest, or any partial interest (expressed as a percentage in

Page 390<PAGE>

multiples of 10%) from one Investment Fund to another as of the

beginning of any future month. Changes will be made by application

in such form and method as approved by the Committee and will be

made effective as soon as possible after such notice is delivered.

(b) Notwithstanding the foregoing, if the Company

contributes Stock to the Plan pursuant to Section 3.1, the portion

of a Participant's Company Account represented by such Stock shall

continue to be invested in Stock, subject to a change in investment

designation as provided in Section 7.3(a). Notwithstanding

anything contained herein to the contrary, a Participant who is an

insider for purposes of Section 16 of the Securities Exchange Act

of 1934 shall not be entitled to transfer the portion of his

Company Account which is invested in Stock to any other Investment

Fund in accordance with Section 7.3(a).

7.4 Each Participant shall have an interest in each In-

vestment Fund in which he has elected to have invested all or any

part of his deferral contributions under Section 2.1, his Employer

matching contributions under Section 3.1, his profit sharing

contribution under Section 4.1, his rollover contributions under

Section 5.1 and transfer amounts under Section 5.2. His interest

at any time in the Investment Funds shall be equal to the sum of

such contributions and transfer amounts, adjusted from time to time

to reflect his proportionate share of the income and losses

realized by such Investment Funds and of the net appreciation or

depreciation in the value of such Investment Funds. The Committee

shall maintain accounts to reflect the interest of each Participant

in each Investment Fund. As of each Valuation Date, the Committee

Page 391<PAGE>

shall ascertain from the Trustee the value of each Investment Fund

and shall on such basis determine the value of the interests of

Participants. The determinations of the Trustee and the Committee

shall be conclusive. Each Participant will be furnished a

statement of his Accounts at least quarterly.

7.5 (a) Each Participant's Prior Plan Account, if any, will

be invested by the Trustee in its sole discretion and in accordance

with the terms of the Trust Agreement. Each such Participant's

Prior Plan Account shall be credited with a proportionate share of

all income, gains or profits earned from the investment of the

portion of the Trust Fund containing Participant's Prior Plan

Account as provided in the Trust Agreement. Each such

Participant's Prior Plan Account shall be debited with a

proportionate share of any losses sustained by the Trustee from the

investment of the Trust Fund containing Participant's Prior Plan

Account on other transactions, and of any expense incurred by the

Trustee in the administration of the Prior Plan Account under the

Trust Fund, as provided in the Trust Agreement.

(b) The Trustee may, in its discretion, transfer in cash

any portion of the assets in a Participant's Prior Plan Account

from such Account to his Profit Sharing Account. Upon any such

transfer, the investment of such transferred amount shall be

governed by the Participant's designation of Investment Funds

pursuant to Section 7.3(a).

Page 392<PAGE>

ARTICLE VIII

VESTING OF INTEREST

8.1 A Participant's interest in his Deferral Account,

Rollover Account and Transfer Account, adjusted for his share of

income or losses and appreciation or depreciation therein, shall be

fully vested at all times.

8.2 (a) A Participant's interest in his Profit Sharing

Account, Company Account and Prior Plan Account, adjusted for the

share of income or losses and appreciation or depreciation therein,

shall become vested in accordance with the following schedule based

on the Participant's Years of Service:

Years of Service Vested Percentage
---------------- -----------------
less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%

(b) Notwithstanding the foregoing,

(i) a Participant's interest in his Profit Sharing
Account, Company Account and Prior Plan Account shall
become fully and immediately vested upon the first to
occur of the following:

(1) the Participant's Retirement,

(2) the Participant's Total Disability, or

(3) the Participant's death; and

(ii) a Participant who was a participant in the
Prior Plan shall be no less vested in his Prior Plan
Account than he was under the Prior Plan.

Page 393<PAGE>

Years of Service shall include his entire Years of Service; pro-

vided however:

(i) in the case of a Participant who was not vested
in any portion of his Profit Sharing Account, Company
Account and Prior Plan Account, his Years of Service
shall not include his Years of Service completed before
a Break in Service if the number of consecutive one-year
Breaks in Service equals or exceeds the greater of five
or the aggregate number of Years of Service, whether or
not consecutive, completed before such Break in Service
(such aggregate number of Years of Service shall not
include any Years of Service not taken into account by
reason of any prior Break in Service);

(ii) in the case of a Participant who has a Break in
Service of less than 12 months, his Years of Service
shall include both the Years of Service before and after
such Break in Service; and

(iii) in the case of a Participant who was a
participant in the Prior Plan, his Years of Service shall
include the period of his service for which he was
credited for vesting purposes under the Prior Plan prior
to the Effective Date.

8.3 In the event a Participant's employment terminates before

his interests in his Profit Sharing Account, Company Account and

Prior Plan Account become fully vested, the portion of such

Accounts which is not vested shall be forfeited and, subject to the

provisions of Section 8.5, allocated in the manner described in

Section 4.2 to the Profit Sharing Accounts of the remaining active

Participants for the Plan Year in which such forfeiture occurs.

8.4 Notwithstanding the provisions of Section 8.2, in the

event the Plan shall be terminated or partially terminated, or upon

a complete discontinuance of contributions, the interest of an

affected Participant in his Profit Sharing Account, Company Account

and Prior Plan Account shall become fully vested.

Page 394<PAGE>

8.5 In the case of a former Participant who has received a

distribution of his entire vested benefit under the Plan and

forfeited his nonvested interest in his Accounts by reason of

termination of employment for any reason, and who subsequently

becomes a Participant prior to the occurrence of five consecutive

one-year Breaks in Service, he shall be entitled to repay to the

Plan the full amount of such distribution. Upon such repayment,

any interest in such Participant's Accounts which was forfeited at

the time of his termination of employment shall be restored and his

right to receive such interest upon a subsequent termination of

employment shall be determined in accordance with Section 8.2 based

upon his total Years of Service at that time, if applicable. Such

restoration shall be made from amounts forfeited under Section 8.3

in the year in which an Employee's right to such restoration

arises. To the extent that current forfeitures are insufficient to

make such restoration, the Company shall make a special

contribution to the Plan to restore the forfeited amount.

ARTICLE IX

PAYMENTS FROM ACCOUNTS
----------------------

9.1 The entire vested interest of a Participant in his

Accounts shall become payable upon any of the following events:

(i) the Participant's Retirement;

(ii) the Participant's Total Disability;

(iii) the Participant's death;

(iv) the Participant's other termination of
employment with the Employer; or

Page 395<PAGE>

(v) upon the Participant's request in
accordance with Section 9.8, on or
after the Participant's attainment
of age 59 1/2; or

(vi) as a hardship withdrawal under
Section 9.9.

9.2 A Participant may, prior to termination of his employment

with the Employer, designate a beneficiary to whom distribution of

his interest in the Trust Fund shall be paid in the event of his

death prior to the full receipt of such interest; provided,

however, that in the event the Participant is married on the date

of his death, such beneficiary shall be deemed to be the

Participant's surviving spouse. The Participant may elect to

change or revoke his designated beneficiary at any time; provided,

however, that in the event prior to such change or revocation such

beneficiary is the Participant's surviving spouse, such election

shall not be effective unless such surviving spouse provides

written consent which acknowledges the effect of such election and

is witnessed by a Plan representative or a notary public. The

affirmative designation of any beneficiary and any elected change

or revocation thereof by a Participant shall be made on forms

provided by the Committee and shall not in any event be effective

unless and until filed with the Committee. If no designated or

deemed beneficiary survives the Participant or former Participant,

or if an unmarried Participant or former Participant fails to

designate a beneficiary under the Plan, the amount payable upon the

death of the Participant or former Participant shall be paid to his

estate.

Page 396<PAGE>

9.3 Upon termination of employment for any reason, any part

of a Participant's interest in his Accounts that has not vested

shall be forfeited and applied in accordance with Section 8.3, and

his active participation under the Plan will terminate subject to

the provisions of Section 9.4.

9.4 Notwithstanding the foregoing provisions of this ARTICLE

IX, and subject to Section 9.10, payments will be made from a

Participant's Accounts only upon the approval and direction of the

Committee, at the time and in the manner determined by the

Committee in accordance with the provisions of the Plan. When the

vested interest of a Participant becomes payable in accordance with

the provisions of Section 9.1 or 9.3, the Committee shall direct

the Trustee to pay from the Trust Fund an amount equal to the value

of such vested interest as determined under Sections 7.4 and 7.5 as

of the next Valuation Date; provided however, that, unless the

Participant or his beneficiary elects otherwise, pursuant to

Section 9.5, any such amount shall be paid to the Participant no

later than the earlier of (i) 60 days after the close of the Plan

Year in which his employment terminates or (ii) the date payment

first became administratively feasible.

9.5 The amounts payable from the Trust Fund shall be paid as

a single sum; provided, however, that such single sum payment shall

not be made without the consent of the Participant (or, if

applicable, his beneficiary) if such amount exceeds $3,500; and

provided further that any amounts retained in Trust Fund of a

terminated Participant shall be invested solely in the [Guaranteed

Income Fund], as described in Appendix A.

Page 397<PAGE>

9.6 If any person who is entitled to receive a payment from

the Plan shall die prior to such payment, the amount remaining to

be paid shall be paid in a single sum to the beneficiary previously

designated by the Participant whose interest is involved, or, if no

such beneficiary survives, to the estate of the Participant.

9.7 Except as otherwise provided by law or the issuance of a

"qualified domestic relations order" (within the meaning of Code

section 414(p)), no person shall have the right to assign,

alienate, transfer, hypothecate or otherwise subject to lien his

interest in or his benefit under the Plan, nor shall benefits under

the Plan be subject to the claims of any creditor. Any other

provision of the Plan to the contrary notwithstanding, if a

qualified domestic relations order requires the distribution of all

or part of an Employee's benefits under the Plan, the establishment

or acknowledgment of the alternate payee's right to benefits under

the Plan in accordance with the terms of such qualified domestic

relations order shall in all events be deemed to be consistent with

the terms of the Plan.

9.8 Upon written application to the Committee, in such form

and manner as the Committee may prescribe, a Participant who is

also an Employee may on or after attainment of age 59 1/2 make a cash

withdrawal once in each Plan Year from any or all of his Accounts.

The minimum cash withdrawal a Participant may make under this

Section 9.8 shall be the lesser of $500 or the balance in his

Accounts, as applicable.

9.9 (a) Upon written application of a Participant, the

Committee shall determine whether the Participant is entitled to

Page 398<PAGE>

make a hardship withdrawal from his Deferral Account (excluding

earnings on such Account), from the vested portion of his Company

Account, or from his Profit Sharing Account, Prior Plan Account,

Rollover Account or Transfer Account, as applicable, subject to the

provisions of this Section 9.9. A hardship entitling a Participant

to make a withdrawal will exist if the Committee determines that

the Participant has an immediate and heavy financial need. A

distribution based upon financial hardship cannot exceed the amount

required to meet the immediate financial need created by the

hardship and not reasonably available from reserves or other

resources of the Participant. The amount of immediate financial

need may include any amount necessary to pay any Federal, state or

local income taxes or penalties anticipated to result from the

distribution. The determination of the existence of financial

hardship and the amount required to be distributed to meet the need

created by the hardship shall be made by the Committee in

accordance with uniform and nondiscriminatory standards. Such

withdrawal shall be made upon 30 days' prior written application to

the Committee. In no event may the amount of such hardship

withdrawal exceed the amount necessary to constitute security for

repayment of any outstanding loan made pursuant to ARTICLE X.

(b) For purposes of this Section 9.9:

(i) A distribution will be deemed to be made on
account of an immediate and heavy financial need of the
Participant if the distribution is on account of (1)
medical expenses described in Code section 213(d)
incurred by the Participant, his spouse, or any
dependents (as defined in Code section 152) or necessary
for these persons to obtain medical care described in
Code section 213(d); (2) the purchase (excluding mortgage
payments) of a principal residence for the Participant;

Page 399<PAGE>

(3) the payment of tuition and related educational fees
for the next 12 months of post-secondary education for
the Participant, his spouse, or any dependents; (4) the
need to prevent the eviction of the Participant from, or
the foreclosure on the mortgage of, the Participant's
principal residence; or (5) other events or conditions as
prescribed or permitted by the Internal Revenue Service
through publication of documents of general
applicability;

(ii) In addition to the events described in (b)(i)
above, the Committee may determine on a nondiscriminatory
basis other events or conditions which establish a
Participant's immediate and heavy financial need;

(iii) A distribution will be deemed necessary to
satisfy an immediate and heavy financial need of a
Participant if (1) the distribution is not in excess of
the amount of the immediate and heavy financial need of
the Participant and (2) the Participant has obtained all
distributions, other than hardship withdrawals, and all
nontaxable loans available under the Plan and any other
plan maintained by the Company in which the Participant
participates; and

(iv) A Participant who receives a hardship with-
drawal in accordance with this Section shall have
contributions to his Deferral Account (as well as other
employee elective contributions under any other plan of
the Employer) suspended for 12 months after receipt of
the hardship withdrawal; the maximum amount of contri-

butions to his Deferral Account made on behalf of such
Participant under this Plan or any other plan of the
Employer in the tax year following the tax year in which
he receives a hardship withdrawal shall be the applicable
amount described in Section 2.5 for such tax year reduced
by the amount of contributions to his Deferral Account
made on behalf of such Participant in the tax year in
which he receives the hardship withdrawal.

9.10 Any other provision of the Plan to the contrary

notwithstanding, payment of a benefit under the Plan to a

Participant shall commence no later than the April 1st next

following the Plan Year in which the Participant attains age 70 1/2,

regardless of whether such Participant has retired as of such date.

Page 400<PAGE>
ARTICLE X

LOANS
-----

10.1 Upon application to the Committee a Participant shall be

permitted to borrow from his Accounts in accordance with criteria

established by the Committee on a uniform and nondiscriminatory

basis. A Participant shall be permitted to have no more than one

loan outstanding at one time. Any such loan shall be evidenced by

a note.

10.2 The minimum amount that a Participant shall be permitted

to borrow is $500. The maximum aggregate amount of all outstanding

loans to a Participant under this Plan and any other plan of the

Employer is the lesser of (i) $50,000 (reduced by the highest

outstanding balance of any prior Plan loan during the one-year

period ending on the day before the date the Plan loan is made), or

(ii) 50% of such Participant's accrued vested balances in his

Accounts.

10.3 Each loan shall be repaid by the Participant through

equal payroll deductions, on a level amortization basis, commencing

with the date of the loan, over a period of not more than 60

months. Notwithstanding the preceding sentence, the Committee may

permit repayment of a loan over a period in excess of five, but not

in excess of twenty, years when the loan is used to acquire any

dwelling unit which within a reasonable time is to be used as a

primary residence of the Participant. Interest on loans shall be

charged at a reasonable rate, as determined by the Committee on a

uniform and nondiscriminatory basis. Such rate will remain fixed

Page 401<PAGE>

for the term of the loan. A Participant may prepay the entire

balance of his loan at any time without penalty.

10.4 No distributions pursuant to ARTICLE IX (other than

Section 9.9) shall be made until the outstanding balance of any

loan plus interest thereon is repaid in full.

10.5 If a loan is in default, the Committee shall liquidate

all or any portion of the Participant's Collateral Account balance

as necessary to discharge the Participant's obligation under the

loan agreement before any amounts are paid to or on behalf of such

Participant. In no event shall such liquidation occur prior to the

time the Participant is entitled to a distribution under Article

IX. The following events will be considered a default:

(1) death or disability of the Participant;

(2) termination of the Plan;

(3) retirement or separation from service by the Participant

and

(4) failure to make any required payment of loan principal

and interest.

10.6 All loans granted under this ARTICLE X shall be granted

in a uniform and nondiscriminatory manner in accordance with

written loan procedures established by the Committee.

10.7 The Company may amend the terms of, or discontinue, the

loan program as it deems appropriate. The Company or the Committee

may also restrict or suspend the making of loans if it determines

that the program is having adverse effects on Plan investment

earnings or on Participants in general.

Page 402<PAGE>
ARTICLE XI

ADMINISTRATION
--------------

11.1 The Plan shall be administered by a Committee of not less

than three persons appointed by the Board of Directors. The

Company shall be the Plan Administrator and "named fiduciary"

(within the meaning of Section 402(a) of the Employee Retirement

Income Security Act of 1974, as amended) and the Committee shall

assume the responsibilities and duties set forth in this

ARTICLE XI.

11.2 The Committee shall establish rules for the ad-

ministration of the Plan. It shall interpret the Plan in its sole

discretion and its determinations shall be conclusive and binding

upon all Participants and their beneficiaries.

11.3 All expenses attributable to the administration of the

Plan and the expenses of the Trustee shall be paid out of the Trust

Fund except to the extent paid by the Employer.

11.4 The Committee shall have the power to assign any of its

responsibilities to subcommittees or members of the Committee and

may designate one or more subcommittees or other persons to carry

out any of its responsibilities.

11.5 The Committee may employ such agents and such clerical

and other services as it may deem advisable in carrying out the

provisions of the Plan, and may consult with counsel, who may be

counsel for the Company.

Page 403<PAGE>

ARTICLE XII

TRUSTEE
-------

12.1 All assets of the Plan shall be held pursuant to a Trust

Agreement between a Trustee designated by the Board of Directors

and the Company. The Trust Agreement shall provide, among other

things, for a Trust Fund, to be administered by the Trustee, with

respect to which all contributions shall be paid, and the Trustee

shall have such rights, powers and duties as the Board of Directors

shall from time to time determine. All assets of the Trust Fund

shall be held, invested and reinvested in accordance with the

provisions of the Trust Agreement.

12.2 All Employer contributions to the Plan are expressly

conditioned upon being deductible under Code section 404(a). At no

time prior to the satisfaction of all liabilities with respect to

Participants and their beneficiaries shall any part of the assets

of the Plan be used for or diverted to purposes other than for the

exclusive benefit of such persons; provided, however, Employer

contributions may be returned to the Employer (a) within one year

after the payment of a contribution, if made by the Employer by

reason of a mistake of fact, (b) within one year after the date of

denial of qualification of the Plan under Code section 401(a) if a

contribution is conditioned upon Plan qualification and the Plan

does not so qualify, or (c) within one year of the disallowance of

a deduction, to the extent a deduction is disallowed for such

contribution under Code section 404(a).

Page 404<PAGE>

ARTICLE XIII

TERMINATION AND AMENDMENT
-------------------------

13.1 The Company expects to continue the Plan indefinitely,

but the continuance of the Plan and the payment of contributions

are not assumed as contractual obligations.

13.2 The Plan may be terminated at any time by adoption of

resolutions by the Board of Directors. If the Plan shall be

terminated, the Trustee shall continue to hold, invest and

administer the Trust Fund in accordance with the provisions of the

Trust Agreement and shall make distributions therefrom in accor-

dance with the provisions of the Plan, as then in effect, pursuant

to instructions filed with the Trustee by the Committee upon such

termination or from time to time thereafter. Upon a complete

discontinuance of contributions, or upon termination or partial

termination of the Plan, each affected Participant or beneficiary

shall have a nonforfeitable interest in his Accounts in the Plan.

13.3 The Plan may be amended at any time and from time to

time, including retroactively, by adoption of resolutions by the

Board of Directors; provided, however, that no amendment shall

reduce the vested percentage of a Participant's accrued benefit

derived from Employer contributions below the vested percentage

thereof on the date such amendment is adopted or becomes effective,

whichever is later; and provided further, that no amendment shall

decrease the accrued benefit of a Participant.

Page 405<PAGE>

ARTICLE XIV

MISCELLANEOUS
-------------

14.1 Participation or non-participation in the Plan shall have

no effect upon the employment status of any Employee.

14.2 All benefits payable under the Plan shall be paid solely

from the Plan, and the Employer assumes no liability or

responsibility with respect to such payments.

14.3 In the event of any merger or consolidation of the Plan

with, or transfer of any assets or liabilities of the Plan to, any

other plan each Participant shall be entitled to receive a benefit

immediately after such merger, consolidation, or transfer (computed

as if such other plan had then terminated) which is equal to or

greater than the benefit he would have been entitled to receive

immediately before such merger, consolidation, or transfer

(computed as if the Plan had then terminated).

14.4 The Plan shall be construed and enforced in accordance

with the laws of the State of New Jersey, except to the extent

preempted by the laws of the United States.

ARTICLE XV

TOP HEAVY PROVISIONS
--------------------

The provisions of this ARTICLE XV shall become applicable

only under the circumstances described hereunder.

15.1 For purposes of this ARTICLE XV, the Plan shall be "top

heavy" if, as of the determination date (the last day of the

preceding Plan Year or, in the case of the first Plan Year, the

Page 406<PAGE>

last day of such year), the present value of the cumulative account

balances for Key Employees under the Plan and all other plans in

the "aggregation group," as defined in Code section 416(g)(2)(A),

exceeds 60% of the present value of the cumulative account balances

under all such plans for all Employees determined as of the appli-

cable "valuation date." For purposes of this ARTICLE XV,

"valuation date" shall mean the most recent Valuation Date within

a 12-month period ending on the determination date. The present

value of such account balances shall be computed in accordance with

Code section 416(g), and the above percentage ratio shall be

determined by a fraction, the numerator of which is the sum of the

present value of the account balances of Key Employees under the

Plan and all other plans in the aggregation group, and the denomi-

nator of which is the sum of the present value of the account

balances under all such plans, including the Plan, for all

Employees. If an individual has not performed any service for the

Employer at any time during the five-year period ending on a

determination date, any accrued benefit of such individual shall

not be taken into account.

15.2 The following provisions shall be applicable to members

only for any Plan Year with respect to which the Plan is top heavy:

(a) Notwithstanding ARTICLE III, the Employer shall make

a special contribution on behalf of each non-Key Employee who has

satisfied the eligibility requirements of the Plan, whether or not

a Participant in the Plan and who is in service at the end of the

Plan Year, with respect to such Plan Year in an amount which equals

the lesser of (i) 3% of his Compensation (as defined in Code

Page 407<PAGE>

section 414(s)), or, to the extent required by the Code and

regulations) or (ii) the largest percentage of Compensation

provided under the Plan for any Key Employee for such Plan Year

without regard to this Section 15.2. Any such special Employer

contribution shall be credited to such Participant's Company

Account. Notwithstanding the foregoing provisions of this Section

15.2(a), if a Participant in the Plan is also a participant in any

defined benefit plan of the Employer, then for each Plan Year with

respect to which the Plan is top heavy, such Participant's accrual

of a minimum benefit under such defined benefit plan in accordance

with Code section 416(c)(1) shall be deemed to satisfy the special

Employer contribution requirement of this Section 15.2(a).

Employer contributions resulting from a salary reduction election

by an Employee or matching contributions shall not be counted

toward meeting the minimum required allocations under this section.

The minimum allocation required (to the extent required to be

nonforfeitable under Code section 416(b)) may not be forfeited

under section 411(a)(3)(B) or 411(a)(3)(D).

(b) Notwithstanding the provisions of Section 6.1, if

during any Plan Year an Employee participates in both a defined

contribution plan and a defined benefit plan maintained by the

Company which comprise a "top heavy group," as defined in Code

section 416(g)(2)(B), the denominators of the defined benefit plan

fraction and the defined contribution plan fraction, as described

in Section 6.1(d), shall be calculated by substituting "1.0" for

"1.25" each place it appears in such Section; provided, however,

that this Section 15.2(b) shall not apply with respect to a plan in

Page 408<PAGE>

the top heavy group if (i) such plan would satisfy the requirements

of Code section 416(h)(2)(A) and (ii) the aggregate accrued

benefits and cumulative account balances of Key Employees under all

plans in the top heavy group do not exceed 90% of the aggregate

accrued benefits and cumulative account balances under all such

plans for all Employees.

Page 409<PAGE>

SAMPLE

APPENDIX A
INVESTMENT FUNDS
----------------

This Appendix A shall be incorporated in, and be deemed

an integral part of the Plan. Terms used in this Appendix A shall

have the same meanings as ascribed in the Plan document, unless the

context otherwise clearly requires.

The Accounts of a Participant shall be invested in one or

more of the following Investment Funds, in accordance with the

election of the Participant pursuant to Section 7.3 of the Plan:

A - Fixed Income Account - invested principally in
intermediate-term public and private bonds and
commercial mortgages.

B - Balanced Account - invest in a balanced portfolio
of common stocks and fixed-income securities.

C - Growth Account 1 - invested primarily in domestic,
dividend paying common stocks.

D - Growth Account 2 - invested primarily in
undervalued common stock and securities convertible
into common stock.

E - Emerging Growth Account - invested primarily in
common stocks of medium-sized companies that have
passed their start-up phase and show positive
earnings.

Page 410<PAGE>

APPENDIX B
GRANDFATHER PROVISIONS
----------------------

This Appendix B shall apply to a Participant in the Prior
Plan with respect to his Prior Plan Account. Terms in this
Appendix B shall have the same meanings as described in the Plan
document, unless the context otherwise clearly requires.

Upon the retirement of a Participant on or after the date
on which such Participant attains age 65 or the fifth anniversary
of the date on which he commenced participation in the Plan,
whichever is later, such Participant shall be entitled to have his
Prior Plan Account paid in one of the following manners:

(1) Such amounts shall be paid or applied in monthly,
quarterly, semi-annual or annual installments as nearly equal as
practicable, over a fixed reasonable period of time not to exceed
the life expectancy of such Participant, of the joint life
expectancy of the Participant and his designated Beneficiary; or

(2) Such amounts shall be paid in a lump sum; or

(3) Such amounts shall be used to purchase from an
insurance company selected by the Trustees, a nontransferable
immediate or deferred annuity contract which shall provide for a
fixed number of payments over a reasonable period of time not to
exceed the life expectancy of such Participant or the joint life
expectancy of the Participant and his designated beneficiary and
which shall not require the survival of the Participant or his
designated beneficiary as a condition of payment.

Page 411<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

Page 412<PAGE>

<PAGE>
EXHIBIT 10.12

PAGE 413<PAGE>

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
$80,000,000 10.60% SUBORDINATED NOTES DUE JUNE 27, 2005

TABLE OF CONTENTS

Page
1. AUTHORIZATION OF ISSUE OF NOTES. . . . . . . . . . . . 1

2. PURCHASE AND SALE OF NOTES; CLOSING. . . . . . . . . . 1

3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . 2

4. PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . 4

5. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . 5

6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . 12

7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . 26

8. SUBORDINATION OF THE NOTES . . . . . . . . . . . . . . 30

9. REPRESENTATIONS, COVENANTS AND WARRANTIES. . . . . . . 37

10. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . 46

11. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . 48

12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 57

PURCHASER SCHEDULE

EXHIBIT A - Form of Note
EXHIBIT B-1 - Form of opinion of Special Counsel to the
Company
EXHIBIT B-2 - Form of opinion of Debevoise & Plimpton
EXHIBIT C - Indebtedness Secured by Liens of the
Company and Restricted, Subsidiaries
EXHIBIT D - Restricted Subsidiaries
EXHIBIT E - Certain outstanding Indebtedness of the
Company and Restricted Subsidiaries
EXHIBIT F - Terminated Plans
EXHIBIT G - Subsidiary Guarantee

PAGE 414<PAGE>

10274499

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
1830 Route 130

Burlington, New Jersey 08016

As of June 27, 1990

To each of the Purchasers
listed in the attached
Purchaser Schedule

Gentlemen:

The undersigned, Burlington Coat Factory
Warehouse Corporation (herein called the "Company"),
hereby agrees with you as follows:

1. AUTHORIZATION OF ISSUE OF NOTES. The
Company will authorize the issue and sale of its subordi-
nated promissory notes in the aggregate principal amount
of $80,000,000, to be dated the date of issue thereof, to
mature June 27, 2005, to bear interest on the unpaid
balance thereof from the date thereof until the principal
thereof shall have become due and payable at the rate of
10.60% per annum and on overdue principal, premium and
interest at the rate specified therein, and to be substan-
tially in the form of Exhibit A attached hereto (any such
notes which may be issued under this Agreement and the
other Agreements referred to in paragraph 2 and any such
notes which may be issued hereunder and thereunder in
substitution or exchange for any such note pursuant to any
such provision collectively referred to herein as the
"Notes").

2. PURCHASE AND SALE OF NOTES; CLOSING.

2A. Purchase and Sale of Notes. The Company
hereby agrees to sell to you and, subject to the terms and
conditions herein set forth, you agree to purchase from
the Company Notes at l00% of the aggregate principal
amount of such Notes, registered in your name or that of
your nominee or nominees, in such denominations, and in
the aggregate principal amount, in each case as specified
opposite your name in the Purchaser Schedule attached
hereto. Concurrently with the execution and delivery of
this Agreement, the Company is entering into separate Note
Agreements (the "Other Agreements") identical with this
Agreement (except as to the identity of the purchaser and
the principal amount of Notes to be acquired) with the

PAGE 415<PAGE>

other purchasers (herein called the "Other Purchasers"
named in the Purchaser Schedule. The sale of Notes under
this Agreement and the other Agreements are to be separate
and several transactions.

2B. Closing. The purchase and sale of the
Notes shall take place at the offices of Debevoise &
Plimpton, 875 Third Avenue, New York, New York 10022 at a
closing (the "Closing") to be held on June 27, 1990 or on
such other date as you and the other Purchasers and the
Company may agree (the date of the Closing being referred
to herein as the "Closing Date"). At the closing, the
Company will deliver to you the Notes to be purchased by
you at the closing -as set forth opposite your name in the
Purchaser Schedule against payment of the purchase price
therefor by transfer of immediately available funds for
credit to the Company's account #020014368 at Chemical
Bank, New York, New York, ABA #020000128.

3. CONDITIONS OF CLOSING. Your obligation
to purchase and pay for the Notes to be purchased by you
hereunder is subject to the fulfillment to your satisfac-
tion, on or before the Closing Date, of the following
conditions:

3A. Opinions of Counsel. You shall have re-
ceived (i) a favorable opinion, dated the Closing Date and
addressed to you, from Reid & Priest, special counsel to
the Company, in substantially the form set forth in Ex-
hibit B-1 and covering such other matters incident to such
transactions as you may reasonably request; and (ii) a
favorable opinion, dated the Closing Date and addressed to
you, from Debevoise & Plimpton, your special counsel in
connection with the transactions contemplated by this
Agreement, in substantially the form set forth in Exhibit
B-2. To the extent that any opinion referred to above in
this paragraph 3A is rendered in reliance upon the opinion
of any other counsel, you shall have received a copy of
such opinion of such other counsel dated the Closing Date
and addressed to you or a letter from such other counsel,
dated the Closing Date and addressed to you, authorizing
you to rely on such other counsel's opinion.

3B. Representations and Warranties; Compliance; No
Default. The representations and warranties contained in
paragraph 9 shall be true on and as of the Closing Date,
except to the extent of changes caused by the trans-

PAGE 416<PAGE>

actions herein contemplated; there shall exist on the
Closing Date no Event of Default or Default; the Company
shall have performed and complied with all agreements and
conditions contained in this Agreement required to be per-
formed or complied with by it at or prior to the closing;
and the Company shall have delivered to you an officer's
Certificate, dated the closing Date, certifying as to the
matters set forth in this paragraph 3B.

3C. Sale of Notes to other Purchasers. The Company
shall have sold to the other Purchasers the Notes to be
purchased by them at the closing and shall have received
payment in full therefor.

3D. Purchase Permitted by Applicable Laws. The
offering, issuance, purchase and sale of, and payment for,
the Notes to be purchased by you on the Closing Date on
the terms and conditions herein provided (including the
use of the proceeds of such Notes by the Company) shall
not violate any applicable law or governmental regulation
(including, without limitation, section 5 of the Securi-
ties Act or Regulation G, T or X of the Board of Governors
of the Federal Reserve System) and shall not subject you
to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental
regulation, and you shall have received such certificates
or other evidence as you may request to establish com-
pliance with this condition.

3E. Consent of Banks. The Company shall have duly
obtained, and delivered to your special counsel copies of,
waivers of Mellon Bank (East) National Association
("Mellon") and BancOhio National Bank ("BancOhio") of the
provisions of Section 7.16 of (i) in the case of Mellon,
the Revolving Credit Agreement dated August 29, 1985,
between Mellon and the Company and (ii) in the case of
BancOhio, the Revolving Credit Agreement dated August 30,
1985, between BancOhio and the Company, as each has been
heretofore amended, to permit the Company to issue and
sell the Notes.

3F. Guarantee. Burlington Coat Factory Warehouse
of New Jersey, Inc. (the "Guarantor") shall have executed
and delivered to you the Subsidiary Guarantee (such
Guarantee, as amended from time to time pursuant to the
terms thereof, being herein called the "Guarantee"),
substantially in the form attached hereto as Exhibit G.
The Guarantee shall be in full force and effect, and no

PAGE 417<PAGE>

term or condition thereof shall have been amended, modi-
fied or waived, except with your prior written consent.

3G. Proceedings. All corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents inci-
dent thereto shall be satisfactory in substance and form
to you, and you shall have received all such counterpart
originals or certified or other copies of such documents
as you may reasonably request.

4. PREPAYMENTS. The Notes shall be subject to
prepayment with respect to the required prepayments speci-
fied in paragraph 4A and also under the circumstances set
forth in paragraph 4B.

4A. Required Prepayments. Until the Notes shall be
paid in full, the Company shall apply to the prepayment of
the Notes, without premium, the sum of $8,000,000 on June
27 in each of the years 1996 through 2004, inclusive, and
such principal amounts of the Notes, together with
interest thereon to the prepayment dates, shall become due
on such prepayment dates. Any prepayment made by the
Company pursuant to any other provision of this paragraph
4 shall not reduce or otherwise affect its obligation to
make any prepayment required by this paragraph 4A. The
remaining $8,000,000 principal amount, or the unpaid
balance then outstanding, of the Notes, together with
interest accrued thereon, shall become due on the maturity
date of the Notes.

4B. Optional Prepayment of Notes With Retirement
Premium. The Notes shall be subject to prepayment, in
whole at any time or from time to time in part (in
multiples of $1,000,000), at the option of the Company, at
100% of the principal amount so prepaid plus interest
thereon to the prepayment date and the Retirement Premium,
if any, with respect to each such Note.

4C. Notice of Optional Prepayment. The Company
shall give the holder of each Note to be prepaid in whole
or in part pursuant to paragraph 4B irrevocable written
notice of any such prepayment at least 20 Business Days
prior to the prepayment date, specifying the date of such
prepayment, and the principal amount of the Notes, and the
Notes held by such holder, being prepaid. Notice of
prepayment having been given as aforesaid, the principal
amount of the Notes specified in such notice, together

PAGE 418<PAGE>

with interest thereon to the prepayment date and the pre-
mium, if any, herein provided, shall become due and pay-
able on such prepayment date. On the Business Day next
preceding the prepayment date, the Company shall deliver
to the holder of each Note being prepaid an officer's -
Certificate stating whether a Retirement Premium is
payable in connection with such prepayment and setting
forth the calculations used in making such determination.

4D. Partial Payments Pro Rata. Upon any partial
prepayment of the Notes, the principal amount so prepaid
shall be allocated to all Notes at the time outstanding -
(including, for the purpose of this paragraph 4D only, all
Notes prepaid or otherwise retired or purchased or
acquired by the Company or any Subsidiary or Affiliate
other than by prepayment pursuant to paragraph 4A or 4B)
in proportion to the respective outstanding principal
amounts thereof.

4E. Retirement of Notes. The company shall not,
and shall not permit any of its Subsidiaries or Affiliates
to, prepay or otherwise retire in whole or in part prior
to their stated final maturity (other than by prepayment
pursuant to paragraph 4A or 4B or upon acceleration of
such final maturity pursuant to paragraph 7A), or purchase
or otherwise acquire, directly or indirectly, Notes held
by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire
or purchase or otherwise acquire, as the case may be, the
same proportion of the aggregate principal amount of Notes
held by each other holder of Notes at the time outstanding
upon the same terms and conditions. Any Notes prepaid or
otherwise retired or purchased or otherwise acquired by
the Company or any of its Subsidiaries or Affiliates shall
not be deemed to be outstanding for any purpose under this
Agreement, except as provided in paragraph 4D.

5. AFFIRMATIVE COVENANTS.

5A. Financial Statements. The Company covenants
that it will deliver to each Significant Holder in
quadruplicate:

(i) as soon as practicable and in any event not
more than 45 days after the end of each quarterly period
in each fiscal year of the Company (except the

PAGE 419<PAGE>

fourth quarter), a consolidated balance sheet of the
company and its Subsidiaries and of the Company and its
Restricted Subsidiaries as at the end of such quarterly
period and the related consolidated statements of income
and cash flows of the Company and its Subsidiaries and of
the Company and its Restricted Subsidiaries for such
period setting forth, in each case in comparative form,
figures for the corresponding period in the preceding
fiscal year of the Company all in reasonable detail and in
a form acceptable to the Required Holder(s) and certified
by the chief accounting officer of the Company as fairly
presenting the consolidated financial condition of the
Company and its Restricted Subsidiaries as at the dates
indicated and the consolidated results of their operations
and cash flows, in each case for the periods indicated, in
conformity with generally accepted accounting principles
applied on a basis consistent with prior periods (except
as disclosed in the certificate of such chief accounting
officer), subject to changes resulting from year-end
adjustments;

(ii) as soon as practicable and in any event not
more than 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and
its Subsidiaries and of the Company and its Restricted
Subsidiaries as at the end of such year and the related
consolidated statements of income and cash flows of the
company and its Subsidiaries and of the Company and its
Restricted Subsidiaries for such year. and setting forth,
in comparative form, corresponding figures for the
preceding fiscal year of the Company, all in reasonable
detail and satisfactory in scope to the Required Holder(s)
and accompanied by a report thereon of Deloitte & Touche
or other independent public accountants of recognized
national standing selected by the Company and reasonably
acceptable to the Required Holder(s), which report shall
state that such consolidated financial statements present
fairly the financial position of the Company and its
Subsidiaries and of the Company and its Restricted
Subsidiaries as at dates indicated and the consolidated
results of their operations and cash flows for the periods
indicated in conformity with generally accepted accounting
principles applied on a basis consistent with prior

PAGE 420<PAGE>

years (except as otherwise specified in such report)
and that the audit by such accountants in connection with
such consolidated financial statements has been made in
accordance with generally accepted auditing standards;

(iii) together with each delivery of financial
statements of the Company and its Subsidiaries and of the
Company and its Restricted Subsidiaries pursuant to
subparagraphs (i) and (ii) of this paragraph 5A, an
officer's Certificate (a) stating that the signer has
reviewed the terms of this Agreement and the Notes and has
made, or caused to be made under his supervision, a review
in reasonable detail of the transactions and condition of
the company and its Subsidiaries and of the Company and
its Restricted Subsidiaries during the fiscal period
covered by such financial statements and that such review
has not disclosed the existence during or at the end of
such fiscal period, and that the signer does not have
knowledge of the existence as at the date of the officer's
Certificate, of any condition or event which constitutes a
Default or Event of Default or, if any such condition or
event existed or exists, specifying the nature and period
of existence thereof and what action the Company has taken
or is taking or proposes to take with respect thereto and
(b) demonstrating (with computations in reasonable detail)
compliance by the Company with the provisions of
paragraphs 6A, 6B(2), 6B(3), 6C and 6F;

(iv) together with each delivery of financial
statements of the Company and its Subsidiaries and of
the Company and its Restricted Subsidiaries pursuant
to subparagraph (ii) of this paragraph 5A, a certifi-
cate by the Company's independent public accountants
stating (a) that their audit examination has included
a review of the terms of this Agreement and the Notes
as they relate to accounting matters and that such review
is sufficient to enable them to make the statement
referred to in clause (c) of this subparagraph (iv), (b)
whether, in the course of their audit examination, there
has been disclosed the existence during the fiscal year
covered by such financial statements (and whether they
have knowledge of the existence as of the date of such
accountants, certificate) of any condition or event which
constitutes a Default or Event of Default and if during

PAGE 421<PAGE>

their audit examination there has been disclosed (or if
they have knowledge of) such a condition or event,
specifying the nature and period of existence thereof (it
being understood, however, that such accountants shall not
be liable to any Person by reason of their failure to
obtain knowledge of any Default, or Event of Default which
would not be disclosed in the course of an audit conducted
in accordance with generally accepted auditing standards),
and (c) that based on their annual audit examination
nothing came to their attention which causes them to
believe that the information contained in the Officer's
Certificate delivered therewith pursuant to subparagraph
(iii) of this paragraph 5A is not correct or that the
matters set forth in such Officer's Certificate are not
stated in accordance with the terms of this Agreement;

(v) promptly upon their becoming available, copies
of all financial statements, reports, notices and proxy
statements sent or made available generally by the Company
to its public security holders, of all regular and
periodic reports and all registration statements and
prospectuses, if any, filed by the Company with any
securities exchange or with the Securities and Exchange
Commission or with NASDAQ, and of all press releases and
other written statements made available generally by the
Company or any of its Subsidiaries to the public
concerning material developments in the business of the
Company and its Subsidiaries;

(vi) promptly upon receipt thereof by the Company,
copies of all material reports submitted to the Company by
independent public accountants and consultants in
connection with each annual, interim or special audit of
the books of the Company or any of its Subsidiaries made
by such accountants;

(vii) promptly upon any officer of the Company
obtaining knowledge (a) that a condition or event
exists that constitutes a Default or Event of De-
fault, (b) that the holder of any Note has given any
notice or taken any other action with respect to a
claimed Default or Event of Default under this Agree-
ment or any of the Other Agreements, (c) of any con-
dition or event which could reasonably be expected
to have a material adverse effect on the business,

PAGE 422<PAGE>

condition (financial or other), assets, properties,
operations or prospects of the Company or the Company and
its Restricted Subsidiaries taken as a whole, (d) that any
Person has given any notice to the Company or any
Restricted Subsidiary or taken any other action with
respect to a claimed Default or event or condition of the
type referred to in subparagraph (iii) of paragraph 7A or
claimed default of the type referred to in paragraph 8D,
or (e) of the institution of any litigation involving
claims against the Company, equal to or greater than
$1,000,000 with respect to any single cause of action or
$5,000,000 in the aggregate, an officer's Certificate
specifying the nature and period of existence of any such
condition or event, or specifying the notice given or
action taken by such holder or Person and the nature of
such claimed Default, Event of Default, default, event or
condition, and what action the Company has taken, is
taking or proposes to take with respect thereto;

(viii) promptly upon any officer of the Company
obtaining knowledge of the occurrence of any (i) "re-
portable event", as such term is defined in section 4043
of ERISA, (ii) "prohibited transaction", as such term is
defined in section 4975 of the Code, in connection with
any Plan or any trust created thereunder which is not
otherwise exempt under a statutory, class or
administrative exemption, (iii) event described in
paragraph 6E, (iv) reorganization or termination of any
Multiemployer Plan to which the Company or any Related
Person is obligated or has been obligated to contribute,
(y) termination of any Plan, or proceedings to terminate
any Plan which are pending or threatened or (vi) liability
to or on account of any Plan under section 4062, 4063 or
4064 of ERISA which will or may be incurred by the Com-
pany, any Subsidiary or a Related Person, a written notice
specifying the nature thereof, what action the Company or
any Related Person has taken, is taking and proposes to
take with respect thereto, and, when known, any action
taken or threatened by the Internal Revenue Service or the
PBGC with respect thereto;

(ix) immediately upon the acceleration of the
maturity of any Senior Debt or the receipt by the Company
of a Payment Notice, an Officer's Certificate describing
the same; and

PAGE 423<PAGE>

(x) with reasonable promptness, such other
information and data with respect to the Company or any of
its Subsidiaries as from time to time may be reasonably
requested by any Significant Holder.

5B. Inspection of Property. The Company cove-
nants that it will permit any Person designated by any
significant Holder in writing, at such significant Hold-
er's expense, to visit and inspect any of the properties
of the Company and its Subsidiaries, to examine the cor-
porate books and financial records of the company and its
subsidiaries and make copies thereof or extracts therefrom
and to discuss the affairs, finances and accounts of any
of such corporations with the principal officers of the
Company or its independent public accountants (and by this
provision the Company authorizes such accountants to dis-
cuss with any Person so designated the affairs, finances
and accounts of the Company and its Subsidiaries, provided
that prior written notice of such discussion shall have
been given by such significant Holder to the Company), all
at such reasonable times and as often as such Significant
Holder may reasonably request.

5C. Covenant to Secure Notes Equally. The Company
covenants that, if it or an Restricted Subsidiary shall
create or incur, or suffer to be incurred or to exist, any
Lien upon any of its property or assets, whether now owned
or hereafter acquired, other than Liens permitted by the
provisions of paragraph 6B(1) or 6C (unless prior written
consent to the creation, incurrence or existence thereof
shall have been obtained pursuant to paragraph 12C), it
will make or cause to be made effective provision whereby
the Notes will be secured by such Lien equally and ratably
with any and all obligations thereby secured so long as
any such obligations shall be so secured, provided that
such security shall not in any way alter the rights under
paragraph 8 of the holders of Senior Debt and the Notes.

5D. Corporate Existence, etc. The Company
covenants that it will at all times preserve and keep in
full force and effect its corporate existence, and rights
and franchises material to its business, and those of each
of its Restricted Subsidiaries, except as otherwise speci-
fically permitted by paragraph 6B(6), provided that the
corporate existence of any Restricted Subsidiary may be
terminated if, in the good faith judgment of the board of

PAGE 424<PAGE>

directors of the Company, such termination is in the best
interest of the Company and is not disadvantageous to the
holders of the Notes.

5E. Payment of Taxes and Claims. The Company
covenants that it will, and will cause each of its Subsid-
iaries to, pay all taxes, assessments and other governmen-
tal charges imposed upon it or any of its properties or
assets or in respect of any of its franchises, business,
income or profits before any penalty or interest accrues
thereon, and all claims (including, without limitation,
claims for labor, services, materials and supplies) for
sums which have become due and payable and which by law
have or may become a Lien upon any of its properties or
assets, provided that no such tax, assessment, charge or
claim need be paid (i) if it is being contested in good
faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserves or other appro-
priate provision, if any, as shall be required by general-
ly accepted accounting principles shall have been made
therefor, or (ii) if and to the extent that nonpayment
thereof would not materially adversely affect the busi-
ness, condition (financial or other), assets, properties,
operations or prospects of the Company or the Company and
its Restricted Subsidiaries taken as a whole.

5F. Compliance with Laws, etc. The Company
covenants that it will, and will cause each of its Subsid-
iaries to, comply with the requirements of all applicable.
laws, rules, regulations and orders of any governmental
authority, the noncompliance with which would materially
adversely affect the business, condition (financial or
other), assets, properties operations or prospects of the
Company or the Company and its Restricted Subsidiaries
taken as a whole.

5G. Maintenance of Properties; Insurance. The
Company covenants that it will maintain or cause to be
maintained in good repair, working order and condition all
properties used or useful in the business of the Company
and its Restricted Subsidiaries and from time to time will
make or cause to be made all appropriate repairs, renewals
and replacements thereof. The Company covenants that it
will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to
its properties and business and the properties and busi-
ness of its Restricted Subsidiaries against loss or damage
of the kinds customarily insured against by corporations

PAGE 425<PAGE>

of established reputation engaged in the same or similar
business and similarly situated, of such types and in such
amounts as are customarily carried under similar circum-
stances by such other corporations.

6. NEGATIVE COVENANTS.

6A. Restricted Payments. The Company covenants
that it will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, (i) declare or pay
any dividends, either in cash or property, on any shares
of capital stock of the Company of any class (except
dividends or other distributions payable solely in shares
of capital stock of the Company), (ii) purchase, redeem or
retire any shares of capital stock of the Company of any
class or any warrants, rights or options to purchase or
acquire any shares of capital stock of the Company other
than in exchange for or out of the net proceeds to the
Company from the substantially concurrent issue or sale of
other shares of capital stock of the Company or warrants,
rights or options to purchase or acquire any shares of its
capital stock, or (iii) make any other payment or dis-
tribution in respect of any shares of capital stock of the
Company (such restricted declarations or payments of
dividends, purchases, redemptions or retirements of capi-
tal stock and warrants, rights or options, and all such
other restricted distributions, being herein collectively
called "Restricted Payments"), if after giving effect to
any such Restricted Payment the aggregate amount of all
sums and property included in all Restricted Payments made
during the period from and after December 31, 1989 to and
including the date of the making of such Restricted Pay-
ment, would exceed the sum of (a) $30,000,000 plus (b) 80%
of Consolidated Net Income for such period, computed on a
cumulative basis for said entire period (or if such Con-
solidated Net Income is a deficit figure, then minus 100%
of such deficit). The Company will not, and will not
permit any Restricted Subsidiary to, authorize or make a
Restricted Payment if after giving effect to the proposed
Restricted Payment, a Default or Event of Default would
exist, or the Company could not incur at least $1.00 of
additional Indebtedness under the provisions of paragraph
6B(2). "Consolidated Net income" shall mean consolidated
gross revenues of the Company and its Restricted
Subsidiaries less all operating and non-operating expenses
of the Company and its Restricted Subsidiaries including
all charges of a proper character (including current and
deferred taxes on income, provision for taxes on unremit-

PAGE 426<PAGE>
ted foreign earnings which are include and current additions to reserves),
but not including in gross revenues any gains (net of expenses and taxes ap-
plicable thereto) in excess of losses resulting from the
sale, conversion or other disposition of capital assets
(i.e., assets other than current assets), any gains
resulting form the write-up of assets, any equity of the
Company or any Restricted Subsidiary in the unremitted
earnings of the corporation which is not a Restricted
Subsidiary, any earnings of any Person acquired by the
Company or any Restricted Subsidiary through purchase,
merger or consolidation or otherwise for any year prior to
the year of acquisition, or any deferred credit
representing the excess of equity in any Restricted
Subsidiary at the date of acquisition over the cost of the
investment in such Restricted Subsidiary; all determined
in accordance with generally accepted accounting
principles.

6B. Lien, Debt and other Restrictions. The
company covenants that it will not, and will not permit
any Restricted Subsidiary to:

6B(l) Liens -- Except as expressly permitted by
paragraph 6C, create or incur, or suffer to be incurred or
to exist, any Lien on its property or assets, whether now
owned or hereafter acquired, or upon any income or profits
therefrom, or transfer any property for the purpose of
subjecting the same to the payment of obligations in
priority to the payment of its general creditors (in each
case whether or not provision is made for the equal and
ratable securing of the Notes in accordance with the
provisions of paragraph 5C), except

(i) Liens for taxes and assessments or govern-
mental charges or levies or Liens securing claims
or demands or mechanics and materialmen or other
like Liens, provided that such taxes, assessments,
charges, levies, claims or demands are not due and
payable or are being contested as permitted by
paragraph 5E;

(ii) Liens of or resulting from any litigation
or legal proceeding which are being contested in
good faith by appropriate actions or proceedings or
any judgment or award, the time for the appeal or
petition for rehearing of which shall not have
expired, or in respect of which the Company or the
Restricted Subsidiary party thereto shall at any
time in good

PAGE 427<PAGE>

faith be prosecuting an appeal or proceeding for a
review and in respect of which a stay of execution
pending such appeal or proceeding for review shall
have been secured;

(iii) Liens and priority claims incidental to the
conduct of its business or the ownership of its
properties and assets (including carrier's, ware-
housemen's and attorneys' Liens and statutory land-
lords' Liens) and deposits, pledges or Liens to
secure the performance of bids, tenders or trade
contracts or leases, or to secure statutory obliga-
tions, surety or appeal or customs bonds or other
Liens of like general nature incurred in the ordinary
course of business and not in connection with the
borrowing of money, provided in each case, the obli-
gation secured is not overdue or, if overdue, is being
contested in good faith by appropriate actions or
proceedings;

(iv) minor survey exceptions or minor encum-
brances, easements or reservations, or rights of others
for rights-of-way, utilities and other similar purposes,
or zoning or other restrictions as to the use of real
properties, which are necessary for the conduct of the
activities of the Company and its Restricted
Subsidiaries or which customarily exist on properties of
corporations engaged in similar activities and similarly
situated and which do not in the aggregate materially
impair the operation of the business of the Company and
its Restricted Subsidiaries;

(v) Liens securing Indebtedness of a Restricted
Subsidiary to the Company or to a Wholly-Owned
Restricted Subsidiary;

(vi) Liens existing as of June 20, 1990 and
securing the Indebtedness of the Company or any Restricted
Subsidiary outstanding on such date and specified in
Exhibit C attached hereto, and Liens renewing, extending
or refunding such Liens, provided that the principal
amount secured is not increased, and such Liens are not
extended to other property; and

(vii) Liens given or incurred after the date
hereof to secure the payment of the purchase price or

PAGE 428<PAGE>

the construction cost incurred in connection with the
acquisition, construction or improvement of existing or
acquired fixed assets intended to be used in carrying on
the business of the Company or a Restricted subsidiary,
including Liens existing on such fixed assets at the
time of acquisition thereof or at the time of
acquisition by the Company or a Restricted Subsidiary of
any business entity then owning such fixed assets,
whether or not such existing Liens were given to secure
the payment of the purchase price of the fixed assets to
which they attach, provided that (a) the Lien shall
attach solely to the property acquired, constructed,
improved or purchased, (b) at the time of acquisition of
any such fixed assets, the aggregate amount remaining
unpaid on all Indebtedness secured by Liens on such
fixed assets whether or not assumed by the Company or a
Restricted Subsidiary shall not exceed an amount equal
to 100% of the lesser of (A) the total purchase price
(if acquisition by stock, then the purchase price shall
be deemed to include liabilities assumed in the
acquisition) of such fixed assets, including
construction or improvement cost, and (B) the fair
market value of such fixed assets at the time of
acquisition thereof (as determines in good faith by the
board of directors of the Company), and (c) after
giving effect to the giving or incurrence of any such
Lien or the acquisition of fixed assets subject to any
such Lien, the Company could incur at least $1 of
additional Indebtedness pursuant to paragraph 6B(2);

6B(2) Debt -- Create, incur or assume any
Indebtedness (other than Indebtedness owed by a Restricted
Subsidiary to the Company or a Wholly-owned Restricted
Subsidiary) unless, at the time of the creation, incur-
rence or assumption thereof and after giving effect there-
to and to the concurrent repayment of any Indebtedness,
Consolidated Indebtedness shall not exceed 60% of Total
Capitalization. For all purposes of this Agreement, (i)
any, Indebtedness or other obligations owed by a corpora-
tion which hereafter becomes a Restricted Subsidiary shall
be deemed to have been incurred by such corporation imme-
diately after it first becomes a Restricted Subsidiary,
and (ii) any Indebtedness or other obligations owed by a
Restricted Subsidiary to the Company or a Wholly-Owned
Restricted Subsidiary which hereafter become owed to any
Person other than the company or a Wholly-Owned Restricted

PAGE 429<PAGE>

Subsidiary shall be deemed to have been incurred by such
Restricted Subsidiary at the time first owed to such other
Person;

6B(3) Sale and Leaseback Transactions -- Except
as expressly permitted by paragraph 6C, enter into or
become liable as lessee or as guarantor with respect to
any lease of any Principal Property whether now owned or
hereafter acquired by the Company or any Restricted Sub-
sidiary, which has been or is to be sold or transferred by
the Company or any Restricted Subsidiary to any Person
other than the Company or any Wholly-Owned Restricted
Subsidiary and having a term (including all renewal terms,
whether or not exercised) of more than 36 months from the
date of inception of such lease (with respect to any
Principal Property, any such sale or transfer and lease or
guarantee thereof, a "Sale and Leaseback Transaction"),
unless (i) if such lease is a Capitalized Lease, the
Capitalized Lease Obligations thereunder are permitted by
the provisions of paragraph 6B(2), after giving effect to
the application of proceeds of the sale of such Principal
Property under clause (ii) below and (ii) the net proceeds
of the sale or transfer of such Principal Property are at
least equal to the fair value (as determined by the Com-

pany's board of directors in good, faith) thereof and the
Company (a) shall offer to purchase, in accordance with
paragraph 4E, a principal amount of Notes equal to the
product obtained by multiplying the amount of such net
proceeds by a fraction the numerator of which is the
aggregate principal amount of Notes at the time outstand-
ing and the denominator of which is Consolidated Indebted-
ness (excluding Guaranties), at a price equal to the
principal amount of the Notes to be purchased plus inter-
est accrued thereon to the date of purchase, but without
premium, and (b) shall apply an amount in cash equal to
such net proceeds to the retirement (other than any manda-
tory retirement or by way of payment at maturity except
that the Company may apply amounts to mandatory retirement
or payment at maturity of Indebtedness other than that
evidenced by the Notes if immediately prior to and without
giving effect to such mandatory retirement or payment at
maturity of other indebtedness, Consolidated Indebtedness
shall not exceed 40% of Total Capitalization), within 180
days of the effective date of any such Sale and Leaseback
Transaction, of Indebtedness of the Company or any
Restricted Subsidiary included in Consolidated Indebted-
ness (including the Notes purchased pursuant to clause (a)
above but excluding Guaranties). For purposes of this

PAGE 430<PAGE>

paragraph 6B(3), the term "Principal property" shall mean
real or tangible property owned by the Company or any
Restricted subsidiary constituting a part of any store,
warehouse, distribution center, manufacturing or office
facility including leasehold improvements and fixtures
constituting a part of such store, warehouse, distribution
center, manufacturing or office facility, but shall not
include personal property (including, but not limited to,
motor vehicles, mobile materials handling equipment, cash
registers and other types of point of sale recording
devices and related equipment, data processing and other
office equipment) the net book value of which, determined
on a cumulative basis calculated from the Closing Date to
the date of determination thereof, is less than 1% of
Consolidated Net Worth;

6B(4) Restriction on Indebtedness of Restricted
Subsidiaries -- Permit any Restricted Subsidiary to cre-
ate, incur or assume any Indebtedness other than (i) In-
debtedness secured by a Lien permitted under any of
clauses (i) through (vii) of paragraph 6B(1), (ii) unse-
cured Indebtedness of a corporation existing at the time
such corporation is merged into or consolidated with, or
sells or otherwise transfers substantially all its assets
(or those of a division thereof) to, such Restricted
Subsidiary, (iii) unsecured Indebtedness of a corporation
existing at the time such corporation first becomes such
Restricted Subsidiary, (iv) Indebtedness of such
Restricted Subsidiary owed to the Company or a Wholly-
Owned Restricted Subsidiary, or (v) Indebtedness of the
Guarantor under the agreement referred to in clause (ii)
of paragraph 3E, and except for any extension, renewal or
replacement of any Indebtedness referred to in clauses (i)
through (iv) of this paragraph 6B(4), provided that the
aggregate principal amount thereof or the aggregate
preference on involuntary liquidation thereof, as the case
may be, shall not be increased;

6B(5) Loans, Advances and Investments -- Make or
permit to remain outstanding any loan or advance to, or
extend credit to, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or
make any capital contribution to, any Person (all of the
foregoing being referred to herein as "Investments"),
except that the Company or any Restricted Subsidiary may

(i) subject to paragraph 6F, make or permit to
remain outstanding loans or advances to, or own,

PAGE 431<PAGE>

purchase or acquire obligations or securities evidencing
Indebtedness of, any Subsidiary;

(ii) subject to paragraph 6F, own, purchase or
acquire stock of a Subsidiary or of a corporation which
immediately after such purchase or acquisition
will be a Subsidiary;

(iii) acquire and own stock, obligations or
securities received in settlement of debts (created in the
ordinary course of business) owing to the Company or any
Restricted Subsidiary;

(iv) own, purchase or acquire marketable direct
obligations issued or unconditionally guaranteed by the
United States of America or any agency thereof and
maturing within one year from the date of acqui-
sition thereof;

(V) make demand deposits in banks in the ordinary
course of business (not for investment purposes), and make
deposits, including but not limited to time deposits, or
own certificates of deposit of United States dollars
maturing within one year from the date of acquisition
thereof issued by commercial banks chartered under the
laws of the United States of America or any state thereof
or the District of Columbia, each having as at any date of
determination combined capital and surplus of not less
than $100,000,000 (determined in accordance with generally
accepted accounting principles) which has a long-term bank
deposit rating of A2 or better by Moody's Investor
service, Inc. (or comparably if the rating system is
changed) and having insurance of customers' deposits with
the Federal Deposit Insurance Corporation;

(vi) own, purchase or acquire commercial paper,
master notes, repurchase agreements, bankers' acceptances
and other similar money market instruments, in each case
maturing no more than 270 days from the date of
acquisition thereof and having as at any date of
determination one of the two highest ratings obtainable
from either Standard & Poor's Corporation or Moody's
Investors Service, Inc.; and

(vii) endorse negotiable instruments for collection
in the ordinary course of business;

PAGE 432<PAGE>
6B(6) Merger and Sale of Assets -- Merge or
consolidate with any other Person or sell, lease or trans-
fer or otherwise dispose of all or substantially all its
assets to any Person or Persons, except that

(i) any Restricted Subsidiary may merge with
the Company (provided that the Company shall be the
continuing or surviving corporation) or with any
one or more other Restricted Subsidiaries if,
immediately after giving effect to such
transaction, no condition or event shall exist
which constitutes a Default or Event of Default;

(ii) any Restricted Subsidiary may sell,
lease, transfer or otherwise dispose of any of its
assets to the Company or another Restricted
Subsidiary;

(iii) the Company may merge or consolidate
with, or sell or dispose of all or substantially
all of its assets to, any other corporation
(including, without limitation, any Restricted
Subsidiary), provided that (a) either (x) the
Company shall be the continuing or surviving
corporation (in the case of any such merger), or
(y) the successor or acquiring corporation shall be
a solvent corporation organized under the laws of
any State of the United States of America and shall
expressly assume in writing all of the obligations
of the Company under this Agreement and on the
Notes, including all covenants herein and therein
contained, and such successor or acquiring
corporation shall succeed to and be substituted for
the Company with the same effect as if it had been
named herein as a party hereto, provided, however,
that no such sale shall release the Company from
any of its obligations and liabilities under this
Agreement or the Notes unless such sale is followed
by the complete liquidation of the Company and
substantially all the assets of the Company
immediately following such sale are distributed in
such liquidation, and (b) immediately after giving
effect to such transaction, (x) the Company, as the
continuing or surviving corporation, or the
successor or acquiring corporation, as the case may
be, shall be able to incur at least $1 of
additional Indebtedness under the provisions of
paragraph 6B(2) and shall not own any stock or
other securities, equity interests, property or
assets which it could not acquire, or

PAGE 433<PAGE>

have outstanding any loan or advance which it could
not make, under the provisions of paragraph 6F, and
(y) no condition or event shall exist which consti-
tutes a Default or Event of Default; and

(iv) any Restricted Subsidiary may merge or
consolidate with, or sell or dispose of all or sub-
stantially all of its assets to, any other corpora-
tion, provided that (a) the corporation which is
the continuing, surviving, successor or acquiring
corporation shall be a Restricted Subsidiary and
(b) immediately after such merger or consolidation
or such sale or other disposition, (x) no condition
or event shall exist which constitutes a Default or
Event of Default and (y) such Restricted
Subsidiary, as the continuing, surviving, successor
or acquiring corporation, as the case may be, (A)
shall be able to incur at least $1 of additional
Indebtedness under the provisions of paragraph
6B(2) and (B) shall not own any stock or other
securities, equity interests, property or assets
which it could not acquire, or have outstanding any
loan or advance which it could not make, under the
provisions of paragraph 6F;

6B(7) Sale or Discount of Receivables -- Sell
with recourse any of its notes or accounts receivable or
sell any of its notes or accounts receivable on terms
(including discounts and commissions) which are not rea-
sonable and competitive with terms being offered generally
at the time by purchasers of notes and accounts receivable
of the type and in the volume being sold;

6B(8) Transactions with Affiliates -- Directly
or indirectly, engage in any transaction (including,
without limitation, the purchase, sale or exchange of
assets or the rendering of any service) with any Affili-
ate, except in the ordinary course of and pursuant to the
reasonable requirements of the Company's or such Restrict-
ed Subsidiary's business and upon fair and reasonable
terms that are comparable to those which might be obtained
at arm's length between unaffiliated parties.

6C. Permitted Financing Transactions. Not-
withstanding anything to the contrary contained in para-
graphs 5C, 6B(l) and 6B(3), but subject to the provisions
of paragraph 6B(2), (i) the Company may create, incur or
assume Indebtedness secured by a Lien in addition to the
Liens permitted by clauses (i) through (vii) of paragraph

PAGE 434<PAGE>
6B(1) and (ii) the Company may enter into Sale and
Leaseback Transactions without applying funds to the
retirement of Indebtedness as provided in paragraph 6B(3),
if the aggregate amount of all Indebtedness secured by
Liens permitted by clause (i) of this paragraph 6C and
Attributable Debt in respect of Sale and Leaseback Trans-
actions permitted by clause (ii) of this paragraph 6C, in
each case excluding Indebtedness or Attributable Debt of a
Restricted Subsidiary owed to the Company or a Wholly-
Owned Restricted Subsidiary, does not exceed 15% of Total
Capitalization, as computed as of the time of becoming
liable with respect to such obligation.

The term "Attributable Debt" shall mean at any
time, in the case of a Capitalized Lease, the Capitalized
Lease Obligations under such Capitalized Lease determined
at such time, and in the case of any other lease, the
present value determined at such time (computed by dis-
counting at the rate of 10.60% per annum compounded semi-
annually) of the obligation of the lessee for net rental
payments during the remaining term of such lease (includ-
ing any period for which such lease has been extended or
may, at the option of the lessor, be extended). The term
"net rental payments" under any lease for any period shall
mean the sum of the rental and other payments required to
be paid in such period by the lessee thereunder not
including, however, any amounts required to be paid by
such lessee (whether or not therein designated as rental
or additional rental) on account of sales, maintenance and
repairs, insurance, taxes, assessments, water rates or
similar charges required to be paid by such lessee there-
under or any amounts required to be paid by such lessee
thereunder contingent upon the amount of sales, main-
tenance and repairs, insurance, taxes, assessments, water
rates or similar charges.

6D. Transactions by Restricted Subsidiaries.
The Company covenants that it will not permit any Re-
stricted Subsidiary to (i) (either directly, or indirectly
by the issuance of rights or options for, or securities
convertible into, such shares) issue, sell or otherwise
dispose of (a) any shares of any Preferred Stock except to
the Company of any Wholly-Owned Restricted Subsidiary or
(b) any shares or Common Stock except (x) to the Company
or another Restricted Subsidiary and (y) concurrently to
any minority shareholders of such Restricted Subsidiary to
the extent necessary to maintain such minority sharehold-
ers' percentage ownership of outstanding shares of common

PAGE 435<PAGE>

Stock of such Restricted Subsidiary, or (ii) sell or
otherwise dispose of, or part with control of, any In-
debtedness of the Company, except to the Company.

6E. Compliance with ERISA. The Company will not,
and will not permit any Related Person to:

(i) engage in any transaction in connection with
which the Company or any Related Person could be subject
to either a civil penalty assessed pursuant to section
502(i) of ERISA or a tax imposed by section 4975 of the
Code, terminate or withdraw from any Plan (other than a
Multiemployer Plan) in a manner, or take any other
action with respect to any such Plan (including, without
limitation, a substantial cessation of operations within
the meaning of section 4068(f) of ERISA or an amendment
of a Plan within the meaning of section 4041(e) of
ERISA), which could result in any liability of the
Company or any Related Person to the PBGC, to a Plan or
to a trustee appointed under section 4042(b) or (c) of n
ERISA, incur any liability to the PBGC or a Plan on
account of a withdrawal from or a termination of a Plan
under section 4063 or 4064 of ERISA, incur any liability
for post-retirement benefits under any and all welfare
benefit plans (as defined in section 3(1) of ERISA, fail
to make full payment when due of all
amounts which, under the provisions of any Plan or
applicable law, the Company or any Related Person is
required to pay as contributions thereto, or permit to
exist any accumulated funding deficiency whether or not
waived, with respect to any Plan (other than a
Multiemployer Plan), if, in any such case, such
penalty or tax or such liability, or the failure to make
such payment, or the existence of such deficiency, as
the case may be, could reasonably be expected to result
in a liability of the Company or any Related Person in
excess of $500,000 in the aggregate;

(ii) at any time permit the value of all benefit
liabilities (determined in each case as of the end of
the relevant Plan year) under all Plans maintained at
such time by the Company or any of its Subsidiaries or
any Related Person (other than Multiemployer Plans) to
exceed the current value (as of such date) of the assets
of all such Plans allocable to such benefit liabilities
by more than $500,000;

PAGE 436<PAGE>

(iii) permit the aggregate complete or
partial withdrawal liability under Title IV of
ERISA with respect to Multiemployer Plans incurred
by the Company or its Subsidiaries or any Related
Person or the aggregate liability under Title IV of
ERISA incurred by the Company or its Subsidiaries
or any Related Person to exceed $500,000; or

(iv) permit the sum of (a) the amount of un-
funded benefit liabilities referred to in subpara-
graph (ii) of this paragraph 6E and (b) the amount
of the aggregate incurred withdrawal liability
referred to in subparagraph (iii) of this paragraph
6E to exceed $500,000.

For the purposes of subparagraphs (iii) and (iv) of this
paragraph 6E, the amount of the withdrawal liability of
the Company and its Subsidiaries and the Related Persons
at any date shall be the aggregate present value of the
amount claimed to have been incurred less any portion
thereof as to which the Company reasonably believes, after
appropriate consideration of possible adjustments arising
under subtitle E of Title IV of ERISA, it and its Subsid-
iaries and their Related Persons will have no liability,
provided that the Company shall obtain prompt written
advice from independent actuarial consultants supporting
such determination. The Company agrees that it will (x)
once in each calendar year, beginning in 1990, request.
and obtain a current statement of withdrawal liability
from each Multiemployer Plan to which the Company or any
Related Person is or has been obligated to contribute and
(y) transmit a copy of such statement to each Significant
Holder, within 15 days after the Company receives the
same. As used in this paragraph 6E, the term "accumulated
funding deficiency" has the meaning specified in section
302 of ERISA and section 412 of the Code,, the terms
"present value" and "current value" have the meanings
specified in section 3 of ERISA, the term "benefit
liabilities" has the meaning specified in section
4001(a)(16) of ERISA and the term "amount of unfunded
liabilities" has the meaning specified in section 4001 of
ERISA.

6F. Acquisition of Unrelated Businesses. The
Company covenants that it will not, and will not permit
any Subsidiary to, at any time purchase or acquire any
stock or other securities of, or equity interest in, any

PAGE 437<PAGE>

corporation or other entity (whether or not constituting a
Subsidiary) which directly, or indirectly through direct
or indirect ownership of any other corporation or entity,
owns or operates any Unrelated Business, or make any
capital contribution, loan or advance to any such cor-
poration or other entity, or purchase or acquire any
assets or property which constitute an Unrelated Business
(any such purchase acquisition, capital contribution, loan
or advance being herein called an "Unrelated Business
Transaction") unless (i) in the case of any such Unrelated
Business Transaction involving a Permitted Manufacturer,
(a) the sum of the Net Sales Transaction Percentages for
all Unrelated Business Transactions involving Permitted
Manufacturers occurring during the period of (x) 36 months
ending on the effective date of such Unrelated Business
Transaction, including such Unrelated Business Transac-
tion, would not exceed 20% and (y) 60 months ending on the
effective date of such Unrelated Business Transaction,
including such Unrelated Business Transaction, would not
exceed 30%, and (b) the sum of the EBIT Transaction Per-
centages for all Unrelated Business Transactions involving
Permitted Manufacturers occurring during the period of (x)
36 months ending on the effective date of such Unrelated
Business Transaction, including such Unrelated Business
Transaction, would not exceed 20%, and (y) 60 months
ending on the effective date of such Unrelated Business
Transaction, including such Unrelated Business Transac-
tion, would not exceed 30%, and ii) in the case of any
such Unrelated Business Transaction not involving a Per-
mitted Manufacturer, (a) the sum of the Net Sales Transac-
tion Percentages for all Unrelated Business Transactions
not involving Permitted Manufacturers after the date of
this Agreement, including such Unrelated Business Transac-
tion, would not exceed 10%, and (b) the sum of the EBIT
Transaction Percentages for all Unrelated Business Trans-
actions not involving Permitted Manufacturers after the
date of this Agreement, including such Unrelated Business
Transaction, would not exceed 10%, provided that the
Company or any Subsidiary may make a loan or advance in
the ordinary course of business to a Subsidiary previously
acquired in an Unrelated Business Transaction (and any
loan or advance so made shall not constitute an Unrelated
Business Transaction) if the proceeds of such loan or
advance are not applied to material capital expenditures
or to the expansion of any Unrelated Business.

For purposes of this paragraph 6F, the term "Net
Sales Transaction Percentage" shall mean, with respect to

PAGE 438<PAGE>

any Unrelated Business Transaction, the fraction (ex-
pressed as a percentage) of which the numerator is the
Consolidated Net Sales of the corporation or other entity
being acquired or otherwise involved in such Unrelated
Business Transaction (and its subsidiaries), or generated
by the assets or property being acquired, for the period
of twelve months ended at the end of the fiscal quarter of
the Company then most recently completed, and the deno-
minator is the Consolidated Net Sales of the Company and
its Subsidiaries for the same period; the term "EBIT
Transaction Percentage", shall mean, with respect to any
Unrelated Business Transaction, the fraction (expressed as
a percentage) of which the numerator is IBIT of the cor-
poration or other entity being acquired or otherwise
involved in such Unrelated Business Transaction (and its
subsidiaries), or generated by the assets or property
being acquired, for the period of twelve months ended at
the end of the fiscal quarter of the Company then most
recently completed, and the denominator is EBIT of the
Company and its Subsidiaries for the same period; the term
"Consolidated Net Sales" shall mean, with respect to any
corporation or other entity (and its subsidiaries), or any
assets or property, for any period, the consolidated
revenues of such corporation or other entity (and its sub-
sidiaries), or generated by such assets or property, as
the case may be, as the same would appear on a consoli-
dated statement of income prepared in accordance with
generally accepted accounting principles for such period,
after deducting therefrom any returns and allowances; the
term "EBIT" shall meal, with respect to any corporation or
other entity (and its subsidiaries), or any assets or
property, for any period, the consolidated net income of
such corporation or other entity (and its subsidiaries),
or generated by such assets or property, as the case may
be, before interest expense and provisions for income
taxes, as the same would appear on such consolidated
statement of income, excluding the results of operations
which have been discontinued prior to the date of deter-
mination; the term "Related Retail Business" shall mean
the operation of retail stores offering primarily outer-
wear and other apparel for men, women and children, which
stores may include departments offering other consumer
merchandise typically sold in department stores and may
contain leased departments offering other consumer mer-
chandise typically sold in department stores; the term
"Unrelated Business" shall mean any business other than a
Related Retail Business; and the term "Permitted Manu-

PAGE 439<PAGE>

facturer" shall mean any manufacturer of outerwear or
apparel for men, women and children.

6G. Termination or Amendment of Service Agree-
ment. The Company covenants that it will not, and will
not permit any Subsidiary to (i) terminate the agreement,
dated October 31, 1984, as amended (the "Service Agree-
ment"), between the Company and each of the Subsidiaries
party thereto or (ii) amend the Service Agreement in a
manner that would materially reduce the aggregate amount
of payments required to be made by Subsidiaries to the
Company thereunder.

7. EVENTS OF DEFAULT.

7A. Acceleration. If any of the following
events shall occur and be continuing for any reason what-
soever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of
law or otherwise):

(i) the Company defaults in the payment of any
principal of or premium on any Note when the same
shall become due, either by the terms thereof or
otherwise as herein provided; or

(ii) the Company defaults in the payment of any
interest on any Note for more than 5 Business Days after
the date due; or

(iii) the Company or any Restricted Subsidiary
defaults in any payment of principal of, premium, if
any, or interest on any other Indebtedness beyond any
period of grace provided with respect thereto, or fails
to perform or observe any other agreement, term or
condition contained in any agreement under which any
such Indebtedness is created (or if any other event
thereunder or under any such agreement shall occur and
be continuing), and at the time of or following such
default, failure or other event such Indebtedness is
declared or becomes due prior to any stated maturity,
provided that the aggregate amount of all such
obligations as to which such acceleration shall occur
exceeds $5,000,000; or

PAGE 440<PAGE>

(iv) any representation or warranty made by the
Company herein or in any writing furnished in connec-
tion with or pursuant to this Agreement shall be
false in any material respect on the date as of which
made; or

(v) the Company fails to perform or observe any
agreement contained in paragraph 5c or 6; or

(vi) the Company fails to perform or observe any
other agreement, term or condition contained herein and
such failure shall not be remedied within 30 days after
any officer of the company obtains actual knowledge
thereof; or

(vii) the Company or any Restricted Subsidiary
makes an assignment for the benefit of creditors or is
generally not paying its debts as such debts
become due; or

(viii) any decree or order for relief in respect of
the Company or any Restricted Subsidiary is entered
under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law, whether now
or hereafter in effect (herein called the "Bankruptcy
Law"), of any jurisdiction; or

(ix) the Company or any Restricted Subsidiary
petitions or applies to any tribunal for, or consents
to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar
official of the Company or any Restricted Subsidiary, or
of any substantial part of the assets of the Company or
any Restricted Subsidiary, or commences a voluntary case
under the Bankruptcy Law of the United States or any
proceedings (other than proceedings for the voluntary
liquidation and dissolution of a Restricted Subsidiary)
relating to the Company or any Restricted Subsidiary
under the Bankruptcy Law of any other jurisdiction; or

(x) any such petition or application is filed, or
any such proceedings are commenced, against the Company
or-any Restricted Subsidiary and the Company or such
Restricted Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an
order, judgment or decree is entered

PAGE 441<PAGE>

appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the
petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for
more than 60 days; or

(xi) any order, judgment or decree is entered in
any proceedings against the Company decreeing the
dissolution of the Company and such order, judgment or
decree remains unstayed and in effect for more
than 60 days; or

(xii) any order, judgment or decree is entered in
any proceedings against the Company or any Restricted
Subsidiary decreeing a split-up of the Company or such
Restricted Subsidiary which requires the divestiture of
assets representing a substantial part, or the
divestiture of the stock of a Restricted Subsidiary
whose assets represent a substantial part, of the
consolidated assets of the Company and its Restricted
Subsidiaries (determined in accordance with generally
accepted accounting principles) or which requires the
divestiture of assets, or stock of a Restricted
Subsidiary, which shall have contributed a substantial
part of the Consolidated Net Income for any of the three
fiscal years then most recently ended, and such order,
judgment or decree remains unstayed and in effect for
more than 60 days;

then (a) if such event is an Event of Default specified in
subparagraph (viii), (ix) or (x) of this paragraph 7A
with respect to the Company, all of the Notes at the time
outstanding shall automatically become immediately due and
payable at par together with interest accrued thereon,
without presentment, demand, protest or notice of any
kind, all of which are hereby waived by the Company, (b)
if such event is any other Event of Default, the Required
Holder(s) may at its or their option, by notice in writing
to the Company, declare all of the Notes to be, and all of
the Notes shall thereupon be and become, immediately due
and payable together with interest accrued thereon and
together with the Retirement Premium, if any, with respect
to each Note, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived
by the Company, provided that (x) if such event is an
Event of Default specified in subparagraph (i) or (ii) of
this paragraph 7A in respect of any Note, any Significant
Holder may, at its option, by notice in writ-

PAGE 442<PAGE>

ing to the Company, declare the Notes held by such Sig-
nificant Holder to be, and all of such notes shall there-
upon be and become, immediately due and payable together
with interest accrued thereon and together with the Re-
tirement Premium if any, with respect to each such Note,
without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company,
(y) if any significant Holder shall have declared all of
the Notes held by such Significant Holder to be due and
payable pursuant to clause (x) of this proviso, then any
other holder may at any time thereafter and until the
expiration of 60 days after such other holder shall have
received notice from the Company of such declaration, by
notice in writing to the Company, declare all of the Notes
held by such other holder to be immediately due and pay-
able, together with interest accrued thereon and together
with the Retirement Premium, if any, with respect to each
such Note, without presentment, demand, protest or any
other notice of any kind, all of which are hereby waived
by the Company, and (z) the Retirement Premium, if any,
with respect to each Note shall be due and payable upon
any such declaration only if (1) such event is an Event of
Default specified in any of subdivisions (i) to (vi),
inclusive, of this paragraph 7A, (2) the Required Hold-
er(s) in the case of a declaration by the Required Holders
(or any significant Holder in the case of a declaration by
such Significant Holder) shall have given to the Company,
at least 10 Business Days before such declaration, written
notice stating its or their intention so to declare Notes
to be immediately due and payable and identifying one or
more such Events of Default whose occurrence on or before
the date of such notice permits such declaration and (3)
one or more of the Events of Default so identified shall
be continuing at the time of such declaration.

At any time after the principal of, and interest
accrued on, together with the Retirement Premium, if any,
on any or all Notes are declared due and payable due to
the occurrence and continuance of a Default or Event of
Default specified in subparagraph (i) or (ii) of this
paragraph 7A by any Significant Holder(s) pursuant to the
provisions of the preceding sentence, the holders of not
less than 51% in aggregate principal amount of the Notes
then outstanding, by written notice to the Company may
rescind and annul any such declaration and its conse-
quences if (A) the Company has paid all overdue interest
on such Notes, the principal of and Retirement Premium, if
any, on such Notes which have become due otherwise than by

PAGE 443<PAGE>

reason of such declaration, and interest on such overdue
principal and premium and (to the extent permitted by
applicable law) any overdue interest in respect of such
Notes at the overdue rate applicable to such Notes and (B)
no judgment or decree has been entered for the payment of
any monies due pursuant to such Notes or this Agreement;
but no such rescission and annulment shall extend to or
affect any existing Event of Default or Default which
shall not have been cured or waived pursuant to paragraph
12C or subsequent Event of Default or Default or impair
any right consequent thereto.

7B. Other Remedies. If any Default or Event of
Default shall occur and be continuing, the holder of any
Note may proceed to protect and enforce its rights under
this Agreement and such Note by exercising such remedies
as are available to such holder in respect thereof under
applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or
in aid of the exercise of any power granted in this
Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any
other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in
equity or by statute or otherwise.

8. SUBORDINATION OF THE NOTES. The Notes shall
be subordinate and junior in right of payment to all
Senior Debt to the extent and in the manner provided in
this paragraph 8.

8A. Senior Debt. As used in this paragraph 8,
the term "Senior Debt" shall mean (i) all principal of and
premium, if any, and interest on any indebtedness of the
Company for borrowed money, (ii) all indebtedness (to the
extent such indebtedness would appear on a balance sheet
of the Company in accordance with generally accepted
accounting principles) (other than accounts payable and
other current liabilities incurred in the ordinary course
of business), whether or not for borrowed money, with
respect to which the Company has become directly liable
and which represents or has been incurred to finance the
purchase price (or a portion thereof) of any property or
services or business acquired by the Company, whether by
purchase, consolidation, merger or otherwise, (iii) all
rental obligations of the Company under Capitalized Leas-

PAGE 444<PAGE>

es, (iv) all indebtedness that has been assumed by the
Company and is secured by any Lien on any property or
asset owned or held by the Company and (y) all
indebtedness, rental obligations under Capitalized Leases
and other obligations of others of the character referred
to in clauses (i), (ii), (iii) and (iv) with respect to
which the Company has become directly liable by way of a
Guaranty, in each case outstanding on the date of this
Agreement or hereafter created, incurred or assumed by the
Company as permitted by the provisions of paragraph 6B(2),
provided that "Senior Debt" shall not include any indebt-
edness or obligation of the Company owed to any Subsidiary
and shall not include any indebtedness or obligation of
the Company which, under the instrument evidencing the
same or under which the same is outstanding, is subor-
dinate to any other indebtedness or obligations of the
Company.

8B. Agreement to Subordinate. The Company
agrees, and each holder by accepting a Note agrees, that
the principal of, premium, if any, and interest on the
indebtedness evidenced by the Notes is subordinated in
right of payment, to the extent and in the manner provided
in this paragraph 8, to the prior payment of all Senior
Debt and that the subordination is for the benefit of, and
shall be enforceable directly by, the holders of Senior
Debt. All provisions of this paragraph 8 shall be subject
to subparagraph 8M.

8C. Liquidation, Dissolution, Bankruptcy. Upon
any payment of distribution of the assets of the Company
of any kind or character, whether in cash, property or
securities, in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the
Company or its property ("Bankruptcy Proceeding"):

(i) holders of Senior Debt shall be entitled to
receive payment in full of the Senior Debt
before holders of Notes shall be entitled to
receive any payment of principal of or
premium, if any, or interest on the Notes,
except that holders of Notes may receive
shares of stock and any debt securities that
are subordinated to Senior Debt to at least
the same extent as the Notes, and

(ii) until the Senior Debt is paid in full, any
payment or distribution (whether by setoff

PAGE 445<PAGE>

or otherwise) to which holders of Notes would
be entitled but for this paragraph 8 shall be
made to holders of Senior Debt as their
interests may appear, except that holders of
Notes may receive shares of stock and any debt
securities that are subordinated to Senior
Debt to at least the same extent as the Notes.

For purposes of this paragraph 8, "payment in
full" and "payment of all", as used with respect to any
Senior Debt, means the receipt of cash or securities
(taken at their Fair Value at the time of receipt, deter-
mined as hereinafter provided) equal to the amount of all
such Senior Debt. In the event that securities are re-
ceived in accordance with any plan of reorganization or
readjustment which has been approved by the holders of
Senior Debt as a class as payment of, in consideration of,
or in exchange for Senior Debt, such Senior Debt shall be
deemed "paid in full."

"Fair Value" means, for purposes of this sub-
paragraph 8C, (a) if the securities are quoted on a na-
tionally recognized securities exchange, the closing price
on the day such securities are received or, if there are
not sales reported on that day, the reported closing bid
price on that day, and (b) if the securities are not so
quoted, a price determined by a nationally recognized
investment banking house selected by the holders of Senior
Debt receiving such securities, such price to be deter-
mined as of the date of receipt of such securities by the
holders of Senior Debt.

8D. Default on Senior Debt. The Company may not
pay principal of, premium, if any, or interest on the
Notes or make any deposit for the purpose of paying or
defeasing the payment of principal of, premium, if any, or
interest on any Notes, and may not repurchase, redeem or
otherwise retire any Notes (collectively "pay the Notes")
if any default on Senior Debt occurs and the maturity of
such Senior Debt is accelerated in accordance with its
terms unless the default has been cured or waived, any
such acceleration has been rescinded or such Senior Debt
has been paid in full; provided, however, that the Company
may pay the Notes without regard to the foregoing if the
Company receives written notice approving such payment
from the Designated Senior Debt Representative. The
"Designated Senior Debt Representative" shall mean such

PAGE 446<PAGE>

Person as the Company shall have designated as the "Desig-
nated Senior Debt Representative" in a notice given by the
Company to the holders of all the Notes (or the most
recent such notice if more than one such notice shall
have been given), which notice, shall certify that such
designation is in compliance with all instruments evidenc-
ing Senior Debt or under which Senior Debt is outstanding,
provided that if not such notice shall have been given,
the "Designated Senior Debt Representative" shall mean any
holder of Senior Debt which the Required Holder(s) deter-
mines to recognize as the "Designated Senior Debt Repre-
sentative". During the continuance of any default in any
amount exceeding $3,500,000 in the payment of Senior Debt
or the continuance of any default in the performance of
any negative covenant in any agreement under which such
Senior Debt is created pursuant to which the maturity
thereof may be accelerated immediately without further
notice (except such notice as may be required to effect
such acceleration), the Company may not pay the Notes for
a period (a "Payment Blockage Period") commencing upon the
receipt by the Company of written notice of such default
from the Designated Senior Debt Representative specifying
an election to effect a Payment Blockage Period (a"Pay-
ment Notice") and ending on the earlier of the cure or
waiver of such default and 179 days thereafter (unless
earlier terminated (i) by written notice to the Company
from the Designated Senior Debt Representative or (ii) by
payment in full of such Senior Debt), provided, however,
that there shall be no Payment Blockage Period if the
aggregate amount of Senior Debt outstanding is less than
$15,000,000. Notwithstanding the provisions described in
the immediately preceding sentence (but subject to the
provisions contained in the first sentence of this
subparagraph 8D), the Company may resume payments on the
Notes after the end of such Payment Blockage Period. Not
more than one Payment Notice may be given in any
consecutive 360-day period, irrespective of the number of
defaults with respect to Senior Debt during such period,
and not more than six Payment Notices with respect to
covenant defaults with respect to Senor Debt during such
period, and not more than six Payment Notices with respect
to covenant defaults may be given over the life of the
Notes. No additional Payment Notice may be given with
respect to any default which as know to any holder of
Senior Debt at the time a prior Payment Notice was given.

8E. Acceleration of Payment of Notes. If an
Event of Default shall have occurred and be continuing
(other than an Event of Default specified in clause

PAGE 447<PAGE>

(viii), (ix) or (x) of paragraph 7A with respect to the
Company), the holders electing to accelerate the Notes
shall give the Designated Senior Debt Representative 5
Business Days' prior written notice before accelerating
the Notes, which notice shall state that it is a "Notice
of Intent to Accelerate"; provided, however, that such
holders may so accelerate the Notes upon the earlier to
occur of the expiration of such 5 Business Day period and
the date of acceleration of any Senior Debt. If payment
of the Notes is accelerated because of an Event of De-
fault, the Company shall promptly notify holders of Senior
Debt of the acceleration. Notwithstanding the above such
holders of the Notes may not accelerate or exercise any
judicial or nonjudicial remedy with respect thereto during
the first forty-five days of a Payment Blockage Period,
unless the maturity of any Senior Debt is accelerated in
accordance with its terms.

8F. When Distribution Must Be Paid Over. If a
distribution is made to the holders of Notes in contraven-
tion of the terms of this paragraph 8, the holders of
Notes who receive the distribution shall hold it in trust
for holders of Senior Debt and upon the written request of
the Designated Senior Debt Representative pay it over to
them as their interests may appear, provided that, unless
the Designated Senior Debt Representative shall sustain
the burden of proof in a court of competent jurisdiction
that the holders of Notes receiving such distribution had
actual knowledge that such distribution contravened the
terms of this paragraph 8, each such obligation to hold in
trust and pay over such distribution arising under this
subparagraph 8F shall terminate on the earlier of (i) six
months after the date of such distribution, (ii) the cure
or waiver of the default following and in respect of which
such distribution contravened the terms of this para-
graph 8, (iii) the rescission of any acceleration upon
such default (unless a Payment Blockage Period shall
remain in effect thereafter) and (iv) the payment in full
of the Senior Debt in respect of which such default had
occurred. If at the time that any amount is turned over
to the holders of Senior Debt pursuant to this para-
graph 8F such amount shall not be required to be applied
to the payment of Senior Debt because no Senior Debt shall
then be due and payable, the holders of such Senior Debt
shall hold such amounts as security for the payment of
Senior Debt and shall apply such amounts to the payment of
Senior Debt when such Senior Debt shall become due and
payable, except that, if prior to the time of such ap-

PAGE 448<PAGE>

plication the holders of the Notes would be entitled to
receive payments from the Company pursuant to the provi-
sions of this Agreement and the Notes which would not
contravene the provisions of this paragraph 8, such hold-
ers of Senior Debt shall, if requested in writing by the
holders of the Notes, return such amounts to the holders
of the Notes.

8G. Subrogation. If any payment or distribu-
tion to which the holders of the Notes would otherwise
have been entitled but for the provisions of this para-
graph 8 shall have been applied, pursuant to the provi-
sions of this paragraph 8, to the payment of Senior Debt
in full, then and in such case, the holders of the Notes
shall be entitled to receive from the holders of Senior
Debt any payment of distributions received by such holders
of Senior Debt in excess of the amount sufficient to pay
all Senor Debt in full. After all Senior Debt is paid in
full and until the Notes are paid in full, the holders of
the Notes shall be subrogated to the rights of holders of
Senior Debt to receive distributions applicable to Senior
Debt. A distribution made under this paragraph 8 to
holders of Senor Debt which otherwise would have been made
to holders of notes is not, as between the Company and its
creditors other than the holders of Senior Debt, on the
one hand, and the holders of Notes, on the other, a
payment by the Company on Senior Debt.

8H. Relative Rights. This paragraph 8 defines
the relative rights of the holders of the Notes and
holders of Senior Debt. Except as provided in this
paragraph 8 nothing in this Agreement shall:

(i) impair, as between the Company and the
holders of the Notes, the obligation of
the Company, which is absolute and
unconditional, to pay principal of,
premium, if any, and interest on the
Notes as and when the same shall become
due and payable in accordance with their
terms; or

(ii) prevent any holder of a Note from exer-
cising its available remedies upon a De-
fault or Event of Default, subject to the
rights of holders of Senior Debt to
receive distributions otherwise payable
to the holders of Notes.

PAGE 449<PAGE>

8I. Subordination may Not Be Impaired by Com-
pany. No right of any holder of Senior Debt to enforce
the subordination of the indebtedness evidenced by the
Notes shall be impaired by any act or failure to act by
the Company or by its failure to comply with this Agree-
ment.

8J. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and
the notice given to the Designated senior Debt Representa-
tive (if any).

8K. Paragraph 8 Not to Prevent Events of Default
or Limit Right to Accelerate. The failure to make a
payment pursuant to the Notes by reason of any provision
in this paragraph 8 shall not be construed as preventing
the occurrence of a Default or Event of Default. Except
as expressly set forth in subparagraph 8E nothing in this
paragraph 8 shall have any effect on the right of the
holders of Notes to accelerate the maturity of the Notes.

8L. Trust Moneys Not Subordinated. Notwith-
standing anything contained herein to the contrary, pay-
ments from money or the proceeds of obligations issued or
guaranteed by the United States of America held in trust
for the purpose of defeasing the payment of principal of,
premium, if any, and interest on the Notes shall not be
subordinated to the prior payment of any Senior Debt or
subject to the restrictions set forth in this paragraph 8
and none of the holders of Notes shall be obligated to pay
over any such amount to the Company or any holder of
Senior Debt of the company or any other creditor of the
Company.

8M. Entitled to Rely. Upon any payment or
distribution pursuant to this paragraph 8, holders of the
Notes shall be entitled to rely (i) upon any order or
decree of a court of competent jurisdiction in which any
proceedings of the nature referred to in subparagraph 8C
are pending, (ii) upon a certificate of the liquidating
trustee or agent or other Person making such payment or
distribution to the holders of the Notes or (iii) upon the
Designated Senior Debt Representative for the purpose of
ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior Debt
and other indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or dis-

PAGE 450<PAGE>

tributed thereon and all other facts pertinent thereto or
to this paragraph 8. In the event that the Company deter-
mines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior
Debt to participate in any payment or distribution pur-
suant to this paragraph 8, the Company may request such
Person to furnish evidence to the reasonable satisfaction
of the company as to the amount of Senior Debt held by
such Person, the extend to which such Person is entitled
to participate in such payment or distributions and other
facts pertinent to the rights of such Person pending
judicial determination as to the right of such Person to
receive such payment.

8N. Reliance by Holders of Senior Debt on
Subordination Provisions. Each holder of a Note, by
accepting a Note, acknowledges and agrees that the fore-
going subordination provisions are, and are intended to
be, an inducement and a consideration to each holder of
any Senior Debt, whether such Senior Debt was created or
acquired before or after the issuance of the Notes, to
acquire and continue to hold, or to continue to hold, such
Senior Debt and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provi-
sions in acquiring and continuing to hold, or in
continuing to hold, such Senior Debt.

8O. Reinstatement of Subordination. If, at any
time, all or part of any payment of any of the Senior Debt
theretofore made by the Company or any other Person is
rescinded or must otherwise be returned by the holders of
Senior Debt for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization
of the Company or such other Person), these subordination
provisions shall continue to be effective or be
reinstated, as the case may be all as though such payment
had not been made.

9. REPRESENTATION, COVENANTS AND WARRANTIES.
The Company represents, covenants and warrants:

9A. Organization. The Company is a corpora-
tion duly organized and existing in good standing under
the laws of the State of Delaware, each Restricted Sub-
sidiary is duly organized and existing in good standing
under the laws of the jurisdiction in which it is incor-

PAGE 451<PAGE>

porated, and the Company has and each Restricted Sub-
sidiary has the corporate power to own its respective
property and to carry on its respective business as now
being conducted. This Agreement and the Notes have been
duly authorized by all necessary corporate action on the
part of the Company and, when executed and delivered by
the Company, will constitute legal, valid and binding
obligations of the Company. The Guarantee has been duly
authorized by all necessary corporate action on the part
of the Guarantor and, when executed and delivered by the
Guarantor, will constitute a legal, valid and binding
obligation of the Guarantor. There are no Restricted
Subsidiaries in existence as of the date hereof other than
those listed in Exhibit D attached hereto.

9B. Business; Financial Statements. The Com-
pany has furnished you with complete and correct copies of
a private placement memorandum with respect to the
Company, dated May 1990 (the "Memorandum"), prepared by
The First Boston Corporation and Ladenburg, Thalmann &
Co., Inc. for use in connection with the Company's private
placement of the Notes. There are included in the Memor-
andum (i) the audited consolidated balance sheets of the
Company and its Subsidiaries as of July 1, 1989 and Octo-
ber 29, 1988, and the related statements of income, stock-
holders' equity and cash flows for the eight months ended
July 1, 1989 and for the year ended October 29, 1988 and
October 31, 1987 (the "Audited Financial Statements"),
accompanied by the opinion thereon of Touche Ross & Co.,
independent public accountants, and (ii) the unaudited
condensed consolidated balance sheets of the Company and
its Subsidiaries as at December 30, 1989 and December 31,
1988 and the related unaudited condensed consolidated
statements of income and cash flows for the period of six
months and three months ended on each such date (the
"Interim Financial Statements"). The Company has also
furnished you with complete and correct copies of the
unaudited condensed consolidated balance sheets of the
Company and its Subsidiaries as at March 31, 1990 and
April 1, 1989 and the related unaudited condensed con-
solidated statements of income and cash flows for the
periods of nine months and three months then ended (to-
gether with the Audited Financial Statements and the
Interim Financial Statements, the "Financial Statements").
The Memorandum correctly describes in all material re-
spects, as of the date thereof, the business then con-
ducted and proposed to be conducted by the Company and
its Restricted Subsidiaries. The Financial Statements

PAGE 452<PAGE>

(including any related schedules and/or notes) are true
and correct in all material respects have been prepared
in accordance with generally accepted accounting prin-
ciples consistently followed throughout the periods in-
volved and show all liabilities, direct and contingent, of
the Company and its consolidated Subsidiaries required to
be shown in accordance with such principles. The balance
sheets fairly present the condition of the Company and its
consolidated Subsidiaries as at the dates thereof, and the
statements of income, shareholders' equity, and cash flows
fairly present the results of the operations of the Com-
pany and its consolidated Subsidiaries for the periods
indicated. There has been no material adverse change in
the business, condition (financial or other), assets,
properties, operations or prospects of the Company or the
Company and its consolidated Subsidiaries taken as a whole
since July 1, 1989.

9C. Actions Pending. There is no action,
suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened against the Company
or any of its Subsidiaries, or any properties or rights of
the Company or any of its Subsidiaries, by or before any
court, arbitrator or administrative or governmental body
which might result in any material adverse change in the
business, condition (financial or other),, assets, proper-
ties, operations or prospects of the Company or the Com-
pany and its Restricted Subsidiaries taken as a whole.

9D. Outstanding Indebtedness. Neither the
Company nor any of its Restricted Subsidiaries has out-
standing any Indebtedness except as described in the
Financial Statements or in Exhibit E hereto. There exists
no material default under the provisions of any instrument
evidencing such Indebtedness or of any agreement relating
thereto.

9E. Title to Properties. Each of the Company
and its Restricted Subsidiaries has good and indefeasible
title to its respective real properties (other than pro-
perties which it leases) and good title to all of its
other respective properties and assets, including the
properties and assets reflected in the balance sheet as at
July 1, 1989 referred to in paragraph 9B (other than
properties and assets disposed of in the ordinary course
of business), subject to no Lien of any kind except Liens
permitted by paragraph 6B(l). All leases necessary in any
material respect for the conduct of the respective busi-

PAGE 453<PAGE>

nesses of the Company and its Restricted Subsidiaries are
valid and subsisting and are in full force and effect.
As of the date hereof, all of the outstanding capital
stock of each Restricted Subsidiary is validly issued,
fully paid and non-assessable, and all such capital stock
is owned by the Company or a Restricted Subsidiary free
and clear of any Lien of any kind.

9F. Taxes. The Company has and each of its
Subsidiaries has filed all Federal, State and other income
tax returns which, to the best knowledge of the officers
of the Company, are required to be filed, and each has
paid all taxes as shown on such returns and on all assess-
ments received by it to the extent that such taxes have
become due, except such taxes as are being contested in
good faith by appropriate proceedings and for which ade-
quate reserves have been established in accordance with
generally accepted accounting principles.

9G. Conflicting Agreements and other Matters.
Neither the Company nor any of its Subsidiaries is in
violation of any term of its charter or by-laws, and
neither the Company nor any of its Subsidiaries is in
violation of any term of any agreement (including any
agreement with stockholders), instrument, order, judgment,
decree, statute, law, rule or regulation to which the
Company or any of its Subsidiaries is subject, the conse-
quences of which violation might have a materially adverse
affect on the business, operations, affairs, condition
(financial or otherwise), properties or assets of the
Company or of the Company and its Restricted Subsidiaries
taken as a whole. Neither the Company nor any of its
Subsidiaries is a party to any contract or agreement or
subject to any charter or other corporate restriction
which materially and adversely affects its business,
property or assets, or financial condition. Neither the
execution nor delivery of this Agreement, the Notes or the
Guarantee, nor the offering, issuance and sale of the
Notes, nor fulfillment of nor compliance with the terms
and provisions hereof, of the Notes or of the Guarantee
will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the
creation of any Lien upon any of the properties or assets
of the Company or any of its Subsidiaries pursuant to, the
charter or by-laws of the Company or any of its Subsidi-
aries, any award of any arbitrator or any agreement (in-
cluding any agreement with stockholders), instrument,

PAGE 454<PAGE>
order, judgment, decree, statute, law, rule or regulation
to which the Company or any of its Subsidiaries is sub-
ject. Neither the Company nor any of its Subsidiaries is
a party to, or otherwise subject to any provision con-
tailed in, any instrument evidencing indebtedness of the
Company or such Subsidiary, any agreement relating thereto
or any other contract or agreement (including its charter)
which limits the amount of, or otherwise imposes restric-
tions on the incurring of, Indebtedness of the Company of
the type to be evidenced by the Notes or Indebtedness of
the Guarantor of the type to be evidenced by the Guaran-
tee, other than the agreements referred to in para-
graph 3E.

9H. Offering of Notes. Neither the Company nor
any agent acting on its behalf has, directly or indirect-
ly, offered the Notes or any similar security of the
Company for sale to, or solicited any offers to buy the
Notes or any similar security of the Company from, or
otherwise approached or negotiated with respect thereto
with, any Person other than Institutional Investors, and
neither the Company not any agent acting on its behalf has
taken or will take any action which would subject the
issuance or sale of the Notes to the provisions of sec-
tion 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.

9I. Regulation G, etc. Neither the Company nor
any Subsidiary owns or has any present intention of
acquiring any "margin stock" as defined in Regulation G
(12 CFR Part 207) of the Board of Governors of the Federal
Reserve System (herein called "margin stock"). The pro-
ceeds of sale of the Notes will be used by the Company to
reduce usage of its existing short-term bank lines of
credit and to fund working capital and new store expan-
sion. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental
or ultimate, of purchasing or carrying any margin stock or
for the purpose of maintaining, reducing or retiring any
indebtedness which was originally incurred to purchase or
carry any stock that is currently a margin stock or for
any other purpose which might constitute this transaction
a "purpose credit" within the meaning of such Regula-
tion G. Neither the Company nor any agent acting on its
behalf has taken or will take any action which might cause
this Agreement or the Notes to violate Regulation G,
Regulation T, Regulation X or any other regulation of the
Board of Governors of the Federal Reserve System or to

PAGE 455<PAGE>

violate the Securities Exchange Act of 1934, as amended,
in each case as in effect now or as the same may hereafter
be in effect.

9J. ERISA. (a) Neither the Company nor any
Related Person has breached the fiduciary rules of ERISA
or engaged in any prohibited transaction in connection
with which the Company or any Related Person could be
subjected to (in the case of any such breach) a suit for
damages or (in the case of any such prohibited trans-
action), either a civil penalty assessed pursuant to sec-
tion 502(i) of ERISA, a tax imposed by section 4975 of the
Code or a lien imposed by section 412(n) of the Code, in
any such case which would be materially adverse to the
Company or any of its Subsidiaries.

(b) No Plan subject to Title IV of ERISA or
any trust created under any such Plan has been terminated
since September 2, 1974 other than those set forth in
Exhibit F hereto. Neither the Company nor any Related
Person has within the past six years contributed, or had
any obligation to contribute, to a single employer plan
that has at least two contributing sponsors not under
common control or ceased operations at a facility under
circumstances which could result in liability under sec-
tion 4068(f) of ERISA. No liability to the PBGC has been
or is expected by the Company to be incurred with respect
to any Plan by the Company or any Related Person which is
or would be materially adverse to the Company and the
Restricted Subsidiaries taken as a whole. There has been
no reportable event (within the meaning of section 4043(b)
of ERISA) or any other event or condition with respect to
any Plan which presents a risk of termination of any such
Plan by the PBGC under circumstances which in any case
could result in liability which would be materially ad-
verse to the Company and the Restricted Subsidiaries taken
as a whole.

(c) Full payment has been made (or will be made
within the period described in section 412 of the Code) of
all amounts which the Company or any Related Person is
required under the terms of each Plan to have paid as
contributions to such Plan as of the last day of the most
recent fiscal year of such Plan ended prior to the date
hereof (or will be made within the period described in
section 404 of the Code), and no accumulated funding
deficiency (as defined in section 302 of ERISA and section
412 of the Code), whether or not waived, exists with

PAGE 456<PAGE>

respect to any plan. Each Plan satisfies the minimum
funding standard of section 412 of the code.

(d) The value of benefit liabilities under
any Plan, determined as of the end of such Plants most
recently ended plan year (determined as of such date based
on assumptions prescribed by the PBGC), did not exceed the
current value of the assets of such Plan allocable to such
benefit liabilities. The term "benefit liabilities" has
the meaning specified in Section 4001 of ERISA.

(e) Since April 28, 1980, (i) neither the
Company nor any Related Person has been obligated to
contribute to any Multiemployer Plan, (ii) neither the
Company nor any Related Person has incurred, or is reason-
ably expected to incur, any withdrawal liability to any
Multiemployer Plan, and (i@ii) neither the Company nor any
Related Person has been notified by the sponsor of a
Multiemployer Plan to which the Company or any Related
Person is obligated or has been obligated to contribute
that such Multiemployer Plan has been terminated or is in
reorganization and no Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated.

(f) Neither the Company nor any Related
Person has, or is expected to incur, any liability for
post retirement benefits under any and all welfare benefit
plans (as defined in section 3(1) of ERISA), whether
written or unwritten, which are or have been established
or maintained, or to which contributions are or have been
made, by the Company or any Related Person.

(g) If the Company and any Related Persons
withdraw from all Multiemployer Plans to which they or any
of them are or have been obligated to contribute under
Title IV of ERISA, the amount of withdrawal liability as
of the date hereof would not exceed $500,000.

(h) Neither the Company nor any Related
Person has engaged in any transaction that could result in
the incurrence of any liabilities under section 4069 or
section 4212 of ERISA.

(i) The execution and delivery of this Agree-
ment and the Other Agreements and the issuance and sale of
the Notes will not involve any transaction which is sub-
ject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to

PAGE 457<PAGE>

section 4975 of the Code. The representation by the Com-
pany in the next preceding sentence is made in reliance
upon and subject to the accuracy of your representation in
paragraph 10(ii) and the representations of the Other Pur-
chasers contained in paragraph 10(ii) of the Other Agree-
ments as to the source of the funds to be used to pay the
purchase price of the Notes to be purchased by you and the
other Purchasers, respectively. With respect to any Plan
identified in writing to the Company in accordance with
clause (c) of paragraph 10(ii), neither the Company nor
any "affiliate" (as defined in Section V(c) of PTE 84-14)
is described in the proviso of such clause (c).

9K. Governmental Consent. Neither the nature of
the Company or of any Subsidiary, nor any of their
respective businesses or properties, nor any relationship
between the Company or any Subsidiary and any other Per-
son, nor any circumstance in connection with the offering,
issuance, sale or delivery of the Notes is such as to
require any authorization, consent, approval, exemption or
any action by or notice to or filing with any court or
administrative or governmental body (other than routine
filings after the closing Date with the Securities and
Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agree-
ment or the Guarantee, the offering, issuance, sale or
delivery of the Notes or fulfillment of or compliance with
the terms and provisions hereof, of the Notes or of the
Guarantee.

9L. Status Under Certain Federal Statutes. (i)
The Company is not (a) an "investment company" or a
company "controlled" by an "investment company", within
the meaning of the Investment Company Act of 1940, as
amended, (b) a "holding company" or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding com-
pany", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended, or (c) a "public
utility" as such term is defined in the Federal Power Act,
as amended; and (ii) neither the Company nor any of its
Subsidiaries is a "rail carrier or a person controlled by
or affiliated with a rail carrier"' within the meaning of
Title 49, U.S.C., and the Company is not a "carrier" to
which 49 U.S.C. SS 11301(b)(1) is applicable.

9M. Foreign Assets Control Regulations, etc.
Neither the issue and sale of the Notes by the Company nor

PAGE 458<PAGE>

its use of the proceeds thereof as contemplated by this
Agreement Will violate the Foreign Assets Control Regula-
tions, the Transaction Control Regulations, the Cuban
Assets Control Regulations, the Foreign Funds Control
Regulations, the Iranian Assets Control Regulations, the
Nicaraguan Trade Control Regulations, the South African
Transactions Regulations, the Libyan Sanctions Regula-.
tions, the Soviet Gold Coin Regulations or the Panamanian
Transactions Regulations of the United states Treasury
Department (31 C.P.R., Subtitle B, Chapter V, as amended).

9N. Environmental Hatters. The Company and each
of its Subsidiaries has obtained all permits, licenses and
other authorizations that are required under all
Environmental Laws, including laws relating to emissions,
discharges, releases, or threatened releases of
contaminants into the environment (including, without
limitation, ambient air, surface water, ground water, or
land) or otherwise relating to the manufacture, process-
ing, distribution, use, treatment, storage, disposal,
transport, or handling of contaminants, except to the
extent that failure to have any such permit, license, or
other authorization does not have a material adverse
effect on business, operations or financial condition of
the Company and its Restricted Subsidiaries. The Company
and each of its Subsidiaries and all properties they own
or lease are in compliance with all terms and conditions
of all such permits, licenses, and other authorizations
required to be obtained by it, and are also in compliance
with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, sched-
ules, and timetables contained in those Environmental Laws
or in any regulation, ordinance, code, plan, order,
decree, judgment, injunction, notice, or demand letter
issued, entered, promulgated, or approved thereunder,
except to the extent that failure so to comply does not
have a material adverse effect on the business, operations
or financial condition of the Company and its Restricted
Subsidiaries. The Company is not aware of any prior use
of any of the owned or leased properties of the Company or
any of its Subsidiaries, by any Person, that constitutes a
violation of any Environmental Laws, except to the extent
that such violation does not have a material adverse
effect on the business, operations or financial condition
of the Company and its Restricted Subsidiaries. The
Company is not aware of any event, condition, or activity
which may interfere with or prevent continued compliance
by the Company and each of its Subsidiaries with all

PAGE 459<PAGE>

Environmental Laws, except to the extent that failure so
to continue to comply would not have a material adverse
effect on the business, operations or financial condition
of the Company and its Restricted Subsidiaries. For the
purposes of this paragraph 9N, "Environmental Laws" shall
mean any and all federal, state, local, and foreign stat-
utes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises,
licenses, agreements, or governmental restrictions relat-
ing to the environment or the release of any materials
into the environment, including but not limited to those
related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.

90. Disclosure. Neither this Agreement, the
Memorandum nor any other document, certificate or state-
ment furnished to you by or on behalf of the Company in
connection herewith contains any untrue statement of a
material fact or omits to state a material fact necessary
in order to make the statements contained herein and
therein not misleading. There is no fact peculiar to the
Company or any of its Restricted Subsidiaries which mate-
rially adversely affects or in the future may (so far as
the Company can now foresee) materially adversely affect
the business, property or assets, or financial condition
of the Company or any of its Restricted Subsidiaries and
which has not been set forth in this Agreement, the Memo-
randum or in the other documents, certificates and state-
ments furnished to you by or on behalf of the Company
prior to the date hereof in connection with the transac-
tions contemplated hereby.

10. REPRESENTATIONS OF THE PURCHASER. (i) You
represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by
you or for the account of one or more pension or trust
funds, which accounts or funds are accredited investors
(as such term is defined under Regulation D promulgated
under the Securities Act), in each case for investment and
not with a view to the distribution thereof or with any
present intention of distributing or selling any of the
Notes, provided that the disposition of your property
shall at all times be within your control.

(ii) You represent that at least one of the
following statements is an accurate representation as to
the source of funds to be used by you to pay the purchase
price of the Notes purchased by you hereunder:

PAGE 460<PAGE>

(a) if you are an insurance company, no part
of such funds constitutes assets allocated to any
separate account maintained by you in which an
employee benefit plan (or its related trust) has
any interest; or

(b) If you are an insurance company, to the
extent that any of such funds constitutes assets
allocated to any separate account maintained by
you, (i) such separate account is a "pooled
separate account" within the meaning of Prohibited
Transaction Class Exemption 90-1, in which case you
have disclosed to the Company the names of each
employee benefit plan whose assets in such separate
account exceed 10% of the total assets or are
expected to exceed 10% of the total assets of such
account as of the date of such purchase (and for
the purposes of this subdivision (b), all employee
benefit plans maintained by the same employer or
employee organization are deemed to be a single
plan), or (ii) such separate account contains only
the assets of a specific employee benefit plan,
complete and accurate information as to the
identity of which you have delivered to the
Company; or

(c) If you are an insurance company, the
source of such funds is an "investment fund"
managed by a "qualified professional asset manager"
or QPAM" (as defined in Part V of Prohibited
Transaction Class Exemption 84-14, issued March 13,
1984), ad the purchase is exempt under Prohibited
Transaction Class Exemption 84-14, provided that no
other party to the transactions described in this
Agreement and no "affiliate" of such other party
(as defined in Section V(c) of Prohibited
Transaction Class Exemption 84-14) has at this
time, and during the immediately preceding one year
has exercised the authority to appoint or terminate
said QPAM as manager of the assets of any plan
identified in writing pursuant to this paragraph
(c) or to negotiate the terms of said QPAM's
management agreement (including renewals or
modifications thereof) on behalf of any such
identified plans; or

PAGE 461<PAGE>

(d) if you are an insurance company, no
part of such funds constitutes the assets of any
separate account maintained by you, the application
of which assets to such purchase would cause such
purchase to constitute a prohibited transaction
under Section 406(a) of ERISA; or

(e) if you are other than an insurance
company, all or a portion of such funds consists of
funds which do not constitute assets of any
employee benefit plan (other than a governmental
plan exempt from the coverage of ERISA) and the
remaining portion, if any, of such funds consists
of funds which may be deemed to constitute assets
of one or more specific employee benefit plans,
complete and accurate information as to the
identity of each of which you have delivered to the
Company in writing.

As used in this paragraph 10, the terms "employee benefit
plan". "governmental plan" and "separate account" shall
have the respective meanings assigned to such terms in
Section 3 of ERISA.

11. DEFINITIONS. For the purpose of this
Agreement, the terms defined in paragraphs 1 and 2 shall
have the respective meanings specified therein and the
following terms shall have the meanings specified with
respect thereto below:

11A. Retirement Premium Terms.

"Called Principal" shall mean, with respect to
any Note, the principal of such Note that is to be prepaid
pursuant to paragraph 4B (any partial prepayment being
applied in satisfaction of required payments of principal
in inverse order of their scheduled due dates) or is de-
clared to be immediately due and payable pursuant to
paragraph 7A, as the context requires.

"Discounted Value" shall mean, with respect to
the Called Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect
to such Called Principal from their respective scheduled
due dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial
practice and at a discount factor (applied on a semiannual

PAGE 462<PAGE>

basis) equal to the Reinvestment Yield with respect to
such Called Principal.

"Reinvestment Yield" shall mean, with respect to
the Called Principal of any Note, the yield to maturity
implied by (a) the yields reported, as of 10:00 A.M. (New
York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on
the display designated as "Page 678" on the Telerate
Service (or such other display as may replace Page 678 on
the Telerate Service) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Set-
tlement Date, or if such yields shall not be reported as
of such time or the yields reported as of such time shall
not be ascertainable, (b) the Treasury Constant Maturity
Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day
next preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such
Called Principal as of such Settlement Date. Such implied
yield shall be determined, if necessary, by (x) converting
U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (y)
interpolating linearly between reported yields.

"Remaining Average Life" shall mean, with
respect to the Called Principal of any Note, the number of
years (calculated to the nearest one-twelfth year) ob-
tained by dividing (i) such Called Principal into (ii) the
sum of the products obtained by multiplying (a) each
Remaining Scheduled Payment of such Called Principal (but
not of interest thereon) by (b) the number of years (calc-
culated to the nearest one-twelfth year) which will elapse
between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining
scheduled Payment.

"Remaining Scheduled payments" shall mean, with
respect to the Called Principal of any Note, all payments
of such Called Principal and interest thereon that would
be due on or after the Settlement Date with respect to
such Called Principal if no payment of such Called Prin-
cipal were made prior to its scheduled due date.

PAGE 463<PAGE>

"Retirement Premium" shall mean, with respect to
any Note, a premium equal to either (i) if the Settlement
Date is prior to June 27, 2000, the excess,, if any, of
the Discounted Value of the Called Principal of such Note
over the sum of (a) such Called Principal plus (b)
interest accrued thereon as of (including interest due on)
such Settlement Date with respect to such Called
Principal, or (ii) if the Settlement Date is on or after
June 27, 2000, the premium (a percentage of the Called
Principal) applicable in accordance with the following
table, depending on the 12-month period in which the
Settlement Date occurs:

12-Month Period Commencing
on and Including June 27 Premium

2000 2.83%
2001 2.12%
2002 1.41%
2003 .71%
2004 0%

The Retirement Premium shall in no event be less than zero.

"Settlement Date" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is
to be prepaid pursuant to paragraph 4B or is declared to be
immediately due and payable pursuant to paragraph 7A, as the
context requires.

11B. Other Terms.

"Affiliate" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common
control with, the Company, except a Restricted Subsidiary. A
Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such corporation,
whether through the ownership of voting securities, by contract or
otherwise.

"Bankruptcy Law" shall have the meaning specified in
subparagraph (viii) of paragraph 7A.

"Business Day" shall mean any day other than a

PAGE 464<PAGE>

Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed.

"Capitalized Lease" shall mean, as applied to any
Person, any lease of any property (whether real, personal or
mixed) by such Person as lessee which would, in accordance with
generally accepted accounting principles, be required to be
classified and accounted for as a capitalized lease on a balance
sheet of such Person, other than, in the case of the Company or a
Restricted Subsidiary, any such lease under which the Company or a
Wholly-owned Restricted Subsidiary is the lessor.

"Capitalized Lease obligation" shall mean any rental
obligation under a Capitalized Lease taken at the amount thereof
accounted for as indebtedness (net of interest expense) in
accordance with generally accepted accounting principles.

"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.

"Common Stock" shall mean, as applied to any
corporation, shares of such corporation which shall not be
entitled to preference or priority over any other shares of such
corporation in respect of either the payment of dividends or the
distribution of assets upon liquidation.

"Consolidated Indebtedness" shall mean as at any date of
determination, the total of all Indebtedness of the company and
its Restricted Subsidiaries outstanding on such date, excluding
Indebtedness owed to the Company or a Wholly-owned Restricted
Subsidiary.

"Consolidated Net Income" shall have the meaning
specified in paragraph 6A.

"Consolidated Net Worth" shall mean, as at any date of
determination, consolidated stockholders' equity of the Company
and its Restricted Subsidiaries determined in accordance with
generally accepted accounting principles on a consolidated basis
(excluding (i) any equity of the Company or any Restricted
Subsidiary in any unrestricted Subsidiaries, (ii) the book amount
included in such consolidated stockholders' equity of treasury
stock, unamortized debt discount and expense, goodwill, trade-
marks, trade names, patents, deferred charges and other

PAGE 465<PAGE>

intangible assets and (iii) the book amount included in such
consolidated stockholders' equity of any write-up of the value of
any assets after the date of this Agreement), after eliminating
all intercompany transactions and all amounts properly
attributable to minority interests, if any, in the stock and
surplus of Restricted Subsidiaries or properly attributable to
Preferred Stock of Restricted Subsidiaries not owned by the
Company or another Restricted Subsidiary.

"Designated Senior Debt Representative,, shall have the
meaning specified in paragraph SD.

"ERISA" shall mean the Employee Retirement income
Security Act of 1974, as amended.

"Event of Default" shall mean any of the events
specified in paragraph 7A, provided that there has been satisfied
any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further
condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.

"Financial Statements" shall have the meaning
specified in paragraph 9B.

"Guarantee" shall have the meaning specified in
paragraph 3F.

"Guarantor" shall have the meaning specified in
paragraph 3F.

"Guaranty", as applied to any Person, shall mean
any direct or indirect liability, contingent or otherwise,
of such Person with respect to any indebtedness, lease,
dividend or other obligation of another, including, with-
out limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business) or discounted
or sold with recourse by such Person, or in respect of
which such Person is otherwise directly or indirectly
liable, including, without limitation, any such obligation
in effect guaranteed by such Person through any agreement
(contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security there-
for, or to provide funds for the payment or discharge of

PAGE 466<PAGE>

such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or
to maintain the solvency or any balance sheet or other
financial condition of the obligor of such obligation, or
to make payment for any products, materials or supplies or
for any transportation or services regardless of the non-
delivery or non-furnishing thereof, in any such case if
the purpose or intent of such agreement is to provide as-
surance that such obligation will be paid or discharged, or
that any agreements relating thereto will be complied with,
or that the holders of such obligation will be protected
against loss in respect thereof. The amount of the obliga-
tion guaranteed.

"Indebtedness", as applied to any Person, shall
mean (a) any indebtedness for borrowed money which such
Person has directly or indirectly created, incurred or
assumed, (b) any indebtedness (to the extend such indebt-
edness would appear on a balance sheet of such Person in
accordance with generally accepted accounting principles)
(other than accounts payable and other current liabilities
incurred in the ordinary course of business) whether or
not for borrowed money, with respect to which such Person
has become directly or inderectly liable and which repre-
sents or has ben incurred to finance the purchase price
(or a portion thereof) of any property or services or
business acquired by such Person, whether by purchase,
consolidation, merger or otherwise, (c) all Capitalized
Lease Obligations of such Person, (d) all indebtedness
secured by any Lien on any property or asset owned or held
by such Person subject thereto, whether or not the indebt-
edness secured thereby shall have been assumed, and (e) all
indebtedness, Capitalized Lease Obligations and other
obligations of others of the character referred to in
clauses (a), (b), (c) and (d) with respect to which such
Person has become liable by way of a Guaranty. In
determining the Indebtedness of the Company and its Re-
stricted Subsidiaries, there shall be included all Preferred
Stock of any Restricted Subsidiary not owned by the Company
or a Wholly-Owned Restricted Subsidiary, valued at the
greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends; and there
shall be excluded all indebtedness of the Company or any of
its Restricted Subsidiaries of the character referred to
in clauses (a), (b), (c), (d) and (e) deemed to be
extinguished under generally accepted accounting prin-
ciples, but only to the extent a corresponding amount of

PAGE 467<PAGE>

assets shall be excluded under generally accepted account-
ing principles in determining Consolidated Net Worth.

"Institutional Investor' shall mean you, any
insurance company, pension fund, mutual fund, investment
company, bank, savings bank, savings and loan association,
investment banking company, trust company, or any finance
or credit company, any portfolio or any investment fund
managed by any of the foregoing, or any other institution-
al investor, and any nominee of the foregoing.

"Investment" shall have the meaning specified in
paragraph 6B(5).

"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (includ-
ing any agreement to give any of the foregoing, any con-
ditional sale or other title retention agreement, any
Capitalized Lease, and the filing of or agreement to give
any financing statement under the Uniform Commercial Code
of any jurisdiction).

"Memorandum" shall have the meaning specified in
paragraph 9B.

"Multiemployer Plan" shall mean any plan which
is a "Multiemployer plan" as such term is defined in sec-
tion 4001(a)(3) of ERISA.

"NASDAQ" shall mean the National Association of
Securities Dealers Automated Quotation System.

"Officer's Certificate" shall mean a certificate
signed in the name of the Company by its President, one of
its Vice President or its Treasurer.

"Payment Notice" shall have the meaning specified
in paragraph 8D.

"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any
department or agency thereof.

"Plan" shall mean an "employee pension benefit
plan" (as defined in section 3(2) of ERISA) which is or
has been established or maintained, or to which contribu-

PAGE 468<PAGE>

tions are or have been made, by the Company or any of its
Related Persons.

"Preferred stock", as applied to any corpora-
tion, shall mean shares of such corporation which shall be
entitled to preference or priority over any other shares
of such corporation in respect of either the payment of
dividends or the distribution of assets upon liquidation
or both.

"PBGC" shall mean the Pension Benefit Guaranty
corporation or any other govern mental authority
succeeding to any of its functions.

"Related Person" with respect to any Person,
shall mean any trade or business, whether or not incor-
porated, which together with such Person, is under common
control, as defined in section 414(c) of the Code.

"Required Holder(s)" shall mean the holder or
holders of at least 60% of the aggregate principal amount
of all the Notes at the time outstanding.

"Restricted Subsidiary" shall mean any Sub-
sidiary of which more than 50% of the total combined
voting power of all classes of Voting Stock of which
shall, at the time as of which any determination is made,
be owned by the Company either directly or through Re-
stricted Subsidiaries and which (i) is organized and
existing under the laws of the United States of America or
any state thereof or Canada or any province thereof or
Puerto Rico or the U.S. Virgin Islands,, (ii) has substan-
tially all of its properties and assets located, and
conducts substantially all of its business, in the United
States of America or Canada or any province thereof or
Puerto Rico or the U.S. Virgin Islands, (iii) does not
have in the chain of ownership between the Company and
such Subsidiary any Unrestricted Subsidiary and (iv) has
not been effectively designated as an Unrestricted Sub-
sidiary by resolution of the board of directors of the
Company, or, having been so designated, has thereafter
been effectively designated as a Restricted Subsidiary by
resolution of the board of directors of the Company. No
designation of a Restricted Subsidiary as an Unrestricted
Subsidiary shall be effective unless (a) at the time of
such designation, such Subsidiary does not own any shares
of Common Stock or Indebtedness of any other Restricted
Subsidiary which is not simultaneously being designated as

PAGE 469<PAGE>

an Unrestricted Subsidiary or any shares of Common Stock
or Indebtedness of the Company, (b) immediately before
giving effect to such designation, no condition or event
exists which constitutes a Default or Event of Default,
(c) immediately after giving effect to such designation,
the Company could incur at least $1 of additional Indebt-
edness under the provisions of paragraph 6B(2) and at
least $1 of additional Indebtedness secured by a Lien
under the provisions of paragraph 6C, (d) immediately
after giving effect to such designation, no condition or
event exists which constitutes a Default or Event of De-
fault and (e) such Subsidiary has not previously been an
Unrestricted Subsidiary. No designation of an Unrestrict-
ed Subsidiary as a Restricted Subsidiary shall be ef-
fective unless (i) immediately after giving effect to such
designation, (y) such Subsidiary satisfies the conditions
of being a Restricted Subsidiary set forth in clauses (i),
(ii) and (iii) of the first sentence of this definition,
(w) such Subsidiary shall not be liable with respect to
any Indebtedness or lease or hold any Investment or allow
its property to be subject to any Lien which it could not
become liable with respect to or hold or allow its
property to become subject to under this Agreement on the
date of such designation if it were then a Restricted
Subsidiary, (x) the Company could incur at least $1 of
additional Indebtedness under the provisions of paragraph
6B(2) and (y) no condition or event shall exist which
constitutes a Default or Event of Default, and (ii) such
Subsidiary has not previously been a Restricted
Subsidiary.

"Sale and Leaseback Transaction" shall have the
meaning specified in paragraph 6B(3).

"Securities Act" shall mean the Securities Act
of 1933, as amended.

"Senior Debt" shall have the meaning specified
in paragraph 8A.

"Significant Holder" shall mean (i) you, so long
as you shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other Institutional
Investor which is at the time a holder of any
Notes.

"Subsidiary" shall mean any corporation at least
a majority of the total combined voting power of all

PAGE 470<PAGE>

classes of Voting Stock of which shall, at the time as of
which any determination is being made, be owned by the
Company either directly or through Subsidiaries.

"Total Capitalization" shall mean as at any date
of determination the sum of Consolidated Indebtedness
(excluding items thereof which under generally accepted
accounting principles are not included in total liabili-
ties on a consolidated balance sheet of the Company and
its Restricted Subsidiaries) and Consolidated Net Worth.

"Transferee" shall mean any direct or indirect
transferee of all or any part of any Note purchased by
you under this Agreement.

"Unrestricted Subsidiary" shall mean any Sub-
sidiary which is not at the time a Restricted Subsidiary.

"Voting Stock" shall mean any shares of stock of
the Company whose holders are entitled under ordinary
circumstances to vote for the election of directors of the
Company (irrespective of whether at the time stock of any
other class or classes shall have or might have voting
power by reason of the happening of any contingency).

"Wholly-owned Restricted Subsidiary" shall mean
any Restricted Subsidiary all of the outstanding capital
stock of which shall, at the time as of which any deter-
mination is made, be owned by the Company either directly.
or through Wholly-Owned Restricted Subsidiaries.

12. MISCELLANEOUS.

12A. Note Payments. The Company agrees that,
so long as you shall hold any Note, it will make payments
of principal of the Notes and premium, if any, and in-
terest thereon, which comply with the terms of this Agree-
ment, by wire transfer of immediately available funds for
credit to your account or accounts as specified in the
Purchaser Schedule attached hereto, or such other account
or accounts in the United States as you may designate in
writing, notwithstanding any contrary provision herein or
in any Note with respect to the place of payment. You
agree that, before disposing of any Note, you will make a
notation thereon (or on a schedule attached thereto) of
all principal payments previously made thereon and of the
date to which interest thereon has been paid. The Company
agrees to afford the benefits of this paragraph 12A to any

PAGE 471<PAGE>

Transferee which shall have made the same agreement in
writing as you have made in this paragraph l2A.

12B. Expenses. The Company agrees, whether or
not the transactions contemplated hereby shall be consum-
mated, to pay, and save you and any Transferee harmless
against liability for the payment of, all out-of-pocket
expenses arising in connection with such transactions,
including (i) all document production and duplication
charges and the fees and expenses of any special counsel
engaged by you or any Transferee in connection with this
Agreement, the transactions contemplated hereby and any
subsequent proposed modification of, or proposed consent
under, this Agreement or the Guarantee, whether or not
such proposed modification shall be effected or proposed
consent granted, (ii) the costs of obtaining a private
placement number from Standard & Poor's Corporation for
the Notes and (iii) the costs and expenses, including
attorneys' fees, incurred by you or any Transferee in
enforcing any rights under this Agreement, the Notes or
the Guarantee or in responding to any subpoena or other
legal process issued in connection with this Agreement or
the transactions contemplated hereby or by reason of your
or any Transferee's having acquired any Note, including
without limitation costs and expenses incurred in any
bankruptcy case. The obligations of the Company under
this paragraph 12B shall survive the transfer of any Note
or portion thereof or interest therein by you or any
Transferee and the payment of any Note.

12C. Consent to Amendments. This Agreement may
be amended, and the Company may take any action herein
prohibited, or omit to perform any act herein required to
be performed by it, if the company shall obtain the writ-
ten consent to such amendment, action or omission to act,
of the Required Holder(s), except that no amendment to
this Agreement shall change the maturity of any Note, or
change the principal of, or the rate or time of payment
of interest or any premium payable with respect to any
Note, or affect the time, amount or allocation of any
required prepayments of the Notes, or reduce the propor-
tion of the principal amount of the Notes required with
respect to any consent, without the written consent of the
holder or holders of all Notes at the time outstanding.
Each holder of any Note at the time or thereafter out-
standing shall be bound by any consent authorized by this
paragraph 12C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued

PAGE 472<PAGE>

thereafter may bear a notation referring to any such
consent. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note. As used herein and
in the Notes, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to
time be amended or supplemented.

12D. Form, Registration, Transfer and Exchange
of Notes; Lost Notes. The Notes are issuable and trans-
ferable as registered notes without coupons in denomina-
tions of at least $l00,000 except as may be necessary to
reflect any principal amount not evenly divisible by
$100,000. The Company shall keep at its principal office
a register in which the Company shall provide or the
registration of Notes and of transfers of Notes. Upon
surrender for registration of transfer of any Note at the
principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like
tenor and of a like aggregate principal amount, registered
in the name of such transferee or transferees. At the
option of the holder of any Note, such Note may be ex-
changed for other Notes of like tenor and of any autho-
rized denominations, of a like aggregate principal amount,
upon surrender of the Note to be exchanged at the prin-
cipal office of the Company. Whenever any Notes are so
surrendered for exchange, the Company shall, at its ex-
pense, execute and deliver the Notes which the holder
making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall
be duly endorsed, or be accompanied by a written instru-
ment of transfer duly executed, by the holder of such Note
or such holder's attorney duly authorized in writing. Any
Note or Notes issued in exchange for any Note or upon
transfer thereof shall carry the rights to unpaid interest
and interest to accrue which were carried by the Note so
exchanged or transferred, so that neither gain nor loss of
interest shall result from any such transfer or exchange.
Upon receipt of written notice from the holder of any Note
of the loss, theft, destruction or mutilation of such Note
and, in the case of any such loss, theft or destruction,
upon receipt of such holder's unsecured indemnity agree-
ment, or in the case of any such mutilation upon surrender
and cancellation of such Note, the Company will make and
deliver a new Note, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Note.

PAGE 473<PAGE>

12E. Persons Deemed Owners; Participations.
Prior to due presentment for registration of transfer, the
Company may treat the Person in whose name any Note is
registered as the owner and holder of such Note for the
purpose of receiving payment of principal of and premium,
if any, and interest on such Note and for all other pur-
poses whatsoever, whether or not such Note shall be over-
due, and the Company shall not be affected by notice to
the contrary. Subject to the preceding sentence, the
holder of any Note may from time to time grant participa-
tions in all or any part of such Note to any Person on
such terms and conditions as may be determined by such
holder in its sole and absolute discretion.

12F. Survival of Representations and Warran-
ties; Entire Agreement. All representations and warran-
ties contained herein or made in writing by or on behalf
of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes,
the transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be
relied upon by any Transferee, regardless of any inves-
tigation made at any time by or on behalf of you or any
Transferee. Subject to the preceding sentence, this
Agreement and the Notes embody the entire agreement and
understanding between you and the Company and supersede
all prior agreements and understandings relating to the
subject matter hereof.

12G. Successors and Assigns. All covenants and
other agreements in this Agreement contained by or on
behalf of either of the parties hereto shall bind and
inure to the benefit of the respective successors and
assigns of the parties hereto (including, without limita-
tion, any Transferee) whether so expressed or not.

12H. Disclosure to other Persons. The Company
acknowledges that the holder of any Note may deliver
copies of any financial statements and other documents
delivered to such holder, and disclose any other informa-
tion disclosed to such holder, by or on behalf of the
Company or any Subsidiary in connection with or pursuant
to this Agreement to (i) such holder's directors, of-
ficers, employees, agents and professional consultants,
(ii) any other holder of any Note, (iii) any Person to
which such holder offers to sell such Note or any part
thereof, (iv) any Person to which such holder sells or
offers to sell a participation in all or any part of such

PAGE 474<PAGE>

Note, (v) any federal or state regulatory authority having
jurisdiction over such holder, (vi) the National Associa-
tion of Insurance Commissioners or any similar organiza-
tion, (vii) Standard & Poor's Corporation (in connection
with obtaining a private placement number for the Notes)
or (viii) any other Person to which such delivery or dis-
closure may be necessary or appropriate (a) in compliance
with any law, rule, regulation or order applicable to such
holder, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which
such holder is a party or (d) in order to protect such
holder's investment in such Note.

12I. Notices. All written communications pro-
vided for hereunder shall be sent by first class mail or
telecopy or nationwide overnight delivery service (with
charges prepaid) and (i) if to you, addressed to you at
the address specified for such communications in the
Purchaser Schedule attached hereto, or at such other
address as you shall have specified to the Company in
writing, (ii) if to any other holder of any Note, ad-
dressed to such other holder at such address as such
other holder shall have specified to the Company in writ-
ing or, if any such other holder shall not have so speci-
fied an address to the Company, then addressed to such
other holder in care of the last holder of such Note which
shall have so specified an address to the Company, and
(iii) if to the Company, addressed to it at 1830 Route
130, Burlington, New Jersey 08016, Attention: Robert
LaPenta, Jr., Corporate Controller, Chief Accounting
Officer, or at such other address as the Company shall
have specified to the holder of each Note in writing;
provided, however, that any such communication to the
Company may also, at the option of the holder of any Note,
be delivered by any other means either to the Company at
its address specified above or to any officer of the
Company.

12J. Descriptive Headings. The descriptive
headings of the several paragraphs of this Agreement are
inserted for convenience only and do not constitute a part
of this Agreement.

12K. Satisfaction Requirement. If any agree-
ment, certificate or other writing, or any action taken or
to be taken, is by the terms of this Agreement required to
be satisfactory to you or to the Required Holder(s), the
determination of such satisfaction shall be made by you or

PAGE 475<PAGE>

the Required Holder(s), as the case may be, in the sole
and exclusive judgment (exercised in good faith) of the
Person or Persons making such determination.

12L. Solicitation of Noteholders. The Company
will not solicit, request or negotiate for or with respect
to any proposed waiver or amendment of an of the provi-
sions of this Agreement or the Notes unless each holder of
the Notes (irrespective of the amount of Notes then owned
by it) shall be informed thereof by the Company and shall
be afforded the opportunity of considering the same and
shall be supplied by the Company with sufficient informa-
tion to enable it to make an informed decision with re-
spect thereto. Executed or true and correct copies of any
waiver sent or effected pursuant to the provisions of this
paragraph 12L shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date
on which the same shall have been executed and delivered
by the holder or holders of the requisite percentage of
outstanding Notes. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee
or otherwise, to any holder of the Notes for any consent
by such holder in its capacity as a holder of Notes to any
waiver or amendment of any of the terms and provisions of
this Agreement unless such remuneration is concurrently
paid, on the same terms, ratably to the holders of all of
the Notes then outstanding.

l2M. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS
OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK.

12N. Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each
of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or
account for more than one such counterpart.

PAGE 476<PAGE>

If you are in agreement with the foregoing,
please sign the form of acceptance on the enclosed coun-
terpart of this letter and return the same to the Company,
whereupon this letter shall become a binding agreement
between you and the Company.

Very truly yours,

BURLINGTON COAT FACTORY
WAREHOUSE CORPORATION

By /s/ Robert LaPenta, Jr.
Title: Chief Accounting Officer

The foregoing Agreement is
hereby accepted as of the
date first above written.

THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA

By /s/ Richard B. Rogers
Title: Vice President

NATIONAL OLD LINE INSURANCE COMPANY

By /s/ Donald W. Chamberlain
Title: Vice President

AUSA LIFE INSURANCE COMPANY

By /s/ Donald W. Chamberlain
Title: Vice President

GENERAL AMERICAN LIFE
INSURANCE COMPANY

By /s/ Leonard M. Rubenstein
Title: Vice President and Treasurer

PAGE 477<PAGE>

LIFE INSURANCE COMPANY OF
THE SOUTHWEST

By /s/ Susan J. Jennings
Title: Vice President
General Counsel & Secretary

LUTHERAN BROTHERHOOD

By /s/ Mark L. Simenstad
Title: Assistant Vice President

SAFECO LIFE INSURANCE COMPANY

By /s/ Ronald Spaulding
Title: Vice President

THE UNION CENTRAL LIFE INSURANCE
COMPANY

By /s/ William G. Brenner
Title: Treasurer

PAGE 478<PAGE>

EXHIBIT 21

Page 479<PAGE>

SUBSIDIARIES OF THE COMPANY

Burlington Coat Factory Warehouse Corporation is the parent
corporation of two hundred and forty subsidiaries which operate
"off-price" retail apparel stores in the United States.

Burlington Coat Factory Realty Corp., a Delaware corporation,
which buys, sells and otherwise deals in real estate in
connection with the Company's business.

Burlington Coat Factory Warehouse, Inc., a Pennsylvania
corporation, which leases the Company's store in Clifton Heights,
Pennsylvania to one of the Company's operating subsidiaries.

Monroe G. Milstein, Inc., a New York corporation, which operates
a wholesale apparel business.

LC Acquisition Corp., a New York corporation, which owns an
interest in a manufacturer of coats.

C.L.B., Inc., a Delaware corporation, through which the Company
collects royalties from its subsidiaries for the use of its trade
names.

C.F.I.C. Corporation, a Delaware corporation, through which the
Company invests excess funds.

C.F.B., Inc., a Delaware corporation, through which the Company
provides financing for its subsidiaries for the acquisition of
their merchandise inventory and store fixtures.

Page 480<PAGE>
<PAGE>

EXHIBIT 23

Page 481<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration
Statements No. 2-96332, No. 33-21569, No. 33-51965 and No. 33-
61351 of Burlington Coat Factory Warehouse Corporation and
subsidiaries on Form S-8 of our report dated September 21, 1995,
appearing in this Annual Report on Form 10-K of Burlington Coat
Factory Warehouse Corporation and subsidiaries for the year ended
July 1, 1995.

DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania

September 29, 1995

Page 482<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE REGISTRANT'S
AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JULY 1, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-01-1995
<PERIOD-END> JUL-01-1995
<CASH> 14,520,000
<SECURITIES> 0
<RECEIVABLES> 19,037,000
<ALLOWANCES> 3,711,000
<INVENTORY> 452,026,000
<CURRENT-ASSETS> 496,721,000
<PP&E> 350,990,000
<DEPRECIATION> 126,497,000
<TOTAL-ASSETS> 735,269,000
<CURRENT-LIABILITIES> 251,253,000
<BONDS> 83,298,000
<COMMON> 41,139,000
0
0
<OTHER-SE> 343,880,000
<TOTAL-LIABILITY-AND-EQUITY> 735,269,000
<SALES> 1,584,942,000
<TOTAL-REVENUES> 1,597,028,000
<CGS> 1,060,212,000
<TOTAL-COSTS> 1,060,212,000
<OTHER-EXPENSES> 493,112,000
<LOSS-PROVISION> 5,162,000
<INTEREST-EXPENSE> 13,602,000
<INCOME-PRETAX> 24,940,000
<INCOME-TAX> 10,074,000
<INCOME-CONTINUING> 14,866,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,866,000
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.37

</TABLE>