Second Note And Mortgage

February 25, 1998


USA Detergents, Inc. 1735 Jersey Avenue North Brunswick, New Jersey 08902


RE: SECOND NOTE AND MORTGAGE


Ladies and Gentlemen:


101 Realty Associates, L.L.C., a New Jersey limited liability company (the "Lender"), is pleased to advise that, subject to the terms and conditions listed below, it shall make a loan (the "Loan") to USA Detergents, Inc., a Delaware corporation (the "Company"), in the principal amount of $4,000,000, which Loan shall be secured in accordance with and subject to the terms hereof. Capitalized terms used herein are defined in Subsection H of this letter agreement (this "Agreement"), unless indicated herein.


A. SECOND NOTE; SECOND MORTGAGE AND SECURITY
AGREEMENT; HAZARDOUS SUBSTANCES INDEMNITY AGREEMENT


1. Subject to the terms and conditions hereof, the Lender hereby agrees to make the Loan to the Company. The Loan shall mature on the Maturity Date and shall bear interest for the period from the Borrowing Date thereof to the date of payment in full thereof at the applicable interest rate per annum determined and payable as specified herein.


2. The obligation of the Company to pay the principal of and interest on the Loan shall be evidenced by a Second Note duly executed and delivered by the Company substantially in the form of Exhibit A attached hereto (the "Second Note"). The Second Note shall (A) be payable to the order of the Lender, (B) be in a stated principal amount equal to $4,000,000, (C) mature on the Maturity Date and (D) be entitled to the benefits of this Agreement.


3. The Loan shall bear interest on the unpaid principal amount thereof from the date such Loan is extended to the Company until such principal amount is paid in full at a rate per annum equal to nine and one-half percent (9.5%), before and after judgment, payable in accordance with the terms of the Second Note.


It is the intention of the parties hereto to conform strictly to all applicable usury laws that are applicable to any party or to any of the transactions contemplated hereby or by any of the Related Documents. Accordingly, notwithstanding anything to the contrary in this Agreement or any of the Related Documents, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received by any party hereunder or under the Related Documents or otherwise in connection with the transactions contemplated hereby or thereby shall under no circumstances exceed the maximum amount of interest that could lawfully be charged by such party under applicable law (the "Maximum Rate"), (ii) in the event that the maturity of any indebtedness evidenced by or payable pursuant hereto or to the Related Documents is accelerated for any reason, or in the event of any required or permitted payment or prepayment of all or any part of such indebtedness, then such consideration that constitutes interest as to any such indebtedness under applicable law may never include more than the maximum amount allowed by such applicable law, and (iii) if under any circumstances the aggregate amounts paid on any instruments prior to or incident to the final payment thereof include any amounts which by applicable law would be deemed interest in excess of the maximum amount allowed by such applicable law, interest theretofore paid shall be credited by the recipient on the principal of the affected indebtedness (or to the extent that the principal of such indebtedness shall have been or would thereby be paid in full, refunded by such recipient to the party entitled thereto).


4. The Loan shall be secured by a second mortgage lien on certain real property located at 1600 Route One North, North Brunswick, New Jersey (the "Property") pursuant to the terms of a Second Mortgage and Security Agreement substantially in the form of Exhibit B attached hereto (the " Second Mortgage").


5. At the closing of the Loan, the Lender and the Company shall enter into a Hazardous Substances Indemnity Agreement substantially in the form of Exhibit C attached hereto (the "Hazardous Substances Indemnity Agreement"), pursuant to which, among other things, the Company shall indemnify the Lender with respect to hazardous wastes on, in, under or affecting the Property.


6. As soon as practicable following the Closing Date, the independent directors of the Company shall engage a qualified independent investment banking firm to evaluate the appropriate "equity kicker", which shall be in the form of warrants to purchase shares of Common Stock, to be issued to the Lender as additional consideration for the Loan and the Lender's guarantee with respect to the holder of a $5 million first mortgage lien on the Property. Such evaluation shall be based upon comparable transactions between unrelated third parties. The independent directors of the Company agree to evaluate and seriously consider the reasonable recommendations of such independent investment banking firm. The foregoing notwithstanding, the parties agree that any warrants to be issued to the Lender shall contain, among other things, standard anti-dilution protections, including protections against equity issuances by the Company at below the exercise price of the warrants and shall grant the Lender customary demand and piggyback registration rights with respect to the shares of Common Stock underlying the warrants.


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B. CONDITIONS PRECEDENT


The making of the Loan shall be subject to the satisfaction of the following conditions precedent:


(1) The Lender shall have received on or before the date hereof each of the following documents and instruments, each dated such date, in form and substance reasonably satisfactory to the Lender and its counsel:


(a) a certificate of the Secretary of the Company dated the
date hereof, certifying that (A) attached thereto are true and
complete copies of the resolutions of the Board of Directors of the
Company or committee thereof authorizing the execution, delivery and
performance by the Company of this Agreement, the borrowings hereunder
by the Company and the execution, delivery and performance by the
Company of the Second Note, the Second Mortgage and the Hazardous
Substances Indemnity Agreement and such other Related Documents to
which it is a party and (B) said resolutions are all the resolutions
adopted by the Board of Directors of the Company or such committee in
connection with the transactions contemplated thereby and are in full
force and effect without modification as of such date;


(b) (A) a copy of the Certificate of Incorporation of the
Company certified as of a recent date, but not more than 10 days prior
to the date hereof, by the Secretary of the Company; (B) a certificate
of the Secretary of State of the State of Delaware as to the due
organization, existence and good standing of the Company as of a
recent date; and (C) a certificate of the Secretary or Assistant
Secretary of the Company dated the date of the Second Note, certifying
(x) that attached thereto is a true and complete copy of its By-laws
as in effect on the date of such certification, and (y) as to the
incumbency and signatures of each of its officers executing this
Agreement, the Secured Note, the Second Mortgage, the Hazardous
Substances Indemnity Agreement and such of the other Related Documents
to which it is a party;


(c) this Agreement, the Second Note, the Second Mortgage, the
Hazardous Substances Indemnity Agreement and each of the other Related
Documents duly executed by all the parties thereto (other than the
Lender);


(d) an opinion of Fulbright & Jaworski L.L.P., counsel to the
Company, substantially in the form of Exhibit D hereto;


(e) subject to the carve outs in paragraph C(3) below, such
consents, approvals or acknowledgments with respect to such of the
transactions hereunder as may be necessary or as the Lender or its
counsel may reasonably deem appropriate;


(f) such other and further documents as the Lender and its
counsel may have reasonably requested and all legal matters incident
to this Agreement and the transactions contemplated hereby, shall be
reasonably satisfactory to the Lender and its counsel.


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(2) As of the date hereof, the following statements shall be true and correct and the Lender shall have received a certificate of the Company signed on its behalf by a duly authorized officer of the Company, dated such date, stating that: (i) the representations and warranties contained in this Agreement and in the Related Documents are true and correct in all material respects on and as of such date before and after giving effect to the borrowing hereunder and to the application of the proceeds therefrom, as though made on or as of such date; and (ii) before and after giving effect to the borrowing hereunder, no Event of Default or Default shall have occurred or would result in such Event of Default.


(3) Pryor, Cashman, Sherman & Flynn, special counsel to the Lender, shall have received payment of its reasonable fees and expenses incurred in connection with this Agreement, the Related Documents and the transactions contemplated hereby and thereby.


C. REPRESENTATIONS AND WARRANTIES


To induce the Lender to enter into this Agreement, the Company hereby represents and warrants to the Lender that:


1. Th ...