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/Each page of the  original  bears one stamp and 3  signatures,  and is dated in
Barbengo on February 26, 1997/

/emblem/ Union Bank of Switzerland

               File No. 0247 /507.944
               Re: Pharmaceutical products plant in Barbengo

Libor mortgage loan contract

by and between

the UNION BANK OF SWITZERLAND, Via Pretorio 14, 6901 Lugano (hereinafter
referred to as UBS)

and

BIGMAR  PHARMACEUTICALS  S.A.,  6917  Barbango  (hereinafter  referred to as the
debtor).

UBS grants the debtor a Libor  mortgage loan at a fixed rate for a total of SFr.
2,000,000.
(Two million Swiss francs)

on the basis of the following conditions:

1. DURATION/PAYMENT

   The  Libor  mortgage  loan  shall  be valid  from the date of  payment  until
   12/31/2001.

   Payment  shall be made two banking days after  receipt of the Libor  mortgage
   loan duly  signed  by the  debtor,  provided  UBS is able to  dispose  of the
   guarantees on that date.

2. INTEREST RATE(S)

   The debtor shall pay a base interest rate plus 1.5% p.a.

   The base  interest  rate shall be the 6 months LIBOR rate for the Swiss franc
   (London  Interbank  Offered  Rate of the British  Bankers  Association  (BBA)
   pursuant  to Telerate  page 3750)  rounded  off to two  decimal  points.  The
   interest rate for a 6-month  period shall be  determined  and notified to the
   debtor two  banking  days  before the  beginning  of the loan and before each
   semi-annual  due  date  for  the  interest.  If  payment  is not  made in the
   beginning of a six-month  period,  UBS shall  establish the interest rate for
   the period  between the date of payment and the  beginning  of the first full
   6-months  period on the basis of the letter rate of the UBS  monetary  market
   (Investdata  p.  589.40),  and inform the debtor of the full  interest  rate.
   Interest shall be calculated  according to

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   international  usage (exact number of days/360).

   The debtor  confirms  that UBS has  informed it of the risks  inherent in the
   interest rate connected with this Libor mortgage and of the  possibilities of
   insuring these risks.

3. DUE DATES OF INTEREST.

   Interest  shall be payable on the last  banking  day of June and  December in
   London.

4. AMORTIZATION

   No  amortization  is  scheduled  for  the  duration  of  the  contract.   The
   stipulations of No. 8 are reserved.

5. DEBIT AT MATURITY

   Interest and amortizations  will be debited,  if there are covering funds, to
   account  No.  0247/507.944.OIN  in the  name of  Bigmar  Pharmaceuticals  SA,
   Barbengo.

6. GUARANTEES

   The Libor mortgage loan is guaranteed as follows:

   -  assignment as guarantee, pursuant to a separate agreements, of:
      SFr. 1,000,000  bearer  mortgage  bond of 11/30/87, dg. 27028, first class
      SFr.  700,000  bearer  mortgage  bond  of  1/20/88,  dg.  1388  2nd  class
      SFr.  300,000  bearer  mortgage  bond  of  9/5/88,  dg.  23360,  3rd class
      encumbering lot 174 of RFD of Barbengo.

   -  establishment of a pledge in our favor, under a separate instrument, for:
      SFr.  2,000,000.00  face  value/reg.  UBS  Libor  Cap.  Warrant  (security
      408.453), 1995-12/31/98, strike 5%

7. DELAY INTEREST

   If interest is not paid at  maturity,  the debtor shall have to pay the delay
   interest  established  by UBS to the bank from that date.  The delay interest
   rate shall  exceed the one month  LIBOR rate valid on the due date by no more
   than 3%, plus the percentage pursuant to No. 2, para 1.

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8. CANCELLATION

   The debtor may cancel the Libor  mortgage  loan  partially  or entirely on an
   interest due date, with three months notice,  against payment of an indemnity
   to be calculated pursuant to section 11.

   UBS shall be  authorized  to cancel the Libor  mortgage loan at any time with
   three months notice,

   -  if the debtor violates contractual obligations, in particular is more than
      30 days in arrears in payment of interest or amortization,

   -  if according to UBS, the real  property  encumbered  by the pledge for the
      Libor  mortgage  suddenly  diminishes  in value or can no  longer  provide
      sufficient cover.

   -  if,  due to  restrictions  imposed by the Swiss  National  Bank or another
      Swiss  authority  involved in this contract,  UBS has tried to renegotiate
      the conditions  established in this contract with the debtor and these new
      negotiations  have  not,  by  the  end  of 2  months,  led  to a  solution
      acceptable to both contractual parties.

   -  if the financial  and/or income  situation of the debtor has  considerably
      deteriorated,  or if a deterioration is foreseeable and  renegotiations of
      the  conditions of this  contract have not led to a mutually  satisfactory
      agreement in two months.

   If a valid cancellation is effective before the stipulated period, the debtor
   shall have to pay an indemnity to UBS,  calculated  pursuant to No. 11, which
   shall be due at the time of cancellation.

9. STIPULATIONS REGARDING THE DUE DATE OF THE LIBOR MORTGAGE LOAN.

   At the end of the agreed  period,  the full amount of the Libor mortgage loan
   shall be due for  reimbursement.  At that time, UBS shall offer new financing
   to the debtor among the possible  mortgage  variants under conditions then in
   force  for new  financing,  provided  the  cancellation  was not due to facts
   listed under No. 8.

10. PAYMENT DUE AS A RESULT OF TRANSFER OF OWNERSHIP OR FORCED EXECUTION.

   If the assets  encumbered  by the pledge are sold  privately  or as part of a
   forced execution, the entire Libor mortgage loan, including current interest,
   shall be due for reimbursement

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    immediately  on the  date  of  the  transfer  of  ownership  or  the  public
    instrument.  If the due date falls within the duration of the Libor mortgage
    loan, the debtor shall pay to UBS an indemnity to be calculated  pursuant to
    No. 11, which shall be due immediately.

11. INDEMNITY

    The amount of the  indemnity  which the debtor  shall have to pay to the UBS
    pursuant to Nos. 8 and 10 shall be 0.05% of the  capital for each  remaining
    monthly payment. If the due date falls within a semester period of interest,
    the  debtor  shall  pay to UBS,  for the  remaining  period  of the  current
    semester,   an  indemnity   corresponding  to  the  difference  between  the
    contractual   interest  rate   (including   the  margin)  and  the  rate  of
    reinvestment (base rate: the UBS rate on the monetary  Euromarket,  pursuant
    to Investdata page 589.40);  the indemnity shall be calculated in percent of
    the total debt for the remaining current semester.

12. JOINT AND SEVERAL LIABILITY / CUMULATIVE ASSUMPTION OF DEBT

    If there are several debtors,  they are jointly and severally liable for the
    debt. Debtors not mentioned on the mortgage  certificates assigned to UBS as
    guarantees shall cumulatively and jointly and severally assume the debts for
    these mortgage certificates.

13. INSURANCE AGAINST FIRE AND DAMAGE CAUSED BY NATURAL ELEMENTS

    The debtor shall insure the building(s),  as well as any appurtenances built
    on the mortgaged  land against fire and damage  caused by natural  elements,
    with a  state  insurance  company  or any  insurance  company  domiciled  in
    Switzerland  for a value which is  sufficient  in the judgment of UBS.  Upon
    request,  the  insurance  policy  and the  receipts  for  premiums  shall be
    exhibited to UBS.


14. GENERAL CONDITIONS

    The remainder of the contract shall be governed by the general conditions of
    UBS, a copy of which was given to the debtor.  The debtor  confirms  that it
    has read the general conditions and accepted them without reservation.

15. ADDITIONAL CONDITIONS

    The following conditions are also valid:

    -  record with the land  registry of the  appurtenances  to your building on
       lot 174 of the RFD of Barbengo:

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    -  postponement  of  the  loan  of  SFr.  2,000,000  granted  you  by Bigmar
       Inc.,  Delaware (USA);

    -  presentation,  without  need of a  reminder,  of the annual  consolidated
       statements of Bigmar Inc., Delaware (USA) within  4 months from the close
       of the fiscal year.

16. VENUE

    The exclusive venue for all  controversies  arising out of this contract and
    the place of  implementation  and execution  shall be Lugano.  But UBS shall
    have the right to bring suit  against the debtor at the  competent  court of
    its head office/domicile or at any other competent court.

The  conditions  of this  contract  alone govern this Libor  mortgage  loan,  in
derogation of any contrary stipulations in the mortgage certificates assigned to
UBS as guarantee.

Barbengo, February 26, 1997                Lugano, 11/26/96
The debtor                                 Union Bank of Switzerland

Bigmar Pharmaceuticals SA               G. Amoretti            pp. R. Burkhard
                                        /signature/            /signature/

John Tramontana              Federico Stroppolo
/signature/                  /signature/

                   /stamp and signature/: Approved and signed
                                    M. Paris

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