Document:

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CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION.  THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

                             MANUFACTURING AGREEMENT

                  This Manufacturing Agreement (hereinafter the "Agreement"),
made and effective as of the 15th day of May, 1994, by and between Merck & Co.,
Inc., a corporation incorporated under the laws of the State of New Jersey,
U.S.A., having its office at One Merck Drive, Whitehouse Station, New Jersey
08889, U.S.A. (hereinafter referred to as "MERCK") and Koffolk, Ltd. and Philipp
Brothers Chemicals, Inc., companies organized and existing under the laws of
Israel and New York, respectively and having offices at P. 0. Box 1098, 61010
Tel Aviv, Israel and One Parker Plaza, Fort Lee, New Jersey 07024, U.S.A.,
respectively (hereinafter collectively referred to as "KOFFOLK').

                                   WITNESSETH:

                  WHEREAS, KOFFOLK has experience MANUFACTURING quantities of
Amprolium; and

                  WHEREAS, MERCK desires to engage the facilities and services
of KOFFOLK to MANUFACTURE, as defined below, for MERCK; and

                  WHEREAS, KOFFOLK is willing to undertake MANUFACTURE of the
PRODUCT, as defined below, for MERCK in accordance with the terms and conditions
set forth herein.

                  NOW, THEREFORE, in consideration of the foregoing premises and
of the mutual covenants of the parties hereinafter set forth, the parties hereto
agree as follows:

                  The following terms are used in this Agreement and shall have
the meanings set forth in this Section:

1.1      The term "PRODUCT" shall mean Amprolium, which is to be MANUFACTURED in
         strict accordance with current GOOD MANUFACTURING PRACTICES and the
         KNOW-HOW, defined below, which is to meet the specifications set forth
         in Schedule A and which is to be packaged as set forth in Schedule B.
         Schedule A may be modified from time to time by MERCK in consultation
         with KOFFOLK

1.2      The term "MANUFACTURE/MANUFACTURING/MANUFACTURED" except as may
         otherwise be agreed in writing by the parties hereto, shall mean all
         operations in the production, packaging, quality control testing and
         storage of the PRODUCT and storage of all raw materials and packaging
         components for PRODUCT.

1.3      The term "KNOW-HOW' shall mean information and data which MERCK has
         determined to be necessary to MANUFACTURE the PRODUCT, whenever
         disclosed to KOFFOLK, including but not limited to the information
         contained in the designated binders referred to as "Technical Know-How
         Package" listed in Schedule C, which may be modified by MERCK at any
         time. "KNOW-HOW' is covered within the definition of "INFORMATION" in
         Section 3.1 below and is subject to the terms of that Section.

1.4      The term "AGENCY" shall mean any applicable Israeli government
         regulatory authority involved in granting approvals for the
         MANUFACTURING of the PRODUCT in Israel.

1.5      The term "CALENDAR QUARTER" shall mean the period of each three
         consecutive calendar months ending on March 31, June 30, September 30
         or December 31, as the case may be.

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1.6      The term "CALENDAR YEAR" shall mean the period from January 1 through
         December 31 in a given year.

1.7      The term "AFFILIATE" shall mean (i) any corporation, company or other
         business entity, fifty percent (50%) or more of the voting stock of
         which is owned directly or indirectly by MERCK or KOFFOLK, (ii) any
         corporation, company or business entity, which owns, directly or
         indirectly, fifty percent (50%) or more of the voting stock of MERCK or
         KOFFOLK or (iii) any corporation, company or other business entity
         under the direct or indirect control of a corporation, company or
         business entity described in (i) or (ii).

1.8      The term "FACILITY" shall mean KOFFOLK's facility located at Plant 04,
         Ramat Chovav, Israel, and all KOFFOLK facilities at that location used
         for the MANUFACTURING and storage of PRODUCT, raw materials and
         packaging components.

1 9      "IMMEDIATE/IMMEDIATELY" shall mean within forty-eight (48) hours.

1.10     "PROMPT/PROMPTLY' shall mean within thirty (30) days.

1.11     The term "current GOOD MANUFACTURING PRACTICES" shall mean all laws and
         regulations which have jurisdiction over the MANUFACTURE of the PRODUCT
         at the time of MANUFACTURE, including but not limited to the Good
         Manufacturing Practices as specified in the United States Code of
         Federal Regulations, the EEC Good Manufacturing Guidelines and any
         other applicable laws, guidelines and/or regulations.

1.12     The term "INTERMEDIATES" shall mean isolated chemical compounds in the
         MANUFACTURE of the PRODUCT as stated in the KNOW-HOW.

2.       APPOINTMENTS

2.1      (a)      MERCK hereby appoints KOFFOLK to act for and on behalf of
                  MERCK to MANUFACTURE the PRODUCT at KOFFOLK's FACILITY subject
                  to the conditions and terms set forth herein, and KOFFOLK
                  accepts such appointment to MANUFACTURE the PRODUCT and to do
                  such other acts as are herein authorized. All PRODUCT
                  MANUFACTURED in accordance with this Agreement shall be the
                  exclusive property of MERCK and shall be supplied to MERCK or
                  any person or entity that MERCK shall designate in writing.

         (b)      During the term of this Agreement: (i) KOFFOLK shall not use
                  the KNOW-HOW or any other information, data or material
                  provided by MERCK hereunder or in connection with this
                  Agreement, either in whole or part, for any purpose other than
                  to MANUFACTURE PRODUCT for MERCK hereunder and (ii) KOFFOLK
                  shall not sell or otherwise provide PRODUCT or any material
                  made using any KNOW-HOW to anyone except MERCK, provided that
                  KOFFOLK may sell INTERMEDIATES to a third party who shall
                  agree to refrain from using such INTERMEDIATES to produce any
                  product containing Amprolium and from providing such
                  INTERMEDIATES to anyone else for such use.

         (c)      Upon termination or natural expiration of this Agreement, and
                  continuing for the duration of KOFFOLK's obligations of
                  confidentiality and non-use set forth in Section 3 below and
                  in the Confidentiality Agreement referred to in Section 3.1(h)
                  below, KOFFOLK shall cease using the KNOW-HOW for any purpose,
                  unless otherwise agreed to in writing by MERCK.

2.2      The appointment of KOFFOLK to MANUFACTURE is exclusive for the PRODUCT.
         However, MERCK

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         shall be able to (i) manufacture PRODUCT itself up to January 1,
         1996, and (ii) make other arrangements for the manufacture
         of PRODUCT if at any time KOFFOLK is unable to fill orders placed by
         MERCK under Section 7 below for three (3) consecutive months. Also,
         this Agreement has no effect on MERCK's right to sell its inventory of
         Amprolium.

2.3      (a)      The parties agree to comply with all laws and regulations of
                  any regulatory authority necessary for MANUFACTURING of
                  PRODUCT. KOFFOLK shall be responsible for obtaining all the
                  necessary permits and licenses for the MANUFACTURE of PRODUCT.
                  KOFFOLK agrees to prepare and file Type I and Type II Drug
                  Master Files with the U. S. Food and Drug Administration to
                  allow for the sale of PRODUCT in the U.S. MERCK will provide
                  reasonable assistance to KOFFOLK in the preparation of the
                  Type I and II Drug Master Files. KOFFOLK shall also undertake
                  any actions to keep those Drug Master Files updated. KOFFOLK
                  will fully cooperate with MERCK in connection with any filings
                  that MERCK makes with regulatory authorities outside of the
                  United States relating to the PRODUCT. KOFFOLK agrees to
                  comply with all applicable regulations in order to allow for
                  sale of PRODUCT in any market in which it may be sold.

         (b)      During the term of this Agreement KOFFOLK agrees to permit
                  MERCK to reference those Drug Master Files in connection with
                  MERCK's filing of any supplement with the FDA, or as otherwise
                  needed by MERCK.

         (c)      During the term of this Agreement and thereafter KOFFOLK shall
                  not permit anyone other than MERCK to reference or otherwise
                  use the Type II Drug Master Files referred to in Section
                  2.3(a) above without the prior written consent of MERCK

2.4      The obligations of MERCK hereunder may be fulfilled either by MERCK or
         an AFFILIATE.

3.       CONFIDENTIALITY

3.1      KOFFOLK agrees that any and all KNOW-HOW or other information or data,
         whether written, graphic or oral which may be provided by MERCK to
         KOFFOLK (including any analysis, materials, product or conclusions
         drawn or derived therefrom) or which may be derived from or related to
         any visits by KOFFOLK personnel to MERCK or may be otherwise known to
         KOFFOLK through its visits or contact with MERCK (hereinafter
         individually and collectively referred to as"INFORMATION") shall be
         disclosed by MERCK and used by KOFFOLK subject to the following terms
         and conditions:

         (a)      KOFFOLK shall keep all INFORMATION in confidence and will not,
                  without MERCK's prior written consent, disclose said
                  INFORMATION to any person or entity, except those of KOFFOLK's
                  officers and employees who directly require said INFORMATION
                  for fulfillment of the purpose of this Agreement. Each officer
                  or employee to whom INFORMATION is to be disclosed shall be
                  advised by KOFFOLK of, and be bound by the terms of this
                  Agreement. KOFFOLK shall take all reasonable precautions to
                  prevent INFORMATION from being disclosed to any unauthorized
                  person or entity.

         (b)      KOFFOLK shall not use, either directly or indirectly, any
                  INFORMATION for any purpose other than to MANUFACTURE PRODUCT
                  for MERCK hereunder without MERCK's prior written consent.

         (c)      KOFFOLK's obligations of confidentiality set forth herein
                  shall not apply to any INFORMATION which is:
                  (i)      possessed by KOFFOLK prior to receipt from MERCK,
                           other than through prior disclosure by MERCK, as
                           evidenced by KOFFOLK's written records;

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                  (ii)     published or available to the general public other
                           than through a breach of this Agreement or other
                           obligation of confidentiality by KOFFOLK; or
                  (iii)    obtained by KOFFOLK from a third party with a valid
                           right to disclose such INFORMATION, provided that
                           said third party is not under a confidentiality
                           obligation to MERCK or the disclosing party if other
                           than MERCK.

                  Any combination of features or disclosures shall not be deemed
                  to fall within the foregoing exclusions merely because
                  individual features are published or available to the general
                  public or in the rightful possession of KOFFOLK unless the
                  combination itself and principle of operation are published or
                  available to the general public or in the rightful possession
                  of KOFFOLK.

         (d)      All INFORMATION, without limitation, shall remain the personal
                  and proprietary property of MERCK. KOFFOLK shall not acquire
                  any license or other intellectual property interest in any
                  INFORMATION disclosed to it by MERCK. Further, disclosure of
                  INFORMATION shall not result in any obligation to grant
                  KOFFOLK any right in and to said INFORMATION.

         (e)      Any and all discoveries and/or inventions by KOFFOLK, whether
                  or not patentable, resulting from KOFFOLK's use of INFORMATION
                  shall be the sole and exclusive property of MERCK. Within
                  thirty (30) calendar days of any discovery or invention,
                  KOFFOLK shall notify MERCK, in writing, of the event and shall
                  assist MERCK in protecting MERCK's proprietary rights to said
                  discovery or invention.

         (f)      Upon request by MERCK, KOFFOLK shall immediately return to
                  MERCK all INFORMATION, all notes which may have been made
                  regarding the INFORMATION, and all copies thereof, except that
                  KOFFOLK may retain one copy of each item of INFORMATION
                  provided that said copy shall be retained and used solely for
                  compliance purposes and shall be held in KOFFOLK's
                  confidential legal files.

         (g)      In the event that KOFFOLK is required by judicial or
                  administrative process to disclose any or all of the
                  INFORMATION, KOFFOLK shall promptly notify MERCK and allow
                  MERCK a reasonable time to oppose such process before
                  disclosing any INFORMATION.

         (h)      The obligations of confidentiality and non-use created herein
                  shall be binding upon KOFFOLK, its successors and assigns with
                  respect to each successive disclosure of INFORMATION and, with
                  respect to each disclosure, shall continue for fifteen (15)
                  years from the date of said disclosure. The obligations of
                  confidentiality and non-use under the Confidentiality
                  Agreement between the parties last dated September 6, 1993
                  shall also continue for fifteen (15) years from the date of
                  any disclosure under that Confidentiality Agreement.

4.       FACILITY

4.1      KOFFOLK hereby undertakes to MANUFACTURE PRODUCT at its FACILITY and
         store raw materials and packaging components at that FACILITY. The
         Facility shall meet current GOOD MANUFACTURING PRACTICES. KOFFOLK shall
         not change the location at which it MANUFACTURES PRODUCT without the
         prior written approval of MERCK. KOFFOLK may change the location at
         which it stores raw materials and packaging components provided that
         any such storage location meets current GOOD MANUFACTURING PRACTICES.

5.       EQUIPMENT

5.1      KOFFOLK agrees, at its cost, to operate the FACILITY and all equipment
         and machinery used, directly or

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         indirectly, to MANUFACTURE PRODUCT in accordance with current GOOD
         MANUFACTURING PRACTICES and in accordance with applicable regulatory
         agency requirements, and to maintain said FACILITY, equipment and
         machinery in an acceptable state of repair and operating efficiency so
         as to meet specifications as set forth in Schedule A and the KNOW-HOW
         and all regulatory requirements. KOFFOLK will be responsible for
         validating the equipment and all processes and procedures involving
         production, cleaning, packaging and any other appropriate steps
         performed at the FACILITY. Such validation by KOFFOLK must meet the
         validation criteria set forth in the KNOW-HOW and all applicable
         regulatory requirements and receive all required regulatory approvals.

5.2      During the term of this Agreement, the FACILITY shall be dedicated
         solely to MANUFACTURING PRODUCT. However, if under Section 7.1 below
         MERCK places binding orders in any CALENDAR YEAR for less than [
                             ] of PRODUCT, KOFFOLK shall have the option to
        use the FACILITY to manufacture another product provided (i) KOFFOLK may
        not manufacture any other product without providing written notice to
        MERCK in advance in order to permit MERCK to consider any potential
        question of cross-contamination; (ii) if MERCK identifies a potential
        problem of cross-contamination, the parties will meet to attempt to
        resolve the problem and (iii) KOFFOLK shall not manufacture any product
        in the FACILITY which MERCK considers to present cross-contamination
        problems. KOFFOLK will supply MERCK PROMPTLY with a copy of all
        governmental and/or regulatory submissions associated with the FACILITY.
        KOFFOLK will IMMEDIATELY notify MERCK in the event that it becomes aware
        of any risks of contamination associated with MANUFACTURING PRODUCT at
        the FACILITY.

6.       SUPPLY OF MATERIALS

6.1      KOFFOLK shall purchase all necessary raw materials and packaging
         components in adequate quantities which are required for MANUFACTURING
         and shipping the PRODUCT and shall perform all quality control testing
         on those raw materials and packaging components as set forth in the
         KNOW-HOW. All such packaging components and raw materials shall meet
         the requirements set forth in Schedule B and the KNOW-HOW,
         respectively. MERCK reserves the right to approve all raw materials and
         packaging components and shall not unreasonably withhold such approval.
         For the purpose of approval by MERCK, KOFFOLK will also inform MERCK in
         writing prior to any changes to sources of supply. KOFFOLK warrants
         that all packaging components and raw materials supplied hereunder
         shall meet the requirements of Schedule B and the KNOW-HOW,
         respectively, and of the applicable regulatory agencies relative to
         such components and materials.

7        FORECASTING, PLACING AND SCHEDULING OF ORDERS

7.1      In order that KOFFOLK may forecast production planning needs, MERCK
         shall submit to KOFFOLK within one hundred and twenty (120) days of
         each CALENDAR QUARTER a non-binding estimate of its marketing
         requirements of PRODUCT for that CALENDAR QUARTER. MERCK shall, at
         least sixty (60) days before the beginning of each month, place a
         binding order with KOFFOLK for the quantity of PRODUCT required by
         MERCK for that month and which KOFFOLK shall have ready for delivery
         under Section 12 below for that month. MERCK's current non-binding
         estimate of its yearly requirements of PRODUCT is between [          ].
         As soon as possible after execution of the Agreement, MERCK will
         provide KOFFOLK with a non-binding estimate of its marketing
         requirements of PRODUCT for the following four (4) months and shall
         also provide its binding order of PRODUCT required by MERCK for the
         following two (2) months. Unless otherwise agreed to by the parties,
         MERCK shall place its orders in full container loads. MERCK will make
         its best effort to place its orders for a CALENDAR YEAR in
         approximately equal quarterly amounts. Notwithstanding the foregoing,
         KOFFOLK shall make every effort to comply with changes that MERCK
         wishes to make to a binding order, but shall not be held liable for its
         inability to do so.

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8.       QUALITY

8.1      The rights conferred by this Agreement are conditioned upon KOFFOLK
         undertaking the MANUFACTURE of PRODUCT strictly in accordance with the
         KNOW-HOW, current GOOD MANUFACTURING PRACTICES and all applicable
         regulatory requirements. KOFFOLK recognizes the serious nature of this
         Agreement and warrants that it will fully comply with the undertaking
         set forth in the preceding sentence.

8.2      KOFFOLK may not change the process by which PRODUCT is MANUFACTURED
         without prior written consent of MERCK.

8.3      KOFFOLK hereby agrees that MERCK or an AFFILIATE shall have the right
         to have reasonable access to the FACILITY during normal business hours
         in order to ascertain compliance by KOFFOLK with the terms of this
         Agreement, including but not limited to, inspection of MANUFACTURE of
         PRODUCT, storage facilities for PRODUCT, raw materials and packaging
         components, all equipment and machinery and all records relating to
         such MANUFACTURE, storage, equipment and machinery. Observations and
         conclusions of any MERCK audit will be discussed with and then issued
         to KOFFOLK, and corrective action shall be agreed upon by MERCK and
         KOFFOLK within twenty (20) days after MERCK delivers its audit report
         to KOFFOLK. Such corrective action will be implemented by KOFFOLK
         within forty-five (45) days of MERCK and KOFFOLK having agreed to the
         corrective action, unless otherwise agreed by the parties.

8.4      KOFFOLK hereby agrees to advise MERCK IMMEDIATELY of any proposed or
         unannounced visit or inspection of the FACILITY or relating to the
         PRODUCT or its MANUFACTURE by any regulatory authority and will permit
         MERCK to be present. If MERCK is not present during such a visit or
         inspection KOFFOLK shall IMMEDIATELY prepare and provide MERCK with a
         full report, in English, of the visit or inspection. KOFFOLK shall also
         IMMEDIATELY provide MERCK with copies of any letters, reports or other
         documents issued by any regulatory authority relative to such
         inspection. KOFFOLK shall prepare a response to any inspection report
         from a regulatory authority and shall submit it to MERCK for review and
         concurrence prior to submission to the regulatory authority. KOFFOLK
         shall also advise MERCK of any regulatory issues regarding any other
         product made, handled or stored at any other plant at KOFFOLK's Ramat
         Chovav operation which would affect MANUFACTURE of the PRODUCT.

8.5      KOFFOLK shall provide MERCK, at the cost and expense of KOFFOLK,
         samples in reasonable quantities and with relevant documentation from
         each production lot of PRODUCT. KOFFOLK and MERCK shall concurrently
         perform, at their respective quality control laboratories, such quality
         control tests as are indicated in the KNOW-HOW. KOFFOLK shall make the
         results of its quality control tests available to MERCK as directed.
         MERCK shall initiate all required quality control tests within fourteen
         (14) days of receipt of samples and MERCK shall advise KOFFOLK of the
         results without undue delay. Until such time as MERCK is satisfied that
         KOFFOLK's quality control laboratories are routinely achieving accurate
         test results within tolerance limits specified in MERCK's control
         procedures for the PRODUCT, no production lot of PRODUCT shall be
         released for delivery unless specific approval has been given in
         writing by MERCK. KOFFOLK is responsible for obtaining and retaining
         [                    ] required for quality control release testing as
         indicated in the KNOW-HOW. KOFFOLK will perform annual stability
         testing at its cost in accordance with the specifications contained in
         the KNOW-HOW. When MERCK is satisfied that KOFFOLK routinely is
         reporting accurate test results within the approved tolerance limits,
         MERCK may inform KOFFOLK in writing that thereafter, until further
         notice, the PRODUCT may be released for delivery if KOFFOLK's tests,
         performed in accordance with procedures supplied by MERCK, show the
         PRODUCT to meet MERCK's acceptable quality standards. However, even
         after waiving such prior quality control approval, MERCK shall have the
         right to request representative samples of PRODUCT and KOFFOLK shall
         satisfy such requests. Any such

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         waiver may be revoked at any time and shall not constitute a waiver of
         or affect in any way KOFFOLK obligations hereunder. KOFFOLK shall at
         all times ensure that PRODUCT is in conformity with the standards of
         quality currently applied by MERCK, and that the labels affixed to the
         PRODUCTS are those duly approved by MERCK and the relevant government
         authorities, where necessary, and shall bear the appropriate
         identification as may from time to time be determined by MERCK.

8.6      MERCK will specify all required labeling as agreed by the relevant
         government authorities, as necessary on the PRODUCT and all components
         and containers. KOFFOLK will comply with all specified labeling and use
         only labeling which has been approved in writing by MERCK in advance.

8.7      Should any production lot fail to meet the specifications set forth in
         Schedule A, such lot shall not be released. The loss resulting from
         such deficiency and the cost to dispose of or return the lot shall be
         borne by the party who is at fault, which shall be determined by
         MERCK's technical staff. If KOFFOLK does not agree with MERCK's
         determination of fault, the parties shall meet to attempt to resolve
         their differences. If the parties are unable to resolve their
         differences as to fault, then either party may refer the matter for
         final decision to a specialized firm of international reputation
         acceptable to both parties hereto. The decision of such firm shall be
         binding on both parties hereto. If MERCK is found to be at fault, it
         shall pay KOFFOLK the fee which it would have otherwise paid for the
         MANUFACTURE of the lot. If KOFFOLK is found to be at fault, it shall
         bear all costs for the lot. The party at fault shall pay the cost for
         the above-referenced specialized firm.

8.8      No PRODUCT or material made hereunder shall be re-worked unless such
         rework is permitted under the U.S. NADA for the PRODUCT.

8.9      KOFFOLK shall provide MERCK with quality control release certificates
         related to the PRODUCT for each batch. At MERCK's request, KOFFOLK
         shall provide MERCK with other MANUFACTURING records.

9.       RECALL

9.1      In the event MERCK or an AFFILIATE shall be required or shall
         voluntarily decide to recall any PRODUCT MANUFACTURED by KOFFOLK
         pursuant to this Agreement, then KOFFOLK shall fully cooperate with
         MERCK or its AFFILIATE in connection with the recall. If such recall is
         initiated because of a defect in the PRODUCT resulting from KOFFOLK's
         negligence in the MANUFACTURE or delivery of the PRODUCT, KOFFOLK will
         credit MERCK for the price it invoiced MERCK for all PRODUCT returned
         and, in addition, KOFFOLK will reimburse MERCK for all reasonable
         recall expenses in connection therewith.

9.2      KOFFOLK agrees to abide by all decisions of MERCK or an AFFILIATE to
         recall a PRODUCT and both parties shall fully cooperate with each other
         in the event of any recall of PRODUCT MANUFACTURED under this
         Agreement.

10.      COMPLAINTS

10.1     KOFFOLK and MERCK shall notify each other IMMEDIATELY if either
         receives any notice of a serious adverse reaction pertaining to the
         PRODUCT. KOFFOLK shall report monthly to MERCK all information
         concerning a complaint of any kind relating to the PRODUCT MANUFACTURED
         hereunder, its components or packaging, including but not limited to
         any PRODUCT quality complaint, or any side effect, injury, toxicity or
         sensitivity reaction.

10.2     MERCK and KOFFOLK will maintain complaint files regarding components
         for packaging, including but

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         not limited to any PRODUCT quality complaints. MERCK and KOFFOLK will
         notify each other IMMEDIATELY of any health hazards with respect to the
         PRODUCT which have impacted or may impact the employees involved in the
         production proce11. PURCHASES AND COMPENSATION

11.1     From the date of this Agreement through January 31, 1995, the price
         that MERCK shall pay for each kilogram of PRODUCT MANUFACTURED by
         KOFFOLK for MERCK hereunder shall be [                           ].
         From February 1, 1995 through December 31, 1995, the price that
         MERCK shall pay for [              ]. The period from the date of
         this Agreement through December 31, 1995 shall be referred to herein as
         the "INITIAL PERIOD". During said INITIAL PERIOD MERCK shall purchase
         [         ] of PRODUCT.

11.2     (a)      Upon termination of the INITIAL PERIOD, and for the remainder
                  of the term of this Agreement,  the price that MERCK shall pay
                  for [

                                    ].

         (b)      If as of December 31, 1995, [

                                                     ].

         (c)      Commencing with the 4th CALENDAR QUARTER of 1996 and every
                  subsequent 4th CALENDAR QUARTER during the term of the
                  Agreement, the parties shall jointly review any changes in [

                                                                    ].

         (d)      If under paragraph 11.2(c) above, the parties jointly
                  determine that [

                           ].

         (e)      Except as provided below, commencing January 1, 1997, and any
                  subsequent January 1 during the term of this Agreement, [

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                                                    ].

         (f)      During the first CALENDAR QUARTER of 1997 and any subsequent
                  first CALENDAR QUARTER during the term of this Agreement, the
                  parties shall jointly review [

                                                     ].

11.3     KOFFOLK shall submit an invoice covering each kilogram of PRODUCT
         MANUFACTURED by KOFFOLK for MERCK hereunder on the date that the
         PRODUCT is delivered under Section 12.3 below, and such invoice shall
         be accompanied by appropriate documentation evidencing performance of
         the invoiced activity. MERCK will pay such invoices with appropriate
         documentation within forty-five (45) days of MERCK's receipt of the
         PRODUCT.

11.4     KOFFOLK agrees that it shall keep accurate records in sufficient detail
         to enable the amounts due to KOFFOLK hereunder to be determined and,
         upon MERCK's request shall permit an independent chartered accountant,
         selected and paid for by MERCK, except one to whom KOFFOLK has
         reasonable objection, to have access during ordinary business hours to
         such of KOFFOLK's records as may be necessary to determine the
         correctness of any payment made or to be made under this Agreement.
         This right of audit shall apply to [                ] as described in
         Sections 11.1 and 11.2 above. Said accountant shall not disclose to
         MERCK any information other than information relating to the
         accuracy of reports and payments made under this Agreement, and in no
         event are the quantities and prices to individual customers or the
         names of those customers to be disclosed to MERCK. In the event of a
         determination by the independent chartered accountant that there has
         been an inaccurate calculation or payment, an appropriate adjustment
         shall be made to the next payment by MERCK. In the event that the
         adjustment requires payment from KOFFOLK to MERCK, subsequent
         payments by MERCK shall be reduced until no further payments are due
         from KOFFOLK.

11.5     Commencing January 1, 1996, if during any CALENDAR YEAR of this
         Agreement [

                  ].

11.6     If through no fault of KOFFOLK withdrawal of PRODUCT is required by
         regulatory bodies in United States, France and the United Kingdom prior
         to January 1, 1996, MERCK and KOFFOLK will agree to negotiate in good
         faith, compensation for KOFFOLK's efforts.

11.7     If KOFFOLK is unable to obtain any license, permit or certificate which
         is necessary for it to perform its obligations hereunder or if MERCK is
         unable to supplement its registration for the PRODUCT in the United
         States, France or the United Kingdom in order to allow KOFFOLK to be
         MANUFACTURER of PRODUCT, the parties shall meet to determine in good
         faith whether the Agreement should be terminated and what, if any,
         compensation should be due to either party.

12.      STORAGE AND DELIVERY OF PRODUCT

12.1     KOFFOLK shall, in accordance with the KNOW-HOW, maintain adequate
         storage accommodations for all the raw materials, packaging components
         and PRODUCT.

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12.2     PRODUCT which has received quality control release shall be stored by
         KOFFOLK in a separate segregated area.

12.3     KOFFOLK shall deliver the PRODUCT to the port and under the terms
         identified by MERCK.

12.4     Claims that any shipment of PRODUCT does not meet the specifications
         contained in Schedule A or the indicated quantity shall be made by
         MERCK to KOFFOLK in writing within sixty (60) days following receipt
         thereof. Upon the receipt of a claim from MERCK, KOFFOLK shall assay
         its retained sample of PRODUCT. If KOFFOLK agrees with MERCK's claim
         and the defect is the fault of KOFFOLK, KOFFOLK shall replace the
         PRODUCT. If the parties are unable to resolve their differences, then
         either party may refer the matter for final analysis to a specialized
         firm of international reputation acceptable to both parties. The
         analysis of such firm shall be binding on both parties hereto. The
         party at fault shall pay the cost for such specialized firm and any
         costs associated with the disposal of PRODUCT.

13.      RECORDS

13.1     All records relating to MANUFACTURING of any PRODUCT shall be retained
         by KOFFOLK for a period of not less than seven (7) years from the date
         of MANUFACTURE of each lot of PRODUCT to which said records pertain.
         KOFFOLK shall provide MERCK with copies of the appropriate documents
         for each production lot, as requested by MERCK.

14.      TERM

14.1     The term of this Agreement shall begin on the date first written above
         and shall continue for a period of [                         ], unless
         terminated sooner as provided for below. At least six (6) months prior
         to the termination date of this Agreement, the parties shall decide
         whether the Agreement will be extended, and if so, on what terms.

15.      TERMINATION

15.1     MERCK shall have the right to terminate this Agreement in whole or in
         part, in the event KOFFOLK fails to fill orders placed by MERCK under
         Section 7 above for three (3) consecutive months.

15.2     Either party shall have the right to terminate this Agreement if the
         other party files a petition in bankruptcy, or enters into an agreement
         with its creditors, or applies for or consents to the appointment of a
         receiver or trustee, or makes an assignment for the benefit of
         creditors, or suffers or permits the entry of an order adjudicating it
         to be bankrupt or insolvent.

15.3     If either party materially breaches any of the provisions of this
         Agreement, and such breach is not cured within ninety (90) days after
         the giving of written notice by the other party specifying such breach,
         the other party shall have the right to terminate this Agreement
         without penalty upon a further sixty (60) days' written notice.

15.4     INFORMATION exchanged between MERCK and KOFFOLK for the MANUFACTURE of
         the PRODUCT shall be PROMPTLY returned to the disclosing party upon
         termination or natural expiration of the AGREEMENT or, at any time,
         upon request by the disclosing party.

15.5     In the event of the sale of the controlling interest of the business of
         KOFFOLK, other than through a public offering of stock for which a
         registration is filed with the applicable regulatory authority, or the
         assignment or delegation by either party of its rights or obligations
         hereunder in violation of Section 20 below, KOFFOLK, in the event of
         such sale, or either party, in the event of such assignment, shall be
         required to

                                       10

<PAGE>

         provide IMMEDIATE notice to the other party and said other party shall
         have the right to terminate this Agreement within forty-five (45) days
         of receipt of such notice. Any notice of termination must be in writing
         and shall give rise to immediate termination of the Agreement.
         Furthermore, no penalty shall be due either party if the other party
         terminates pursuant to this Paragraph.

15.6     KOFFOLK shall not be entitled in connection with the termination or
         natural expiration of this Agreement, in accordance with its terms, to
         claim any indemnity, reimbursement or compensation for alleged losses
         of clientele, good will, loss of profits on anticipated sales or the
         like, and MERCK shall have no liability for losses or damages which
         might result from said termination or natural expiration of the
         Agreement. KOFFOLK acknowledges that it had decided and will decide on
         all investment expenditures and commitments in full awareness of the
         possibility of losses or damages resulting from termination or natural
         expiration of the Agreement and is willing to bear the risk thereof.

15.7     Upon termination of this Agreement, the provisions of Sections 2.1(c),
         2.3(c), 3, 9, 10, 11.4, 12.4, 13, 15.4, 15.6, 15.7, 18, 21, 22, 23-27,
         29 and 30 shall survive. The definitions in Section 1 above needed for
         the above surviving provisions shall also survive.

16.      AMENDMENTS

16.1     No modifications, changes, alterations, or additions to this Agreement
         shall be effective unless in writing, properly executed by authorized
         representatives of both parties, and identified as an Amendment to this
         Agreement.

17.      FORCE MAJEURE

17.1     Unless expressly provided for within this Agreement, neither party
         shall be responsible for any failure to comply with the terms of this
         Agreement where such failure is due to force majeure, which shall
         include, without limitation, fire, flood, explosion, strike, labor
         disputes, labor shortages, picketing, lockout, transportation embargo,
         or failures or delays in transportation, strikes or labor disputes
         affecting supplies, or acts of God, civil riot or insurrection, war,
         acts of the Government or any agency thereof judicial action or other
         reason of a like nature not the fault of the party delayed in
         performing work or doing acts required under the terms of this
         Agreement. Specifically excluded from this definition are those acts of
         Government (of the U.S. or Israel) or any agency thereof or judicial
         action which could have been avoided by compliance with such laws or
         regulations, publicly available and reasonably expected to be known by
         KOFFOLK or MERCK

17.2     Paragraph 17.1 shall not be available, however, to any party who fails
         to use reasonable diligence to remedy, remove or mitigate such cause
         and the effects thereof in an adequate manner and with all reasonable
         dispatch. The requirement that any force majeure hereunder and the
         effects thereof be remedied, removed or mitigated with all reasonable
         dispatch shall not require the settlement of strikes or labor
         controversies by acceding to the demands of the opposing party or
         parties.

17.3     The party affected by any such force majeure shall promptly notify the
         other, explaining the nature, details and expected duration thereof
         Such party shall also advise the other from time to time as to when the
         other can expect the affected party to resume performance in whole or
         in part of its obligations hereunder, as well as notify the other at
         the expiration of any such force majeure. If a party anticipates that
         force majeure may occur, including but not limited to a strike, that
         party shall also promptly notify the other explaining the nature,
         details and expected duration thereof Should any force majeure excusing
         performance hereunder result in a delay in performance or
         nonperformance in whole or in part which extends for a period exceeding
         ninety (90) days, either party may terminate this Agreement after such
         ninety (90) days on fifteen (15) days prior written notice.

                                       11
<PAGE>

18.      INDEMNITY

18.1     KOFFOLK shall indemnify and hold MERCK and its AFFILIATES harmless
         from and against any and all claims, losses, liabilities and expenses
         (including but not limited to reasonable lawyers' fees and other
         litigation costs) arising out of or resulting from KOFFOLK's (i)
         negligence or failure to follow the KNOW-HOW, including but not limited
         to the specifications contained therein, in the MANUFACTURE of PRODUCT;
         (ii) use of raw materials and packaging components, storage and
         disposal of PRODUCT, raw materials or packaging components in the
         MANUFACTURE of PRODUCT; or (iii) sale or provision of INTERMEDIATES to
         third parties under Section 2.1(b) above. MERCK shall indemnify and
         hold KOFFOLK and its AFFILIATES harmless from and against any and all
         claims, losses, liabilities and expenses (including but not limited to
         reasonable lawyers' fees and other litigation costs) arising out of or
         resulting from MERCK's negligence hereunder.

18.2     Each party agrees to give the other prompt written notice of any claims
         made, for which the other might be liable under the foregoing
         indemnification, together with the opportunity to defend, negotiate,
         and settle such claims. The party seeking indemnification under this
         Agreement shall provide the other party with all information in its
         possession, authority, and assistance to enable the indemnifying party
         to carry on the defense of such suit.

18.3     Neither party shall be responsible or bound by any settlement made
         without its prior written consent.

19.      COOPERATION

19.1     Each party agrees to execute such further papers, agreements,
         documents, instruments and the like as may be necessary to effect the
         purpose of this Agreement and to carry out its provisions.

19.2     At MERCK's written request, KOFFOLK shall cooperate with MERCK and
         provide such information as may be necessary to secure a duty
         suspension for the PRODUCT or any formulation derived from or a
         precursor to the PRODUCT in any jurisdiction where duty suspensions are
         allowed by law, regulation or authorized procedures. Any cost
         reductions derived from the award of any such duty suspension shall
         inure solely to MERCK.

20.      ASSIGNMENT/DELEGATION

20.1     This Agreement shall not be assignable by KOFFOLK, other than to an
         AFFILIATE, nor shall the obligations of KOFFOLK be delegatable without
         the prior written consent of MERCK, which consent shall not be
         unreasonably withheld. Any such attempted assignment or delegation by
         KOFFOLK without such prior written consent shall be void. If approved
         in writing by an authorized representative of MERCK, then once assigned
         or delegated, all of the provisions of this Agreement and all rights
         and obligations of the parties hereunder shall be binding upon and
         inure to the benefit of and be enforceable by and against the
         successors and assigns of KOFFOLK. In addition, in the event KOFFOLK
         seeks and obtains MERCK's consent to assign or delegate its rights or
         obligations to another party, the obligations of the assignee or
         transferee must be guaranteed in writing by KOFFOLK. At the sole
         discretion of MERCK, this guarantee of obligations may include the
         posting of a performance bond or establishment of an escrow account to
         guarantee performance.

20.2     MERCK retains the right to assign its rights or delegate its
         obligations under this Agreement to a third party without the consent
         of KOFFOLK. In the event of such an assignment or delegation, all of
         the provisions of this Agreement and all rights and obligations of the
         parties hereunder shall be binding upon and inure to the benefit of and
         be enforceable by and against the successors and assigns of MERCK

                                       12

<PAGE>

21.      RELATIONSHIP CREATED

21.1     The relationship between KOFFOLK and MERCK is that of an independent
         contractor and a customer, respectively, and under no circumstances
         shall either party, its agents or employees be deemed agents or
         representatives of the other party. Neither party shall have the right
         to enter into any contracts or commitments in the name of or on behalf
         of the other party in any respect whatsoever. In addition, neither
         party shall hold itself out to anyone, or otherwise represent, that it
         has any such authority vis-a-vis the other party.

21.2     Nothing herein shall be construed as granting any license or right
         under any patent, trademark or KNOW-HOW or other right of either
         party, by implication or otherwise, to the other.

22.      INSURANCE

22.1     During the term of this Agreement KOFFOLK will maintain
         general/comprehensive liability including products liability insurance
         in an amount not less than one million dollars per occurrence and five
         million dollars in the aggregate. Such policy shall name Merck & Co.,
         Inc. as an "Additional Insured". KOFFOLK shall provide Certificates of
         Insurance evidencing said insurance, which will be placed with insurers
         acceptable to MERCK, and KOFFOLK shall provide written notice to MERCK
         at least thirty (30) days prior to cancellation, non-renewal or
         material change in such insurance.

23.      JURISDICTION

23.1     This Agreement shall be governed by, interpreted and construed, and all
         claims and disputes, whether in tort, contract or otherwise be resolved
         in accordance with the substantive laws of the State of New York,
         United States of America, without reference to any rules of conflict of
         laws or renvoi. In the event of any controversy or claim arising our of
         or relating to this Agreement, performance hereunder, termination
         hereof, or relationship created hereby, each party irrevocably submits
         to the exclusive jurisdiction of the courts of the Supreme Court of the
         State of New York and the U.S. District Court for the Southern District
         of New York for the purposes of any suit, action or other proceeding
         arising out of this Agreement or transactions contemplated hereby. Each
         party irrevocably and unconditionally waives any objection to the
         laying of venue in the courts of New York as stated above and that any
         such action was brought in an inconvenient forum. Notwithstanding the
         foregoing, in the event of a threatened disclosure in violation of this
         Agreement, MERCK shall have the right to seek injunctive relief from
         any competent court in the jurisdiction where the disclosure is
         threatened to prevent such disclosure pending resolution of the merits
         of the dispute.

24.      HEADINGS

24.1     The headings used in this Agreement are intended for convenience only
         and shall not be considered part of the written understanding between
         the parties and shall not affect the construction of the Agreement.

25.      ENTIRE AGREEMENT

25.1     This Agreement and the attached Schedules constitute the entire
         Agreement between the parties relating to the subject matter hereof and
         all prior proposals, discussions, and writings by and between the
         parties and relating to the MANUFACTURING of the PRODUCT are
         superseded, except that the Confidentiality Agreement between the
         parties last dated September 6,1993 and the Letter Agreement between
         MERCK and Philipp Brothers Chemicals, Inc. last dated February 7,1994
         shall continue in effect for all information communicated by MERCK
         under those Agreements. As set forth in Section 3.1(h) above, the term
         of confidentiality and non-use in the Confidentiality Agreement has
         been changed to fifteen (15) years from

                                       13

<PAGE>

         disclosure.

25.2     All work performed by KOFFOLK for MERCK shall be subject to the
         provisions of this AGREEMENT and attached Schedules and shall not be
         subject to the terms and conditions contained in any purchase order of
         MERCK or confirmation of KOFFOLK except insofar as any such purchase
         order or confirmation provides the identity of PRODUCT, delivery date
         and place of delivery and labeling or packaging changes.

26.      WAIVER

26.1     Failure by MERCK or KOFFOLK at any time to enforce any of the terms or
         conditions of this Agreement shall not affect or impair such terms or
         conditions in any way, or the right of MERCK or KOFFOLK at any time to
         avail itself of such remedies as it may have for any breach of such
         terms or conditions under the provisions of this Agreement, in equity
         or at law.

27.      SEVERABILITY

27.1     If any term or provision of this Agreement shall be held invalid or
         unenforceable, the remaining terms hereof shall not be affected but
         shall be valid and enforced to the fullest extent permitted by law. The
         parties hereto shall use best efforts to substitute a valid, legal and
         enforceable provision which, in so far as practical, implements the
         purpose hereof.

28.      WASTE

28.1     KOFFOLK shall assume responsibility for disposing of all waste and
         rejected raw material, components, or PRODUCT generated during the
         performance of this Agreement in accordance with all applicable
         governmental laws, rules and regulations.

29.      ENVIRONMENTAL

29.1     KOFFOLK will comply with all applicable governmental laws, rules and
         regulations as well as any other applicable laws, rules and
         regulations, including but not limited to those relating to the
         protection of human health and the environment.

29.2     KOFFOLK agrees to indemnify, defend, and hold harmless MERCK, its
         employees, agents, heirs and assigns from and against any and all
         damage, claim, liability, or loss, including reasonable attorneys' and
         other fees, arising out of or in any way connected to (1) any condition
         in, on, or near the FACILITY; or (2) any condition caused by KOFFOLK,
         its employees or agents or arising out of or in any way connected to
         any act or omission whatsoever of KOFFOLK, and/or with KOFFOLK's
         operations, employees or agents. KOFFOLK's duty of indemnification
         shall include, but not be limited to, damage, liability, or loss
         pursuant to any applicable government's environmental laws; or pursuant
         to claims for injury to person or damage to property including natural
         resources and further including claims for environmental investigation
         and/or remediation of property at or around the FACILITY or any
         off-site location where material from the FACILITY may have been
         transported or otherwise came to be located. This provision will not be
         construed, nor interpreted as an assumption of acknowledgment by
         KOFFOLK of any obligation to any person or entity other than MERCK.
         KOFFOLK has the option of selecting the attorneys for the defense of
         claims under this provision. MERCK may elect to have its own attorneys
         as additional counsel, in which case MERCK shall be responsible for the
         fees of said attorneys. KOFFOLK shall have a continuing obligation to
         fully cooperate with MERCK in the defense of any such claim. If MERCK's
         negligence is the sole cause of the referred damage, claim, liability
         or loss, KOFFOLK shall not be required to indemnify MERCK.

                                       14

<PAGE>

30.      NOTICE

30.1     All notices and demands required or permitted to be provided under the
         terms of this Agreement shall be in writing and in English unless
         otherwise expressly provided in this Agreement and shall be
         conclusively presumed for all purposes of this Agreement to be given or
         made at the time the same is received by one of the parties via
         certified mail, return receipt requested with sufficient first-class
         postage, prepaid, addressed as follows:

         If to KOFFOLK:
         Koffolk, Ltd.
         P.0. Box 1098
         61010 Tel Aviv, Israel
         Telephone:     (011) 972-3-921-9961
         Panafax:       (011) 972-3-923-0341
         Attention:     Avraham Raz

         Philipp Brothers Chemicals, Inc.
         One Parker Plaza
         Fort Lee, New Jersey 07024 U.S.A.
         Telephone:     (201) 944-6020
         Panafax:       (201) 944-5937
         Attention:     Jack C. Bendheim

         If to MERCK:
         Merck & Co., Inc.
         One Merck Drive
         Whitehouse Station, New Jersey 08889 U.S.A.
         Telephone:     (908) 423-3068
         Panafax:       (908) 735-1106
         Attention:     Vice President, Business Affairs, Merck Manufacturing
                        Division

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their representatives duly authorized
as of the day and year first above written.

MERCK & CO.

By: /s/
    ---
Title:  V.P.

KOFFOLK, LTD.
By:  /s/
    ---
Title:  G.M.

PHILIPP BROTHERS CHEMICALS, INC.
By: /s/ Jack C. Bendheim
    --------------------
Title:  President

                                       15

<PAGE>

Schedule A

Specifications
--------------

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION.  THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                   ]

<PAGE>

Schedule B

Packaging
---------

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION.  THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                   ]

<PAGE>

Schedule C

Technical Know-How Package
--------------------------

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION.  THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                   ]

<PAGE>

Schedule D

Raw Material Costs
------------------

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION.  THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                   ]<PAGE>

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

LAWYERS AND MERCHANTS TRANSLATION BUREAU INC.
Legal, Financial, Scientific, Technical and Patent Translations
11 Broadway New York, NY 10004

Certificate of Accuracy

Translation from Portuguese into English
State of New York
                                    SS:
County of New York

                  On this day personally appeared before me A. S. Drane
who, after being duly sworn, deposes and states:

That he is a translator of the Portuguese and English languages by profession
and as such connected with the LAWYERS & MERCHANTS' TRANSLATION BUREAU;

                  That he has carefully made the attached translation from
the original document written in the Portuguese language; and

                  That the attached translation is a true and correct English
version of such original, to the best of his knowledge and belief.

SUBSCRIBED AND SWORN TO BEFORE ME THIS SEP 14 1998

/S/ A.S. DRANE
----------------

/S/ SUSAN TAPLEY
----------------
Notary Public

<PAGE>

                  CONTRACT OF DISTRIBUTION AND OTHER AGREEMENTS

         By this private instrument made between PLANALQUIMICA INDUSTRIAL LTDA.,
with registered office in Braganca Paulista - SP, at Rua 23 No. 555 - Distrito
Industrial 4, registered in the CGC/MF [tax roll] under No. 00.641.670/0001-97,
represented herein by RAUL CUNHA FREIRE, hereinafter referred to as the
MANUFACTURER, of the one part, and ELANCO QUIMICA LTDA., with registered office
in this capital, at Av. Morumbi No. 8,264, registered in the CGC/MF under No.
43.940.618/0001-44, and subsidiary in Cosmopolis-SP, where it is established at
Rodovia Gal. Milton Tavares de Souza Km 135, represented herein by MARIO FRANCA
CAMARGO, hereinafter referred to as the DISTRIBUTOR, of the other part, having
regard to the fact that:

a) the MANUFACTURER manufactures the product for veterinary use "Nicarmix Premix
25%" - hereinafter referred to as the "PRODUCT" used to combat coccidiosis, and
wishes to expand its business as regards the promotion and sale of the PRODUCT
in Brazil, Uruguay and Paraguay;

b) the DISTRIBUTOR sells various veterinary products in the anti- coccidian line
and, as a result of this, is knowledgeable about potential markets for the
promotion and sale of the PRODUCT, and has the necessary client technical
support services, as required by the MANUFACTURER;

<PAGE>

the following is established and agreed:

CLAUSE I - OBJECT

         I.1. The MANUFACTURER grants to the distributor, who accepts, with
effect from 03.01.96, exclusivity in the promotion and sale of the PRODUCT,
throughout the territory of Brazil, Paraguay and Uruguay.

         I.1.1. The technical characteristics defining the PRODUCT are detailed
in Annex I hereof.

         I.2. Independently of the activities to be performed by the DISTRIBUTOR
hereunder, during the term of this agreement it may continue to devote itself to
any other activities of a commercial or industrial nature, whether present or
future.

         I.3. For the purposes of the sale referred to in point I.1., the
MANUFACTURER shall sell and deliver to the DISTRIBUTOR, at the address of the
subsidiary shown in the preamble hereof, the quantities of the PRODUCT
manufactured by it as requested by the DISTRIBUTOR, under the terms of the
agreement which both parties shall from time to time sign, as established in
clause III hereinafter.

         I.3.1. The PRODUCT shall be delivered to the DISTRIBUTOR fully

                                        2

<PAGE>

finished and packaged, ready for sale.

         I.4. Within the limits of this contract, the DISTRIBUTOR may organize
and plan freely its commercial policy in such a way as to develop harmoniously
the interests of the contracting parties.

CLAUSE II - EXCLUSIVITY AND PREFERENCE

         II.1. The rights of promotion and sale of the PRODUCT are granted by
the MANUFACTURER to the DISTRIBUTOR exclusively, for all of the territories
indicated in clause I, while observing the clauses and conditions of this
contract.

         II.2. By virtue of that exclusivity, the MANUFACTURER is under an
obligation to supply the PRODUCT, destined for sale in the territories
mentioned, exclusively to the DISTRIBUTOR.

         II.3. Only those sales which the MANUFACTURER shall make,
directly, [
                    ], shall be expressly excluded from that
exclusivity, and [                            ] shall not purchase the product
in the same formulation as Nicarmix.

         II.4. The MANUFACTURER shall give preference to supplying the
PRODUCT to the DISTRIBUTOR and, this being the case, is prohibited from
supplying it to other potential buyers until it has met the

                                        3

<PAGE>

quantities ordered by the DISTRIBUTOR.

CLAUSE III - ORDERS AND PERIODIC AGREEMENTS

         III.1. Every 30 (thirty) days, the DISTRIBUTOR shall forward in writing
to the MANUFACTURER the orders of the PRODUCT and respective delivery schedule,
and such orders and schedule shall only be altered by written request up to 05
(five) days prior to the date set for delivery, provided that this be
technically possible.

         III.2. Periodically, every 03 (three) months, the parties shall meet to
fix, jointly and by mutual agreement, forecasts of quantities and other periodic
conditions which shall govern this contract.

         III.2.1. When the parties are agreed as to the aspects mentioned they
shall enter into a written agreement which shall be incorporated into this
contract as Annex II - Periodic Conditions.

         III.3. Unforeseeable market changes shall give rise to the joint
revision of the terms and conditions hereof.

CLAUSE IV - TERM AND RENEWAL

         IV.1.    This contract shall run for a period of [

                                       4

<PAGE>

         ], commencing on 03.01.96.

         IV.2. The contract shall be automatically renewed, for an indefinite
period, unless the party interested in not renewing the agreement communicates
that intention in writing, at least 90 (ninety) days prior to the end of the
contractual period.

CLAUSE V - STOCKS AND GUARANTEE OF UNINTERRUPTED SUPPLY

         V. For the purposes of achieving the object of this contract, the
MANUFACTURER undertakes to keep in stock, ready for supply to the DISTRIBUTOR, a
minimum quantity of the product, so that the supply is continuous, even in the
event of a strike, breakdown of equipment and/or any other foreseeable
situation.

CLAUSE VI - INFORMATION AND CONFIDENTIALITY

         VI.1. During the performance of this contract the DISTRIBUTOR shall
inform the MANUFACTURER of the list of clients acquiring the PRODUCT and the
respective quantities. Every three months the DISTRIBUTOR shall also advise the
average price of the product charged during that period.

         VI.2. The MANUFACTURER further undertakes to supply the
DISTRIBUTOR with the technical information, respective manuals and other
necessary information in relation to the PRODUCT and the

                                        5

<PAGE>

performance of the agreement.

         VI.3. It is established as of now that any information passed on by one
party to the other as a result of this agreement shall be treated as commercial
and industrial secrets and shall, as such, be confidential information, which
shall not be disclosed to third parties without the prior written consent of the
party which provided the information. Such prohibition shall remain even after
this contract has expired, in which case the only exception shall be the list of
clients who acquired the PRODUCT.

CLAUSE VII - RESPONSIBILITY FOR THE PRODUCT

         VII.1. In its capacity as a producer of veterinary products, the
MANUFACTURER is technically responsible for the PRODUCT, and is obliged to
comply with all applicable laws including, but not limited to, matters
concerning licenses required for the manufacture and sale of the PRODUCT, and
shall supply to the DISTRIBUTOR any supporting documents necessary for the
performance of this contract.

         VII.2. The MANUFACTURER is responsible for repairing any damage caused
to consumers as a result of the quality of the PRODUCT, and shall also be liable
for such defects as it may contain, and undertakes to exempt the DISTRIBUTOR
from any liability as regards such aspects, with the sole exception of facts

                                       6

<PAGE>

caused by the DISTRIBUTOR itself.

         VII.3. The MANUFACTURER shall display on the sales packaging sufficient
clear information on the PRODUCT, specifying the quantity, characteristics,
composition and quality, and on the risks which it presents, and any other
necessary information, bearing in mind the need to comply with the applicable
rules and regulations on the manufacture and sale of the PRODUCT.

CLAUSE VIII - DEFAULT AND RESCISSION

         VIII.1. If either of the parties fails to fulfill any one of the terms
or conditions of this agreement, such that it prejudices the interests of the
other, the other party must notify the defaulting party in writing of the
default, with a view to settling the claim amicably.

         VIII.2. If the default persists for more than 30 (thirty) days after
the notification is sent, the notifying party may consider this contract
automatically rescinded, independently of any other formality and without
prejudice to any applicable damages as a result of such default.

         VIII.3. This contract shall be rescinded by operation of law
in cases of bankruptcy, composition with creditors or insolvency of
either of the parties, independently of notice or prior

                                       7

<PAGE>

notification.

CLAUSE IX - LIABILITY EXCLUSION

         Neither of the parties shall be liable towards the other for any
indirect or consequential loss or damage, even if such losses and damage result
from loss of profits, loss of production or loss of products.

CLAUSE X - TAXES

         All taxes, duties and contributions of any kind existing now or in the
future in respect of this contract shall be paid by the party legally liable,
and on no account shall any inversion of obligations take place.

CLAUSE XI - GENERAL CONDITIONS

         XI.1. The promotions, events and marketing activities designed to
promote sales of the PRODUCT such as, inter alia, advertisements, leaflets,
congresses, etc., shall be carried out for the account and at the discretion of
the MANUFACTURER, and shall be assessed by the parties so as to establish in
advance the conditions for their execution.

         XI.2. This contract does not generate any kind of company with

                                       8

<PAGE>

its own legal personality, and each party shall retain its own. This instrument
does not, therefore, imply any merger, integration, incorporation or succession
of one party by the other.

         XI.3. This contract corresponds to the full agreement of the parties on
the contractual object, expressly revoking any previous documents and
understandings on the matter.

         XI.4. Neither of the parties shall assign or in any way transfer the
rights and obligations arising out of this contract without the prior written
authorization of the other.

         XI.5. Failure to exercise any right or power of the parties shall not
imply waiver or novation, and shall be regarded as mere liberality, which shall
not prevent the party from exercising it at any moment.

         XI.6. The parties are obligated for themselves and their successors and
elect the central jurisdiction of the District of Sao Paulo-SP, for questions
arising out of this contract, excluding any other, however privileged.

CLAUSE XII - ANNEXES

         The documents listed below, initialed by the parties or by their
authorized representatives, form an integral part of this

                                        9

<PAGE>

instrument as "ANNEXES" and shall be fully valid, except insofar as they
contradict the provisions of this contract, in which case the contract shall
prevail:

ANNEX I - TECHNICAL CHARACTERISTICS OF THE PRODUCT

ANNEX II - PERIODIC AGREEMENT

         And being in full agreement, they sign this contract, with two
witnesses, in four copies of identical form and content.

                            Sao Paulo, March 1, 1996.
                            /s/
                            PLANALQUIMICA INDUSTRIAL LTDA.

                            /s/
                            ELANCO QUIMICA LTDA.

WITNESSES:
/s/

ACS/JOR
/s/

                                       10

<PAGE>

                                     ANNEX I

                    TECHNICAL CHARACTERISTICS OF THE PRODUCT

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                    ]

<PAGE>

                                    ANNEX II

1. PRICE AND DEADLINE

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                    ]

2. ELANCO SELLING PRICE

CONFIDENTIAL TREATMENT REQUESTED FOR ALL BRACKETED ([ ]) INFORMATION. THE
CONFIDENTIAL PORTION HAS BEEN SO OMITTED AND FILED SEPARATELY WITH THE
COMMISSION.

[                    ]

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